Philipp v. Federal Republic of Germany , 248 F. Supp. 3d 59 ( 2017 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ALAN PHILIPP, et al.,
Plaintiffs,
v.
Civil Action No. 15-266 (CKK)
FEDERAL REPUBLIC OF GERMANY,
et al..,
Defendants.
MEMORANDUM OPINION
(March 31, 2017)
This case centers around the June 14, 1935, sale of a collection of medieval relics known
as the “Welfenschatz” by a consortium of three art dealer firms in Frankfurt (“Consortium”) to the
State of Prussia through the Dresdner Bank. Plaintiffs Alan Philipp, Gerald G. Stiebel, and Jed R.
Leiber, legal successors of the estates of members of the Consortium, filed suit against Defendants
the Federal Republic of Germany (“Germany”) and Stiftung Preussischer Kulturbesitz (“SPK”),
an instrumentality of Germany, alleging that the SPK is in wrongful possession of the
Welfenschatz because the 1935 sale was coerced as part of the Nazi persecution of the Jewish
sellers. Presently before the Court is Defendants’ [18] Motion to Dismiss the First Amended
Complaint and Incorporated Memorandum of Law, requesting that the Court dismiss all of
Plaintiffs’ claims on the grounds that: (1) Defendants are entitled to sovereign immunity; (2) the
claims are preempted and non-justiciable because they conflict with U.S. foreign policy; and/or
(3) the doctrine of forum non conveniens favors dismissal. 1
1
Defendants also advanced an argument that Plaintiffs’ claims are barred by the statute of
limitations in their motion. However, Defendants formally withdrew their statute of limitations
1
Upon consideration of the pleadings, 2 the relevant legal authorities, and the record as a
whole, the Court GRANTS IN PART and DENIES IN PART Defendants’ [18] Motion to Dismiss
the First Amended Complaint for the reasons described herein. Specifically, the Court GRANTS
as conceded Defendants’ request that the Court dismiss the following five non-property based
claims because Defendants are entitled to sovereign immunity on each claim: fraud in the
inducement (Count V); breach of fiduciary duty (Count VI); breach of the covenant of good faith
and fair dealing (Count VII); civil conspiracy (Count VIII); and tortious interference (Count X).
The Court DENIES Defendants’ request for dismissal on the remaining five claims: declaratory
relief (Count I); replevin (Count II); conversion (Count III); unjust enrichment (Count IV); and
bailment (Count IX).
I. BACKGROUND
In or around 1929, the Consortium was formed by three art dealer firms owned by German
Jews in Frankfurt. The three firms, J.&S. Goldschmidt, I. Rosenbaum, and Z.M. Hackenbroch,
were owned by Plaintiffs’ ancestors and/or predecessors-in-interest. 3 Compl. ¶ 34. The
argument without prejudice with the possibility of it being raised later in light of the enactment of
the Holocaust Expropriated Art Recovery Act of 2016, H.R. 6130, Pub L. No. 114-308, which was
signed into law after briefing was complete on the pending motion to dismiss. Defs.’ Notice at 3.
As such, the Court shall not consider this argument at this time. However, Defendants are not
barred from raising this issue at a later time.
2
While the Court bases its decision on the record as a whole, its consideration has focused
on the following documents: 1st Am. Compl. (“Compl.”), ECF No. [14]; Defs.’ Mot. to Dismiss
1st Am. Compl. & Incorp. Mem. of Law (“Defs.’ Mot.”), ECF No. [18]; Pls.’ Opp’n to Defs.’ Mot.
to Dismiss (“Pls.’ Opp’n”), ECF No. [19]; Defs.’ Reply in Further Supp. of Mot. to Dismiss 1st
Am. Compl. (“Defs.’ Reply”), ECF No. [20]; Pls.’ Notice, ECF No. [21]; Defs.’ Notice, ECF No.
[22]; Pls.’ Stmt. on HEAR Act as it Relates to U.S. Policy (“Pls.’ Stmt.”), ECF No. [23]; Jt. Status
Report on Need for Further Briefing on Effect of HEAR Act (“Jt. Status Report”), ECF No. [24].
These motions are fully briefed and ripe for adjudication. In an exercise of its discretion, the Court
finds that holding oral argument would not be of assistance in rendering its decision. See LCvR
7(f).
3
Specifically, Plaintiff Philipp, a citizen of the United Kingdom and a resident of London,
is the grandson and sole legal successor to the estate of the late Zacharias Max Hackenbroch, the
2
Consortium acquired the Welfenschatz on October 5, 1929, pursuant to a written agreement with
the Duke of Brunswick-Lüneberg. Id. ¶ 35. The Welfenschatz is comprised of 82 medieval
reliquary and devotional objects, dating primarily from the 11th to 15th century, that were
originally housed in the Braunschweiger Dom (Brunswick Cathedral) in Germany. Id. ¶¶ 30, 41.
The Consortium eventually brought the Welfenschatz to the United States to offer it for sale to
museums and, by 1931, sold 40 of the 82 pieces to museums and individuals in Europe and the
United States, including the Cleveland Museum of Art. Id. ¶ 41. Plaintiffs’ claims center around
the remaining 42 objects that were acquired by the State of Prussia pursuant to a contract with the
Consortium on June 14, 1935, which was facilitated through the Dresdner Bank. 4 Id. ¶ 151.
Defendant SPK, an instrumentality of Germany, was created for the purpose of succeeding all of
Prussia’s rights in cultural property and currently is in possession of the Welfenschatz. Id. ¶ 184.
The Welfenschatz currently is located at the SPK-administered Museum of Decorative Arts
(“Kunstgewerbemuseum”) in Berlin. 5 Id. ¶ 26(iv).
Plaintiffs’ position is that the 1935 sale between the Consortium and the State of Prussia,
a political subdivision of the German Weimar Republic and later the Third Reich, was coerced as
sole owner of the former Hackenbroch art dealers. Compl. ¶ 17. Plaintiff Stiebel, a U.S. citizen
and a resident of Santa Fe, New Mexico, is the great nephew and legal successor of the estate of
the late Isaak Rosenbaum, co-owner of I. Rosenbaum art dealers. Id. ¶ 18. Plaintiff Leiber, a U.S.
citizen and resident of West Hollywood, California, is the grandson and sole heir of Saemy
Rosenberg, the other co-owner of Rosenbaum art dealers, and the great nephew of Isaak
Rosenbaum and partly a successor to his estate. Id. ¶ 19. Plaintiffs are the assignees of the claims
of Julius Falk Goldschmidt by written instrument from the sole owners of the J.&S. Goldschmidt
firm. Id. ¶ 20.
4
For ease of reference, the Court shall refer to these 42 objects at issue as “the
Welfenschatz,” even though Plaintiffs’ claims do not involve the 40 of the 82 objects in the
collection that were sold in the United States and Europe prior to the 1935 transaction. See Compl.
¶ 31 (listing the objects at issue).
5
During World War II, the Welfenschatz was shipped out of Berlin to be saved from
destruction and robbery. It was seized by U.S. troops and handed over in trust to the State of
Hesse. Compl. ¶ 181.
3
part of the Nazi persecution of the Jewish sellers of the Welfenschatz and, as such, the Court shall
briefly summarize the allegations in the complaint that Plaintiffs rely on in support of this position.
Id. ¶ 22. Specifically, Plaintiffs allege the 1935 transaction was spearheaded by Nazi-leaders
Hermann Goering and Adolf Hitler, who were involved in explicit correspondence to “save the
Welfenschatz” for the German Reich. Id. ¶¶ 2, 9. Further, the 1935 sale resulted in a payment of
4.25 million RM, which Plaintiffs assert demonstrates the lack of an arms’-length transaction
because it was barely 35% of the market value of the Welfenschatz. Id. ¶¶ 4, 12. Further, the
money exchanged was never fully accessible to the Consortium because it was split and partly paid
into a blocked account, and was subject to “flight taxes” that Jews had to pay in order to escape.
Id. ¶¶ 4, 12. Moreover, in November of 1935, Goering presented the Welfenschatz as a personal
“surprise gift” to Hitler during a ceremony. Id. ¶¶ 13, 179.
Plaintiffs contend that during the time that the Consortium possessed the Welfenschatz,
there were concerted efforts by Germany’s Reichsregierung (Reich Government), the Prussian
State Government and several other entities and museum officials to regain possession of the
Welfenschatz starting in 1930. See generally id. ¶¶ 37-40. After the Nazi rise to power in
Germany, see generally id. ¶¶ 44-65, Plaintiffs point to more statements regarding an interest in
Germany regaining possession of the Welfenschatz. Specifically, Plaintiffs point to a letter written
by the new Mayor of Frankfurt Friedrich Krebs to Hitler requesting that Hitler “create the legal
and financial preconditions for the return of the [Welfenschatz].” Id. ¶ 69 (quoting Compl., Ex.
2). Plaintiffs also reference a letter from 1933 written by a Frankfurt museum director to the
President of the German Association for the Preservation and Promotion of Research indicating
that one member of the Consortium indicated the owners were “very willing . . . to enter into
negotiations with the Reich,” id. ¶ 77, and minutes from a 1934 meeting among several museum
4
directors and a board member of the Dresdner Bank when the purchase of the Welfenschatz was
again discussed, id. ¶ 79.
