Mary Wyatt v. Francis Gates , 800 F.3d 331 ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 14-3327 and 14-3344
MARY NELL WYATT, individually and as Executrix of the Es-
tate of RONALD E. WYATT, et al.,
Plaintiffs-Appellants,
v.
SYRIAN ARAB REPUBLIC, et al.,
Defendants,
and
FRANCIS GATES, et al.,
Third-Party Defendants-Appellees.
____________________
FRANCIS GATES, et al.,
Plaintiffs-Appellees,
v.
SYRIAN ARAB REPUBLIC, et al.,
Defendant,
v.
MARY NELL WYATT, et al.,
Claimants-Appellants.
2 Nos. 14-3327 and 14-3344
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division
Nos. 11 C 8715 and 14 C 6161 — Virginia M. Kendall, Judge.
____________________
ARGUED MAY 20, 2015 — DECIDED AUGUST 31, 2015
____________________
Before BAUER, FLAUM, and HAMILTON, Circuit Judges.
HAMILTON, Circuit Judge. These appeals address attempts
to execute final judgments against the nation of Syria ob-
tained by two groups of United States victims of Syrian
state-sponsored terrorism. Both groups of victims have won
judgments under the Foreign Sovereign Immunities Act.
Both seek to satisfy their judgments by seizing the same Syr-
ian assets located in the Northern District of Illinois.
We affirm the actions of the district court, which ordered
the assets disbursed to the appellees, whom we refer to as
the Gates plaintiffs. The legal issue we decide on the merits
is that plaintiffs who win judgments in state-sponsored ter-
rorism cases against foreign governments under 28 U.S.C.
§ 1605A, and who seek to attach property under § 1610(g),
are not required to comply with the notice requirement of
§ 1608(e) before executing their judgments. The Foreign Sov-
ereign Immunities Act contains extensive procedural protec-
tions for foreign sovereigns in United States courts, but Con-
gress has amended the Act to cut back some of those protec-
tions in cases of state-sponsored terrorism. Before dealing
with the merits of this issue at the end of this opinion, how-
Nos. 14-3327 and 14-3344 3
ever, we must first deal with a complex procedural history
and several jurisdictional challenges.
To explain, we begin by introducing the legal framework
for remedies for state-sponsored terrorism under the Foreign
Sovereign Immunities Act, the parties and their claims, and
the involved procedural history of these appeals. We then
address challenges to our jurisdiction and conclude by ad-
dressing the merits of these appeals.
I. Legal, Factual, and Procedural Background
A. Terrorism and the Foreign Sovereign Immunities Act
The default rule of United States law is that foreign states
are immune from suit and attachment of assets in United
States courts, but the Foreign Sovereign Immunities Act
(FSIA) provides a number of exceptions and special proce-
dures for such cases. The FSIA is comprehensive, so all cases
against foreign sovereigns must be fitted into its statutory
framework. Republic of Argentina v. NML Capital, Ltd., 573
U.S. —, 134 S. Ct. 2250, 2255–56 (2014); Gates v. Syrian Arab
Republic, 755 F.3d 568, 571 (7th Cir. 2014) (earlier appeal in-
volving same Syrian assets at issues in these appeals).
The FSIA now contains provisions specific to claims for
state-sponsored terrorism. Section 1605A removes sovereign
immunity in actions for money damages for personal injury
or death resulting from an act of state-sponsored terrorism.
28 U.S.C. § 1605A. Once plaintiffs obtain a judgment under
§ 1605A, they may proceed to attach assets to execute that
judgment under § 1610. Subsection § 1610(g) allows plain-
tiffs with a judgment against a state sponsor of terrorism to
attach and execute the judgment against property of the for-
4 Nos. 14-3327 and 14-3344
eign state itself and any agency and instrumentality of the
state.
Other provisions of § 1610 establish the more general
process for executing a judgment against a foreign state in
suits other than those for state-sponsored terrorism, such as
more ordinary contract or tort cases arising out of a foreign
state’s commercial activities. Subsections 1610(a) and (b) de-
scribe the property of foreign states that is generally subject
to attachment to satisfy a judgment. Subsection 1610(c) de-
lays attachment and execution under § 1610(a) and (b) until
a court determines that a reasonable period of time has
elapsed following the entry of judgment. Subsection 1610(c)
also requires compliance with § 1608(e), which directs a
plaintiff who obtains a default judgment to serve the foreign
state with a copy of the judgment in a specific manner.
The interplay of these more general provisions and the
special provisions for state-sponsored terrorism are at the
center of the dispute between these two groups of victims. In
Gates, we described the perhaps unintended consequences of
this statutory scheme in previous appeals by a third group of
victims seeking the same assets in dispute here:
[T]he FSIA does not provide a mechanism for
distributing equitably among different victims
any Syrian assets in the United States that are
subject to attachment. Instead, victims who fi-
nally obtain judgments must then engage in
the costly, burdensome, and often fruitless task
of searching for available assets.
