United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 2, 2018 Decided July 10, 2018
No. 17-7064
ALAN PHILIPP, ET AL.,
APPELLEES
v.
FEDERAL REPUBLIC OF GERMANY AND STIFTUNG
PREUSSISCHER KULTURBESITZ,
APPELLANTS
Consolidated with 17-7117
Appeals from the United States District Court
for the District of Columbia
(No. 1:15-cv-00266)
Jonathan M. Freiman argued the cause for appellants.
With him on the briefs were Benjamin M. Daniels, David R.
Roth, and David L. Hall.
Nicholas M. O'Donnell argued the cause and filed the brief
for appellees.
Gary A. Orseck, Ariel N. Lavinbuk, Daniel N. Lerman, and
D. Hunter Smith were on the brief for amicus curiae David
Toren in support of appellees.
2
Before: TATEL, GRIFFITH, and WILKINS, Circuit Judges.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: In this case, the heirs of several
Jewish art dealers doing business in Frankfurt, Germany in the
1930s seek to recover a valuable art collection allegedly taken
by the Nazis. Defendants, the Federal Republic of Germany
and the agency that administers the museum where the art is
now exhibited, moved to dismiss, claiming immunity from suit
under the Foreign Sovereign Immunities Act. They also argued
that the heirs failed to exhaust their remedies in German courts
and that their state-law causes of action are preempted by
United States foreign policy. The district court rejected all three
arguments and denied the motion to dismiss. For the reasons
set forth below, we largely affirm.
I.
Because this appeal comes to us from the district court’s
ruling on a motion to dismiss, “we must accept as true all
material allegations of the complaint, drawing all reasonable
inferences from those allegations in plaintiffs’ favor.” de
Csepel v. Republic of Hungary, 714 F.3d 591, 597 (D.C. Cir.
2013) (internal quotation marks omitted). Viewed through that
lens, the complaint relates the following events:
In 1929, three Frankfurt-based firms owned by Jewish art
dealers joined together into a “Consortium” and purchased “a
unique collection of medieval relics and devotional art” called
the Welfenschatz. First Amended Compl. (FAC) ¶ 1, Philipp v.
Federal Republic of Germany, 248 F. Supp. 3d 59 (D.D.C.
2017) (No. 1:15-cv-00266); see id. ¶¶ 34–35. The treasure—or
“schatz”—acquired its name due to its association with the
House of Welf, an ancient European dynasty. See id. ¶ 30.
3
Dating primarily from the eleventh to fifteenth centuries, the
several dozen pieces that make up the Welfenschatz were
housed for generations in Germany’s Brunswick Cathedral. See
id. After displaying the Welfenschatz throughout Europe and
the United States and selling a few dozen pieces, the
Consortium placed the remainder of the collection, which at
that time retained about eighty percent of the full collection’s
value, into storage in Amsterdam. Id. ¶¶ 41, 78.
The heirs allege that “[a]fter the [1933] Nazi-takeover of
power in Germany, . . . the members of the Consortium faced
catastrophic economic hardship,” id. ¶ 10, and in 1935,
following “two years of direct persecution” and “physical peril
to themselves and their family members,” id. ¶ 145, the
Consortium sold the Welfenschatz to the Nazi-controlled State
of Prussia for 4.25 million Reichsmarks (the German currency
at the time), id. ¶¶ 145–160, “barely 35% of its actual value,”
id. ¶ 12. “Standing behind all of this was [Hermann] Goering,”
id. ¶ 73, “Prime Minister of Prussia at that time,” id., a
“notorious racist and anti-Semite,” id. ¶ 74, and “legendary” art
plunderer, id. ¶ 75. Goering “seldom if ever” seized outright
the art he desired, preferring “the bizarre pretense of
‘negotiations’ with and ‘purchase’ from counterparties with
little or no ability to push back without risking their property
or their lives.” Id. The Welfenschatz was then shipped from
Amsterdam to Berlin, see id. ¶ 157, where Goering presented
it to Adolf Hitler as a “surprise gift,” id. ¶ 179 (quoting Hitler
Will Receive $2,500,000 Treasure, Balt. Sun, Oct. 31, 1935, at
2). All but one of the Consortium members then fled the
country. See id. ¶¶ 163, 170–171. The remaining member died
shortly after, officially of “cardiac insufficiency,” id. ¶ 163, but
“rumors” circulated that he was “dragged to his death through
the streets of Frankfurt by a Nazi mob,” id. ¶ 166.
