Gross v. German Foundation Indus. Initiative

Decision Date10 December 2008
Docket NumberNo. 07-3727.,No. 07-3726.,07-3726.,07-3727.
Citation549 F.3d 605
PartiesElly GROSS; Roman Neuberger; John Brand, in their individual capacities as thirdparty beneficiaries of the agreements leading to the establishment of the German Foundation "Remembrance, Responsibility and the Future", as representatives of all German Foundation beneficiaries; Sylvia Greenbaum, Appellants in 07-3726 v. THE GERMAN FOUNDATION INDUSTRIAL INITIATIVE, and its constituent managing companies; Allianz AG; BASF AG; Bayer AG; BMW AG; Commerzbank AG; Daimlerchrysler AG; Deutsche Bank AG; Degussa-Huells AG; Deutz AG; Dresdner Bank AG; Friedr Krupp AG Hoesch Krupp; Hoechst AG; Rag AG; Robert Bosch GMBH, Siemens AG; Veba AG; Volkswagen AG, sued individually; and as members of the German Foundation Industrial Initiative Barbara Schwartz Lee; Bernard Lee, Appellants in 07-3727. v. Deutsche Bank, AG; Dresdner Bank, AG.
CourtU.S. Court of Appeals — Third Circuit

Neil McDonell, Esquire, Brian E. McGunigle, Esquire, Deirdre Sheridan, Esquire, Dorsey & Whitney LLP, New York, NY, Attorney for Appellee, Robert Bosch GmbH.

Daniel V. Gsovski, Esquire, Ian Ceresney, Esquire, Herzfeld & Rubin P.C., New York, NY, Attorney for Appellee, Volkswagen AG.

Before McKEE, NYGAARD, and MICHEL,* Circuit Judges.


MICHEL, Chief Circuit Judge.

At issue in this World War II reparations case is whether the Joint Statement of the Berlin Accords constitutes a privately enforceable contract between some of the participants to the Joint Statement. Appellants contend that the defendant German companies owe "interest" on their payments to a reparations fund created by the Berlin Accords. In a prior appeal to our court, we held that the claim presented a justiciable issue not foreclosed by the political question doctrine. Having again considered the allegations of the complaints, we hold that the disputed interest provision of the Joint Statement does not constitute or confer a privately enforceable cause of action on the Appellants, who assert standing as third-party beneficiaries. In so holding, we note the thoroughness of the district court's analysis and reasoning. Because we agree with Judge Debevoise's rationale, we adopt it as ours, with some minor points as described herein.

I. Background

Because the history and facts of this case are set forth in ample detail in our previous opinion, Gross v. German Foundation Industrial Initiative, 456 F.3d 363 (3d Cir.2006) ("Gross II"), and the two district court opinions, Gross v. German Foundation Industrial Initiative, 499 F.Supp.2d 606 (D.N.J.2007) ("Gross III"), and In re Nazi Era Cases Against German Defendants Litigation, 320 F.Supp.2d 235(D.N.J.2004) ("Gross I"), we do not repeat them here.1 Rather, we briefly summarize the history and facts, insofar as they aid the present discussion.

The claims here involve reparations for Nazi-era slave labor, forced labor, appropriation of personal property, and dishonored insurance policies. As early as 1998, the United States and German governments, aware of the significance of the claims and the seriousness of the risk posed to the German economy, encouraged negotiations between the plaintiffs and the defendant German corporations. The negotiations involved senior diplomatic executives from both the U.S. and German governments, specifically and respectively former Deputy Secretary of the Treasury Stuart Eizenstat and Count Otto Lambsdorff, chief negotiator for former German Chancellor Gerhard Schroeder. Several German companies came together as the German Foundation Industrial Initiative ("the Initiative"), which acted as the negotiating arm of the German industry. Representing the claimants were plaintiffs' attorneys who had filed the U.S. civil actions.

After many months of intense negotiations and significant lucubration, on July 17, 2000, a diplomatic agreement, commonly referred to as the Berlin Accords or the Berlin Agreements, was reached as a means of resolving these long-standing claims. Under the agreement, the German Foundation "Remembrance, Responsibility and the Future" ("the Foundation") was established as the intended, exclusive forum for receiving, processing, and paying reparation claims at issue here. Germany and the German companies each agreed to contribute DM 5 billion to fund the Foundation. The plaintiffs' lawyers agreed to dismiss with prejudice the numerous pending litigations, so that the victims would receive payment through the Foundation rather than civil actions and that the German companies would achieve "all-embracing and enduring legal peace."

The Berlin Accords consist of (1) the Joint Statement, (2) the Executive Agreement between the United States and Germany, and (3) the Foundation Law. The Joint Statement—formally titled "The Joint Statement on occasion of the final plenary meeting concluding international talks on the preparation of the Foundation `Remembrance, Responsibility and the Future'"—sets forth a goal of the Foundation, which is to "provide dignified payments to hundreds of thousands of survivors and to others who suffered from wrongs during the National Socialist era and World War II." Joint Statement, pmbl. ¶ 12. The Joint Statement commits the German government and German industry to provide DM 10 billion in capitalization. As structured, the Initiative would collect DM 5 billion from individual German companies and then transfer the money to the Foundation. Particularly significant for this case, the last sentence of Paragraph 4(d) of the Joint Statement states:

German company funds will continue to be collected on a schedule and in a manner that will ensure that the interest earned thereon before and after their delivery to the Foundation will reach at least 100 million DM.

The second document, the Executive Agreement, outlines the U.S. and German governments' commitments to the Foundation and obligates the United States Executive, in all cases for which it is notified of a claim against a German company arising out of the WWII era, to file a statement of its foreign policy interests with the court in which the claim is pending, stating that United States' foreign policy interests favor resolution through the Foundation. The third document, the Foundation Law, is codified under German law and establishes the Foundation as the legal entity for processing claims and distributing the DM 10 billion fund.

On May 30, 2001, the German legislature declared "legal peace," triggering the obligations of the German government and the German companies to each pay DM 5 billion to the Foundation. The German government made timely payment, but the Initiative did not complete payment until December 2001, at which point it had transferred DM 5.1 billion, which included DM 100 million as the "interest" designated in Paragraph 4(d) of the Joint Statement.

Due to the delay in the Initiative's payment and the differing assertions of what the "interest" provision mandated, several claimants filed suit, attempting to enforce the "interest" provision of the Joint Statement. In June 2002, Elly Gross and others filed their complaint as third-party beneficiaries seeking recovery for breach of contract against the Initiative and against its founding companies. They alleged that the German corporations owed interest in excess of the DM 100 million already paid, based on the Initiative's financial obligation from and after July 17 2000, the date the Joint Statement was signed. In July 2003, Bernard and Barbara Schwartz Lee brought a similar breach of contract action against Deutsch Bank AG and Dresdner Bank AG. They allege that the two banks agreed to pay interest earned on their payment from December 14, 1999.

These complaints were assigned to Judge Bassler. The Initiative and the defendant corporations moved to dismiss the complaints pursuant to Federal Rule of Civil Procedure 12(b)(6) and argued, in the alternative, that the claims were nonjusticiable. In a single opinion, the district court held that the claims were not justiciable. Gross I, 320 F.Supp.2d at 254. On appeal, we reversed, holding that, while the claims implicated foreign policy issues within the realm of the Executive Branch, the case was nevertheless justiciable. Gross II, 456 F.3d at 377-91. We also noted that "[a] court would face at least two...

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