Keren Elmaliach,, et al., Respondents,v.Bank of China Limited,, Appellant.

Brief

N.Y.January 5, 2015

To Be Argued By: MITCHELL R. BERGER Time Requested: 30 Minutes APL-2014-00030 New York County Clerk’s Index No. 102026/09 Court of Appeals STATE OF NEW YORK KEREN ELMALIACH, as an individual, as statutory representative of the Estate of EMI ELMALIACH and as natural guardian of plaintiff, JAN ELMALIACH, et al., Plaintiffs-Respondents, —against— BANK OF CHINA LIMITED, 410 Madison Avenue, New York, New York 10017, Defendant-Appellant. REPLY BRIEF FOR DEFENDANT-APPELLANT d MITCHELL R. BERGER ALEXANDRA E. CHOPIN SQUIRE PATTON BOGGS (US) LLP 2550 M Street N.W. Washington, DC 20037 Telephone: (202) 457-5601 Facsimile: (202) 457-6315 Of Counsel: DORSEY & WHITNEY LLP 51 West 52nd Street New York, New York 10019 Telephone: (212) 415-9200 Facsimile: (212) 953-7201 Attorneys for Defendant-AppellantDated: August 14, 2014 ii TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................ iv PRELIMINARY STATEMENT ............................................................................ 1 I. ARGUMENT ................................................................................................ 11 A. The Parties and Appellate Division Are Agreed That There Is a Conflict of Laws Between the Conduct-Regulating Rules Of the Relevant Jurisdictions That Requires a Choice-of-Law Analysis. ................................................................... 11 B. Although Appellate Division and the Parties Agree That the Duty of Care At Issue Is a Conduct-Regulating Rule, Plaintiffs Urge This Court to Apply Rules Used Exclusively In the Loss-Allocating Rule Context. .............................................. 12 C. Plaintiffs’ Citation and Interpretation of New York Law Misleads The Court. .......................................................................... 14 D. This Court Explicitly Rejected the Lex Loci Delicti Place of Injury Rule That Appellate Division Employed. ............................ 23 E. Choice of Law Must Not Be Based On Unproven “Knowledge” Allegations About State of Mind; Plaintiffs Cannot Prove Their Knowledge Allegation, Which Plaintiffs Admit May Be “Case Dispositive.” .................................................. 31 F. China and New York Regulate BOC, and Are Best Able To Create the Required “Admonitory Effect” To Prevent the Alleged Tortious Banking Conduct From Recurring. ................... 36 G. China’s Interests and Law Are Properly Before This Court. ....... 41 1. There Is No Dispute That China Has An Interest In the Bank Duty at Issue In this Case. ............................................... 41 2. All Parties Properly Submitted Evidence to Supreme Court and Appellate Division Regarding China’s Interests and Negligence Law. .................................................. 43 iii 3. This Court May Take Judicial Notice of the Extensive Briefing Of Chinese Law In Wultz. ........................................... 46 H. New York Will Not Impose a Duty of Care, Even If BOC Had Knowledge of Possible Harm to Third Parties, Because It Did Not Have the Legal Control Over Its Customer to Do So. ........................................................................................................ 49 1. New York Law Is Clear That a Notional Opportunity to Stop a Tortfeasor’s Conduct Is Not Dispositive Evidence of the Requisite Ability and Authority to Control a Tortfeasor. ................................................................................. 49 2. Plaintiffs Fail To Carry Their Burden of Proof to Show that BOC Has a “Special Relationship” Evidencing Both Authority and Ability to Control Its Customers. ....................... 54 I. Plaintiffs’ Breach of Statutory Duty Claim Fails As a Matter of Law. ................................................................................... 60 CONCLUSION ....................................................................................................... 62 iv TABLE OF AUTHORITIES Page(s) CASES ACLI International, Inc. v. E.D. & F. Man, Ltd., 76 A.D.2d 635 (2d Dep’t 1980) .......................................................................... 22 Allstate Insurance Co. v. Stolarz, 81 N.Y.2d 219 (1993) ..................................................................................passim Arar v. Ashcroft, 585 F.3d 559 (2d Cir. 2009) ............................................................................... 22 Babcock v. Jackson, 12 N.Y.2d 473 (1963) ..................................................................................passim Baron v. Galasso, 83 A.D.3d 626 (2d Dep’t 2011) .................................................................... 53, 58 Bischoff v. Yorkville Bank, 218 N.Y. 106 (1916) ........................................................................................... 53 Century Bus. Credit Corp. v. North Fork Bank, 246 A.D.2d 395 (1st Dep’t 1998) ....................................................................... 55 Chateau Rive Corp. v. Enclave Dev. Assoc., 22 A.D.3d 445 (2d Dep’t 2005) .......................................................................... 47 Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66 (1993) ....................................................................................passim Darby v. Compagnie Nat’l Air France, 96 N.Y.2d 343 (2001) ................................................................................... 56, 58 Devore v. Pfizer, Inc., 58 A.D.3d 138 (1st Dep’t 2008), lv. denied 876 N.Y.S.2d 704 (2009) .............. 27 Edwards v. Erie Coach Lines Co., 17 N.Y.3d 306 (2011) ......................................................................... 1, 18, 19, 20 Elmaliach v. Bank of China, Ltd., 110 A.D.3d 192 (1st Dep’t 2013) ................................................................passim v Elmaliach v. Bank of China Ltd., Index No. 102026/09, 2011 N.Y. Misc. LEXIS 6767 (N.Y. Sup. Ct. July 7, 2011) ........................................................................................................passim Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947) ............................................................................................ 22 Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222 (2001) ................................................................................... 59, 60 Home Sav. of America, FSB v. Amoros, 233 A.D.2d 35 (1st Dep’t 1997) ............................................................. 53, 56, 58 In re Agape Litig., 681 F. Supp. 2d 352 (E.D.N.Y. 2010) ................................................................ 56 In re New York City Asbestos Litig., 5 N.Y.3d 486 (2005) ..................................................................................... 57, 59 J. Zeevi & Sons v. Grindlays Bank (Uganda) Ltd., 37 N.Y. 2d 220 (1975) ........................................................................................ 21 Jansen v. Fidelity & Casualty Co., 589 N.E.2d 379 (N.Y. 1992) ............................................................................... 57 Kaufman v. American Youth Hostels, 5 N.Y.2d 1016, modfg. 6 A.D.2d 223 (1959) ..................................................... 26 Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155 (2d Cir. 2012) (“Licci II”) ............................................................ 38 Licci v. Lebanese Canadian Bank, SAL, 739 F.3d 45 (2d Cir. 2013) (“Licci III”) ......................................................passim Long v. Pan American World Airways, Inc., 16 N.Y.2d 337 (1965) ......................................................................................... 30 Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 101 A.D.3d 1 (1st Dep’t 2012) ........................................................................... 22 Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 23 N.Y.3d 129 (2014) ..................................................................................passim vi Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Brothers Co., No. 601650/09, 2010 N.Y. Misc. LEXIS 6936 (N.Y. Sup. Ct. July 26, 2010) ................................................................................................................... 21 Meserole v. Sony Corp. of Am., Inc., No. 08 Civ. 8987, 2009 U.S. Dist. LEXIS 42772, 2009 WL 1403933 (S.D.N.Y. May 18, 2009).................................................................................... 31 Miller v. Miller, 22 N.Y.2d 12 (1968) ....................................................................................passim Morales v. County of Nassau, 94 N.Y.2d 218 (1999) ......................................................................................... 61 Murphy v. Am. Home Prods. Corp., 58 N.Y.2d 293 (1983) ......................................................................................... 61 Neumeier v. Kuehner, 31 N.Y.2d 121 (1972) ................................................................................... 13, 24 Padula v. Lilarn Properties Corp., 84 N.Y.2d 519 (1994) ..................................................................................passim Patel v. New York Life Ins. Co., No. 11 Civ. 4895, 2012 U.S. Dist. LEXIS 72717, 2012 WL 1883529 (S.D.N.Y. May 21, 2012).................................................................................... 31 People v. Hobson, 39 N.Y.2d 479 (1976) ......................................................................................... 22 People v. LaPage, 25 Misc. 3d 890 (N.Y. Sup. Ct. 2009) ................................................................ 22 People v. Taylor, 9 N.Y.3d 129 (2007) ........................................................................................... 22 Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) ............................................................................................ 22 Poplar v. Bourjois, Inc., 298 N.Y. 62 (1948) ....................................................................................... 26, 28 vii Pulka v. Edelman, 40 N.Y.2d 781 (1976) ............................................................................. 50, 53, 54 Purdy v. Public Adm’r of County of Westchester, 72 N.Y.2d 1 (1988) ......................................................................................passim Ramerica Int’l, Inc. v. Mil-Spec Indus., Corp., 293 A.D.2d 420 (1st Dep’t 2002) ....................................................................... 34 Schultz v. Boy Scouts of Am., 65 N.Y.2d 189 (1985) ..................................................................................passim Shin-Etsu Chem. Co. v. ICICI Bank Ltd., 9 A.D.3d 171 (1st Dep’t 2004) ........................................................................... 22 Slater v. Mexican Nat. R. R. Co., 194 U.S. 120 (1904) ............................................................................................ 26 Speedmark Transp., Inc. v. Mui, 778 F. Supp. 2d 439 (S.D.N.Y. 2011) ................................................................ 31 Swift & Co. v. Bankers Trust Co., 280 N.Y. 135 (1939) ........................................................................................... 14 Tooker v. Lopez, 24 N.Y.2d 569 (1969) ..................................................................................passim Uhr v. E. Greenbush Cent. Sch. Dist., 94 N.Y.2d 32 (1999) ........................................................................................... 61 USAlliance Fed. Credit Union v. CUMIS Ins. Soc., Inc., 346 F. Supp. 2d 468 (S.D.N.Y. 2004) ................................................................ 61 Vanship Holdings Ltd. v. Energy Infrastructure Acquisition Corp., 884 N.Y.S.2d 24 (1st Dep’t 2009) ...................................................................... 46 Wultz v. Bank of China, Ltd., 11 Civ. 1266 (SAS), 2012 U.S. Dist. LEXIS 161399, 2012 WL 5431013 (S.D.N.Y. Nov. 5, 2012) (“Wultz V”) ................................................................. 47 Wultz v. Bank of China, Ltd., 811 F. Supp. 2d 841 (S.D.N.Y. 2011) (“Wultz III”) ........................................... 47 viii Wultz v. Bank of China Ltd., 865 F. Supp. 2d 425 (S.D.N.Y. 2012) (“Wultz IV”) ........................... 9, 42, 46, 47 Wultz v. Islamic Republic of Iran, 755 F. Supp. 2d 1 (D.D.C. 2010) (“Wultz I”) ..............................................passim Yuppie Puppy Pet Prods., Inc. v. Street Smart Realty, LLC, 77 A.D.3d 197 (1st Dep’t 2010) ......................................................................... 46 OTHER AUTHORITIES 2 Conflict of Laws (1935) ........................................................................................ 26 Hancock, Torts in the Conflict of Laws (1942) ....................................................... 26 James T. Areddy, Israeli Victims of Terror File Suit Against Bank of China, Wall St. J., Aug. 28, 2008 ................................................................................... 35 Reese, “The Ever Changing Rules of Choice of Law,” Nederlands Tijdschrift Voor Internationaal Recht (1962) ..................................................... 26 Restatement of Conflict of Laws § 384 ................................................................... 26 Robert Sedler, Symposium: Interests Analysis, Party Expectations and Judicial Method in Conflicts Torts Cases: Reflections on Cooney v. Osgood Machinery, Inc., 59 Brooklyn L. Rev. 1323 (1994) ........................ 37, 38 Traynor, Conflict of Laws in Time, 1967 Duke L. J. 713 ....................................... 37 1 PRELIMINARY STATEMENT Plaintiffs concede that, even if this Court accepts their expansive view of bank duties under New York law, their claims are “conduct-regulating” in nature and present a conflict of laws that necessitates a choice-of-law analysis.1 But, Plaintiffs urge this Court to revert in its choice-of-law analysis to the long- abandoned lex loci delicti rule that focused primarily on the place of a plaintiff’s injury, rather than on the place of the defendant’s conduct. For this Court to do so would contravene fifty years of established choice of law jurisprudence.2 This Court’s choice-of-law precedent—including most recently Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 23 N.Y.3d 129 (2014)—directly forecloses Plaintiffs’ absurd claim that the choice of law for conduct-regulating claims remains “govern[ed]” by “traditional rules” of the “law of the place of the tort,” because “disruption to the lex loci delicti rule was minimal.”3 Indeed, Plaintiffs’ only legal authority for that claim is the skewed result of artfully placed punctuation.4 To the contrary, Mashreqbank, and the precedent on which it builds, 1 Opp. at 86-88. 