[00:00:02] Speaker 00: Case number 16-7042. [00:00:05] Speaker 00: David L. D. Suseple at L versus Republic of Hungary on foreign state at L appellant. [00:00:11] Speaker 00: Mr. Stalber for the appellants. [00:00:13] Speaker 00: Ms. [00:00:14] Speaker 00: Beninetti for the appellees. [00:00:16] Speaker 00: Mr. Stalber, good morning. [00:00:18] Speaker 05: Good morning, Your Honor. [00:00:21] Speaker 05: On behalf of the Hungarian government and certain of its agency and instrumentality museums, along with my colleague, Ms. [00:00:28] Speaker 05: Sarah Andre on brief, it is my pleasure to argue before this court. [00:00:32] Speaker 05: We are back before this court because the district court took the extraordinary step of taking jurisdiction over a foreign sovereign under a jurisdictional provision in the very limited Sovereign Immunity Act, which is factually, legally, and temporally unrelated to the underlying commercial cause of action. [00:00:53] Speaker 05: That is something that no other court, be it in the D.C. [00:00:56] Speaker 05: Circuit, the New York Circuit, or anywhere in this land, has before occurred. [00:01:01] Speaker 03: Well, let me ask you about that. [00:01:03] Speaker 03: You say it's factually and legally unconnected to the bailment, right? [00:01:08] Speaker 05: Yes. [00:01:09] Speaker 03: The district court found that at least some of these paintings were never returned to the family. [00:01:15] Speaker 05: Yes. [00:01:16] Speaker 03: And you don't challenge that? [00:01:18] Speaker 05: We do not. [00:01:18] Speaker 03: So why isn't that your factual and legal connection? [00:01:22] Speaker 03: They were seized by the Nazis, never returned, and now they're in a bailment. [00:01:27] Speaker 03: What more do you need? [00:01:28] Speaker 05: They were seized by the Nazis in 1944. [00:01:31] Speaker 05: That is, Your Honor, right, underlying expropriation. [00:01:34] Speaker 05: But we are at the motion to dismiss phase. [00:01:37] Speaker 05: And as the complaint is alleged and set forth, it sets forth two causes of action which sprang from the breach in 2008. [00:01:43] Speaker 03: Could you just answer my question? [00:01:45] Speaker 05: It is not legal. [00:01:46] Speaker 03: My question is, why aren't they, why isn't there a direct factual legal connection to the bailments since they were seized, never returned, and are now in an alleged bailment? [00:01:57] Speaker 05: Because, Your Honor, that creates a seizure. [00:01:59] Speaker 05: That does not create a contractual bailment or other type of relationship between the Hungarian government and the plaintiffs at this point in time, Your Honor. [00:02:08] Speaker 03: I don't understand your point. [00:02:10] Speaker 05: Well, Your Honor, in addition to the court, and we agree that the works were seized, the complaint has set forth two causes of action. [00:02:21] Speaker 05: A breach of the bailment and a [00:02:24] Speaker 05: conversion as a result of the breach of that bailment. [00:02:27] Speaker 05: Both of those breaches tie back to the 2008 decision from the Hungarian courts, not to the 1944 taking in violation of international law. [00:02:39] Speaker 05: And this presents to us the quandary that we find ourselves in. [00:02:43] Speaker 05: Because if you use the expropriation exception to take jurisdiction over a commercial claim, [00:02:49] Speaker 05: As the court also found, at least 15 of the, at least 11 of the artworks, there is no conceivable evidence at all of a bailiff. [00:02:58] Speaker 03: But then how's that any different from Simon? [00:03:03] Speaker 03: Simon is- Simon, there were, as the court said, garden variety common law claims. [00:03:11] Speaker 03: And because, and that fell within the exception because, because [00:03:20] Speaker 03: because there was a right in property taken in violation of international law at issue in the case. [00:03:27] Speaker 03: That's the same thing here. [00:03:30] Speaker 03: In fact, you could replace the words in Simon with bailman, and you'd have this case. [00:03:38] Speaker 05: I submit you would not, Your Honor, because in Simon you had unidentifiable property. [00:03:44] Speaker 05: In this particular case, we have 44 separate and distinct individual works of art, which are separate pieces of property, attributable to particular individuals. [00:03:53] Speaker 05: In this particular case, in addition to the court finding that the works were taken, we have at least 11 of the artworks [00:04:02] Speaker 05: to which the court said there is no, absolutely no evidence of a bailment. [00:04:07] Speaker 05: So you have an expropriation jurisdiction without any viable cause of action, and then we pull the foreign sovereign in. [00:04:14] Speaker 05: The other reason why this doesn't work, Your Honors, is that under the Foreign Sovereign Immunity Act, under the expropriation exception prong, to take jurisdiction over the foreign sovereign, where the property is not present in the United States, or otherwise exchanged for property that is present in the United States, [00:04:33] Speaker 05: You cannot take jurisdiction over the foreign sovereign. [00:04:37] Speaker 05: It's very limited. [00:04:39] Speaker 05: Two Solicitor General advisory opinions have been issued on this point, most recently in the Casir case in which we're involved for the Spanish government, and even more recently for Helmer. [00:04:49] Speaker 03: I just don't understand how you get around Simon. [00:04:55] Speaker 03: Simon? [00:04:56] Speaker 03: In Simon? [00:04:58] Speaker 03: there was a right in property taken in violation of international law at issue, right? [00:05:05] Speaker 03: There and here, that right is the right to possess the property. [00:05:10] Speaker 05: The right to possess the