Gross v. German Foundation ( 2008 )

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
12-10-2008
Gross v. German Foundation
Precedential or Non-Precedential: Precedential
Docket No. 07-3726
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
Nos. 07-3726 & 07-3727
____________
ELLY GROSS;
ROMAN NEUBERGER; JOHN BRAND,
in their individual capacities as third-party beneficiaries
of the agreements leading to the establishment of the
German Foundation “Remembrance, Responsibility and the
Future”, as representatives of all German Foundation
beneficiaries; SYLVIA GREENBAUM,
Appellants in 07-3726
v.
THE GERMAN FOUNDATION INDUSTRIAL
INITIATIVE, and its constituent managing companies;
ALLIANZ AG; BASF AG; BAYER AG; BMW AG;
COMMERZBANK AG; DAIMLERCHRYSLER AG;
DEUTSCHE BANK AG; DEGUSSA-HUELLS AG; DEUTZ
AG; DRESDNER BANK AG; FRIEDR KRUPP AG
HOESCH KRUPP; HOECHST AG; RAG AG; ROBERT
BOSCH GMBH, SIEMENS AG; VEBA AG;
VOLKSWAGEN AG, sued individually; and as members of
the German Foundation Industrial Initiative
______________
1
BARBARA SCHWARTZ LEE; BERNARD LEE,
Appellants in 07-3727
v.
DEUTSCHE BANK, AG; DRESDNER BANK, AG
__________
On Appeal from the United States District Court
for the District of New Jersey
(Civ. Action Nos. 02-cv-02936 and 03-cv-03181)
District Judge: Honorable Dickinson R. Debevoise
____________
Argued October 29, 2008
Before: McKEE, NYGAARD, and MICHEL,* Circuit Judges.
(Opinion Filed: December 10, 2008)
BURT NEUBORNE, ESQUIRE (ARGUED)
New York University Law School
40 Washington Square South
New York, New York 10012
*
The Honorable Paul R. Michel, Chief Judge of the United
States Court of Appeals for the Federal Circuit, sitting by
designation.
2
AGNIESZKA M. FRYSZMAN, ESQUIRE
(ARGUED)
MICHAEL D. HAUSFELD, ESQUIRE
KATHLEEN M. KONOPKA, ESQUIRE
HILARY K. RATWAY, ESQUIRE
Cohen, Milstein, Hausfeld & Toll P.L.L.C.
1100 New York Avenue, N.W., West Tower,
Suite 500
Washington, D.C. 20005
LISA J. RODRIGUEZ, ESQUIRE
Trujillo Rodriguez & Richards, LLC
3 Kings Highway West
Haddonfield, New Jersey 08033
ALLYN Z. LITE, ESQUIRE
Lite, Depalma, Greenberg & Rivas
Two Gateway Center, 12th Floor
Newark, New Jersey 07102
Attorneys for Appellants, Elly Gross,
Barbara Schwartz Lee, and Bernard Lee
JEFFREY BARIST, ESQUIRE (ARGUED)
SANDER BAK, ESQUIRE
FELIX WEINACHT, ESQUIRE
Milbank, Tweed, Hadley & McCloy
One Chase Mahattan Plaza
New York, New York 10005
Attorney for Appellees,
Deutsche Bank and Dresdner Bank
3
ROGER M. WITTEN, ESQUIRE (ARGUED)
LOUIS R. COHEN, ESQUIRE
JOHN A. TRENOR, ESQUIRE
MATTHEW E. DRAPER, ESQUIRE
Wilmer Cutler Pickering Hale and Dorr LLP
399 Park Avenue
New York, New York 10022
Attorney for Appellees, Allianz AG,
Bayer AG,Commerzbank AG, Degussa-
Huells AG, Deutz AG, and RAG AG
KONRAD L. CAILTEUX, ESQUIRE
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attorney for Appellee, BMW AG
BUD G. HOLMAN, ESQUIRE
PAUL DOYLE, ESQUIRE
Kelley, Drye & Warren
101 Park Avenue, 29th Floor
New York, New York 10178
Attorney for Appellee, DaimlerChrysler
AG
JOHN J. GIBBONS, ESQUIRE
TERRY MYERS, ESQUIRE
THOMAS R. VALEN, ESQUIRE
Gibbons P.C.
One Gateway Center
4
Newark, New Jersey 07102
Attorneys for Appellee, ThyssenKrupp
AG
BRANT W. BISHOP, ESQUIRE
ORESTE P. MCCLUNG, ESQUIRE
Kirkland & Ellis LLP
655 15th Street, N.W.