2 See infra at 17-30. 3 Opp. at 38 (quoting Edwards v. Erie Coach Lines Co., 17 N.Y.3d 306, 319 (2011)) (paraphrasing of Edwards is Plaintiffs’ own). 4 See id. (quoting Edwards, 17 N.Y.2d at 318); but see infra at 18-20 (comparing Plaintiffs’ citation of Edwards to actual text of Edwards). 2 confirms that New York employs a “greatest interest” analysis to choose the governing law. In a conduct-regulating rule case, as here, the “greatest interest” analysis focuses primarily on the place of the defendant’s allegedly tortious conduct and whether the laws of that place are best able to regulate the defendant’s conduct.5 That is so because the goal of the “greatest interest” test is to apply the law that will have “an admonitory effect” to prevent similar alleged conduct from recurring, and “to protect the reasonable expectations of the parties who relied on” that jurisdiction’s laws “to govern their primary conduct.”6 The implications of this appeal reach well beyond this case. The facts of Elmaliach also form the “nexus of the facts” of five other cases currently pending in the New York state and federal courts.7 In addition to these six cases, the Elmaliach Plaintiffs’ counsel is representing similarly situated plaintiffs making substantively similar claims in Licci v. Lebanese Can. Bank, SAL and American Express Bank, Ltd., Case No. 08 CV 7253 (GBD) (S.D.N.Y.), No. 10-1306-cv (2d Cir.), alleging that American Express Bank breached a duty of care to the plaintiffs 5 See infra at 17-18, 21, 26-28, 38-40. 6 Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 198 (1985); see also Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993) (same); see also infra at Parts I.C, I.D, I.F (describing greatest interest analysis); Opening Br. at 25-26, 29-49 (discussion of greatest interest analysis). 7 Opp. at i (Statement of Related Litigation); see also Elmaliach v. Bank of China Ltd., Index No. 102026/09, 2011 N.Y. Misc. LEXIS 6767, *6-7 (N.Y. Sup. Ct. July 7, 2011) (“Plaintiffs’ counsel have commenced additional, substantially similar lawsuits on behalf of other victims of attacks in Israel, likewise seeking redress against financial institutions for providing wire transfer services to terrorist organizations.”). 3 under Israeli law by knowingly processing wire transfers to terrorist operatives. The New York state and federal courts have issued contradictory decisions on the same choice-of-law question arising in all of these actions. Indeed, there is now a direct clash between Appellate Division here and the U.S. Court of Appeals for the Second Circuit on this question.8 This appeal provides this Court with the opportunity to resolve that clash so that New York choice-of-law rules will be applied uniformly in the state and federal courts of New York.9 Plaintiffs also mistakenly urge this Court to import considerations of the foreseeability of injury into the choice-of-law framework. Foreseeability has not historically been an element of the greatest-interest test because foreseeability, like other state-of-mind issues, is almost always disputed right through trial of a case. Foreseeability cannot become an element of the greatest-interest test without inviting strategic law-shopping and creating intractable practical problems. Choice of law, by definition, is an outcome-affecting, if not outcome-determinative, decision. If foreseeability is allowed to shape the choice-of-law decision, then a creative plaintiff can select the favored governing law (thereby impacting the 8 The Second Circuit recently declined to follow what it called the Appellate Division’s “mistaken application” of New York choice-of-law rules in Elmaliach, noting the “New York Court of Appeals has not been presented with this precise issue.” Licci v. Lebanese Canadian Bank, SAL, 739 F.3d 45, 48, 50 (2d Cir. 2013) (“Licci III”). For a further discussion of the contradictory decisions of the State and Federal courts in these cases, see Opening Br. at 1, fn.1. 9 This issue is likely to recur because, “as a practical matter, any [sizeable] dollar transaction” involving foreign banks “must go through New York.” Mashreqbank PSC v. Ahmed Hamad A1 Gosaibi & Bros. Co., 23 N.Y.3d 129, 138 (2014). 4 outcome of the case) simply by alleging that injury in that jurisdiction was foreseeable to the defendant, and insisting that foreseeability allegation must preliminarily be credited. That is what Plaintiffs did here, and Appellate Division’s choice of law plainly was affected by Plaintiffs’ foreseeability allegations.10 Appellate Division appears not to have considered the practical problem created by importing foreseeability into the choice-of-law analysis: A choice-of- law decision must be reconsidered when, as here, a plaintiff cannot, or fails to, prove foreseeability allegations. This creates intractable circularity: Choice of law must be resolved before the jury is instructed, but foreseeability likely can be resolved only by the jury itself, after it is instructed on the applicable law. This case exemplifies that problem: Plaintiffs’ foreseeability-of-injury allegation rests on an alleged chain of communications first between the Israeli and Chinese governments, and then between the Chinese government and BOC. BOC always hotly disputed that allegation.11 Even so, Supreme Court and Appellate 10 Elmaliach v. Bank of China, Ltd., 110 A.D.3d 192, 206 (1st Dep’t 2013) (“Clearly outside the scope of ‘routine’ banking services would be allegations that a bank knew or had reason to know that it was providing material support to terrorists . . . .”). 11 Plaintiffs never have claimed that the former Israeli agent ever met with BOC, or had any information about BOC’s knowledge, foreseeability, or other state of mind. A federal court in related litigation has remarked on the implausibility of this allegation: “[I]t does seem remarkable that BOC—an internationally respected financial institution with branches in this country—would actually intend to facilitate the terroristic murder of American civilians.” Wultz v. Islamic Republic of Iran, 755 F. Supp. 2d 1 (D.D.C. 2010) (“Wultz I”). 5 Division both relied heavily on Plaintiffs’ foreseeability-of-injury allegation— Supreme Court to deny the motion to dismiss, and Appellate Division to choose Israeli law. Now it is obvious that Plaintiffs cannot prove that allegation. As anticipated in BOC’s opening brief, the State of Israel has now prevailed on its motion to quash the deposition of a former Israeli agent whom Plaintiffs hoped would testify about alleged Israeli-PRC inter-governmental meetings.12 Wultz v. Bank of China Ltd., Case No. 11-cv-01266 (S.D.N.Y.), Opn. & Order (July 21, 2014) (Dkt. #572). R. at SSA484. But, even before the federal court quashed the deposition, the Israeli government expressly refused to endorse Plaintiffs’ allegations: “Israel emphatically does not admit Plaintiffs’ allegations, but will not be drawn into the slippery slope of partial disclosures, with the attendant risk to national security.” Wultz v. Bank of China Ltd., Case No. 11-cv- 01266 (S.D.N.Y.), State of Israel’s Supp. Mem. (June 27, 2014) (Dkt. #543) at 6-7 (“Israel has made clear that its silence on an issue is not assent.”). R. at SSA481- 82. Disputed foreseeability-of-injury allegations thus cannot control the choice of law. More sensibly, New York’s choice-of-law jurisprudence has always depended upon undisputed facts concerning the domicile of the parties, the place of 12 See Opening Br. at 14-15. Plaintiffs also have acknowledged that the absence of this deposition would be “case dispositive.” Id. (quoting Wultz v. Bank of China Ltd., Case No. 13- mc-1282-RBW (D.D.C.), Dkt. #13, Motion of Intervenor-Plaintiffs to Strike Non-Party State of Israel’s Motion to Quash, at 7 (filed Dec. 2, 2013). R. at A1996). 6 the defendant’s relevant conduct, and the place of the plaintiff’s injuries. Those dispositive facts are equally undisputed here, and in particular, all parties and the courts agree that BOC’s banking conduct occurred principally in China, to a lesser extent in New York, and not at all in Israel.13 While Plaintiffs concede that China’s interests are part of the “greatest interest” analysis, they pretend that it never dawned on them that Chinese law might govern this case.14 Plaintiffs’ assertion is bold; not only did BOC raise Chinese law to both Supreme Court and Appellate Division in arguing China’s interest in this litigation (which both courts acknowledge in their decisions), but both Plaintiffs and BOC submitted extensive briefs, expert affidavits and declarations, legislative authority and other Chinese law materials to Supreme Court and Appellate Division.15 Moreover, both BOC and the plaintiffs in the “virtually identical” Wultz federal case extensively briefed the application of Chinese law to the look-alike non-federal negligence and breach of statutory duty claims in that case, which were then dismissed under Chinese law.16 BOC 13 See infra at 42; Opening Br. at 32-33. Plaintiffs allege that BOC conducted key meetings and decisions in China related to the complained-of banking conduct, that the wire transfers at issue were received in China, and the bank accounts and bank decisionmakers are located in China. Plaintiffs allege that New York is connected to the claims because the wired funds passed through a BOC branch on their way to the customer’s accounts in China. See id. 14 See Opp. at 15-16, 20-21. 15 See infra at 42-49. 16 See infra at 46-49. 7 specifically drew Appellate Division’s attention to the Wultz Chinese law-dismissal decision, and this Court also can take judicial notice of that discussion of Chinese law.17 Ultimately, Plaintiffs’ argument in favor of choosing Israeli law depends on the fact that Plaintiffs were injured in Israel and that Israel (like New York and China) has a strong interest in combatting terrorism. This Court’s precedent forecloses Plaintiffs’ rote reliance on the place of their injury in the choice-of-law analysis, and requires a focus not on Israel’s anti-terrorism interests but on the interests of China and New York in regulating BOC’s conduct. Just as importantly, Plaintiffs’ entreaty that “Israel is currently fighting a war against Hamas” cannot be allowed shape the choice-of-law decision.18 Israel does indeed know how to wage a war on terrorism and was in armed conflict with Hamas when this brief was written. But Israel has made clear that this lawsuit and its companion cases form no part of Israel’s anti-terrorism arsenal. In the State of Israel’s motion to quash a deposition that the Elmaliach plaintiffs view as case-dispositive (see infra at 34), Israel’s then-National Security Advisor and Head of the National Security Council at the Israeli Prime Minister’s Office, Major General (Res.) Yaacov Amidror, declared that Plaintiffs’ attempt to embroil 17 See id. 18 Opp. at 61. 8 Israel in this litigation “would harm Israel’s security, undermine its ability to protect its citizens, residents and tourists from terrorism and other grave threats, and would interfere with international cooperative efforts to prevent terrorism.” Dkt. #1, Wultz v. Bank of China, Ltd., Case No. 13-mc-1282-RBW, State of Israel’s Motion to Quash, Ex. B (Amidror Decl.), ¶¶ 7-8 (R. A1986-87); see also Israel Supp. Mem. at 7 (asserting that compelled participation by Israel in this litigation “could jeopardize Israel’s national security”). R. at SSA478. The federal court granted Israel’s motion to quash, and also denied Plaintiffs’ counsel’s subsequent motion for reconsideration of that order, because the court refused to “second-guess the assessment of the National Security Advisor,” Major General Amidror.19 Under a proper application of New York’s greatest-interest test, Plaintiffs’ claims should be governed by Chinese or New York law, not by Israeli law. The alleged tortious conduct—BOC’s banking activity—indisputably occurred in China and New York. Because BOC is subject to an extensive structure of banking oversight, monitoring and reporting obligations under Chinese, U.S. federal, and New York law, BOC reasonably conformed its conduct and expectations to those bank regulatory laws.20 China and New York thus have the 19 Dkt. #572 (July 21, 2014 Order on Motion to Quash), at 16 (R. SSA499); see also Dkt. #600 (Aug. 7, 2014 Denial of Motion for Reconsideration) (R. SSA510); see also infra at 34-36. 20 See infra at fn. 26, 40-42; Opening Br. at 31-34. 9 greatest power to prevent bank conduct of the type alleged in Plaintiffs’ Complaint.21 Israel is in no position to affect BOC’s banking conduct through a prospective “admonitory effect” because BOC does not do any business in Israel and Israel does not regulate BOC. This Court reaffirmed earlier this year in Mashreqbank that, under the proper application of the “greatest interest” test, the law of the place of the allegedly tortious conduct governs conduct-regulating claims like those against BOC. See Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 23 N.Y.3d 129 (2014) (holding that, in the conduct-regulating rule context, “the place where the allegedly tortious conduct occurred” is “[t]he jurisdiction with the greatest interest in resolving the issues”).22 Mashreqbank and the line of benchmark cases on which it is based illustrate that Appellate Division misapplied the “greatest interest” test by relying on an 21 The Second Circuit and the Southern District of New York have analyzed the same choice-of- law question in two factually similar cases (including one against BOC) and ruled that, while Israel is the place of the plaintiffs’ injury, Israeli law cannot govern because Israel has no connection to the alleged bank conduct at issue. See infra at nn.8, 47-48. The Southern District applied the greatest interest test and chose Chinese law to govern, because the plaintiffs had alleged, as here, that “the decision to continue processing the transfers and the bulk of the actual banking services occurred in China. In contrast, only a small fraction of the relevant banking conduct occurred in New York. . . . None of the banking conduct occurred in Israel.” Wultz v. Bank of China Ltd., 865 F. Supp. 2d 425, 429 (S.D.N.Y. 2012) (“Wultz IV”). 