Dresdner Bank, which was majority-owned by the German state at the time of the Nazi rise
to power, served as the intermediary facilitating the 1935 transaction between the Consortium and
Prussia. Id. ¶¶ 88-89. Plaintiffs cite to an investigative report from a German weekly news
magazine noting that it “shows the [Dresdner] bank took part early on in Third Reich’s policy of
confiscating Jewish property and wealth.” Id. ¶ 90; see also id. ¶ 132. Plaintiffs detail the history
of the discussions between the Dresdner Bank and the Consortium regarding the sale price of the
Welfenschatz, noting that in January 1934, the Consortium was unwilling to sell the objects for
below 6.5 million RM or 6 million RM in “extreme circumstances,” id. ¶ 92, while the Dresdner
Bank indicated the sale price could not exceed 3.5 million RM, id. ¶ 93. Plaintiffs also point to a
record from May 1934 indicating that the Consortium advised the Dresdner Bank that it had an
offer of 7 million RM, probably from a Berlin private banker. Id. ¶ 94. Further, Plaintiffs point
to a draft letter written to Hitler by the Secretary of the Prussian State Ministry and provided to the
Deputy Minister of the Ministry of Science in July 1934 regarding acquisition of the Welfenschatz
through Prussian treasury bonds in order to “bring the historically, artistically and national-
politically valuable [Welfenschatz] to the Reich in addition to many other valuable cultural
treasures,” and specifically referencing the role of Prussian Prime Minister Goering. Id. ¶¶ 103,
111 (quoting Compl., Ex. 3). In February 1935, the Dresdner Bank Director noted that the Prussian
Finance Minister asked him to handle the Welfenschatz matter. Id. ¶ 133.
In April 1935, an owner of a Berlin art dealership who served as the messenger between
the Bank and the Consortium, notified the Bank’s Director that he had been “intensely preoccupied
with the matter” for a year and a half and reported that the problem with acquiring the
5
Welfenschatz was that the members of the Consortium were confident in the asking price. Id. ¶¶
83, 137. Later that month, the Dresdner Bank Director authorized a bid of 3.7 million on behalf
of its client. Id. ¶ 140. At some point, the Consortium sent word that it was willing to sell the
Welfenschatz for 5 million RM. Id. ¶ 139. Plaintiffs also point to a new museum that intended to
acquire the Welfenschatz and allege that “[t]he ‘authoritative entities’ were . . . invited to review
the plans at [the prospective buyer museum] to ensure that there was no ‘conflict,” which resulted
in the elimination of an independent interested purchaser. Id. ¶ 143.
On May 4, 1935, the Consortium offered the Welfenschatz for a sale price of 4.35 million
RM to the Dresdner Bank, id. ¶ 146, and, after receiving a response from the Dresdner Bank,
submitted its final offer on May 17, 1935, id. ¶ 148. The contract was executed on June 14, 1935,
selling the Welfenschatz for the price of 4.25 million RM. Id. ¶ 151. On July 18, 1935, the
Welfenschatz was packed for shipping from Amsterdam, where it was housed, for delivery to
Berlin, and the Dresdner Bank made the requisite payment on the following day. Id. ¶¶ 157-58.
The payments were split, with 778,125 RM paid into a blocked account with Dresdner Bank, and
3,371,875 RM, paid to three different bank accounts in Germany. Id. ¶¶ 159-60. Plaintiffs agreed
to accept art objects in Berlin museums to satisfy some of the purchase price. Id. ¶ 159. However,
the objects were not selected by art dealers, as the parties had agreed to, but rather by museum
officials. Id. The Consortium also was required to pay a 100,000 RM commission to the Berlin
art dealer who served as the messenger between the Bank and the Consortium. Id. The Consortium
used the proceeds from the sale to pay back investors who financed the 1929 purchase of the
Welfenschatz. Id. ¶ 161.
Plaintiffs raised their claims related to the Welfenschatz before the German Advisory
Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially
6
Jewish Property (“Advisory Commission”) which was established by Germany in 2003 to address
Nazi-looted art claims in accordance with the Washington Conference on Holocaust Era-Assets’
Principles on Nazi-Confiscated Art. Id. ¶¶ 15, 196-98, 205. After hearing testimony from five
experts presented by Plaintiffs, the Advisory Commission issued a non-binding recommendation
that the 1935 sale at issue was not a coerced transaction and, as such, the Advisory Commission
did not recommend the return of the Welfenschatz to Plaintiffs. Id. ¶¶ 224, 227-28.
Plaintiffs now bring the following ten claims related to the 1935 sale of Welfenschatz,
which Plaintiffs’ assert was made under duress, against Germany and the SPK: declaratory relief
(Count I); replevin (Count II); conversion (Count III); unjust enrichment (Count IV); fraud in the
inducement (Count V); breach of fiduciary duty (Count VI); breach of the covenant of good faith
and fair dealing (Count VII); civil conspiracy (Count VIII); bailment (Count IX); and tortious
interference (Count X). Defendants seek dismissal of each of the claims on the grounds that: (1)
Defendants are entitled to sovereign immunity on each Plaintiffs’ claims; (2) Plaintiffs’ claims are
preempted and non-justiciable because they conflict with U.S. foreign policy; and (3) the doctrine
of forum non conveniens requires that Plaintiffs’ claims be resolved in Germany, rather than in
this Court.
II. LEGAL STANDARD
A court must dismiss a case when it lacks subject matter jurisdiction pursuant to Rule
12(b)(1). In so doing, the Court may “consider the complaint supplemented by undisputed facts
evidenced in the record, or the complaint supplemented by undisputed facts plus the court’s
resolution of disputed facts.” Coal. for Underground Expansion v. Mineta, 333 F.3d 193, 198
(D.C. Cir. 2003) (citations omitted). “At the motion to dismiss stage, counseled complaints, as
well as pro se complaints, are to be construed with sufficient liberality to afford all possible
inferences favorable to the pleader on allegations of fact.” Settles v. U.S. Parole Comm’n, 429
7
F.3d 1098, 1106 (D.C. Cir. 2005). In spite of the favorable inferences that a plaintiff receives on
a motion to dismiss, it remains the plaintiff’s burden to prove subject matter jurisdiction by a
preponderance of the evidence. Am. Farm Bureau v. Envtl. Prot. Agency, 121 F. Supp. 2d 84, 90
(D.D.C. 2000). Furthermore, a court need not accept inferences drawn by the plaintiff if those
inferences are not supported by the facts alleged in the complaint. Odhiambo v. Republic of Kenya,
930 F. Supp. 2d 17, 22-23 (D.D.C. 2013), aff’d 764 F.3d 31 (D.C. Cir. 2014) (citing Browning v.
Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002)).
III. DISCUSSION
A. Sovereign Immunity
Under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1602-1611, “a
foreign state is presumptively immune from the jurisdiction of United States courts,” and “unless
a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against
a foreign state.” Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993); see also 28 U.S.C. §§ 1604-
1605. The FSIA defines the term “foreign state” to include a state’s political subdivisions,
agencies, and instrumentalities. 28 U.S.C. § 1603(a). The FSIA provides “the sole basis for
obtaining jurisdiction over a foreign state in the courts of this country.” Nelson, 507 U.S. at 355
(quoting Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443 (1989) (internal
quotation marks omitted)). Because “subject matter jurisdiction in any such action depends on the
existence of one of the specified exceptions . . . [a]t the threshold of every action in a district court
against a foreign state . . . the court must satisfy itself that one of the exceptions applies.” Verlinden
B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 493-94 (1983). “In other words, U.S. courts have no
power to hear a case brought against a foreign sovereign unless one of the exceptions applies.”
Diag Human S.E. v. Czech Republic-Ministry of Health, 64 F. Supp. 3d 22, 30 (D.D.C. 2014),
8
rev’d on other grounds 824 F.3d 131 (D.C. Cir. 2016). Plaintiffs assert that this Court has subject
matter jurisdiction over each of their claims against Germany and its instrumentality, the SPK,
under FSIA’s expropriation exception, 28 U.S.C. § 1605(a)(3).
The FSIA’s expropriation exception to foreign sovereign immunity allows a party to
proceed with a claim:
in which rights in property taken in violation of international law are in issue and
that property or any property exchanged for such property is present in the United
States in connection with a commercial activity carried on in the United States by
the foreign state; or that property or any property exchanged for such property is
owned or operated by an agency or instrumentality of the foreign state and that
agency or instrumentality is engaged in a commercial activity in the United States.
28 U.S.C. § 1605(a)(3). As such, in order to satisfy the expropriation exception, a claim must
satisfy three requirements: “(i) the claim must be one in which ‘rights in property’ are ‘in issue’;
(ii) the property in question must have been ‘taken in violation of international law’; and (iii) one
of two commercial-activity nexuses with the United States must be satisfied.” Simon v. Republic
of Hung., 812 F.3d 127, 140 (D.C. Cir. 2016).
The U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) has
clarified that for the purposes of the analysis under this exception, the district court must examine
the relationship between the jurisdictional question and the merits determination. See id. at 140-
41. Specifically, the D.C. Circuit recognized situations in which a plaintiff raises a basic
expropriation claim, arguing that his or her property has been taken without just compensation in
violation of international law. Id. In such instances, the merits of the claim directly mirror the
jurisdictional standard, i.e., a determination as to whether the property was taken in violation of
international law. Id. When there is a complete overlap between the inquiries, “the plaintiff need
only show that its claim is ‘non-frivolous’ at the jurisdictional stage, and then must definitively
prove its claim in order to prevail at the merits stage.” Id. at 141. However, in other situations, a
9
plaintiff may seek recovery based on “garden-variety common-law causes of action such as
conversion, unjust enrichment, and restitution,” and plead a violation of international laws to give
rise to jurisdiction but not to establish liability on the merits. Id. In those situations, the court
requires more than a mere non-frivolous argument to satisfy the jurisdictional standard. Id.
