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Simon v. Republic of Hungary

United States Court of Appeals, District of Columbia Circuit

December 28, 2018

Rosalie Simon, et al., Appellants
v.
Republic of Hungary and Magyar Allamvasutak Zrt., Appellees

          Argued April 20, 2018

          Appeal from the United States District Court for the District of Columbia (No. 1:10-cv-01770)

          Paul G. Gaston argued the cause for appellants. With him on the briefs were Charles S. Fax, Liesel J. Schopler, L. Marc Zell, and David H. Weinstein.

          Samuel J. Dubbin was on the brief for amici curiae Holocaust Survivors Foundation USA, Inc., et al. in support of plaintiffs-appellants.

          Geoffrey M. Klineberg and Daniel S. Severson were on the brief for amicus curiae Professor William S. Dodge in support of plaintiffs-appellants.

          Gregory S. Silbert argued the cause for appellees. With him on the brief was Konrad L. Cailteux.

          Before: Millett, Pillard, and Katsas, Circuit Judges.

          OPINION

          Millett, Circuit Judge.

         "Nowhere was the Holocaust executed with such speed and ferocity as it was in Hungary." Simon v. Republic of Hungary, 812 F.3d 127, 133 (D.C. Cir. 2016) (internal quotation marks and citation omitted). More than 560, 000 Hungarian Jews-68% of Hungary's pre-war Jewish population-were killed in one year. Id. at 134. In 1944 alone, a concentrated campaign by the Hungarian government marched nearly half a million Jews into Hungarian railroad stations, stripped them of all their personal property and possessions, forced them onto trains, and transported them to death camps like Auschwitz, where 90% of them were murdered upon arrival. Id. at 133-134.

         Fourteen of the very few survivors of the Hungarian government's pogrom (collectively, "Survivors"), including four United States citizens, filed suit against the Republic of Hungary and Magyar Államvasutak Zrt. ("MÁV"), Hungary's state-owned railway company. As relevant here, the litigation seeks compensation for the seizure and expropriation of the Survivors' property as part of the Hungarian government's genocidal campaign. See Simon, 812 F.3d at 134.

         In a prior appeal in this case, we held that Hungary's and MÁV's seizure of the Survivors' property was an act of genocide, and that the Survivors had adequately alleged jurisdiction over MÁV's acts of genocidal expropriation in violation of international law. See Simon, 812 F.3d at 142, 147-148. Although the Survivors' first complaint had not sufficiently alleged that jurisdiction existed over Hungary, we noted that they might yet be able to make that showing. See id. at 148.

         On remand, the district court dismissed the case on two alternative grounds, both of which are at issue here. First, the court held that, regardless of whether the Survivors' claims against Hungary amounted to expropriation, principles of international comity required that the Survivors first try to adjudicate their claims in Hungary. Second, the court held that, under the doctrine of forum non conveniens, a Hungarian forum would be so much more convenient for resolution of the claims as to clearly override the Survivors' choice to litigate the case in the United States.

         The district court erred on both fronts. Our recent decision in Philipp v. Federal Republic of Germany, 894 F.3d 406 (D.C. Cir. 2018), which post-dated the district court's ruling, squarely rejected the asserted comity-based ground for declining statutorily assigned jurisdiction. With respect to the dismissal on forum non conveniens grounds, the district court committed material legal errors at each step of its analysis. A proper application of the relevant factors leaves no basis for designating Hungary the strongly preferred location for this litigation because Hungary is not home to any identified plaintiff, has not been shown to be the source of governing law, lacks a process for remediation recognized by the United States government, and is not the only location of material amounts of evidence. There is, in short, far too little in this record to designate Hungary a more convenient forum than the one chosen by the Survivors. For those reasons, we reverse and remand for further proceedings consistent with this opinion.

         I

         A

         The terrible facts giving rise to this litigation are recounted at length in our first opinion in this case. See Simon, 812 F.3d at 132-134. In brief, Hungary "began a systematic campaign of [official] discrimination" against its Jewish population "as early as 1941." Id. at 133. At that time, Hungary began rounding up tens of thousands of Jewish citizens and refugees who had fled from surrounding countries, and sending them to internment camps near the Polish border. Id.; Second Amended Class Action Complaint ¶ 105, Simon v. Republic of Hungary, No. 10-1770 (D.D.C. June 13, 2016), ECF No. 118 ("Second Am. Compl.").

         Then, in 1944, the Nazis occupied Hungary and installed a "fanatically anti-Semitic" regime. Simon, 812 F.3d at 133. Over the Summer of 1944, Hungary rounded up more than 430, 000 Jews for deportation to Nazi death camps, primarily Auschwitz. Second Am. Compl. ¶ 120. With tragic efficiency, Hungarian government officials, including MÁV employees, created a schedule of deportations, along with planned routes and destinations, with four trains running daily. Id. ¶ 117. Seventy to ninety people were packed into an individual freight car, so that each train transported 3, 000 to 3, 500 Hungarian Jews to almost certain death. Id. Before the Jews were crammed into the trains, MÁV officials robbed them of all their possessions. Id. ¶ 112. According to the Survivors, "[w]ithout the mass transportation provided by the Defendant [MÁV], the scale of the Final Solution in Hungary would never have been possible." Id. ¶ 133.