22 Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 23 N.Y.3d 129, 138 (2014) (noting that Saudi Arabia, where the defendant’s allegedly tortious activity “occurred,” “is clearly” the jurisdiction whose law governs); see also id. (rejecting New York law, noting that “no relevant conduct apart from the execution of fund transfers occurred in New York”). 10 inflexible application of lex loci delicti to choose Israel’s law solely because it was the place of Plaintiffs’ injury. Given the wealth of decisions from this Court reiterating that lex loci delicti was abandoned in 1963, Plaintiffs cannot sustain their assertion that the lex loci delicti place of injury rule “generally continues to apply in conduct-regulating cases, ‘almost invariably’ and absent ‘extraordinary’ circumstances’” in New York.23 Rather, this Court’s longstanding jurisprudence confirms that the correct application of the “greatest interest” test requires that the law of China or New York, both of which regulate BOC’s banking conduct, governs this action. New York, for its part, will not impose a common law duty on banks to protect non-customers absent a “special relationship” between a bank and its tortfeasor-customer, which gives the bank “the ability and authority to control” that customer.24 That rule is unwavering even if the defendant knew or reasonably should have known that the tortfeasor was likely to harm third parties, and even if the defendant could have taken precautions to prevent the conduct “as a practical matter.”25 Although Plaintiffs conjecture that BOC should have prevented the wire-transferred funds from reaching its customer before he then allegedly re- 23 Opp. at 40 (citing cases, internal citation omitted). 24 See infra at 55-60; Opening Br. at 60-64 (quoting Purdy v. Public Adm’r of County of Westchester, 72 N.Y.2d 1 (1988)). 25 Id. 11 transferred them to terrorists, New York law evidences that a bank is not required to block a customer’s access to wire transfers or to take other precautions to stop the alleged tortfeasor’s conduct.26 The decision of Appellate Division should be reversed and Plaintiffs’ claims should be dismissed under the law of either China or New York. I. ARGUMENT A. The Parties and Appellate Division Are Agreed That There Is a Conflict of Laws Between the Conduct-Regulating Rules Of the Relevant Jurisdictions That Requires a Choice-of-Law Analysis. There is no dispute among the parties that there is a conflict of laws between New York and Israel regarding whether each imposes a duty of care on banks to protect non-customers from alleged tortious acts of the bank’s customer. BOC demonstrated this conflict in its opening brief, and Plaintiffs concede the point in their opposition. See Opening Br. at 27; Opp. at 12 (“Israeli negligence law is somewhat distinct from New York negligence law . . . .”); id. at 88 (stating that the “difference” between new York and Israeli law on duty of care “could have a significant possible effect on the outcome of the trial as it could impact the scope of the duty . . . Moreover, the standard for breach of duty under Israeli negligence 26 See infra at Part H.1, at 49-54. Banks operating in New York and China (like BOC) have submitted to extensive, costly regulatory oversight by Chinese, U.S. federal, and New York banking regulators, which imposes on them a duty to monitor and report to the government suspicious customer activity related to terrorist financing or money laundering. See Opening Br. at 31-34. A common law duty of care would compete with, if not confuse, banks’ compliance with those regulations. 12 law is more lenient than the corresponding standard under New York law”); see generally id. 86-88. Appellate Division correctly recognized this conflict. See Elmaliach v. Bank of China Ltd., 110 A.D.3d 192, 201 (1st Dep’t 2013) (“[T]he Israeli law of negligence ‘differs slightly’ from New York law . . . . We agree with the district court’s analysis in Wultz I and conclude that the differences between the New York and Israeli laws of negligence could affect the trial’s outcome, perhaps significantly.”). B. Although Appellate Division and the Parties Agree That the Duty of Care At Issue Is a Conduct-Regulating Rule, Plaintiffs Urge This Court to Apply Rules Used Exclusively In the Loss- Allocating Rule Context. There is similarly no dispute among the parties or disagreement in Appellate Division that the duty of care at issue, namely whether a bank has a duty to protect noncustomers, is a “conduct-regulating rule” rather than a “loss allocation” rule.27 See Opening Br. at 19, 30; Opp. at 3; Elmaliach, 110 A.D.3d at 202. Although Plaintiffs concede that the duty of care is conduct-regulating in nature, Plaintiffs advance the theory that this Court should instead apply a choice- of-law analysis used exclusively in “loss-allocation rule” cases, because they 27 A loss-allocating rule concerns immunities from liability and limitations on damages for conduct that is concededly tortious. See Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 198 (1985). 13 perceive that the conduct-regulating rule here has loss-allocating rule features. See Opp. at 75 (advocating that Court apply the rules from Neumeier v. Kuehner, 31 N.Y.2d 121 (1972)). Specifically, Plaintiffs argue that, because New York does not create a duty of care for banks to protect noncustomers, that rule “is, arguably, not conduct-regulating because it does nothing to incentivize good behavior or disincentivize negligent behavior . . . [in] other words, it is a loss-allocating rule.” Opp. at 76. Appellate Division rejected this same argument by Plaintiffs, concluding that “the duty of care owed by a bank to third parties is a conduct-regulating rule.” Elmaliach, 110 A.D.3d at 202; 202 n.6. Appellate Division was correct to ignore Plaintiffs’ theory, because it is based on a fundamental misunderstanding of the distinction between conduct-regulating and loss-allocating rules. Conduct- regulating rules are those that “involve the appropriate standards of conduct, rules of the road, for example . . . .” that cause parties to “govern their primary conduct.” Padula v. Lilarn Properties Corp., 84 N.Y.2d 519, 522 (1994). The critical piece that Plaintiffs miss is that BOC has governed and conformed its conduct toward customers and noncustomers according to the laws of China and New York. See, e.g., Miller v. Miller, 22 N.Y.2d 12, 19 (1968) (recognizing “fairness” problem in applying New York law to a defendant who “has patterned his conduct upon the law of the jurisdiction in which he was 14 acting”); Cooney, 81 N.Y.2d at 72 (observing that, in conduct-regulating cases, applicable law will be that of the jurisdiction that has “the greatest interest in regulating behavior within its borders”); see also Opening Br. at 45-46. C. Plaintiffs’ Citation and Interpretation of New York Law Misleads The Court. Although the New York state and federal courts in Elmaliach, Wultz and Licci disagreed about how to apply New York’s choice-of-law analysis, all are agreed that New York applies a “greatest interest” test to select the governing law. See Licci II, 672 F.3d 155, 157 (2d Cir. 2012); Wultz IV, 865 F. Supp. 2d 425, 427 (S.D.N.Y. 2012); Elmaliach, 110 A.D.3d 192, 201-02 (1st Dep’t 2013) All of these courts also recognized that the “greatest interest” test supplanted New York’s old lex loci delicti rule following Babcock v. Jackson, in which this Court “rejected squarely and unequivocally the traditional choice-of-law rule which looked invariably to the law of the place of the tort.” Miller, 22 N.Y.2d at 15 (citing Babcock v. Jackson, 12 N.Y.2d 473, 484 (1963)). In “tort cases with multi-State contacts,” as here, Babcock concluded that justice, fairness and the best practical result “may best be achieved by giving controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.” Babcock, 12 N.Y.2d at 481-82 (quoting Swift & Co. v. Bankers Trust Co., 280 N.Y. 135, 141 (1939)). Merely “counting 15 contacts” with a jurisdiction is insufficient; courts must instead assess the relative importance of those contacts to the issue in the case. See Tooker v. Lopez, 24 N.Y.2d 569, 576 (1969) (emphasizing a need for “rational choice-of-law” rather than rote application of “lex loci delictus”); Schultz v. Boy Scouts of America, 65 N.Y.2d 189, 196 (1985). This Court reaffirmed the Babcock “greatest interest” test in Schultz, 65 N.Y.2d at 197. Since Schultz, the place where the defendant’s conduct occurs has “a predominant, if not exclusive concern,” because it is of “critical importance” to apply the law that will have an “admonitory effect” to prevent similar alleged conduct from occurring in the future, and to “protect[] the reasonable expectations of the parties who relied on” the jurisdiction’s laws “to govern their primary conduct.” Id. at 198 (citing cases and other authorities); see also Padula, 84 N.Y.2d at 521-22 (“Conduct-regulating rules have the prophylactic effect of governing conduct to prevent injuries from occurring. ‘If conflicting conduct- regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders.’”) (quoting Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993) (emphasis added)). In a conduct-regulating rule case, as here, the interests of the jurisdiction where the tort occurred “outweigh any interests of the common-domicile jurisdiction.” Id. 16 BOC demonstrated in its opening brief that Appellate Division conducted the “greatest interest” choice-of-law analysis incorrectly, because it failed to weigh each jurisdiction’s interests according to “the purpose of the particular law in conflict,” also described as “the particular issue” being litigated in the case. Opening Br. at 25-26, 29-30 (quoting Padula, 84 N.Y.2d at 521 (in turn quoting Schultz, 65 N.Y.2d at 197); see also Cooney, 81 N.Y.2d at 72 (“particular issue”); Schultz, 65 N.Y.2d at 197 (“greatest interest”); see also Elmaliach, 110 A.D.3d at 202. The “particular law” in conflict here is the extent of the duty of care by a bank to protect noncustomers from the tortious acts of its customers. The “particular issue” presented by Plaintiffs’ claims—and thus the proper focus of the “greatest interest” analysis—concerns BOC’s banking activity in China and New York. But, Appellate Division did not weigh each jurisdiction’s interests in regulating bank conduct in choosing the governing law, other than to make passing mention that both China and New York have an interest in overseeing their “financial institutions.” Elmaliach, 110 A.D.3d at 203; but see Miller, 22 N.Y.2d at 19 (cautioning that “[o]ur inquiry as to the choice of an appropriate law cannot, however, stop merely in defining a[n] interest—albeit a substantial one—in the application of the particular law which is the object of the conflict”) (emphasis 17 added). In fact, although it described Israel’s only interest in the case as “protecting its citizens and residents, who were the intended targets of the terrorist attacks inside Israeli territory,” Appellate Division applied the defunct rule of lex loci delicti to choose Israel’s law because “[w]here a defendant’s negligent conduct occurs in one jurisdiction and the plaintiff suffers injuries in another, the place of the wrong is considered to be the place where the plaintiffs’ injuries occurred.” Elmaliach, 110 A.D.3d at 203 (internal citations and quotation marks omitted). Plaintiffs have seized on Appellate Division’s mistaken return to an obsolete choice-of-law rule and now urge this Court to disregard relative jurisdictional interests altogether in favor of a similar, rote application of lex loci delicti. See Opp. at 38; but see Babcock, 12 N.Y.2d at 481 (“abandoning” lex loci delicti and adopting the “greatest interest” test as New York’s choice of law analysis). Plaintiffs go so far as to assert that the “greatest interest” test does not apply in conduct-regulating rule claims like those here against BOC. See Opp. at 38. Plaintiffs’ approach is absolutely foreclosed by, and indeed contradicts, more than fifty years of this Court’s choice-of-law jurisprudence. This Court abandoned lex loci delicti because it was “rigid,” “mechanical,” “inflexible” and “unsatisfactory because the location of the controlling event was sometimes fortuitous, did not reflect the parties’ intentions, or was insignificant as against the location of other events.” Allstate Insurance Co. v. Stolarz, 81 N.Y.2d 219, 225 18 (1993) (citing Cooney, 81 N.Y.2d at 72). Lex loci delicti also “failed to accord any significance to the policies underlying the conflicting laws.” Id. From Babcock through, most recently, Mashreqbank v. Ahmed Hamad Al Gosaibi, 23 N.Y.3d 129 (2014), this Court’s precedent makes clear that the “greatest interest” analysis is required when there is a conflict of conduct-regulating rules. See supra at 15. Although this Court abandoned lex loci delicti as a viable choice of law analysis in Babcock, Plaintiffs pretend that Babcock’s rejection of lex loci delicti was limited to loss-allocation rule cases. See Opp. at 38. In support, via the artful placement of bracketed phrases and selective quotation, Plaintiffs assert that Edwards v. Erie Coach Lines Co., 17 N.Y.3d 306 (2011), says that the “greatest interest” test is “limited to competing loss-allocation—not conduct-regulating— rules.” Opp. at 38 (citing Edwards, 17 N.Y.3d at 318-19). But Plaintiffs’ presentation to this Court of Edwards’ language is misleading: To accomodat[e] the competing interests in tort cases with multi-State contacts, we adopted [a new approach] which gave the controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, ha[d] the greatest concern with the specific issue raised in the litigation. This new method of analysis, however, was limited to competing loss- allocation—not conduct-regulating—rules. Id. (alteration and emphasis is Plaintiffs’). This is what the Court of Appeals actually said, with the missing language in bold-face type: 19 To “accomodat[e] the competing interests in tort cases with multi- State contacts,” we adopted the “center of gravity” or “grouping of contacts” approach, which gave the “controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, ha[d] the greatest concern with the specific issue raised in the litigation” (Babcock v. Jackson, 12 N.Y.2d at 481). This new method of analysis, however, was limited to competing loss- allocation—not conduct-regulating—rules. Edwards, 17 N.Y.2d at 318 (emphasis added). Plaintiffs also neglected to include the next passage, which described New York’s rejection of the “grouping of contacts” approach. Over time, the “grouping of contacts” approach put into place by Babcock evolved into a more explicit “interest analysis.” This method of deciding choice-of-law issues “reject[ed] a quantitative grouping of contacts” because “[c]ontacts obtain significance only to the extent that they relate to the policies and purposes sought to be vindicated by the conflicting laws.” Id. at 318-20 (emphasis added). Plaintiffs’ counsel have already tested this theory before the Second Circuit Court of Appeals in Licci v. Lebanese Canadian Bank, SAL, 739 F.3d 45, 47 n.2 (2d Cir. 2013) (“Licci III”) (“On October 30, 2013, the appellants filed a petition for rehearing en banc, arguing, inter alia, that our opinion, which conflicts with Bank of China and employs an interest-analysis approach, is erroneous because the New York Court of Appeals has stated that interest analysis is ‘limited to competing loss-allocation—not conduct-regulating—rules.’ Edwards v. Erie Coach Lines Co., 17 N.Y.3d 306, 319 (2011).”). The Second Circuit rejected the 20 argument because: “Edwards, itself a loss-allocation case, did not overrule Padula v. Lilarn Properties Corp., 84 N.Y.2d 519 (1994), which instructs courts to engage in interest analysis in conduct-regulating cases, 84 N.Y.2d at 521.” Id. at 47 n.2. Even if Edwards had not included its helpful elaboration about New York’s adoption and application of the “greatest interest” analysis, this Court’s recent decision in Mashreqbank PSC v. Ahmed Hamad Al Gosaibi, 23 N.Y.3d 129 (2014), removes any ambiguity. Mashreqbank is important to this appeal, first, because that decision reaffirmed that the “greatest interest” choice-of-law analysis applies to conduct-regulating rule cases (indeed, citing Edwards for that proposition). Id. at 138 (citing Edwards, 17 N.Y.3d at 320 and Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993)). Mashreqbank is important, further, because this Court defined the “place of the tort”—in the context of describing the facts it will consider in performing the “greatest interest” analysis—as the place where the “tortious conduct occurred.” Id. at 138 (holding that that New York was not “[t]he jurisdiction with the greatest interest in resolving the issues” because Saudi Arabia was the site where “the allegedly tortious conduct occurred”). In particular, Mashreqbank reversed the Appellate Division, and held that “New York law did not apply,” because “no relevant conduct apart from the execution of fund transfers occurred in New York.” Id. at 138-39 (emphasis added). Because the “place where the allegedly 21 tortious conduct occurred” was outside New York, this Court saw “no reason why New York law should be applied.” Id. at 138 (emphasis added). Plaintiffs concede that Mashreqbank defined the “place of the tort” as the place where the “allegedly tortious conduct occurred,” rather than the place of the plaintiffs’ injury. Opp. at 42 (conjecturing that Mashreqbank “us[ed] language that was accurate, but perhaps not precise”) (emphasis is Plaintiffs’). In doing so, Mashreqbank disintegrates Plaintiffs’ chief argument that Israeli law governs this case because Plaintiffs were injured in Israel. See infra at Part D, p. 27-29. It comes as no surprise, then, that Plaintiffs ask this Court to disavow Mashreqbank’s guidance as mere “dicta” on the grounds that Mashreqbank “is about forum non conveniens,” not choice of law. Opp. at 41.28 Mashreqbank’s discussion of choice of law is not dicta, however, because this Court properly and squarely considered choice of law, applied New York’s “greatest interest” test, and concluded that New York law did not apply.29 See Mashreqbank, 23 N.Y.3d at 28 Plaintiffs also assert that, because Mashreqbank distinguishes J. Zeevi & Sons v. Grindlays Bank (Uganda) Ltd., 37 N.Y. 2d 220 (1975) as a choice-of-law case, this Court must now distinguish Mashreqbank as a forum non conveniens case. See Opp. at 41. Mashreqbank explained that Zeevi considered New York’s strong interest in New York banking transactions as a factor in choice of law. See Zeevi, 37 N.Y. 2d at 227. Although Mashreqbank ruled that the New York banking interests identified in Zeevi did not “automatically” decide the broader forum non conveniens issue, this Court also separately reached and ruled upon the choice of law. See Mashreqbank, 23 N.Y.3d 129 at 137-38. 29 The lower courts in Mashreqbank also raised and considered choice of law, which put the issue directly before this Court as part of the forum non conveniens inquiry on appeal. See Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Brothers Co., No. 601650/09, 2010 N.Y. Misc. LEXIS 6936, *19-20 (N.Y. Sup. Ct. July 26, 2010) (holding that “the need to apply 22 138. Mashreqbank’s consideration of choice of law is not dicta, further, because the choice of law analysis was “integral part of the decision” in the case. People v. LaPage, 25 Misc. 3d 890, 897 (N.Y. Sup. Ct. 2009) (citing People v. Taylor, 9 N.Y.3d 129 (2007); People v. Hobson, 39 N.Y.2d 479 (1976)); see also Arar v. Ashcroft, 585 F.3d 559, 574 n.7 (2d Cir. 2009) (same). Choice of law is “integral” to a decision on forum non conveniens, because “[t]he applicability of foreign law is an important consideration in determining a forum non conveniens motion.”30 Shin-Etsu Chem. Co. v. ICICI Bank Ltd., 9 A.D.3d 171, 178 (1st Dep’t 2004); see also ACLI International, Inc. v. E.D. & F. Man, Ltd., 76 A.D.2d 635, 643-44 (2d Dep’t 1980) (holding in a forum non conveniens case that “the choice of law by the parties [i]s a persuasive factor in such determination”) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 509 (1947)). Mashreqbank is therefore relevant, binding authority. foreign law is an appropriate concern on a forum non conveniens motion”); see also Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 101 A.D.3d 1, 13 (1st Dep’t 2012) (considering choice of law). 30 The U.S. Supreme Court has explained that “[t]he doctrine of forum non conveniens . . . is designed in part to help courts avoid conducting complex exercises in comparative law. As we stated in Gilbert, the public interest factors point towards dismissal where the court would be required to ‘untangle problems in conflict of laws, and in law foreign to itself.’ Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 509 (1947).” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 251 (1981). 23 D. This Court Explicitly Rejected the Lex Loci Delicti Place of Injury Rule That Appellate Division Employed. The centerpiece of Plaintiffs’ claim that Israeli law should govern this case is that New York law “almost always points to” the law of the place of the tort, which Plaintiffs’ define as the “place of the injury.” Opp. at 41; see also id. at 38 (“’[T]he law of the place of the tort’ will generally govern in conduct-regulating cases and . . . in such cases, the disruption to the lex loci delicti was minimal.”); id., at Preliminary Statement, pp. 2-3; Point I, pp. 30-54. The Second Circuit has already rejected this same argument in the look-alike Licci case.31 See Opening Br. 31 The Second Circuit applied the law of the place of the bank-defendant’s conduct based on an alleged fact-pattern that Supreme Court here recognized as “substantially similar” to the alleged fact-pattern in Elmaliach. Compare Elmaliach v. Bank of China Ltd., Index No. 102026/09, 2011 N.Y. Misc. LEXIS 6767, *6-7 (N.Y. Sup. Ct. July 7, 2011) (“Plaintiffs’ counsel have commenced additional, substantially similar lawsuits on behalf of other victims of attacks in Israel, likewise seeking redress against financial institutions for providing wire transfer services to terrorist organizations.”) with Licci III, 739 F.3d at 48. But, Plaintiffs attempt to evade Licci by claiming differences in “essential facts” between Licci and Elmaliach. Opp. at 22 n.12. Plaintiffs describe Licci defendant American Express Bank (“AmEx”) as “just a correspondent bank that received instructions . . . and merely followed those instructions to allow, improperly (but with an unknown state of mind), money to get into the hands of terrorists.” Id. (emphasis added). While Plaintiffs suggest that their allegations of knowledge by BOC differentiate this case from Licci, the Licci plaintiffs (represented by Plaintiffs’ counsel here) told a markedly different story to the Second Circuit: Given that Plaintiffs have alleged that AmEx knew or should have known that its actions were facilitating the terrorist activities of a terrorist organizations dedicated, in part, to the destruction of the State of Israel and the murder of its residents, it follows that AmEx should have expected that the laws of Israel would be applied to its negligent and illicit activities. Licci v. Lebanese Canadian Bank, SAL, Case No. 10-1306, Doc. No. 232-2 (2d Cir.), at 5 (emphasis added) R. at A2265; see also id. at 4 (identifying knowledge allegations in the complaint, FAC ¶¶ 144-62, 226-31)) R. at A2264. 24 at 23-24, 50-52. Plaintiffs support their argument only by tangling the straightforward choice-of-law analysis that New York has been applying for more than fifty years: 1. Plaintiffs first admit that the Court of Appeals started a “revolution” when it abandoned the rote application of lex loci delicti place of injury rule in favor of a “greatest interest” analysis. Opp. at 30-31; see also id. at 34 (“The Neumeier Court noted that while Babcock ‘wisely’ rejected the old ‘mechanical place of injury rule’ . . . .”) (quoting Neumeier v. Kuehner, 31 N.Y.2d 121, 127 (1972)). 2. Plaintiffs then backpedal to argue that “in abrogating the old rule, [this Court] was merely stating that the law of the place of the tort does not always apply. It does, however, usually apply, at least when conduct-regulating rules are involved.” Id. at 31 (emphasis in original). 3. Plaintiffs then admit the contradiction between Babcock’s unequivocal “departure from rigid and inflexible rules” and their theory that “lex loci delicti generally continues to apply in conduct-regulating rule cases.” Id. at 40 (citing Allstate Insurance Co. v. Stolarz, 81 N.Y.2d 219, 225 (1993)). 4. Plaintiffs then attempt to explain away this contradiction by citing to passages in this Court’s landmark cases that describe obsolete New York approaches to choice of law, rather than citing the rules of those cases. 25 For example, Plaintiffs base their argument that the place of the tort is the “place of the injury” on an utter mischaracterization of Stolarz and Babcock. See Opp. at 40 (citing Stolarz, 81 N.Y.2d at 225 (in turn citing Babcock, 12 N.Y.2d at 483)). Those decisions actually explain that the “place of injury” rule is based on the vested rights doctrine, which this Court has absolutely “discredited” and “abandoned.” The Stolarz Court reviewed the “rigid and mechanical” historical approach to New York choice of law in tort cases, explaining that “courts invariably applied lex loci delicti—the law of the place of ‘the tort’—to all substantive issues.” Stolarz, 81 N.Y.2d at 225. Stolarz then explained why New York abandoned lex loci delicti: These inflexible rules proved unsatisfactory because the location of the controlling event was sometimes fortuitous, did not reflect the parties’ intentions, or was insignificant as against the location of other events. Moreover, the traditional approaches failed to accord any significance to the policies underlying the conflicting laws (see, Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72). In a typical court case—a car accident, for example, strong governmental interests may underlie the choice of law issue. The place where the accident occurred, for example, has an overriding interest in regulating conduct within its borders.” Id. (citing Babcock, 12 N.Y.2d at 483). Id. In the preceding passage, Stolarz relies on Babcock in its discussion of New York’s adoption of the “greatest interest” analysis and the proper application of the methodology. That cited section of Babcock states in no uncertain terms that New 26 York’s traditional choice of the law of place of “the injury” had been “discredited” and “abandon[ed].” Babcock, 12 N.Y.2d at 477-78. Babcock explains further that the traditional rule of lex loci delicti emerged from the “vested rights doctrine.” Id. Without the vested rights doctrine, a plaintiff could not have recovered for a tort occurring in a foreign jurisdiction, because the vested rights doctrine looked exclusively to the law of the place of the injury to create the tort claim. See id. It is this vested rights doctrine-based rule that the Court of Appeals outright rejected in Babcock and its progeny, “despite the advantages of certainty, ease of application and predictability which it affords,” because of its failure to consider the policy interests of other relevant jurisdictions. Id. This Court explained: The traditional choice of law rule, embodied in the original Restatement of Conflict of Laws (§ 384), and until recently unquestioningly followed in this court (see, e.g., Poplar v. Bourjois, Inc., 298 N.Y. 62, 66 [1948]; Kaufman v. American Youth Hostels, 5 N.Y.2d 1016 [1959], modfg. 