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Case number 17-704, Maddie Marie-Louise Chabart, appellate, versus Federal Republic of Germany, et al.

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Mr. Braven for the appellate, Mr. Harris for the appellate.

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I'd like to reserve four minutes for rebuttal with the court's permission.

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This case is about a two-step process for evaluating a sovereign's invocation of sovereign immunity.

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The district court cut short the process, focusing on whether the complaint did or did not sufficiently allege the elements of foreign sovereign immunity, exception 1605A3, the expropriation exception, and never got to the factual development of the case.

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And so first and foremost, the question is, is a fair reading of the complaint, applying the inferences that reasonably can be applied, satisfying the Rule 8 pleading standard?

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And clearly, they do.

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The complaint alleges with specificity that Mrs. Schubart's property in East Germany was taken by the German government.

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through a series of steps that started in 1991 and ended in 2014.

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It alleges that the property is owned or controlled by an agency or instrumentality of Germany, the BBBG.

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And it alleges through a variety of allegations that the BBBG is engaging in commercial activities.

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Let's focus on that.

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What are the allegations about BBBG's current commercial activity in the United States?

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All right.

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In order to answer that question, we've started... From the complaint, not from your appeal.

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Understand.

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Starting with paragraph one of the complaint, which, if it were the only place in the complaint talking about commercial activity, I think we would be where this court was in Simon in looking at the bare allegation, unsupported by any specific fact allegations, that property was used by Hungary and the United States for a commercial purpose.

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We have here that the BBBG continues, has engaged and continues to engage in commercial activity in the United States, including sales marketing of her property and other properties.

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So what does that mean?

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What activities were they engaged in?

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Well, in paragraph four,

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The BBBG is alleged to have provided information about expropriated properties to potential customers to give lease and purchase prices and other details necessary to make a bid to purchase the property.

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The complaint in paragraph... Was this an allegation that this was ongoing at the time the complaint was filed?

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Ongoing at the time the complaint was filed, the complaint says has engaged and continues to engage at the present time.

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Now, how does the complaint back that up with allegations?

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In paragraph 13, the complaint focuses on the early years of marketing these expropriated properties.

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An office was opened in New York.

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The New York office generated over a period of four years 1.6 billion in sales.

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Over the continuing years, as reported in statistics from the BBBG, the United States was the largest market for these expropriated properties.

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In order to sell that volume of property, it is reasonable to infer that the BBBG set up a network of pension funds,

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high net worth individuals.

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When did that office close?

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It closed in approximately 1994.

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When it closed, having just developed this fabulously successful commercial market in New York, the BVBG continued those activities as alleged in the complaint, using its website to reach out to buyers in the United States.

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And those sales continued.

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It's a sufficiently reasonable interpretation of these allegations that the BBBG continued to sell properties just like Mrs. Schubart's.

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How do we know that a website or is targeted to the U.S.?

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I mean, a website is targeted to whoever on the World Wide Web can access it, right?

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The website does not have to be targeted to the United States in order for the BBBG to be using it to continue the commercial activity in the US, namely marketing and sales to US customers.

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How was it done?

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The precise details will only come out in discovery, but the way it was likely done is that the buyers who before could call New York and get details now would call the BBBG's office in Germany using the information that they got on the internet and back and forth communications culminating in sales.

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In order to find that the complaint is sufficient, this court need only conclude that a reasonable extension of the commercial activities in the early days through the internet marketing continue to reach the US market.

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We don't know specifics of customers, but we will.

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And we don't know the specifics.

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How much money has BVG made using its website?

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Well, we know that, according to their statistics, as of 2008, they had generated 3.3 billion total worldwide sales.

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In the United States, I'm sorry.

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We know that 1.65 in the United States was in the first four years.

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But in the first four years, that's when the office was open.

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Two of those years, the office was open.

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Two of those years, yes.

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And the majority.

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So the $1.65 billion, was that just from the office?

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Just from the office.

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So what allegations have you made about the amount of sales that have been made in the United States through the website?