Washington, D.C. 20005
Attorney for Appellee, Siemens AG
THOMAS M. MUELLER, ESQUIRE
MARK D. MCPHERSON, ESQUIRE
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104-0050
Attorney for Appellee, BASF AG
NEIL MCDONELL, ESQUIRE
BRIAN E. MCGUNIGLE, ESQUIRE
DEIRDRE SHERIDAN, ESQUIRE
Dorsey & Whitney LLP
250 Park Avenue
New York, New York 10177
Attorney for Appellee, Robert Bosch
GmbH
DANIEL V. GSOVSKI, ESQUIRE
IAN CERESNEY, ESQUIRE
Herzfeld & Rubin P.C.
40 Wall Street
5
New York, New York 10005
Attorney for Appellee, Volkswagen AG
____________
OPINION OF THE COURT
____________
MICHEL, Chief Circuit Judge.
At issue in this World War II reparations case is whether
the Joint Statement of the Berlin Accords constitutes a privately
enforceable contract between some of the participants to the
Joint Statement. Appellants contend that the defendant German
companies owe “interest” on their payments to a reparations
fund created by the Berlin Accords. In a prior appeal to our
court, we held that the claim presented a justiciable issue not
foreclosed by the political question doctrine. Having again
considered the allegations of the complaints, we hold that the
disputed interest provision of the Joint Statement does not
6
constitute or confer a privately enforceable cause of action on
the Appellants, who assert standing as third-party beneficiaries.
In so holding, we note the thoroughness of the district court’s
analysis and reasoning. Because we agree with Judge
Debevoise’s rationale, we adopt it as ours, with some minor
points as described herein.
I. Background
Because the history and facts of this case are set forth in
ample detail in our previous opinion, Gross v. German
Foundation Industrial Initiative, 456 F.3d 363 (3d Cir. 2006)
(“Gross II”), and the two district court opinions, Gross v.
German Foundation Industrial Initiative, 499 F. Supp. 2d 606(D.N.J. 2007) (“Gross III”), and In re Nazi Era Cases Against
German Defendants Litigation, 320 F. Supp. 2d 235 (D.N.J.
7
2004) (“Gross I”), we do not repeat them here.1 Rather, we
briefly summarize the history and facts, insofar as they aid the
present discussion.
The claims here involve reparations for Nazi-era slave
labor, forced labor, appropriation of personal property, and
dishonored insurance policies. As early as 1998, the United
States and German governments, aware of the significance of
the claims and the seriousness of the risk posed to the German
economy, encouraged negotiations between the plaintiffs and
the defendant German corporations. The negotiations involved
senior diplomatic executives from both the U.S. and German
governments, specifically and respectively former Deputy
1
Several other cases have also detailed the history of the
Berlin Accords and the reparation claims at issue here. See
generally Am. Ins. Ass’n v. Garamendi, 539 U.S. 396 (2003);
Iwanowa v. Ford Motor Co., 67 F. Supp. 2d 424 (D.N.J.
1999); Burger-Fischer v. Degussa AG, 65 F. Supp. 2d 248(D.N.J. 1999).
8
Secretary of the Treasury Stuart Eizenstat and Count Otto
Lambsdorff, chief negotiator for former German Chancellor
Gerhard Schroeder. Several German companies came together
as the German Foundation Industrial Initiative (“the Initiative”),
which acted as the negotiating arm of the German industry.
Representing the claimants were plaintiffs’ attorneys who had
filed the U.S. civil actions.
After many months of intense negotiations and
significant lucubration, on July 17, 2000, a diplomatic
agreement, commonly referred to as the Berlin Accords or the
Berlin Agreements, was reached as a means of resolving these
long-standing claims. Under the agreement, the German
Foundation “Remembrance, Responsibility and the Future”
(“the Foundation”) was established as the intended, exclusive
forum for receiving, processing, and paying reparation claims at
issue here. Germany and the German companies each agreed to
9
contribute DM 5 billion to fund the Foundation. The plaintiffs’
lawyers agreed to dismiss with prejudice the numerous pending
litigations, so that the victims would receive payment through
the Foundation rather than civil actions and that the German
companies would achieve “all-embracing and enduring legal
peace.”
The Berlin Accords consist of (1) the Joint Statement, (2)
the Executive Agreement between the United States and
Germany, and (3) the Foundation Law. The Joint
Statement—formally titled “The Joint Statement on occasion of
the final plenary meeting concluding international talks on the
preparation of the Foundation ‘Remembrance, Responsibility
and the Future’”—sets forth a goal of the Foundation, which is
to “provide dignified payments to hundreds of thousands of
survivors and to others who suffered from wrongs during the
National Socialist era and World War II.” Joint Statement,
10
pmbl. ¶ 12. The Joint Statement commits the German
government and German industry to provide DM 10 billion in
capitalization. As structured, the Initiative would collect DM 5
billion from individual German companies and then transfer the
money to the Foundation. Particularly significant for this case,
the last sentence of Paragraph 4(d) of the Joint Statement states:
German company funds will continue to be
collected on a schedule and in a manner that will
ensure that the interest earned thereon before and
after their delivery to the Foundation will reach at
least 100 million DM.