These victims of terror can then find them-
selves pitted in a cruel race against each oth-
Nos. 14-3327 and 14-3344 5
er—a race to attach any available assets to sat-
isfy the judgments. The terms of the race are
essentially winner-take-all rather than any eq-
uitable sharing among victims of similar losses.
Under the FSIA’s compensation scheme, a ter-
rorism judgment against Syria can be satisfied
only at the expense of other terrorism victims.
Gates, 755 F.3d at 571.
B. The Gates Plaintiffs
In both of these appeals, the appellees are the Gates
plaintiffs. They are defending the district court’s decision to
release confiscated Syrian funds to them to satisfy their
judgment. The Gates plaintiffs are relatives of Olin Eugene
“Jack” Armstrong and Jack L. Hensley. Hensley and Arm-
strong were kidnapped in September 2004 by al-Qaeda
when the two men were working as contractors in Iraq for
the U.S. military. They were gruesomely murdered, and the
killings were captured on a video that was made public by
al-Qaeda. The Gates plaintiffs sued Syria under the FSIA for
sponsoring al-Qaeda’s terrorism. (Syria has been on the list
of state sponsors of terrorism since the list was created in
1979.)
On September 26, 2008, the Gates plaintiffs obtained a
default judgment in the United States District Court for the
District of Columbia for $413 million against Syria. A month
later, on October 23, the court clerk sent a copy of the default
judgment to the Syrian Foreign Ministry via a private deliv-
ery service, but the delivery was rejected and the delivery
agent was told “the shipment is no longer required.” The
6 Nos. 14-3327 and 14-3344
next day, Syria filed a notice of appeal challenging the dis-
trict court’s personal jurisdiction over Syria.
While that appeal was pending, the Gates plaintiffs
sought to take steps to execute their judgment against Syria.
The Wyatt plaintiffs, who had filed their own suit against
Syria, moved to intervene in the Gates case in the District of
Columbia, asserting a prior claim on Syrian assets in the Dis-
trict of Columbia because they had filed their suit earlier.
The district court stayed enforcement of the Gates judgment
pending appeal and denied as moot the Wyatt motion to in-
tervene.
On May 20, 2011, the United States Court of Appeals for
the District of Columbia Circuit found personal jurisdiction
proper and affirmed the district court’s default judgment in
favor of the Gates plaintiffs. Gates v. Syrian Arab Republic, 646
F.3d 1, 5 (D.C. Cir. 2011). The Gates plaintiffs then filed a mo-
tion in the District of Columbia district court for a § 1610(c)
order authorizing them to enforce their judgment because a
“reasonable time” had passed after entry of judgment and
notice to Syria. 28 U.S.C. § 1610(c). The district court agreed
that § 1610(c) had been satisfied and authorized the Gates
plaintiffs to proceed to attachment and execution of the
judgment.
C. The Wyatt Plaintiffs
In both of the current appeals, the appellants are the Wy-
att plaintiffs. They are also victims of terrorism sponsored by
Syria. They are the relatives of Ronald Wyatt and Marvin T.
Wilson, two biblical archaeologists who were captured in
Turkey in August 1991 by armed members of the Kurdistan
Workers’ Party (PKK), a militant Kurdish organization. The
Nos. 14-3327 and 14-3344 7
two men were held in captivity for 21 days under harsh con-
ditions and in constant fear for their lives. The Wyatt plain-
tiffs sued the Syrian government for sponsoring PKK terror-
ism.
Over a year after the District of Columbia Circuit af-
firmed the Gates judgment, the Wyatt plaintiffs obtained on
December 17, 2012 a default judgment against Syria in the
United States District Court for the District of Columbia for
$338 million. The district court ordered the Wyatt plaintiffs
to serve a copy of the default judgment on Syria pursuant to
28 U.S.C. § 1608(e). Syria appealed the judgment, and the
Wyatt plaintiffs cross-appealed, arguing that service under
28 U.S.C. § 1608(e) was unnecessary because Syria had par-
ticipated actively in the litigation and obviously knew of the
default judgment. On January 30, 2014, the United States
Court of Appeals for the District of Columbia Circuit af-
firmed the judgment against Syria and rejected the Wyatt
plaintiffs’ cross-appeal, holding that § 1608(e) is a “clear and
unambiguous statute” that required service of the default
judgment. Wyatt v. Syrian Arab Republic, 554 Fed. App’x 16,
17 (D.C. Cir. 2014) (mem).
