Agudas Chasidei Chabad of United States v. Russian Federation ( 2015 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
AGUDAS CHASIDEI CHABAD OF
UNITED STATES,
Plaintiff,
v. Case No 1:05-cv-01548-RCL
RUSSIAN FEDERATION, et al.
Defendants.
vvvvvvvvvvvv
MEMORANDUM OPINION
Plaintiff Agudas Chasidei Chabad of the United States (“plaintiff”) moves for interim
judgment of accrued sanctions in the amount of $43,700,0001 against defendants the Russian
Federation (“Russia”), the Russian Ministry of Culture and Mass Communication (the “Ministry”),
the Russian State Library (“RSL”), and the Russian State Military Archive (“RSMA”)
(collectively, “defendants”) reflecting sanctions that have accrued under the Court’s January 16,
2013 Order, ECF No. 115. See Plaintiff’s Motion for Interim Judgment of Accrued Sanctions,
January 28, 2014, ECF No. 127. After considering plaintiff’ s motion, the United States’ second
Statement of Interest (“US Statement”) in this matter, ECF No. 134; plaintiff” s response, ECF
No. 135; oral argument held on August 20, 2015; Statement of Defendants with Respect to Further
Participationz, ECF No. 71; and applicable law, and for reasons given below, the Court will
GRANT the motion and award plaintiff interim judgment of accrued sanctions. The Court will
1 Plaintifi‘s Motion for Interim Judgment of Accrued Sanctions requests the court to enter judgment in the amount
of $14,750,000, which amount reflects fines accrued over 365 days (from January 16, 2013 until January 16, 2014)
less a 70-day hiatus. See Plaintiff’s Motion for Interim Judgment of Accrued Sanctions, January 28, 2014, ECF No.
127 at 2. This amount was amended by plaintiff during the August 20, 2015 hearing to $43,700,000, which amount
was reduced to writing in plaintiff’s proposed order and interim judgment. ECF No. 141-1.
2 Including defendant’s subsequent refusal to accept service of the Court’s Default Judgment through diplomatic
channels. See ECF No. 87 and ECF No. 90—1.
further ORDER plaintiff to provide notice of certain actions to the United States as described in
separate order.
I. BACKGROUND3
Plaintiff brought this action in 2004 seeking return of religious books, artifacts and other
materials concerning the cultural heritage of its forbearers, which fell into defendants’ hands in the
early 20th century. See Agudas Chasidei Chabad of US. v. Russian Fed ’n (Chabad 110, 798
F. Supp. 2d 260, 263 (D.D.C. 2011). In 2009, after losing on jurisdictional arguments, defendants’
lawyers informed the Court that they would no longer be participating in the case as defendants
believed the Court lacked “authority to adjudicate rights in property that in most cases always has
been located in the Russian Federation . . . Statement of Defendants, June 26, 2009, ECF No.
71. A year later, this Court entered default judgment in favor of Chabad, see Agudas Chasidei
Chabad of US. v. Russian Fed ’n (Chabad II), 729 F .Supp.2d 141 (D.D.C. 2010), and ordered
defendants to “surrender to the United States Embassy in Moscow or to the duly appointed
representatives of . . . Chabad . . . the complete collection.” Id. Defendants failed to comply with
this order and on January 16, 2013, the Court granted plaintiff’s motion for civil contempt
sanctions, ordering monetary sanctions of $50,000 per day, payable to plaintiff. See Agudas
Chasidei Chabad ofUS. v. Russian Fed’n (ChabadIV), 915 F. Supp. 2d 148 (D.D.C. 2013).
Defendants continue to disregard the Court’s Order and have entered no fiirther appearance
since declaring their unwillingness to participate further. Plaintiff requests “entry of an interim
3 As the history of this case is set out elsewhere in detail, this opinion provides only a brief summary of the relevant
background. See Agudas Chasidei Chabad of US. v. Russian Fed’n (Chabad 1), 466 F. Supp. 2d 6, 10-14 (D.D.C.
2006) (providing full factual history) rev ’d in part on other grounds, 528 F.3d 934 (DC. Cir. 2008).
review...” citing Chicago & Southern Air Lines, Inc. v. Waterman Steamship Corp, 333 US. 103
(1948)).