The second document, the Executive Agreement, outlines
the U.S. and German governments’ commitments to the
Foundation and obligates the United States Executive, in all
cases for which it is notified of a claim against a German
company arising out of the WWII era, to file a statement of its
11
foreign policy interests with the court in which the claim is
pending, stating that United States’ foreign policy interests favor
resolution through the Foundation. The third document, the
Foundation Law, is codified under German law and establishes
the Foundation as the legal entity for processing claims and
distributing the DM 10 billion fund.
On May 30, 2001, the German legislature declared “legal
peace,” triggering the obligations of the German government
and the German companies to each pay DM 5 billion to the
Foundation. The German government made timely payment, but
the Initiative did not complete payment until December 2001, at
which point it had transferred DM 5.1 billion, which included
DM 100 million as the “interest” designated in Paragraph 4(d)
of the Joint Statement.
Due to the delay in the Initiative’s payment and the
differing assertions of what the “interest” provision mandated,
12
several claimants filed suit, attempting to enforce the “interest”
provision of the Joint Statement. In June 2002, Elly Gross and
others filed their complaint as third-party beneficiaries seeking
recovery for breach of contract against the Initiative and against
its founding companies. They alleged that the German
corporations owed interest in excess of the DM 100 million
already paid, based on the Initiative’s financial obligation from
and after July 17, 2000, the date the Joint Statement was signed.
In July 2003, Bernard and Barbara Schwartz Lee brought a
similar breach of contract action against Deutsch Bank AG and
Dresdner Bank AG. They allege that the two banks agreed to
pay interest earned on their payment from December 14, 1999.
These complaints were assigned to Judge Bassler. The
Initiative and the defendant corporations moved to dismiss the
complaints pursuant to Federal Rule of Civil Procedure 12(b)(6)
13
and argued, in the alternative, that the claims were
nonjusticiable. In a single opinion, the district court held that
the claims were not justiciable. Gross I, 320 F. Supp. 2d at 254.
On appeal, we reversed, holding that, while the claims
implicated foreign policy issues within the realm of the
Executive Branch, the case was nevertheless justiciable.
Gross II, 456 F.3d at 377–91. We also noted that “[a] court
would face at least two questions on the merits of this dispute:
(1) is the Joint Statement, or part of the Joint Statement,
enforceable as a private contract, and (2) if so, what ‘interest’
obligation, if any, did the parties intend for the German
Foundation Industrial Initiative?” Id. at 387.
On remand, the cases were reassigned to Judge
Debevoise. Among other motions, defendants in the Gross case
moved to dismiss under Rule 12(b)(6) on the basis that the
claims were not privately enforceable. Defendants in the
14
Schwartz Lee case moved to dismiss on the basis of a lack an
enforceable December 1999 contract. In a single opinion, Judge
Debevoise dismissed both complaints, holding that the Joint
Statement is not a contract but a political document and thus
does not confer a private cause of action on the plaintiffs. Gross
III, 499 F. Supp. at 610. Plaintiffs in both cases timely appealed
on September 11, 2007.
II. Standard of Review and Jurisdiction
The district court had diversity jurisdiction under 28
U.S.C. § 1332(a)(2).2 We have jurisdiction under 28 U.S.C. §
1291. We review de novo the district court’s dismissal of the
action under Federal Rule of Civil Procedure 12(b)(6). Phillips
2
Gross Appellants also contend that the district court had
federal question jurisdiction under 28 U.S.C. § 1331, but they
have not briefed the issue. Judge Bassler, held that the court
had diversity jurisdiction only, see Gross I, 320 F. Supp. at
238–39, and we need not address the issue here.
15
v. County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008); see
also In re Paoli R.R. Yard PCB Litig., 221 F.3d 449, 461 (3d
Cir. 2000) (“De novo means [that] . . . the court’s inquiry is not
limited to or constricted by the . . . record, nor is any deference
due the . . . conclusion [under review].” (quotation omitted)). In
our plenary review, we apply the same legal standard of
determining whether a plaintiff has stated a valid claim, viz. “‘a
complaint with enough factual matter (taken as true) to suggest’
the required element.” Phillips, 515 F.3d at 234 (quoting Bell
Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1965 (2007)). We must
accept the complaint’s allegations as true and draw all
reasonable inferences in favor of the non-movant. Worldcom,
Inc. v. Graphnet, Inc., 343 F.3d 651, 653 (3d Cir. 2003).