To comply with 28 U.S.C. § 1608(e), the Wyatt plaintiffs
then served a copy of the judgment on the Syrian govern-
ment, which had already appealed the same judgment. The
Wyatt plaintiffs then sought a § 1610(c) order from the Dis-
trict of Columbia district court to authorize them to enforce
their judgment because a “reasonable time” had passed. On
May 19, 2014, that court ruled that the Wyatt plaintiffs had
complied with § 1610(c) and authorized them to proceed to
attachment and execution of the judgment.
8 Nos. 14-3327 and 14-3344
D. The Northern District of Illinois Litigation
In the meantime, however, while the Wyatt plaintiffs had
still been seeking a final judgment and § 1610(c) order in the
District of Columbia, the Gates plaintiffs had taken steps to
execute their judgment against Syrian assets. They subpoe-
naed the Office of Foreign Assets Control in the U.S. Treas-
ury Department to identify Syrian assets in the United States
that could be attached to satisfy their judgment. The Office
responded under a protective order and told the Gates plain-
tiffs that some Syrian assets were located in the Northern
District of Illinois.
1. Procedural History of Appeal No. 14-3344
The Gates plaintiffs registered their judgment from the
District of Columbia action with the district court in the
Northern District of Illinois as case No. 11-cv-8715 and
served a citation to discover assets on JP Morgan Chase
Bank. The bank identified responsive accounts belonging to
agencies and instrumentalities of Syria that were held by the
bank itself and by AT&T. See 28 U.S.C. § 1610(g) (authorizing
the attachment of and execution of a judgment against “the
property of an agency or instrumentality” of a state liable for
sponsoring terrorism). The Gates plaintiffs responded by
serving AT&T with a citation to discover assets and pursued
other responsive accounts at JP Morgan Chase Bank.
The Gates plaintiffs litigated for two years in Illinois
seeking a court order granting them the Syrian funds to sat-
isfy their judgment. Part of that litigation was defending the
priority of their claim against a competing claim by the
Baker plaintiffs, another group of victims of terrorism seek-
ing to satisfy their own judgment against Syria. The Baker
Nos. 14-3327 and 14-3344 9
plaintiffs intervened in the Gates suit in 2012. The district
court ruled that the Gates plaintiffs had priority over the
Baker plaintiffs and issued two turnover orders. A May 13,
2013 order directed the release of the funds held by AT&T,
and a February 3, 2014 order directed the release of the
funds held by JP Morgan Chase. The Baker plaintiffs ap-
pealed those orders to this court. On June 18, 2014, we issued
an opinion affirming both of the district court’s turnover or-
ders. Gates, 755 F.3d 568.
The Gates plaintiffs promptly moved for an order direct-
ing the clerk of the Northern District of Illinois to release the
assets to them. Two days later, on August 17, 2014, the Wyatt
plaintiffs took their first action regarding the Gates lawsuit
in Illinois. The Wyatt plaintiffs filed not a motion to inter-
vene but a memorandum of opposition contesting the Gates
plaintiffs’ right to the assets. The Gates plaintiffs moved to
strike the filing. The district court held a hearing and on Oc-
tober 22, 2014 granted the Gates plaintiffs’ motion to release
funds. The Wyatt plaintiffs’ appeal of that order was docket-
ed as No. 14-3344.
2. Procedural History of Appeal No. 14-3327
On August 11, 2014, the Wyatt plaintiffs had also filed a
separate action in the Northern District of Illinois, No. 14-cv-
6161. They named Syria as the defendant and the Gates
plaintiffs as third-party defendants. In that action, the Wyatt
plaintiffs registered their judgment from the District of Co-
lumbia action and served a citation to discover assets on the
clerk of court for the Northern District of Illinois. (By that
time, JP Morgan Chase and AT&T had placed the disputed
funds in the district court’s registry.) The Wyatt plaintiffs al-
so moved for the turnover and release of the assets. The
10 Nos. 14-3327 and 14-3344
Gates plaintiffs moved to dismiss the complaint for failure to
state a claim and lack of jurisdiction. Also on October 22,
2014, the district court dismissed the Wyatt plaintiffs’ com-
plaint. The court also denied the Wyatt plaintiffs’ motion to
stay that decision a few weeks later. The Wyatt plaintiffs’ ap-
peal of those orders was docketed as No. 14-3327.
II. Jurisdiction
Jurisdiction is a threshold issue that we must address be-
fore discussing the merits. India Breweries, Inc. v. Miller Brew-
ing Co., 612 F.3d 651, 657 (7th Cir. 2010). We first explain why
we have jurisdiction to hear these appeals and then why the
district court had jurisdiction to enter the orders the Wyatt
plaintiffs ask us to review.
A. Appellate Jurisdiction
The Gates plaintiffs challenge on two grounds our juris-
diction to hear these appeals. First, they argue the Wyatt
plaintiffs had no right to challenge the turnover order
awarding the assets to the Gates plaintiffs. This argument
challenges our jurisdiction to hear appeal No. 14-3344. Sec-
ond, the Gates plaintiffs argue that both appeals are moot
because we have no power to order a meaningful remedy.
