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Walters v. People's Republic of China

United States District Court for the Southern District of New York

December 2, 2009, Decided

18 Misc. 302


 [*573]  OPINION & ORDER

SIDNEY H. STEIN, U.S. District Judge.

The Industrial and Commercial Bank of China, Ltd., Bank of China, Ltd., and China Construction Bank Corp. (collectively, "the Banks"), which are not parties to this litigation, seek an order vacating restraining notices and quashing subpoenas issued to them by plaintiffs Debbie and Max Walters.

I. Background

Mr. and Mrs. Walters originally filed suit in 1993 in the U.S. District Court for the Western District of Missouri under various theories of product liability, negligence, and breach of warranty stemming from the allegedly improper manufacture of an SKS semi-automatic rifle made in China that jammed and killed their thirteen year old son. The Walters named the People's Republic of China ("PRC"), among other defendants, in their amended complaint. The PRC asserted its sovereign immunity in that action, but that court nonetheless issued a default judgment against the PRC for $ 10 million in October 1996, finding that it had jurisdiction over the PRC pursuant to the "commercial activity" exception to immunity found in the Foreign Sovereign Immunities Act ("FSIA"). (See Walters v. Century International Arms, Inc., No. 93 Civ. 5188 P 5 (W.D. Mo. Oct. 22, 1996),  [**2] Ex. E to Dec of Lanier Saperstein dated Nov. 13,  [*574]  2009 ("Saperstein Dec.").) For the past thirteen years, the Walters have sought--so far without success--to collect against the PRC. 1 

In October of this year, the Walters served restraining notices and subpoenas on the New York branches of the Industrial and Commercial Bank of China, Ltd., Bank of China, Ltd., and China Construction Bank Corp. (See Exs. N-P to Saperstein Dec.) The notices and subpoenas seek "[a]ll documents showing all property, including money, in your possession in which the government of The People's Republic of China has any interest" and "forbid[] [the Banks] to make or suffer any sale, assignment, transfer or interference with any property (including money) in which the [PRC] has any interest . . . ." (Id.)

The Banks subsequently moved to vacate the restraining notices and quash the subpoenas. Specifically, the Banks contend that the Walters seek to restrain funds and subpoena documents related to property that may not be restrained under the FSIA. The Walters respond in their memoranda--and  [**3] their counsel specifically represented to the Court at oral argument on November 24, 2009--that they seek to restrain only property belonging to the PRC that is held by the Banks outside of the United States. They contend that such property falls outside of the scope of the FSIA and, therefore, can be restrained. Plaintiffs also argue belatedly in a surreply memorandum that the Banks lack standing to assert the affirmative defense of sovereign immunity on the PRC's behalf.

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672 F. Supp. 2d 573 *; 2009 U.S. Dist. LEXIS 116523 **


Subsequent History: Decision reached on appeal by Walters v. Indus. & Commer. Bank of China, Ltd., 2011 U.S. App. LEXIS 13810 (2d Cir. N.Y., July 7, 2011)


restrain, subpoenas, sovereign immunity, notices, foreign state, immunity, attachment

Civil Procedure, Remedies, Provisional Remedies, Attachment, International Law, Sovereign Immunity, Foreign Sovereign Immunities Act, Construction & Interpretation, Judgments, Enforcement & Execution, General Overview, Exceptions, Jurisdiction