Garb v. Republic of Poland

• Decision Date: 03 March 2006
• Docket Number: Docket No. 02-7844.
• Citation: 440 F.3d 579
• Parties: Theo GARB, Bella Jungewirth, Sam Lefkowitz, Peter Koppenheim, Judah Weller, Chana Lewkowicz, Samuel Goldin, Karl Dlamond, Hala Sobol, Saul Klausner, and Goldie Knobel, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. REPUBLIC OF POLAND, Ministry of the Treasury of Poland (Ministerstwo Skarbu Panstwa), and John Does #1-100, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

440 F.3d 579

Theo GARB, Bella Jungewirth, Sam Lefkowitz, Peter Koppenheim, Judah Weller, Chana Lewkowicz, Samuel Goldin, Karl Dlamond, Hala Sobol, Saul Klausner, and Goldie Knobel, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. REPUBLIC OF POLAND, Ministry of the Treasury of Poland (Ministerstwo Skarbu Panstwa), and John Does #1-100, Defendants-Appellees.

Docket No. 02-7844.

United States Court of Appeals, Second Circuit.

Argued April 15, 2003.

Remanded June 14, 2004.

Submitted September 10, 2004.

Decided March 3, 2006.

Stephen A. Whinston (Edward W. Millstein, Berger & Montague, P.C., Philadelphia, PA, Edward E. Klein, Klein & Solomon, LLP, New York, NY, on the brief), Berger & Montague, P.C., Philadelphia, PA, for Plaintiffs-Appellants Garb, et al.

Owen C. Pell (Karen M. Asner, on the brief), White & Case LLP, New York, NY, for Defendants-Appellees Republic of Poland, et al.

Douglas Hallward-Driemeier (William H. Taft IV, Jonathan B. Schwartz, Wynne M. Teel, Robert D. McCallum, Jr., Gregory G. Katsas, Jr., Mark B. Stern, on the brief), Department of Justice, Washington, D.C., for Amicus Curiae United States of America in support of Defendant-Appellee Republic of Poland.

Charles Chotkowski, Fairfield, CT, Amicus Curiae.

Before KEARSE, CABRANES, and STRAUB, Circuit Judges.

Judge STRAUB dissents in a separate opinion.

JOSÉ A. CABRANES, Circuit Judge.

We consider here claims emerging from the re-drawing of the map of Europe following the defeat of the Axis Powers in the Second World War, the displacement of millions of people, particularly surviving Jews, in much of the continent, and the installation by force of governments in Central and Eastern Europe. See Michael R. Marrus, The Unwanted European Refugees in the Twentieth Century 335-36 (1985) (describing the forced migration of Jews and expropriation of Jewish assets throughout Central and Eastern Europe following the Second World War), Compl. ¶ 3,¹ see also Malcolm J. Proudfoot, European Refugees 1939-52, at 190 (1956) ("When the [Second World] [W]at ended, there were approximately 11 million non-German displaced persons in Europe who required repatriation"), id. at 189 (providing a breakdown by nationality of persons requiting repatriation).

Plaintiffs appeal from a judgment of the United States District Court for the Eastern District of New York (Edward R. Korman, Chief Judge) dismissing their claims against the Republic of Poland and the Ministry of the Treasury of Poland for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1). See Garb v. Republic of Poland, 207 F.Supp.2d 16 (E.D.N.Y.2002). Plaintiffs' claims, which at the pleadings stage we accept as true in all respects, see, e.g., Hallock v. Bonner, 387 F.3d 147, 150 (2d Cir.2004), arise from the mistreatment of Jews in Poland after the Second World War—mistreatment that Chief Judge Korman properly described as "horrendous" Garb, 207 F.Supp.2d at 17. In particular, plaintiffs challenge the Polish Government's expropriation of their property following the asserted enactment of post-war legislation designed for that purpose. Id. at 18.

As the District Court aptly noted, "strong moral claims are not easily converted into successful legal causes of action." Id. at 39 (internal quotation marks and alteration omitted) Despite the severe injuries asserted by plaintiffs, the capacity of United States courts to exercise jurisdiction over plaintiffs' claims hinges on a legal inquiry narrowly circumscribed by statute. It is well settled that the only source of subject matter jurisdiction over a foreign sovereign in the courts of the United States is the Foreign Sovereign Immunities Act of 1976 ("FSIA"), 28 U.S.C. §§ 1330, 1602-1611, which codifies several exceptions to the long-established doctrine of foreign sovereign immunity.

Following a remand from the Supreme Court, see Republic of Poland v. Garb, 542 U.S. 901, 124 S.Ct. 2835, 159 L.Ed.2d 265 (2004), we consider for the second time whether plaintiffs' claims fall under these statutory exceptions. In the period between our previous disposition of this matter, see Garb v. Republic of Poland, 72 Fed.Appx. 850 (2d Cir.2003) (summary order), and the Supreme Court's remand, the question of the FSIA's retroactivity has been resolved in the affirmative, see Republic of Austria v. Altmann, 541 U.S. 677, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004). Accordingly, we now apply the FSIA retroactively to claims arising from events that took place prior to that statute's 1976 enactment.

