Former Hostage Terry Anderson Wins $341 Million Against Iran

Former Hostage Terry Anderson Wins $341 Million Against Iran

Legislation Enables Small Group of Victims of Terrorism to Collect

By Diana Digges

At A Glance

Verdict: $341.7 total.$300 million in punitive damages

Status: Collection pending.

State: District of Columbia

Date of Verdict: March 24, 2000

Length of Trial: 2 days

Length of Deliberations: Bench trial

Type of Case: Personal injury

Case Name: Anderson, et al v. The Islamic Republic of Iran

Plaintiffs' Lawyers:

Stuart Henry Newberger, of Crowell & Moring, L.L.P., Washington, D.C. 250 lawyers

Defense Lawyers: None

When Judge Thomas Penfield Jackson ordered Iran to pay $341 million in damages to former hostage Terry Anderson and his family last March, the judge acknowledged that "the likelihood that any award will ever be paid is minimal."

Although Iran has significant assets frozen in the United States, the Clinton administration opposed any payment on the grounds that it would damage efforts to normalize diplomatic relations between the two countries and could prompt other nations to file retaliatory lawsuits against the United States.

What Judge Jackson didn't count on was the combined power of Anderson's fame and the lobbying efforts of his well-connected attorney, Stuart H. Newberger.

"We worked mightily until Clinton signed the bill," says Newberger, referring to legislation passed by Congress in late October that enables a small group of terrorism victims to collect on judgments against Iran and Cuba. Now, Anderson and his family will recover 100 percent of the compensatory damages and a portion of the punitives, plus post-judgment interest."

The compensatory damages totaled $37.9 million - $24.4 million for Terry Anderson, $6.7 million for his Lebanese-born wife, and $6.7 million for their daughter Sulome, who was born while Anderson was in captivity. Because the Anderson's plan to donate their punitive damages to the federal government, they can add another 10 percent to the compensatory damages for a total collection of $41.7 million.

"We worked the Hill, and got every Democrat and Republican to support [the legislation]," says Newberger, who formerly worked in the U.S. Attorney's office and represented the CIA and the State Department, among others. "We were right and they knew it."

Without that legislation, the judgments won by terrorism victims would have remained symbolic.

Making Symbolic Victories Real

The legislation put teeth into a 1996 amendment to the Foreign Sovereign Immunities Act (FSIA). That amendment gave American victims of terrorist acts abroad the right to sue foreign countries for civil damages in U.S. courts, providing that the State Department lists those countries as sponsors of terrorism. Iran has been on the list since 1984.

Eight families, including those involved in this year's #4 verdict, have won court judgments against Iran under the 1996 FSIA amendment, but until the recent legislation passed, they had no hope of collecting.

The Iranian-backed Islamic group Hezbollah kidnapped Anderson, chief Middle East correspondent for the Associated Press, in Beirut in 1985. He was tortured and held in captivity for 2,454 days - longer than any other hostage - under conditions that Judge Jackson described as "savage and cruel by any civilized standards."

At the two-day evidentiary hearing, Newberger introduced testimony from high-profile experts on Iran, including Ambassador Robert Oakley, former director of the State Department Office of Terrorism and a leading National Security Council advisor on issues of terrorism. Oakley's testimony identified the Iranian Ministry of Information and Security as responsible for causing the seizure of the hostages in Lebanon by Hezbollah.

Patrick Clawson, a director of a private think tank on the Middle East, established that Iran had sponsored Hezbollah since 1982, when Israel invaded Lebanon.

Iran presented no defense and has said it will not honor the judgments.

Jackson found - as he had in two earlier cases - that Iran had provided Hezbollah "with funding, direction and training for its terrorist activities in Lebanon."

While the FSIA exempts a foreign state from punitive damages, it does allow punitives against an "agency or instrumentality" of a state. Jackson, who achieved national fame presiding over the Microsoft trial, determined that the Ministry of Information and Security was such an agency and ordered it to pay $300 million in punitive damages. He arrived at the specific amount by calculating the MOIS maximum annual budget for terrorist activities and tripling it.

The October legislation allows plaintiffs to collect 100 percent of their compensatory damages from the U.S. Treasury which, in turn, will collect from Iran. This precedent-setting mechanism has prompted some criticism from experts in international law, but Newberger is quick to point out that this is not taxpayers' money.

"The U.S. is already holding $400 million of Iran's assets - and possession is nine tenths of the law," he says. "There is also a unique option: If you have punitive damages as well, and you elect to hand them over to the federal government, you get another 10 percent of the compensatories. It's a way to get people out of the collection business."

More than $213 million, plus interest, will be handed over to the eight families who have won judgments. Most of the plaintiffs, including Anderson, never expected to receive a penny.

"When I first filed the suit, it had more to do with what I thought would be just than with whether I thought I would win," Anderson told the Associated Press.

A Unique Strategy

What made this case distinct from the others against Iran - and what prompted, in part, the large punitive damages award - was an emphasis on the harm done to the newsgathering business as well as to individuals.

"This was a unique case," says Newberger. "It was the first time that there really had been an emphasis not just on the individual saga that the victims and their families had suffered, but also on freedom of the press issues, and the impact of this terrorism on America's right to collect information and inform the public. It didn't hurt that Terry was a well-known, high-profile journalist. The case attracted a lot of attention - journalists like to write about other journalists."

CBS anchorman Dan Rather and Eugene Roberts, former managing editor of the New York Times and executive editor of the Philadelphia Inquirer, testified to how acts of terrorism affected their ability to cover the news.

"They couldn't send in film crews or reporters, they didn't have access to information. And people were intimidated," says Newberger.

In his decision to award $300 million in punitive damages, Jackson argued that part of the reason was "to vindicate the interest of society at large in the collection and dissemination of complete and accurate information about world conflicts."

Anderson's fame helped translate Jackson's judgment into dollars. He provided a rallying cry to finally get Congress behind legislation allowing collection, says Newberger.

"He was a principal point for the legislation, along with the family of Alicia Flatow, who was killed in Gaza by Hamas terrorists," he says. "Several other families were very supportive, and worked with us on the Hill as we progressed. But Terry's unique role as a famous and respected journalist probably raised the visibility and political heat. And it didn't hurt that we had the most famous judge in the country."