Philipp v. Kulturbesitz

ALAN PHILIPP, et al., Plaintiffs, v. STIFTUNG PREUSSISCHER KULTURBESITZ, Defendant.

Civil Action No. 15-00266 (CKK)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

July 26, 2021

MEMORANDUM OPINION

Plaintiffs Alan Philipp ("Philipp"), Gerald G. Stiebel ("Stiebel"), and Jed R. Leiber ("Leiber") (collectively the "Plaintiffs'), are the legal successors of the estates of members of a Consortium comprised of three art dealer firms based in Frankfurt, Germany - J.&S. Goldschmidt, I. Rosenbaum, and Z.M. Hackenbroch. Plaintiffs Philipp and Stiebel indicate that their ancestors, Zacharias Max Hackenbroch and Isaac Rosenbaum, respectively, were the owners or co-owners of two [of the three] art dealer firms. First Am. Compl., ECF No. 14, ¶¶ 1, 17-18. Plaintiff Leiber [who was added in the First Amended Complaint] is the heir of Saemy Rosenberg, who co-owned the I. Rosenbaum art dealer firm. First Am. Compl., ECF No. 14, ¶ 19. The First Amended Complaint explains further that Philipp, Stiebel, and Leiber are "assignees of the claims of Julius Falk Goldschmit . . . and authorized agents for the heirs of Arthur Goldschmidt, who together were the sole owners of the J.&S. Goldschmidt[,]" the third art dealer firm. Id. at ¶ 20.

Plaintiffs allege that Defendant Stiftung Preussischer Kulturbesitz ("SPK") is in wrongful possession of a collection of medieval relics known as the Welfenschatz, which was sold by the Consortium - under coercion, as part of the Nazi persecution of the Jewish sellers - on June 14, 1935 to the State of Prussia through the Dresdner Bank. Plaintiffs Philipp and Stiebel initially filed their lawsuit against the Federal Republic of Germany ("Germany") and SPK, although Germany has since been dismissed from the case. This case is currently before this Court on Plaintiffs' [56] Motion for Leave to File a Second Amended Complaint, which is opposed by Defendant SPK.¹ For the reasons set forth herein, Plaintiffs' [56] Motion for Leave to Amend is DENIED. A separate Order accompanies this Memorandum Opinion.

I. Legal and Procedural Background

This Court incorporates by reference the background set forth in its [26] Memorandum Opinion, which granted in part and denied in part Defendants' [18] Motion to Dismiss the Plaintiffs' First Amended Complaint. See Philipp v. Fed. Republic of Germany, 248 F. Supp. 3d 59, 70-72 (D.D.C. 2017) (concluding that Plaintiffs' claims fell within the exception to the domestic takings rule adopted in Simon v. Republic of Hungary, 812 F.3d 127 (D.C. Cir. 2016)).² Defendants filed a [27] Notice of Appeal to the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit"), and the case was stayed in this Court while the interlocutory appeal was pending. The D.C. Circuit's opinion in Philipp v. Federal Republic of Germany, 894 F.3d 406 (D.C. Cir. 2018), noted that the appeal raised a novel question insofar as the court was asked to decide "for the first time whether seizures of art may constitute 'takings of property that are themselves genocide.'" Philipp, 894 F.3d at 411 (quoting Simon, 812 F. 3d at 144). The D.C. Circuit concluded that they could be and affirmed the application of the expropriation exception to sovereign immunity as well as this Court's exercise of subject matter jurisdiction. The Circuit Court did however vacate this Court's denial of immunity to Germany and directed that Germany be dismissed.

Shortly thereafter, Defendants filed their [43] Motion to Stay Pending Petition for Writ of Certiorari to the United States Supreme Court, which was granted by this Court's [47] Order. The Supreme Court granted certiorari and issued its decision in Federal Republic of Germany v. Philipp, 141 S. Ct. 703, 715 (2021), holding that "the phrase "rights in property taken in violation of international law," as used in the FSIA's expropriation exception, refers to violations of the international law of expropriation and thereby incorporates the domestic takings rule." As the Supreme Court explained, the international law of takings governs "confiscation of the property of foreigners, but measures taken by a state with respect to the property of its own nationals are not subject to these principles." Id. at 710 (internal quotation marks omitted). Furthermore, contrary to the D.C. Circuit's decisions in Simon and Philipp, the FSIA's expropriation exception invoked only the narrow doctrine of "international law governing property rights," rather than broadly incorporating international human-rights norms like the law of genocide. Id. at 711-712. The D.C. Circuit's judgment was vacated, and the case was remanded for further proceedings. The Supreme Court explicitly declined to consider the heirs' alternative argument "that the sale of the Welfenschatz is not subject to the domestic takings rule because the consortium members were not German nationals at the time of the transaction" and stated that the Court of Appeals should direct the District Court to "consider this argument, including whether it was adequately preserved below." Id. at 716

