Schubarth v. Federal Republic of Germany
220 F. Supp. 3d 111
D.D.C.2016Background
- Schubarth, a U.S. citizen, alleges she inherited >500 acres in Thuringia expropriated by East Germany in 1945 and seeks full fair-market compensation under the U.S.–Germany FCN Treaty.
- She applied for restitution in Thuringia in 1991 and again in 1995; after a 19-year administrative process the state awarded €35,279 in 2014, which she contends is inadequate.
- In Dec. 2014 she sued the Federal Republic of Germany and BVVG (a German state-owned agency that markets former East German lands) in D.D.C. to recover the property’s value.
- Defendants moved to dismiss based on sovereign immunity under the Foreign Sovereign Immunities Act (FSIA), arguing Schubarth failed to plead an applicable FSIA exception (the expropriation exception, 28 U.S.C. § 1605(a)(3)).
- Schubarth relied on clause (2) of §1605(a)(3), claiming BVVG is an agency/instrumentality engaged in commercial activity in the United States; she pointed to a past New York office and ongoing English-language and internet marketing.
- The court found the Complaint did not plausibly allege BVVG engaged in commercial activity in the United States at or near the time of suit and therefore dismissed for lack of subject-matter jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FSIA expropriation exception (28 U.S.C. §1605(a)(3)) applies via clause (2) | BVVG is an agency/instrumentality that is engaged in commercial activity in the U.S. (past NY office, ongoing internet/English-language marketing) | Schubarth fails to allege BVVG engaged in commercial activity in the U.S.; prior NY activity was remote and internet marketing is not U.S.-specific | Dismissed: plaintiff did not plead BVVG was "engaged in a commercial activity in the United States," so §1605(a)(3) is inapplicable and court lacks jurisdiction |
| Whether clause (1) of §1605(a)(3) applies (property present in U.S.) | N/A — Schubarth concedes property not present in U.S. | Property was not and is not present in the U.S. | Inapplicable; plaintiff conceded clause (1) does not apply |
| Whether FCN Treaty or FSIA waiver applies to waive Germany’s immunity for BVVG | FCN Treaty waives immunity where the agency engages in commercial activity in U.S. | Treaty waiver is coextensive with FSIA commercial-activity requirement and is not met | Waiver inapplicable because plaintiff failed to allege commercial activity in U.S. |
| Whether court should consider extrinsic evidence beyond the complaint on jurisdictional issue | Plaintiff relied on exhibits; court noted defendants challenged legal sufficiency (not facts) | Defendants did not contest complaint facts; court may but need not consider outside materials | Court primarily evaluated sufficiency of Complaint; considered exhibits only to show how a more complete complaint might fail as well |
Key Cases Cited
- Simon v. Republic of Hungary, 812 F.3d 127 (D.C. Cir.) (standard for evaluating FSIA exceptions when sufficiency of pleadings challenged)
- Phoenix Consulting, Inc. v. Republic of Angola, 216 F.3d 36 (D.C. Cir.) (burden on defendant to show plaintiff’s allegations do not meet FSIA exception)
- Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82 (D.C. Cir.) (dismissal warranted where no plausible inference supports FSIA exception)
- Abelesz v. Magyar Nemzeti Bank, 692 F.3d 661 (7th Cir.) (definition and examples of "commercial activity" under FSIA)
- Agudas Chasidei Chabad of U.S. v. Russian Fed’n, 528 F.3d 934 (D.C. Cir.) (analysis of agency/instrumentality commercial-activity prong timing and U.S. contacts)
- Altmann v. Republic of Austria, 317 F.3d 954 (9th Cir.) (recent U.S. commercial acts can satisfy FSIA commercial-activity requirement)
- Cassirer v. Kingdom of Spain, 616 F.3d 1019 (9th Cir.) (examples of commercial activities tying an instrumentality to U.S. market)
- Siderman de Blake v. Republic of Argentina, 965 F.2d 699 (9th Cir.) (solicitation and commercial dealings in the U.S. relevant under FSIA)
- Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998 (4th Cir.) (defendant bears burden to show plaintiff’s allegations do not fit an FSIA exception)