We address these arguments in turn.
1. Right of Wyatt Plaintiffs to Challenge the Turnover
Order
The Gates plaintiffs maintain that we do not have juris-
diction over No. 14-3344 because the Wyatt plaintiffs never
properly became, or tried to become, parties to the case in
the district court, so that they have no right to appeal the or-
der releasing the funds. The Gates plaintiffs complain that
the Wyatt plaintiffs flouted the Federal Rules of Civil Proce-
Nos. 14-3327 and 14-3344 11
dure by failing to apply for intervention under Rule 24,
which requires a party seeking intervention to file a timely
motion stating the grounds for intervention, accompanied by
a pleading setting forth the claim. Without a motion to inter-
vene, say the Gates plaintiffs, the Wyatt plaintiffs never be-
came parties to the Gates action and cannot appeal the order
in that case.
The Wyatt plaintiffs respond that the Gates action in Illi-
nois sought to attach Syrian assets to execute the final judg-
ment of another federal court, so their ability to participate
should be governed by Illinois law. Federal Rule of Civil
Procedure 69(a) provides that attachment and execution
procedures to satisfy a federal judgment “must accord with
the procedure of the state where the court is located, but a
federal statute governs to the extent it applies.” The Wyatt
plaintiffs contend they were not required to intervene to as-
sert their claim to the Syrian assets.
Intervention is ordinarily the proper path to assert rights
in a federal civil case to which one is not yet a party. There
are a few exceptions to that general rule, however. In enter-
taining the appeal of a law firm challenging distribution of
fees out of a class settlement, we held the firm was a party
even though it never intervened: “Intervention isn’t the only
route for becoming a party. Nonparties in a trial court can
participate as parties to the appeal without formal interven-
tion if the outcome of the appeal would be likely to deter-
mine (not just affect) their rights.” In re Trans Union Corp.
Privacy Litig., 664 F.3d 1081, 1084 (7th Cir. 2011). In Trans Un-
ion, we relied in part on SEC v. Enterprise Trust Co., 559 F.3d
649, 651 (7th Cir. 2009), which held that persons claiming
rights in property in receivership could appeal the district
12 Nos. 14-3327 and 14-3344
court’s approval of the receiver’s plan without having for-
mally intervened.
Because Rule 24 intervention is not quite the exclusive
method for joining a lawsuit to appeal a district court order,
we apply Rule 69 and look to Illinois law on attachment and
execution to determine whether this procedure was proper.1
Illinois law on the procedure for attachment and execution
of a judgment gives adverse claimants to property the right
to appear and maintain a claim before their interest in the
property is extinguished. The statute on these supplemen-
tary proceedings provides:
If it appears that any property, chose in action,
credit or effect discovered, or any interest
therein, is claimed by any person, the court
shall, as in garnishment proceedings, permit or
require the claimant to appear and maintain
his or her right. The rights of the person cited
and the rights of any adverse claimant shall be
asserted and determined pursuant to the law
relating to garnishment proceedings.
735 Ill. Comp. Stat. 5/2-1402(g). This provision incorporates
the law of garnishment proceedings, which provides:
In the event any indebtedness or other property due
from or in the possession of a garnishee is claimed
by any other person, the court shall permit the
claimant to appear and maintain his or her claim. A
1We took this approach in a non-precedential decision involving
quite similar issues. United States v. Macchione, 309 Fed. App’x 53, 55 (7th
Cir. 2009) (looking to Illinois law to determine the right of adverse
claimants to appear even without formal intervention).
Nos. 14-3327 and 14-3344 13
claimant not voluntarily appearing shall be
served with notice as the court shall direct. If a
claimant fails to appear after being served with
notice in the manner directed, he or she shall
be concluded by the judgment entered in the
garnishment proceeding.
735 Ill. Comp. Stat. 5/12-710(a) (emphasis added). The statute
further provides that an adverse claimant who appears and
files a timely claim is “a party to the garnishment proceed-
ing” whose “claim shall be tried and determined with the
other issues in the garnishment action.” 735 Ill. Comp. Stat.
5/12-710(b).
The Wyatt plaintiffs argue that these statutes permit
them, without Rule 24 intervention, to oppose the release of
funds in the Gates case in district court and to appeal the
court’s adverse decision because they are adverse claimants
entitled to an opportunity to have their claim heard. They
interpret these statutes to mean that their claim on the assets
can be resolved only after they received proper notice and an
opportunity to appear and maintain their claim. Because
they never received notice, they argue, the district court, and
this court on appeal, must address their claim to the assets to
give them the opportunity to be heard granted by Illinois
law.