4
“After the war, [the Welfenschatz] was seized by U.S.
troops,” id. ¶ 181, and eventually turned over to appellant
Stiftung Preussischer Kulturbesitz (SPK), a German agency
formed “for the purpose . . . of succeeding to all of Prussia’s
rights in cultural property,” id. ¶ 184; see id. ¶¶ 181–84. The
Welfenschatz is now exhibited in an SPK-administered
museum in Berlin. Id. ¶ 26(iv).
In 2014, appellees, Alan Philipp, Gerald Stiebel, and Jed
Leiber, heirs of Consortium members, sought to recover the
Welfenschatz, and they and the SPK agreed to submit the claim
to a commission that had been created pursuant to the
Washington Conference Principles on Nazi–Confiscated Art,
id. ¶ 220, an international declaration that “encouraged”
nations “to develop . . . alternative dispute resolution
mechanisms” for Nazi-era art claims, id. ¶ 197 (quoting U.S.
Dep’t of State, Washington Conference Principles on Nazi-
Confiscated Art ¶ 11 (1998) [hereinafter Washington
Principles]). Known as the German Advisory Commission for
the Return of Cultural Property Seized as a Result of Nazi
Persecution, Especially Jewish Property, id. ¶ 205, the
Advisory Commission concluded “that the sale of the
Welfenschatz was not a compulsory sale due to persecution”
and it therefore could “not recommend the return of the
Welfenschatz to the heirs,” Advisory Commission,
Recommendation Concerning the Welfenschatz (Guelph
Treasure) (Mar. 20, 2014), Appellants’ Supp. Sources 7; see
also FAC ¶ 221.
Seeking no further relief in Germany, the heirs filed suit in
the United States District Court for the District of Columbia
against the Federal Republic of Germany and the SPK
(collectively, “Germany”), asserting several common-law
causes of action, including replevin, conversion, unjust
enrichment, and bailment. See FAC ¶¶ 250–304. They sought
5
the return of the Welfenschatz “and/or” 250 million dollars, id.
Prayer for Relief, a “conservative estimate[]” of its value, id.
¶ 33. Germany moved to dismiss, arguing that it enjoyed
immunity from suit under the Foreign Sovereign Immunities
Act (FSIA), that international comity required the court to
decline jurisdiction until the heirs exhaust their remedies in
German courts, and that United States foreign policy
preempted the heirs’ state-law causes of action. The district
court rejected all three arguments and, aside from a few
uncontested issues, denied the motion to dismiss. Philipp, 248
F. Supp. 3d at 87.
Germany appealed the district court’s FSIA determination
as of right. See Owens v. Republic of Sudan, 531 F.3d 884, 887
(D.C. Cir. 2008) (“[W]hen . . . a denial [of a motion to dismiss]
subjects a foreign sovereign to jurisdiction, the order is ‘subject
to interlocutory appeal.’” (quoting El–Hadad v. United Arab
Emirates, 216 F.3d 29, 31 (D.C. Cir. 2000))). On Germany’s
motion, the district court certified the other two issues for
interlocutory appeal, Philipp v. Federal Republic of Germany,
253 F. Supp. 3d 84 (D.D.C. 2017), and this court granted
Germany’s petition to present them now, Per Curiam Order, In
re Federal Republic of Germany, No. 17-8002 (D.C. Cir. Aug.
1, 2017). Reviewing de novo, we address Germany’s
immunity, comity, and preemption arguments in turn.
II.
Under the FSIA, foreign sovereigns and their agencies
enjoy immunity from suit in United States courts unless an
expressly specified exception applies. 28 U.S.C. § 1604. The
heirs assert jurisdiction under the statute’s “expropriation
exception,” see id. § 1605(a)(3), which “has two
requirements”: that “‘rights in property taken in violation of
international law are in issue,’” and that “there is an adequate
commercial nexus between the United States and the
6
defendant[],” de Csepel v. Republic of Hungary, 859 F.3d
1094, 1101 (D.C. Cir. 2017) (quoting 28 U.S.C. § 1605(a)(3)).
Germany “bears the burden of proving that [the heirs’]
allegations do not bring [the] case within” the exception.
Phoenix Consulting Inc. v. Republic of Angola, 216 F.3d 36, 40
(D.C. Cir. 2000).
A.
As to the expropriation exception’s first requirement, we
explained in Simon v. Republic of Hungary, 812 F.3d 127 (D.C.