Having resolved the Court’ s authority to issues sanctions in this matter, the court is satisfied
that its decision grants required and appropriate deference to the Executive’s, “delicate, plenary,
and exclusive power of the President as the sole organ of the federal government in the field of
international relations.” United States v. Curtiss—Wright Export Corp, 299 US. 304, 320 (1936)
and acknowledges the Executive’s “ ‘vast share of responsibility for the conduct of our foreign
relations.’ ” Youngstown Sheet & Tube Co. v. Sawyer, 343 US. 579, 610 (1952). The CouIt grants
some measure of deference to the “considered judgment of the Executive on a particular question
of foreign policy.” Republic of Austria v. Altmann, 541 US. 677, 702 (2004). As such, under 28
U.S.C. §517 and consistent with the application of F SIA, the Court solicited and has considered
the United States’ position that granting this motion will have possible, if not vague, consequences
on foreign policy interests. The Court is sensitive to these foreign policy interests. Nonetheless,
the Court reaffirms its position that the current posture of this case places is squarely under the
FSIA, not yet an enforcement action, and without Executive action to the contrary. The Court is
satisfied that this decision is consistent with the Court’s authority and the role of the Judiciary
herein.
D. Amount
The Court issued civil contempt sanctions in the amount of $50,000 per day until
defendants comply with its July 30, 2010 Order. ECF No. 80. As of August 20, 2015, and less 70
days as stipulated by plaintiff, the amount accrued is $43,700,000. ECF No. 127. Such amount
will increase by $4,500,000 every 90 days starting on August 21, 2015.
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III. CONCLUSION
Plaintiff’s motion for interim judgment of accrued sanctions will be GRANTED, and the
Court will issue an Order with this Opinion, entering judgment against all defendants in the amount
of $43,700,000 for monetary sanctions accrued through August 20, 2015. The plaintiff may
petition the clerk for additional judgment every 90 days until defendants comply with this Court’s
July 30, 2010 Order. The Court fithher orders plaintiff to provide the United States with notice of
certain actions as described in an additional Order issued with this Opinion.
DATED: September 10, 2015 g: ; c:~ 2W
Royce C. Lamberth
United States District Judge
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monetary judgment in the amount accrued under” the Court’s Sanctions Order of January 16, 2013.
See Chabad IV.
H. ANALYSIS
The Court remains deprived of defendants’ participation and can only consider the
statement of interest of the United States and plaintiff’ s motion. See ECF Nos. 87 and 90-1. The
United States objects to the requested interim judgment of accrued sanctions on two grounds. First,
the United States restates its legal argument against imposition of sanctions that the Court
previously rejected. See Chabad I V (finding the United States’ argument unpersuasive and
sanctions appropriate) and ECF No. 134. Second, the United States argues that interim judgment
of accrued sanctions would further damage the United States’ foreign policy interests, including
its diplomatic efforts to reach a settlement with defendants on plaintiffs behalf. ECF No. 134 at
6-9. The Court agrees with plaintiff’s analysis that this is not an enforcement action, and questions
related to enforcement are not ripe for adjudication. ECF No 135 at 6. Nonetheless, the Court
notes that the mechanism that bridges the action requested by plaintiff today and enforcement
remains uncomplicated. Under the provisions of 28 U.S.C. §1610(c), “no attachment or execution
referred to in subsections (a) and (b) of this section shall be permitted until the court has ordered
such attachment and execution afier having determined that a reasonable period of time has elapsed
following the entry of judgment and the giving of any notice required under section 1608(e) of this
chapter.” As the Court noted in its July 26, 2011 opinion, there are two requirements therein
required for a plaintiff seeking to enforce judgment against a foreign state. Chabad III, 798
F.Supp.2d. at 266. Specifically, notice that judgment has been entered and adequate opportunity
to respond. Id. That analysis dealt with default judgment ordering specific performance requested
by plaintiff. The enforcement question implicated in this instance is attachment and execution of
defendants’ property that may be identified within the United States. Therefore, the Court notes
that as stipulated by plaintiff, concerns related to such enforcement are premature until such time
as plaintiff has identified property to attach and execute, provided notice to defendants of such
attachment and execution, and given defendants “reasonable time” to respond. Id. Given that
defendants have had notice of plaintiff‘s efforts to liquidate monetary sanctions for more than a
year, it is likely that plaintiff will be able to pursue attachment and execution“.
