Ungaro-Benages v. Dresdner Bank Ag

• Decision Date: 03 August 2004
• Docket Number: No. 03-11880.,03-11880.
• Citation: 379 F.3d 1227
• Parties: Ursula UNGARO-BENAGES, Judge, as heir of Lili Berliner nee Orenstein, Plaintiff-Appellant, v. DRESDNER BANK AG, Deutsche Bank AG, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

379 F.3d 1227

Ursula UNGARO-BENAGES, Judge, as heir of Lili Berliner nee Orenstein, Plaintiff-Appellant, v. DRESDNER BANK AG, Deutsche Bank AG, Defendants-Appellees.

No. 03-11880.

United States Court of Appeals, Eleventh Circuit.

August 3, 2004.

COPYRIGHT MATERIAL OMITTED

Beverly A. Pohl, Bruce Rogow, Bruce S. Rogow, P.A., Fort Lauderdale, FL, for Plaintiff-Appellant.

Jeffrey Barist, Jeffrey L. Nagel, Milbank, Tweed, Hadley & McCloy, LLP, New York City, Alan S. Fine, Miami, FL, for Defendants-Appellees.

Douglas Hallward-Driemeier, Washington, DC, for Amicus Curiae, U.S.

Roger M. Witten, New York City, for Amicus Curiae, Fed. Republic of Germany.

Appeal from the United States District Court for the Southern District of Florida.

Before BIRCH, KRAVITCH and OAKES^*, Circuit Judges.

KRAVITCH, Circuit Judge:

Plaintiff-appellant, Ursula Ungaro-Benages, filed suit against two German banks, Dresdner Bank and Deutsche Bank, to recover assets from her family's estate. The plaintiff alleges that the banks, through the Nazi Regime's program of "Aryanization," stole her family's interest in its manufacturing company, Orenstein & Koppel ("O&K"). The district court granted summary judgment for the defendant banks on multiple grounds, including the political question doctrine, international comity, statute of limitations and failure to state a claim. For the reasons that follow, we affirm the decision of the district court.

I. Background

A. The History of the Orenstein's Interests in O&K

In 1876, the plaintiff's great-grandfather, Benno Orenstein, together with Arthur Koppel, created O&K, which became Germany's sixth largest manufacturer of machinery. The company produced heavy earth-moving equipment and railway lines.¹ Benno Orenstein was the Director General of O&K until his death in 1926, when his son, Alfred Orenstein, became Managing Director. At this time, the Orenstein family's shares of O&K were distributed equally among Benno Orenstein's four children, although members of the family were not permitted to sell the shares without Alfred Orenstein's permission for ten years. Ungaro-Benages alleges that the family maintained a controlling interest in the company, including hundreds of thousands of preferred shares and common shares.²

Ungaro-Benages does not have precise information on what happened to the O&K shares once the Nazi party came to power. She alleges that because the Orensteins were Jewish, their ownership in O&K was vulnerable to "Aryanization," a state-instituted program in which Jewish assets were transferred to non-Jews by way of "boycotts, force, terror and coercion." Jewish owners were ousted from the boards of German corporations and assets were sold to non-Jews at nominal values. German banks, including the defendants in this action, acted as "trustees" for Jewish assets and aided the German government in transferring these assets away from their Jewish owners. The plaintiff alleges that both defendant banks were voluntarily involved in and profited from the state practice of Aryanization. She further alleges that the defendant banks continue to this day to conceal documentary evidence of their actions.

In the case of O&K, Ungaro-Benages alleges that Dresdner Bank, with the assistance of Deutsche Bank, successfully ousted the Orensteins from their positions on the board and effectively stole their stock. In her initial complaint, she maintains that the Nazi government and the Dresdner Bank "pressured and coerced" the Orenstein family into an agreement whereby Erich Niemann, a Dresdner Bank managing director, took over day-to-day control of O&K and became a trustee for all of the Orenstein's shares of preferred and common stock. Niemann was replaced by Karl Rasche, another Dresdner Bank representative in 1935. By 1938, all of the Jewish members of O&K's board, as well as the boards of both banks, had been removed, and Alfred Orenstein had relocated to South Africa to manage the company's branch there. O&K later terminated its contract with Alfred Orenstein. The plaintiff alleges that, by 1943, Deutsche Bank owned two-thirds of all O&K shares and had completely divested the Orensteins of their interests in the company. There is only one record of any payment to an Orenstein family member for shares of stock: 37,943RM to Alfred Orenstein.

