Anderman v. Federal Republic of Austria, No. CV 01-01769 FMC (AIJx) (C.D. Cal. 4/15/2003)

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Chava Anderman, et al., Plaintiffs, v. Federal Republic of Austria, et al., Defendants.

No. CV 01-01769 FMC (AIJx).

United States District Court, C.D. California.

April 15, 2003.

ORDER GRANTING MOTIONS TO DISMISS

FLORENCE-MARIE COOPER, United States District Judge

This case arises out of events that occurred in Austria during the Nazi era. The allegations in this action chronicle the deprivation of property that often accompanied the greater horrors — murder, genocide, slave labor, and forced labor — of the Holocaust. Claims such as these have been the subject of many international diplomatic efforts over the last half century. None of these efforts have come close to rendering perfect justice to those wronged during this dark period in our history. This Court would be under a solemn duty to render some measure of justice to those wronged, were it within its power to do so. Reluctantly, however, the Court concludes that adjudication of the claims asserted by Plaintiffs is beyond its constitutional authority.

I. Parties

Plaintiffs in this action are Jews who were citizens, nationals, or residerns of Austria in 1938, as well as their descendants, heirs, legatees, assigns, and beneficiaries. (FAG ¶ 21).

Defendant Federal Republic of Austria ("Austria") is a foreign state. (FAC ¶ 362). Austria was invaded by Germany in March 1938 ("the Anschluss") and became part of Germany at that time. (FAC ¶ 24). Austria was liberated by the Allied Forces in 1945, and was later restored as a democratic state in 1955 by the State Treaty for Re-Establishment of an Independent and Democratic Austria ("STRIDA"). (FAC ¶ 36).

Defendant Dorotheum is an auction house. (FAC ¶ 363). Plaintiffs allege that Dorotheum is owned and controlled by Austria, through its instrumentality, Österreichische Industrie AG ("ÖIAG"), which is also a Defendant in this action. (FAC ¶ 363). ÖIAG serves as a holding company for commercial enterprises owned by Austria. (FAC ¶ 364).

Collectively, the Court refers to Austria, Dorotheum, and ÖIAG as "the Austrian Governmental Defendants."

Defendant Donau Allgemeine Versicherungs Aktiengesellsschaft ("Donau") is an insurance company that is alleged to have sold insurance policies to Austrian Jews before 1938. (FAG ¶ 373). Plaintiffs allege that Donau failed to pay on these policies. (FAG ¶ 373).

Defendant Union Versicherung AG ("Union") is an insurance company that is alleged to have sold insurance policies to Austrian Jews before 1938. (FAC ¶ 374). Plaintiffs allege that Union failed to pay on these policies. (FAC ¶ 374).

Defendant Uniqa Personenversicherung AG ("Uniqa") is an insurance company that is alleged to have sold insurance policies to Austrian Jews before 1938. (FAG ¶ 375). Plaintiffs allege that Uniqa failed to pay on these policies. (FAG ¶ 375).

Defendant Wiener Staedtische Allgemeine Versicherung ("Wiener Staedtische") is an insurance company that is alleged to have sold insurance policies to Austrian Jews before 1938. (FAG ¶ 377). Plaintiffs allege that Uniqa failed to pay on these policies. (FAC ¶ 377).

Defendant Interunfall Versicherung AG ("Interunfall") is an insurance company that is alleged to have sold insurance policies to Austrian Jews before 1938. (FAG ¶ 369). Plaintiffs allege that Interunfall failed to pay on these policies. (FAG ¶ 369).

Collectively, the Court refers to Defendants Donau, Union, Uniqa, Wiener Staedtische, and Interunfall as "the Insurance Defendants."

II. Plaintiffs' Claims

A. Factual Allegations

The First Amended Complaint ("FAC") is a detailed document, consisting of over 200 pages and almost 500 paragraphs. The allegations in the FAC are merely summarized here.

Plaintiffs allege that beginning in 1933 and continuing through 1945 (and thereafter), Austrian Jews were deprived of property through theft, intimidation, coercion, and discriminatory taxes. (FAG ¶ 20). These practices were especially pronounced during the Anschluss, or German annexation of Austria in 1938. (FAC ¶ 24-30). The FAC details the property taken. The property at issue includes real estate (homes, land, factories, and warehouses), liquid assets (cash, stocks, bonds, commercial papers, gold), equipment, automobiles, household items (furniture, artwork, rugs, silver cutlery and candlesticks), jewelry, and watches.

In April 1938, Austrian Jews were required to register their property by June 1938. (FAC ¶ 25). In November 1938, Austrian Jews were prohibited from conducting financial or property transactions. (FAC ¶ 26). This prohibition was to be effective in January 1939, but in practice the prohibition became effective in December 1938. (FAC ¶ 27).