         B

         The United States traditionally afforded foreign sovereign nations immunity from suit in domestic courts as a matter of "grace and comity." Republic of Austria v. Altmann, 541 U.S. 677, 689 (2004). Given the Political Branches' constitutional expertise in foreign affairs, courts would historically "defer[] to the decisions of the political branches-in particular, those of the Executive Branch-on whether to take jurisdiction over particular actions against foreign sovereigns and their instrumentalities." Id. (internal quotation marks omitted); see also United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319-320 (1936). But over time, conflicting theories on when immunity should apply created "disarray" in the State Department's immunity decisions. Altmann, 541 U.S. at 690.

         Congress responded in 1976 by enacting the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602 et seq. The FSIA is a "comprehensive statute containing a set of legal standards governing claims of immunity in every civil action against a foreign state or its political subdivisions, agencies, or instrumentalities." Altmann, 541 U.S. at 691 (internal quotation marks omitted); see also id. ("Congress sought to remedy these problems by enacting the FSIA."). Congress enacted guiding "principles" so that the "courts of the United States" could decide "the claims of foreign states to immunity" on the terms prescribed by Congress. 28 U.S.C. § 1602; see Altmann, 541 U.S. at 691 ("The Act * * * transfers primary responsibility for immunity determinations from the Executive to the Judicial Branch.").

         The FSIA enumerates specific exceptions to foreign sovereign immunity and confers federal-court jurisdiction over foreign sovereigns in qualifying cases. 28 U.S.C. §§ 1605- 1605A. Courts may hear a case only if "one of the exceptions applies" because "subject-matter jurisdiction in any such action depends on that application." Altmann, 541 U.S. at 691 (internal quotation marks omitted). Congress was also explicit that, if an exception applies, "[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States." 28 U.S.C. § 1605(a).

         This case involves the FSIA's expropriation exception to foreign sovereign immunity. Section 1605(a)(3) waives foreign sovereign immunity in cases asserting that "rights in property [were] taken in violation of international law" if "that property or any property exchanged for such property" either (i) "is present in the United States in connection with a commercial activity carried on in the United States by the foreign state," or (ii) "is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States[.]" 28 U.S.C. § 1605(a)(3).

         Application of that exception hinges on a three-part inquiry:

[1] the claim must be one in which "rights in property" are "in issue";
[2] the property in question must have been "taken in violation of international law"; and
[3] one of two commercial-activity nexuses with the United States must be satisfied.

Simon, 812 F.3d at 140.

         C

         1

         The Survivors are four United States citizens-Rosalie Simon, Charlotte Weiss, Rose Miller, and Ella Feuerstein Schlanger-as well as Helen Herman and Helena Weksberg from Canada; Tzvi Zelikovitch, Magda Kopolovich Bar-Or, Zehava Friedman, Yitzhak Pressburger, Alexander Speiser, Ze-ev Tibi Ram, and Moshe Perel from Israel; and Vera Deutsch Danos from Australia. Second Am. Compl. ¶¶ 5-9, 14, 22, 27, 28, 39, 41, 49, 65, 73, 81.[1] Seeking some measure of compensation for their injuries, the Survivors filed suit against the Republic of Hungary, MÁV, and Rail Cargo Hungaria Zrt., a private railway company that is the successor-in-interest to the former cargo division of MÁV. Simon v. Republic of Hungary, 37 F.Supp.3d 381, 385 (D.D.C. 2014). The Survivors claim that "their possessions and those of their families were taken from them" by the defendants as they boarded trains destined for concentration camps. Id. at 386 (internal quotation marks omitted).[2]

         There is no dispute that Hungary and MÁV are, respectively, a foreign sovereign and an instrumentality of a foreign sovereign whose claims of immunity are governed by the FSIA. See Simon, 812 F.3d at 135 (citing 28 U.S.C. § 1603). Earlier in this litigation, the United States government filed a Statement of Interest recommending that Rail Cargo Hungaria Zrt., now nearly 100% owned by an Austrian company, be dismissed from the case because of the United States' "strong support for international agreements with Austria involving Holocaust claims against Austrian companies-agreements that have provided nearly one billion dollars to Nazi victims." Statement of Interest of the United States of America at 1, Simon v. Republic of Hungary, No. 10-1770 (D.D.C. July 15, 2011), ECF No. 42. Given the United States' longstanding collaboration with Austria to "develop funds to compensate victims of the Holocaust," including the Austrian General Settlement Fund, the United States maintained that a "suit against [Rail Cargo Hungaria Zrt.] runs contrary * * * to enduring United States foreign policy interests." Simon, 37 F.Supp.3d at 393-394 (internal quotation marks omitted).