property in our particular case, according to the plaintiff's complaint, springs from a contractual relationship, a bailment, which they allege was breached in 2008. [00:05:22] Speaker 05: In Simon, the claim arises from the 1944 takings and the taking at that time and the continuous holding of that property. [00:05:32] Speaker 05: There is nothing commercial about the Simon case. [00:05:37] Speaker 03: Go ahead. [00:05:39] Speaker 04: Do you rely on Simon for the holding in Simon that under 1605A, with respect to not the agencies, but the country itself, Hungary, that the property has to be in the United States? [00:05:56] Speaker 05: Yes, we do, Your Honor. [00:05:57] Speaker 04: What do you do with Chat Chabad? [00:06:00] Speaker 05: We don't think those are at all inconsistent, Your Honor, because in Chabad, the court was dealing with the Russian government in that particular case, as you know. [00:06:09] Speaker 05: And in Chabad, yes, the property was located in Russia. [00:06:12] Speaker 05: But in Chabad, the issue was not before the court, not specifically before the court, because the Russian government did not raise it. [00:06:22] Speaker 05: Once the court found jurisdiction under the exception over the agencies, it just swept in the Russian government. [00:06:31] Speaker 05: At that point in time, the Russians stepped away from this case. [00:06:35] Speaker 05: They stepped away from their case, I should say, and let a default judgment get taken up on them. [00:06:40] Speaker 04: So it was jurisdiction by consent? [00:06:43] Speaker 05: It was jurisdiction by waiver, jurisdiction by consent. [00:06:46] Speaker 05: But there's no specific finding in that case that you can blur the lines between a commercial taking and an expropriation. [00:06:52] Speaker 05: There's no specific finding. [00:06:54] Speaker 04: That's not what I'm talking about. [00:06:55] Speaker 04: I'm talking about the expropriation jurisdiction. [00:07:03] Speaker 04: And you've got, in Simon, the court holds that the property, for the country itself, not the agencies and instrumentalities, for the country itself, the property has to be in the United States. [00:07:15] Speaker 04: In Chabot, the court holds the property doesn't have to be in the United States, so long as the agencies and instrumentalities are operating a commercial venture in the United States. [00:07:27] Speaker 04: Those cases are, in my mind anyway, impossible to swear. [00:07:33] Speaker 05: Well, Your Honor, I think they can be squared as follows. [00:07:36] Speaker 05: It's implied in the Chabag case, if not a specific holding, that it analyzes the point. [00:07:42] Speaker 05: And in the Simon case... It's not implied. [00:07:44] Speaker 04: The end of the discussion says that we therefore have, as I recall, that we therefore [00:07:49] Speaker 04: for a jurisdiction over Russia. [00:07:50] Speaker 05: You're right. [00:07:51] Speaker 05: Exactly what happens. [00:07:52] Speaker 05: But my point is that the Russians never raised the issue. [00:07:56] Speaker 05: They don't bring it to the court's attention. [00:07:58] Speaker 05: It's not a brief issue. [00:08:00] Speaker 05: And the court stops its analysis short by simply saying, we've got the agencies and its mentalities. [00:08:05] Speaker 05: Therefore, I guess we get the Russian government. [00:08:07] Speaker 05: They raised no objection to it. [00:08:09] Speaker 05: They stepped away from the case and did not bring it back. [00:08:11] Speaker 05: In Simon, however, it was squarely before this court. [00:08:15] Speaker 05: And it came back before the panel on a reconsideration. [00:08:19] Speaker 05: And on the reconsideration, both parties briefed extensively the issue as to whether you could take jurisdiction over Hungary when the property is not present in the United States or exchanged for property present in the United States. [00:08:32] Speaker 05: And in Simon, the court rejected the reconsideration of the panel. [00:08:35] Speaker 05: So it remanded it back. [00:08:37] Speaker 05: And now there's a question as to whether there is any property in the United States or not. [00:08:41] Speaker 05: As to our case, there is absolutely no allegation in the motion to dismiss or anywhere else that the property is present in the United States. [00:08:51] Speaker 05: This only goes to the Republic of Hungary. [00:08:53] Speaker 05: And we would submit it is only – and it demonstrates why when you have an expropriation client, expropriation jurisdiction, and you attempt to slam it into a commercial exception, [00:09:05] Speaker 05: with cause of action, they don't fit. [00:09:08] Speaker 05: They're inconsistent. [00:09:09] Speaker 05: And you end up with the result of, yes, having to retreat back to the expropriation exception. [00:09:14] Speaker 05: But because it is a very limited exception, and we afford foreign sovereigns a greater deference to deal with property that is within the territory of those sovereigns, particularly in a case where [00:09:28] Speaker 05: We have individual property. [00:09:30] Speaker 05: We have 44 works, which now as we come back before this Court, before Judge Tatel on the last panel, we know they're separate and distinct property. [00:09:38] Speaker 05: We know that at least 24 of the artworks belong to Italians. [00:09:44] Speaker 05: We know at least 8 of the artworks belong to Hungarians. [00:09:47] Speaker 05: Only 12 of the artworks have any connection at all with the United States. [00:09:52] Speaker 05: And with respect to those 24 from the Italians, not only did they decide not to participate in litigation in Hungary, they, in fact, said they don't – we don't want to submit evidence that we may have to support our claim. [00:10:05] Speaker 05: So while I think your