Cir. 2016), that although an “intrastate taking”—a foreign
sovereign’s taking of its own citizens’ property—does not
violate the international law of takings, id. at 144, an intrastate
taking can nonetheless subject a foreign sovereign and its
instrumentalities to jurisdiction in the United States where the
taking “amounted to the commission of genocide,” id. at 142.
This, we explained, is because “[g]enocide perpetrated by a
state,” even “against its own nationals[,] . . . is a violation of
international law.” Id. at 145. In so holding, we adopted the
definition of genocide set forth in the Convention on the
Prevention of the Crime of Genocide. Id. at 143. “[A]dopted by
the United Nations in the immediate aftermath of World War
II,” id., the Convention defines genocide, in relevant part, as
“[d]eliberately inflicting” on “a national, ethnical, racial or
religious group . . . conditions of life calculated to bring about
its physical destruction in whole or in part,” Convention on the
Prevention and Punishment of the Crime of Genocide
(Genocide Convention), art. 2, Dec. 9, 1948, 78 U.N.T.S. 277.
In Simon, “survivors of the Hungarian Holocaust,” 812
F.3d at 134, alleged that in 1944–45 Hungary “forced all Jews
into ghettos, . . . confiscating Jewish property” in the process,
id. at 133, and then “transport[ed] Hungarian Jews to death
camps, and, at the point of embarkation, confiscate[d] [their
remaining] property,” id. at 134. Assuming the truth of these
7
allegations—like here, the case came to us from a ruling on a
motion to dismiss—we held that because the allegations of
“systematic, wholesale plunder of Jewish property . . . aimed
to deprive Hungarian Jews of the resources needed to survive
as a people . . . describe[d] takings of property that are
themselves genocide within the legal definition of the term,” id.
at 143–44 (internal quotation marks omitted), they “fit[]
squarely within the terms of the expropriation exception,” id.
at 146.
A year later, in de Csepel v. Republic of Hungary, 859 F.3d
1094 (D.C. Cir. 2017), we considered claims by the heirs of a
Jewish collector whose art was seized by the “Hungarian
government and its Nazi collaborators,” id. at 1097. We held,
among other things, that plaintiffs could pursue their
“bailment” claim for return of the art. Id. at 1103. The case, we
explained, was “just like Simon.” Id. at 1102. “Here, as there,
Hungary seized Jewish property during the Holocaust. Here, as
there, plaintiffs bring ‘garden-variety common-law’ claims to
recover for that taking.” Id.
In today’s case, the heirs argue that, after Simon and de
Csepel, “[i]t is beyond serious debate that Nazi Germany took
property in violation of international law by systematically
targeting its Jewish citizens to make their property vulnerable
for seizure.” Appellees’ Br. 27. The district court agreed,
concluding that, “like in Simon, the taking of the Welfenschatz
as alleged in the complaint bears a sufficient connection to
genocide such that the alleged coerced sale may amount to a
taking in violation of international law.” Philipp, 248 F. Supp.
3d at 71. Germany disagrees, insisting that “[t]he allegations
here have little in common with the Simon allegations except
that they happened under Nazi rule.” Appellants’ Br. 35.
According to Germany, four differences between this case and
Simon compel a different result.
8
First, Germany argues that unlike in Simon, where the
Nazis confiscated “food, medicine, clothing, [or] housing,”
here they seized art. Id. at 40. Although de Csepel also involved
a seizure of art, we had no need to decide then whether Simon
applied because the Hungarian government had conceded that
the seizure there was genocidal, see de Csepel v. Republic of
Hungary, 169 F. Supp. 3d 143, 164 (D.D.C. 2016). Thus, we
are asked for the first time whether seizures of art may
constitute “takings of property that are themselves genocide.”
Simon, 812 F.3d at 144 (emphasis omitted). The answer is yes.
Congress has twice made clear that it considers Nazi art-
looting part of the Holocaust. In enacting the Holocaust
Victims Redress Act, which encouraged nations to return Nazi-
seized assets, Congress “f[ound]” that “[t]he Nazis’ policy of
looting art was a critical element and incentive in their
campaign of genocide against individuals of Jewish . . .
heritage.” Holocaust Victims Recovery Act, Pub. L. No. 105-
158, § 201, 112 Stat. 15, 15 (1998). And in the Holocaust
Expropriated Art Recovery Act (HEAR Act), which extended
statutes of limitation for Nazi art-looting claims, Congress
again “f[ound]” that “the Nazis confiscated or otherwise
misappropriated hundreds of thousands of works of art and
other property throughout Europe as part of their genocidal
campaign against the Jewish people and other persecuted
groups.” Holocaust Expropriated Art Recovery Act of 2016,
Pub. L. No. 114-308, § 2, 130 Stat. 1524, 1524 (emphasis
added).
