Alan Philipp v. Federal Republic of Germany
894 F.3d 406
| D.C. Cir. | 2018Background
- In 1929 three Jewish-owned Frankfurt firms formed a consortium and acquired the Welfenschatz (medieval art treasure); by 1935 the collection was stored in Amsterdam.
- Plaintiffs (heirs of consortium members) allege that under Nazi pressure and persecution the consortium sold the Welfenschatz to the State of Prussia in 1935 for far below market value; the collection later went to Stiftung Preussischer Kulturbesitz (SPK) and is exhibited in Berlin.
- Plaintiffs sought return (or $250 million) in D.D.C. asserting state-law claims (replevin, conversion, unjust enrichment, bailment) alleging takings in violation of international law.
- Germany (Federal Republic and SPK) moved to dismiss asserting FSIA immunity (no expropriation exception), lack of exhaustion in German courts/comity, and preemption by U.S. foreign policy; district court denied dismissal.
- On appeal the D.C. Circuit (1) largely affirmed denial as to SPK, (2) held the Federal Republic must be dismissed under Simon/de Csepel due to lack of U.S. nexus, and (3) rejected Germany’s exhaustion and preemption arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether expropriation exception (28 U.S.C. §1605(a)(3)) applies because the alleged taking violated international law (genocide) | Taking of Welfenschatz was part of Nazi campaign targeting Jews and thus a genocidal taking under Simon | The facts differ from Simon (art vs. food/housing; forced sale vs. forcible seizure; earlier date; lack of genocidal intent) so Simon does not apply | Held for plaintiffs: allegations plausibly connect the taking to genocidal conduct; expropriation exception applies at pleading stage as to SPK and claims against Germany generally (except Federal Republic dismissed for nexus) |
| Whether there is adequate commercial nexus to subject the Federal Republic to jurisdiction | Heirs argued claims fall within expropriation exception and that nexus exists for instrumentality (SPK) | Germany: Welfenschatz is in Berlin, not U.S., so Federal Republic lacks the required U.S. nexus | Held: Under Simon/de Csepel, Republic lacks nexus and must be dismissed; SPK remains because an instrumentality can be subject to suit without the property being physically in U.S. |
| Whether plaintiffs must first exhaust remedies in German courts (international comity) | No statutory exhaustion required; FSIA controls; plaintiffs need not exhaust German remedies | Germany urged a comity-based exhaustion requirement before U.S. courts hear the claim | Held: Rejected exhaustion requirement; NML Capital controls—FSIA’s text governs immunity and contains no exhaustion mandate |
| Whether plaintiffs’ state-law claims are preempted by U.S. foreign policy (Washington Principles/Terezin Declaration) | Plaintiffs: U.S. policy (statutes and actions) does not bar domestic litigation; Congress has facilitated Nazi-era art claims | Germany: Allowing suit undermines international dispute-resolution efforts and U.S. diplomatic commitments | Held: Rejected preemption; no direct conflict with an express federal policy to prohibit litigation, and statutes/Executive Branch positions do not require dismissal |
Key Cases Cited
- Simon v. Republic of Hungary, 812 F.3d 127 (D.C. Cir. 2016) (held intrastate takings can be within FSIA expropriation exception when they amount to genocide)
- de Csepel v. Republic of Hungary, 859 F.3d 1094 (D.C. Cir. 2017) (applied Simon principles to Holocaust-era art seizure; discussed instrumentality nexus)
- NML Capital, Ltd. v. Republic of Argentina, 134 S. Ct. 2250 (2014) (FSIA is the exclusive statutory framework for sovereign immunity; defenses must rest on the Act’s text)
- American Ins. Ass'n v. Garamendi, 539 U.S. 396 (2003) (state law preempted where it conflicted with expressed federal foreign-policy commitments)
- Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480 (1983) (FSIA replaced pre-existing common-law immunity regime)