6 A.D.2d 223), has been that the substantive rights and liabilities arising out of a tortious occurrence are determinable by the law of the place of the tort. It had its conceptual foundation in the vested rights doctrine, namely, that a right to recover for a foreign tort owes its creation to the law of the jurisdiction where the injury occurred and depends for its existence and extent solely on such law. (See Hancock, Torts in the Conflict of Laws [1942], pp. 30-36; Reese, “The Ever Changing Rules of Choice of Law,” Nederlands Tijdschrift Voor Internationaal Recht [1962], 389.) Although espoused by such great figures as Justice Holmes (see Slater v. Mexican Nat. R. R. Co., 194 U.S. 120 (1904)) and Professor Beale (2 Conflict of Laws [1935], pp. 1286-1292), the vested rights doctrine has long since been discredited because it fails to take account of underlying policy considerations in evaluating the significance to be ascribed to the circumstance that an act had a foreign situs in determining the rights and liabilities which 27 arise out of that act. Babcock v. Jackson, 12 N.Y.2d 473, 477-78 (1963) (internal citations omitted) (emphasis added); see also, e.g., Tooker v. Lopez, 24 N.Y.2d 569, 572 (1969) (explaining that, in Babcock, “[t]his court rejected unequivocally the traditional lex loci delictus rule . . . .”) Plaintiffs argue that subsequent rulings of this Court and the Appellate Division held that, “when the conflict pertains to a conduct-regulating rule, the law of the place where the tort occurs will generally apply, with the locus of the tort generally defined as the place of the injury.” Elmaliach, 110 A.D.3d at 202-03 (emphasis added) (citing Devore v. Pfizer, Inc., 58 A.D.3d 138, 141-42 (1st Dep’t 2008), lv. denied 876 N.Y.S.2d 704 (2009)). In fact, Schultz and Devore do not stand for the proposition that place of a plaintiff’s injuries will control; both only discussed lex loci delicti to reinforce that the rule should no longer be so “invariably” applied. Miller v. Miller, 22 N.Y.2d 12, 15 (1968) (citing Babcock, 12 N.Y.2d at 483); see also Licci III, 739 F.3d at 49 (“Schultz’s reference to the ‘place of injury’ rule occurred in the context of discussing the ‘traditional rule[]’ of lex loci delicti, which equates the “place of the wrong” with the place of the injury,” which was the rule that New York had abandoned). By failing to differentiate between the locations of a defendant’s conduct and a plaintiff’s injury, Appellate Division in Elmaliach jettisoned the core purpose of determining which 28 jurisdiction has the greatest interest in regulating a defendant’s conduct. See Opening Br. at 23-24, 48-49. Plaintiffs admit the contradiction between their acknowledgement that this Court abandoned the lex loci delicti place of injury rule, and their position that the place of the injury continues to control the analysis. See Opp. at 40. Plaintiffs throw out a few counterarguments to explain away that contradiction, all of which have previously been addressed and rejected by this Court. For example, Plaintiffs rely on Supreme Court Justice Oliver Wendell Holmes and Poplar v. Bourjois, Inc. to argue for application of the traditional place of injury rule—both of which authorities this Court specifically forsakes in Babcock. Compare Opp. at 2 (citing Holmes, J.), and 39 (“Poplar is significant not simply because it applied the law of the place of injury, but because it described that place as the place where ‘the wrong occurred.’”), with Babcock, 12 N.Y.2d at 477-78 (“Although espoused by such great figures as Justice Holmes . . .”, and specifically referencing the abandonment of the traditional rule as applied in Poplar v. Bourjois, Inc.). Plaintiffs also argue that this Court has had only a single opportunity to consider whether to apply the place of injury rule in a conduct-regulating rule case, which they attempt to characterize as supportive of the place-of-injury argument. See Opp. at 43 (discussing Padula v. Lilarn Props. Corp., 84 N.Y.2d 519 (1994)). Plaintiffs fail to mention that Babcock did describe how to apply the interest 29 analysis in a negligence-based conduct-regulating rule case, and emphasized that it would be “almost unthinkable” to apply a law other than that of the jurisdiction where the tortious conduct had occurred: We were careful to distinguish the interest of Ontario in this case from what it would have been, had the issue related to the manner in which the defendant had been driving his car at the time of the accident. “Where the defendant’s exercise of due care in the operation of his automobile is in issue, the jurisdiction in which his allegedly wrongful conduct occurred would usually have a predominant, if not exclusive concern. In such a case, it is appropriate to look to the law of the place of the tort so as to give effect to that jurisdiction’s interest in regulating conduct within its borders, and it would be almost unthinkable to seek the applicable rule in the law of some other place.” (Babcock, 12 N.Y.2d, supra, p. 483.) Tooker, 24 N.Y.2d at 572-73 (emphasis added). Babcock also anticipated and answered attempts to distinguish its ruling on the grounds that the choice of law question raised in that case (pertaining to car insurance provisions) had not been “raised or considered” in other guest statute/car accident cases, or posed in “so stark a manner” with a “statute so unique as Ontario’s.” Babcock, 12 N.Y.2d at 484. Babcock’s answer applies here no less forcefully to deny Plaintiffs’ efforts to minimize Babcock’s rejection of lex loci delicti: Be that as it may, however, reconsideration of the inflexible traditional rule persuades us, as already indicated, that, in failing to take into account essential policy considerations and objectives, its application may lead to unjust and anomalous results. This being so, the rule, formulated as it was by the courts, should be discarded. 30 Id.; see also Long v. Pan American World Airways, Inc., 16 N.Y.2d 337, 343 (1965) (“It would be highly incongruous and unreal to have the flexible principle of Babcock apply in a case where the victim of the tort is injured but not where he is killed.”). Finally, Plaintiffs mistakenly contend that applying the law of the place of conduct “could prove harmful to the State of New York.” Opp. at 73. Plaintiffs imagine a hypothetical situation in which New Yorkers are injured by medication manufactured by a pharmaceutical company in an “overseas” country “that has not yet adopted modern products liability laws” to assert that the New Yorkers will have no recourse if the law of the “place of the tortious conduct” governs. Id. at 73-74. Employing Plaintiffs’ same reasoning, however, “all one must do is flip the facts” to see that the injured parties get nothing under Plaintiffs’ place-of-injury rule, if the pharmaceutical company is instead based in the U.S. and the injured parties are located in a country that has “not yet adopted modern products liability laws.” Id. at 73. Indeed, flipping Plaintiffs’ own hypothetical reinforces the danger of using a rote application of lex loci delicti. See Stolarz, 81 N.Y.2d at 225 (“These inflexible rules proved unsatisfactory because the location of the controlling event was sometimes fortuitous, did not reflect the parties’ intentions, or was insignificant as against the location of other events.”). This volatility is exactly why, instead, the governing law must be chosen according to the 31 “significance [of] the policies underlying the conflicting laws.” Id. (citing Cooney, 81 N.Y.2d at 72). E. Choice of Law Must Not Be Based On Unproven “Knowledge” Allegations About State of Mind; Plaintiffs Cannot Prove Their Knowledge Allegation, Which Plaintiffs Admit May Be “Case Dispositive.” Plaintiffs argue that Israeli law should apply in Elmaliach, because “the location of the[ir] injuries was predictable to the defendant.” Opp. at 4 (brackets added for clarity).32 But, foreseeability, or any other aspect of a defendant’s state of mind, has never been deemed relevant to the New York choice-of-law analysis, because facts concerning a defendant’s state of mind are almost always disputed and unproven from the pleadings stage through trial.33 The “greatest interest” analysis instead depends upon facts that are undisputed or supported by the 32 Plaintiffs also argue that this knowledge allegation is sufficient to create a duty of care under New York law although none would ordinarily exist. See Opp. at 81-82; see infra at Part H.1, at 50-55. 33 Even if Plaintiffs’ knowledge allegation is sufficiently notice-pled, the record facts remain far too spare for Israeli law to be imposed now, when these facts are ardently disputed by BOC and the State of Israel itself. See Patel v. New York Life Ins. Co., No. 11 Civ. 4895, 2012 U.S. Dist. LEXIS 72717, 2012 WL 1883529, *8-9 (S.D.N.Y. May 21, 2012) (“Because a choice of law analysis is fact intensive, courts often decline to make a choice of law determination at the motion to dismiss stage.”) (citations and internal quotations omitted); Speedmark Transp., Inc. v. Mui, 778 F. Supp. 2d 439, 444 (S.D.N.Y. 2011) (holding choice of law analysis in abeyance where, “the record lack[ed] facts necessary to conduct the context-specific” inquiry); Meserole v. Sony Corp. of Am., Inc., No. 08 Civ. 8987, 2009 U.S. Dist. LEXIS 42772, 2009 WL 1403933, *18-19, n.6 (S.D.N.Y. May 18, 2009) (holding choice of law analysis was premature, notwithstanding that plaintiff had adequately pleaded a complaint). 32 record.34 Appellate Division disregarded this rule, however, and ascribed special importance to Plaintiffs’ allegation that BOC received second- or third-hand information that terrorist groups were wiring funds to a BOC customer, but did not halt the wire transfers. See Opening Br. at Part I.D, pp. 21-22, 53-54; see also Elmaliach, 110 A.D.3d at 206-07. While Appellate Division contravened New York law by doing so, perhaps more importantly, the appellate court introduced enormous instability into the case; by relying on an unproven knowledge allegation to choose the governing law, the trial court now cannot make decisions in this case with any finality. Should the trial court pick a new governing law midstream when the allegation of knowledge is disproven or unproven? This case presents a very real probability of that kind of derailment. Plaintiffs apparently hoped to prove their knowledge allegation through the testimony of a former Israeli government official, Uzi Shaya, who supposedly 34 In Babcock, for example, it was undisputed that the parties were all New York residents; that the vehicle which crashed had been licensed and maintained in New York; and that the accident at issue had occurred in Ontario. Babcock v. Jackson, 12 N.Y.2d 473 476, 482 (1963); see also, e.g., Allstate Ins. Co. v. Stolarz, 81 N.Y.2d 219, 223 (1993) (finding, “[i]ndisputably,” that the contract at issue had been entered into in New Jersey; the parties were New Jersey entities; and the vehicle at issue registered in New Jersey); Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 69 (1993) (“The facts relevant to this appeal are essentially undisputed.”); Tooker v. Lopez, 24 N.Y.2d 569, 571 (1969) (no dispute that parties were New York domiciliaries; that the vehicle was registered in New York; and that the accident occurred in Michigan); Miller v. Miller, 22 N.Y.2d 12, 15 (1968) (no dispute that the estate plaintiff was for a New York decedent; that the defendants lived in Maine at the time of the accident at issue; and that the accident had occurred in Maine). 33 would testify about a meeting between the Chinese and Israeli governments that allegedly aired Israeli assertions that a BOC customer in China was receiving wire- transferred funds from terrorist groups. See R. A116-117, ¶ 71; R. A53-55; see also Opp. at 9. Without question, Plaintiffs have assigned massive weight to that “meeting” allegation, and have relied almost entirely on Mr. Shaya’s deposition for support. See Opp. at 26 (“If Shaya testifies, his testimony will likely provide the plaintiffs in Wultz, Moriah, and Elmaliach with all that they need to prove their cases.”); see also Wultz v. Bank of China Ltd., Case No. 13-mc-1282-RBW (D.D.C.), Dkt. #13, Motion of Intervenor-Plaintiffs to Strike Non-Party State of Israel’s Motion to Quash, at 7 (filed Dec. 2, 2013), R. at A1996 (plaintiffs admitting that the quashing of the Shaya deposition “could well prove case- dispositive”). As BOC anticipated in its opening brief, the federal court has now granted the State of Israel’s motion to quash Mr. Shaya’s deposition. See supra at 5-8 (discussing Israel’s quash motion); Opening Br. at 14-15. Plaintiffs acknowledge that their inability to proceed with Mr. Shaya’s deposition is likely fatal to their claims, because Plaintiffs now cannot plausibly prove that an Israel-PRC meeting ever happened, much less that BOC was apprised of anything discussed in that 34 meeting.35 Although Plaintiffs speculate baselessly about Israel’s motives in moving to quash the Shaya deposition, Israel has been explicit that it views this litigation as a danger to Israel’s national security and a threat to the security of its citizens, residents and visitors. Major General (Res.) Yaacov Amidror, Israel’s then- National Security Advisor and Head of the National Security Council at the Israeli Prime Minister’s Office, submitted a declaration in support of the State of Israel’s motion to quash, in which he explained that Mr. Shaya’s deposition could not proceed, because: Any disclosure of such information would implicate the methods and activities used by the State of Israel to prevent terrorism, would harm Israel’s national security, would compromise Israel’s ability to protect the lives of its citizens, residents and tourists from terrorism and other grave threats and would interfere with international cooperative efforts to prevent terrorism. After personally considering the subpoena request, I have concluded that any disclosure or further public description of these matters regarding Mr. Shaya’s responsibilities or actions, including disclosure of any such information in legal proceedings, would reveal information harmful to Israel’s national security interests. Dkt. #1, Wultz v. Bank of China, Ltd., Case No. 13-mc-1282-RBW, State of 35 While this Court presumes Plaintiffs’ allegations to be true at the motion to dismiss phase, those allegations must nonetheless be plausible and capable of being proven. See Ramerica Int’l, Inc. v. Mil-Spec Indus., Corp., 293 A.D.2d 420 (1st Dep’t 2002) (observing that pleadings are to be construed so as to give the plaintiff the benefit of every plausible favorable inference, and acknowledging that essential facts can be negated by documentary evidence) (emphasis added). Plaintiffs have offered no suggestion as to how they intend to prove this critical allegation without Mr. Shaya, such that this Court should temper its deference to the allegation. 35 Israel’s Motion to Quash, Ex. B (Amidror Decl.), ¶¶ 7-8 (emphasis added). R. at A1987. The federal court refused to “second-guess the assessment of the National Security Advisor,” Major General Amidror. Dkt. #572 (July 21, 2014 Order on Motion to Quash), at 16 (R. SSA499); see also Dkt. #600 (Aug. 7, 2014 Denial of Motion for Reconsideration) (R. SSA510); supra at n.19. Consistent with its deference to Israel’s assessment of its own national security interests, the federal court rejected the plaintiffs’ “manifest injustice” plea for reconsideration, holding that “it is Israel that is prohibiting Shaya from testifying, not this Court.” Dkt. #600, Order on Motion for Reconsideration, at 3. R. at SSA512. To the extent Plaintiffs suggest that Israel previously substantiated the meeting allegation, moreover, the State of Israel declared in its motion to quash briefing that it “emphatically does not admit Plaintiffs’ allegations” about an Israeli-PRC meeting,36 and, further, that “Israel emphatically does not admit Plaintiffs’ allegations, but will not be drawn into a slippery slope of partial 36 The PRC’s central bank (the Peoples’ Bank of China, not BOC) also has denied that “the alleged meeting between Israeli and Chinese officials ever took place.” Wultz v. Islamic Repub. of Iran, 755 F. Supp. 2d 1, 51 n.8 (D.D.C. 2010) (“Wultz I”); see also James T. Areddy, Israeli Victims of Terror File Suit Against Bank of China, Wall St. J., Aug. 28, 2008, at A5 (“The People’s Bank of China Friday said in a faxed reply that it didn’t hold talks in 2005 with Israeli counterterrorism officers about the matter and that such an account ‘doesn’t conform with the facts.’”). 