In re Nazi Era Cases against German Def. Litig.

• Decision Date: 08 June 2004
• Docket Number: No. CIV.02-2936(WGB).,No. CIV.03-3181(WGB).,CIV.02-2936(WGB).,CIV.03-3181(WGB).
• Citation: 320 F.Supp.2d 235
• Court: U.S. District Court — District of New Jersey
• Parties: In re NAZI ERA CASES AGAINST GERMAN DEFENDANTS LITIGATION. Elly Gross, et al., Plaintiffs, v. The German Foundation Industrial Initiative, et al., Defendants. Barbara Schwartz Lee and Bernard Lee, Plaintiffs, v. Deutsche Bank, AG, & Dresdner Bank, AG, Defendants.

320 F.Supp.2d 235

In re NAZI ERA CASES AGAINST GERMAN DEFENDANTS LITIGATION.

Elly Gross, et al., Plaintiffs, v. The German Foundation Industrial Initiative, et al., Defendants.

Barbara Schwartz Lee and Bernard Lee, Plaintiffs, v. Deutsche Bank, AG, & Dresdner Bank, AG, Defendants.

No. CIV.02-2936(WGB).

No. CIV.03-3181(WGB).

United States District Court, D. New Jersey.

June 8, 2004.

Allyn Z. Lite, Esq., Lite, DePalma, Greenberg & Rivas, LLC, Newark, NJ, Michael D. Hausfeld, Esq., Agnieszka M. Fryszman, Esq., Cohen, Milstein, Hausfeld & Toll, P.L.L.C., Washington, DC, Burt Neuborne, Esq., Michelle Weitz, Esq., Deborah Sturman, Esq., Bernstein Litowitz Berger & Grossman, New York, NY, Lisa J. Rodriguez, Esq., Haddonfield, NJ, for Plaintiffs.

John J. Gibbons, Esq., Thomas R. Valen, Esq., Gibbons, Del Deo, Dolan, Griffinger & Veccione, PC, Newark, NJ, Terry Myers, Esq., Gibbons, Del Deo, Dolan, Griffinger & Veccione, New York, NY, Kevin J. McKenna, Esq., Gibbons, Del Deo, Dolan, Griffinger & Veccione, Newark, NJ, Brian E. McGunigle, Esq., Coudert Brothers LLP, New York, NY, Daniel Gsovski, Esq., Hersfeld & Rubin, P.C., New York, NY, Jeffrey L. Chase, Esq., Chase, Kurshan, Herzfeld & Rubin, LLC, Livingston, NJ, Bud G. Holman, Esq., Kelley, Drye & Warren, New York, NY, Christopher Landau, Esq., Brant W. Bishop, Esq., Susan Kearns, Esq., Kirkland & Ellis LLP, Washington, D.C., Keith G. Von Glahn, Esq., Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Newark, NJ, Thomas M. Mueller, Esq., Michael O. Ware, Esq., Shannon L. Steege, Esq., Mayer, Brown, Rowe & Maw, LLP, New York, NY, Jeffrey Barist, Esq., Jeffrey L Nagel, Esq., Milbank, Tweed, Hadley & McCoy, LLP, New York, NY, Konrad L. Cailteux, Esq., Nina Nagler, Esq., Weil, Gotshal & Manges LLP, New York, NY, Rosemary J. Bruno, Esq., Klett, Rooney, Lierber & Schorling, P.C., Newark, NJ, Roger M. Witten, Esq., John A. Trenor, Esq., David W. Bowker, Esq., Anja, L. Manuel, Esq., Wilmer, Cutler, Pickering LLP, New York, NY, Joseph A. Boyle, Esq., Kelley, Drye & Warren LLP, Parsippany, NJ, for defendants.

OPINION

BASSLER, District Judge.

These actions arise from initial efforts made by Holocaust victims to obtain money judgments from German corporations ("German Industry") for their complicity in exploiting plaintiffs as slave laborers¹ during World War II. What remains here is a burgeoning dispute over certain terms to an agreement principally between counsel for Nazi-era victims, the German Government and German Industry, and facilitated by the United States, which in the dawning days of the twenty-first century appeared to tuck neatly to bed a giant dispute, fifty years in the making, concerning claims against German Industry in U.S. courts.

Since the end of World War II, Germany has paid "more than DM 100 billion in compensation to victims of Nazi persecution[.]"² Schwartz Lee Compl., Ex. 13 at 1 (Statement by Treasury Deputy Secretary Stuart Eizenstat to the German Bundestag on Feb. 16, 2000.) Additionally, in December 1999, attorneys for various plaintiffs, the German Government and German Industry orally agreed that various plaintiffs would dismiss their lawsuits against German Industry in exchange for the creation of the German Foundation "Remembrance, Responsibility and the Future" (the "Foundation"), which would be funded in the amount of DM 10 billion, half of the principal contribution to be made by German Industry. That oral arrangement was memorialized on July 17, 2000 in a joint statement signed in Berlin (the "Joint Statement")³ and concurrently the Governments of the United States and Germany signed an executive agreement (the "Executive Agreement") that reflected the specific commitments of the two governments to the Foundation. A detailed history of these events can be found in this Court's opinions In re Nazi Era Cases Against German Defendants Litigation ("Nazi Era Cases"), 198 F.R.D. 429 (D.N.J.2000), and Frumkin v. J.A. Jones, 129 F.Supp.2d 370 (D.N.J.2001).

