Simon v. Republic of Hung.

443 F.Supp.3d 88

Rosalie SIMON, et al., Individually, for themselves and for all others similarly situated, Plaintiffs,

v.REPUBLIC OF HUNGARY, et al., Defendants.

Civil Action No. 10-1770 (BAH)

United States District Court, District of Columbia.

Signed March 11, 2020

Charles Samuel Fax, Rifkin Weiner Livingston LLC, Bethesda, MD, David H. Weinstein, Pro Hac Vice, Weinstein Kitchenoff & Asher LLC, Philadelphia, PA, Lawrence Marc Zell, Pro Hac Vice, Zell, Aron & Co., Israel, Liesel J. Schopler, Rifkin Weiner Livingston LLC, Annapolis, MD, Paul G. Gaston, Law Offices of Paul G. Gaston, Washington, DC, for Plaintiffs.

Audrey E. Stano, Pro Hac Vice, Weil, Gotshal & Manges, LLP, Redwood Shores, CA, Holly Elizabeth Loiseau, Weil, Gotshal & Manges, LLP, Washington, DC, Brian Keith Gibson, Pro Hac Vice, Konrad Lee Cailteux, Weil, Gotshal & Manges, LLP, New York, NY, for Defendants.

MEMORANDUM OPINION

BERYL A. HOWELL, Chief Judge

The named plaintiffs in this proposed class action include four American citizens (Rosalie Simon, Charlotte Weiss, Rose Miller, and Ella Feuerstein Schlanger), two Canadian citizens (Helen Herman and Helena Weksberg), seven Israeli citizens (Tzvi Zelikovitch, Magda Kopolovich Bar-Or, Zehava (Olga) Friedman, Yitzhak Pressburger, Alexander Speiser, Ze-ev Tibi Ram, and Moshe Perel), and one Australian citizen (Vera Deutsch Danos) (collectively, "the plaintiffs"), who are fourteen of the approximately 825,000 Hungarian Jews who were subjected to the atrocities and horrors of the Holocaust at the hands of the Hungarian government between 1941 and 1945. Second Am. Compl. ("SAC") ¶¶ 5–9, 14, 22, 28, 39, 41, 49, 65, 73, 81, 131, ECF No. 118. The plaintiffs instituted this suit against the Republic of Hungary ("Hungary") and the Hungarian national railway, Magyar Államvasutak Zrt. ("MÁV"), (collectively, "the defendants") seeking restitution for property that was seized from them as part of Hungary's broader effort to eradicate the Jewish people and then commingled in the state's public fisc. SAC ¶¶ 173–215.¹

After the D.C. Circuit twice rejected several bases asserted by defendants for dismissal of the plaintiffs' claims, the defendants now for the third time seek dismissal of the plaintiffs' Second Amended Complaint for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), on grounds of sovereign immunity not exempted under the Foreign Sovereign Immunity Act ("FSIA"), 28 U.S.C. § 1602 et seq. See Defs.' Mot. to Dismiss the Second Amended Class Action Complaint Because of Their Sovereign Immunity ("Defs.' Mot."), ECF No. 138. The plaintiffs counter that the requirements of the FSIA's expropriation exception are met, and jurisdiction therefore may be exercised. See Pls.' Mem. Opp'n Defs.' Third Mot. Dismiss ("Pls.' Opp'n"), ECF No. 148. For the reasons explained below, the plaintiffs have the better arguments under binding precedent of the D.C. Circuit, requiring denial of the defendants' motion to dismiss.

I. BACKGROUND

The factual background of this case has been extensively reviewed in prior decisions of this Court and the D.C. Circuit. See generally Simon v. Republic of Hungary , 37 F. Supp. 3d 381, 385–95 (D.D.C. 2014), aff'd in part, rev'd in part , 812 F.3d 127 (D.C. Cir. 2016) ; see also Simon v. Republic of Hungary ("Simon I "), 812 F.3d 127, 132–34 (D.C. Cir. 2016) ; Simon v. Republic of Hungary ("Simon II "), 911 F.3d 1172, 1175–76 (D.C. Cir. 2018). Consequently, that background, as supplemented in the Second Amended Complaint, will only be briefly summarized below, followed by review of the relevant procedural history.

A. Factual Background

In 1944, "the Nazis and Hungary, knowing they had lost [the war], raced to complete their eradication of the Jews before the Axis surrendered." SAC ¶ 3. As part of their greater plan to eradicate the Jewish people, the defendants stripped Hungarian Jews of their possessions, including cash, jewelry, heirlooms, art, valuable collectibles, and gold and silver, loaded them onto trains, and transported them in squalid conditions to concentration camps where they were either murdered or forced to work as slave laborers. Id. ¶¶ 17, 20, 23–26, 32–34, 44–48, 52, 57, 69–71, 76, 81. "In less than two months ... over 430,000 Hungarian Jews were deported, mostly to Auschwitz, in 147 trains." Id. ¶ 120; id. , Ex. B (list of deportation trains in 1944, along with " DATES , ORIGIN OF TRANSPORTS AND NUMBER OF DEPORTEES "). The "vast majority" of the Hungarian Jews sent "to the killing fields and death camps of Nazi Germany-occupied Poland and the Ukraine" died. Id. ¶ 3. "The overall loss of Hungarian Jewry during the Second World War, excluding those who fled abroad, was 564,507." Id. ¶ 131.