The parties dispute which standard the Court should apply in this case. Plaintiffs assert
that they need only advance a non-frivolous argument because the alleged coerced sale of the
Welfenschatz is a taking in violation of international law. Defendants argue that Plaintiffs raise
common-law causes of action in which there is not a complete overlap between the jurisdictional
issue and the merits of the claims. The Court agrees with Defendants that the merits of Plaintiffs’
common law claims do not mirror the jurisdictional standard because in order for this Court to
have jurisdiction, Plaintiffs must demonstrate that the takings were in violation of international
law, a showing that is not required in order to succeed on the merits of their claims. See de Csepel
v. Republic of Hung. (de Csepel III), 169 F. Supp. 3d 143, 157 (D.D.C. 2016) (finding that the
plaintiffs’ claims did not directly mirror the expropriation jurisdictional standard because plaintiffs
relied on a violation of international law exclusively for jurisdictional purposes and not to establish
liability on the merits). As such, the Court shall require that Plaintiffs advance more than a mere
non-frivolous argument with respect to Plaintiffs’ assertion that a taking in violation of
international law is at issue.
Bearing this in mind, the Court now turns to the issue of whether the FSIA’s expropriation
exception gives rise to subject matter jurisdiction in this Court over Plaintiffs’ ten claims. 6 The
Court shall address each of the requirements of the expropriation exception in turn.
6
In their initial motion, Defendants appear to contend that Plaintiffs only advanced their
unjust enrichment claim (Count IV) under the FSIA’s commercial activity exception and not under
the expropriation exception. Defs.’ Mot. at 9. However, the Complaint indicates that Plaintiffs
10
1. Rights in Property
Defendants argue that the Court should dismiss the following five claims because they do
not directly implicate property interests or rights to possession of property: fraud in the inducement
(Count V); breach of fiduciary duty (Count VI); breach of the covenant of good faith and fair
dealing (Count VII); civil conspiracy (Count VIII); and tortious interference (Count X). Instead,
Defendants assert these five claims to “seek damages for allegedly wrongful conduct and are not
property claims concerning the rightful ownership or possession of the Welfenschatz.” Defs.’
Mot. at 12. Indeed, this Court is required to “make FSIA immunity determinations on a claim-by-
claim basis.” Simon, 812 F.3d at 141. In order to meet the requirements of the expropriation
exception, each claim must “‘directly implicat[e] property interests or rights to possession,’ . . . ,
thus satisfying the ‘rights in property . . . in issue’ requirement of § 1605(a)(3).” Id. at 142.
Despite Defendants setting forth this argument in a separate subsection of their motion, see
Defs.’ Mot. at 11-12, Plaintiffs did not directly respond to this argument in their opposition, see
generally Pls.’ Opp’n at 22-39. Defendants in a separate section of their reply brief request that
the Court find Plaintiffs conceded this argument by failing to respond in their opposition. Defs.’
Reply at 4-5. Plaintiffs have not sought leave to file a surreply or otherwise respond to this
argument. Here, Plaintiffs have only alleged that this Court has jurisdiction over the five claims
at issue based on the FSIA’s expropriation exception. As such, the Court shall treat Defendants’
argument as conceded and dismiss these five claims on the basis that this Court lacks subject matter
jurisdiction over these claims. See Hopkins v. Women’s Div., Gen. Bd. of Glob. Ministries, 238 F.
rely on the expropriation exception as a basis for proceeding with their claims, but also rely on the
commercial activity exception only for their unjust enrichment claim. See Compl. ¶¶ 25, 28.
Plaintiffs clarified this point in their opposition, noting “the expropriation exception provides
jurisdiction over all of the Plaintiffs’ claims,” which necessarily includes their unjust enrichment
claim. Pls.’ Opp’n at 39 (emphasis added).
11
Supp. 2d 174, 178 (D.D.C. 2002) (citing FDIC v. Bender, 127 F.3d 58, 67-68 (D.C. Cir. 1997) (“It
is well understood in this Circuit that when a plaintiff files an opposition to a motion to dismiss
addressing only certain arguments raised by the defendant, a court may treat those arguments that
the plaintiff failed to address as conceded.”); Achagzai v. Broad. Bd. of Governors, 109 F. Supp.
3d 67, 70 n.2 (D.D.C. 2015) (points not disputed in opposition to motion to dismiss conceded)
(citing Hopkins, 238 F. Supp. 2d at 178); Youming Jin v. Ministry of State Sec., 335 F. Supp. 2d
72, 82 n.7 (D.D.C. 2004) (applying this principle to arguments regarding the grounds for
jurisdiction).
2. Taking in Violation of International Law
Defendants next contend that Plaintiffs failed to sufficiently plead that the Welfenschatz
was taken in violation of international law. Here, Plaintiffs allege that the 1935 sale was made
under duress as part of the Nazi’s systematic organized plunder of Jewish property in furtherance
of the genocide of the Jewish people during that time. For the reasons described herein, the Court
finds that Plaintiffs sufficiently pled the taking of the Welfenschatz was part of the genocide of the
Jewish people during the Holocaust and, accordingly, violated international law.
The D.C. Circuit has recognized that takings may fall within the expropriation exception
when “the takings of property described in the complaint bear a sufficient connection to genocide
that they amount to takings ‘in violation of international law.’” Simon, 812 F.3d at 142. In such
situations, the expropriations themselves constitute genocide and genocide itself is a clear violation
of international law. Id. As the D.C. Circuit recognized, the generally accepted definition of
genocide for the purposes of customary international law is as follows:
[A]ny of the following acts committed with intent to destroy, in whole or in part, a
national, ethnical, racial or religious group, as such:
(a) Killing members of the group;
12
(b) Causing serious bodily or mental harm to members of the group; [or]
(c) Deliberately inflicting on the group conditions of life calculated to bring about
its physical destruction in whole or in part . . .
Id. at 143 (quoting Convention on the Prevention and Punishment of the Crime of Genocide
(Genocide Convention), art. 2, Dec. 9, 1948, 78 U.N.T.S. 277 (emphasis added)).
In Simon v. Republic of Hungary, the D.C. Circuit considered claims arising out of actions
carried out against Hungary’s Jewish population starting in 1941 with a systematic campaign of
discrimination culminating in the implementation of policies calling for the total destruction of
that population by Hungary’s fanatically anti-Semitic Prime Minister Döme Sztójay between 1944
and 1945. Id. at 133. As the D.C. Circuit noted, the complaint in that case detailed the persecution,
property confiscation and ghettoization, and transport and murder in death camps of the Hungarian
Jewish population during this time period. Id. at 133-34. The claims brought by Jewish survivors
of the Hungarian Holocaust against the Republic of Hungary, a state-owned Hungarian railway,
and an Austrian rail-freight company alleged that Hungary collaborated with the Nazis to
exterminate Hungarian Jews and expropriate their property and that the railway defendants played
an integral role in these efforts by transporting Hungarian Jews to death camps and confiscating
their property. Id.
The D.C. Circuit applied the allegations in that case to the definition of genocide set forth
above and found that the complaint sufficiently alleged takings of property intended to
“[d]eliberately inflict[ ] on the group conditions of life calculated to bring about its physical
destruction in whole or in part to bring about its physical destruction.” Id. at 143 (quoting
Genocide Convention, art. 2(c)). Specifically, the D.C. Circuit explained:
The Holocaust’s pattern of expropriation and ghettoization entailed more than just
moving Hungarian Jews to inferior, concentrated living quarters, or seizing their
13
property to finance Hungary’s war effort. Those sorts of actions would not alone
amount to genocide because of the absence of an intent to destroy a people. The
systematic, “wholesale plunder of Jewish property” at issue here, however, aimed
to deprive Hungarian Jews of the resources needed to survive as a people.
Expropriations undertaken for the purpose of bringing about a protected group’s
physical destruction qualify as genocide.
Id. (internal citation omitted). The D.C. Circuit found the allegations in the complaint to be
sufficient under the FSIA’s expropriation exception because “the complaint describe[d] takings of
property that are themselves genocide within the legal definition of the term” and, as such, takings
in violation of international law. Id. at 144.
The Court finds that, like in Simon, the taking of the Welfenschatz as alleged in the
complaint bears a sufficient connection to genocide such that the alleged coerced sale may amount
to a taking in violation of international law. Plaintiffs sufficiently pled that they were targeted
because they were Jewish sellers in possession of property that was of particular interest to the
Nazi regime. The complaint further includes sufficient allegations that the taking of this property
was in furtherance of the genocide of the Jewish people during the Holocaust. Indeed, in addition
to the allegations highlighted in the background section of this opinion surrounding the 1935
transaction, Plaintiffs describe the hostile environment for Jews in Germany following Adolf
Hitler’s ascension to power in 1933. Compl. ¶¶ 44-65. Plaintiffs allege that members of the
Consortium were particularly vulnerable to persecution because of their ownership of the
Welfenschatz and because of their prominence and success. Id. ¶ 67. Specifically, Plaintiffs assert
that the Geheime Staatspolizei (“the Gestapo”) opened files on members of the Consortium, id.,
and that the members of the Consortium were subject to direct threats of violence for being Jewish
and for trying to sell the Welfenschatz, id. ¶ 10. With this context in mind, the Court finds that
Plaintiffs have sufficiently alleged a taking in violation of international law to satisfy the FSIA’s
expropriation exception.
14
In the interest of completeness, the Court shall address Defendants’ arguments that the
facts at issue in this case are distinguishable from those in Simon. First, Defendants point to the
subject of the alleged taking. Here, Defendants assert that the Consortium’s 1929 purchase of the
Welfenschatz was a business investment because the Consortium planned to flip it for a profit and,
as such, the Welfenschatz was not “property indispensable for individual survival.” Defs.’ Mot.
at 22. Second, Defendants point to the nature of the transaction. Defendants assert that Plaintiffs
merely allege a forced sale for less than market value and not the outright plunder of the
Welfenschatz. Id. The Court is not persuaded by these arguments.
