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Nazi-Era Jewish Art Cases Get Mixed Reception from Justices (3)

Dec. 7, 2020, 4:53 PM; Updated: Dec. 7, 2020, 10:07 PM

The U.S. Supreme Court Monday considered a pair of cases addressing whether families of Holocaust victims can sue foreign countries in the U.S. for seizing property from Jewish citizens during World War II.

In one case, heirs of Jewish art dealers are suing to recover a collection of medieval relics known as the Guelph Treasure, which they say the Nazi Germany forced the dealers to sell at 1930s for 35% of its value.

In the other, families of Hungarian Holocaust victims sued the country for seizing property from Jewish citizens before sending them to death camps.

In both, the foreign nations argue the issue should be resolved in their own courts—not U.S. ones.

The justices tried to balance longstanding U.S. efforts to provide reparations to Holocaust victims, including legislation that makes it easier to bring certain claims, with concerns about opening up U.S. courts to human rights suits for atrocities like slavery committed abroad.

Look what you’re opening up,” Justice Stephen Breyer said, noting the list of things that could qualify under the plaintiffs’ reading of the case “goes on and on.” And if we can bring these kinds of actions here, well, so can these other countries do the same and accuse us?”

Reading the law the way the plaintiffs urge the court to would be “a radical departure” of what Congress intended to do, Justice Clarence Thomas said.

‘Rip a Hole’

Under the Foreign Sovereign Immunities Act, plaintiffs are generally prohibited from suing foreign countries in U.S. courts.

Under the FSIA’s expropriation exception, however, foreign countries can be sued over property that was “taken in violation of international law” and the defendant has some commercial connection to the U.S.

Sullivan & Worcester’s Nicholas M. O’Donnell said the “ordinary and natural meaning” of the law allows plaintiffs to sue Germany here.

The art was “taken” from the dealers as part of the genocide of German Jews and so falls within the exception, O’Donnell said.

“So why don’t we follow the plain meaning of the statute,” Justice Sonia Sotomayor asked.

But Germany—supported by the U.S. as a friend-of-the-court—argues that the FSIA was passed to relieve the State Department from having to make a case-by-case recommendation to courts in every case involving a foreign country by setting a categorical rule.

The FSIA “was the codification of the restrictive theory of sovereign immunity, and it adopted a general rule of immunity subject to exceptions,” said Justice Department lawyer Edwin Kneedler.

The would “rip a large hole” in that restrictive approach to allowing sovereign’s to be sued in U.S. Courts.

Echoing Thomas, Kneedler said the exception was meant to be a small one and that the plaintiffs’ interpretation would be a “radical departure” from that intent by allowing U.S. courts to consider the extent of foreign government’s wrongdoing to its own citizens.

Instead, Germany and the U.S. argued that the “taken in violation of international law” language in the FSIA means a violation of the international law of takings—that is, the taking of property by the government without compensation.

Under the international takings law, foreign governments can be sued for depriving non-citizens of their property without compensation, but not for taking their own citizens’ property.

The justices balked at O’Donnell’s suggestion that “taking” is a term of art and Congress’s use of the alternative term “taken” showed its intent to depart from the technical definition.

Taken versus taking—that’s “slicing the salami pretty thin,” Kagan said.

“Counsel, the distinction that you’re drawing between taken and taking seems awfully thin to me,” Justice Amy Barrett said.

Safety Valve

A determination that the FSIA’s expropriation exception doesn’t allow for the suit against Germany to proceed in U.S. courts doesn’t mean that it will be.

Germany—and Hungary—suggest an additional way for the justices to toss out these suits.

Although present in both cases, the issue was discussed almost exclusively in the Hungarian one.

Subjecting Hungary to “economy-crushing liability” in other countries for events that happened in Hungary to then-Hungarian citizens could have serious foreign policy implications, said Weil’s Gregory Silbert, who represents Hungary.

Concerns for international comity weigh in favor of allowing the home country to decide these cases—not the U.S.

But the plaintiffs say Congress—through the Foreign Sovereign Immunities Act—already decided that these case should be heard in the U.S.

And several justices seemed to agree.

Justice Neil Gorsuch asked Silbert whether the justices would just be substituting their judgment for that of Congress.

The justices, though, were concerned that their ruling might sweep too broadly.

“Is there room for any kind of a safety valve” in your position, Chief Justices John Roberts asked the plaintiff’s counsel, Goldstein and Russell’s Sarah Harrington.

Harrington said courts might be able to dismiss these cases where the executives says it will have significant foreign policy implications. But that’s not what happening here.

As in the German case the U.S. is siding with Hungary, saying court should be allowed to consider foreign policy concerns even after the FSIA. But it hasn’t taken a position as to whether this particular case would have adverse consequences.

Roberts had some harsh questions for Justice Department lawyer Benjamin W. Snyder for that position.

“Some might say that what’s going on here is that the State Department is expecting the courts to do the difficult and sensitive and some might say dirty work for you,” Roberts said—that is, discerning the likely foreign policy implications.

The cases are Federal Republic of German v. Philipp, U.S., No. 19-351 and Republic of Hungary v. Simon, U.S., No. 18-1477.

(Updates with Breyer argument quote in sixth paragraph.)

To contact the reporter on this story: Kimberly Strawbridge Robinson in Washington at krobinson@bloomberglaw.com

To contact the editors responsible for this story: Seth Stern at sstern@bloomberglaw.com; John Crawley at jcrawley@bloomberglaw.com

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