In this case, moreover, the Welfenschatz was more than
just art. As Germany acknowledges, “the Consortium bought
[the Welfenschatz] not for pleasure or display, but as business
inventory, to re-sell for profit.” Appellants’ Br. 12. By seizing
businesses’ inventory—like the other economic pressures
alleged in the complaint, such as the “boycott of Jewish-owned
9
businesses,” FAC ¶ 58, and “exclu[sion]” of Jews from certain
professions, id. ¶ 120—the Nazis “dr[ove] Jews out of their
ability to make a living,” id. ¶ 61, and thereby, in the words of
the Genocide Convention, “inflict[ed] . . . conditions of life
calculated to bring about [a group’s] physical destruction in
whole or”—at the very least—“in part,” Genocide Convention
art. 2(c).
Second, Germany argues that whereas Simon involved a
“forcible deprivation” of property, Appellants’ Br. 40, this case
involves only a “forced sale . . . for millions of Reichsmarks,”
id. at 42. For purposes of this appeal, however, Germany
concedes that the forced sale qualifies as a “tak[ing],” id. at 28
n.12, and it offers no reason why a taking by forced sale cannot
qualify as a genocidal taking. Indeed, the heirs’ allegations—
allegations that, we repeat, we must accept as true at this stage
of the litigation—support just that conclusion. According to the
complaint, Goering “routinely went through the bizarre
pretense of ‘negotiations’ with and ‘purchase’ from” powerless
counterparties. FAC ¶ 75. In addition, the heirs allege, the
Nazis made it impossible for Jewish dealers to sell their art on
the open market. Jewish art dealers’ “means of work” were
“effectively end[ed],” and “[m]ajor dealers’ collections were
liquidated because they could not legally be sold.” Id. ¶ 120.
“Jewish art dealers . . . lost” even “their Jewish customers,”
because, as a result of the crippling economic policies, “there
was no money left to buy art.” Id. ¶ 124. “By spring of 1935,”
the heirs allege, “the exclusion of Jews from . . . German life
. . . had become nearly total. The means by which German art
could be sold by Jewish dealers had effectively been
eliminated.” Id. ¶ 138. It was within that context, the heirs
allege, that the Nazis pressured the Consortium to sell the
Welfenschatz for well below market value. Id. ¶ 139. “The
Consortium had,” the heirs allege, “only one option.” Id. ¶ 145.
10
Fearful of losing the entire value of their property, or worse,
the Consortium acquiesced. Id. ¶ 139.
Third, Germany claims that “conditions for Hungarian
Jews in 1944–45”—the period of time at issue in both Simon
and de Csepel—“were far different from conditions for
German Jews nearly a decade earlier, in the summer of 1935.”
Appellants’ Br. 40 n.23. The sale of the Welfenschatz,
Germany points out, predated “the Nuremberg Laws, . . . the
Decree on the Elimination of the Jews from Economic Life
. . . , and . . . the mass murder of German Jews.” Id.
In Simon, however, we explained that the “Holocaust
proceeded in a series of steps.” Simon, 812 F.3d at 143. “‘The
Nazis . . . achieved [the Final Solution] by first isolating [the
Jews], then expropriating the Jews’ property, then ghettoizing
them, then deporting them to the camps, and finally, murdering
the Jews and in many instances cremating their bodies.’” Id. at
144 (alterations in original) (quoting Complaint ¶ 91, Simon v.
Republic of Hungary, 37 F. Supp. 3d 381 (D.D.C. 2014) (No.
1:10-cv-1770)). Although the events at issue in Simon occurred
at the later steps of the Holocaust, i.e., ghettoization and
deportation, and the events at issue here occurred at the earlier
steps, i.e., isolation and expropriation, both are “steps” of the
Holocaust, id. at 143. And, as the heirs allege, those earlier
steps began as early as 1933, more than two years before the
Nazis seized the Welfenschatz. Specifically, the heirs allege
that the Nazis rose to power in the early 1930s by “blam[ing]
Jews for any and all economic setbacks,” FAC ¶ 48, and once
in power, “encourage[d]” the “boycotts of Jewish businesses
[that] spread in March and April 1933, just weeks after Hitler’s
ascension,” id. ¶ 58. Moreover, the 1933 “found[ing] [of] the
Reich Chamber of Culture,” which “assumed total control over
cultural trade” and excluded Jews, “effectively end[ed] the
means of work for any Jewish art dealer in one stroke.” Id.