Appellants ask us to determine whether the Joint
Statement confers a private cause of action for their breach of
contract claim. If it does, then Appellants’ complaints are “a
16
proper exercise of [their] ‘right . . . to seek judicial relief from
injuries caused by another’s violation of a legal requirement.’”
See McKesson Corp. v. Islamic Republic of Iran, 539 F.3d 485,
488 (D.C. Cir. 2008) (quoting Cannon v. Univ. of Chicago, 441
U.S. 677, 730 n.1 (1979) (Powell, J., dissenting)). We review
the interpretation of an international agreement de novo. United
States ex rel. Saroop v. Garcia, 109 F.3d 165, 167 (3d Cir.
1997); see also McKesson, 539 F.3d at 488; United States v. Al-
Hamdi, 356 F.3d 564, 569 (4th Cir. 2004) (“Interpretation of an
international treaty is an issue of law subject to de novo
review.”).
III. Application of the Law of International Agreements
In setting forth our analysis, we reiterate that we do so
only to the extent necessary to supplement the well-reasoned
analysis of the district court. Below, we first confirm the district
court’s turn to the law of international agreements as providing
17
the legal framework for examining the Joint Statement. Next,
applying those principles, we expand on some additional points
which warrant further discussion here.
A.
At the outset, Appellants contend that Judge Debevoise
erred by applying
treaty law as opposed to federal common law. But we do not
see merit in this argument. The events leading to the Berlin
Accords evince an unprecedented diplomatic effort to create an
international agreement establishing a forum for the resolution
of certain reparation claims and also to dispose of the pending
legal actions.
As Judge Debevoise noted, “July 17, 2000, was the
occasion of one of the most remarkable diplomatic
achievements since the end of World War II.” Gross III, 499 F.
Supp. at 608. It was on that day that eight sovereign nations, a
18
consortium representing numerous German companies, an
international organization devoted to Nazi-era claims, and U.S.
plaintiffs’ attorneys together signed the Joint Statement of the
Berlin Accords. Appellants cannot reasonably dispute the
significant political nature of the talks leading to the Accords.
Granted, one objective was to settle then-pending U.S. litigation
between the plaintiffs and the defendant German companies, but
we weigh that private aspect of the resolution against the Berlin
Accords’ political, diplomatic, and historical significance. The
creation of the Berlin Accords was more than a mere settlement;
it was a profound expiation by the Federal Republic of Germany
and German companies. Indeed, from the start of the
negotiations, Deputy Secretary Eizenstat, the lead U.S.
negotiator, “was determined that the responsible foreign
government [i.e., Germany], not just private companies, would
have to be directly involved and directly engaged through a
19
senior official who would be [Eizenstat’s] counterpart.” Stuart
E. Eizenstat, Imperfect Justice: Looted Assets, Slave Labor, and
the Unfinished Business of World War II 215 (2003).
We recognize that the Joint Statement is not a formal
treaty; nevertheless, it constitutes part of the understanding
reached among sovereign nations and private parties.
Negotiations occurred during plenary sessions comprising high-
level executives of foreign nations. The signatories of the Joint
Statement itself includes the representatives of eight different
nations. Further, the Joint Statement has meaning only in the
context of the entire Berlin Accords. Indeed, the Joint
Statement by itself is incomplete, as it talks of the Foundation,
but understanding what the Foundation is requires resort to the
Foundation Law. In sum, the Joint Statement appears to be a
unique document, the objectives of which are to memorialize the
efforts of the diplomatic talks resolving both political and legal
20
issues. Thus, for at least these reasons, we agree with the
district court that the law of international agreements provides
the appropriate jurisprudential guidance in the analysis of
whether the Joint Statement creates a private cause of action.
B.
To ascertain whether an international agreement creates
a private cause of action, we first look to the text of the
agreement. See United States v. Alvarez-Machain, 504 U.S.
655, 663 (1992) (“In construing a treaty, as in construing a
statute, we first look to its terms to determine its meaning.”). At
the same time, however, a court has greater leeway to look
beyond the words of an international agreement. See, e.g., Air
France v. Saks, 470 U.S. 392, 397 (1985) (“‘[T]reaties are
construed more liberally than private agreements, and to
ascertain their meaning we may look beyond the written words
to the history of the treaty, the negotiations, and the practical
21
construction adopted by the parties.’” (quoting Choctaw Nation
of Indians v. United States, 318 U.S. 423, 431–32 (1943))).
