De Csepel v. Republic of Hung. (In re Republic of Hung.)
| Decision Date | 08 March 2022 |
| Docket Number | No. 20-7047, No. 20-8001,20-7047 |
| Citation | 27 F.4th 736 |
| Parties | David L. DE CSEPEL, et al., Appellees v. REPUBLIC OF HUNGARY, a foreign state, et al., Appellants In re: Republic of Hungary, et al., Petitioners |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Thaddeus J. Stauber argued the cause for appellants. With him on the briefs was Sarah Erickson André.
Alycia Regan Benenati argued the cause for appellees. With her on the brief were Sheron Korpus and David E. Mills.
Before: Tatel, Pillard, and Jackson* , Circuit Judges.
For the third time, we consider a family's decades-long effort to recover a valuable art collection that the World War II-era Hungarian government and its Nazi collaborators seized during their wholesale plunder of Jewish property during the Holocaust. On remand from our second decision, the district court dismissed the family's claims against the Republic of Hungary and permitted the suit to proceed against the remaining defendants, a Hungarian asset management company, a university, and three art museums. The remaining defendants appeal the district court's denial of sovereign immunity, and the parties also seek our discretionary review of additional issues. For the reasons explained below, we exercise that discretion to review several holdings, and we affirm the district court on those that we review.
We described the background of this case in our earlier opinions, de Csepel v. Republic of Hungary , 714 F.3d 591, 594–97 (D.C. Cir. 2013) ( de Csepel I ) and de Csepel v. Republic of Hungary , 859 F.3d 1094, 1097–99 (D.C. Cir. 2017) ( de Csepel II ). For the reader's convenience, we repeat it virtually in full. Baron Mór Lipót Herzog was a "passionate Jewish art collector in pre-war Hungary" who assembled a collection of more than two thousand paintings, sculptures, and other artworks. Am. Compl. ¶ 37. Known as the "Herzog Collection," this body of artwork was "one of Europe's great private collections of art, and the largest in Hungary," and included works by renowned artists such as El Greco, Velázquez, Renoir, and Monet. Id . Following Herzog's death in 1934 and his wife's shortly thereafter, their daughter Erzsébet and two sons István and András inherited the collection. Id. ¶ 38.
Then came World War II, and Hungary joined the Axis Powers. In March 1944, Adolf Hitler sent German troops into Hungary, and SS Commander Adolf Eichmann entered the country along with the occupying forces and established headquarters at the Majestic Hotel in Budapest. Id . ¶¶ 50, 51 59. During this time, Hungarian Jews were subjected to anti-Semitic laws restricting their economic and cultural participation in Hungarian society and deported to German concentration camps. Id . ¶¶ 43, 46, 51. As an integral part of its oppression of Hungarian Jews, "[t]he Hungarian government, including the Hungarian state police, authorized, fully supported and carried out a program of wholesale plunder of Jewish property, stripping anyone ‘of Jewish origin’ of their assets." Id . ¶ 53. Jews "were required to register all of their property and valuables" in excess of a certain value, and the Hungarian government "inventoried the contents of safes and confiscated cash, jewelry, and other valuables belonging to Jews." Id . ¶ 54. "[P]articularly concerned with the retention of artistic treasures belonging to Jews," the Hungarian government established "a so-called Commission for the Recording and Safeguarding of Impounded Art Objects of Jews ... and required Hungarian Jews promptly to register all art objects in their possession." Id . ¶ 55. "These art treasures were sequestered and collected centrally by the Commission for Art Objects," headed by the director of the Hungarian Museum of Fine Arts. Id.
In response to widespread looting of Jewish property, the Herzogs "attempted to save their art works from damage and confiscation by hiding the bulk of [them] in the cellar of one of the family's factories at Budafok." Id . ¶ 57. Despite these efforts, "the Hungarian government and their Nazi[ ] collaborators discovered the hiding place" and confiscated the artworks. Id . ¶ 58. They were "taken directly to Adolf Eichmann's headquarters at the Majestic Hotel in Budapest for his inspection," where he "selected many of the best pieces of the Herzog Collection" for display near Gestapo headquarters and for eventual transport to Germany. Id . ¶ 59. "The remainder was handed over by the Hungarian government to the Museum of Fine Arts for safekeeping." Id . After seizure of the collection, a pro-Nazi newspaper ran an article in which the director of the Hungarian Museum of Fine Arts boasted that the " " Id . ¶ 58.
