Freund v. Republic of France, No. 06 Civ. 1637(RJS).

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: Richard J. Sullivan
• Citation: 592 F.Supp.2d 540
• Parties: Mathilde FREUND, Leo Bretholz, Freddie Knoller, et al., individually and on behalf of all other persons similarly situated, Plaintiffs, v. The REPUBLIC OF FRANCE, Société Nationale des Chemins de fer Français, and Caisse des Dépôts et Consignations, Defendants.
• Docket Number: No. 06 Civ. 1637(RJS).
• Decision Date: 19 December 2008

592 F.Supp.2d 540 Mathilde FREUND, Leo Bretholz, Freddie Knoller, et al., individually and on behalf of all other persons similarly situated, Plaintiffs,
v.
The REPUBLIC OF FRANCE, Société Nationale des Chemins de fer Français, and Caisse des Dépôts et Consignations, Defendants. No. 06 Civ. 1637(RJS). United States District Court, S.D. New York. December 19, 2008.

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Harriet Tamen, Esq., Law Offices of Harriet Tamen, Lucille Alice Roussin, Esq., and Stephen Thran Rodd, Esq., Abbey Spanier Rodd Abrams & Paradis, LLP, New York, NY, for Plaintiffs.

Karen M. Asner, Esq., Owen C. Pell, Esq., and Sali A. Rakower, Esq., White & Case LLP, New York, NY, for Defendant CDC.

Jeremy Goldman Epstein, Esq., Shearman & Sterling LLP, New York, NY, for Defendant France.

Andreas Frank Lowenfeld, Esq., New York University School of Law, New York, NY, for Defendant SNCF.

OPINION AND ORDER

RICHARD J. SULLIVAN, District Judge:

This action arises out of the expropriation of property from thousands of Jews and other "undesirables" during World War II as they were transported by rail to French holding camps, detained at those facilities, and ultimately deported to Nazirun concentration camps. Plaintiffs are Holocaust survivors, as well as the heirs and beneficiaries of some Holocaust victims. They allege that, between August 1941 and July 1943, their money and property was confiscated while they were aboard trains operated by Defendant Société Nationale des Chemins de Fer Français("SNCF") and held at camps run by civil servants of the Republic of France ("France"). They further allege that proceeds

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from those confiscations were deposited at Defendant Caisse des Dépôts et Consignations ("CDC").

Before the Court are Defendants' respective motions to dismiss. After careful consideration, the Court concludes that the bounds of its jurisdiction are not coterminous with the moral force of Plaintiffs' claims. For the reasons that follow, the Court finds that it lacks subject matter jurisdiction to adjudicate Plaintiffs' claims under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et seq. (the "FSIA" or the "Act"), and that, even if jurisdiction were proper, the case presents serious justiciability issues that make abstention appropriate. Accordingly, Defendants' motions to dismiss are granted.

I. BACKGROUND A. Facts¹

During World War II, 75,000 Jews and thousands of other "undesirables" were taken captive and detained at holding camps in France. (Compl. ¶¶ 6-7.) SNCF transported the detainees by train between various French holding camps, and to Nazi-run concentration camps. (Id. ¶ 8.) When the detainees boarded the trains, SNCF employees demanded their money, suitcases, and valuables. (Id.) Upon arrival at the French holding camps, the detainees were forced to turn over any remaining money and property.² (Id. ¶ 7.) Much of the confiscated property was ultimately deposited at CDC. (Id.) Some of the victims were searched again before the SNCF trains transported them to concentration camps. (Id.) In total, property was confiscated from approximately 56,400 people. (U.S. Dep't of Justice, Statement of Interest of the United States of America, June 29, 2006 ("Statement of Interest") at 3; Rakower Decl. Ex. B at 25.)

1. The Parties

Plaintiffs bring this action individually and on behalf of other Holocaust survivors and victims, their heirs, and beneficiaries. (Compl. ¶ 1.) The putative class includes all individuals detained in French holding camps, as well as those transported by SNCF trains either to those holding camps or to Nazi-run concentration camps. (Id. ¶ 51.) Plaintiffs are citizens of the United States, France, and other foreign nations. (See id. ¶¶ 10-11.)

Plaintiffs have named the Republic of France as a defendant in this action in its sovereign capacity as a "foreign state" under the FSIA, 28 U.S.C. § 1603(a). (Id. ¶ 24.)

Defendant CDC was created by an 1816 French statute in order to "restore faith in public finances following the Napoleonic Wars." (Rosenfeld Decl. ¶ 4.) It has been designated the "public depository of

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France" and is subject to the "oversight and guarantee of the French Legislature." (Id. ¶¶ 5-6.) During World War II, CDC accepted deposits of property taken from the detainees in the holding camps. (See id. ¶ 7 & Ex. D.) Today, the President of France appoints the CDC's Chairman and Chief Executive. (Id. ¶ 6.) The CDC also has a twelve-member Supervisory Board, including four members from the French Senate and French Chamber of Deputies. (Id.)