First, the Court finds that expropriating property that Plaintiffs planned to sell for a profit
falls within the definition of genocide that includes deliberately inflicting on the group conditions
of life calculated to bring about its physical destruction in whole or in part. Plaintiffs alleged that
the coerced sale of the Welfenschatz was accomplished to deprive the Consortium of their ability
to earn a living and the motivation for the taking was to deprive the Consortium of resources
needed to survive as a people in furtherance of the genocide of the German Jews during the
Holocaust. C.f. de Csepel III, 169 F. Supp. 3d at 163-64 (noting that the confiscation of artwork
during the Holocaust in furtherance of the Nazis’ campaign of genocide satisfies the elements of
the expropriation exception as recognized by the D.C. Circuit in Simon). Indeed, Plaintiffs allege
that they were specifically targeted because they were Jewish. Further, the fact that there was
money exchanged for the Welfenschatz does not undermine Plaintiffs’ assertion that this was a
sham transaction meant to deprive them of their property as part of the genocide that occurred
during the Holocaust. As another judge in this district noted, “the legislative history of the FSIA
makes clear that the phrase ‘taken in violation of international law’ refers to ‘the nationalization
or expropriation of property without payment of the prompt, adequate, and effective compensation
15
required by international law.” Id. at 166 (quoting H.R. Rep. No. 91-1487, at 19 (emphasis
added)). As such, Plaintiffs’ allegations that the 1935 sale was coerced without adequate and
effective compensation meets the requirements of the expropriation exception of the FSIA.
Finally, Defendants advance an argument that the takings at issue in this case cannot be
one made in violation of international law because Plaintiffs merely argue that Germany
expropriated property of its own nationals. Defs.’ Mot. at 13. In such instances, Defendants
contend that purely domestic taking cannot fall within the expropriation exception and the
“domestic takings” rule as set forth in the Restatement (Third) of Foreign Relations § 712(1) bars
such actions from proceeding in this Court. Id. at 13-14. As the D.C. Circuit explained, “[t]he
domestic takings rule means that, as a general matter, a plaintiff bringing an expropriation claim
involving an intrastate taking cannot establish jurisdiction under the FSIA’s expropriation
exception because the taking does not violate international law.” Simon, 812 F.3d at 144-45.
However, in Simon, the D.C. Circuit expressly rejected the application of the domestic takings rule
in the context of intrastate genocidal takings. Id. at 145. Rather, the D.C. Circuit, tracing the
development of international human rights law, noted that in those circumstances the relevant
international law violation for jurisdictional purposes under the expropriation exception is
genocide, including genocide perpetuated by a foreign state against its own nationals. Id. at 145-
46. In light of the D.C. Circuit’s holding in Simon, the Court rejects Defendants’ argument that
the domestic takings rule precludes the application of the FSIA’s expropriation exception in these
circumstances. In sum, the Court finds Plaintiffs have set forth allegations sufficient to establish
a takings in violation of international law at the motion to dismiss stage based on this record.
16
3. Commercial Activity Nexus
Defendants next allege that Plaintiffs have failed to adequately plead a commercial activity
nexus with respect to Germany. Defendants concede that Plaintiffs have adequately pled a
commercial-activity nexus as to the SPK, an instrumentality of Germany. 7 Defs.’ Mot. at 23. The
FSIA provides two avenues for establishing jurisdiction under the expropriation exception, one
that addresses the commercial activity requirements for a foreign state, like Germany, and one that
addresses the requirements for an instrumentality of a foreign state, like the SPK. As discussed
above, the Court finds that the parties sufficiently pled that the rights in property taken in violation
of international law are at issue. The statute provides that a foreign state, like Germany, is not
immune from a suit when: “that property or any property exchanged for such property is present
in the United States in connection with a commercial activity carried on in the United States by
the foreign state; or that property or any property exchanged for such property is owned or operated
by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged
in a commercial activity in the United States . . . .” 18 U.S.C. § 1605(a)(3) (emphasis added).
The crux of the issue before the Court is whether Plaintiffs must satisfy both clauses, the
first to proceed against Germany and the second to proceed against its instrumentality SPK, or
whether the two clauses present alternative requirements and, as such, Plaintiffs need to only
satisfy one requirement to proceed. If Plaintiffs are only required to satisfy one clause, they would
7
With respect to the SPK, Plaintiffs must show “that [the Welfenschatz] or any property
exchanged for [the Welfenschatz] is owned or operated by [the SPK] and that [the SPK] is engaged
in a commercial activity in the United States.” See 28 U.S.C. § 1605(a)(3). As the FSIA explains:
“A ‘commercial activity’ means either a regular course of commercial conduct or a particular
commercial transaction or act. The commercial character of an activity shall be determined by
reference to the nature of the course of conduct or particular transaction or act, rather than by
reference to its purpose.” Id. § 1603(d).
17
not need to make any additional showing since Defendants concede that Plaintiffs have satisfied
the commercial-activity nexus requirement with respect to the SPK. 8
The parties point to two D.C. Circuit opinions that seem to suggest different requirements.
In Agudas Chasidei Chabad v. Russian Federation, 528 F.3d 934 (D.C. Cir. 2008), the D.C. Circuit
noted that the two clauses “specify[ ] alternative commercial activity requirements.” 9 Id. at 946;
see also id. at 948 (finding the “second alternative commercial activity requirement” was clearly
satisfied). The use of the word “or” to separate the two clauses in the statute would seem to support
this reading. However, in Simon, the D.C. Circuit recognized that “the nexus requirement differs
somewhat for claims against the foreign state itself [like Germany] . . . as compared with claims
against an agency or instrumentality of a foreign state [like the SPK] . . . .” Simon, 812 F.3d at
146. As the Simon court explained:
As to the claims against [a foreign state], the question is whether the ‘property [in
issue] or any property exchanged for such property is present in the United States
in connection with a commercial activity carried on in the United States by the
foreign state.’ As to the claims against [an instrumentality], the question is whether
the ‘property [in issue] or any property exchanged for such property is owned or
operated by an agency or instrumentality of the foreign state and that agency or
instrumentality is engaged in a commercial activity in the United States.’
8
Plaintiffs’ briefing seems to conflate the analysis under the two separate clauses and
does not separately analyze the requirements for a foreign state and an instrumentality. See Pls.’
Opp’n at 35-39.
9
In Chabad, the D.C. Circuit parsed the language of the expropriation exception as
follows:
[A] rights in property taken in violation of international law are in issue and [B] [1]
that property or any property exchanged for such property is present in the United
States in connection with a commercial activity carried on in the United States by
the foreign state; or [2] that property or any property exchanged for such property
is owned or operated by an agency or instrumentality of the foreign state and that
agency or instrumentality is engaged in a commercial activity in the United States
....
Chabad, 528 F.3d at 946-47.
18
Id. (internal citations omitted). As such, Simon suggests that to proceed on claims against a foreign
state like Germany, Plaintiffs must meet the requirements of the first clause and to proceed on
claims against an instrumentality such as the SPK, Plaintiffs must meet the requirements of the
second clause.
The Court is persuaded by the analysis of District Judge Christopher R. Cooper with respect
to this issue in Helmerich & Payne International Drilling Co. v. Bolivarian Republic of Venezuela,
185 F. Supp. 3d 233, 239-42 (D.D.C. 2016). In Helmerich, Judge Cooper raised several important
points: (1) Simon did not ignore or distinguish Chabad, but instead appeared to apply it; (2) the
D.C. Circuit denied the request for a rehearing on this issue in Simon; (3) to follow Chabad would
require deviating from Simon’s directive that to proceed against a foreign state, the first
commercial-nexus requirement must be met (as is the case here); and (4) this issue was not argued
or briefed in Chabad or Simon. Id. at 241-42. However, as Judge Cooper noted, while the Court
seems bound by the precedent in Chabad, “the D.C. Circuit’s clear articulation of a contrary rule
in Simon and its implicit view that the new rule is consistent with—and perhaps even based on—
Chabad places the Court in somewhat of a quandary.” Id. at 242. Ultimately, Judge Cooper
deferred ruling on the issue without further briefing. At this juncture, the Court deems it
appropriate to follow the D.C. Circuit’s ruling in Chabad and allow the claims against Germany
to proceed because it is uncontested that Plaintiffs have sufficiently pled the second requirement
of the commercial-activity nexus. 10 However, the parties are not precluded from raising this issue
at a later juncture with more fulsome briefing.
10
Plaintiffs pled that the Welfenschatz is featured in books and guidebooks produced by the
SPK that are for sale in the United States, and that Germany engages in painting and exhibition
loans with museums in the United States. See generally Compl. ¶ 26.
19
In sum, the Court finds that it has subject matter jurisdiction over five of Plaintiffs’ ten
claims pursuant to the expropriation exception of the FSIA. As such, the Court shall deny
Defendants’ request to dismiss the following claims on that basis: declaratory relief (Count I);
replevin (Count II); conversion (Count III); unjust enrichment (Count IV); and bailment (Count
IX). Further, the Court finds that it does not have subject matter jurisdiction over the following
five claims because these claims do not directly implicate property interests or rights to possession:
fraud in the inducement (Count V); breach of fiduciary duty (Count VI); breach of the covenant of
good faith and fair dealing (Count VII); civil conspiracy (Count VIII); and tortious interference
(Count X). Accordingly, the Court shall dismiss only those five claims as Plaintiffs have not
demonstrated that those claims fall within one of the FSIA’s exceptions that would give rise to this
Court’s jurisdiction over a foreign state and its instrumentality.
B. Preemption and Non-Justiciability
Defendants next argue that the Court should dismiss Plaintiffs’ claims because they are
preempted and because they run afoul of international comity. Specifically, Defendants assert that
U.S. foreign policy encourages parties to pursue their claims related to Nazi-looted art through
dispute resolution mechanisms established under the multinational Washington Conference
Principles on Nazi-Confiscated Art. In this instance, Defendants argue that Plaintiffs’ claims in
this Court are preempted because they already have been adjudicated through Germany’s Advisory
Commission, which was created to hear such claims under the Washington Principles, and the
Commission determined that there was not a compulsory sale of the Welfenschatz due to
persecution. Defendants also allege that international comity requires the Court to defer to the
decision of the Advisory Commission or, in the alternative, require Plaintiffs to first litigate their
20
claims in Germany. The Court shall first address Defendants’ preemption arguments and then
shall turn to Defendants’ arguments concerning international comity.