After the armistice agreement ended the hostilities of World War II, id. ¶ 137, Hungary signed the "Paris Peace Treaty of February 10, 1947" ("1947 Treaty") that incorporated "a number of provisions relating to the restoration of confiscated property," with promises to undertake the restoration of, and fair compensation for, property, legal rights or interests confiscated from persons "on account of the racial origin or religion of such persons," id. ¶ 138 (quoting 1947 Treaty, 61 Stat. 2065, 41 U.N.T.S. 135, art. 27, para. 1). Article 27 and related provisions "were not self-executing (they needed appropriate municipal legislation and enforcement to prevail); and they did not provide for sanction in case of non-compliance, other than the implied possible litigation before an international tribunal." Id. (quoting 2 RANDOLPH L. BRAHAM , THE POLITICS OF GENOCIDE: THE HOLOCAUST IN HUNGARY , 1308–09 (rev. ed. 1994)).

The plaintiffs acknowledge that the Hungarian government "implement[ed] an array of legislative enactments and remedial statutes," but Hungarian Jews "saw no tangible results with respect to restitution and indemnification" for their seized property. Id. Moreover, "[w]ith the communist party in power in Hungary" after World War II, " ‘the issue of compensation or restitution was squashed,’ " and to the extent the Hungarian government had set aside funds for victims of the Holocaust, "the funds were rarely used for their intended purpose and they were frequently raided by the Communists for financing their own political projects." Id. ¶¶ 141–42 (quoting 2 BRAHAM at 1309). In 1992, two years after "the downfall of the Communist regime" in Hungary, the Hungarian government adopted at least two laws to provide remedies to Hungarian Jews victimized in the Holocaust: one of these laws "provid[ed] compensation for material losses incurred between May 1, 1939 and June 8, 1949," and the other "provid[ed] compensation for those who, for political reasons, were illegally deprived of their lives or liberty between March 11, 1939 and October 23, 1989," but plaintiffs claim that the remedies provided under those programs are "paltry and wholly inadequate." Id. ¶ 143.

In sum, the plaintiffs claim never to have been properly compensated for the personal property seized from them by the defendants as the plaintiffs were being deported. Id. ¶¶ 83–84. The plaintiffs believe that the defendants "liquidated [this] stolen property, mixed the resulting funds with their general revenues, and devoted the proceeds to funding various governmental and commercial operations." Id. ¶ 97. Thus, the plaintiffs claim that the "stolen property or property exchanged for such stolen property is owned and operated by Hungary and MÁV," some of which property "is present in the United States in connection with commercial activity carried on in the United States by Hungary," id. ¶ 98, including, for example, "fees and payments, offices, furniture, furnishings, bank accounts, artwork, stock and bond certificates, securities held in ‘street name’ and airplanes," id. ¶ 101.

Sixty-five years after the end of World War II and twenty years after the fall of the Hungarian communist regime, the plaintiffs filed the instant action against Hungary and MÁV, seeking, inter alia , restitution for the possessions seized from them and their families during the Holocaust, and to certify a class "consist[ing] of [1] all surviving Jewish victims of the Holocaust" who were residents of Hungary between September 1, 1939 and May 8, 1945, and "[2] the heirs (whether American citizens or aliens) and open estates ... of the deceased Jewish victims of the Holocaust, whether presently American citizens or aliens," who were residents of Hungary between September 1, 1939 and May 8, 1945. Id. ¶ 153. According to the plaintiffs, this class would consist of at least "5,000 survivors" and "countless heirs and estates" of the "approximately 825,000 Jews in Hungary" who were victims of the atrocities committed by the defendants. Id. ¶¶ 131, 154.

The plaintiffs' Second Amended Complaint asserts, in ten counts, claims for conversion (Count I), unjust enrichment (Count II), breach of fiduciary and special duties imposed on common carriers (Count III), recklessness and negligence (Counts IV, V), civil conspiracy with Nazi Germany to commit tortious acts (Count VI), aiding and abetting (Count VII), restitution (Count VIII), accounting (Count IX), a demand for a declaratory judgment that plaintiffs and class members are entitled to inspect and copy certain documents, and for injunctive relief enjoining the defendants from tampering with or destroying such documents (Count X; Prayer For Relief, ¶¶ 5, 6). See SAC ¶¶ 173–215. The plaintiffs also assert that subject matter jurisdiction may properly be exercised over their claims, and that the defendants are not immune from suit, pursuant to the FSIA's expropriation exception, 28 U.S.C. § 1605(a)(3), SAC ¶¶ 86–92, which exception permits suit against a foreign sovereign or its agencies or instrumentalities in United States courts to vindicate "rights in property taken in violation of international law" when an adequate commercial nexus is present between the United States and ...