point on Simon is well taken, [00:10:08] Speaker 05: It also demonstrates that this is a case where exhaustion under international comedy is very appropriate, and the Hungarian government is only seeking consistent treatment between Fischer, Simon, and today's kids. [00:10:20] Speaker 04: Let me ask you something about that. [00:10:22] Speaker 04: You predicate appellate jurisdiction on the 28 U.S.C. [00:10:27] Speaker 04: 1291. [00:10:30] Speaker 04: Final judgment, right? [00:10:33] Speaker 04: That was not the predicate for jurisdiction in the last time this case was here. [00:10:38] Speaker 04: There was a 1292b that was issued by the district court because there were non-final judgments that the district court reached in that case and that were up on appeal. [00:10:53] Speaker 04: So if you're relying on the final judgment rule, then I suppose, although there's no [00:11:01] Speaker 04: discussion of this in either side's views, that you're dealing with the collateral ordered up. [00:11:08] Speaker 04: Is that right? [00:11:09] Speaker 05: Well, I'll be honest with you, Your Honor. [00:11:11] Speaker 05: You've got me there. [00:11:12] Speaker 04: But what I do know is that we are back... The judgment that you're appealing from was not a final judgment. [00:11:19] Speaker 05: Correct. [00:11:20] Speaker 04: Right. [00:11:21] Speaker 04: You rely on the final judgment rule of 28 U.S.C. [00:11:25] Speaker 04: 1291. [00:11:29] Speaker 04: So how do you get appellate jurisdiction? [00:11:34] Speaker 04: If it's not a final judgment, it was not a final judgment, you rely on jurisdiction or the final judgment rule, how do we have jurisdiction? [00:11:42] Speaker 05: So in your position, the appellate court here can't take jurisdiction to hear our argument with respect to the exhaustion, because in Simon it was in a different context? [00:11:51] Speaker 05: Am I understanding correctly? [00:11:52] Speaker 04: That's exactly where I'm going, because I can see wedging this into the collateral [00:11:58] Speaker 04: order doctrine on the basis that you have a right not only to immunity, but a right not to have to go through proceedings leading to a final judgment. [00:12:08] Speaker 04: But the exhaustion doctrine question is not to my mind. [00:12:13] Speaker 04: I have no cases that have held that a ruling on failure to exhaust is within the collateral order doctrine. [00:12:23] Speaker 04: And nobody cites him. [00:12:25] Speaker 05: You're right. [00:12:25] Speaker 05: Nobody does say, Your Honor. [00:12:26] Speaker 05: We'd be happy to supplement it. [00:12:28] Speaker 05: But I do think that we have had the issue of exhaustion before this court in Simon, which was taken up sua spanae at that point in time. [00:12:35] Speaker 05: We have properly briefed it and presented it to this court. [00:12:38] Speaker 05: So I do think it is ripe and appropriate for this court to address it at this point in time. [00:12:42] Speaker 04: But Simon, am I correct in remembering Simon, that Simon was an appeal from a total dismissal? [00:12:50] Speaker 05: Simon was in appeal from a motion to dismiss. [00:12:56] Speaker 05: Whether it was total or not, I don't know, but it also came up on the Foreign Society Immunity Act with respect to an immediate interlocutory appeal. [00:13:04] Speaker 05: In our particular case, we have taken and went back to the court and took extensive discovery. [00:13:10] Speaker 05: And we know from that discovery, which is presented to the court, that we have separate and distinct claims which have not been exhausted in any way, shape, and form in Hungary, whether they be with respect to the 24 artworks from the Italians or the eight artworks from [00:13:27] Speaker 05: the Hungarian side of the claims. [00:13:29] Speaker 05: And so we put Hungary in a very interesting position where we're now saying we're taking jurisdiction over an expropriation exception relating back to 1944. [00:13:40] Speaker 05: But you've been dealing with a complaint for the last six years that was based on a commercial breach, a commercial breach which is alleged to have occurred because your courts, your independent courts, heard a case for eight years and made factual findings and a decision with respect to ownership based on certain defenses which were not available against the Italians. [00:14:01] Speaker 05: For example, there is no statute of limitations in Hungary with respect to these types of claims. [00:14:07] Speaker 05: In addition, the 1973 agreement, which was used in that particular proceeding to bar the claims of the American representatives because they claimed that they had submitted to the Foreign Claims Settlement Conference that the property had been taken from them during the communist era, and therefore they were right to get [00:14:27] Speaker 05: compensation for it, and therefore their claims were barred. [00:14:30] Speaker 05: That's not going to be an offense that's available to the Italians, I mean to the Hungarian government with respect to the Italian claims or the Hungarian citizen claims. [00:14:38] Speaker 05: So what we end up with, because we have taken what was a contractual bailman claim, [00:14:45] Speaker 05: where there is no direct effect in the United States, we end up finding ourselves trying to square an expropriation claim into a commercial claim, something that has not been done before, whether it's this court or any other court, and GAR gives us good instruction [00:15:01] Speaker 05: to say that we cannot allow the plaintiff, through creative language and creative meandering around, to find a cause of action that fits the claim or jurisdictional basis that they wanted to do. [00:15:12] Speaker 05: It's a transformation that simply doesn't work. [00:15:15] Speaker 05: And once