         The United States government said nothing about any United States policy interest that would support dismissal of the claims against the Republic of Hungary or MÁV. See generally United States Statement of Interest.

         The district court subsequently dismissed Rail Cargo Hungaria Zrt. as a defendant for lack of personal jurisdiction. Simon, 37 F.Supp.3d at 444. The district court separately dismissed the case against Hungary and MÁV for lack of subject matter jurisdiction. The court reasoned that the Treaty of Peace with Hungary, Feb. 10, 1947, 61 Stat. 2065, 41 U.N.T.S. 135 ("1947 Treaty"), "provide[d] for an exclusive, extrajudicial mechanism to resolve" the Survivors' claims, and so the court was "constrained by the FSIA to recognize [their] sovereign immunity." Simon, 37 F.Supp.3d at 420.

         This court reversed. We held that the 1947 Treaty did not preempt the Survivors' suit because there was no express conflict between the Treaty and the Survivors' common-law claims. Simon, 812 F.3d at 140. The Treaty established only a "minimum obligation by Hungary" to compensate victims; it did not provide the "exclusive means" by which victims could obtain relief, leaving the Survivors free to pursue other available remedies. Id. at 137 (emphasis omitted).

         This court also ruled that the FSIA's expropriation exception, 28 U.S.C. § 1605(a)(3), encompassed the types of common-law claims of conversion, unjust enrichment, and restitution asserted by the Survivors. Simon, 812 F.3d at 141 ("We make FSIA immunity determinations on a claim-by-claim basis[.]"). More specifically, we held that the expropriation exception "squarely" applied, id. at 146, because Hungary's and MÁV's expropriations of the Survivors' property were "themselves genocide," in violation of fundamental tenets of international law, id. at 142. "The Holocaust's pattern of expropriation and ghettoization" in Hungary was a "wholesale plunder of Jewish property * * * aimed to deprive Hungarian Jews of the resources needed to survive as a people." Id. at 143 (internal quotation marks omitted). Systematically stripping "a protected group" of life's necessities in order to "physical[ly] destr[oy]" them is "genocide." Id.

         Looking to the complaint, this court held that the Survivors had satisfactorily pled a commercial nexus with respect to MÁV because MÁV engaged in commercial activity in the United States by "maintain[ing] an agency for selling tickets, booking reservations, and conducting similar business" here. Simon, 812 F.3d at 147 (internal quotation marks omitted). The complaint's pleadings, however, needed more specificity to show the type of commercial nexus that would support exercising jurisdiction over Hungary. We remanded for the district court to address that issue. Id. at 148. This court also left it to the district court to decide on remand "whether, as a matter of international comity, it should refrain from exercising jurisdiction over [the remaining] claims until the plaintiffs exhaust domestic remedies in Hungary," and whether the doctrine of forum non conveniens warranted dismissal. Id. at 151.

         2

         Upon their return to district court, the Survivors amended their complaint to allege specific facts regarding Hungary's ongoing commercial activity in the United States, including, among other things, "[t]he promotion of Hungarian businesses through trading houses," the promotion of Hungary as a destination for United States tourists, "[t]he promotion of American investment in Hungarian business[, ]" "[t]he acquisition by Hungary of military equipment," Hungary's use of the United States' capital and debt markets to secure financing, and Hungary's acceptance of federal grants and loans from the United States. Second Am. Compl. ¶ 101.

         The district court again dismissed the case. The court chose not to address whether the Survivors had adequately pled facts supporting application of the FSIA's expropriation exception. Instead, the district court held that, notwithstanding the jurisdiction expressly granted by the FSIA over properly pled expropriation claims, "principles of international comity" required the Survivors "to exhaust [Hungarian] remedies, except where those remedies are futile or imaginary." Simon v. Republic of Hungary, 277 F.Supp.3d 42, 54 (D.D.C. 2017) (internal quotation marks omitted) (citing Fischer v. Magyar Államvasutak Zrt., 777 F.3d 847, 852, 858 (7th Cir. 2015)). The district court further ruled that, notwithstanding the Survivors' arguments about the rise of anti-Semitism in Hungary, a "lack of meaningful remedies," and restrictions on the independence of Hungary's judiciary, the Survivors' "pursuit of their claims in Hungary would not be futile." Simon, 277 F.Supp.3d at 57-63.

         The district court further decided that dismissal was warranted under the doctrine of forum non conveniens. The court reasoned that the Survivors' choice of forum merited "minimal" deference, and that Hungary would be more convenient because of the evidence and many witnesses located there. Simon, 277 F.Supp.3d at 63, 64-65. In applying the forum non conveniens doctrine, the court placed particular emphasis on Hungary's interest in resolving the dispute itself. Id. at 66.

         The Survivors appeal both grounds for dismissal and request that the case be reassigned to a new district court judge. We agree that the district court erred in requiring the exhaustion of Hungarian remedies and in its forum non conveniens analysis, ...


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