B. Ungaro-Benages's Connection to O&K

Each of Benno Orenstein's four children received an equal share of the family's O&K stock upon his death. One of Benno's daughters, Lili, married and had two daughters, Ursula ("Ulla") and Liselotte. Ulla had a son, Peter Ungaro, and a daughter, Ursula Ungaro-Benages (the plaintiff). Liselotte had no heirs and left all of her assets to her sister (Ulla), Peter, and Ursula. The plaintiff now claims to represent, along with her brother, one-quarter of the estate of Benno Orenstein. The plaintiff only learned in 1993 that she was of Jewish descent. She did not discover until 2001 that she was the great-granddaughter of Benno Orenstein. Her grandmother, Lili Orenstein Berliner, did know about the family's history and attempted to ascertain what had happened to her interest in O&K. In 1950, Lili Berliner, through an attorney, wrote to Deutsche Bank requesting an accounting of her assets. Apparently Lili Berliner and her attorney took no further action. The plaintiff maintains that the bank did not provide any information and alleges that it still has failed to account for the assets.

C. The International Agreements Addressing WWII Claims

After the end of WWII, there were several international agreements addressing restitution and reparations. In its sector of occupied Germany, the United States enacted military laws requiring that property taken by the Nazi Regime be restored and providing that individuals could bring claims for restitution of identifiable property. In 1954, the United States government together with the British and French governments, entered into an agreement to unite their sectors into an independent West German government. See Termination of the Occupation Regime in the Federal Republic of Germany, Oct. 23, 1954, 6 U.S.T. 4117. This agreement reaffirmed Germany's obligation to provide restitution as prescribed by United States' military law.³

In addition to claims by German nationals, the West German government also faced claims based on its wartime activities by other governments and foreign nationals. Many of the post-war treaties called for reparations, but the 1953 London Debt Agreement-an effort by Western powers to reindustrialize West Germany to help fight the Cold War-suspended these obligations. The suspension of claims was viewed as a suspension of the reparations question until a final post-war treaty on Germany was concluded, which did not occur until 1990 when Germany was reunified. In the 1990s, class-action lawsuits against the German government and private German companies increased dramatically in American courts, which caused considerable concern in Germany. In an effort to stem American litigation, the German government sought to enter into an international agreement with the United States to remove this litigation to an alternative forum based in Germany.

In 2000, President Clinton entered into an agreement with the German government ("the Foundation Agreement") aimed at achieving a "legal peace."⁴ See Agreement concerning the Foundation "Remembrance, Responsibility and the Future," July 17, 2000, U.S.-F.R.G., 39 I.L.M. 1298. In the agreement, the German government agreed to establish a private foundation, the Foundation "Remembrance, Responsibility, and the Future" ("the Foundation"), to hear claims brought by victims of the Nazi regime.⁵ The Foundation is funded by voluntary contributions from the German government and German companies. Both the United States government and the German government argue that this fund offers compensation to victims of the Nazi regime that would not be available through traditional litigation.

In return, the United States agreed to encourage its courts and state governments to respect the Foundation as the exclusive forum for claims from the National Socialist era. The agreement, however, did not suspend or transfer lawsuits in American courts to Germany. Instead, the United States promised to file a Statement of Interest in any lawsuit dealing with WWII restitution or reparations.⁶ The statement would inform United States courts that it is in the foreign policy interests of the United States for the case to be dismissed on any valid legal ground but would not suggest that the agreement itself provides an independent legal basis for dismissal.

II. Discussion

The district court dismissed the case on five grounds: (1) non-justiciable political question, (2) international comity, (3) statute of limitations, (4) failure to state a claim on which relief can be granted,⁷ and (5) a lack of capacity to sue.⁸ The district court rejected the defendants' assertion that the act of state doctrine was another independent ground for dismissal. We affirm the district court's opinion based on international comity.

A. Federal Common Law of Foreign Affairs

At the outset, we need to specify the source of law governing the present claim. We hold that federal law, rather than Florida law, governs notwithstanding the fact that the plaintiff brought state law claims against the defendant banks.

Under the Erie doctrine, a federal court adjudicating state law claims applies the substantive law of the state. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477(1941). The Supreme Court, however, has carved out exceptions to this doctrine where there are uniquely federal interests at stake. See Hinderlider v. La Plata River Co., 304 U.S. 92, 110, 58 S.Ct. 803, 82 L.Ed. 1202 (1938). One such exception applies to litigation that implicates the nation's...