you try doing that, we find that the Hungarian government itself doesn't belong in this case under an expropriation exception. [00:15:23] Speaker 03: What are the implications of all this for the newly enacted [00:15:30] Speaker 03: for the newly enacted Recovery Act that was enacted during the pendency of this litigation. [00:15:36] Speaker 03: If we send that back with directions to allow the plaintiffs to amend their complaint, what are the implications of that for all this? [00:15:48] Speaker 05: Well, if the court is speaking to the HERE Act, which was recently passed, my submission to you would be there's actually no implications to it. [00:15:56] Speaker 05: The HERE Act is not a jurisdictional statute. [00:16:00] Speaker 05: The HERE Act simply deals with the statute of limitations from date of discovery to six years and provides exceptions. [00:16:07] Speaker 05: But I would submit to you, we still end up with the problem that you can't take jurisdiction over the Hungarian government because they'd have to go back and make an expropriation claim, but the property is not in the United States. [00:16:19] Speaker 05: So the HERA Act has no implications. [00:16:22] Speaker 05: The other is, the HERA Act was not meant to reopen cases that had been final. [00:16:28] Speaker 05: So you'd have a question as to whether or not the final case, which was with respect to at least 11 of the claims, would reopen it. [00:16:34] Speaker 03: What is the evidence for that? [00:16:36] Speaker 03: What is the evidence for that? [00:16:38] Speaker 05: Well, the evidence is the 2008 decision that was in the Hungarian judicial system. [00:16:44] Speaker 03: No, no, no, but this act was passed last year, right? [00:16:48] Speaker 05: The HERE Act was passed this last year, yes. [00:16:51] Speaker 03: That's my question. [00:16:52] Speaker 05: And the HERE Act states that it does not reopen cases that are otherwise finable and now appealable. [00:16:58] Speaker 03: But this is an open pending case. [00:17:01] Speaker 05: This is an open pending case here, yes, Your Honor. [00:17:04] Speaker 05: But my point is that within the HERE Act itself recognizes that international comedy could be applied and should be applied to enforce the Hungarian judgments. [00:17:13] Speaker 05: With respect to the Italian claims, with respect to the Hungarian claims, and even with respect to the US plaintiff's claims, if we go back to the 1944 taking, then clearly there was discovery that the property was taken in 1944. [00:17:31] Speaker 05: And the statute of limitations, be it six years, be it 10 years, be it 30 years, be it four years, would still be applicable. [00:17:39] Speaker 05: And there is an exception in the HERE Act, which states that if you were aware of your claim and would have been able to bring your claim, the otherwise applicable statute of limitations would apply. [00:17:48] Speaker 05: So we'd be right back to the Washington DC statute of limitations. [00:17:52] Speaker 05: Now, I understand that in a motion to dismiss, that might be a whole lot to swallow. [00:17:58] Speaker 05: It's right there in the complaint as it's pled. [00:18:01] Speaker 05: So amendment back or remand back would be futile with respect to the Hungarian government anyway because now you have to make an expropriation claim because we know a commercial claim doesn't work. [00:18:12] Speaker 05: I think it's important to note that not only was the HERA passed, but Hungary in its own country [00:18:18] Speaker 05: And in recognizing the need to continue to examine these cases, 2013 passed special legislation, which is consistent with the Washington principles, which is consistent with the terrorism declaration, which says we are going to hear cases on the merits to the extent they arise from the Holocaust era. [00:18:37] Speaker 05: That is a remedy that is there and available to the Herzog family, the De Geppel family, [00:18:43] Speaker 05: the Italian claimants that have not presented their claims before. [00:18:47] Speaker 05: So what are the ramifications, Your Honor, of the HERE Act? [00:18:50] Speaker 05: What are the ramifications of the Hungarian regulations? [00:18:53] Speaker 05: I think all of them tell us that the case is properly brought and heard in Hungary where these historical events happened and occurred. [00:19:01] Speaker 05: And the Foreign Side Community Act provides for very limited exceptions. [00:19:06] Speaker 05: very limited exceptions, in which we are going to take jurisdiction over Hungary, particularly with property that is not present in the United States. [00:19:14] Speaker 02: All right, we'll give you a couple minutes in reply. [00:19:16] Speaker 05: Thank you very much. [00:19:18] Speaker 02: Benanati. [00:19:25] Speaker 01: Good morning, Your Honors. [00:19:26] Speaker 01: May it please the Court, I'm Alicia Benanati from Kasowitz, Benson, Torres, and Friedman on behalf of the Appellees, David DeCheppel, Angela Herzog, and Julia Herzog. [00:19:37] Speaker 01: Judge Titel, you got it exactly right. [00:19:40] Speaker 01: This case is like Simon. [00:19:42] Speaker 01: Just as in Simon, there is no dispute that the 42 artworks that remain in this case were all taken by defendants and their Nazi collaborators during World War II. [00:19:54] Speaker 01: as part of a broader campaign of genocide against the Hungarian Jews. [00:19:59] Speaker 01: And just as in Simon, the claims at issue in this case squarely place the rights and property that were taken in violation of international law in issue. [00:20:11] Speaker 01: Now in Simon [00:20:13] Speaker 01: The court held that claims for conversion and unjust enrichment were property-based claims that fell comfortably within the expropriation exception. [00:20:21] Speaker 01: Our bailment claims here are no different, and we also have claims for conversion and unjust enrichment as well. [00:20:28] Speaker 01: And the unjust enrichment claim in particular, I would submit if you look in the complaint, directly ties back to the taking of the collection during World War II. [00:20:39] Speaker 02: But the difference with Simon is you may have a legal claim that's similar, but Simon had identical facts. [00:20:48] Speaker 02: And with the bailment, in particular, you have different facts, unless you're arguing that any property expropriated originally as part of genocide keeps that taint if it ever ends up again in the hands of the Hungarian government and its agencies. [00:21:08] Speaker 01: No, that's not what we're arguing, Your Honor, but with respect to the vast majority of the artworks that are pleaded in our complaint, they were taken during World War II, and they were never returned legally, physically, or otherwise. [00:21:21] Speaker 01: The district court found evidence that at most 15 artworks were returned to the family. [00:21:26] Speaker 01: Everything else was taken during the war and remained in the possession and custody and control of the museums. [00:21:32] Speaker 01: And so while there may have been subsequent events where the museums acknowledged, yes, [00:21:37] Speaker 01: The Herzog family owns this art. [00:21:39] Speaker 01: Yes, we're holding it as a custodian. [00:21:41] Speaker 01: The fact is, the artworks only came into the museum's possession in the first place because of the events of the Holocaust. [00:21:50] Speaker 02: All right, but some of them were physically given back, were they not? [00:21:53] Speaker 01: Yes. [00:21:53] Speaker 02: It wasn't all on paper. [00:21:54] Speaker 01: Correct. [00:21:55] Speaker 01: Of the 15 that the district court found there was some evidence of return, at least some portion of those, there were some that, yes, were physically returned to the family for a very brief period of time before they were re-seized. [00:22:09] Speaker 01: And even as to those artworks that were taken back in this case, what distinguishes this case from other cases where the facts might be more remote is that [00:22:19] Speaker 01: when the artworks were brought back into the museum, they were done so as a direct result again of events that had happened during the Holocaust. [00:22:25] Speaker 01: The seizure of the artworks belonging to Ishtvan Herzog were as a result of a Holocaust era contract that he entered into with his non-Jewish wife, where he said that the artworks belonged to her. [00:22:40] Speaker 01: And that was the agreement that became the predicate for her alleged smuggling conviction. [00:22:46] Speaker 01: Now she put in an affidavit saying she never smuggled anything. [00:22:50] Speaker 03: This doesn't have anything to do with the... [00:22:52] Speaker 03: with those artworks that were never, I mean, there may be some things for the district court to sort out, right, with respect to art that was either returned and repossessed or seized or forfeited in some other way. [00:23:08] Speaker 03: But is it your point that with respect to a particular number of these, I don't know what it is, they were never returned, right? [00:23:16] Speaker 03: So in this case you're now talking about is irrelevant to that group of paintings, correct? [00:23:21] Speaker 03: Correct. [00:23:23] Speaker 04: What do you do with the sign that's holding that with respect to the Republic of Hungary, it probably has to be in the United States? [00:23:34] Speaker 01: We – the Simon Court seemed to be under the impression that their decision was consistent with Chabad. [00:23:39] Speaker 01: And I think, as Your Honor correctly pointed out, it's not. [00:23:43] Speaker 01: In the Chabad case, the Court clearly sustained jurisdiction over Russia and the Russian State Library and the Archive based on the fact that the Library and the Archive were agencies or instrumentalities of Russia that were engaged in commercial activity in the United States. [00:24:00] Speaker 03: But didn't, in the petition for rehearing before the panel, the argument about Chabad was made, correct? [00:24:06] Speaker 03: It was, correct. [00:24:07] Speaker 03: And so why don't we, what we essentially have, it seems to me, is a decision by the Simon panel, having looked at Chabad, that for whatever reason, Chabad didn't decide the question of [00:24:22] Speaker 03: Russia's continued involvement in the case, right? [00:24:27] Speaker 01: Isn't that what we have? [00:24:28] Speaker 03: So that means Simon's binding on this court. [00:24:31] Speaker 01: We have a circuit split, basically. [00:24:33] Speaker 03: No, you can't – you mean an intra-circuit split. [00:24:35] Speaker 01: Intra-circuit split, and also a circuit split. [00:24:37] Speaker 03: No, you can't have an intra-circuit split. [00:24:39] Speaker 03: The rule is that if there's a real split, the earlier decision controls. [00:24:44] Speaker 03: So the question is, does Chabad control [00:24:47] Speaker 03: I would submit yes, because... But no, but I just asked you, you made the Chabad argument before the Simon panel, and it disagreed with you. [00:24:54] Speaker 03: So don't we have a decision by that panel that Chabad did not resolve the jurisdictional issue, that it didn't address it? [00:25:03] Speaker 03: You see my point? [00:25:04] Speaker 03: I do see your point, Your Honor. [00:25:05] Speaker 01: That's my question. [00:25:06] Speaker 01: But the Habbad court is not the only court to have reached this same conclusion. [00:25:11] Speaker 01: The Altman case, which went all the way to the Supreme Court, sustained jurisdiction over the Republic of Austria and the Austrian National Gallery based on exactly the