Ultimately, at issue here is whether mutually sufficient and timely interest payments have been made to the Foundation by German Industry. Elly Gross, Roman Neuberger, Sylvia Greenbaum, John Brand, Barbara Schwartz Lee and Bernard Lee (collectively, "Plaintiffs") argue that "unless action is taken to enforce the interest obligations contained in the Joint Statement, the victims of Nazi persecution will suffer a shortfall of substantially more than DM 100 million in anticipated payments, rendering it impossible for the Foundation to fund adequately payments to certain categories of victims...." Neuborne Decl. ¶ 102. Presently, the named defendants — German Industry corporations and the German Foundation Industrial Initiative⁴ — move to dismiss Plaintiffs' claims pursuant to Federal Rules of Civil Procedure Rule 12(b)(6), but argue principally in the alternative that Plaintiffs' claims are nonjusticiable, i.e., that the political question and act of state doctrines as well as principles of international comity necessitate dismissal. In addition, Defendants argue that Plaintiffs' complaints are barred by the doctrine of res judicata as well as Plaintiffs' inability to establish Article III standing. The Court will address these grounds in reverse order after its threshold review of subject matter jurisdiction and venue.

Before tackling these legal issues, however, the Court is compelled to acknowledge that the Foundation is well on its way to satisfy its founding two-part objective "to make financial compensation available ... to former forced laborers and to those affected by other injustices from the National Socialist period" and the establishment of a future fund to serve educational needs "[i]n commemoration and respect" of those victims as well as those who did not survive. Schwartz Lee Compl., Ex. 17 at 1. Deputy Secretary of State Richard L. Armitage acknowledged the first goal by writing: "I am pleased to learn that the Foundation's tremendous progress continues, and that $1.3 billion in payments have been made to some 750,000 surviving forced and slave laborers." Valen Decl., Ex. J at 2. In a letter to Secretary of State Colin L. Powell, the German Minister of Finance noted the Foundation's accomplishment in broader terms: "The [Foundation] stands as one of the proud achievements of German-American cooperation in recent decades. We have every political reason to defend this." Id., Ex. I at 1. More recently, Plaintiffs' counsel provided that the current disputes over interest "should not obscure the fundamental success of the [Foundation] in assembling and paying out over DM 5.5 billion to more than 1.5 million victims of Nazi persecution during its first two and one-half years of existence." Neuborne Decl. ¶ 21. With this estimable backdrop, the Court frames its analysis.

I. Original Jurisdiction & Venue

Plaintiffs allege that this Court has diversity, federal question and supplemental jurisdiction in this action. Diversity jurisdiction certainly exists. Plaintiffs Schwartz Lee and Lee are citizens of California and the named defendants in their complaint (the "Schwartz Lee Complaint") are German corporations. Similarly, plaintiffs Gross, Neuberger, Greenbaum and Brand are citizens of New York, New York, Florida and Texas, respectively, and the named defendants in their complaint (the "Gross Complaint") are German corporations. Further, the amount in controversy requirement is met in these civil actions. The disputed sum exceeds DM 100 million, well beyond the minimum amount in controversy requirement.

Federal question jurisdiction is not evident, however. No claim is made that invokes the Constitution, federal law or treaties to which the United States is a signatory. Instead, the Schwartz Lee and the Gross Complaints are founded explicitly on common law breach of contract and fraudulent misrepresentation claims. As for supplemental jurisdiction, both complaints fail to differentiate what, if any, claims fall beyond the ones that this Court may entertain pursuant to original jurisdiction based on diversity of citizenship.

Both the Schwartz Lee and Gross Complaints assert that venue is proper in this Court pursuant to 28 U.S.C. §§ 1391(a)(2) and 1391(d). It appears that § 1391(a)(2) is an adequate ground as venue is proper, in diversity jurisdiction actions, in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred[.]" 28 U.S.C. § 1391(a)(2). Plaintiffs argue that promises and misrepresentations — the underlying cause of the dispute here — were made before this Court as to the legal and financial responsibilities of German Industry. As such, venue is proper here.

II. Article III Standing

The United States Constitution's Article III "case and controversy" requirement necessitates that a party have standing to obtain judicial resolution of a dispute. Generally, for individual standing,

at an irreducible minimum, Art. III requires the party who invokes the court's authority to "show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant," ... and that the injury "fairly can be traced to the challenged action" and "is likely to be redressed by a favorable decision...."

Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982) (citations omitted); see Public Interest Research Group of N.J., Inc. v. Powell Duffryn Terminals Inc., 913 F.2d 64, 70 (3d Cir.1990). In Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), the Supreme Court expounded on this "irreducible constitutional minimum" requirement by articulating a three-part test for standing.

First, the plaintiff must have suffered an "injury in fact" — an invasion of a legally protected interest which is (a) concrete and particularized ... and (b) "actual or imminent, not `co...