36 disclosures, with the attendant risk to national security.”37 Plaintiffs therefore do not have, and likely never had, any ability to prove their meeting allegation, which was the entire basis for their claim that injury in Israel was foreseeable to BOC. For Appellate Division to have built its choice-of- law foundation on that allegation was legal error, one now almost certain to disrupt the efficient progress of this case to resolution. F. China and New York Regulate BOC, and Are Best Able To Create the Required “Admonitory Effect” To Prevent the Alleged Tortious Banking Conduct From Recurring. Plaintiffs maintain that the law of China should not apply to them because they “have never set foot in China” and have no contact or other relationship with China. Opp. at 50. Instead, Plaintiffs assert that Israeli law should apply because they are Israeli domiciliaries and residents who were attacked in Israel, and Plaintiffs “expected that the laws of Israel would be there to protect them.” Id. at 50-51. This Court in Miller v. Miller made clear that choice of law does not turn on parties’ expectations that they will be protected by the laws of their place of domicile or where their injuries occurred: We reject the argument advanced in the dissenting opinion that the choice of applicable law in this tort action should be determined on 37 Wultz v. Bank of China Ltd., Case No. 13-mc-1282-RBW (D.D.C.), Dkt. #31, The State of Israel’s Reply in Support of its Motion to Quash, filed Jan. 16, 2014, at 2 (emphasis in original). R. at A2010. 37 the basis of the expectations of the parties as derived from their contact with the State of the place of the accident. Such a determination of the applicable law is based upon an obvious fiction having little to do with laws in conflict. Miller v. Miller, 22 N.Y.2d 12, 20 (1968); see also Tooker v. Lopez, 24 N.Y.2d 569, 577 (1969) (“The argument that the choice of law in tort cases should be governed by the fictional expectation of the parties has been rejected unequivocally by this court.”); Miller, 22 N.Y.2d at 20 (“It is for this reason that ‘[few] speculations are more slippery than assessing the expectations of parties as to the laws applicable to their activities, and especially is this true when the expectations relate to the law of torts.’ (Cavers, The Choice-of-Law Process, p. 119, p. 302; see, also, Traynor, Conflict of Laws in Time, 1967 Duke L. J. 713, 715.)”). The emotional nature of Plaintiffs’ claims should not be allowed to overtake the central premise of the “greatest interest” test—that the jurisdiction best able to prevent future alleged tortious conduct is the jurisdiction that regulates the alleged- tortfeasor defendant. See Robert Sedler, Symposium: Interests Analysis, Party Expectations and Judicial Method in Conflicts Torts Cases: Reflections on Cooney v. Osgood Machinery, Inc., 59 Brooklyn L. Rev. 1323, 1328-29 (1994) (“When a state’s law reflects an admonitory or regulatory policy, its interest in applying its law in order to implement that policy is not predicated on its connection with any party, but rather on its connection with the conduct sought to be deterred or the activity sought be regulated. 38 Consistent with that premise, New York choice-of-law jurisprudence consistently refers to the governing law jurisdiction in conduct-regulating cases as the one that can best “regulate” or “govern” the tortfeasor’s conduct.38 For example, in Padula, this Court held that “[i]f conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders.’” Id., 84 N.Y.2d at 521-22 (emphasis added) (quoting Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993)). Schultz v. Boy Scouts of America, 65 N.Y.2d 189, 195 (1985), similarly clarified that the governing law jurisdiction is the one that is best able to “protect[] the reasonable expectations of the parties who relied on it to govern their primary conduct and in the admonitory effect that applying its law will have on similar conduct.” Id. at 198 (citing cases and other authority) (emphasis added). In this case, Plaintiffs seek to shape BOC’s future banking conduct, not to 38 See, e.g., Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 23 N.Y.3d 129, 138 (2014) (noting that Saudi Arabia, where the defendant’s allegedly tortious activity occurred, “is clearly” the jurisdiction whose law governs); Cooney v. Oswald, Mach., Inc., 81 N.Y. 2d 66, 78 (1993) (Missouri law should apply “because the accident occurred in Missouri”); see also, e.g., Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155, 157-58 (2d Cir. 2012) (“Licci II”) (“If conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply…” and concluding that New York has the greatest interest because “all of the challenged conduct undertaken by AmEx occurred in New York…although plaintiffs’ injuries occurred in Israel.”). 39 prevent BOC from committing terrorist attacks. Plaintiffs’ singular goal is best served by applying the law of the jurisdiction empowered to regulate BOC’s bank conduct. See Cooney, 81 N.Y. 2d at 72 (holding that “the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders”) (emphasis added). Of the interested jurisdictions, only China and New York are empowered to regulate BOC’s banking conduct. As a last, but misguided, resort, Plaintiffs defame the viability of China’s bank-regulatory system. Opp. at 88-89; but see Opening Br. at 31-34, and nn.28- 29 (reviewing China’s extensive system of bank regulation). Detailed findings made by the U.S. Federal Reserve Board of Governors (“FRB”) eliminate any credible basis for Plaintiffs’ criticism of China’s bank regulatory system as applied to BOC. As this Court can take judicial notice, the FRB made these findings as a mandatory part of its 2012 review and approval of BOC’s fitness to open a bank branch in Chicago. See May 9, 2012 FRB Order No. 2012-6, pursuant to The Foreign Bank Supervision Enhancement Act of 1991), at 1. R. at SSA1. The FRB determined that the “enhancements to the standards of bank supervision in China with respect to BOC warrant a finding that BOC is subject to comprehensive, consolidated supervision by its home country supervisors.” Id. at 4, R. at SSA4 (FRB “consider[ing] the Basel Core Principles for Effective Banking Supervision, 40 which are recognized as the international standard for assessing the quality of bank supervisory systems, including with respect to comprehensive, consolidated supervision.”). In making that finding, the FRB elaborated:  “For a number of years, authorities in China have continued to enhance the standards of consolidated supervision to which banks in China are subject, including through additional or refined statutory authority, regulations, and guidance; adoption of international standards and best practices; enhancements to the supervisory system arising out of supervisory experiences,” and improved guidance by the Chinese bank regulators at the China Banking Regulatory Commission (“CBRC”). Id.39  “BOC is subject to supervision by several other financial regulators, including the State Administration for Foreign Exchange, China Securities Regulatory Commission (“CSRC”), and China Insurance Regulatory Commission (“CIRC”).” Id. at 9. R. at SSA9.  “The PBOC supervises and examines Chinese banks with respect to AML and coordinates efforts among other agencies. . . . BOC has policies and 39 According to the FRB, “[b]efore April 2003, the People’s Bank of China (“PBOC”) acted as both China’s central bank and primary banking supervisor, including with respect to anti-money- laundering matters. In April 2003, the CBRC was established as the primary banking supervisor and assumed the majority of the PBOC’s bank regulatory functions. The PBOC maintained its roles as China’s central bank and primary supervisor for anti-money-laundering matters.” May 9, 2012 FRB Order, at 5 n.12. R. at SSA5. 41 procedures to comply with Chinese laws and rules regarding AML. . . . BOC’s compliance with AML requirements is monitored by the PBOC and by BOC’s internal and external auditors. Based on all the facts of record, the Board has determined that the AML efforts by BOC and its home country supervisors are consistent with approval” to permit BOC to open a Chicago branch. Id. at 14. R. at SSA14. The FRB’s findings provide further confirmation that the laws of China, as robustly applied by China’s bank regulators, are best positioned to provide the admonitory effect for which New York’s greatest interest test strives. G. China’s Interests and Law Are Properly Before This Court. 1. There Is No Dispute That China Has An Interest In the Bank Duty at Issue In this Case. There is no dispute among the parties or in Appellate Division that China’s interest in regulating BOC’s conduct is relevant to the “greatest interest” analysis.40 See Opp. at 15 (acknowledging that, before Appellate Division, “BOC did suggest . . . that China had a greater interest in the application of its law than does Israel”); id. at 68 (“China, presumably the site of much of BOC’s negligent conduct in this 40 All parties previously submitted evidence to Supreme Court and Appellate Division concerning China, New York, and Israel’s relative interests in applying their laws to Plaintiffs’ claims. See, e.g., Pl. Sup. Ct. Br. at 28-31; Pl. App. Div. Br. at 26-27; see also BOC Sup. Ct. Br. at 19-23; BOC App. Br. at 29-36. Appellate Division recognized that BOC had raised China’s “substantial interest in adjudicating the action. . . .” Elmaliach, 110 A.D.3d at 196 (acknowledging BOC’s argument that “China has a substantial interest in adjudicating the action because the alleged conduct primarily took place in China”). 42 case, undoubtedly has a significant interest in the application of its law to this dispute.”); id. (acknowledging China “has the ability to regulate the acts of BOC”); see also Elmaliach, 110 A.D.3d at 203 (“Defendant BOC is domiciled in China; its transactions occurred in New York and China. China has a great interest in overseeing its financial institutions.”). Nor is there any dispute that the great majority of BOC’s alleged conduct giving rise to Plaintiffs’ claims occurred in China. See, e.g., Elmaliach v. Bank of China Ltd., 2011 N.Y. Misc. LEXIS 6767, *3 (N.Y. Sup. Ct. July 7, 2011); Elmaliach, 110 A.D.3d at 203; Opp. at 68 (describing China as “presumably the site of much of BOC’s negligent conduct in this case”); Opening Br. at 31-32 (detailing Chinese contacts); see also Wultz IV, 865 F. Supp. 2d at 429 (choosing Chinese law to govern, because plaintiffs had alleged, as here, that “the decision to continue processing the transfers and the bulk of the actual banking services occurred in China. In contrast, only a small fraction of the relevant banking conduct occurred in New York. . . . None of the banking conduct occurred in Israel”). All parties and courts in this case and its companion cases have consistently, directly raised the Chinese interests at issue in the proceedings below, as well as in this appeal. Plaintiffs cannot credibly argue this Court is precluded from choosing Chinese law. 43 2. All Parties Properly Submitted Evidence to Supreme Court and Appellate Division Regarding China’s Interests and Negligence Law. Plaintiffs mislead the Court by claiming that “no evidence has been presented as to the content of Chinese law or the nature of its relevant polices, and the Plaintiffs have never had a fair adversarial opportunity to develop and debate the content of Chinese law or its underlying policies.” Opp. at 73, ¶ 8. Plaintiffs fully appreciated that Chinese law was implicated in the proceedings below, and had a reasonable opportunity to present evidence and analysis regarding how Plaintiffs’ claims would be impacted if they were brought within “the Chinese justice system.” Id. at 33 (noting that Supreme Court faced the question “whether the Chinese justice system provides a viable alternative forum for this case”). In fact, both Plaintiffs and BOC submitted extensive briefs, expert affidavits and declarations, legislative authority and other Chinese law materials to Supreme Court and Appellate Division. For example, Plaintiffs expressly acknowledged and addressed BOC’s argument that “Chinese law may apply.” Pl. App. Div. Br. at 2; see also Elmaliach, 110 A.D.3d at 199 (“Plaintiffs argue that Israeli law should govern, not Chinese law[.]”); Pl. Sup. Ct. Br. at 31 (“[T]hat is not a reason to send plaintiffs off to China to litigate this case under Chinese law.”) (emphasis is Plaintiffs’); see also Pl. App. Div. Br. at 40 (“Plaintiffs’ interests are heightened if, as they 44 contend, Chinese law does not, and the Chinese courts cannot, effectively deter future negligence by BOC.”). Plaintiffs also submitted to Supreme Court the affidavits of two purported experts on Chinese law analyzing aspects of the Chinese legal system, including damages remedies in tort. See Donald Clarke Declaration, Exh. I to Tolchin Affirmation (R. A982), Clive Ansley Declaration, Exh. J to Tolchin Affirmation (R. A1030). Plaintiffs asked their Chinese law expert, Mr. Ansley, “to provide [his] professional opinion on whether Chinese law would apply to the case, and if so whether the defendant would be likely or unlikely to be found liable, with specific reference to whether the BOC would under Chinese law owe a duty of care to the Plaintiffs.” Id., ¶ 73. R. A1054. Mr. Ansley opined that, “[t]here is no doubt whatsoever that Chinese law would be applied in this case.” Exh. J to Tolchin Affirmation (Ansley Decl.), ¶ 83. R. A1054. Mr. Ansley also declared that “the notion of a “duty of care” is non-existent in China.41 Id., ¶ 85. For its part, BOC argued to Appellate Division that “if there exists a conflict in the law, New York or Chinese law should govern[.]” Elmaliach, 110 A.D.3d at 199 (emphasis added); see also BOC App. Div. Br. at 1, 7, 35, 38. In Supreme Court, BOC submitted analysis and evidence regarding Chinese tort law and the 41 In support of his opinion that BOC would not be found liable under Chinese law, Mr. Ansley stated that “there is a draft PRC Tort Law in existence, but it has not been enacted and at the moment, there is no statutory authority for the ‘duty of care’ concept, nor have the ‘courts’ acted on it, to the best of my knowledge.” Exh. J to Tolchin Affirmation (Ansley Decl.), ¶ 85. 