1. Preemption
Defendants assert that modern U.S. policy towards recovered art reflects the preference
that claims be decided through alternative dispute resolution mechanisms like Germany’s
Advisory Commission. The Court shall first provide a brief history of the developments in U.S.
foreign policy that Defendants argue support their position that Plaintiffs’ claims are preempted
by the decision of Germany’s Advisory Commission. The Court shall then address the substance
of Defendants’ preemption argument.
The United States convened the Washington Conference on Holocaust Era Assets in 1998
to develop an equitable approach to Nazi-looted art given some of the inadequacies that previously
existed in the processes for dealing with such claims. See Defs.’ Mot. at 32; Compl. ¶ 196. To
that end, the Washington Conference agreed upon a set of non-binding principles to “expeditiously
. . . achieve a just and fair solution” to claims of Nazi-confiscated art. Defs.’ Mot. at 32 (quoting
Von Saher v. Norton Simon Museum of Art, 754 F.3d 712, 721 (9th Cir. 2014)). “[T]he Principles
[also] encouraged nations ‘to develop national processes to implement these principles,’ including
alternative dispute resolution.” Von Saher, 754 F.3d at 721. Defendants also point to the Terezin
Declaration issued after the Prague Holocaust Era Assets Conference, in 2009, which was a follow-
up to the Washington Conference. Compl. ¶¶ 201-02. The Terezin Declaration reaffirmed the
Washington Principles and noted “Governments should consider all relevant issues when applying
various legal provisions that may impede the restitution of art and cultural property, in order to
achieve just and fair solutions, as well as alternative dispute resolution, where appropriate under
law.” Id. ¶ 202. Defendants’ position is that the Washington Principles and the Terezin
21
Declaration clearly demonstrate a preference for the resolution of claims related to Nazi-looted art
through mediation rather than litigation, and encourage use of alternative dispute resolution
mechanisms. Defs.’ Mot. at 33, 40. The Court notes that although the proceedings before the
Advisory Commission are a form of alternative dispute resolution, they do not constitute a
mediation as it is known. Moreover, Defendants argue that the State Department’s position is to
defer to other nations’ alternative dispute resolution proceedings under the Washington Principles.
Id. at 33-35 (citing an amicus brief filed before the Supreme Court of the United States and a press
statement issued by then-Secretary of State Hillary Rodham Clinton).
The parties point to the following summary of U.S. policy on restitution of Nazi-looted art
as described by the United States Court of Appeals for the Ninth Circuit:
(1) a commitment to respect the finality of “appropriate actions” taken by foreign
nations to facilitate the internal restitution of plundered art; (2) a pledge to identify
Nazi-looted art that has not been restituted and to publicize those artworks in order
to facilitate the identification of prewar owners and their heirs; (3) the
encouragement of prewar owners and their heirs to come forward and claim art that
has not been restituted; (4) concerted efforts to achieve expeditious, just and fair
outcomes when heirs claim ownership to looted art; (5) the encouragement of
everyone, including public and private institutions, to follow the Washington
Principles; and (6) a recommendation that every effort be made to remedy the
consequences of forced sales.
Von Saher, 754 F.3d at 721. As Plaintiffs correctly point out, this language does not
preclude seeking resolution of their claims through litigation, especially where, as here,
Plaintiffs sought a remedy through the procedures put in place in Germany in accordance
with the Washington Principles. 11
11
Defendants’ preemption challenge centers around U.S. foreign policy as expressed by
the Executive Branch to date and, as such, that is the focus the Court’s discussion. However, the
position of Congress appears consistent with the position of the Executive Branch as to the
resolution of claims related to Nazi-looted art. Indeed, the Holocaust Expropriated Art Recovery
Act of 2016, H.R. 6130, Pub. L. No. 114-308 (“HEAR Act”), which was signed into law on
December 16, 2016, reflected Congress’ preference that disputes such as the one at issue here be
22
In 2003, Germany created the Advisory Commission in light of the Washington Principles
and after the German Federal Government, the German Länder, and the German National
Associations of Local Authorities issued a Joint Declaration related to tracing and returning Nazi-
looted art. Defs.’ Mot. at 35-36. In 2012, Plaintiffs submitted their claim regarding the
Welfenschatz to the Commission. Id. at 36; Compl. ¶ 220. After hearing the evidence including
testimony from five experts presented by Plaintiffs, the Commission did not recommend the
restitution of the Welfenschatz. Compl. ¶¶ 221, 224. Defendant chose not to present evidence to
the contrary. Id. ¶ 223. It is undisputed by the parties that the Commission’s recommendation is
non-binding and Defendants would not have been required to return the Welfenschatz even if that
had been the Commission’s recommendation. Compl. ¶ 235; Defs.’ Mot. at 39 n.16; Defs.’ Reply
at 15 n.7. Defendants now argue that Plaintiffs’ state law claims are preempted because allowing
these claims to proceed in this Court would undercut U.S. foreign policy on Nazi-looted art.
Defendants primarily rely on the Supreme Court of the United States’ opinion in American
Insurance Association v. Garamendi, 539 U.S. 396 (2003), and the United States District Court
for the Southern District of New York’s application of that opinion in In re Assicurazioni Generali
resolved by alternative dispute resolution processes but did not preclude the possibility of litigating
such claims. In relevant part, the HEAR Act includes the following Congressional finding:
While litigation may be used to resolve claims to recover Nazi-confiscated art, it is
the sense of Congress that the private resolution of claims by parties involved, on
the merits and through the use of alternative dispute resolution such as mediation
panels established for this purpose with the aid of experts in provenance research
and history, will yield just and fair resolutions in a more efficient and predictable
manner.
HEAR Act § 2(8) (emphasis added). It is clear from the text of the HEAR Act that Congress
specifically recognized and did not foreclose the use of litigation as a means to resolve claims to
recover Nazi-confiscated art. As such, the Court agrees with Plaintiffs that the HEAR Act supports
their argument that U.S. policy does not conflict with Plaintiffs’ ability to pursue their claims in
this Court.
23
S.P.A. Holocaust Ins. Litig., 340 F. Supp. 2d 494 (S.D.N.Y. 2004), aff’d, 592 F.3d 113 (2d Cir.
2010), cert. denied, 562 U.S. 952 (2010), in support of their argument. For the reasons described
herein, this Court is not persuaded that these cases support Defendants’ preemption argument.
In Garamendi, the Supreme Court addressed the issue of claims-based on insurance
policies issued to Jews before and during World War II, the proceeds of which were either paid to
the Third Reich or never paid at all. Garamendi, 539 U.S. at 402-03. At issue were two procedures
put in place to address such claims, one based on an agreement between the President of the United
States and the German Chancellor and one enacted by the state of California. The Court shall
briefly address each in turn as such background is relevant in distinguishing the issue in that case
from the one in the instant action.
After multiple class-action lawsuits seeking restitution for such insurance claims poured
into the United States, negotiations between the German Chancellor and the President of the United
States produced an executive agreement through which Germany agreed to enact legislation to
create a foundation funded by a voluntary compensation fund contributed to equally by the German
Government and German companies. Id. at 405. In exchange, the United States agreed to file a
notice in all related cases brought in U.S. courts indicating that it was the U.S. Government’s
position that foreign policy interests support the foundation as the exclusive forum and remedy for
resolution of all such claims. Id. at 406. Further, the United States agreed to use its “best efforts”
to get state and local governments to respect the foundation as the exclusive mechanism for
resolving these claims. Id. With respect to insurance claims, the countries agreed that the
foundation would work with the International Commission on Holocaust Era Insurance Claims
(ICHEIC), which negotiated with European insurers to get information on unpaid policies issued
to Holocaust victims and worked to settle claims under those identified policies. Id. at 406-07.
24
Germany stipulated that insurance claims within the scope of the handling procedures adopted by
the ICHEIC against German companies shall be processed based on procedures of the ICHEIC
and any additional procedures agreed to by the foundation, the ICHEIC, and the German
Insurances Association. Id. at 407.
Meanwhile, California enacted a state statute making it an unfair business practice for
insurers operating in California to fail to pay any valid claim from a Holocaust survivor and
enacted a subsequent statute that allowed California residents to sue in state court on insurance
claims based on acts perpetrated during the Holocaust. Id. at 409. At issue in Garamendi was a
portion of the state statute that required all insurers currently doing business in California to
disclose the details of insurance policies issued to persons in Europe which were in effect between
1920 and 1945. Id. The California legislation specifically acknowledged that while the
international Jewish community was in active negotiations to resolve all outstanding claims
through the ICHEIC, it still deemed the state legislation necessary to protect the claims of
California residents. Id. at 410-11. In response to the enactment of the California legislation,
Deputy Secretary of the Treasury Stuart Eizenstat wrote both to the insurance commissioner and
the governor of California to express concern regarding the California statute, and noting that such
actions by the state government threatened to damage the ICHEIC and related diplomatic relations
with Germany. Id. at 411.
Several American and European insurance companies and a national trade association filed
suit against the insurance commissioner of California to challenge the constitutionality of the state
statute. Id. at 412. The Supreme Court recognized that “at some point an exercise of state power
that touches on foreign relations must yield to the National Government’s policy, given the
‘concern for uniformity in this country’s dealings with foreign nations’ that animated the
25
Constitution’s allocation of the foreign relations power to the National Government in the first
place.” Id. at 413. The Court also noted that generally there is executive authority to determine
the policy of the United States government in foreign affairs. Id. at 414. The Supreme Court
acknowledged, “At a more specific level, our cases have recognized that the President has authority
to make ‘executive agreements’ with other countries, requiring no ratification by the Senate or
approval by Congress, this power having been exercised since the early years of the Republic.”