A. The Court’s Authority to Issue Interim Judgment of Accrued Sanctions
The Court has authority to issue sanctions. See Chabad III, 798 F.Supp.2d. at 272-3, and
again in Chabad I V. The Court has been asked to issue interim judgment, reducing accrued
sanctions to a sum certain as of a specific date. Recalling that the Foreign Sovereign Immunities
Act of 1976’s (“FISA”), Pub.L. No. 94-583, 90 Stat. 2891 (codified as amended at 28 U.S.C. §§
1330, 1332(a), 1391(f), 1441 (d), 1602-1611) “provisions governing jurisdictional immunity, on
the one hand, and execution immunity, on the other, operate independently,” Walters v. Industrial
and Commercial Bank of China, Ltd, 651 F.3d. 280 (2d. Cir. 2011), the Court here examines a
predicate to execution immunity analysiss. The Court is not persuaded that the law should be
applied differently now than when it ordered sanctions under the authority of the FSIA, as applied
in FG Hemisphere Associates, LLC v. Democratic Republic of Congo, 637 F.3d 373 (DC. Cir.
2011).
The United States argues that the Court has reached the limit of the Court’s authority under
the FSIA. The United States offers no additional persuasive law, facts, or argument to show that
the issue of enforcement is specifically ripe. ECF No. 134 at 7. The Court may be more proximal
4 Such attachment and execution being subject to the provisions of 22 U.S.C. § 2459, granting immunity from
attachment or execution to property or interest that constitutes art, artifacts, or other cultural objects. See also
ECF No. 101.
5 The predicate being interim judgment of accrued sanctions.
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to the question of enforcement than when it ordered sanctions, and while it has not yet reached the
question of enforcement, the Court notes the implications of this decision with regard to such.
The United States argues further that plaintiff intends to pursue enforcement action and
suggests that the Court should consider such intentions in ruling on this matter. The United States
further admonishes “[t]he Court should be aware that these further enforcement actions would
cause even greater harm to the United States’ foreign policy interests, including the United States’
interest in promoting a resolution of [this] dispute.” ECF No. 134 at 7. The Court takes notice of
the United States’ concerns of foreign policy interests and discusses them more fully below.
It is noteworthy that the United States does not address defendants’ willful withdrawal
from this matter and continued failure to either appear or comply with the Court’s orders.
Conversely, in every case cited by the United States in its statement of interest, defendants (or the
party invoking protections under the FSIA) participated in litigation. See Argentine Republic v.
Amerada Hess Shipping Corp, 488 US. 428, 109 S. Ct. 683 (1989); FG Hemispheres Associates,
LLC v. Democratic Republic of Congo, 637 F.3d 373 (DC. Cir. 2011);Autotech Technologies LP
v. Integral Research and Development Corp., 499 F.3d 737 (7th Cir. 2007); Connecticut Bank of
Commerce v. Republic of Congo, 309 F.3d 240 (5th Cir. 2002) (The Democratic Republic of the
Congo did not appear in an initial action, but then subsequently appeared and took part in
litigation); S&S Machinery Co., v. Masinexportimport, 706 F.2d 411 (2d Cir. 1983); Republic of
Philippines v. Pimentel, 553 US. 851, 128 S. Ct. 2180 (2008); Pere v. Nuovo Pignone, Inc., 150
F.3d 477 (5th Cir. 1998).
B. Foreign Policy Interests of the United States
Next, the United States urges that the Court consider certain foreign policy interests. In
fact, the United States offers similar and slightly more specific concerns as in FG Hemisphere
Associates, LLC v. Democratic Republic of Congo, 637 F.3d 373 (D.C.Cir.2011). As in FG
Hemisphere, the United States suggests the threat of vague foreign policy interests and of
reciprocal treatment of the United States in Russian courts. 637 F.3d 373 at 379. In examining
this issue, the Court first examines defendant’s history of participation in and reaction to litigation
herein, then turns to concerns raised by the United States in a letter submitted from the Department
of States, and finally turns to specific foreign policy concerns enumerated in the statement of
interest. ECF No. 134.
i. Defendant’s Participation in and Reaction to Litigation
The original complaint in this case was filed nearly eleven years ages. It was transferred to this
Court several months later and has been pending in this Court for nearly ten years7. Defendants
participated in litigation for four and a half years, filing numerous documents and pleadings until
filing a Statement With Respect to Further Participation on June 26, 2009. ECF No. 71.