45 Chinese legal system. See, e.g., BOC Sup. Ct. Mem. at 19-21 (describing civil remedies and approach to procedural issues under Chinese law); id. at 23-24 (analyzing Chinese law and procedure in multi-party litigations with foreign parties). BOC also submitted multiple affidavits from two noted Chinese law experts analyzing relevant aspects of Chinese civil procedure and the Chinese legal system. See R. A551 (Randall Peerenboom Aff.); R. A1509 (Randall Peerenboom Supplemental Aff., Exh. 23 to Loughlin Aff.); R. A1716 (Jacques deLisle Aff., Exh. 24 to Loughlin Aff). BOC also presented ten exhibits consisting of Chinese statues and regulations referred to by its experts, including China’s General Principles of the Civil Law of the People’s Republic of China (“GPCL”), Provisions on Cause of Actions for Civil Cases, and amendments to China’s banking law. See R. A404-49, A469 (Exhs. 11, 12, 16 to Loughlin Aff.). BOC’s expert affidavits and declarations examined relevant Chinese law tort principles. See, e.g., R. A557 (Peerenboom Aff.), ¶ 20 n.4 (“A Chinese court would apply PRC law to determine whether there has been an infringement of right (i.e. a tort).”) (citing GPCL, Art. 146, located at R. A557)); R. A564, ¶ 40 (“Assuming PRC law would apply, Article 106 of the GPCL sets forth the fundamental principle that parties who violate the rights of another shall bear civil liability.”). Dr. Peerenboom also elaborated on Chinese choice-of-law provisions designating “the law of the place where an infringing act occurred” as controlling, 46 id., ¶ 39, and China’s approach to damages remedies in tort. R. A1556-61 (Peerenboom Supplemental Affidavit, Exh. 23 to Loughlin Aff.), ¶¶ 49-53. BOC’s expert, Jacques deLisle, provided an overview of tort damages awards under Chinese law. R. A1788-93(deLisle Aff., Exh. 24 to Loughlin Aff.), ¶¶ 166-181. His declaration discussed, among other things, the negligence standard that generally applies under Chinese tort law. See id. R. A1788, ¶ 166 n.161. 3. This Court May Take Judicial Notice of the Extensive Briefing Of Chinese Law In Wultz. BOC also submitted evidence to Appellate Division regarding the substance of the relevant Chinese laws that the Southern District of New York evaluated in the “nearly identical” Wultz case in dismissing the look-alike negligence and breach of statutory duty claims against BOC in that case. See R. SSA21-467 (BOC submissions from Wultz); see also Wultz IV, 865 F. Supp. 2d 425, 428 (S.D.N.Y. 2012). This Court may take judicial notice of the Wultz proceedings and dismiss the counterpart negligence and breach of statutory duty claims against BOC in this case. See Yuppie Puppy Pet Prods., Inc. v. Street Smart Realty, LLC, 77 A.D.3d 197, 202 (1st Dep’t 2010) (taking judicial notice of an “undisputed court record or file” in another case). New York courts may consider on appeal any issues that “appear[] upon the face of the record and which could not have been avoided” had they been raised at the proper juncture, even if they were not. Vanship Holdings Ltd. v. Energy Infrastructure Acquisition Corp., 65 A.D.3d 405, 408 (1st Dep’t 47 2009) (citations omitted); see also Chateau Rive Corp. v. Enclave Dev. Assoc., 22 A.D.3d 445, 447 (2d Dep’t 2005) (“[W]e exercise our discretion in this matter and enlarge the joint record by taking judicial notice.”). Wultz determined there was a conflict between New York and Israeli law, as here. See Wultz III, 811 F. Supp. 2d 841, 849 (S.D.N.Y. 2011). Following the Second Circuit’s subsequent decision in Licci, the Wultz court solicited briefing from the parties on relevant Chinese law. See Licci II, 672 F.3d 155 (2d Cir. 2012); Wultz IV, 865 F. Supp. 2d 425 (S.D.N.Y. 2012). The Wultz parties submitted five expert reports on Chinese law, and a further 60 pages of briefing and exhibits. See Wultz v. Bank of China, Ltd., 11-cv-01266 (S.D.N.Y.) at Dkt. ##160-161, 178-179, 187-188. R. SSA21-471. The Wultz court ultimately applied Chinese law to dismiss the plaintiffs’ negligence and breach of statutory duty claims against BOC, which rely on identical legal theories and operative factual allegations against BOC as the two claims pled here. See Wultz V, 11 Civ. 1266 (SAS), 2012 U.S. Dist. LEXIS 161399, 2012 WL 5431013, *15-20 (S.D.N.Y. Nov. 5, 2012) (dismissing Israeli law claims under Chinese law); Wultz IV, 865 F. Supp. 2d at 428 (choosing Chinese law). Plaintiffs’ counsel here had every incentive to ensure that the Chinese law 48 issues were fully and effectively litigated in the “virtually identical” Wultz case. 42 The parties stipulated in Supreme Court, which the Court entered as an order, that they would make use in Elmaliach of any evidence presented in Wultz. That necessarily includes the evidence presented to the Wultz court on the content of Chinese tort law.43 This Court has the benefit of the briefing, record evidence, and analysis in Wultz, along with evidence of Chinese law all parties submitted to the lower courts 42 Plaintiffs have long been aware of the significance of the Wultz Chinese law decision to their claims in Elmaliach. In 2012, BOC put both Supreme Court and Plaintiffs on notice that BOC might, as it later did, rely on the Wultz proceedings to prove the substance of Chinese law and its application to substantively identical non-federal claims. See generally R. SSA20 (BOC Letter to Justice Kapnick, July 24, 2012) (apprising Supreme Court of developments in Wultz and discussing application of Chinese law). After the Wultz court decided that Chinese law governed—but before it considered the substance of Chinese law—BOC successfully sought “leave to renew” its motion to dismiss in Supreme Court based on Chinese law. See id. Noting that it intended to demonstrate that Plaintiffs’ claims cannot be maintained under Chinese law, BOC informed Supreme Court that, “[m]any of the same issues will be presented in Wultz, where Judge Scheindlin is expected to set a schedule . . . for the parties to brief whether plaintiffs can maintain their substantively-identical non-federal claims under Chinese law.” Id. at 2. 43 Given the “nearly identical” factual allegations in Wultz and Elmaliach, BOC determined it would be more efficient to advise Appellate Division of the Wultz dismissal of the look-alike negligence and breach of statutory duty counts under Chinese law, rather than awaiting resolution of its motion for leave to renew. By the time of the Wultz dismissal, however, BOC’s briefing in Appellate Division was completed. See Elmaliach v. Bank of China, No. 102026/09, App. Div. First Dep’t Docket (noting BOC Reply Brief submission on October 25, 2012). Accordingly, BOC filed a post-briefing letter on December 18, 2012 alerting Appellate Division to the Wultz Chinese law-dismissal decision. See R. SSA518-29 (BOC Letter to Clerk of Court, Dec. 18, 2012) (apprising court of Wultz decision and attaching copy). Appellate Division received this letter well prior to oral argument, and noted it as supplemental authority. See First Dep’t Docket (noting Feb. 15, 2013 as date of oral argument, nearly two months after submission of letter). At oral argument, BOC relied heavily on the Wultz dismissal decision to argue that Chinese law not only was one of the relevant choices under the greatest interest test, but also foreclosed Plaintiffs’ claims. 49 in Elmaliach. The extensive authority available to this Court regarding the Chinese law issues in this case more than adequately permits this Court to meaningfully determine that Chinese law requires the dismissal of Plaintiffs’ claims. H. New York Will Not Impose a Duty of Care, Even If BOC Had Knowledge of Possible Harm to Third Parties, Because It Did Not Have the Legal Control Over Its Customer to Do So. Plaintiffs seek to create a duty of care in New York on the basis of their unprovable allegation that BOC knew its customer was providing financial support to terrorist organizations. See Opp. at 82; see also supra at 5, 7-8, 34-36. Plaintiffs posit that, although BOC “perhaps” had no “duty to control” Shurafa, as a matter of “common sense,” BOC “did have a duty not to give Shurafa money upon learning that Shurafa was likely to give that money to Hamas and the PIJ.” Opp. at 84. That Plaintiffs concede that BOC “perhaps” did not have this control over its customer—and yet still argue BOC had a duty of care—is evidence that Plaintiffs neither understand the law on this point, nor the implications of their concession. 1. New York Law Is Clear That a Notional Opportunity to Stop a Tortfeasor’s Conduct Is Not Dispositive Evidence of the Requisite Ability and Authority to Control a Tortfeasor. In its opening brief, BOC demonstrated that New York will not impose a common law duty of care on a defendant unless the plaintiff has proven that the defendant had a “special relationship” giving it “the ability and authority to 50 control” the third-party tortfeasor—even if the defendant knew or reasonably should have known that the tortfeasor was likely to harm third parties, and even if the defendant could have taken precautions to prevent the conduct “as a practical matter.” Opening Br. at 60-64 (emphasis added); see also Purdy v. Public Adm’r of County of Westchester, 72 N.Y.2d 1 (1988) (“In the ordinary circumstance, common law in the State of New York does not impose a duty to control the conduct of third persons to prevent them from causing injury to others; liability for the negligent acts of third persons generally arises when the defendant has authority to control the actions of such third persons. This is so, we have said, even where “as a practical matter” defendant could have exercised such control.”) (emphasis added). New York’s limitation on the duty of care is based on the foundational principle that “not all relationships give rise to a duty. One should not be held legally responsible for the conduct of others merely because they are within our sight or environs. Neither should one be answerable merely because there are others whose activities are such as to cause one to envision damages or injuries as a consequence of those activities.” Pulka v. Edelman, 40 N.Y.2d 781, 785-86 (1976) (emphasis added). Even so, Plaintiffs argue that BOC had a duty of care to protect the general public by preventing its customer from receiving wire transferred funds from allegedly suspect sources, because it purportedly was 51 advised of Israeli claims that those funds were being used to support terrorist attacks in Israel. See Opp. at 9. Over the last forty years, this Court has on multiple occasions considered to what lengths a defendant must go to stop the tortious conduct of someone who, as a practical matter, may appear within the defendant’s control. This Court considered, for example, whether a parking garage must stop its customers from driving recklessly in the garage, whether a doctor must prevent his dangerously ill patient from driving her car, and whether an employer must prevent its drunk employee from driving off the worksite. In each of these cases, the defendant knew that unrelated members of the general public were likely to be harmed by the tortfeasing customer, patient or employee. In each of these cases, the plaintiffs alleged that the defendant should have prevented the tortfeasor’s access to the dangerous instrument that caused the plaintiffs’ injuries. And, in each of these cases, this Court held that the defendant had no duty of care to do so. In Purdy v. Public Administration of the County of Westchester, 72 N.Y.2d 1 (1988), for example, the plaintiff argued that the doctor-patient relationship was a sufficient “special relationship” to create a duty of control, such that the defendant nursing-home doctor should have prevented his nursing-home patient (Mrs. Shaw) from driving her car, or at least warned her that she might harm someone in doing so, because the defendant doctor knew Mrs. Shaw was prone to blackouts. 52 Although the doctor had previously examined Mrs. Shaw, knew about her blackout condition, and authorized her to leave, unaccompanied, the nursing facility where the doctor was employed and Mrs. Shaw was a resident, this Court held that the defendant doctor owed no duty of care to the injured plaintiff. See id. at 9. The doctor-patient relationship did not provide “the necessary authority or ability to exercise such control over Shaw’s conduct so as to give rise to a duty . . . to protect plaintiff—a member of the general public,” even though “‘as a practical matter’ the defendant could have exercised such control.” Id. at 8-9 (emphasis added); see also D’Amico v. Christie, 71 N.Y.2d 76, 88 (1987) (same). The Purdy Court rested its decision on the plaintiff’s failure to show that the nursing-home doctor had the requisite legal control over his nursing-home resident patient to prevent the harm to the plaintiff. “Plaintiff points to no provision of the Public Health Law or regulation governing health-related facilities that either authorizes or requires defendants to prevent Shaw—in nonemergency situations— from leaving the premises or to control her conduct while she is off the premises. . . . Nor did the contractual relationship between [the nursing home] and Shaw give [the doctor] the authority in nonemergency circumstances to restrict Shaw from leaving the facility, or to control her conduct while she was away from the facility.” Id. at 9. Plaintiffs here similarly point to no statute, common law or other authority 53 demonstrating that a bank has the legal control over a standard depository account holder enabling the bank to block the customer’s access to his money, even if “as a practical matter” a bank might be able to stop the money from reaching the customer’s account. See Opp. at 84. Plaintiffs cite only to three irrelevant cases that describe a bank’s relationship with a trustee who holds fiduciary trust accounts at the bank—specialized accounts that are potentially subject to heightened duties of care. See id. (citing Bischoff v. Yorkville Bank, 218 N.Y. 106, 112 (1916) (fiduciary trust fund account held by an executor of estate); Home Sav. of America, FSB v. Amoros, 233 A.D.2d 35, 38 (1st Dep’t 1997) (mortgage trust fund account held by a lawyer as