Philipp v. Federal Republic of Germany
Civil Action No. 2015-0266
| D.D.C. | Jul 26, 2021Background
- Plaintiffs are heirs/assignees of three Frankfurt art-dealer firms that sold the medieval Welfenschatz in 1935; they allege the sale was coerced as part of Nazi persecution.
- Plaintiffs sued Stiftung Preussischer Kulturbesitz (SPK) and the Federal Republic of Germany; Germany was later dismissed after appeal.
- The D.C. Circuit applied an expropriation/genocide theory to deny sovereign immunity, but the Supreme Court in Federal Republic of Germany v. Philipp held the FSIA expropriation exception incorporates the domestic-takings rule and vacated the D.C. Circuit decision.
- The Supreme Court remanded and instructed the lower courts to consider whether the consortium members were non‑German nationals at the time of the 1935 transaction and whether that argument was adequately preserved below.
- Plaintiffs moved for leave to file a second amended complaint adding detailed allegations about Nazi nationality policy and the dealers’ nationalities; SPK opposed.
- The district court denied leave to amend, holding the Supreme Court mandate confined the court to the existing record and that Rule 15(a) denial was warranted by undue delay and prejudice to SPK.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Supreme Court mandate permits amending the operative complaint to add nationality allegations | Amendment is permissible because the mandate left open nationality questions and law changed, so plaintiffs should be allowed to plead new facts | Mandate requires the court to assess preservation based on the record as it existed at remand; permitting new allegations would violate the mandate | Denied — mandate bars amending the complaint to add new theories/facts bearing on preservation; court must decide preservation from the existing record |
| Whether the Supreme Court decision constitutes a change in governing law justifying amendment | The Supreme Court’s decision is a new development that allows amendment in light of altered legal framework | No change: domestic‑takings rule pre‑existed and was always available; plaintiffs knew or could have alleged nationality facts earlier | Denied — court finds no intervening change in law that excuses delay; domestic‑takings rule was longstanding |
| Whether plaintiffs unduly delayed in seeking amendment | Plaintiffs acted promptly after the Supreme Court’s decision and mandate | Plaintiffs knew relevant facts and defendants had raised domestic‑takings arguments earlier; waiting until after loss to amend is undue delay | Denied — undue delay shown because plaintiffs could have pleaded nationality information earlier |
| Whether permitting amendment would prejudice defendant or show bad faith | Plaintiffs say no bad faith and discovery has not begun, so no prejudice | SPK says amendments are substantial, would require new experts and investigations, and further delay a long‑pending case | Denied — prejudice to SPK shown; court found no need to find bad faith but acknowledged prejudice and delay |
Key Cases Cited
- Federal Republic of Germany v. Philipp, 141 S. Ct. 703 (2021) (Supreme Court holds FSIA expropriation exception incorporates domestic‑takings rule)
- Philipp v. Federal Republic of Germany, 894 F.3d 406 (D.C. Cir. 2018) (D.C. Circuit applied expropriation/genocide theory and affirmed jurisdiction)
- Simon v. Republic of Hungary, 812 F.3d 127 (D.C. Cir. 2016) (D.C. Circuit recognized expropriation exception could reach takings linked to genocide)
- F. Hoffmann‑LaRoche, Ltd. v. Empagran S.A., 542 U.S. 155 (2004) (Supreme Court remand precedent discussing consideration of alternative theories preserved below)
- Foman v. Davis, 371 U.S. 178 (1962) (Rule 15(a) standard: leave to amend should be freely given absent factors such as undue delay or prejudice)
- In re Johns‑Manville Corp., 600 F.3d 135 (2d Cir. 2010) (remand court may be barred from considering forfeited arguments when Supreme Court directs limited review)
- Parmalat Capital Fin. Ltd. v. Bank of Am. Corp., 671 F.3d 261 (2d Cir. 2012) (mandate and spirit of remand limit district court’s ability to entertain new dispositive theories)