Moreover, “the public acts and proclamations of [foreign]
governments, and those of their publicly recognized agents, in
carrying into effect th[e] treaties, though not made exhibits in
th[e] cause, are historical and notorious facts, of which the court
can take regular judicial notice.” United States v. Reynes, 50
U.S. (9 How.) 127, 147–48 (1850); see also El Al Israel
Airlines, Ltd. v. Tseng, 525 U.S. 155, 167 (1999).
In general, a court’s “role is limited to giving effect to
the intent of the [t]reaty parties.” Sumitomo Shoji Am., Inc. v.
Avagliano, 457 U.S. 176, 185 (1982). Thus, clear language
controls unless it “‘effects a result inconsistent with the intent or
expectations of its signatories.’” Id. at 180 (quoting Maximov v.
United States, 373 U.S. 49, 54 (1963)). In line with this
precedent, and regardless of whether we apply any presumption
22
for or against private enforceability, our duty is to ascertain
whether the signatories of the Joint Statement intended to permit
a private cause of action against the German companies.
Our examination of the text of the Joint Statement and
the entire Berlin Accords supports the district court’s rationale
and conclusion. We discern a strong intent on the part of the
participants to enter into an agreement that is not enforceable
through a private cause of action. First, the Joint Statement,
along with the Berlin Accords as a whole, aspires to something
other than simply the creation of a private, bargained-for
exchange. One specific objective was to send “a conclusive,
humanitarian signal, out of a sense of moral responsibility,
solidarity and self-respect.” Joint Statement, pmbl. ¶ 5. Another
clear purpose was for the German companies to receive “all-
embracing and enduring legal peace.” See Executive
Agreement, pmbl. ¶ 10, and arts. 2(1), 2(2), 3(1); Joint
23
Statement, pmbl. ¶ 13, and ¶ 4(b); Foundation Law, pmbl. ¶ 6.
Even without any presumptive approach, this language strongly
connotes an intent not to create a right of private action for only
some of the Joint Statement’s participants.
Second, as the district court noted, the Joint Statement
uses language that is generally consistent with a non-binding
political document. The signatories of the Joint Statement refer
to themselves as “participants,” not as “parties.” Joint Statement
¶¶ 1–4. The participants “declare” rather than “agree” or
“undertake.” Id. ¶ 1. The title of the document itself suggests
a non-binding arrangement. See Staff of S. Comm. on Foreign
Relations, 106th Cong., Print No. 106-71, Treaties and Other
International Agreements: The Role of the United States Senate
60 (Comm. Print 2001) (“Joint statements of intent are not
binding agreements unless they meet the requirements of legally
binding agreements, that is, that the parties intend to be legally
24
bound.”). Each of these textual clues points towards a document
without privately enforceable rights.
It is true, as Appellants point out, that some language of
the Joint Statement can be read as suggesting binding
obligations. For instance, Paragraph 4(d) does use the terms
“will” and “shall” when describing the steps that the German
companies intend to take. Appellants argue that such language
should be read as imposing legally enforceable obligations on
the German companies. But these few examples cannot
overcome the contrary language indicating a non-binding nature.
The Joint Statement contains insufficient rights-granting
language to confer on Appellants a private cause of action.
Appellants also rely too much on textual hairsplitting
between “shall” and “will,” as used in the Joint Statement.
Specifically, Gross argues that “shall” is used with judicially
enforceable acts and “will” with unenforceable acts. Thus, their
25
argument goes, things that “will” be done are not privately
enforceable, but things that “shall” be done are enforceable. We
disagree with the alleged subtlety. For example, Paragraph 4(d)
uses both “shall” and “will” in referring to the intended actions
of the German companies: “the DM 5 billion contribution of the
German companies shall be due”; “[t]he German companies will
make available reasonable advanced funding”; “German
company funds will continue to be collected.” Joint Statement
¶ 4(d) (emphases added). The Joint Statement also uses “shall”
and “will” interchangeably with the German government and the
German companies. Id. ¶¶ 4(a), 4(d). Even if a clear difference
in meaning exists between “shall” and “will”—and we are not
convinced there always is, see Hewitt v. Helms, 459 U.S. 460,
471 (1983) (characterizing “shall,” “will,” and “must” as
“language of an unmistakably mandatory character”)—the
26
distinction is not borne out in the Joint Statement’s text.3
Appellants also propose that the district court erred by
not severing the last sentence of Paragraph 4(d) from the rest of
the Joint Statement. According to their argument, severability
permits that sentence to be the grant of private enforceability.