trustee); Baron v. Galasso, 83 A.D.3d 626, 628 (2d Dep’t 2011) (real estate escrow account held by lawyer as trustee). Plaintiffs argue that whether a duty of care will lie seems like a matter of “common sense.” Plaintiffs are correct in one sense: common sense dictates that a defendant cannot stop the tortfeasing conduct of someone it cannot actually control. This Court emphasized that point in Pulka v. Edelman, 40 N.Y.2d 781, 783 (1976), when it considered the negligence claims by a pedestrian against the owners of a parking garage after a patron of the garage hit the pedestrian on a sidewalk adjacent to the garage. There was record evidence in Pulka that the garage knew that its customers were a “source of potential injury to pedestrians and it was reasonably foreseeable that injuries to such pedestrians would be 54 inflicted by vehicles operated by third persons.” Id. at 782. As the lower courts did here, the Appellate Term and the Appellate Division ruled for the Pulka plaintiff, because they placed great weight on the fact that the garage knew the general public was likely to be harmed, but took no action to stop customers’ reckless driving. This Court reversed, however, because [T]he garage may have taken precautions, but, in no sense, can it be said that there was, in fact, a reasonable opportunity to stop drivers from disregarding these precautions in the same way that such drivers disregard their own sense of the danger to pedestrians caused by not stopping or by proceeding recklessly. Accordingly, to say that a duty to use care arose from the relationship of the garage to its patrons when there was no opportunity to fulfill that duty, places an unreasonable burden on the garage, indeed. Id. at 783-84 (emphasis added). The Pulka Court explained its reasoning: That in this particular case there was evidence that no significant precautionary measures were taken to prevent the negligent conduct of its patrons does not justify the imposition of any duty. Although it is reasonable to require one person to be responsible for the negligent conduct of another in some instances, it is unreasonable to impose that duty where the realities of every day experience show us that, regardless of the measures taken, there is little expectation that the one made responsible could prevent the negligent conduct. Foreseeability should not be confused with duty. Id. at 785 (emphasis added). 2. Plaintiffs Fail To Carry Their Burden of Proof to Show that BOC Has a “Special Relationship” Evidencing Both Authority and Ability to Control Its Customers. Plaintiffs fail to carry their burden to show that BOC had a duty of care to 55 protect the general public from its customer. Most critically, Plaintiffs never provide this Court with any authority to show that BOC was equipped with sufficient legal control over its customer to create a duty of care vis-à-vis third parties. BOC demonstrated in its opening brief that Plaintiffs’ inability to prove that that element of legal control is fatal to Plaintiffs’ claims. See Opening Br. at 56-67. For example, Plaintiffs never argue, much less prove, that BOC had a “special relationship” with its customer, Shurafa, nor discuss whether BOC had the “ability and authority” to control Shurafa.44 After BOC raised and extensively discussed the issue in its opening brief in this appeal, Plaintiffs conceded that “perhaps” BOC has no such control, and offered no further substantive response. Opp. at 84. Plaintiffs also fail to address New York’s refusal to expand a bank’s duty of care to include protection of non-customers as alleged here. New York has explicitly refused to require a bank to “monitor the depositors’ financial activities” because doing so “would be to unreasonably expand banks’ orbit of duty.” Century Bus. Credit Corp. v. North Fork Bank, 246 A.D.2d 395, 396 (1st Dep’t 1998) (dismissing negligence action against defendant bank). Plaintiffs made no 44 Plaintiffs have no relationship with BOC, such that any duty by BOC “would have to arise out of some special relationship between [BOC] and [Plaintiffs] such as would require [BOC] to control [Shurafa]’s conduct for the benefit of [Plaintiffs.]” Purdy, 72 N.Y.2d at 8. 56 response to this point in their opposition, tacitly conceding that the new duty of care they seek would dramatically, “unreasonably” broaden the responsibilities of all banks to customers and non-customers alike. Plaintiffs also fail to resolve the incompatibility of their claims with the fact that the customer here is the holder of a conventional depository account, and that BOC is not a trustee or other fiduciary managing a trust or escrow account, which might require a bank to undertake certain monitoring obligations. There is no “special relationship” between a bank and a conventional depository account holder, because the relationship does not equip the bank with the requisite control over the customer. See Opening Br. at 56-67; see also Darby v. Compagnie Nat’l Air France, 96 N.Y.2d 343, 347 (2001) (emphasis omitted) (noting both court’s and plaintiffs’ inability to “locate a case which even suggests that New York law imposes upon banks a duty to protect non-customers from a fraud involving [conventional, non-trust] depository accounts”).45 Special relationships previously recognized by this Court include master- servant, parent and child, or common carrier and passenger, all of which require a 45 Where trust or fiduciary accounts are at issue and where the bank has “actual knowledge or notice” that trust funds are being diverted, New York law recognizes a narrow exception to the general rule that banks have no duty to protect non-customers. Home Sav. of Am., FSB v. Amoros, 233 A.D.2d 35, 39 (1st Dep’t 1997). But that exception is confined to a “fiduciary’s diversion of trust funds,” id., and does not extend to the standard, non-trust depository account alleged by Plaintiffs. See In re Agape Litig., 681 F. Supp. 2d 352, 360 (E.D.N.Y. 2010) (rejecting application of exception because “the problem with this argument is that the account holder did not hold trust accounts”). 57 high degree of control over the tortfeasor. See Purdy, 72 N.Y.2d at 8. Plaintiffs have submitted no legal authority in either the proceedings below or in this appeal to demonstrate that BOC is entitled, by law or contract, to exert a comparable high degree of control over its conventional depository account holder. See Opp. at 83; see also D’Amico, 71 N.Y.2d at 88. Plaintiffs’ comparison of the relationship between a bank and its conventional account holder to the employer-employee and landlord-invitee relationships is therefore inappropriate. Purdy, 72 N.Y.2d at 8. Simply proving the existence of a “special relationship” does not mean that a defendant will have a duty of care, moreover. For example, even employer- employee and landowner-invitee relationships do not give rise to duties that exceed the contract obligations or the typical characteristics of that relationship. See, e.g., In re New York City Asbestos Litig., 5 N.Y.3d 486, 495, 498 (2005) (declining to extend employer’s duty to provide safe workplace to third-party wife of employee because, among other things, such an expansion would upset “our long-settled common-law notions of an employer’s and landowner’s duties”); Jansen v. Fidelity & Casualty Co., 589 N.E.2d 379, 380 (N.Y. 1992) (declining employee’s request to impose duty on employer’s insurance carrier to carefully conduct safety inspections of workplace where “[u]nder the terms of the insurance contract, [carrier] had the right but not the obligation to conduct safety inspections”); D’Amico, 71 N.Y.2d at 88 (holding that plaintiffs failed to prove why the court 58 should expand the employer-employee relationship). Even if this Court were to conclude that a bank has a special relationship giving it authority and ability to control depository customers, therefore, Plaintiffs would still need to demonstrate that the proposed duty of care to noncustomers falls within the scope of that special relationship. That inquiry requires this Court to consider the parties’ reasonable expectations and the legal obligations associated with the special relationship. Darby v. Compagnie Nat’l Air France, 96 N.Y.2d 343, 347 (2001) (noting that to derive scope of duties “[c]ourts identify what people may reasonably expect of one another”). Plaintiffs also have failed to meet this burden of proof. Plaintiffs’ cited legal authority instead concerns only trust or other specialized fiduciary accounts that feature limited supervisory obligations. See supra at 54 (discussing inapposite trust account cases). Importantly, those cases examined whether the bank owed a duty of care to the trust beneficiary whose funds were embezzled, not to members of the general public at large lacking any relationship to the account. See Home Sav., 233 A.D.2d at 36-42; Baron, 83 A.D.3d at 628. Plaintiffs’ own legal authority actually reinforces that a standard, non-trust depository account carries no duty to supervise. Under Plaintiffs’ novel theory, a bank would be expected to exert control the use of funds by anyone with a basic bank account, and effectively insure any third 59 party allegedly injured by a depository account holder’s transfer of funds. Plaintiffs assert that the bank’s duty of care covers all eight million Israeli citizens, and logically, all victims of terrorism in the world. See Opp. at 63 (“Terror takes a major toll on the Israeli population. Obviously those who are killed and injured, and their loved ones, like the Plaintiffs here, suffer the most intensely. But everyone else suffers as well.”); id. at 66 (“Israel is . . . the place where BOC’s negligent acts were felt (not just by the Plaintiffs, but by the entire country).”). That kind of limitless liability plainly offends New York law and public policy. See Opening Br. at 67-70. To begin with, New York has consistently expressed its “reluctance to extend liability to a defendant for failure to control the conduct of others.” In re New York City Asbestos Litig., 5 N.Y.3d at 493 (citing Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222 (2001)). The Court of Appeals has often emphasized New York’s aversion in this regard, explaining that “[t]his judicial resistance to the expansion of duty grows out of practical concerns both about potentially limitless liability and about the unfairness of imposing liability for the acts of another.” Id. That admonition comes with a warning: the “’specter of limitless liability’ is banished only when ‘the class of potential plaintiffs to whom the duty is owed is circumscribed by the relationship’” to the holder of the duty. Id. at 498. Because there is no relationship here between the bank and Plaintiffs, and certainly not 60 between BOC and “the entire country” of Israel, this Court should not recognize such a boundless duty. Opp. at 66. Nor is there any public policy need to expand bank duties to include a common law duty to protect non-customers. Banks, including those operating in New York and China (like BOC), already have a regulatory duty to monitor and report to the government suspicious customer activity related to terrorist financing or money laundering. See Opening Br. at 31-34; see also supra at 40-42. Banks expend considerable resources on oversight infrastructure to comply with those obligations, and government regulators severely penalize any breach of those requirements. To paraphrase this Court’s decision in Hamilton, this Court “should be cautious in imposing novel theories of tort liability while the difficult problem” of Hamas “remains the focus of a national policy debate.” Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222, 240 (2001). I. Plaintiffs’ Breach of Statutory Duty Claim Fails As a Matter of Law. Paradoxically, Plaintiffs contend that their Israeli Breach of Statutory Duty claim should go forward even if this Court does not apply Israeli law. But New York law has no equivalent to the Israeli breach of statutory duty claim and does not afford private plaintiffs a universal right to operate as citizen attorney-generals. See Opp. at 79. The New York Legislature has not granted private citizens the 61 free-standing ability to bring private suit to enforce any and all criminal and civil statutes, as Plaintiffs would have this Court do. On the contrary, “[a] statutory command . . . does not necessarily carry with it a right of private enforcement by means of tort litigation.” Uhr v. E. Greenbush Cent. Sch. Dist., 94 N.Y.2d 32, 38 (1999) (declining to imply private cause of action where inconsistent with the statute’s legislative scheme). Lacking a comparable New York cause of action, Plaintiffs cannot invoke New York’s legislative silence as grounds for enforcing Israeli law. New York legislates wide-ranging causes of action through the CPLR and other statutes, yet Plaintiffs identify no statute conferring a cause of action for breach of statutory duty. See Morales v. County of Nassau, 94 N.Y.2d 218, 224 (1999) (“[C]ourts typically do not rely on legislative silence to infer significant alterations of existing law on the rationale that legislative bodies generally do not ‘hide elephants in mouseholes.’”); see also USAlliance Fed. Credit Union v. CUMIS Ins. Soc., Inc., 346 F. Supp. 2d 468, 470 n.1 (S.D.N.Y. 2004) (“The absence of a cause of action is every bit as much a conduct-regulating rule as the existence of one.”). Plaintiffs advocate “a significant change in our law” contrary to a “long- settled rule,” but this Court recognizes that “such recognition must await action of the Legislature.” Murphy v. Am. Home Prods. Corp., 58 N.Y.2d 293, 301 (1983) (declining to recognize new tort urged by plaintiffs). New York law therefore 62 forecloses Plaintiffs’ claim to enforce an Israeli claim for breach of statutory duty lacking any New York counterpart. CONCLUSION For the foregoing reasons, and those set forth in BOC’s opening brief, the decision of Appellate Division should be reversed and, under a proper application of New York’s “greatest interest” test, Plaintiffs’ claims should be dismissed under the law of either China or New York. Dated: New York, New York August 14, 2014 Of Counsel: DORSEY & WHITNEY LLP 51 West 52nd Street New York, New York 10019 Tel.: (212) 415-9200 Fax: (212) 953-7201 SQUIRE PATTON BOGGS (US) LLP By: PZ--4. A.. MI~~F ALEXANDRA E. CHOPIN SQUIRE PATTON BOGGS (US) LLP 2550 M Street, N.W. Washington, D.C. 20037 Tel. No. (202) 457-6000 Attorneys for Defendant-Appellant Bank of China Limited