same criteria, that the artwork at issue was located in the Austrian National Gallery in Austria, [00:25:26] Speaker 01: and that the Austrian National Gallery was engaged in commercial activity in the United States. [00:25:30] Speaker 01: Now, that case came out of the Ninth Circuit, but it went all the way to the Supreme Court, and nobody ever suggested that Austria should be dismissed, and Austria participated in that litigation the entire time. [00:25:41] Speaker 01: Nobody ever said it should be dismissed on the grounds that the property wasn't present in the United States, and that's because the language of the statute is unambiguous. [00:25:49] Speaker 01: The language of the statute says that a foreign state [00:25:54] Speaker 01: is subject to the jurisdiction of the courts if either test is met. [00:25:58] Speaker 01: It doesn't say that a foreign state is only subject to jurisdiction if the property is present in the United States and an agency or instrumentality is only subject to jurisdiction if the property is owned or operated and the agency or instrumentality is engaged in commercial activity. [00:26:14] Speaker 01: It's an alternative test that applies to a foreign state. [00:26:17] Speaker 03: I have a practical question. [00:26:21] Speaker 03: What difference does it make if Hungary's not in the case, as long as the museums, all these artworks are in these museums that are defendant, correct? [00:26:29] Speaker 01: I'm sorry, all the artworks are? [00:26:30] Speaker 03: All the artworks are in the museums that are defendants, right? [00:26:34] Speaker 03: They are, but... So does it make a practical difference? [00:26:37] Speaker 01: I think it does, Your Honor, insofar as Hungary owns the art, the museums display the art, the museums operate the art, but Hungary owns it. [00:26:46] Speaker 01: So you have a disconnect there where you have defendants in the case who are in possession of the property, but who don't own it. [00:26:57] Speaker 04: I see. [00:26:57] Speaker 04: I see. [00:26:58] Speaker 04: What's the relief you're seeking? [00:27:00] Speaker 01: We're seeking restitution of the art and in the alternative damages. [00:27:05] Speaker 04: Could you get damages against the museums of war? [00:27:11] Speaker 01: In theory, I suppose yes, Your Honor. [00:27:14] Speaker 01: But that's not the relief that the family's seeking. [00:27:16] Speaker 01: These are unique artworks that were taken literally from their homes during World War II. [00:27:22] Speaker 01: This is a case where damages doesn't really remedy the wrong. [00:27:26] Speaker 01: Only getting the art back would remedy the wrong. [00:27:29] Speaker 04: Has there been an evaluation of the pieces of art? [00:27:34] Speaker 01: Formally in the case, no, but informal evaluations have placed the value of the artworks in excess of $100 million. [00:27:43] Speaker 03: Could you just state as clearly as you can your response to Mr. Stauber's argument that this case is, that the bailment claim here is somehow different from the claims in Simon? [00:27:58] Speaker 01: That the bailment claim is different from the claims in Simon? [00:28:00] Speaker 03: Yeah, that was his argument. [00:28:01] Speaker 03: His argument is Simon doesn't control here, because this is a bailment claim. [00:28:05] Speaker 01: Right, and I disagree with that. [00:28:06] Speaker 03: Yeah, right. [00:28:07] Speaker 03: I was just asking, could you just state clearly what's, explain the difference. [00:28:12] Speaker 01: Because regardless of whether this claim is based on conversion, on just enrichment, or bailment, rights and property are still in issue for purposes of safety. [00:28:22] Speaker 03: And that's the whole assignment, correct? [00:28:23] Speaker 01: That's the holding of Simon. [00:28:25] Speaker 01: That's the difference in language between 1605A2 and 1605A3 of the FSA. [00:28:30] Speaker 01: Under the commercial activity exception, the claim has to be based upon commercial activity. [00:28:35] Speaker 01: 1605A3 doesn't say that. [00:28:37] Speaker 01: You don't have to have your claim be based upon the taking. [00:28:40] Speaker 01: The rights and property taken in violation of international law just have to be in issue. [00:28:45] Speaker 01: And we have that here. [00:28:47] Speaker 03: And what are the consequences of the newly enacted statute? [00:28:52] Speaker 01: So the HERE Act applies to, as you say, pending litigations, including to this case. [00:28:58] Speaker 01: And what that act has done is it's reset the clock so that [00:29:03] Speaker 01: Six years from the date of the enactment of the act, you can still bring a claim for a Holocaust-era taking. [00:29:10] Speaker 01: And I disagree with Mr. Stauber's interpretation that that would in any way bar the claims in this case. [00:29:15] Speaker 01: We believe, and we're happy to fully brief that, that the HERE Act [00:29:19] Speaker 01: would resurrect the statute of limitations for any World War II conversion claim that we would seek to bring at this point, that the three-year statute of limitations that formerly applied the state statute for the District of Columbia has now been preempted by this federal law, and that claims for a World War II conversion are no longer time-barred. [00:29:40] Speaker 03: And would that have any impact on whether Hungary's a proper party defendant? [00:29:46] Speaker 03: Well, it wouldn't, right? [00:29:47] Speaker 03: I mean, if it isn't a proper party defendant because of Simon, it still won't be under the new legislation. [00:29:55] Speaker 01: That's correct, because regardless, the property's not in the United States. [00:29:58] Speaker 01: There's no dispute about that. [00:29:59] Speaker 03: And is there anything, if you're allowed to amend