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The only data on the website.

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What allegations have you made?

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The allegation in the complaint, this is in

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I mean, beyond the statement that there's been something ongoing, it seems to me you make some specific allegations about what came out of the office being here.

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There's no question that when the office was here, there was ongoing commercial activity.

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The issue is whether you have pled with sufficient specificity that the website

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has been a source of ongoing commercial sales in the United States.

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And it seems at best quite vague about that.

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The complaint need not specify the dollar amount nor specific sales in the United States.

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The inference that we're asking the court to make is that from this wildly successful office-based brick and mortar operation,

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When the BVBG closed the office and moved back to its German operations over the internet to continue to reach out, and the complaint says, engaging and continues to gauge in, they successfully sold property to the American market.

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It's an inference.

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It's not alleged specifically that they sold X dollars to Y customers.

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It's not necessary to satisfy Rule 8.

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All you need to determine is that if she's given the opportunity through factual development to prove her case, she will, in fact, show those ongoing commercial sales.

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Can I ask you a question about how you believe the statute should be interpreted?

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Let's suppose the facts are, and let's suppose it were pled in a complaint that there was an office in New York and the day before, or the week before the complaint was filed, they shut down the office in New York and all commercial activities in the United States.

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And so as of the moment that the complaint was filed, those commercial activities, which have been very robust and ongoing for decades, had ceased.

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How do we interpret the statute there?

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Well, the statute says engages in commercial activity.

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It doesn't say how recently.

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That would be a legal question for the court as to whether activity done

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months before or even a few years before is relevant.

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But doesn't it say they shall be

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It uses the present tense of is, right?

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The statute.

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The statute says it engages in commercial activity.

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It could be from time to time and still satisfy that definition.

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It doesn't have to be every day right up until the date of filing.

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Well, it says a state shall not be immune in a case in which rights and property are taken in violation of international law.

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And then it says, if that property or any property exchange for such property is owned or operated by instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity, so it shall not

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be immune if it is engaged.

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And it is engaged need not be on the day before the complaint was filed.

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It's a matter of reading the complaint liberally.

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How much is in the complaint that can be proved?

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It would have been so easy to make allegations, if there were facts to support it, make allegations that would have satisfied what the district court said was missing here.

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The district court did not specify what was missing.

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What was missing from a fair reading of the district court's opinion.

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I thought the district court specified that what was missing was allegations along the lines of what Judge Wilkins is saying about is engaged because the allegations were too dated from the 1990s.

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I think that's the district court opinion on page five.

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If the allegations stopped with the office and did not say that the BBBP continued those same activities, which is what it says.

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And the district court refers to that and says, but those weren't targeted to the United States, not is engaged in the United States.

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But it's an unfair reading of the complaint.

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This complaint is entitled to the inference when it says the same functions that were done in the brick and mortar are now being done over the internet.

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some of those activities are continuing to target the US market.

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That's all that we need in order to say, let's now go to the next stage, as this court held in Phoenix, consulting versus Angola.

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Let's go to the next stage and see whether the court holds in fact development.

[00:12:08] Speaker 05:
What we have is very different than the hypothetical Judge Wilkins.

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What we have is the allegation that the New York office closed down 20-some years ago, and then

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just very vague allegations about anything that's taking place after that.

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And obviously, that bothered the district court.

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And I agree with, if I understood Judge Kavanaugh's question, that doesn't seem like, if there are facts to support some ongoing commercial activity in the United States, that that would be all that hard to allege.

[00:12:42] Speaker 01:
It is alleged here, Your Honor, with a fair reading, the ongoing specific activities of supplying potential buyers in the United States with prices.

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The activities that you have a website that is in English.

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That's not quite the same as alleging that there's ongoing commercial activity in the United States.

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It is alleged here, we don't have the specific details of how it was carried out, but it would be, how unfair would it be to allow this case to be dismissed when in fact

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The BBBG, using its website, answered inquiries from the United States right up until the present day, right up until now, and made sales to customers.

