Abelesz v. OTP Bank

• Decision Date: 22 August 2012
• Docket Number: Nos. 11–2353,11–2386,11–3247,11–2875,11–3249.,s. 11–2353
• Citation: 692 F.3d 638
• Parties: Erno Kalman ABELESZ et al., Plaintiffs–Appellees, v. OTP BANK, Defendant–Appellant. Erno Kalman Abelesz et al., Plaintiffs–Appellees, v. MKB Bank Zrt., sued as MKB Bayerische Landesbank, Defendant–Appellant. Erno Kalman Abelesz et al., Plaintiffs–Appellees, v. MKB Bank Zrt., sued as MKB Bayerische Landesbank, Defendant–Appellant. In re MKB Bank Zrt., sued as MKB Bayerische Landesbank, Petitioner. In re OTP Bank, Petitioner.
• Court: U.S. Court of Appeals — Seventh Circuit

692 F.3d 638

Erno Kalman ABELESZ et al.,^* Plaintiffs–Appellees,

v.OTP BANK, Defendant–Appellant.

Erno Kalman Abelesz et al., Plaintiffs–Appellees,

v.MKB Bank Zrt., sued as MKB Bayerische Landesbank, Defendant–Appellant.

Erno Kalman Abelesz et al., Plaintiffs–Appellees,

v.MKB Bank Zrt., sued as MKB Bayerische Landesbank, Defendant–Appellant.

In re MKB Bank Zrt., sued as MKB Bayerische Landesbank, Petitioner.

In re OTP Bank, Petitioner.

Nos. 11–2353, 11–2386, 11–2875, 11–3247, 11–3249.

United States Court of Appeals,Seventh Circuit.

Argued Jan. 11, 2012.

Decided Aug. 22, 2012.

Anthony Alfred D'Amato, Attorney, Northwestern University School of Law, Jeffrey A. Leon (argued), Attorney, Complex Litigation Group, LLC, Robert James Pavich (argued), Attorney, Pavich Law Group, Chicago, IL, Richard H. Weisberg, Attorney, Cardozo Law School, New York, NY, for Holocaust Victims of Bank Theft.

Thomas G. Corcoran, Jr. (argued), Attorney, Berliner, Corcoran & Rowe, Washington, DC, Gregory Louis Stelzer, Attorney, Figliulo & Silverman, P.C., Chicago, IL, for Defendant–Appellant.

Thomas G. Corcoran, Jr. (argued), Attorney, Berliner, Corcoran & Rowe, Washington, DC, James R. Figliulo, Attorney, Figliulo & Silverman, P.C., Chicago, IL, for Petitioner.

Tyrone C. Fahner, Attorney, Mayer Brown LLP, Chicago, IL, Charles A. Rothfeld (argued), Attorney, Mayer Brown LLP, Washington, DC, for Petitioner and Defendant–Appellant.

Joel D. Bertocchi, Attorney, Hinshaw & Culbertson, Chicago, IL, for Amicus Curiae.

Before KANNE, WILLIAMS, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

A group of Holocaust survivors and heirs of other Holocaust victims filed suit against several banks alleging that the banks participated in expropriating property from Hungarian Jews during the Holocaust. This case and a parallel case against the Hungarian national railway have produced nine separate pending appeals and mandamus petitions. In this opinion, we address the plaintiffs' claims against two privately owned Hungarian banks, defendants MKB Bank Zrt. (“MKB”) and OTP Bank (“OTP”). In separate opinions released today, we address plaintiffs' claims against another private bank, the Hungarian national bank, and the Hungarian national railway.¹

Plaintiffs' complaint describes a part of the tragic, historic crimes that were the Holocaust, focusing on the role of Hungarian banks in expropriating money from Jews and financing part of the Holocaust. Since defendants seek review of denials of their motions to dismiss, our account of the facts treats all factual allegations in the complaint as true. As post-World War I treaties took their economic toll on Hungary, the non–Jewish population became increasingly hostile toward Hungarian Jews who, as a group, enjoyed relatively great economic influence. The widespread murders of the Holocaust came relatively late to Hungary, in April 1944, but long before then, Hungarian Jews were subjected to a series of anti-Semitic decrees that sought to limit Jewish economic influence and property ownership. Jews were ordered to turn over their personal property and valuables to officials who collected the property and gave receipts to the owners—ostensibly so the owners could reclaim the property at a future date. A special account was created to centralize and coordinate the funds from frozen and looted Jewish bank accounts. “Aladar” (“straw men”) were designated by the government to administer Jewish property.

Plaintiffs allege that Hungarian banks, including defendants MKB and OTP, played critical roles in the ex-propriation scheme, which was essential to finance the genocide of the Holocaust in Hungary. The scheme relied on Hungarian banks to freeze the assets of their Jewish customers, preventing them from withdrawing funds to finance escape from the ever-increasing Hungarian repression. Plaintiffs allege that expropriation of Jews' wealth was also a critical component of the genocide, both to fund the government's murderous activities and to impoverish survivors so that it would be impossible for them to return to their homes in Hungary. Beginning in April 1944, Hungarian Jews were deported to Auschwitz and other death camps. After the end of World War II, some Jewish survivors or heirs of murdered victims attempted to return to their family homes and to retrieve valuables in safe deposit boxes. Those who were able to return found empty safe deposit boxes and homes occupied by strangers.