Defendant SNCF was created in 1938, when the French government consolidated five regional train networks. (Compl. ¶ 25.) It is the national railway of France and is wholly owned by the French government. (Id.) SNCF is also one of the 500 largest companies in the world, and it derives substantial revenue from international business, including business conducted with United States citizens. (Id. ¶¶ 25, 61.)

2. The Drancy Holding Camp

Plaintiffs' claims center on property expropriations at French provincial holding camps such as Pithiviers, Beaune-la-Rolande, Compiègne, and Drancy. (See id. ¶ 10.) The Complaint focuses on the events in and around the camp at Drancy as Plaintiffs' starkest example of the atrocities that serve as the basis for their claims.

Over a six-day period starting on August 20, 1941, acting on orders from Nazi authorities, the Paris Police captured approximately four thousand Jews and brought them to a camp outside the city at Drancy. (See Rodd Decl. Ex. 6 at 14.) By March 1942, Drancy was being used as a "transit station" for deportation to Nazi concentration camps, mainly Auschwitz. (Compl. ¶ 10; Rodd Decl. Ex. 6 at 4, 14.) Between July and November 1942, approximately 29,000 victims were deported to Auschwitz, and an additional 8,000 people were sent between February 9 and March 25, 1943. (Rodd Decl. Ex. 6 at 4.) The Nazis took control of Drancy in July 1943 and used it as a concentration camp. (Id.)

Approximately 80,000 people "passed through" Drancy, including 40,000 Jews from outside of France. (Compl. ¶ 11.) About 67,000 of those victims were deported to Nazi-run concentration camps elsewhere in Europe. (Compl. ¶ 11; Rodd Decl. Ex. 6 at 14.) Less than 3% of these victims survived. (Compl. ¶ 6.)

Before the Nazis seized control of Drancy, it was run by French civil servants who kept records of the property that was seized from detainees. (Rodd Decl. Ex. 6 at 14.) The records from Drancy reflect that approximately 12,039,892 French francs were seized. (Compl. ¶ 15.)³ Overall, an estimated 200,000,000 francs were expropriated from detainees at the French provincial camps. (Id. ¶ 14.)

The proceeds from the Drancy expropriations were initially deposited with the City of Paris Municipal Savings Bank, but, starting in February 1942, the money was brought directly to CDC. (Rodd Decl. Ex. 6 at 14.) At the end of World War II, 1,081,158.75 expropriated francs from Drancy had been returned. (Id. at 15.) However, as of December 1999, 9,733,308 expropriated francs remained deposited at CDC. (See Compl. ¶ 21.)

Limited amounts of the expropriated funds were reimbursed to 138 claimants in 1945 and 1946, but only twenty-five reimbursements were made after October 1947. (Rodd Decl. Ex. 6 at 15.) Physical property that was seized was returned on an even more limited basis. A series of auctions

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was held in the early 1950s, and the proceeds from the sales were deposited at CDC. (Id.) Although CDC forfeited some of the spoliated funds to the French Treasury between 1978 and 1986, it also retained significant amounts of those funds. (Id.; Statement of Interest Ex. 1, Declaration of Stuart E. Eizenstat, Jan. 19, 2001 ("Eizenstat Decl.") ¶ 6)

3. The Matteoli Mission And United States Diplomatic Efforts

In 1995, French President Jacques Chirac publicly declared that France would seek to remedy the harms done by the Vichy Regime and Nazi occupation. (Eizenstat Decl. ¶ 6.) Two years later, the French government initiated the Study Mission on the Spoliation of Jews in France (the "Matteoli Mission"). (Statement of Interest at 3.) The Matteoli Mission issued a 3,000 page report in April 2000, which described various types of spoliations suffered by Jews in France between 1940 and 1944 (the "Matteoli Report"). (Eizenstat Decl. ¶ 6.)

The Matteoli Report quantified, to some extent, past restitution for the French expropriations, but found that "significant portions of the spoliated bank assets remain[] unknown." (Id.) It recommended, inter alia, creating a commission to hear claims relating to lost property, and establishing a foundation that would provide support to Holocaust victims and their families, as well as education regarding the Holocaust. (Id. ¶ 7.)

While the Matteoli Mission was conducting its inquiry, individual Holocaust victims began filing claims in United States courts relating to the expropriations in France. (Id. ¶ 8.) In August 2000, just months after the Matteoli Report had been released, "a United States District Court denied a motion to dismiss two of the cases, indicating that they would be allowed to proceed." (Id.)

As the Matteoli Mission was working in France and the American lawsuits against French banks proceeded, the United States government sought to facilitate an alternative resolution of the Holocaust survivors' claims. Between the fall of 1998 and the summer of 2000, Stuart E. Eizenstat, serving as the Secretary of State's Special Envoy on Property Restitution in Central and Eastern Europe, led a team of United States officials seeking to "facilitate[] negotiations leading to a resolution of class action lawsuits filed in [United States] courts against German companies arising from slave and forced labor and other wrongs by those companies during the Nazi era."...