De Csepel v. Hungary

1

DAVID L. de CSEPEL, et al., Plaintiffs, v. HUNGARY, et al., Defendants.

Civil Action No. 10-1261 (JDB)

United States District Court, District of Columbia

August 1, 2022

ORDER

JOHN D. BATES, UNITED STATES DISTRICT JUDGE

This case involves a group of family members, all descendants of renowned art collector Baron Mor Lipot Herzog, who claim ownership of certain artworks in a collection seized by the World War II-era Hungarian government and its Nazi collaborators during the Holocaust. See Am. Compl [ECF No. 141] ¶¶ 1-2, 6-8, 106. Plaintiffs commenced this action twelve years ago, see Compl [ECF No. 1] at 27; since then, the parties have filed numerous dispositive motions, three appeals, and a petition for certiorari. See de Csepel v. Republic of Hungary, 27 F.4th 736, 741-42 (D.C. Cir. 2022) (“de Csepel IV”). After the D.C Circuit's latest decision remanding the case to this Court, defendants-a group of museums in possession of the contested artworks and Magyar Nemzeti Vagyonkezelo Zrt.^[1] (“MNV”)-now move to stay the litigation because they intend to file a petition for certiorari seeking review of the D.C. Circuit's decision. See Mem. of P & A. in Supp. of Defs.' Mot. to Stay Activity Before the District Ct. Pending Resolution of Defs.' Forthcoming Pet. for a Writ of Cert. [ECF No. 199-1] (“Mot. to Stay”) at 1-2. Plaintiffs oppose this request, arguing that a stay is not warranted. See generally Pls.' Mem. of P. & A. in Opp'n to Mot. to Stay [ECF No. 202] (“Opp'n”). Because the relevant factors do not support staying proceedings at this time, the Court will deny defendants' motion.

Background

In its latest decision, the D.C. Circuit thoroughly set out the factual background and procedural history of this case, and the Court will incorporate that summary by reference. See de Csepel IV, 27 F.4th at 739-42. As relevant here, the D.C. Circuit held that (1) although the Republic of Hungary has been dismissed as a defendant, this litigation may nonetheless proceed pursuant to Federal Rule of Civil Procedure 19(b) because the remaining defendants are so aligned with Hungary that they will adequately protect Hungary's interests, id. at 748-52; and (2) that the Foreign Sovereign Immunities Act (“FSIA”) does not require prudential exhaustion in suits against foreign states, so plaintiffs were not required to exhaust their potential remedies in Hungary before filing suit in the United States, id. at 753. The court of appeals declined to review “the district court's determinations of jurisdiction over individual artworks” and remanded the case to this Court for further proceedings. Id. at 753-54.

After receiving the parties' views, the Court set a schedule for further motions, including defendants' proposed motion to dismiss on the issue of domestic takings, the parties' proposed cross-motions for summary adjudication on choice of law, and defendants' proposed motion for summary judgment on the issues of comity and statute of limitations. See Scheduling Order, June 21, 2022 [ECF No. 200] at 1. Defendants now move to stay that schedule pending their forthcoming petition for certiorari. Specifically, defendants report that they will seek review of the D.C. Circuit's decision holding:

(1) that neither Federal Rule of Civil Procedure 19 nor the Supreme Court's decision in Republic of Philippines v. Pimentel, 533 U.S. 851 (2008), bar this action from going forward where the owner of the claimed property and the sources of Plaintiffs' injuries is immune and it is undisputed that its interests will be adversely affected if the case continues[; and] (2) that non-immune sovereigns may not raise a defense of international comity (exhaustion), even though the Seventh Circuit recognizes it is a defense available to non-immune sovereigns, see Fischer v. Magyar Allamvasutak Zrt., 777 F.3d 847, 857-58 (7th Cir. 2015), and the Supreme Court recognizes that such entities must be treated like private parties, see Cassirer v. Thyssen-Bornemisza Collection Found., 142 S.Ct. 1502, 1508-10 (2022).

Mot. to Stay at 1-2. The petition is due to be filed on August 8, 2022. Id. at 1.

Legal Standard

“[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time for itself, for counsel, and for litigants. How this can best be done calls for an exercise of judgment, which must weigh competing interests and maintain an even balance.” Air Line Pilots Ass'n v. Miller, 523 U.S. 866, 879 n.6 (1998) (alteration in original; citation omitted). A party seeking a stay must show that the stay is warranted upon consideration of four factors: “(1) the likelihood that the party seeking the stay will prevail on the merits . . .; (2) the likelihood that the moving party will be irreparably harmed absent a stay; (3) the prospect that others will be harmed if the court grants the stay; and (4) the public interest in granting the stay.” Loving v. IRS, 920 F.Supp.2d 108, 110 (D.D.C. 2013) (quoting Cuomo v. Nuclear Regulatory Comm'n, 772 F.2d 972, 974 (D.C. Cir. 1985) (per curiam)).