Austria was liberated by Allied Forces in 1945. (FAC ¶ 35). In May 1955, the Allies granted Austria independence subject to STRIDA. (FAC ¶ 36). STRIDA required payment of restitution and reparations to Austrian Jews. (FAC ¶ 36; 6 UST 2369, 1955 WL 44063 (U.S. Treaty)). In June 1955, the United States ratified this treaty. (Id.).

Approximately half a century later, in January 2001, Austria and the United States entered into a proposed settlement with Austrian Jews and their heirs worldwide regarding Holocaust-related claims (including claims such as those at issue in this action). (FAC ¶ 40).

Insurers sued in this action claim the only avenue of relief involves the International Commission on Holocaust Era Insurance Claims ("ICHEIC"). (FAC ¶ 42).

B. Plaintiffs' Claims

In their first cause of action, Plaintiffs assert a claim against the Austrian Governmental Defendants based on the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602-1611 ("FSIA").

In their second cause of action, Plaintiffs assert a claim against all Defendants, alleging that they confiscated property (and/or conspired to plunder and transact in plundered property) in violation of customary international law, including: the United Nations Charter; the Universal Declaration of Human Rights; the Nuremberg Principles of 1950; the Nuremberg Charter; the Hague Convention IV, Respecting the Laws and Customs of War on Land of 1907 (Article 46), the Geneva Conventions (especially Article 3(1)). Plaintiffs also accuse Defendants of war crimes and crimes against humanity.

In their third cause of action, Plaintiffs allege that the Austrian Governmental Defendants breached Art. 26, ¶ 1, of STRIDA. This provision requires Austria to pay reparations to individuals who had property seized because of racial origin or religion. See 6 UST 2369, 1955 WL 44063 (1955).

In their fourth and fifth causes of action, Plaintiffs seek imposition of a constructive trust as to all Defendants, and allege that all Defendants breached a fiduciary duty owed to Plaintiffs by seizing property and turning it over to the Nazis without Plaintiffs' consent.

In their sixth and seventh causes of action, Plaintiffs assert claims based on unjust enrichment and conversion against all Defendants.

In their eighth cause of action, Plaintiffs assert against the Insurance Defendants a claim based on the Alien Tort Claims Act, 28 U.S.C. § 1350.

In their ninth cause of action, Plaintiffs assert a breach of contract claim against the Insurance Defendants.

Plaintiffs' tenth cause of action asserts a claim under the California Holocaust Victim Insurance Relief Act of 1999 ("HVIRA") against the Insurance Defendants.

In the eleventh cause of action, Plaintiffs seek an accounting from all Defendants.

Finally, the twelfth cause of action asserts a claim under California's unfair business practices law, Cal. Bus. & Prof'l Code § 17200, et seq., against all Defendants.

III. Court's Power to Decide Threshold Issues

In a previous Order, the Court held that service was insufficient as to all Defendants except Austria. The Court ordered Plaintiff to serve the remaining Defendants in conformity with Fed.R.Civ.P. 4(f)(2)(C)(ii) and 28 U.S.C. § 1608(b).

At that time, the Court was of the opinion that it should not decide issues of subject-matter jurisdiction and justiciability prior to determining whether it had personal jurisdiction over the Defendants. At the hearing on this matter, counsel for Defendants argued that the Court has the power to decide certain threshold issues, including subject-matter jurisdiction and justiciability, without first determining whether it has personal jurisdiction. Defendants relied on Ruhgras AG v. Marathon Oil Company, 526 U.S. 574, 119 S.Ct. 1563 (1999), and In re Papandreou, 139 F.2d 247 (D.C. Cir. 1998). Upon examination of the relevant authority, the Court agrees with Defendants on this matter.

In Steele Company v. Citizens for a Better Environment, 523 U.S. 83, 118 S.Ct. 1003 (1998), the Supreme Court held that district courts may not presume they have subject-matter jurisdiction in an action in order to proceed to the merits of the claims presented in that action. The following year, the Supreme Court clarified the holding of Steele Company, holding that a court may determine whether it has personal jurisdiction over a party before proceeding to determine whether it has subject-matter jurisdiction. See Ruhgras, 526 U.S. at 577-78. The Court noted that "customarily, a federal court first resolves doubts about its jurisdiction over the subject matter, but [that] there are circumstances in which a district court appropriately accords priority to a personal jurisdiction inquiry." Id. at 578. Therefore, Ruhgras establishes that the Court may address issues of subject-matter jurisdiction prior to addressing personal jurisdiction.

Ruhgras also establishes that the Court can decide issues of justiciability as threshold issue. The Supreme Court stated:

While Steel Co. reasoned that subject-matter jurisdiction necessarily precedes a ruling on the merits, the same principle does not dictate a sequencing of jurisdictional issues. A court that dismisses on . . . non-merits grounds such as . . . personal jurisdiction, before finding subject-matter jurisdiction, makes no assumption of...