Id. at 415. While the Supreme Court noted that the text of the executive agreement at issue did
not have a preemption clause, the Court nevertheless found that the state statute was in clear
conflict with the federal policy and, as such, was preempted. Id. at 420-25. The Supreme Court
specifically found that with respect to insurance claims, the national opinion as expressed in the
executive agreements signed by the President has been to encourage European insurers to work
with the ICHEIC to develop claim procedures, a position that was repeatedly supported by high
levels of the Executive Branch. Id. at 421-22.
In Assicurazioni Generali, the U.S. District Court for the Southern District of New York
applied Garamendi to claims brought against an Italian insurer based on policies in Europe before
and during World War II under several state statutes and common law, as well as customary
international law. There, the district court dismissed the plaintiffs’ claims finding that pursuant to
the Supreme Court’s holding in Garamendi, “[l]itigation of Holocaust-era insurance claims, no
matter the particular source of law under which the claims arise, necessarily conflicts with the
executive policy favoring voluntary resolution of such claims through ICHEIC.” Assicurazioni
Generali, 340 F. Supp. 2d at 501.
The Court finds the reasoning in Garamendi to be inapplicable to the facts of the instant
action for a number of reasons. First, Garamendi dealt with the applicability of a state statute
26
setting forth a process for addressing claims that already were covered by a process set forth in an
executive agreement signed by the President of the United States. Defendants appear to assert that
this action brings claims akin to actions brought under a state statute because Plaintiffs advance
claims rooted in common law even though those claims are brought in federal court under an
exception to the FSIA. While the issue of preemption was not directly addressed, the Court notes
that in Simon, the D.C. Circuit permitted common law property-based claims, like the ones here,
to proceed against a foreign state pursuant to the FSIA’s expropriation exception.
Second, there does not appear to be a direct conflict between the property-based common
law claims raised by Plaintiffs and foreign policy as expressed by the President. Indeed, in
Garamendi, the executive agreement at issue clearly contemplated the U.S. Government taking
active steps to declare its view that U.S. foreign policy interests supported the notion that the
ICHEIC should be the exclusive mechanism for resolution of these types of insurance-related
claims. Specifically, the U.S. Government agreed to submit a statement in cases in which a
German company was sued on a Holocaust-era claim in an American court. Second, recognizing
that the filing of such statements may not provide an American court with an independent basis
for dismissal, the U.S. Government agreed to tell courts that U.S. policy grounds favor dismissal
on any valid legal ground. Further, the U.S. Government “promised to use its ‘best efforts, in a
manner it considers appropriate,’ to get state and local governments to respect the foundation as
the exclusive mechanism.” Garamendi, 539 U.S. at 406.
The U.S. Government made no such assurances that it would submit statements expressing
its view that U.S. foreign policy supports all claims related to Nazi-looted art being resolved
through alternative dispute mechanisms when such claims are pursued in American courts.
Further, Defendants do not point to any statements made by the Executive Branch that such
27
alternative dispute mechanisms set up in accordance with the Washington Principles should be the
exclusive mechanism for resolving such claims. Rather, the statements of U.S. foreign policy
related to such claims demonstrate only that this is the preferred mechanism for addressing such
claims. The United States acknowledged this point in an amicus brief filed in the Supreme Court
and cited by the Defendants in their briefing. Brief for the United States as Amicus Curiae, Von
Saher v. Norton Simon Museum of Art, No. 09-1254 (U.S. May 27, 2011), 2011 WL 2134984, at
*15, cert. denied, 564 U.S. 1037 (“Unlike in Garamendi, the United States has not entered into
Executive Agreements with foreign governments to resolve contemporary claims for Holocaust
art, and it has supported the just and equitable resolution of claims from that era.”).
This is a logical distinction. The Garamendi Court tackled an executive agreement that
established the formation of the ICHEIC, procedures for identifying and processing claims through
same, and a system for funding the recovery of such claims. This is not the type of comprehensive
scheme contemplated by the Washington Principles and the Terezin Declaration. Rather, the
Washington Principles were agreed-upon, non-binding principles entered into by 13
nongovernmental organizations and 44 governments that encouraged nations to develop national
processes, including alternative dispute resolution processes, to implement these principles. As
such, the executive agreement itself did not establish such processes but only provided guidance
for doing so to the stakeholders. 12
12
The Court notes that while Defendants in the instant action have not pointed to a direct
statement made by the President, it may be sufficient that such statements were made by high-
level executive officials. Indeed, the majority in Garamendi noted:
The dissent would also dismiss the other Executive Branch expressions of the
Government’s policy, insisting on nothing short of a formal statement by the
President himself. But there is no suggestion that these high-level executive
officials were not faithfully representing the President’s chosen policy, and there is
28
Third, Plaintiffs rely on an amicus brief filed by the United States in a case before the
Supreme Court in which the Supreme Court ultimately denied certiorari. See generally Brief for
the United States as Amicus Curiae, Von Saher, No. 09-1254 (U.S. May 27, 2011), 2011 WL
2134984. In that case, the United States advanced its view that:
[I]t is United States policy to support both the just and fair resolution of claims to
Nazi-confiscated art on the merits and the return of such art to its rightful owner.
But that policy does not support relitigation of all art claims in U.S. courts. Neither
the Washington Principles nor the Terezin Declaration takes an explicit position in
favor of or against the litigation of claims to Nazi-confiscated art. Rather, they
encourage resort to alternative dispute resolution, so that such claims may be
resolved as justly, fairly, and expeditiously as possible.
Id. at *18. The United States went on to explain: “When a foreign nation . . . has conducted bona
fide post-war internal restitution proceedings following the return of Nazi-confiscated art to that
nation under the external restitution policy, the United States has a substantial interest in respecting
the outcome of that nation’s proceedings.” Id. at *19. As such, the United States’ own statement
of its foreign policy undercuts Defendants’ request for dismissal. Indeed, the United States notes
that neither the Washington Principles nor the Terezin Declaration explicitly take a position
regarding the litigation of Nazi-confiscated art claims. Further, the United States does
acknowledge a “substantial interest” in respecting the outcome of a nation’s “bona fide post-war
internal restitution proceedings.” However, here, Plaintiffs have sufficiently pled that the
Advisory Commission proceedings were not bona fide proceedings but rather specifically allege
that it was a “sham process” that was conducted inconsistently with “internationally accepted
principles and precedents (among others),” Compl. ¶ 221, and resulting in a “politically-motivated
no apparent reason for adopting the dissent’s “nondelegation” rule to apply within
the Executive Branch.
Garamendi, 539 U.S. at 424 n.13 (internal citations omitted).
29
decision,” id. ¶ 222, that failed to address Plaintiffs’ uncontested expert testimony, id. ¶ 227-28.
At the motion to dismiss stage, the Court finds such allegations sufficient to allow the claims to
proceed as U.S. foreign policy supports the just and fair resolution of claims to Nazi-confiscated
art.
2. Non-justiciability
Defendants also contend that Plaintiffs’ claims are non-justiciable due to international
comity and, as such, should be dismissed. Here, Defendants argue that international comity
requires that the Court defer to the Advisory Commission or, in the alternative, requires that
Plaintiffs exhaust their remedies in Germany. The Court shall first address Defendants’ argument
that international comity requires this Court to defer to the decision of the Advisory Commission.
The Court shall then address Defendants’ argument that international comity requires Plaintiffs to
exhaust their remedies in Germany before proceeding in this Court.
The term “‘[c]omity’ summarizes in a brief word a complex and elusive concept—the
degree of deference that a domestic forum must pay to the act of a foreign government not
otherwise binding on the forum.” de Csepel v. Republic of Hung. (de Csepel II), 714 F.3d 591,
606 (D.C. Cir. 2013) (quoting Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d
909, 937 (D.C. Cir. 1984)). The D.C. Circuit explained that “‘the merits of the case should not, in
an action brought in this country upon the judgment, be tried afresh’ based ‘upon the mere assertion
of the party that the judgment was erroneous in law or in fact,” id., provided:
there has been opportunity for a full and fair trial abroad before a court of competent
jurisdiction, conducting the trial upon regular proceedings, after due citation or
voluntary appearance of the defendant, and under a system of jurisprudence likely
to secure an impartial administration of justice between the citizens of its own
country and those of other countries, and there is nothing to show either prejudice
in the court, or in the system of laws under which it was sitting, or fraud in procuring
the judgment, or any other special reason why the comity of this nation should not
allow it full effect . . . .
30
Id. (quoting Hilton v. Guyot, 159 U.S. 113, 202-03 (1895)).
Defendants first assert that international comity requires the Court to defer to the decision
of the Advisory Commission. In essence, Defendants’ argument appears to be either that the
Advisory Commission’s decision is unreviewable or that Plaintiffs have failed to sufficiently plead
a basis for reviewing the Commission’s decision. Defendants have pointed to no authority that
would preclude judicial review of a decision made by a commission set up in accordance with the
non-binding, agreed upon Washington Principles, particularly in light of Plaintiffs’ uncontested
assertion that the parties are not bound by the Commission’s decision even if it recommends the
return of the property at issue. Here, Plaintiffs allege that the Commission’s decision was not
supported by the uncontested evidence presented by Plaintiffs and that the proceeding itself was a
“sham.” Compl. ¶¶ 3, 224-25. Indeed, Plaintiffs claim that:
[T]he Advisory Commission heard from five experts who established the context
surrounding the sale at issue by showing (i) the actual market value of the collection
in 1935; 11.6 Million RM; (ii) the law applicable to the sale; (iii) the historical
background which supports the claim that the sale in issue was coercive and made
under duress—and certainly cannot be characterized as one governed by free will
and free choice in an open market; and (iv) the art dealers were the sole owners of
the collection.
