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Chief Justice Signals Trouble With|Law for Victims of Beirut Bombing

(CN) - Legislation designed to give victims of 1983 Beirut barracks bombing a leg up in their efforts to collect $1.75 billion from Iran's central bank reminded Chief Justice John Roberts at a Supreme Court hearing Wednesday of what happens in undemocratic countries.

"You know, there are places in the world where courts function just the way our courts do," Roberts said, according to a transcript of the hearing. "Except every now and then, when there's a case that the strong man who runs the country is interested in because a crony is one of the parties or whatever, and he picks up the phone and he tells the court, 'You decide this case this way. And I don't care what you thought the law was, decide it this way.'"

Referring to the case at hand, Roberts added later: "I'm not sure I see what the difference is here."

The blockbuster remark could signal a new setback in a 15-year effort to make Iran pay for attacks that killed nearly 300 U.S. and French service members on Oct. 23, 1983.

Deborah Peterson, whose Marine brother died in the attacks, led other family members seeking to hold Iran liable in a federal complaint filed in Washington, D.C., shortly after the terrorist attacks of Sept. 11, 2001.

Six years later, Chief U.S. District Judge Royce Lamberth held Iran and its intelligence agency liable for the attack, but the law at the time did not allow for punitive damages and made collection difficult to achieve.

Congress solved both of those problems with a series of laws, one of which identified the Peterson case by case number.

That statute , called the Iran Threat Reduction and Syria Human Rights Act of 2012, contained an immunity-striking provision that applied only to Peterson's collections action against Bank Melli, Iran's central bank, in the Southern District of New York.

Representing the bank, Molo Lamken attorney Jeffrey Lamken opened his remarks by saying that Congress has not attempted to pass such a law in centuries.

"For nearly 200 years, Congress never enacted a statute that purported to limit the effect to one and only one specified case pending before Article III courts disclaiming any reach beyond that solitary monetary dispute," Lamken said.

Both the court's liberal and conservative wings probed Congress' power to intervene in specific lawsuits.

Justices Ruth Bader Ginsburg and Elena Kagan asked whether the focus on a single case was the issue, and statutes designed to target three, 19 or 100 cases would pass constitutional muster.

Tackling the issue philosophically, Judge Antonin Scalia asked: "Where do you get the notion that Congress can only act by generality?"

The bank's attorney took the position that Congress is not barred from enacting legislation affecting "a certain bridge, a single parcel of land, [or] a single set of presidential papers."

What legislators cannot do, Lamken said, is declare, "new law, plaintiffs win."

The justices seemed to reserve their more pointed questions for Ted Olson, representing the victims for Gibson, Dunn & Crutcher.

Justice Anthony Kennedy wondered whether Congress could strike the statute of limitations in the hypothetical case Smith v. Jones, but not Doe v. Roe.

When Olson replied that it could, Ginsburg questioned if that raised an "equal protection issue."

Scalia appeared disturbed by the novelty of the statute.

"Why has the United States never done this before?" he asked. "That's what troubled me about the case. You know, when 230 years have gone by and never before has the government done something like this. I wonder, you know, maybe Congress didn't think it had the power to do it."

Roberts brought up the possibility of Congress gaming such a power to avoid government liability.

"In other words, Congress can pass a statute and then say, whenever the statutory interpretation of the executive branch is challenged, you, court, will enter judgment in favor of the secretary," he said.

Facing down this issue for the government, Deputy Secretary General Edwin Kneedler agreed that a law could not dictate "A must win and B must lose."

Roberts was not satisfied with this concession.

"You're saying that Congress must be cute about it," he said. "They can't say Smith wins. But they can say in the case of Jones v. Smith, where the critical issue is this, we can change that in a way so Smith wins. And don't worry about the law generally, because it's just this case."

Riffing on his colleague's remark, Justice Stephen Breyer said: "If you want to be cute, Congress has 4,000 ways of being cute, and I can't quite see this court trying to police its ways."

Breyer nevertheless called it "unusual" that Congress crafted a law that "refers to a particular docket number."

Kneedler defended the need for such a power "as a bargaining chip and also to compensate people who may be injured - and frankly, to sanction."

"A bargaining chip may mean you want to use the one bargaining chip, one set of assets this time and hold off on the other ones," he said. "The executive and president and Congress need great flexibility in the area of national affairs."

In his rebuttal, Lamken called the power "completely foreign to our legal traditions."

"It's completely foreign to history," he said. "And for 200 years, Congress never once enacted a law like that. That reticence would be amazing if it were not but the fact that Congress understood that that was constitutionally prohibited."

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