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But we don't have those details.

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I have two questions to help my understanding.

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So what – Ms.

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Schubart – and I hope I'm pronouncing her name right – you suggest that she was unable to bring

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this lawsuit until after seeking restitution from Germany, and that was a 19-year delay, right?

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Correct.

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Help me understand, why did she have to wait?

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Why couldn't she bring her lawsuit here?

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So Germany enacted several statutes.

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The first, the 1991... But did any of those forbid her from bringing the suit here?

[00:13:56] Speaker 01:
No, no forbidding.

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It was just a decision on her part to...

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Let me just explain what Germany did.

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In 1991, they enacted a statute to apply for restitution.

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They decided, no, we're not giving it back.

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I understand all of that.

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My only question is, why did she wait?

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Because the decision on compensation only came out on the 18th of November, 2014.

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So she was hoping for...

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favorable relief from Germany, didn't get it, and so can't get it.

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She asked the agency, go to the foreign ministry, apply to the finance ministry, apply the treaty, and give me what I'm entitled to.

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And she couldn't know whether they did that until the decision came out.

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So is it your position that she didn't have a right claim because there hadn't been an expropriation in violation of international law until she got the final decision from Germany?

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The legal theory of the complaint is a creeping expropriation, just like in McKesson, a series of steps.

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The last step in McKesson was a cutoff of McKesson's participation in the board.

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There were earlier steps here.

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The last step was a compensation decision that offered her 35,000 euros, 11,000 of which were interest, for 500 acres.

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That was not what the treaty required.

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That was not what she was entitled to as a U.S.

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citizen.

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But she couldn't know that until less than a month before the complaint was filed.

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So she had filed back in 1994 while the New York office was still open.

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here in the U.S.

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Then I think the court would have entertained the motion to dismiss on the grounds that there was not a full, ripened cause of action for taking in violation of international law.

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And that taking had those steps.

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Denial of restitution, passing a statute that said we're not going to give Americans

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Implicitly, we're not going to give Americans the treaty compensation standard.

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Preliminary decision, not based on the treaty.

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And then a final decision, not based on the treaty.

[00:16:01] Speaker 03:
Maybe this isn't necessarily equitable, but maybe Congress intended for there to be a present commercial activity in the US at the time of the lawsuit.

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a sovereign could essentially decide to end their commercial activities in the U.S.

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before they make their final decision on the expropriation to escape the jurisdiction of the U.S.

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If that's the way the Congress wrote the statute, is there anything wrong with that?

[00:16:42] Speaker 01:
Congress wrote the statute to require a nexus requirement.

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Either the property has to be here, or the property can be back in the host state, but the agency that owns or controls it has some commercial activity here.

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And the motion for reconsideration brought to the attention of the court a specific commercial contract that was acted on as recently as a few months before the complaint was filed.

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But the court refused to entertain it.

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That was wrong.

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That was a lack of due process for a claimant who in her complaint said there is ongoing use of the internet to do what had been done in the New York office.

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The fact that it isn't more specific is based on the fact that she didn't have access to more specific information from the website.

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She's entitled to develop those facts.

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And you sought jurisdictional discovery or below?

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We didn't get a chance to ask for jurisdictional discovery.

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The court cut this short by not even holding Germany to the standard that this court has imposed time and time again that the defendant must come forward and show by declarations and documents that the allegations in the complaint

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are not true.

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So if, for example, Germany had presented the district court with an affidavit that said, no, when we close the office, we shut down all contact with the United States.

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And there were no further transactions.

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That's a specific factual denial.

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Then there would have been jurisdictional discovery to test whether that denial was correct.

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I thought in its motion to dismiss

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It was argued that the BBVG does not engage in commercial activity in the United States.

[00:18:34] Speaker 01:
That's pretty strong.

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That is the same bald, pursery defense that Germany is claiming was in the complaint as a bald, pursery allegation.

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They didn't back it up with any facts.