11
¶ 120. The heirs also allege that outright violence against
German Jews began several years before the seizure, including
that “[b]y the spring 1933, . . . the murder of Jews detained [in
the Dachau concentration camp] went unprosecuted.” Id. ¶ 59.
Moreover, in two statutes dealing with Nazi-era art-looting
claims, Congress has expressly found that the Holocaust began
in 1933. In the first statute—the very section of the FSIA at
issue here—Congress provided jurisdictional immunity for
certain art exhibition activities, 28 U.S.C. § 1605(h), but
created an exception for art taken during the “Nazi[] era,”
defined as beginning in January 1933, id. § 1605(h)(2)(A). In
the second, the HEAR Act, Congress again defined January
1933 as the beginning of the Nazi era. HEAR Act § 4 (defining
“covered period” as “beginning on January 1, 1933”).
The heirs’ position finds further support in a timeline on
the website of the United States Holocaust Memorial Museum,
which Germany itself cites for its observation that the taking of
the Welfenschatz predated the Nuremburg Laws. See
Appellants’ Br. 40 n.23. That same timeline demonstrates that,
by the time of the taking in 1935, the Nazi government had
already opened the Dachau concentration camp, excluded Jews
from all civil-service positions, and organized a nationwide
boycott of Jewish-owned businesses.
Fourth, emphasizing that the definition of genocide
includes an “intent to destroy,” Genocide Convention art. 2(c)
(emphasis added), Germany argues that this case differs from
Simon because unlike there, where the plaintiffs alleged that
the takings were “aimed to deprive Hungarian Jews of the
resources needed to survive as a people,” Simon, 812 F.3d at
143, here the heirs allege that the Nazis wanted the
Welfenschatz because it was “historically, artistically and
national-politically valuable,” FAC ¶ 111. Elsewhere in the
12
complaint, however, the heirs make clear that “[the Nazis] took
the collection from [the Consortium] in order to ‘Aryanize’
[it].” Id. ¶ 25(iv). More specifically, the heirs allege that “the
collection was wrongfully appropriated not least because [the
Consortium members] were regarded as state’s enemies for
holding the iconic Welfenschatz,” id. ¶ 25(ii), that “the
Gestapo[] opened files on the members of the Consortium
because of their ownership of the Welfenschatz and their
prominence and success,” id. ¶ 67, and that “Prussian interest
in the Welfenschatz was . . . revived . . . [once] the Consortium
was . . . vulnerable,” id. ¶ 68. In short, the heirs have
sufficiently alleged that in seizing the Welfenschatz the Nazis
were motivated, at least in part, by a desire “to deprive
[German] Jews of the resources needed to survive as a people.”
Simon, 812 F.3d at 143.
Finally, unable to demonstrate that this case falls outside
Simon’s reach, Germany warns that allowing this suit to go
forward will “dramatically enlarge U.S. courts’ jurisdiction
over foreign countries’ domestic affairs” by stripping
sovereigns of their immunity for any litigation involving a
“transaction from 1933–45 between” a Nazi-allied government
and “an individual from a group that suffered Nazi
persecution.” Appellants’ Br. 42–43. But as we have just
explained, our conclusion rests not on the simple proposition
that this case involves a 1935 transaction between the German
government and Jewish art dealers, but instead on the heirs’
specific—and unchallenged—allegations that the Nazis took
the art in this case from these Jewish collectors as part of their
effort to “drive[] [Jewish people] out of their ability to make a
living.” FAC ¶ 61. Because Germany has failed to carry its
burden of demonstrating that these allegations do not bring the
case within the expropriation exception as defined and applied
in Simon, the district court properly denied Germany’s motion
to dismiss.
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B.
In Simon we held that, with respect to foreign states (but
not their instrumentalities), the expropriation exception’s
second requirement—“an adequate commercial nexus between
the United States and the defendant[],” de Csepel, 859 F.3d at
1101—is satisfied only when the property is present in the
United States. Simon, 812 F.3d at 146. Because the Simon
plaintiffs had offered but a “bare, conclusory assertion” to that
effect, we dismissed the Republic of Hungary from the action.