On March 16, 2021, the D.C. Circuit issued its [53] Mandate and attached Judgment indicating that - consistent with the Supreme Court mandate - this case was remanded to this Court, with instructions to "consider whether the sale of the Welfenschatz is not subject to the domestic takings rule because the consortium members were not German nationals at the time of the transaction, including whether this argument was adequately preserved in the District Court." See Mandate and attached Judgment.

A few days thereafter, the parties filed their [54] Second Joint Status Report, indicating a proposed briefing schedule for Plaintiffs to move for leave to amend their Complaint. Defendant anticipates "renewing its motion to dismiss the then-operative complaint, as determined by the Court's ruling on the motion for leave to amend." Second Joint Status Report, ECF No. 54, at 2. Plaintiffs' Motion for Leave to Amend is now ripe for consideration by this Court.

II. Legal Standard for a Motion to Amend

In cases where plaintiffs have already amended their Complaint, Federal Rule of Civil Procedure 15(a)(2) provides that "a party may amend its pleading only with the opposing party's written consent or the court's leave [and] [t]he court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2); see Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003 (D.C. Cir. 1996), cert den., 520 U.S. 1197 (1997) (finding that leave to amend a complaint is within the court's discretion and should be freely given unless there is good reason to the contrary); Firestone v Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996) (noting that it is an "abuse of discretion" to deny leave to amend without sufficient reason).

"When evaluating whether to grant leave to amend, the Court must consider (1) undue delay; (2) prejudice to the opposing party; (3) futility of the amendment; (4) bad faith; and (5) whether the plaintiff has previously amended the complaint." Howell v. Gray, 843 F. Supp. 2d 49, 54 (D.D.C. 2012) (citing Atchinson v. District of Columbia, 73 F.3d 418 (D.C. Cir. 1996)). "Within these bounds, a district court has discretion to grant or deny leave to amend under Rule 15(a)." Atchinson, 73 F.3d at 426; see also Foman v. Davis, 371 U.S. 178, 182 (1962) ("[T]he grant or denial of any opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason . . . is not an exercise of discretion.") The party opposing the amendment bears the burden of coming forward with a colorable basis for denying leave to amend. Abdullah v. Washington, 530 F. Supp. 2d 112, 115 (D.D.C. 2008).

III. Analysis of Arguments

In this case, Plaintiffs allege that the impetus for their proposed addition of "allegations about Nazi German's policies with regard to nationality, and specific allegations about the nationality of the specific victims in this case" is based on the "recent change in the governing law." Pl.'s Mem., ECF No. 56-1, at 8.³ Plaintiffs propose adding a new section captioned "The Nazis and the Question of German Nationality[,]" which "expands upon facts that the Plaintiffs had no necessity to allege under the prior standard of law (although they did)[.]" Id. at 9. Defendant alleges that the proposed amendments fall into the following categories: (1) amendments to make the complaint conform to the removal of Germany as a defendant and striking claims that have been dismissed: (2) revisions reflecting the "passage of time since the First Amended Complaint was filed more than five years ago;" (3) "pages of new allegations about Nazi ideology, particularly focusing on statements by Nazi officials about whether they believed Jews could be true German citizens;" (4) a "recharacteriz[ation] [of] the facts about the Consortium's legal status" with a focus on the individual owners; and (5) new facts about two of the art dealers, alleging the Rosenbaum and Rosenberg were "Dutch nationals, or functionally stateless." Def.'s Opp'n, ECF No. 57, at 18-19. Defendant does not object to an amendment with regard to categories (1) and (2) above, although Defendant contends it is unnecessary. Id.

Plaintiffs contend however that the proposed amendment "does not change the core substance of the case," but instead, it "provides additional facts relevant to a determination of whether Plaintiffs' relatives were German at the time of the forced sale[.]" Id. at 10. Plaintiffs assert further that there is "no delay in pleading allegations under a standard that did not previously exist[,]" as the law "changed in February 2021;" the mandate was issued in March, and the instant Motion was filed in April." Id. at 11. Nor is there "prejudice" as discovery has not yet commenced, and there is "certainly no bad faith." Id.

Absent from Plaintiffs' Motion is any discussion of the Supreme Court's mandate ...