"Fearing for their lives, and stripped of their property and livelihoods, the Herzog family was forced to flee Hungary or face extermination." Id . ¶ 62. Erzsébet Herzog (Erzsébet Weiss de Csepel following her marriage) fled Hungary with her children, first reaching Portugal and eventually settling in the United States, where she became a U.S. citizen in 1952. Id . István Herzog was nearly sent to Auschwitz but "escaped after his former sister-in-law's husband ... arranged for him to be put in a safe house under the protection of the Spanish Embassy." Id . ¶ 41. "He died in 1966, leaving his estate to his two sons, Stephan and Péter Herzog, and his second wife, Mária Bertalanffy." Id . András Herzog was "sent ... into forced labor in 1942 and he died on the Eastern Front in 1943." Id . ¶ 40. His daughters, Julia Alice Herzog and Angela Maria Herzog, fled to Argentina and eventually settled in Italy. Id . ¶¶ 40, 63.
Following the end of World War II, the Herzog family began a seven-decade effort to reclaim the art collection, including through the Hungarian courts. de Csepel II , 859 F.3d at 1098. When those efforts proved unsuccessful, three heirs to the collection — Erzsébet's son David L. de Csepel, along with András's daughters Julia Alice and Angela Maria Herzog (collectively, "the family") — filed suit in U.S. district court. The family brought the suit against the Republic of Hungary, three art museums — the Budapest Museum of Fine Arts, the Hungarian National Gallery, and the Budapest Museum of Applied Arts — and the Budapest University of Technology and Economics. Compl. ¶¶ 9–13. The family alleges that Defendants’ possession or re-possession of at least forty pieces of the Herzog Collection following World War II "constituted one or more express or implied bailment contracts" and that Defendants’ failure to return the artworks upon demand breached the bailment contracts and constituted conversion and unjust enrichment. Am. Compl. ¶¶ 16, 99–123, 139–142. The family seeks imposition of a constructive trust, an accounting, and a declaration of its ownership of the Herzog Collection, all aimed at either recovering the artwork or obtaining over $100 million in compensation. Id. ¶¶ 124–38 & pt. V.
This dispute first arrived in our court in 2013, and the question before us then was whether the suit was barred by the Foreign Sovereign Immunities Act ("FSIA"). de Csepel I , 714 F.3d at 597. "That Act authorizes federal jurisdiction over civil actions against foreign states, as relevant here, only in certain cases involving expropriated property or commercial activity, and only to the extent such jurisdiction is not inconsistent with certain international agreements." de Csepel II , 859 F.3d at 1099 (citing 28 U.S.C. §§ 1604–05). We rejected Defendants’ assertion of sovereign immunity, concluding on the pleadings that the family's claims satisfied the FSIA's commercial activity exception and that jurisdiction was not inconsistent with agreements between the United States and Hungary. de Csepel I , 714 F.3d at 597–603.
This dispute returned to our court after the district court, following the close of discovery, concluded that, as the evidentiary record had developed, the commercial activity exception did not apply but the action could nonetheless proceed under the FSIA's expropriation exception. de Csepel II , 859 F.3d at 1099. We affirmed the district court's conclusion that the expropriation exception applied to "twenty-five or so artworks taken by Hungary during the Holocaust and never returned. " Id. at 1103. But we remanded for the district court to consider whether the expropriation exception applies to nineteen artworks that were temporarily returned to members of the Herzog family. Id. at 1103–04. We instructed the district court to (1) dismiss the Republic of Hungary because it enjoys immunity under the FSIA and (2) "grant the Herzog family leave to amend their complaint in light of the Holocaust Expropriated Art Recovery Act" of 2016 ("HEAR Act"). Id. at 1107, 1110.
Back in the district court, the family filed an amended complaint that referenced the HEAR Act and added a new defendant, Hungarian National Asset Management Inc. ("MNV"), which exercises ownership rights over and manages certain Hungarian assets. Am. Compl. ¶¶ 3, 14, 87–98. The district court dismissed the Republic of Hungary in accordance with our directive, and rejected Defendants’ arguments that MNV is not a proper party to this suit and that this action may not proceed against the remaining defendants in Hungary's absence. de Csepel v. Republic of Hungary , No. 10-cv-01261, ––– F.Supp.3d ––––, –––– – ––––, ––––, ––––, ––––, 2020 WL 2343405, at *5–6, 10, 17, 33 ( Remand II ). The court retained jurisdiction over five of the nineteen artworks that were temporarily returned to the Herzog family, holding that the FSIA's expropriation exception applied to these pieces. Id. at ––––, ––––, at *19, 35.
Defendants now appeal, seeking...
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