Id. at 148. We faced the same issue in de Csepel because the
art at issue there was not in the United States. de Csepel, 859
F.3d at 1107. Bound by Simon, we again dismissed the
Republic of Hungary. Id.
Relying on Simon and de Csepel, Germany argues that
because the Welfenschatz is in Berlin, not the United States,
the Federal Republic of Germany must be dismissed. Although
the heirs initially urged us to “reverse course on th[is]
question,” Appellees’ Br. 34, as they acknowledged at oral
argument, this panel is bound by Simon and de Csepel, Oral
Arg. 50:14–40. Accordingly, on remand, the district court must
grant the motion to dismiss with respect to the Federal Republic
of Germany—but not the SPK, an instrumentality for which the
commercial-nexus requirement can be satisfied without the
presence of the Welfenschatz in the United States. See de
Csepel, 859 F.3d at 1007 (explaining that “an agency or
instrumentality loses its immunity if” the agency or
instrumentality owns or operates the property at issue and is
engaged in commercial activity in the United States).
III.
In Simon, we left open the question whether a court,
despite having jurisdiction over an expropriation claim,
“nonetheless should decline to exercise [it] as a matter of
14
international comity unless the plaintiffs first exhaust domestic
remedies (or demonstrate that they need not do so).” Simon,
812 F.3d at 149. In arguing that the answer to that question is
yes, Germany does not claim, as it did in the district court, that
we should defer to the Advisory Commission’s refusal to
recommend the return of the Welfenschatz, see Philipp, 248 F.
Supp. 3d at 81. Instead, Germany argues that the heirs must
“exhaust [their] remedies against [Germany] in [its] courts
before pressing a claim against it elsewhere.” Appellants’ Br.
65. “‘[B]ypass[ing] [its] courts,’” Germany insists, would
“undermine [its] ‘dignity [as] a foreign state.’” Id. at 68
(quoting Republic of Philippines v. Pimentel, 553 U.S. 851, 866
(2008)). The district court rejected this argument, as do we.
The key case is the Supreme Court’s decision in Republic
of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250 (2014),
where Argentina claimed immunity from post-judgment
discovery as a matter of international comity. The Court
rejected that claim because nothing in the FSIA’s plain text
provided for such immunity. Id. at 2255. As the Court
explained, although courts once decided on a case-by-case
basis whether to grant foreign states immunity as matter of
international comity, “Congress abated the bedlam in 1976,
replacing the old executive-driven, factor-intensive, loosely
common-law-based immunity regime with the [FSIA]’s
‘comprehensive set of legal standards governing claims of
immunity in every civil action against a foreign state.’” Id.
(quoting Verlinden B.V. v. Central Bank of Nigeria, 461 U.S.
480, 488 (1983)). “[A]fter the enactment of the FSIA,” the
Court continued, “the Act—and not the pre-existing common
law—indisputably governs the determination of whether a
foreign state is entitled to sovereign immunity.” Id. at 2256
(quoting Samantar v. Yousuf, 560 U.S. 305, 313 (2010)). Going
forward, “any sort of immunity defense made by a foreign
15
sovereign in an American court must stand on the Act’s text.
Or it must fall.” Id.
Acknowledging that nothing in the text of the FSIA’s
expropriation exception requires exhaustion, Germany argues
that applying NML Capital here “confuses immunity from
jurisdiction with non-immunity common-law doctrines.”
Appellants’ Reply Br. 38. The FSIA, Germany points out,
operates as a pass-through, “granting jurisdiction yet leaving
the underlying substantive law unchanged.” Id. at 39 (quoting
Owens v. Republic of Sudan, 864 F.3d 751, 763 (D.C. Cir.
2017)). As Germany emphasizes, FSIA section 1606 provides
that foreign states not entitled to immunity, “shall be liable in
the same manner and to the same extent as a private individual
under like circumstances.” Id. at 38 (quoting 28 U.S.C.
§ 1606). According to Germany, “exhaustion is a non-
jurisdictional common-law doctrine,” that, like forum non
conveniens, “‘remains fully applicable in FSIA cases.’” Id. at
39 (quoting Price v. Socialist People’s Libyan Arab
Jamahiriya, 294 F.3d 82, 100 (D.C. Cir. 2002)).
Germany’s effort to circumvent NML Capital fails for
several reasons. To begin with, although a different provision
of the FSIA, its terrorism exception, conditions jurisdiction on
the claimant “afford[ing] the foreign state a reasonable
opportunity to arbitrate the claim,” 28 U.S.C.
