Agudas Chasidei Chabad of U.S. v. Russian Fed'n

659 F.Supp.3d 1

AGUDAS CHASIDEI CHABAD OF UNITED STATES, Plaintiff, v. RUSSIAN FEDERATION; Russian Ministry of Culture and Mass Communication;Russian State Library; and Russian State Military Archive, Defendants.

No. 1:05-cv-1548-RCL

United States District Court, District of Columbia

Signed February 27, 2023

Alyza Doba Lewin, Nathan Lewin, Lewin and Lewin LLP, Washington, DC, Jennifer Phend Nock, Robert P. Parker, Steven Lieberman, Rothwell, Figg, Ernst & Manbeck, PC, Washington, DC, Jonathan E. Stern, Dreier Stein & Kahan, LLP, Santa Monica, CA, for Plaintiff.

MEMORANDUM OPINION

ROYCE C. LAMBERTH, UNITED STATES DISTRICT JUDGE

During the 20th century, amid civil unrest, revolution, and then world war, a collection of invaluable religious books and manuscripts were seized in violation of international law. Plaintiff Agudas Chasidei Chabad of the United States ("Chabad") is the rightful owner of those books and manuscripts. Nearly two decades ago, it sued the Russian Federation ("Russia"), Russian Ministry of Culture and Mass Communication, Russian State Library, and Russian State Military Archive (together, "defendants") and requested that this Court order a return of that property. In 2010, after determining that the materials were indeed expropriated, the Court entered a default judgment against defendants and ordered them to return the texts to Chabad. After they failed to comply with that directive, the Court imposed monetary sanctions to coerce compliance. Since that time, defendants have failed to satisfy the Court's order and the accrued sanctions now approach $200 million. To make good on that debt, Chabad moves now to attach and execute on Russian property held or controlled by third parties VEB.RF ("VEB") and Tenex (whether it be Tenex-USA or its corporate parent entity). Chabad alternatively seeks authorization to assert and record judicial liens.

Because the judgments that Chabad seeks to enforce were entered by default, and defendants have not received required notice, this Court will DENY WITHOUT PREJUDICE Chabad's motion.

I. BACKGROUND

The Court has comprehensively and repeatedly explained the factual and procedural history of this lawsuit, see, e.g., Agudas Chasidei Chabad of U.S. v. Russian Fed'n ("Stay Opinion"), No. 1:05-cv-1548-RCL, 2020 WL 13611456, at *1-8 (D.D.C. Nov. 6, 2020), aff'd, Agudas Chasidei Chabad of United States v. Russian Fed'n, 19 F.4th 472 (D.C. Cir. 2021), and therefore the following will constitute a non-exhaustive summary of the pertinent information for the present motion.

The plaintiff here is Chabad, a non-profit corporation in New York representing the longstanding Chabad Chasidic movement of Judaism which started "in the mid-18th Century in and around the Russian Empire." Id. at *1 (internal quotation marks omitted). Over time, the organization "produced and curated a body of religious materials central to Chabad Chasidism." Id. At issue in this case are two sets of those materials: "the Library," which contains thousands of books and hundreds of manuscripts dating back to 1772, and "the Archive," which contains the "Chabad Rebbes' handwritten teachings, correspondence, and other records." Id. (internal quotation marks omitted).

In 2004, Chabad sued defendants, alleged that they possessed the Library and Archive, and asked this Court to issue an order directing defendants to return them. Id. at *1-2. The defendants appeared and moved to dismiss the complaint, alleging that they were immune from suit. Id. at *2.

Though Congress has established a general rule depriving courts of subject-matter jurisdiction over lawsuits against foreign states—an instruction located in the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1604 et seq.—the statute provides an exception to that presumption when property is taken in violation of international law. Id. § 1605(a)(3). This Court held that, pursuant to Section 1605(a)(3), the Court maintained subject-matter jurisdiction over claims related to the Archive, but not claims related to the Library. Agudas Chasidei Chabad of U.S. v. Russian Fed'n ("Chabad I"), 466 F. Supp. 2d 6, 31 (D.D.C. 2006). The D.C. Circuit then affirmed in part, vacated in part, and reversed in part, concluding that, under Section 1605(a)(3), this Court had subject-matter jurisdiction over Chabad's claims related to both the Archive and the Library. Agudas Chasidei Chabad of U.S. v. Russian Fed'n ("Chabad II"), 528 F.3d 934, 939, 955 (D.C. Cir. 2008).