The Wyatt plaintiffs rely on an Illinois decision holding it
was reversible error to deny an adverse claimant the oppor-
tunity to prove his claim. See B.J. Lind & Co. v. Diacou, 278
N.E.2d 526, 529 (Ill. App. 1971) (reversing citation judgment
and directing on remand that “all parties be afforded the
opportunity to prove their respective claims”). Illinois law
undoubtedly favors giving an adverse claimant an oppor-
14 Nos. 14-3327 and 14-3344
tunity to be heard before extinguishing the claim. See 735 Ill.
Comp. Stat. 5/2-1402(g) (“If it appears” there is an adverse
claim, “the court shall, as in garnishment proceedings, per-
mit or require the claimant to appear and maintain his or her
right.”); Bloink v. Olson, 638 N.E.2d 406, 411 (Ill. App. 1994)
(holding that if third party claims entitlement to assets of
judgment debtor, “a trial must be held to ascertain the par-
ties’ rights to the disputed property”).
On the other hand, there are reasons to distinguish the
Wyatt plaintiffs’ procedural maneuver from the usual ad-
verse claim contemplated by these statutes and cases. First,
the Wyatt plaintiffs presented their adverse claim only after
the Gates plaintiffs had obtained a final judgment awarding
them the assets. Second, the Wyatt plaintiffs do not claim
that either the Gates plaintiffs or the parties holding the as-
sets (Chase and AT&T) can be faulted for failing to give no-
tice of the proceedings. The Wyatt plaintiffs acquired their
claim to the Syrian assets months after the district court or-
dered the turnover of the assets. At the time of the turnover
proceedings, neither the Gates plaintiffs nor the parties hold-
ing the assets had notice of an adverse claim by the Wyatt
plaintiffs.
Illinois law tells us, however, that the first distinguishing
fact—the Wyatt plaintiffs’ attempt to upset a final judg-
ment—does not necessarily bar their attempt to have their
claim heard. More than a century ago, an Illinois appellate
court heard the appeal of an adverse claimant who appeared
before the district court two weeks after judgment was en-
tered in favor of a judgment creditor. Paepcke-Leicht Lumber
Co., v. Becker, for Use of, 124 Ill. App. 311, 312 (1906). The ad-
verse claimant moved to vacate the judgment, but the trial
Nos. 14-3327 and 14-3344 15
court refused to upset the judgment or allow the claimant to
interplead in the case. The appellate court reversed: “It is no
answer to appellant’s claim that a judgment was entered pri-
or to his motion for leave to interplead. The court had ample
power to vacate that judgment during the term at which it
was rendered.” Id. at 317. The Paepcke-Leicht Lumber case sig-
nals that the final judgment in favor of the Gates plaintiffs
does not bar us from considering the merits of the Wyatt
plaintiffs’ claim.
Illinois law is less clear, however, on the second issue:
whether an adverse claimant is entitled to maintain her
claim even when neither the judgment creditor nor the par-
ties holding the assets had notice of the claim. Several cases,
including Paepcke-Leicht Lumber, hold that an adverse claim
should be heard whether notice of the garnishment proceed-
ings is given to the holder of the assets before or after as-
signment of funds in the account when there are sufficient
funds in the account. Id. (“The bank should have stated, in
its answer to the interrogatories, for its own protection, the
claim of which appellant had apprised it.”); Chott v. Tivoli
Amusement Co., 82 Ill. App. 244, 248-49 (1899) (“If the gar-
nishee has notice or information that a third party claims an
interest in the fund or property in controversy, he must, if he
would protect himself against such claim, disclose it by his
answer, even though he can not, of his own knowledge,
swear to the existence of the claim or its precise nature.”).
These cases indicate that the failure to give notice to a known
claimant can justify consideration of a post-judgment claim.
That does not mean that prior knowledge of the claim is nec-
essary for a court to hear it. No Illinois case that we are
aware of answers whether prior knowledge is required.
16 Nos. 14-3327 and 14-3344
As a federal court applying state law, our duty is to apply
Illinois law as we believe the Illinois Supreme Court would,
and in doing so, we accord great weight to the decisions of
appellate courts. Liberty Mutual Fire Ins. Co. v. Statewide Ins.
Co., 352 F.3d 1098, 1100 (7th Cir. 2003). The question is ad-
mittedly close, but we believe the Illinois courts would more
likely than not entertain the adverse claim on the merits,
even when the garnishee and judgment creditor had no prior
knowledge of the claim, so long as the claimant had also
been given no notice of the attachment litigation. We would
not be surprised if the Illinois courts were to decide this
question the other way, given the great interest in finality of
judgments, but our prediction is consistent with the prefer-
ence in Illinois law for giving adverse claimants a fair oppor-
tunity to be heard before extinguishing their claims. A rule
flatly barring courts from hearing later-raised adverse claims
would risk placing even fraudulent prior claims beyond re-
view. At the same time, we recognize that the approach we
adopt today is subject to abuse by fraudulent and frivolous
claims by greedy interlopers and bystanders. In such cases
(but this is not one), courts have available and should em-
ploy sanctions and other tools firmly to discourage such
abuse. For these reasons, we conclude that the Wyatt plain-
tiffs’ failure to seek to intervene in the district court does not
bar them from appealing the district court’s turnover order.
