Gross v. German Found. Indus. Initiative

456 F.3d 363

Elly GROSS, Roman Neuberger, John Brand, in their individual capacities as third-party beneficiaries of the agreements leading to the establishment of the German Foundation "Remembrance, Responsibility, and the Future," as representatives of all German Foundation beneficiaries Appellant v. GERMAN FOUNDATION INDUSTRIAL INITIATIVE, and its constituent managing companies; Allianz AG; BASF AG; Bayer AG; BMW AG; Commerzbank AG; DaimlerChrysler AG; Deutsche Bank AG; Degussa-Huells AG; Deutz AG; Dresdner Bank AG; Friedr Krupp AG Hoesch Krupp; Hoechst AG; Rag AG; Robert Bosch GMBH; Siemens AG; VEBA AG; Volkswagen AG, sued individually, and as members of the German Foundation Industrial Initiative

Barbara Schwartz Lee; Bernard Lee, Appellants v. Deutsche Bank AG; Dresdner Bank AG.

No. 04-2744.

No. 04-2745.

United States Court of Appeals, Third Circuit.

Argued April 26, 2006.

Filed August 3, 2006.

Burt Neuborne, (Argued), New York University Law School, New York, New York, Agnieszka Fryszman, (Argued), Cohen, Milstein, Hausfeld & Toll, Washington, D.C., Allyn Z. Lite, Lite, Depalma,

Greenberg & Rivas, Newark, New Jersey, for Appellants, Elly Gross, Barbara Schwartz Lee and Bernard Lee.

Jeffrey A. Barist, (Argued), Milbank, Tweed, Hadley & McCloy, New York, New York, for Appellees, Deutsche Bank AG and Dresdner Bank AG.

Roger M. Witten, Wilmer Cutler Pickering Hale and Dorr, New York, New York, for Appellees, Allianz AG, Bayer AG, Commerzbank AG, Deutz AG, and RAG AG.

Thomas M. Mueller, Mayer Brown Rowe & Maw, New York, New York, for Appellee, BASF AG.

Konrad L. Cailteux, Weil, Gotshal & Manges, New York, New York, for Appellee, BMW AG.

Bud G. Holman, Kelley, Drye & Warren, New York, New York, for Appellee, DaimlerChrysler AG.

Kevin J. McKenna, John J. Gibbons, Gibbons, Del Deo, Dolan, Griffinger & Vecchione, Newark, New Jersey, for Appellees, Degussa-Huells AG, Friedr Krupp AG Hoesch Krupp, and Robert Bosch GmbH of Stuttgart, Germany.

Brant W. Bishop, Kirkland & Ellis, Washington, D.C., for Appellee, Siemens AG.

Daniel V. Gsovski, Herzfeld & Rubin, New York, New York, for Appellee, Volkswagen AG.

Walter E. Diercks, Rubin, Winston, Diercks, Harris & Cooke, Washington, D.C., for Amicus Curiae-Appellee, Federal Republic of Germany.

Before SCIRICA, Chief Judge, SMITH and STAPLETON, Circuit Judges.^*

SCIRICA, Chief Judge.

At issue in this World War II reparations case is whether a suit seeking additional funds for victims of Nazi-era wrongs is justiciable. Claimants contend German companies owe "interest" on their payments to a reparations fund created with the substantial involvement of the United States and German governments to benefit Nazi victims or their descendants. The District Court held the claim presented a nonjusticiable political question. We will reverse and remand.

I. Background

During the Nazi era, German companies employed slave and forced labor, appropriated private property, and refused to pay insurance policies. Legal redress was largely unavailable to the victims of these crimes for nearly half a century¹ because their claims against the German government and German companies were barred or deferred by various international agreements and treaties, intended to facilitate the rebuilding of the German economy.²

The situation began to change after the fall of the Berlin Wall in November 1989, when the Federal Republic of Germany, the German Democratic Republic, the United States, Great Britain, France, and the former Soviet Union entered into the Two-Plus-Four Treaty,³ ending the rights formerly held by the Allies in Germany. The treaty was silent on the issue of private individuals' war-related claims against the German government and German companies, but German courts interpreted it to terminate the previous bar on such claims. E.g., Oberverwaltungsgericht [OVG] [Administrative Court of Appeals, Muenster] NJW 1998, 2302, at 8-10, cited in Iwanowa v. Ford Motor Co., 67 F.Supp.2d 424, 455 (D.N.J.1999); Landgericht [LG] [District Court, Bremen] 1998, 1 O 2889/90, at 13, cited in Iwanowa, 67 F.Supp.2d at 455; see also Am. Ins. Ass'n v. Garamendi, 539 U.S. 396, 404-05, 123 S.Ct. 2374, 156 L.Ed.2d 376 (2003).⁴