Id. ¶ 224. Further, Plaintiffs contend that the Commission did not incorporate these uncontested
findings into their recommendation and argue that “[i]gnoring the experts entirely in an otherwise
detailed opinion undermines the credibility of the report by the Advisory Commission.” Id. ¶¶
227-28. The Court finds that these allegations along with the other allegations in the complaint
are sufficient to provide a plausible basis for review. In reaching this holding, the Court simply
finds that Plaintiffs’ allegations as set forth in the complaint are sufficient to survive a motion to
dismiss on this issue. However, the Court expresses no other opinion regarding the validity or
prudence of the Commission’s decision related the Welfenschatz.
31
Defendants next assert that Plaintiffs are required to exhaust their remedies in Germany
before bringing an action in this Court. The issue of whether international comity requires a
plaintiff to exhaust remedies in a foreign state prior to bringing an action under an exception to the
FSIA has not been squarely addressed by the D.C. Circuit. However, the United States Court of
Appeals for the Seventh Circuit (“Seventh Circuit”) expressly tackled the issue in Fischer v.
Magyar Allamvasutak Zrt, 777 F.3d 847 (7th Cir. 2015), cert. denied, -- U.S. --, 135 S. Ct. 2817
(2015). In Fischer, the Seventh Circuit recognized that the text of the FSIA’s expropriation
exception does not include an exhaustion requirement. Id. at 859. However, the Seventh Circuit
held that the defendants could invoke “the well-established rule that exhaustion of domestic
remedies is preferred in international law as a matter of comity.” Id. As such, the Fischer court
required plaintiffs “to show either that they exhausted any available . . . remedies [in the foreign
state] or that there was a legally compelling reason to excuse such an effort.” Id. In reaching this
holding, the Fischer court relied primarily on an earlier Seventh Circuit opinion in Abelesz v.
Magyar Nemzeti Bank, 692 F.3d 661 (7th Cir. 2012), and §§ 712 and 713 of the Restatement
(Third) of the Foreign Relations Law of the United States.
Given that the Seventh Circuit did not rely on any binding precedent in this jurisdiction,
the Court next turns to precedent from the D.C. Circuit. In Chabad, the D.C. Circuit addressed a
district court’s holding that a plaintiff was not required to exhaust remedies in Russia before
litigating the case in the United States. Chabad, 528 F.3d at 948. The D.C. Circuit opined this
result was “likely correct,” but found that the issue need not be reached on appeal because Russia
identified plainly inadequate remedies. Id. Specifically, the D.C. Circuit noted that a different
section of the FSIA previously contained a local exhaustion requirement that required foreign
states to be provided the opportunity to arbitrate certain claims, but that provision was repealed by
32
Congress in 2008. Id. The D.C. Circuit noted that although the exhaustion requirement was
repealed, its original inclusion supported the inference that “Congress’s inclusion of a provision
in one section strengthens the inference that its omission from a closely related section [here, the
expropriation exception] must have been intentional.” Id. at 948. The D.C. Circuit in Chabad,
like the Seventh Circuit in Fischer, also addressed the language of the Restatement (Third) of the
Foreign Relations Law of the United States, which provides:
Exhaustion of remedies. Under international law, ordinarily a state is not required
to consider a claim by another state for an injury to its national until that person has
exhausted domestic remedies, unless such remedies are clearly sham or inadequate,
or their application is unreasonably prolonged.
Restatement § 713, cmt. f. The D.C. Circuit distinguished this provision from the facts of that
case, noting that the Restatement addressed claims of one state against another, or nation v. nation
litigation. Chabad, 528 F.3d at 949. However, the FSIA’s expropriation exception involves the
claims of an individual of one state against another state and, as such, “there is no apparent reason
for systematically preferring the courts of the defendant state.” 13 Id.
In Simon, the D.C. Circuit again touched on the issue. Specifically, the D.C. Circuit noted
that the Seventh Circuit in Fischer found persuasive the prudential exhaustion argument that “the
court . . . should decline to exercise jurisdiction as a matter of international comity unless the
plaintiffs first exhaust domestic remedies (or demonstrate that they need not do so).” Simon, 812
F.3d at 149. However, the D.C. Circuit declined to address the issue because it was not before that
13
The D.C. Circuit also addressed Justice Stephen G. Breyer’s concurrence in Republic of
Austria v. Altmann, 541 U.S. 677 (2004). The D.C. Circuit characterized Justice Breyer’s
argument regarding exhaustion as follows, “there simply is no unlawful taking if a state’s courts
provide adequate postdeprivation remedies.” Chabad, 528 F.3d at 949. However, the D.C. Circuit
suggested that this substantive theory advanced by Justice Breyer would appear “to moot the
argument from the language of the FSIA and is independent of Restatement § 713.” Id.
33
Court on appeal. Id. Rather, the D.C. Circuit noted that the district court on remand should
consider the issue if it is raised by the defendants. Id.
In de Csepel, another district judge in this jurisdiction, Judge Ellen Segal Huvelle,
addressed the issue of whether the court should decline to exercise jurisdiction as a matter of
international comity unless plaintiffs first exhausted their remedies in Hungary or demonstrated
that such efforts would be futile. de Csepel III, 169 F. Supp. 3d at 169. After tracing the language
of the Restatement and the D.C. Circuit’s discussion in Chabad, the de Csepel court noted that
“both international and domestic courts (including the D.C. Circuit) have reasonably construed the
prudential theory of exhaustion to be inapplicable to causes of action brought by individuals and
not states.” Id. at 169 (emphasis added). In light of that finding, the court respectfully declined to
apply the Seventh Circuit’s holding in Fischer and rejected the defendants’ exhaustion argument
based on international comity. Id. However, the de Csepel court stated in a footnote that even if
the court agreed with the Seventh Circuit’s application of the exhaustion requirement based on
international comity, the court still found that the plaintiffs had adequately shown that efforts to
seek a remedy in Hungary would have been futile. Id. at 169 n.15.
Here, absent binding precedent from the D.C. Circuit, the Court is persuaded by Judge
Huvelle’s analysis in de Csepel and is inclined to agree that the prudential exhaustion requirement
based on international comity is not applicable to cases, such as this one, which are brought by
individuals against the a foreign state. The Court further notes that even if it were inclined to apply
the prudential exhaustion requirement, it would decline to do so based on this record without first
affording the parties an opportunity to provide further, targeted briefing on the adequacy of
available remedies in Germany.
34
C. Doctrine of Forum Non Conveniens
Finally, Defendants argue that the Court should dismiss Plaintiffs’ claims based on the
doctrine of forum non conveniens. Forum non conveniens is a discretionary doctrine that permits
a federal court to dismiss an action in favor of its resolution in a court of foreign state. Sinochem
Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S. 422, 429 (2007). “The forum non conveniens
analysis calls for the court to consider ‘(1) whether an adequate alternative forum for the dispute
is available and, if so, (2) whether a balancing of private and public interest factors strongly favors
dismissal.’” de Csepel II, 714 F.3d at 605 (quoting Chabad, 528 F.3d at 950). Specifically, an
action may be dismissed when there is an alternative forum available and “‘trial in the chosen
forum would establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to
plaintiff’s convenience, or . . . the chosen forum [is] inappropriate because of considerations
affecting the court’s own administrative and legal problems.’” Sinochem, 549 U.S. at 429 (quoting
American Dredging Co. v. Miller, 510 U.S. 443, 447-48 (1994)). “Dismissal for forum non
conveniens reflects a court’s assessment of a ‘range of considerations, most notably the
convenience to the parties and the practical difficulties that can attend the adjudication of a dispute
in a certain locality.’” Id. (quoting Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 723 (1996)).
Moreover, a defendant invoking the doctrine bears a heavy burden in challenging a plaintiff’s
chosen forum. Id. at 430. However, “[w]hen the plaintiff’s choice is not its home forum, . . . the
presumption in the plaintiff’s favor ‘applies with less force,’ for the assumption that the chosen
forum is appropriate is in such cases ‘less reasonable.’” Id. (quoting Piper Aircraft Co. v. Reyno,
454 U.S. 235, 255-56 (1981)). For the reasons described herein, the Court shall not exercise its
discretion to dismiss Plaintiffs’ claims based on the doctrine of forum non conveniens.
35
1. Alternative Forum
Defendants contend that Germany is an available and adequate forum for Plaintiffs to
pursue their claims. See generally Defs.’ Mot. at 53-55. Plaintiffs argue that Germany is not an
adequate forum “because of the inability of [P]laintiffs even to bring the claims, Germany’s lack
of coherent policy generally toward victims of Nazi-looted art, and the unfair treatment that
Plaintiffs specifically have already suffered as a result of the Advisory Commission’s
recommendation.” Pls.’ Opp’n at 57.
The parties submitted competing opinions from experts on the German legal system
regarding the sufficiency of German courts as a forum to adjudicate Plaintiffs’ claims in support
of their respective positions. See generally Defs.’ Mot., Ex. A (Declaration of Prof. Dr. Christian
Armbrüster); Id., Ex. B (Declaration of Prof. Dr. Jan Thiessen); Pls.’ Opp’n, Ex. 1 (Declaration of
Prof. Dr. Stephan Meder); Defs.’ Reply, Ex. A (Supp. Declaration of Prof. Dr. Jan Thiessen); Id.,
Ex. B (Supp. Declaration of Prof. Dr. Christian Armbrüster). Specifically, these expert opinions
differ as to whether Plaintiffs would be able to pursue their claims in German courts. See, e.g.,
Theissen Decl. at 15 (“German courts would have jurisdiction over this lawsuit. There are various
legal provisions on which a plaintiff could base a claim. Thus, the plaintiffs would not be excluded
from the outset with their claims as alleged in the First Amended Complaint.”); Meder Decl. at 33
(“From my point of view, and in consideration of the legal framework, the literature and the legal
precendent [sic], the matter of asserting and enforcing these claims in Germany before German
courts must be at best affirmed theoretically (in contrast to the assertion by Thiessen), but is de
facto excluded from a practical point of view.”); Id. at 38 (“The plaintiffs Alan Philipp, Gerald
Stiebel, and Jed Leiber cannot pursue the claims asserted before the District of Columbia in
Washington D.C. before German courts.”).