§ 1605A(a)(2)(A)(iii), no such requirement appears in the
expropriation exception, and we have long recognized “the
standard notion that Congress’s inclusion of a provision in one
section strengthens the inference that its omission from a
closely related section must have been intentional,” Agudas
Chasidei Chabad of U.S. v. Russian Federation, 528 F.3d 934,
948 (D.C. Cir. 2008). Moreover, far from demonstrating that
the FSIA leaves room for an exhaustion requirement, the very
FSIA provision that Germany relies on, section 1606,
16
forecloses that possibility. By its terms, that provision permits
only defenses, such as forum non conveniens, that are equally
available to “private individual[s],” 28 U.S.C. § 1606.
Obviously a “private individual” cannot invoke a “sovereign’s
right to resolve disputes against it.” Appellants’ Br. 68
(emphasis added).
To be sure, the Seventh Circuit, in a case similar to Simon,
required the plaintiffs—survivors of the Hungarian Holocaust
and the heirs of other victims—to “exhaust any available
Hungarian remedies or [show] a legally compelling reason for
their failure to do so,” Fischer v. Magyar Allamvasutak Zrt.,
777 F.3d 847, 852 (7th Cir. 2015). In doing so, the court
distinguished NML Capital, holding that “defendants need not
rely on . . . the FSIA,” but may “invoke the well-established
rule that exhaustion of domestic remedies is preferred in
international law as a matter of comity.” Id. at 859. The
Seventh Circuit drew that “well-established rule” from a
provision of the Third Restatement of Foreign Relations Law
of the United States, but as this court has explained, that
“provision addresses claims of one state against another,”
Agudas Chasidei Chabad of U.S. v. Russian Federation, 528
F.3d 934, 949 (D.C. Cir. 2008). Confirming that interpretation,
the tentative draft of the Fourth Restatement explains that “the
rule cited by the [Seventh Circuit] applies by its terms to
‘international . . . proceedings,’” Restatement (Fourth) of
Foreign Relations Law of the United States § 455 Reporters’
Note 9 (Am. Law Inst., Tentative Draft No. 2, 2016)—i.e.,
“nation vs. nation litigation,” Chabad, 528 F.3d at 949; see also
Agudas Chasidei Chabad of U.S. v. Russian Federation, 466 F.
Supp. 2d 6, 21 (D.D.C. 2006) (“[T]his court is not willing to
make new law by relying on a misapplied, non-binding
international legal concept.”). And as we explained above, the
FSIA, Congress’s “comprehensive” statement of foreign
sovereign immunity, which “is, and always has been, a ‘matter
17
of grace and comity,’” NML Capital, 134 S.Ct. at 2255
(quoting Verlinden, 461 U.S. at 486), leaves no room for a
common-law exhaustion doctrine based on the very same
considerations of comity.
In so concluding, we have considered the contrary position
advanced by the United States in an amicus brief recently filed
before a different panel of this court, where it argued that “[t]he
fact [that] the FSIA itself does not impose any exhaustion
requirement for expropriation claims . . . does not foreclose
dismissal on international comity grounds.” Brief of United
States as Amicus Curiae at 14–15, Simon v. Republic of
Hungary, No. 17-7146 (D.C. Cir. June 1, 2017). This position,
of course, is flatly inconsistent with NML Capital, a case the
government fails to cite, relying instead on non-FSIA cases, see
id. at 15. Accordingly, nothing in the government’s brief alters
our conclusion that the heirs have no obligation to exhaust their
remedies in Germany.
Germany protests that, as a “staunch U.S. ally,” it
“deserves the chance to address [the heirs’] attacks” in its own
courts. Appellants’ Br. 77. As the Court made clear in NML
Capital, however, such “apprehensions are better directed to
that branch of government with authority to amend the
[FSIA].” NML Capital, 134 S. Ct. at 2258.
IV.
This brings us, finally, to Germany’s argument that the
heirs’ state-law causes of action—replevin, conversion, unjust
enrichment, and bailment—conflict with, and thus are
preempted by, United States foreign policy. In support,
Germany cites the Washington Principles, which “encouraged”
nations “to develop . . . alternative dispute-resolution
mechanisms for resolving ownership issues,” Washington
Principles ¶ 11, as well the Terezin Declaration, a follow-up
18
agreement also urging alternative dispute resolution.