In light of the German courts' interpretation of the treaty, many uncompensated victims brought claims against German companies in United States courts. Victims and their heirs, both individually and in class actions, sued banks, insurers, and manufacturers that had used or profited from slave and forced labor, or wrongfully appropriated assets during the National Socialist era. In response to early cases and in preparation for further litigation, seventeen major German corporations formed an unincorporated association called the German Foundation Industrial Initiative. The seventeen founding members were Allianz AG, BASF AG, Bayer AG, BMW AG, Commerzbank AG, DaimlerChrysler AG, Degussa Huls AG, Deutsche Bank, Deutz AG, Dresdener AG, Hoechst AG, RAG AG, Robert Bosch GmbH, Siemens AG, Veba AG, Thyssen-Krupp AG, and Volkswagen AG.

A. Negotiations for a Reparations Fund

The United States and German governments, aware of the significance of the underlying claims and the seriousness of the risk posed to the German economy, encouraged negotiations between plaintiffs and defendant German corporations. In the Fall of 1998, the German government asked Deputy Secretary of the Treasury Stuart Eizenstat⁵ to facilitate a resolution of the class action suits. Over the next year and a half, Deputy Secretary Eizenstat chaired a series of meetings among lawyers for the victims, lawyers for the German companies, and representatives of the German government. Leading negotiations on the German side were Chancellor Schroeder's Envoy and Chief German Negotiator, Count Otto Lambsdorff, and his predecessor, Bodo Hombach.

On February 16, 1999, German Chancellor Gerhardt Schroeder, joined by the German companies that comprised the German Foundation Industrial Initiative, announced plans for formal negotiations to settle all pending litigation in United States courts relating to German companies' Nazi era conduct. The United States State Department hosted the first plenary session of formal negotiations on May 11 and 12, 1999. The goal was to create a foundation (a reparations fund) to compensate Nazi-era victims and to fund ongoing projects to prevent religious and ethnic intolerance in Germany. In exchange for funding the foundation, German companies would receive "legal peace"—the termination and resolution of all suits against them in United States courts on WWII-era claims and an assurance of protection from future suits.

A total of 12 plenary sessions were held in Bonn and Berlin, Germany, and in Washington, D.C. Lawyers in the pending cases joined government representatives from the United States, Germany, Israel, Belarus, the Czech Republic, Poland, Russia, Ukraine, representatives from the Conference on Jewish Material Claims Against Germany, and representatives from the German Foundation Industrial Initiative.

Negotiations reached a breakthrough in December 1999. Responding to an offer from the German companies to fund the foundation with DM 8 billion, the plaintiffs' lawyers, with the support of Poland, the Czech Republic, the Republic of Belarus, and the Ukraine, countered on December 13 with an offer for DM 10 billion. President Bill Clinton wrote to Chancellor Gerhard Schroeder that day, urging acceptance of the DM 10 billion "counteroffer," which was "a firm commitment for settlement of which we both could be proud." See Garamendi, 539 U.S. at 405-06, 123 S.Ct. 2374. The next day, Chancellor Schroeder accepted the counteroffer, thanking President Clinton for his "decisive impulses for a consensus which could be accepted by all parties involved." Also that day, Deputy Secretary Eizenstat communicated to the victims' attorneys the German Foundation Industrial Initiative's and German government's acceptance of this offer. President Clinton announced the agreement from the Oval Office the following day, December 15. Two days later, the parties made a formal public announcement in Bonn, Germany.

Over the ensuing months, the parties negotiated allocation details—how much money would go to each partner organization and which types of victims were eligible—and detailed procedures for the Foundation's operation. On July 20, 2000, the foundation, called "Remembrance, Responsibility and the Future," was formally established.

B. The Berlin Accords

The documents establishing the Foundation, collectively referred to as the Berlin Accords or the Berlin Agreements, consist of the Joint Statement, the Executive Agreement between the United States and Germany, and the Foundation Law. The Joint Statement—formally titled "The Joint Statement on occasion of the final plenary meeting concluding international talks on the preparation of the Foundation `Remembrance, Responsibility and the Future'"—sets forth the goal of the Foundation, which is to "provide dignified payments to hundreds of thousands of survivors and to others who suffered from wrongs during the National Socialist era and World War II." Preamble, para. 12. The Joint Statement commits the German government and German industry to a DM 10 billion capitalization, and places responsibility for collecting the German companies' share on the German Foundation Industrial Initiative. Particularly significant for this case, Section 4(d) of the Joint Statement provides, in part:

German company funds will continue to be collected on a schedule and in a manner that will ensure that the interest earned thereon before and after their delivery to the Foundation will reach at least 100 million DM.

The second document of the Berlin Accords, the Executive Agreement, outlines the United States and German governments' commitment to the Foundation. It obligates the United States Executive, in all cases for which it is notified of a claim against a...