Mady Schubarth v. Federal Republic of Germany
891 F.3d 392
D.C. Cir.2018Background
- Plaintiff Mady Marieluise Schubarth, a U.S. citizen, claims she inherited >500 acres of agricultural land in former East Germany that were expropriated under Soviet/East German rule and seeks compensation under the 1954 U.S.–West Germany FCN Treaty.
- After German reunification, the Treuhand Trust Agency marketed and sold expropriated East German property (including via a New York office and later internet efforts); BVVG succeeded to many of the Trust Agency’s responsibilities and continued marketing/sales of such lands.
- Schubarth applied for restitution/compensation in German administrative proceedings; after lengthy delay she received a final decision recognizing expropriation but awarding €35,279 — she sued in U.S. court seeking full treaty-based compensation.
- Defendants are the Federal Republic of Germany and BVVG (a German state-owned company). Defendants moved to dismiss for lack of subject-matter jurisdiction under the Foreign Sovereign Immunities Act (FSIA) and for failure to state a claim.
- District Court dismissed for lack of jurisdiction, concluding Schubarth failed to plead that Germany or BVVG engaged in “commercial activity in the United States” under FSIA §1605(a)(3); Schubarth appealed.
- D.C. Circuit affirmed dismissal as to Germany (relying on de Csepel) but reversed as to BVVG, holding the complaint plausibly alleged ongoing U.S. commercial activity by BVVG when read as a whole.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FSIA expropriation exception permits suit against Germany for land located abroad | Schubarth: FCN Treaty rights incorporated into German law and Germany waived immunity; claim fits §1605(a)(3) | Germany: Expropriation exception requires property or exchanged property to be present in U.S.; Estate is abroad | Held: No jurisdiction over Germany — de Csepel controls; foreign state immune when property is located abroad |
| Whether BVVG is "engaged in a commercial activity in the United States" under §1605(a)(3) | Schubarth: BVVG continued Trust Agency’s U.S. marketing/sales (NY office, internet) and collected large sums — plausibly ongoing U.S. commercial activity | BVVG: Predecessor’s 1990s U.S. activity and website links are insufficient to show ongoing U.S. commercial activity at filing | Held: Reversed as to BVVG — complaint plausibly alleges ongoing U.S. commercial activity by BVVG at pleading stage |
| Whether the FCN Treaty effected a waiver of sovereign immunity for Germany/BVVG | Schubarth: Treaty and its incorporation into German law waived immunity and entitles her to treaty-based compensation | Defendants: Treaty waiver not shown because §1605(a)(3) nexus lacking; treaty argument not adequately pleaded as to Germany | Held: District Court correctly denied FSIA waiver claim as to Germany (given de Csepel); BVVG waiver not reached on appeal and left to district court if needed |
| Whether plaintiff should have had jurisdictional discovery / evidentiary development before dismissal | Schubarth: District Court prematurely dismissed without allowing discovery on BVVG’s U.S. contacts; submitted new evidence post-judgment | Defendants: No jurisdictional discovery warranted because factual basis not contested; plaintiff could have sought discovery earlier | Held: On the pleadings, allegations assumed true; court remanded for further proceedings; district court’s prior refusal to consider later evidence not addressed further here |
Key Cases Cited
- de Csepel v. Republic of Hungary, 859 F.3d 1094 (D.C. Cir. 2017) (foreign state remains immune under §1605(a)(3) when expropriated property is located abroad)
- Helmerich & Payne Int’l Drilling Co. v. Bolivarian Republic of Venezuela, 137 S. Ct. 1312 (Sup. Ct. 2017) (plaintiff must make more than a nonfrivolous showing that expropriation exception applies; district court may take evidence when jurisdictional facts require development)
- Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82 (D.C. Cir. 2002) (assumption of truth for unchallenged factual allegations in FSIA jurisdictional review)
- Simon v. Republic of Hungary, 812 F.3d 127 (D.C. Cir. 2016) (dismissal for lack of FSIA jurisdiction warranted only if no plausible inferences from alleged facts would satisfy nexus requirements)