your complaint, [00:30:06] Speaker 03: under the newly enacted statute, which resurrects your claims that were barred, right? [00:30:11] Speaker 03: Correct. [00:30:13] Speaker 03: What does that add to what you have here? [00:30:16] Speaker 03: Did you see my point? [00:30:17] Speaker 03: In other words, [00:30:19] Speaker 03: Does that give you all the relief, all the basis you need to go forward in your claim? [00:30:24] Speaker 01: Well, it simplifies things insofar as then you don't need to even reach this question of whether a bailment claim falls within the expropriation exception if there's an expropriation claim. [00:30:34] Speaker 03: Well, that's what I was wondering when I was reading these briefs. [00:30:37] Speaker 03: I mean, if you're allowed to amend your complaint, these issues are irrelevant, right? [00:30:42] Speaker 01: Yes, that particular issue is irrelevant and even also insofar as if the district court finds for whatever reason at the end of the day with the factual record that we've developed through discovery that we can't establish a bailment with respect to a handful of the artworks because there's just not enough in the record. [00:31:01] Speaker 01: If she finds that conclusion, then being able to assert an expropriation claim for the takings during World War II would potentially help with those artworks as well. [00:31:11] Speaker 03: So if all we did was remand to allow you to amend your complaint, would you have everything you need? [00:31:24] Speaker 01: I think we would, Your Honor, except that then we'll be right back. [00:31:26] Speaker 01: If that's all that you do and you give us no guidance on the law, then we'll be right back here in another four years. [00:31:32] Speaker 03: Which aspect of the law? [00:31:33] Speaker 03: You said the bailment thing then becomes irrelevant. [00:31:36] Speaker 03: Right. [00:31:36] Speaker 03: I mean, Simon already... In terms of whether Hungary remains a defendant. [00:31:41] Speaker 03: Oh, no. [00:31:42] Speaker 03: Forget that. [00:31:42] Speaker 03: I'm not asking about whether Hungary remains a defendant. [00:31:45] Speaker 03: I'm asking about the other issues. [00:31:47] Speaker 03: Okay. [00:31:48] Speaker 03: Your claims against the museums. [00:31:51] Speaker 03: You have Simon, which makes it clear this is an expropriation and violation of international law, right? [00:31:56] Speaker 01: Yes. [00:31:56] Speaker 01: I agree. [00:31:57] Speaker 01: We're squarely within the Simon decision with this case. [00:31:59] Speaker 03: So if you're able to amend your complaint, in other words, set aside the question of whether Hungary's a defendant, all right? [00:32:10] Speaker 03: From your perspective, do you need anything from this court other than the ability to amend your complaint? [00:32:21] Speaker 01: I don't think so. [00:32:25] Speaker 02: Thank you. [00:32:28] Speaker 02: He doesn't have any time left. [00:32:29] Speaker 02: Why don't you take two minutes? [00:32:34] Speaker 05: Thank you, Your Honor. [00:32:36] Speaker 05: I would submit that we find ourselves in this difficult idea of trying to figure out how to make jurisdiction work with completely unrelated causes of actions because, in fact, we've gone through six years of full facts of discovery. [00:32:49] Speaker 05: And we have presented to the district court, which has made factual findings that, in fact, at least 11 of the artworks, there's absolutely no evidence of bailment. [00:32:57] Speaker 05: 15 of the artworks, in fact, were physically and legally returned. [00:33:01] Speaker 05: So we would contend that in those contexts, it demonstrates why there has not been before today a case in which a completely or even temporally unrelated cause of action as pled in a complaint is allowed to bootstrap in through the expropriation exception. [00:33:21] Speaker 05: And the reason that the statute is plain on its face, when you're going to deal with an expropriation claim, the property has to be present in the United States. [00:33:29] Speaker 05: Because in the foreign sovereign immunity world, there are very, very strict instructions before we're going to hail a foreign sovereign into this court. [00:33:38] Speaker 05: Hungary, unlike Russia, has actually participated very actively and openly in the discovery process in this case and made the arguments before it. [00:33:47] Speaker 05: In the Altman case, which was also brought up here today that came forward in the Ninth Circuit, the question as to whether or not the Austrian government was properly in the case as it defended because the property was in Austria was never before this court. [00:34:00] Speaker 05: The fact that the Austrians chose not to make that argument is neither here nor there. [00:34:04] Speaker 05: The fact is, [00:34:06] Speaker 05: that the Foreign Cyberimmunity Act was examined for its retroactive effect from the Supreme Court level and was decided that it should reach back and allow for those claims. [00:34:16] Speaker 05: But in this particular case, solid authority in garb and twice expressed by the Solicitor General, most recently in the Hellmark decision and before that in the Casir case, where we see the Solicitor General saying, wait a minute, [00:34:30] Speaker 05: We can't be taking jurisdiction under the expropriation exception over a friendly foreign sovereign in the Kingdom of Spain or even a not so friendly foreign sovereign in the case of Venezuela. [00:34:40] Speaker 05: Here, we have a friendly foreign sovereign, a member of good standing in the European Union, which [00:34:46] Speaker 05: the implications of amending a complaint after six years so someone can create a cause of action which is futile against the Hungarian government in the first place and is wholly