36
In the Court’s analysis under the forum non conveniens doctrine, the first step is to consider
whether there is an available forum before moving to the next steps of the analysis. The Court has
considered the competing information regarding the availability of causes of action for Plaintiffs
if their claims were pursued in Germany. However, regardless of the adequacy of Germany as a
forum to adjudicate the claims at issue, which is disputed by the parties, the Court finds that it
would not exercise its discretion to dismiss the claims under the forum non conveniens doctrine
based on the balance of the private and public interests at play. As such, the Court shall not reach
a decision on this issue. The Court deems this course to be appropriate particularly because
Defendants carry the burden of demonstrating this requirement in support of dismissal. El-Fadl v.
Central Bank of Jordan, 75 F.3d 668, 677 (D.C. Cir. 1996). In light of this decision, the Court
shall not address the parties’ arguments regarding the application of the statute of limitations to
Plaintiffs’ claims should they be raised in a German court and, relatedly, Defendants’ concession
that it would not raise a statute of limitations defense if this Court required Plaintiffs to first pursue
their claims in a German court.
2. Private Interests
The Supreme Court provided the following guidance when considering private interests in
the forum non conveniens analysis:
Important considerations are the relative ease of access to sources of proof;
availability of compulsory process for attendance of unwilling, and the cost of
obtaining attendance of willing, witnesses; possibility of view of premises, if view
would be appropriate to the action; and all other practical problems that make trial
of a case easy, expeditious and inexpensive. There may also be questions as to the
enforceability of a judgment if one is obtained. The court will weigh relative
advantages and obstacles to fair trial.
Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947), superseded on other grounds as recognized
in Quackenbush, 517 U.S. at 722.
37
Defendants set forth three main arguments to support their contention that private interest
factors strongly favor dismissal: (1) Plaintiffs’ claims center on German-language documents
located in German historical archives, many of which have not been digitized and would require
translation; (2) German law is likely applicable because the relevant events occurred in Germany
and involved the German Government, German nationals, and German legal entities; and (3) this
Court’s judgement is potentially unenforceable in Germany without a separate action from a
German court. See generally Defs.’ Mot. at 55-61. In response, Plaintiffs contend that the factors
identified by Defendants do not balance strongly in favor of dismissal. Plaintiffs also point to the
fact that the District of Columbia is a convenient forum for their witness Plaintiff Leiber’s mother,
who Plaintiffs assert has personal knowledge of the allegations in their Complaint, is of advanced
age, and lives in the United States. 14 Pls.’ Opp’n at 65-66. Moreover, Plaintiffs point out that two
of the three Plaintiffs in this case reside in the United States. Plaintiffs also argue that the District
of Columbia is convenient for Defendant Germany because of the presence of German diplomatic
representatives in the city and the proximity of the Embassy of the Federal Republic of Germany.
Id. at 66.
Here, the Court agrees that proceeding in this Court rather than in Germany will place some
additional burdens on the parties, namely requiring the translation of certain German language
documents. However, as Plaintiffs point out, these documents would likely need to be digitized
regardless of the forum. Further, while this matter may require the Court to consider issues of
14
In their reply, Defendants argue that Plaintiff Leiber’s mother would only have been
seven or eight years old at the time that the Consortium sold the Welfenschatz. Defs.’ Reply at
29. Plaintiffs have not been specific as to the nature of this witness’ potential testimony. However,
the witness may be available to offer testimony not specifically regarding the discussions leading
to the transaction but rather about the effects of the transaction on their lives including the access
to funds.
38
foreign law, this Court is capable of considering such issues even though this factor weighs in
favor of having the case heard in Germany. Finally, to the extent that Defendants who are the
German Government and its instrumentality that currently has possession of the objects at issue
raises the issue of the enforceability of this Court’s judgment, the Court shall not consider this as
a factor that weighing in favor of dismissal. TMR Energy Ltd. v. State Prop. Fund of Ukr., 411
F.3d 296, 303 (D.C. Cir. 2005). To do so would allow a defendant to overcome a plaintiff’s choice
of forum based on a defendant’s own assertion that it may not adhere to a judgment entered in that
forum even if that forum otherwise has jurisdiction (as here, under the FSIA). Further, to the extent
that further steps are required to enforce a judgment of this Court, Plaintiffs, who chose to file suit
in this Court, are the party that would be required to take those additional steps. As such, the Court
finds the balance of these private interest factors weigh slightly, but not heavily, in favor of
Defendants’ request.
3. Public Interests
The D.C. Circuit has identified three factors for a court to weigh when conducting a public
interests analysis:
first, that courts may validly protect their dockets from cases which arise within
their jurisdiction, but which lack significant connection to it; second, that courts
may legitimately encourage trial of controversies in the localities in which they
arise; and third, that a court may validly consider its familiarity with governing law
when deciding whether or not to retain jurisdiction over a case.
Pain v. United Technologies Corp., 637 F.2d 775, 791-792 (D.C. Cir. 1980), cert. denied, 454 U.S.
1128 (1981).
Defendants assert this suit lacks significant connections to the District of Columbia and
Germany has an interest in litigating this case in its courts because the claims arose there. Defs.’
Mot. at 62-63. Further, Defendants argue that Germany has a particular interest in this case
39
because it has “powerful interest[s] in remedying the crimes of the Nazi government[,] . . . in
providing compensation and restitution of Nazi-looted art to victims of Nazi persecution,” id. at
63, and in having a German court resolve the issue of the ownership of the Welfenschatz which
currently is displayed in a German museum and any damages related thereto, id. at 65. Finally,
Defendants assert that choice-of-law issues favor litigation in Germany because this action may
require the Court to apply areas of German law which are open and/or unfamiliar to the Court and
which present a language barrier to this Court.
Plaintiffs counter these arguments by asserting that “federal courts in the United States
have expressed a strong interest in providing a forum for the resolution of Holocaust-era claims.”
Pls.’ Opp’n at 67. Moreover, Plaintiffs note that the District of Columbia has been designated by
Congress as the proper venue for claims brought against foreign states under the FSIA. See 28
U.S.C. § 1391(f)(4). Further, Plaintiffs point out that this Court is regularly called upon to address
issues of foreign legal concepts in cases. Plaintiffs also note that the majority of German law at
issue in this case is historical law which would require the use of historical legal experts regardless
of the forum. Pls.’ Opp’n at 67-68.
Here, the Court finds the balance of the public interests are in equipoise. The Court
recognizes Germany’s interest in adjudicating claims like the ones in the instant action. However,
“‘there is a public interest in resolving issues of significant impact in a more central forum, such
as this one.’” de Csepel v. Republic of Hung. (de Csepel I), 808 F. Supp. 2d 113, 139 (D.D.C.
2011) (quoting Agudas Chasidei Chabad v. Russian Fed’n, 466 F. Supp. 2d 6, 29-30 (D.D.C.
2006)).
40
4. Balance of Interests
The parties dispute the degree of deference that the Court should afford Plaintiffs’ choice
of forum. While Defendants acknowledge that Plaintiffs’ choice to proceed in this Court enjoys
some deference, Defendants argue that the Court should grant Plaintiffs little deference because
the lack of significant contacts between the events and this forum “suggests that [P]laintiffs’ choice
of forum was motivated by tactical considerations, such as a desire to avoid Germany’s fee-shifting
rules or to force the defendants to litigate the case in a much more costly forum.” Defs.’ Mot. at
67. Plaintiffs argue that their choice of forum is entitled to strong deference because two of the
three Plaintiffs are U.S. citizens who currently reside in the United States, and note that the analysis
should be unaffected by the fact that Plaintiffs do not live in the District of Columbia because any
federal court in this country may be considered their “home forum.” Pls.’ Opp’n at 60-61.
Plaintiffs further assert that they are not engaged in forum shopping and instead selected this Court
because Defendant SPK is engaged in commercial activity in the District pursuant to 28 U.S.C. §
1391(f)(3) and because this District is the proper forum to bring claims against Defendant
Germany pursuant to § 1391(f)(4). The Court agrees with Plaintiffs that their selection of this
forum to adjudicate their claims is entitled to deference. Indeed, the Court finds no support for
Defendants’ claim that Plaintiffs engaged in forum shopping when they brought their claims in the
home forum of two of the three Plaintiffs and, as such, the Court shall not diminish the degree of
deference that it applies to Plaintiffs’ choice of forum based on this argument. Here, the Court
finds that the balance of public and private interests does not overcome that presumption in favor
of Plaintiffs’ choice of forum. As such, the Court shall decline to exercise its discretion to dismiss
Plaintiffs’ claims under the doctrine of forum non conveniens.
41
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants’ request that the Court dismiss
five non-property based claims because Defendants are entitled to sovereign immunity on the
following claims: fraud in the inducement (Count V); breach of fiduciary duty (Count VI); breach
of the covenant of good faith and fair dealing (Count VII); civil conspiracy (Count VIII); and
tortious interference (Count X). The Court DENIES Defendants’ request for dismissal on the
remaining five claims: declaratory relief (Count I); replevin (Count II); conversion (Count III);
unjust enrichment (Count IV); and bailment (Count IX). Specifically, the Court finds that
Plaintiffs have sufficiently pled these five claims under the expropriation exception to the FSIA
pursuant to 28 U.S.C. § 1605(a)(3). The Court further finds that these five claims are not
preempted or non-justiciable, nor should they be dismissed under the doctrine of forum non
conveniens.
An appropriate Order accompanies this Memorandum Opinion.
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
42