After the D.C. Circuit remanded the case, defendants withdrew from further participation in this action. ECF No. 71-1. Russia explained that it took issue with the Circuit's ruling depriving it of immunity from suit and it would therefore no longer participate. Id. This Court subsequently entered default judgment against all defendants. Agudas Chasidei Chabad of U.S. v. Russian Fed'n ("Chabad III"), 729 F. Supp. 2d 141, 148 (D.D.C. 2010). It then ordered defendants to ensure a "prompt and safe" return of Chabad's religious materials. Order Granting Pl.'s Mot. for Entry of Default Judgment, ECF No. 80. Specifically, the Court directed defendants to "surrender to the United States Embassy in Moscow or to the duly appointed representatives of . . . Chabad . . . the complete collection." Id.

In 2011, after determining that Russia had received adequate notice of the Court's default judgment, and "that plaintiff ha[d] demonstrated defendants' non-compliance to a reasonable certainty," this Court instructed defendants to show cause why they should not be held in civil contempt. Agudas Chasidei Chabad of U.S. v. Russian Fed'n ("Chabad IV"), 798 F. Supp. 2d 260, 273 (D.D.C. 2011) (internal quotation marks omitted). The Court then "direct[ed] plaintiff to serve a copies of its motion for sanctions and t[he] order to show cause on defendants via mail using the addresses defendants' former counsel provided, and [ ] g[a]ve defendants the same 60 days they are generally entitled in responding to service of papers initiating suit under the FSIA." Id. at 273-74.

In 2013, after defendants failed to respond, Chabad moved for civil monetary contempt sanctions against defendants. Chabad v. Russian Fed'n ("Sanctions Opinion"), 915 F. Supp. 2d 148, 149-51 (D.D.C. 2013). This request came after "multiple meetings at the Russian Embassy in Washington, D.C.," during which "the parties were unable to reach a settlement." Id. at 150-51 (internal quotation marks and citation omitted). After determining that civil monetary sanctions were both within the Court's authority and appropriate for the situation, the Court issued sanctions in the amount of $50,000 per day until defendants comply with the Court's 2010 order to return the materials. Id. at 154-55; Order ("Sanctions Order"), ECF No. 115. That day has yet to arrive.

Following the imposition of sanctions, this Court has thrice issued interim judgments of accrued sanctions. Interim Judgment, ECF No. 144; Order and Judgment ("Second Interim Judgment"), ECF No. 201; Revised Interim Judgment, ECF No. 263. Chabad also subpoenaed various entities, including VEB and Tenex-USA, to discover Russian property that might satisfy the accrued sanctions debt. See Mem. Order 1 ("Motion to Quash Order"), ECF No. 198; Stay Opinion, 2020 WL 13611456 at *7.

Following that discovery, Chabad moved to attach and execute to satisfy the sanctions debt, or alternatively to assert and record judicial liens. Pl.'s Mot., ECF No. 235. Chabad also filed a sealed memorandum in support. Pl.'s Mem., ECF No. 236-2. VEB opposed, VEB's Opp'n, ECF No. 241-1, and Chabad replied, Pl.'s Reply to VEB, ECF No. 254. Tenex-USA also opposed, Tenex-USA's Opp'n, ECF No. 248-2, and Chabad replied, Pl.'s Reply to Tenex-USA, ECF No. 253. Tenex-USA moved to file a sur-reply, Tenex-USA's Mot. Sur-Reply ECF No. 256-2, Chabad opposed, Pl.'s Opp'n to Sur-Reply, ECF No. 258, and Tenex-USA replied, Tenex-USA's Reply Sur-Reply, ECF No. 259.¹

Upon consideration of the parties briefing, the applicable law, and the whole record, the Court will DENY WITHOUT PREJUDICE Chabad's motion because defendants have not been provided sufficient notice of the monetary sanctions judgments that Chabad seeks to enforce.

II. LEGAL STANDARDS

The FSIA provides the governing legal standards in this dispute. Under that statute, "Congress established . . . a comprehensive framework for resolving any claim of sovereign immunity." Republic of Argentina v. NML Cap., Ltd., 573 U.S. 134, 141, 134 S.Ct. 2250, 189 L.Ed.2d 234 (2014) (quoting Republic of Austria v. Altmann, 541 U.S. 677, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004)). "Thus, any sort of immunity defense made by a foreign sovereign in an American court must stand on the Act's text. Or it must fall." Id. at 141-42, 134 S.Ct. 2250. The framework includes two kinds of immunity: jurisdictional immunity and execution immunity. TIG Ins. Co. v. Republic of Argentina, 967 F.3d 778, 781 (D.C. Cir. 2020). "To enforce an award against a foreign state in the United States, a party must therefore establish both that the foreign state is not immune from suit and that the property to be attached or executed against is not immune." Id. Because Chabad seeks attachment of Russia's property, both immunities must be defeated for it to succeed.

A. Jurisdictional Immunity

As this Court and the D.C. Circuit have already determined, an exception to the FSIA's default rule of sovereign immunity applies. That exception reads as follows:

(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case—

(3) 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

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