With respect to the first factor, the movant “need not always establish a high probability of success on the merits,” Cuomo, 772 F.2d at 974; some courts have concluded that, “instead, so long as the other factors strongly favor a stay, such remedy is appropriate if ‘a serious legal question is presented,'” Loving, 920 F.Supp.2d at 110 (quoting Citizens for Resp. & Ethics in Wash. v. Off. of Admin., 593 F.Supp.2d 156, 160 (D.D.C. 2009)). But to succeed under this formulation, the possibility of irreparable harm to the moving party “must be both certain and great,” and the movant “must show that the injury complained of is of such imminence that there is a clear and present need for equitable relief to prevent irreparable harm.” Wis. Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985) (cleaned up; citation omitted).

Analysis

Defendants argue that they have satisfied all four factors, so the Court should exercise its discretion to stay this litigation. See Mot. to Stay at 8. Plaintiffs, naturally disagree on all counts. See Opp'n at 8. The Court will address the factors in turn.

I. Presentation of a Serious Legal Question

Defendants do not argue that they are likely to succeed on the merits of their petition, see Mot. to Stay at 8; instead, they contend that the petition “will present serious legal questions” regarding the Court's jurisdiction over “agency or instrumentality defendants[] when the sovereign . . . is immune” and “the role of international comity” in proceedings under the FSIA, id. at 8-9. Defendants also assert that “there is a high likelihood certiorari will be granted” because the Supreme Court has granted certiorari regarding “two recent D.C. Circuit[] decisions” addressing claimants' failure to exhaust domestic remedies as a ground for abstention. Reply Br. in Supp. of Mot. to Stay [ECF No. 204] (“Reply”) at 2 (cleaned up); see Philipp v. Federal Republic of Germany, 894 F.3d 406 (D.C. Cir. 2018), vacated, 141 S.Ct. 703 (2021), and Simon v. Republic of Hungary, 812 F.3d 127 (D.C. Cir. 2016), abrogated by Fed. Republic of Germany v. Philipp, 141 S.Ct. 703 (2021). In both Philipp and Simon, the Supreme Court called for the views of the Solicitor General, who recommended granting certiorari on the exhaustion issue. Reply at 2-3; see Br. for United States as Amicus Curiae at 1, 30-34, Fed. Republic of Germany v. Philipp, No. 19-351 (Sept. 11, 2020); Br. for United States as Amicus Curiae at 1, 25-27, Republic of Hungary v. Simon, No. 18-1447 (May 26, 2020). Although the Supreme Court ultimately did not pass on the exhaustion issue, defendants argue that the Solicitor General's involvement in Philipp and Simon “confirms this is a serious legal question,” and that the likely involvement of the Solicitor General in this case “increases likelihood that certiorari will be granted” here. Reply at 3, 6-7.

Even assuming that defendants are correct about the seriousness of the legal issues they will present, the Court concludes that a stay is not warranted at this time. Where the party seeking a stay does not argue that it has a “high probability of success on the merits,” some courts observe that a stay may nevertheless be appropriate if the petition presents a “serious legal question”-but only “so long as the other factors strongly favor a stay.” Loving, 920 F.Supp.2d at 110 (citation omitted); see also In re Special Proc., 840 F.Supp.2d 370, 372 (D.D.C. 2012) (“It is only when the other three factors tip sharply in the movant's favor that the standard for success on the merits changes.”). Indeed, some judges in this District have reasoned that “[a] showing of irreparable harm is crucial” in order for the court to issue a stay, and “[f]or harm to be ‘irreparable' . . . the injury must be both certain and great.” Fed. Trade Comm'n v. Boehringer Ingelheim Pharms., Inc., 241 F.Supp.3d 91, 97 (D.D.C. 2017) (first alteration in original) (quoting Fed. Trade Comm'n v. Church & Dwight Co., Inc., 756 F.Supp.2d 81, 86 (D.D.C. 2010)). Accordingly, the Court will move on to assess whether defendants are likely to face irreparable harm if a stay is not imposed.

II. Likelihood of Irreparable Harm to Defendants

Defendants first argue that they will be irreparably harmed if they are forced to “face judicial proceedings before a district court that might not have jurisdiction.” Mot. to Stay at 14. They note that the rights of a party entitled to sovereign immunity are “irretrievably lost” if that party is forced to litigate, id. (quoting Richardson-Merrill, Inc. v. Koller, 472 U.S. 424 431 (1985)), a loss that defendants assert is “beyond remediation and is the essence of irreparable...