US -Iran Hostages file a law suite against Iran

In the era of the yellow ribbon and the hostage bracelet, of the Ayatollah Khomeini and the Great Satan, 52 Americans blindfolded and held captive in Iran became the symbols of the nation's first modern encounter with state-supported terrorism.

By the time they flew out of Tehran on Jan. 20, 1981, 444 days after they were taken captive on Nov. 4, 1979, they were the focus of a patriotic fervor unmatched in decades, as the nation rallied around a new president who promised that the United States would never again endure a similar humiliation.

Twenty years later, in the aftermath of Sept. 11, with another new president and another set of victims dominating the nation's attention, the aging hostages from Tehran are in U.S. District Court today. This time, they are at the center of a lawsuit that illustrates how justice for victims of international terrorism is neither swift nor sure and and is far more complex than ticker-tape parades and yellow ribbons can suggest.

In a twist that brings the courts, Congress and the White House onto new legal territory, victims in a number of cases have found that their courtroom foe is not their tormentors but the U.S. government. Officials from the Bush and Clinton administrations have said that judgments requiring payments from frozen assets of hostile nations might compromise U.S. foreign policy and thus should be dismissed by the courts.

"It never occurred to me when I was getting the crap beat out of me in a Tehran jail cell that I would have to one day fight the same government that I was defending," said David Roeder, the U.S. Air Force attache at the Tehran embassy, now retired in Alexandria and the lead plaintiff in the suit before Judge Emmet G. Sullivan. "It's just so demoralizing. So discouraging."

The situation has grown so acrimonious that Congress passed an appropriations amendment last month that requires President Bush to submit a "fair and equitable" system of compensation for all U.S. victims of international terrorism by the next budget year.

But the long saga of the "original hostages," as some Tehran captives refer to themselves, will take a crucial step this morning when Sullivan conducts a final hearing before deciding how much, if any, damages are due to them.

Sullivan has already entered a default judgment against Iran, the nation the U.S. State Department has listed as the world's No. 1 sponsor of terrorism for the past decade. The default judgment was automatic because Iran did not reply to the suit, as it has ignored all such cases.

Under formulas previously used by the courts in hostage cases, the victims could receive $10,000 per day for their ordeal -- $4.44 million for each hostage, plus millions for family members who also are part of the suit. The total of compensatory damages under that formula would be well in excess of $200 million, by far the largest such judgment in U.S. courts.

But the payment of any damages would have to come from seized Iranian assets, which are mostly tied up in litigation at the U.S.-Iran claims tribunal at the Hague, the international court in the Netherlands. There is also perhaps $25 million in funds from the rental of Iran's former diplomatic property in the United States.

Lawyers from the State and Justice departments will urge Sullivan to throw out the case -- which would mean the former hostages would receive nothing. The government's position is straightforward, the lawyers said: The United States signed an agreement to free the hostages that "bars and precludes" lawsuits related to their captivity.

That agreement, known as the Algiers Accords, was negotiated by Deputy Secretary of State Warren M. Christopher, enforced by President Jimmy Carter's Executive Order No. 12283 and endorsed by President Ronald Reagan when he took office Jan. 20, 1981.

Minutes later, the U.S. released $7.995 billion in blocked Iranian assets, and the hostages were put on a plane for home.

"Notwithstanding how we appear to the plaintiffs and their counsel, the United States is not seeking intervention here to defend the interests of Iran, but to defend the obligations" of the Algiers Accords, James J. Gilligan, a Justice Department lawyer, told Sullivan during an emotional hearing Oct. 15, the first time the government intervened in the year-old lawsuit.

The hostages, however, argue that the accords were overturned by landmark legislation in 1996. The Anti-terrorism and Effective Death Penalty Act enables victims to recover damages from nations designated by the State Department as sponsors of terrorism. The bill covers "acts of torture, extra-judicial killing, aircraft sabotage, hostage taking or the provision of material support or resources . . . for such an act."

Most critically, the law allows successful plaintiffs to take commercial property owned by a foreign state in the United States. U.S. District Judge Royce C. Lamberth wrote in a 1998 opinion that the law was "a sea change in the United States' approach to foreign sovereign immunity."

Not everyone saw it that way.

In the past five years, an intense debate has emerged between advocates for victims of terrorism and officials in the State Department and the White House who caution that such judgments might set off international retaliation, endangering U.S. property and interests abroad.

This dilemma has given rise to a small but emotional body of cases that have sought to test the post-1996 statutes, developing a new branch of domestic and international law.

The precedent-setting cases, involving former hostages taken in Lebanon, an American named Alisa Flatow who was killed in Israel by a Hamas suicide bomber and a Brothers to the Rescue plane that was shot down by Cuba, have resulted in more than $300 million in payments to victims and their families.

But those payments are not quite the victory they might appear.

Looking to strike a balance between victims' rights and national security issues, Congress hit on a compromise in bills passed in 1998 and 2000. These said that up to $400 million could be paid out in a small number of specific cases -- but with all the funds coming out of the U.S. Treasury.

The $400 million cap is the amount Iran had in a U.S. bank account when the hostages were seized. Ultimately, it will be up to the president to decide whether he will press Iran to repay that money.

Once the $400 million has been paid out, the well dries up for all other terrorist victims, again leaving the Tehran hostages out of the picture.

"I have tremendous sympathy for the hostages in Lebanon, and particularly for people who died on September 11th, but I'm angry that our government seems to feel that our ordeal was something that didn't even happen," said Barry Rosen, the former press attache at the Tehran Embassy. "It's like we came back home and they've been trying to wipe their hands clean from us ever since."

But many observers, including some who have collected judgments, doubt that terrorist states have been punished by the congressional compromise.

"The sad part is these hostages and terrorism victims think they're punishing Iran," said Allan Mendelsohn, a panel member at a recent American Bar Association seminar on terrorism lawsuits. "It's gross nonsense. What difference does it make to Iran if the U.S. Treasury gives money to U.S. victims?"

Stephen M. Flatow, a New Jersey lawyer who was paid $22.5 million in a judgment last year against Iran for the death of his daughter in Israel, is skeptical that Iran even noticed the award. The State Department blocked his bid to seize Iranian property in the United States, including the former diplomatic residence. He was paid from the Treasury funds that match Iran's foreign military sales account.

"I got into this suit to put Iran out of the terrorism business," he said this week. "What I got instead was a cat fight with State, Treasury and Justice. It sent the wrong signal to Tehran. What would have sent the right signal is if we had been allowed to seize Iranian property here, and if they complained, the State Department told them: 'Tough. That's the price you pay for sponsoring terrorism.' That the U.S. tied us up in knots was the worst thing that could have happened."

Lynn Cassell, a spokeswoman for the State Department, disagreed.

"Using blocked assets isn't the answer," she said. "It undermines the president's ability to use one of our most effective foreign policy tools. Keeping hostile states' assets blocked provides leverage against international terrorism."

Sullivan is expected to take several weeks to consider the Tehran hostages' case, and no one is expecting that the terrorism victims' dilemma will be resolved with his ruling.

"It's a new area, with a lot of discoveries to be sorted out," said former senator Frank R. Lautenberg (D-N.J.), co-sponsor of one of the groundbreaking legislative amendments that allowed foreign nations and their agents to be sued. "We now have the ability to discover the routing and resources of a lot of hidden assets that give these terrorists' organizations their muscle. It's still being sorted out, and that process is going to take a long time."