According to Germany, “letting [the heirs] press [the] same
claims” they already presented to the Advisory Commission
“again in a U.S. court” may cause signatories to the
Washington Principles to “question whether [they] should
follow the [] Principles,” thereby “undermin[ing] the
considerable diplomatic effort that the U.S. devoted to them.”
Appellants’ Br. 56–57.
Germany relies principally on two cases, American
Insurance Association v. Garamendi, 539 U.S. 396 (2003), and
Crosby v. National Foreign Trade Council, 530 U.S. 363
(2000). In Garamendi, the Supreme Court began by reiterating
the basic rule that “at some point an exercise of state power that
touches on foreign relations must yield to the National
Government’s policy, given the ‘concern for uniformity in this
country’s dealings with foreign nations’ that animated the
Constitution’s allocation of the foreign relations power to the
National Government in the first place.” Garamendi, 539 U.S.
at 413 (quoting Banco Nacional de Cuba v. Sabbatino, 376
U.S. 398, 427 n.25 (1964)). Applying that rule to the facts of
the case before it, the Court found California’s attempt to
regulate Holocaust-era insurance claims preempted by “the
foreign policy of the Executive Branch, as expressed
principally in . . . executive agreements with Germany, Austria,
and France.” Id. In those executive agreements, the United
States had “promised to use its ‘best efforts, in a manner it
considers appropriate,’ to get state and local governments to
respect [an internal dispute resolution process] as the exclusive
mechanism.’” Id. at 406 (quoting Agreement Concerning the
Foundation “Remembrance, Responsibility and the Future,”
Ger.-U.S., July 17, 2000, 39 I.L.M. 1298, 1300). In particular,
the United States agreed that in any case involving Holocaust-
era insurance claims, it would submit a statement “‘that U.S.
policy interests favor dismissal on any valid legal ground.’” Id.
19
(quoting Agreement Concerning the Foundation
“Remembrance, Responsibility and the Future,” 39 I.L.M. at
1304). Acknowledging that the executive agreements
contained no preemption clause, the Court nonetheless
concluded that the “express federal policy and the clear conflict
raised by the [California] statute. . . require[d] state law to
yield.” Id. at 425.
Similarly, in Crosby, the Court found Massachusetts’s
regulation of commerce with Burma to be “an obstacle to the
accomplishment of Congress’s full objectives under [a] federal
Act” that imposed some economic sanctions on Burma and
gave the President discretion to impose more. 530 U.S. at 373.
The Massachusetts law, the Court explained, by “imposing a
different, state system of economic pressure against the
Burmese political regime,” could “blunt the consequences of
discretionary Presidential action,” id. at 376.
This case is very different. Although the Washington
Principles and Terezin Declaration both “encourage[]” nations
“to develop . . . alternative dispute resolution mechanisms for
resolving ownership issues,” Washington Principles ¶ 11,
neither requires that the alternative mechanisms be exclusive or
otherwise “takes an explicit position in favor of or against the
litigation of claims to Nazi-confiscated art.” Brief of United
States as Amicus Curiae at 18, Saher v. Norton Simon Museum
of Art at Pasadena, 131 S. Ct. 3055 (2011) (No. 09-1254), 2011
WL 2134984, at *18. Unlike in Garamendi, where the
President promised to seek “dismissal on any valid legal
ground,” 539 U.S. at 406 (internal quotation marks omitted), or
in Crosby, where the state law at issue “blunt[ed]” the force of
discretion Congress had explicitly granted the President, 530
U.S. at 376, here, as the district court explained, there is no
“direct conflict between the property-based common law
20
claims raised by Plaintiffs and [United States] foreign policy,”
Philipp, 248 F. Supp. 3d at 78.
Indeed, far from adopting, as in Garamendi, an “express
federal policy,” 539 U.S. at 425, of disfavoring domestic
litigation of Nazi-era art-looting claims, the United States has
repeatedly made clear that it favors such litigation. Congress,
as explained above, see supra at 8, recently extended statutes
of limitation for Nazi-era art-looting claims, see HEAR Act
§ 4, and the FSIA exempts them from the jurisdictional
immunity otherwise afforded certain art collections
temporarily exhibited in the United States, see 28 U.S.C.
§ 1605(h)(1)–(3).
V.
For the foregoing reasons, we affirm the district court’s
denial of the motion to dismiss, except that on remand, the
district court must, as required by Simon and de Csepel, grant
the motion to dismiss with respect to the Federal Republic of
Germany.
So ordered.