Invoking subject-matter jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1330(a), the Alien Tort Statute, 28 U.S.C. § 1350, and federal question jurisdiction, 28 U.S.C. § 1331, plaintiffs allege six causes of action: genocide, aiding and abetting genocide, bailment, conversion, constructive trust, and accounting. Plaintiffs seek to have their case certified as a class action and ask that each defendant bank be held jointly and severally responsible for damages of approximately $75 billion. The defendant banks moved to dismiss on many grounds, including lack of subject-matter jurisdiction and lack of personal jurisdiction. The district court denied all motions to dismiss, motions to reconsider, and motions for certification of interlocutory appeal under 28 U.S.C. § 1292(b). Holocaust Victims of Bank Theft v. Magyar Nemzeti Bank, 807 F.Supp.2d 689 (N.D.Ill.2011) (denying motions to dismiss); 807 F.Supp.2d 699 (N.D.Ill.2011) (denying motions for reconsideration, clarification, and certification of interlocutory appeal).

Those denials pose some challenging problems of appellate jurisdiction, as we explain below. The appellate jurisdiction story in this case begins with defendant Magyar Nemzeti Bank (“MNB”), the Hungarian national bank, which moved to dismiss based on a defense of sovereign immunity under the FSIA, 28 U.S.C. § 1604. The district court denied MNB's motion. MNB has appealed the district court's denial of its motion to dismiss on sovereign immunity. As we explain in Abelesz v. Magyar Nemzeti Bank, it is well established that an order denying sovereign immunity under the FSIA is a collateral order subject to interlocutory appeal. 692 F.3d at 666. From that one sound basis for appellate jurisdiction, MNB has asked us to exercise pendent appellate jurisdiction over the other arguments it made for dismissal. And, in turn, appellants MKB and OTP, like Erste Group Bank, seek here to stretch the narrow doctrine of pendent appellate jurisdiction to include their appeals and the separate issues they seek to raise. MKB and OTP, like Erste, also filed petitions for writs of mandamus, which they ask us to consider in the event that appellate jurisdiction is lacking.

We dismiss MKB's and OTP's appeals for lack of appellate jurisdiction. Their petitions for writs of mandamus are granted, however, based on an unusual combination of the extraordinary nature of this litigation and the complete absence of any arguable basis for exercising general personal jurisdiction over MKB and OTP in a U.S. court.

The losses alleged by plaintiffs were part of the crimes of the Holocaust in central Europe in the 1940s. This case demonstrates some of the limits in trying to use civil courts on another continent to obtain legal relief for those crimes, now more than 60 years old. Our order that the claims against MKB and OTP be dismissed is not based on a determination that the conduct alleged here was beyond the reach of the law. When faced with similar claims, Judge Kram wrote eloquently:

It goes without saying that the events which form the backdrop of this case make up one of the darkest periods of man's modern history. Those persecuted by the Nazis were the victims of unspeakable acts of inhumanity. At the same time, however, it must be understood that the law is a tool of limited capacity. Not every wrong, even the worst, is cognizable as a legal claim.

In re Austrian & German Bank Holocaust Litigation, 80 F.Supp.2d 164, 177 (S.D.N.Y.2000), aff'd on other grounds sub nom., D'Amato v. Deutsche Bank, 236 F.3d 78 (2d Cir.2001). We agree. We are a court of law that must itself comply with the law. We must confront a basic jurisdictional question—whether plaintiffs are entitled to require these defendants to defend themselves in a U.S. federal court. The district court lacks the constitutional power to exercise personal jurisdiction over these defendants, so the answer to that question is no. We order the district court to dismiss the claims against MKB and OTP for lack of personal jurisdiction.²

I. Appellate Jurisdiction

At the outset, we must consider our own jurisdiction over these appeals. MKB and OTP seek review of the district court's denial of their motions to dismiss. As a general rule, the district court must issue a final order before an appellate court has jurisdiction to entertain an appeal. See 28 U.S.C. § 1291. MKB and OTP both argue that this court has pendent appellate jurisdiction over their appeals on the theory that the issues they present are “inextricably intertwined” with MNB's appeal of the district court's denial of foreign sovereign immunity. MKB further argues that the “adverse foreign policy consequences” of maintaining the suit against it render the district court's refusal to dismiss the case a collateral order subject to immediate appeal. Neither argument provides us with jurisdiction over MKB's and OTP's appeals.

A. Pendent Appellate Jurisdiction

As noted, defendant MNB, the Hungarian national bank, has appealed the district court's denial of its sovereign immunity defense under the FSIA. In its own appeal, MNB raises other issues that it argues are pendent to the FSIA immunity defense. We clearly have jurisdiction over MNB's appeal of the denial of sovereign immunity and address the merits of that defense in a separate opinion in Abelesz v. Magyar Nemzeti Bank, 692 F.3d 661. From this one solid foothold on appellate jurisdiction, MKB and OTP argue that this court should exercise pendent...