2. Mootness of Both Appeals
The Gates plaintiffs next argue that both appeals are
moot because the funds that were in the custody of the dis-
trict court have already been disbursed to them. They claim
it is no longer possible for this court or the district court to
fashion meaningful relief for the Wyatt plaintiffs because we
Nos. 14-3327 and 14-3344 17
do not have the power to order that money now in the hands
of the Gates plaintiffs be returned to the court or given to the
Wyatt plaintiffs. See A.B. v. Housing Auth. of South Bend, 683
F.3d 844 (7th Cir. 2012) (a case is moot if no form of meaning-
ful relief is possible). In the absence of a live controversy, the
Gates plaintiffs argue, the appeals should be dismissed. See
Milwaukee Police Ass’n v. Board of Fire & Police Comm’rs of
Milwaukee, 708 F.3d 921 (7th Cir. 2013).
We hold the cases are not moot because we have the eq-
uitable power to require the return of the funds if the order
releasing them was erroneous. As the Supreme Court ex-
plained almost a hundred years ago, it is a “principle, long
established and of general application, that a party against
whom an erroneous judgment or decree has been carried in-
to effect is entitled, in the event of a reversal, to be restored
by his adversary to that which he has lost thereby. This right,
so well founded in equity, has been recognized in the prac-
tice of the courts of common law from an early period.”
Arkadelphia Milling Co. v. St. Louis Southwestern Railway Co.,
249 U.S. 134, 145 (1919); see also In re Zurn, 290 F.3d 861, 862
(7th Cir. 2002) (noting that litigant should return money ob-
tained from a judgment reversed on appeal but observing
that state court was right forum for dispute); Buzz Barton &
Associates, Inc. v. Giannone, 483 N.E.2d 1271, 1275 (Ill. 1985)
(“[I]f a party has received benefits from an erroneous decree
or judgment, he must, after reversal, make restitution, and if
he has sold the property erroneously adjudged to belong to
him, he must account to the true owners for its value.”).
The Gates plaintiffs point out that these cases cited by the
Wyatt plaintiffs involved bilateral relations, where the court
ordered one party to return funds wrongfully obtained from
18 Nos. 14-3327 and 14-3344
the other party to the case. But the presence of an additional
party—here the funds originally belonged to Syria but were
disbursed to the Gates plaintiffs and now are sought by the
Wyatt plaintiffs—does not defeat our jurisdiction to correct a
disbursement if it was wrongful. We have considered this
question in interpleader cases and held that we have juris-
diction to set aside an erroneous distribution order and to
direct the defendant who received the funds to pay them to
another defendant, the rightful recipient. Smith v. Widman
Trucking & Excavating, Inc., 627 F.2d 792, 798–99 (7th Cir.
1980); see also General Railway Signal Co. v. Corcoran, No. 89 C
9360, 1992 WL 220604, at *4–5 (N.D. Ill. Sept. 4, 1992) (Rov-
ner, J.) (declining to limit Smith to Rule 60(b) motions and
concluding that a district court retains jurisdiction to vacate
an order of distribution regardless of whether the court or a
claimant holds the funds).2
Accordingly, if the Wyatt plaintiffs were to prevail on the
merits and demonstrate that the turnover orders were issued
erroneously, we would have the power to order the Gates
2 To be clear, no one contends that any party to this dispute has
committed any sort of fraud on any court. But if we accepted the Gates
plaintiffs’ argument that we have no jurisdiction even to consider the
Wyatt plaintiffs’ claim, then it would also be beyond our jurisdiction to
correct an order disbursing funds even if it had been obtained by fraud.
That troubling proposition could allow litigants to use the court’s im-
primatur to legalize fraud. During oral argument, the Gates plaintiffs
responded to the fraud hypothetical by saying that Rule 60(b)—which
lists fraud as a ground for relief from a final judgment—could be used to
correct the fraud. But that answer implicitly concedes that it would be
possible to fashion a remedy, which means that the appeals are not moot
and that we have jurisdiction to decide the merits.