Without doubt, treaties and international agreements can include
sections that are privately enforceable amidst sections not
privately enforceable. See Lidas, Inc. v. United States, 238 F.3d
1076, 1080 (9th Cir. 2001) (holding that the United
States-France Income Tax Treaty’s “exchange of information
provisions . . . are severable from the double taxation
provisions”); United States v. Postal, 589 F.2d 862, 884 n.35
3
We note in passing that Schwartz Lee does not see any
distinction between “shall” and “will” and considers both to
be mandatory. Schwartz Lee Appeal Br. 34 (“The words
‘shall’ and ‘will’ indicate the binding nature of the
agreement.”).
27
(5th Cir. 1979) (“A treaty need not be wholly self-executing or
wholly executory.”); see also Restatement (Third) Foreign
Relations Law of the United States § 111 cmt. h (1986) (“Some
provisions of an international agreement may be self-executing
and others non-self-executing.”). And we do not ignore these
precedents. The test here is not, however, an overly formalistic
application of any particular doctrinal rule. Rather, our charge
is to remain true to what the participants envisioned as their
intended outcome, as shown through interpretative methods
discussed above. In this case, the Joint Statement’s language
does not lend itself to the dichotomous approach urged by
Appellants. Excision of a single sentence from the body of the
Joint Statement, and from the entire Berlin Accords, invites
departure from the participants’ intentions.
At oral argument, Appellants’ counsel repeated their
contention that it would “have been an act of temporary insanity
28
for experienced counsel to have agreed to dismiss sixty cases
with prejudice prior to payment, without the existence of a
judicially enforceable means of insuring compliance.” But we
think this assertion is tenuous and overstates the situation. As
the district court recognized, Appellants’ counsel were not
dismissing the actions with only the slim hope or gamble that the
German companies might proceed with their payments. Counsel
dismissed the complaints, in part, because the Joint Statement
had the support and backing of the governments of both the
United States and the Federal Republic of Germany. Indeed, but
for the actions of President Clinton and Chancellor Schroeder,
it is questionable whether the negotiations would have been
fruitful. See Imperfect Justice 243-58 (describing the critical
involvement of President Clinton and Chancellor Schroder
during the negotiations in December 1999). Had the German
companies opted to not complete their payments to the Initiative,
29
serious political consequences and executive discomfiture would
have resulted.
Moreover, despite Gross’s argument to the contrary, the
district court did not find that Appellants’ only recourse rests
exclusively with the German Ministry of Finance. The assertion
runs counter to the undisputed fact that Appellants always
retained the option to reopen litigation through Federal Rule of
Civil Procedure 60(b). Indeed, Appellants could have utilized
that procedure, but, to avoid jeopardizing the entire, politically
sensitive resolution and the payment of the DM 10 billion to the
victims, claimants declined to move to reopen litigation under
Rule 60(b). See In re Nazi Era Cases Against German
Defendants Litig., 213 F. Supp. 2d 439, 442 (D.N.J. 2002).
Instead, they asked the court to define and enforce the
defendants’ “interest” obligation. On July 23, 2002, the district
court declined to do so, holding that jurisdiction to enforce the
30
Joint Statement was absent. Id. at 450–51. Appellants chose not
to appeal that decision. What the district court in the present
case concluded was that, given the Foundation’s procedure and
the option under Rule 60(b), the participants to the Joint
Statement exhibited, through the text and structure of the Berlin
Accords, an intent not to legally bind other participants by a
contractual right enforceable through U.S. litigation. In our
view, the district court correctly construed the terms of the Joint
Statement and the arduous negotiations leading to the Joint
Statement as manifestations of all participants’ intentions to
implement a non-judicial procedure for resolving further
disputes.
C.
Appellants urge us to consider the litigious context in
which the Joint Statement was drafted. In this context of
settling class action lawsuits, Gross argues, the Joint Statement
31
must be viewed as a quasi-settlement fashioned after a
settlement agreement pursuant to Federal Rule of Civil
Procedure 23. We are cognizant of the drafting environment,
but we remain convinced that the manifested intentions of the
participants were to create a document that set forth the
objectives of the negotiations without granting privately
enforceable contractual rights, other than any provided by the
Foundation Law. If the contextual evidence does anything, it
strengthens our belief that the participants to the Joint Statement
did not contemplate an agreement which would require further
legal wrangling in courts.
To the extent that the district court considered the history
of the Berlin Accords, we agree with the court’s reliance on the
general approach set forth in Frolova v. Union of Soviet
Socialist Republics, 761 F.2d 370, 373 (7th Cir. 1985).
Although Frolova concerns a formal treaty, the factors listed are
32
just as applicable here in analyzing whether the historical
context surrounding the Joint Statement evinces an intent to
confer privately enforceable rights.
33
D.