inconsistent with the participation of a foreign sovereign in this litigation. [00:35:00] Speaker 05: We would submit that it is not appropriate at this stage to remand this case for an opportunity for leave to amend. [00:35:07] Speaker 05: But we also would submit that whatever the court does, having clear direction, which we think is very clear from Simon, we think is very clear from Garve, that exhaustion is appropriate in this particular situation, especially as to the Italians and the Hungarians, and that bringing Hungary into this case in this late date of keeping them in when the arguments don't support it is futile. [00:35:31] Speaker 02: Let me ask you a question about the facts. [00:35:33] Speaker 02: These numbers keep floating around. [00:35:36] Speaker 02: The 15 number is what? [00:35:38] Speaker 02: The bailment? [00:35:39] Speaker 05: No. [00:35:40] Speaker 05: There was 44 artworks originally claimed. [00:35:43] Speaker 05: Two of those artworks that the trial court found, there is no jurisdiction over because they came into Hungarian possession in the 1960s or 1950s. [00:35:51] Speaker 05: Those are out. [00:35:52] Speaker 05: We have 42 left. [00:35:54] Speaker 05: Of the 42, the court made a factual finding that 15 of the 42 [00:35:59] Speaker 05: were physically and legally returned after the war pursuant to the Paris Peace Treaty, which this Court is very familiar with, because Hungary was doing its best, at least in that particular situation, to try to comply with its obligations under the treaty, which is where we would submit the treaty then steps in, because it is actually [00:36:17] Speaker 02: Where are the 15? [00:36:19] Speaker 02: What happened to the 15 then? [00:36:20] Speaker 05: The 15, along with the rest of the artworks, came into the Hungarian state's possession through various means, each one individually and separately, which is why we'd also submit when the court then just grabbed everything from a jurisdictional basis under the expropriation exception, while it started down the right path of analyzing each work individually and separately for purposes of the commercial exception, when it realized that didn't work, [00:36:45] Speaker 05: It just threw a net over all of them, which violates the basic tenet of the Foreign Side Immunity Act. [00:36:51] Speaker 02: Why did you separate out 15? [00:36:53] Speaker 02: That's all I'm trying to find out. [00:36:56] Speaker 05: All I'm trying to point out to the court is that we have a factual finding. [00:37:01] Speaker 05: that the Hungarian government post-World War II complied with its treaty obligations and physically returned the specific property that it was able to to the representatives or directly to the Herzogheirs. [00:37:15] Speaker 05: And so in the context of those 15, those are no longer fitting within the expropriation exception. [00:37:20] Speaker 05: That property was fully and fairly returned. [00:37:22] Speaker 05: To the extent it was taken, again, it was taken during the communist era pursuant to sovereign acts, not violations of international law. [00:37:31] Speaker 05: which is again why we end up in a futile exercise of amending the complaint. [00:37:36] Speaker 03: And of the remaining 27, some the district court found had never been returned and some have been or what do we know about those 27? [00:37:47] Speaker 05: We know that those 27 are in the possession and ownership of the Hungarian state. [00:37:51] Speaker 03: Right. [00:37:51] Speaker 03: Those are the ones we're talking about here. [00:37:53] Speaker 05: And those are the ones that we're talking about here. [00:37:55] Speaker 05: And with respect to those, we know that, as to a potential bailment claim, after full factual discovery, the court made a finding that, as to 11 of them, there was actually no evidence expressed in play or otherwise that there was even a bail... that there was a bailment. [00:38:12] Speaker 03: But the district court also found that there was no break in possession with respect to many of them, correct? [00:38:18] Speaker 05: That is correct. [00:38:18] Speaker 03: There was no break in possession. [00:38:19] Speaker 03: Many of them were never returned. [00:38:21] Speaker 05: That is correct. [00:38:21] Speaker 03: They were always in the possession of the Hungarian museums. [00:38:24] Speaker 05: Yes, that is correct. [00:38:25] Speaker 05: And that is no different than a lot of property that had nothing to do with artwork, but came into the possession and the ownership of the Hungarian state after World War II in connection with communist era takings, which is why we have the 1973 agreement. [00:38:42] Speaker 05: which was negotiated and put in place during the Nixon era, so that Hungary, in its efforts to re-engage with the community during the Cold War, stood forward and the Herzog family, rightly so, made a claim to the Foreign Claims Settlement Conference and stated to the appropriate commission that their artwork had been taken from them during the communist era when they were U.S. [00:39:04] Speaker 05: citizens. [00:39:05] Speaker 05: Seven of the artworks that are in dispute here fit into that category, which is why we submit. [00:39:11] Speaker 05: When you open the case back up for an expropriation exception, as compared to the commercial activity exception, you end up needing to reanalyze the treaties, 47 Paris Peace Treaty, the Act of State, the political question. [00:39:25] Speaker 05: it changes the complete dynamics of this case. [00:39:28] Speaker 05: And therefore, we submit that moving it back and amending a complaint to try to bring in a different cause of action is not an exercise that should be entered into. [00:39:38] Speaker 05: Thank you. [00:39:39] Speaker 05: Thank you very much, Your Honor.