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But then you came back in the opposition to the motion dismissed, and page seven said,

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Internet marketing, posting information on the internet allows users from throughout the world to sign up for newsletters.

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Portions of the website are in English.

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And then the total amount of sales.

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And that's really nothing connecting it to the United States.

[00:19:18] Speaker 01:
That's a brief.

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The complaint alleges that these activities continue.

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This is the brief identifying the key issues after the allegations made in the motion to dismiss that you haven't done enough in the complaint.

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And so I was looking at that just to point out that paragraph, which summarizes, I think, in the light most favorable to you, you're putting forth your best arguments.

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What is in the complaint doesn't really say much of anything about the United States.

[00:19:44] Speaker 01:
That paragraph taken out of context does not do the job of putting the complaint allegations in the light most favorable to Mr. Schubart.

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If you look down the list of exhibits that were attached with that pleading, all of those exhibits were designed to show, to exemplify what had been alleged in the complaint.

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There was no effort to go further than what was in the complaint there.

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That was done on the motion for reconsideration.

[00:20:10] Speaker 02:
The best sentence or two sentences in the complaint are,

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And the first paragraph?

[00:20:17] Speaker 01:
Well, we start with the first paragraph, one, that sales marketing to potential buyers in the United States was being done and continues to be done to the present day.

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And then in paragraph four, what was the activity?

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And the sentence, subsequently, the BVBG has continued these activities by posting links.

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That's enough for this court to say, OK, she should be able to prove what she's alleged, that in fact these activities continued in the United States.

[00:20:54] Speaker 01:
It's not on the website.

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It's not available from a literature search.

[00:20:59] Speaker 01:
But it's alleged here, and the reasonable inference is, that she will be able to show that, in fact, these sales done in New York continue.

[00:21:10] Speaker 02:
If you have a website and no one from the United States accesses or engages in a transaction,

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Is that enough to be commercial activity in the United States?

[00:21:23] Speaker 01:
No, no.

[00:21:24] Speaker 01:
You would need some evidence at the factual development stage.

[00:21:27] Speaker 01:
You'd need some evidence to back up these allegations that the BBBT continued these activities that were carried out in the office using its internet.

[00:21:37] Speaker 01:
And the way we would do that is we would ask for the emails back and forth from the US from potential buyers.

[00:21:43] Speaker 01:
What did the buyers ask for?

[00:21:45] Speaker 01:
What did the BB give them?

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And were some of those communications the beginning of what resulted in a sale?

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We think that we can show that, but we need the opportunity.

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And we feel that Germany, by sitting back and relying only

[00:22:02] Speaker 01:
on the complaint allegations and mischaracterizing them and leaving out these references of ongoing commercial activity in the United States, thought they could get away with it.

[00:22:13] Speaker 01:
They said, boldly, no, we don't do any commercial activity in the United States.

[00:22:17] Speaker 01:
We know that's not true because the motion for reconsideration presented the court with a contract funded by USAID to provide consulting services

[00:22:29] Speaker 01:
to a company in the United States.

[00:22:30] Speaker 03:
Can I just make sure I understand what your argument is about how the statute should be construed?

[00:22:37] Speaker 03:
Are you saying that the statutory language that provides the exception from sovereign immunity that says is engaged, are you saying that we should not

[00:22:53] Speaker 03:
interpret that and construe that literally so that it doesn't matter whether there's commercial activity at the time of the filing of the complaint in the United States.

[00:23:07] Speaker 01:
When that issue is before the court, when plaintiff has developed the facts and shows the last transaction based on exchanges of emails with American purchasers, let's suppose it was eight months before the complaint was filed, then the legal interpretation of the statute is right and you'll have to decide, is eight months before

[00:23:28] Speaker 01:
Good enough.

[00:23:29] Speaker 03:
In some of the cases... Why isn't it right now?

[00:23:31] Speaker 03:
I mean, why don't we have to figure out what those words mean right now as far as at least measuring the allegations in the complaint versus what the statute requires?