We also briefly address Gross’s position that the Supreme
Court has implicitly rejected the district court’s approach in
assessing the private enforceability of the Joint Statement.
Gross relies upon Medellín v. Texas, 128 S. Ct. 1346 (2008), and
its analysis of whether the Vienna Convention’s Optional
Protocol Concerning the Compulsory Settlement of Disputes,
the United Nations Charter, and the International Court of
Justice Statute were self-executing treaties. In Appellants’ view,
Medellín does away with any presumption against self-execution
of treaties.
An overly strict reliance on the concept of “self-
executing” versus “non-self-executing” treaties may be
misleading in this case. A self-executing treaty is one which
“do[es] not require domestic legislation to give [it] the full force
of law.” Renkel v. United States, 456 F.3d 640, 643 (6th Cir.
34
2006) (citing Trans World Airlines, Inc. v. Franklin Mint Corp.,
466 U.S. 243, 252 (1984)). By itself, the status of “self-
executing” does not answer the question of whether a document
creates a private right of enforcement. See Restatement (Third)
of Foreign Relations Law of the United States § 111 cmt. h
(1986) (“Whether a treaty is self-executing is a question distinct
from whether the treaty creates private rights or remedies.”); see
also United States v. Li, 206 F.3d 56, 68 (1st Cir. 2000) (en
banc) (“[T]he self-executing character of a treaty does not by
itself establish that the treaty creates private rights.”). Thus,
even if we were faced with a treaty, Medellín’s self-execution
discussion does not complete the picture.
As we see it, Medellín does not undermine the district
court’s analysis. The Supreme Court recognized that, “[e]ven
when treaties are self-executing in the sense that they create
federal law, the background presumption is that ‘[i]nternational
35
agreements, even those directly benefitting private persons,
generally do not create private rights or provide for a private
cause of action in domestic courts.’” Medellín, 128 S. Ct. at1357 n.3 (quoting Restatement (Third) of Foreign Relations Law
of the United States § 907, cmt. a (1986)). We have agreed with
this approach, see Mannington Mills, Inc. v. Congoleum Corp.,
595 F.2d 1287, 1298 (3d Cir. 1979), as have several of our sister
courts. See, e.g., United States v. Emuegbunam, 268 F.3d 377,
389–90 (6th Cir. 2001); Garza v. Lappin, 253 F.3d 918, 924 (7th
Cir. 2001) (“[A]s a general rule, international agreements, even
those benefitting private parties, do not create private rights
enforceable in domestic courts.”); United States v.
Jimenez-Nava, 243 F.3d 192, 195 (5th Cir. 2001); United States
v. Li, 206 F.3d 56, 60–61 (1st Cir. 2000) (en banc); Goldstar
(Panama) S.A. v. United States, 967 F.2d 965, 968 (4th Cir.
1992); Canadian Transp. Co. v. United States, 663 F.2d 1081,
36
1092 (D.C. Cir. 1980). Thus, when determining the intent of the
Joint Statement’s participants, we keep in mind the accepted
approach that, “[w]hen no [privately enforceable] right is
explicitly stated, courts look to the treaty as a whole to
determine whether it evidences an intent to provide a private
right of action.” Tel-Oren v. Libyan Arab Republic, 726 F.2d
774, 808 (D.C. Cir. 1984) (Bork, J., concurring).
Again, we emphasize that we do not apply a strict
presumption in this case. Rather, we draw from the state of
international agreement law to understand better what the text
of the Joint Statement teaches about the intentions of the signing
participants. Being sophisticated negotiators and litigants, the
participants worked not in a vacuum but in the international
negotiating arena. International agreement law therefore acts as
a useful judicial prism through which to view the textual
evidence of the participants’ intentions.
37
E.
Finally, we note that the issue of whether the “interest”
provision is a privately enforceable contractual right can be seen
from another vantage point, which we believe confirms that the
dispute here is not based on a privately enforceable right.
Appellants have characterized the present “interest” claim as
being completely distinct from a claimant’s application for
restitutionary funds. Framed as such, the pending lawsuit does
not appear to be asking for a larger restitutionary payment for
Elly Gross or the other plaintiffs. This seems the right strategy
because, if the claim were for an explicit request for a larger
restitution-based payment, the case would surely fail. Such a
claim would be covered exclusively by the process set forth in
the Foundation Law.