Nos. 14-3327 and 14-3344 19
plaintiffs to return the funds. Because it is possible for a
court to award meaningful relief, the appeals are not moot.3
B. Jurisdiction of the District Court
The Wyatt plaintiffs raise a different jurisdictional issue,
challenging the jurisdiction of the district court. They con-
tend that the district court had no jurisdiction to issue the
November 6 order releasing the funds after the Wyatt plain-
tiffs filed their notice of appeal on October 22, 2014, which
divested the district court of jurisdiction. The Wyatt plain-
tiffs argue that the court’s November 6 order—granting the
Gates plaintiffs’ motion for release of the funds—is void be-
cause it was entered without jurisdiction. See Kusay v. United
States, 62 F.3d 192, 194 (7th Cir. 1995) (declaring that any ac-
tion by the district court after the notice of appeal was filed
but before the mandate from the court of appeals issues is a
“nullity”).4
3 To support their mootness argument, the Gates plaintiffs also rely
on Porco v. Trustees of Indiana University, 453 F.3d 390, 394–95 (7th Cir.
2006). That case is plainly distinguishable. We held Porco’s suit was
moot because the Eleventh Amendment precluded us from ordering the
defendant, a state university, to return money that had been disbursed
according to a court order. The Eleventh Amendment poses no bar to
relief in this suit because none of the Gates plaintiffs is a state.
4 The district court’s November 6 order also denied the Wyatt plain-
tiffs’ motion to stay the release of funds. The district court clearly had
jurisdiction to deny the Wyatt plaintiffs’ motion to stay the release of the
funds. Federal Rule of Appellate Procedure 8(a)(1)(A) provides that a
party to an appeal should “ordinarily move first in the district court for
… a stay of the judgment or order of a district court pending appeal.”
That rule would make no sense if a district court lacked jurisdiction to
rule on the motion for a stay of its judgment pending appeal.
20 Nos. 14-3327 and 14-3344
Our cases holding that the notice of appeal transfers ex-
clusive jurisdiction to the court of appeals have explained
that the district court is divested of control over only “those
aspects of the case involved in the appeal.” Henry v. Farmer
City State Bank, 808 F.2d 1228, 1240 (7th Cir. 1986). That rule
“does not prevent the court from handling collateral matters
such as the award of costs and … the collection of a judg-
ment.” Chicago Truck Drivers Pension Fund v. Central
Transport, Inc., 935 F.2d 114, 119–20 (7th Cir. 1991). Even after
a notice of appeal has been filed, the district court retains the
power to take further action “in aid of execution of a judg-
ment that has not been stayed or superseded.” Henry, 808
F.2d at 1240.
The district court’s November 6, 2014 order was in aid of
execution of a judgment, not a new judgment that exceeded
its jurisdiction. The district court had ordered the turnover
of the funds to the Gates plaintiffs on May 13, 2013 and Feb-
ruary 3, 2014. After that decision was affirmed on appeal by
this court and the case was returned to the district court in
August 2014, the Wyatt plaintiffs filed their opposition. The
district court considered the Wyatt plaintiffs’ claim but ulti-
mately issued a final judgment against them, dismissing
their claim, on October 22. The district court and this court
declined to stay that judgment pending appeal. The court’s
November 6 order for release of the funds was therefore a
proper execution of its judgments awarding the funds to the
Gates plaintiffs and denying the Wyatt plaintiffs’ opposition.
The district court was acting within its jurisdiction.
III. The Priority of the Competing Claims
We come at last to the merits of the dispute. The Gates
plaintiffs registered their judgment and served a citation to
Nos. 14-3327 and 14-3344 21
discover assets on December 8, 2011. Under Illinois law, that
gave the Gates plaintiffs a perfected lien on the assets as of
that date. See Gates, 755 F.3d at 578, citing 735 Ill. Comp. Stat.
5/2-1402(m). If the Gates plaintiffs’ judgment, attachment,
and execution are valid, then they plainly have priority over
the Wyatt plaintiffs, who did not register a judgment and
serve a citation to discover assets until nearly three years lat-
er.
The Wyatt plaintiffs claim that the Gates plaintiffs are not
entitled to the Syrian assets identified in the Northern Dis-
trict of Illinois because the Gates plaintiffs failed to comply
with § 1608(e) of the FSIA. That provision requires that a
foreign state be served with any default judgment entered
against it: “A copy of any such default judgment shall be sent
to the foreign state or political subdivision in the manner
prescribed for service in this section.” 28 U.S.C. § 1608(e).
For the purposes of our discussion of this argument, we as-
sume that the Wyatt plaintiffs are correct in asserting that the
Gates plaintiffs have not complied with the service require-
ments of § 1608(e).5
5 The Gates plaintiffs had the clerk of court send a copy of the de-
fault judgment to Syria via a private courier service, but the delivery was
rejected in Syria. Section 1608(a)(2) requires that documents that are
served by mail be sent “requiring a signed receipt,” which the Gates
plaintiffs admit they never obtained. The Gates plaintiffs claim that they
satisfied § 1608(e) even though they never received a signed receipt.
