A federal appeals court in Manhattan Wednesday overturned a landmark $655 million verdict for terror victims against the Palestinian Authority and the Palestine Liberation Organization, finding that U.S. courts should not have exercised jurisdiction.

The 2015 verdict, in a case brought in 2004 under the federal Anti-Terrorism Act that allows American victims of international terrorism to sue, awarded damages to 11 families whose members were injured or killed in attacks in Israel from 2002 to 2004.

But the U.S. Circuit Court of Appeals said the limited contacts of the Palestinian groups with the United States and the Supreme Court’s narrowing of the situations where federal courts can exercise jurisdiction meant the case should have been dismissed.

“The terror machine gun attacks and suicide bombings that triggered this suit and victimized these plaintiffs were unquestionably horrific,” the three-judge appeals panel said. “But the federal courts cannot exercise jurisdiction in a civil case beyond the limits prescribed by the due process clause of the Constitution, no matter how horrendous the underlying attacks or morally compelling the plaintiffs’ claims.”

Lawyers for the plaintiffs said in a statement that the ruling — reversing decisions by U.S. District Judge George Daniels that said the PLO and PA had sufficient U.S. contacts to be sued here — contradicted the spirit of the anti-terror act passed in the wake of the 1985 shipboard killing of American tourist Leon Klinghoffer.

“Congress passed the Anti-Terrorism Act after the PLO killed Leon Klinghoffer in order to protect Americans wherever in the world they traveled,” said lawyer Kent Yalowitz. “The very terrorists who prompted the law have now hidden behind the U.S. Constitution to avoid responsibility for their crimes.”

advertisement | advertise on newsday

Yalowitz suggested the families may ask for review by the full 2nd Circuit or appeal to the Supreme Court, and also called for intervention by Congress and the State Department to press for compensation.

“This cruel decision must be corrected so that these families may receive justice,” he said. “No one denies, as the federal jury has found, that the Palestinians carried out these attacks and killed and injured these American citizens, who will not give up seeking justice from the courts.”

Gassan Baloul, a lawyer for the PA and PLO, praised the ruling. “We are very gratified that the court fully accepted our clients’ consistent position that the PA and the PLO are not subject to the jurisdiction of the United States courts in these matters,” he said in a statement.

During the seven-week trial, the plaintiffs contended that evidence showed the PA — the governing entity in Palestinian territories — and the PLO provided financial aid to families of suicide bombers and gunmen killed during attacks, as well as paying salaries of their employees jailed in terror cases in Israel.

The plaintiffs in the case included Rena Sokolow of Cedarhurst, who testified at the trial about how she was injured by a bomb blast in Jerusalem. Sokolow and the other plaintiffs could not immediately be reached for comment Wednesday.

U.S. jurisdiction in the case was primarily asserted on the basis of a Washington diplomatic mission maintained by the PLO, which conducts foreign affairs for the Palestinian Authority, engages in normal commercial activities, and has contracts with lobbying and consulting firms in the United States.

The court said those contacts were far too minimal, and rejected other theories of jurisdiction based on claims that the terrorist acts at issue in the lawsuit were aimed at influencing U.S. policy, noting that the violence was “indiscriminate” without any evidence Americans were targeted.

“It is insufficient for purposes of due process to rely on evidence that a political organization sought to influence United States policy, without some other connection among the activities underlying the litigation, the defendants, and the forum,” the appeals court said.