Accordingly, the Court ordered default judgment generally on October 27, 2009, and upon motion
by plaintiff, ordered specific performance as default judgment on July 30, 2010. ECF Nos. 77 and
80. The Clerk entered default judgment on August 30, 2010. ECF No. 82. Plaintiff endeavored
to serve defendant notice of the default judgment through diplomatic channels, but was rebuffed.
ECF No. 87. The Court then granted plaintiff s motion to Enforce Judgment and Permit
Attachment, while holding in abeyance plaintiff s motion for Sanctions on July 26, 2011 and still,
defendants did not respond. ECF No. 101. After soliciting and considering views of the United
States, and considering plaintiff’ s motion for sanctions, the Court granted such motion and ordered
sanctions on January 16, 2013. ECF Nos. 107, 111, and 115. Still, defendants did not respond in
or to the Court, however, defendants did respond more publicly. Plaintiff notes that its
6 Plaintiff filed in in the Central District of California on November 9, 2004. ECF No. 1 at 3.
7 See Order from United States District Court for the Central District of California, July 14, 2005. ECF No. 1 at 8.
6
representatives were invited to a meeting in Moscow with a former Ambassador of the Russian
Federation to the United States in February 20138. ECF No. 135 at 9. Russian President Vladimir
Putin then clearly decided not to accept the proposed resolution the next day, instead transferring
the Library portion of the collections involved in this case to “a special department of the Russian
State Library at the Jewish Museum and Tolerance Center in Moscow.” Id. Finally, plaintiff filed
this motion for Interim Judgment of Accrued Sanctions on January 28, 2014, more than three years
alter the Clerk entered default judgment and more than four years after defendants ab sconded from
litigation. The only additional responses of which the Court is aware are the bellicose statements
of the Russian President, Vladimir Putin, and tit-for-tat litigation instituted in Russian courts.
Defendants have given clear indication that they do not intend to comply with this Court’s orders.
The time has come to give plaintiff some of the tools to which it is entitled under law.
ii. Concerns raised by United States Department of State
In Exhibit A to its Statement of Interest, the United States submits a letter from Principal
Deputy Legal Adviser Mary E. McLeod from the United States Department of State. Ms. McLeod
raises several concerns that merit the Court’s analysis. While conceding that defendants have not
participated in litigation, the letter urges the Court that “an out-of—court dialogue presents the best
means towards an ultimate resolution.” ECF No. 134-1 at 2. The record does not reflect this point
of view, and the Court rejects this argument.
The Department of State contends that litigation in this case has both had an adverse impact
on relations between the United States and Russia and discouraged resolution of this dispute. ECF
No. 134—1. Specifically, the Department of State contends that “[i]fChabad pursues the additional
steps it has outlined in its recent motion, those measures will cause significant harm to the foreign
8 The occurrence of this meeting further underscores plaintiff’s argument that the Court’s sanctions order at least
brought defendants to the bargaining table in some form.
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policy interests of the United States.” ECF No. 134-] at 2. There is simply no evidence on the
record that this case has any impact on relations between the United States and Russia outside of
this case, particularly in light of defendants’ reaction and participation as discussed above.
The Department further suggests that this court cannot enforce sanctions against a foreign
state. Unfortunately, the Department does not provide any analysis of the provisions of the FSIA
that it invokes. The Court underwent such analysis when it originally ordered default judgment
and again when it ordered sanctions. See Chabad III and Chabad IV. The Court is satisfied that
its analysis is sound on this point.