We hold that none of the FSIA's exceptions to foreign sovereign immunity applies here and that subject matter jurisdiction is therefore lacking. First, we hold that plaintiffs have not satisfied the "commercial activity" exception of the FSIA, 28 U.S.C. § 1605(a)(2), because (a) a state's confiscation of property within its borders is not a "commercial" act, (b) the subsequent commercial treatment of expropriated property is not sufficiently "in connection with" the prior expropriation to satisfy the "commercial activity" exception, and (c) we decline to credit plaintiffs' recharacterization of what are in essence "takings" claims as "commercial activity" claims. Second, we hold that plaintiffs have not satisfied the "takings" exception of the FSIA, 28 U.S.C. § 1605(a)(3), because (a) plaintiffs seek to recover property that is not "present in the United States," (b) in such circumstances, plaintiffs must show that the property "is owned or operated by an agency or instrumentality of the foreign state," (c) plaintiffs allege that the property is "owned by" the Ministry of the Treasury of Poland, Appellants' R. at 15, and (d) the Ministry of the Treasury of Poland is not an "agency or instrumentality" of the Republic of Poland because its "core function" is governmental rather than commercial.

BACKGROUND

Plaintiffs are "Jewish persons and entities (and their heirs and successors) who owned real property in Poland during the period September 1, 1939 to May 30, 1945" Garb, 207 F.Supp.2d at 19 (internal quotation marks omitted). They filed suit in the District Court on June 18, 1999, [A 2] seeking redress from the Republic of Poland and the Ministry of the Treasury of Poland for expropriation of real property from Jews in post-War Poland. See id. at 17-19. The District Court's thorough opinion sets forth plaintiffs' claims in commendable detail, including the post-War violence perpetrated by the government of Poland against Polish Jews who had returned from the Soviet Union, the expropriation of property from those Jews, and the Polish government's actual and constructive participation in that violence and expropriation. Id.

Because this suit sought to hold a foreign sovereign State liable in the courts of the United States, and because, under the FSIA, "a foreign state is presumptively immune from the jurisdiction of United States courts[,] unless a specified [statutory] exception applies," Saudi Arabia v. Nelson, 507 U.S. 349, 355, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993),² plaintiffs have asserted that two exceptions to the FSIA apply to their claims—namely, (1) the "commercial activity" exception of 28 U.S.C. § 1605(a)(2),³ and (2) the "takings" exception of 28 U.S.C. § 1605(a)(3).⁴

Defendants contested the applicability of those exceptions and moved to dismiss this action for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1). In a comprehensive opinion, the District Court granted defendants' motion, see Garb, 207 F.Supp.2d at 39-40, finding that the "commercial activity" exception did not apply because, inter alia, (1) a government's expropriation of property from its own citizens "is a quintessentially sovereign act and is never viewed as having commercial character," id. at 31 (internal quotation marks omitted), and, in any event, (2) plaintiffs had failed to demonstrate, as required, that the assertedly commercial activity had a "direct effect" in the United States, id. at 32-33.

The District Court also concluded that plaintiffs could not rely on the "takings" exception to foreign sovereign immunity because (1) the FSIA's "takings" exception could not be applied retroactively to hold a foreign sovereign liable for conduct that predates the 1976 enactment of the FSIA, id. at 25-30, and alternatively, even if the "takings" exception were to be applied retroactively, defendants would still enjoy sovereign immunity because (2) plaintiffs had not established that a State's expropriation of property from its own nationals violates international law—a prerequisite for the application of the "takings" exception, id. at 33-34, and (3) the property in question is apparently neither "present in the United States" nor "owned or operated by an agency or instrumentality of the foreign state," id. at 34-38.

The District Court granted defendants' motion to dismiss in an order entered June 24, 2002, and plaintiffs timely filed a Notice of Appeal on July 19, 2002. We consolidated the appeal with Republic of Austria v. Whileman, Nos 02-9361 & 02-3087, for the purposes of oral argument.⁵ [See Garb Docket Entry of Feb. 25, 2003].

We heard oral argument on April 15, 2003, and, in light of a supervening and controlling decision by another panel of our Court in Abrams v. Societe Nationale des Chemins de Fer Francais, 332 F.3d 173 (2d Cir.2003), we filed a summary order on August 6, 2003 vacating the District Court's June 26, 2002 judgment (which had dismissed plaintiffs' claims against Poland), see Garb, 72 Fed.Appx. at 855. Relying on Abrams, we stated that this "case[] raises the threshold questions whether and on what terms the federal courts have jurisdiction under the [FSIA] to adjudicate the liability of sovereign states for conduct occurring prior to the statute's enactment [in 1976]" id. at 853. We explained, bound as we then were by Abrams, that whether the FSIA could...