When we look closer, however, and consider the
potential result had Appellants been successful, the requested
38
relief reveals itself as a request for increased restitutionary funds
for Ms. Gross and the other plaintiffs. As we see it, Appellants’
contention is that each plaintiff has not received the appropriate
amount of money under plaintiffs’ interpretation of the Joint
Statement because the German companies have not paid enough
“interest.” We recognized as much in our prior opinion. See
Gross II, 456 F.3d at 380 (“It is true that a judgment for the
claimants would require payment to the Foundation, translating
to increased payments to victims.”). Viewing the pending suit
from this perspective further confirms the district court’s
analysis and conclusion that the signing participants of the Joint
Statement did not intend for the “interest” provision to confer a
privately enforceable contractual right on only some of the
signatories.
To the extent Appellants read Gross II as effectively
deciding the issue before us today, that is error. The issue in
39
Gross II was only whether the case was justiciable.
Justiciability involves, for the most part, concerns of separation
of powers. Nixon v. United States, 506 U.S. 224, 252–53 (1993)
(Souter, J., concurring) (“[T]he political question doctrine is
‘essentially a function of the separation of powers,’ existing to
restrain courts ‘from inappropriate interference in the business
of the other branches of Government . . . .” (citation omitted)
(quoting United States v. Munoz-Flores, 495 U.S. 385, 394
(1990))). The question we decide today, on the other hand, is
one grounded in the intentions of the signatories to the Joint
Statement. See Sumitomo, 457 U.S. at 185 (“Our role is limited
to giving effect to the intent of the [t]reaty parties.”). Thus, a
particular claim may be justiciable, in that it is not best reserved
for the Executive Branch, but may nevertheless lack a
foundational cause of action because that is what the
participants contemplated.
40
IV. Application to Schwartz Lee Plaintiffs
The Schwartz Lee Appellants dispute the propriety of
applying the judgment to dismiss the Gross complaint to the
Schwartz Lee complaint. They contend that the district court
could not dismiss their complaint because the defendant banks
in the Schwartz Lee case (i.e., Deutsche Bank AG and Dresdner
Bank AG) never moved to dismiss based on the lack of a private
cause of action. Rather, the Banks’ motion to dismiss asserted
that no enforceable contract existed between plaintiffs and
defendants.
First, we note that the two Schwartz Lee plaintiffs are
members of the putative class in the Gross action. Barbara
Schwartz Lee and Bernard Lee both averred that they are
beneficiaries of the Foundation. Schwartz Lee Compl. 4-5. The
putative class in the Gross case comprises all beneficiaries of
the Foundation. Gross Compl. 3. Also, the two defendant banks
41
in Schwartz Lee are individually named as defendants in the
Gross case.
Second, although docketed as separate cases, the two
have proceeded as if one. In Gross I, Judge Bassler issued a
single opinion that temporarily disposed of both actions. On
appeal in Gross II, we reviewed that dismissal as if the two
cases were a single action. Likewise, when remanded to the
district court, the litigants continued on a single course with but
minor differences in their “interest” calculations. Arguments for
the dispositive motions were heard during a single session
before Judge Debevoise on April 17, 2007.
The situation before us does not raise fairness concerns
sought to be addressed by the doctrines of issue and claim
preclusion. See Nat’l R.R. Passenger Corp. v. Pa. Pub. Util.
Comm’n, 288 F.3d 519, 525 (3d Cir. 2002) (“Th[e] general rule
[of collateral estoppel] is subject to a number of equitable
42
exceptions designed to assure that the doctrine is applied in a
manner that will serve the twin goals of fairness and efficient
use of private and public litigation resources.”). Schwartz Lee’s
attorneys had notice that the Initiative moved to dismiss the
complaint as privately unenforceable. Furthermore, in a letter
to the district court dated November 22, 2006, counsel for
plaintiffs in both Gross and Schwartz Lee presented arguments
countering the Initiative’s position that the Joint Statement was
not privately enforceable. Counsel presented their arguments on
the letterhead of Lite DePalma Greenberg & Rivas, LLC, local
counsel for both sets of plaintiffs. The letter was signed by 1)
Burt Neuborn, counsel for Gross plaintiffs; 2) Michael Hausfeld
and Agnieszka Fryszman, counsel for Schwartz Lee plaintiffs;
and 3) Allyn Z. Lite, “Plaintiffs’ Liaison Counsel.” The letter
set forth a cogent summary of the plaintiffs’ position without
distinguishing between the two cases. From the district court’s
43
perspective, plaintiffs in both cases were aware of and addressed
a common basis for dismissal.
Moreover, Schwartz Lee has not presented any argument
or position overlooked by the district court. Thus, even if we
were to vacate the district court’s dismissal of the Schwartz Lee
complaint, the only logical outcome after remanding would be
dismissal. Accordingly, we find no error in the district court’s
dismissal of Schwartz Lee’s complaint.
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V. Conclusion
For the foregoing reasons, we affirm the district court’s
dismissal of the complaints.
45