Finally, the Department suggests “that entry of a money judgment for accrued sanctions in
this case would set another troubling precedent for foreign governments, which could threaten the
United States’ own position in litigation in foreign courts.” ECF No. 134—1 at 3. To the contrary,
such a judgment is entirely consistent with the FSIA. As discussed below, the Court is not
persuaded that retaliatory or “tit-for-tat” litigation against the United States should be the basis for
shirking its responsibility to make rulings consistent with law. It would be a troubling precedent,
indeed, to disregard the law and rule as the Department prays.
iii. Specific Foreign Policy Concerns
The Court examines three such concerns starting with the vague and moving to the specific
and concludes, in agreement with plaintiffs, that the United States “does not say that entry of
interim judgment Chabad seeks will interfere with negotiations on subjects more pressing than the
return of Chabad’s property. Nor is there any mention of any realistic threat by Russia on a matter
of political, economic, or strategic concern to the United States.” ECF No. 135 at 7-8. Rather
than a vague assertion of foreign policy interests, the Executive (by and through its representatives
appearing before the Court from the Departments of Justice and State) has taken no action on this
matter contrary to plaintiff” 3 position.
First, the United States argues that interim judgment implicates vague, but serious foreign
policy interests. Given the United States’ current sanctions against Russia and Russian interests
based upon various geopolitical events, the Court is unpersuaded by such a vague concern in this
case. Additionally, the Court notes that the Russian minister of culture has reportedly indicated,
“[t]he problem does not lie in relations between Russia and the United States. It lies in relations
between Russia and a Jewish community registered in the United States?” fithher undercutting the
United States’ warning of grave foreign policy concerns. The Court notes that the United States
expresses no opinion on the foreign policy interests of simply allowing a foreign litigant to
withdraw from litigation when convenient to its interests, as defendants have done in this case“).
In asking the court to exercise its “equitable and remedial authority and discretion,” the United
States mischaracterizes this motion as “another order seeking to compel disposition of property
possessed by a foreign state within its own borders.” ECF No. 134 at 6-7. The United States again
asks the court to consider a question not yet ripe. The Court again declines to do so. See Licea v.
Curacao Drydock Co., Inc., 794 F. Supp. 2d 1299 (S.D.Fla. 2011) for additional analysis of the
threshold between F SIA’S jurisdictional immunity (which the Court has already considered) and
FSIA’s execution immunity (not yet before the Court).
Second, the United States argues that such an order would fiarther impede the “ongoing
diplomatic efforts to resolve the dispute.” ECF No. 134 at 7. In fact, the only evidence that the
9 "Schneerson Library display at Jewish center will depoliticize problem,” February 25, 2013, http://www.interfax-
religion.com/?act=news&div=10292
1° It is not lost on the Court that the United States simultaneously urges the Court (and the plaintiff) to allow for
diplomatic resolution, while implying that diplomatic relations with the Russian Federation are fraught so as to
make progress on this matter unlikely. This demonstrates relative diplomatic apathy to this specific matter.
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United States has provided in support is the letter of the Principal Deputy Legal Adviser, United
States Department of State. ECF No. 134 at Exhibit A. In this letter, she reiterates the United
States’ position without additional specific facts or argument. The Court is persuaded by plaintiff’ s
argument that “those views are contrary to experience.” Plaintiff s Response to the Statement of
Interest of the United States, ECF No. 135 (citation omitted). The Court reached this conclusion
previously, noting in the January 16, 2013 Order that, “though the United States may indeed be
‘committed to continuing these efforts,’ it provides neither any information regarding its future
plans, nor any other reason to believe that its new efforts will be more likely to succeed than past
failures.” ChabadIV, 915 F.Supp.2d at 153.
Lastly, the United States notes ongoing litigation in Russian courts involving seven books
from the same collection here at issue, ECF No. 134-1 at 2. The United States explained during
oral argument that this litigation “appears to be tit for tat retaliatory measures taken in response to
what happens in this case,” to include the Russian court apparently issuing a sanctions order of
$50,000 per day against the United States. The Court is not persuaded this Russian litigation
should have any bearing on the Court’s decision today.
C. The Court is Not in Conflict with the Executive’s Foreign Relations Powers
Judicial review is not prevented by implications of foreign affairs, especially to a Court
reviewing an action falling under specific legislation, as here with the FSIA. See generally Baker
v. Carr, 369 US. 186, 211 (1962) (“. .. it is error to suppose that every case or controversy which
touches foreign relations lies beyond judicial cognizance...”) and Zweibon v. Mitchell, 516 F.2d
594, 623 (DC. Cir. 1975) (“Similarly, we see no reason to take the Waterman dicta as a Supreme
Court statement that any issue that touches foreign affairs is to be immunized from judicial
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