Most courts have interpreted § 1608 to require strict compliance with the
specific rules for service on foreign states. E.g., Magness v. Russian Federa-
tion, 247 F.3d 609, 615 (5th Cir. 2001) (“We conclude that the provisions
for service of process upon a foreign state or political subdivision of a
foreign state outlined in section 1608(a) can only be satisfied by strict
compliance.”); but see Peterson v. Islamic Republic of Iran, 627 F.3d 1117,
22 Nos. 14-3327 and 14-3344
The Wyatt plaintiffs’ argument fails to deal with the
structure and terms of the FSIA, and in particular with its
special provisions for claims for state-sponsored terrorism.
The statutory consequence of failing to satisfy the service re-
quirement in § 1608(e) is that plaintiffs with a judgment
against a foreign state cannot obtain authorization under
§ 1610(c) to proceed to attachment and execution of that
judgment. Section 1610(c) provides:
No attachment or execution referred to in sub-
sections (a) and (b) of this section shall be per-
mitted until the court has ordered such at-
tachment and execution after having deter-
mined that a reasonable period of time has
elapsed following the entry of judgment and
the giving of any notice required under section
1608(e) of this chapter.
28 U.S.C. § 1610(c). Subsections (a) and (b) list categories of
assets of foreign states, and of their agencies and instrumen-
talities, that can be attached in aid of execution of a judg-
ment obtained through a suit authorized by the FSIA. Ac-
cordingly, a plaintiff who does not serve a copy of the de-
fault judgment to satisfy § 1608(e) is not entitled to authori-
zation to execute the judgment under § 1610(c).
1129 (9th Cir. 2010) (“The Ninth Circuit has adopted a substantial com-
pliance test for the FSIA’s notice requirements and … the defendant had
actual notice.”). We do not decide what § 1608(e) requires, nor whether
the Gates plaintiffs have satisfied those requirements, because the Gates
plaintiffs were entitled to execute their judgment against the Syrian as-
sets without complying with § 1608(e).
Nos. 14-3327 and 14-3344 23
The critical point here, however, is that the Gates plain-
tiffs are not executing their judgment under § 1610(c) or un-
der § 1610(a) or (b), the provisions cross-referenced in
§ 1610(c). The Gates plaintiffs obtained § 1610(c) authoriza-
tion from the district court in the District of Columbia, which
the Wyatt plaintiffs claim was an error. That order was un-
necessary. The Gates plaintiffs are seeking to execute a
judgment for state-sponsored terrorism, so they may pro-
ceed through the execution provision specifically enacted for
terrorism judgments, § 1610(g).
As we held in Gates, Ҥ 1610(c) simply does not apply to
the attachment of assets to execute judgments under
§ 1610(g) for state-sponsored terrorism.” 755 F.3d at 575. We
reached that conclusion based on the structure and language
of the FSIA and its legislative history. We also found that
conclusion was consistent with the legislative purpose be-
hind the 2008 FSIA Amendments that added § 1610(g) to the
statute. The purpose of those amendments was “to make it
easier for terrorism victims to obtain judgments and to at-
tach assets.” Id. at 576. “Exempting attachments under
§ 1610(g), that is, attachments stemming from terrorism-
related judgments, from § 1610(c)’s solicitous notice re-
quirements is entirely consistent with the liberalizing pur-
pose of the 2008 Amendments.” Id. at 576–77.
The service of default judgments under § 1608(e) is one of
§ 1610(c)’s solicitous notice requirements, from which at-
tachments under § 1610(g) are exempt. The Gates plaintiffs,
as terrorism victims who obtained a judgment under
§ 1605A, could proceed to attachment and execution under
§ 1610(g) without complying with § 1610(c). That means they
are also exempt from § 1608(e), at least as a prerequisite for
24 Nos. 14-3327 and 14-3344
attachment and execution. A failure to comply with § 1608(e)
does not render invalid their attachment of assets and satis-
faction of their judgment for state-sponsored terrorism.
The Gates plaintiffs were therefore entitled to priority, so
we affirm the district court’s orders challenged in these ap-
peals disbursing funds to the Gates plaintiffs and dismissing
the Wyatt plaintiffs’ challenges to them. We affirm without
needing to address several alternative arguments for affirm-
ance, including whether these appeals amount to improper
collateral challenges to the District of Columbia court’s issu-
ance of a § 1610(c) order to the Gates plaintiffs, whether the
mandate rule foreclosed the Wyatt plaintiffs’ efforts after
Gates, and whether the Wyatt plaintiffs waived their chall-
enges by not pursuing their unsuccessful effort to intervene
in the Gates case in the District of Columbia years before
judgment was entered.
The orders of the district court are AFFIRMED.