[00:23:42] Speaker 01:
The reason is that the complaint alleges that those activities that we're being engaged in continue to be engaged in up to the present time.

[00:23:51] Speaker 01:
So the issue of what would be a cutoff, how recent does it have to be, hasn't yet come up.

[00:23:57] Speaker 01:
When the evidence is developed, then it will come up, then we'll see.

[00:24:00] Speaker 02:
Your point is that the complaint alleges ongoing, you just said this, but ongoing to the present day.

[00:24:07] Speaker 02:
Correct.

[00:24:08] Speaker 02:
Now that may not turn out to be true, but your point is the complaint alleges that.

[00:24:11] Speaker 01:
Exactly.

[00:24:12] Speaker 01:
And has the Supreme Court in HNP held?

[00:24:16] Speaker 01:
In that ordinary case, the plaintiff seeking to overcome an assertion of immunity has the right to develop the facts and show that- We'll give you a couple minutes back on the rebuttal.

[00:24:28] Speaker 01:
Okay.

[00:24:28] Speaker 05:
Thank you very much.

[00:24:31] Speaker 05:
We'll hear now from Mr. Harris.

[00:24:37] Speaker 04:
Good morning.

[00:24:37] Speaker 04:
May it please the Court.

[00:24:38] Speaker 04:
I'm Jeffrey Harris, representing the Federal Republic of Germany and VVG.

[00:24:44] Speaker 04:
First, with regard to the Federal Republic of Germany, the statute, the expropriation exception, requires that the property be present in the United States for there to be jurisdiction over the Federal Republic of Germany.

[00:25:01] Speaker 04:
In this case, the complaint alleges that the property is in Germany.

[00:25:05] Speaker 04:
So there really is no argument that there is any jurisdiction under the expropriation exception against the Republic of Germany.

[00:25:16] Speaker 04:
With regard to BVVG, there are really two parts to the argument.

[00:25:22] Speaker 04:
One, if BVVG as an agency or instrumentality of Germany is carrying out a core governmental function, then it too is regarded as the sovereign state, and the same standard applies, namely that the property has to be present in the United States in order for there to be jurisdiction.

[00:25:45] Speaker 03:
Did you put any facts in with your motion to dismiss that would help us to decide that question?

[00:25:54] Speaker 03:
Or are we just stuck with what's in the complaint?

[00:25:59] Speaker 04:
The references that we put in in our motion were to

[00:26:06] Speaker 04:
What we argue, Judge Wilkins, is that the complaint says that this agency was set up and they use the governmental function of dealing with property that had been expropriated or otherwise lost during the stage in which

[00:26:30] Speaker 04:
The Russians were in what became East Germany.

[00:26:33] Speaker 04:
The East Germans were.

[00:26:34] Speaker 04:
And then after reunification, this agency's job, which we argue is a governmental function, was to make some order out of this and deal with the property that had been under the East German system.

[00:26:50] Speaker 04:
There was no private ownership of property.

[00:26:53] Speaker 04:
So we say that that is quintessentially a governmental function.

[00:26:58] Speaker 03:
But the expropriation, I could see if the allegation is that this is the agency or the instrumentality that actually expropriated the property, then I think you would have a pretty strong core function argument.

[00:27:13] Speaker 03:
But they're saying that this is the agency that was put together to dispose of the property that had been expropriated.

[00:27:21] Speaker 03:
I mean, it seems to me akin to

[00:27:23] Speaker 03:
I mean, it's not a perfect analogy, but the government seizes, you know, property in the course of arresting people here in this country, but they have a contractor or some government agency that sells off that property, and then it proceeds to the crime victims or to the government.

[00:27:45] Speaker 03:
I wouldn't see that instrumentality as being exercising a core function of the government.

[00:27:53] Speaker 04:
Well, to be perfectly candid, you can argue that one flat around.

[00:27:57] Speaker 04:
There is some authority for the fact that you have to look to the original expropriation and not to the subsequent disposal of the property.

[00:28:07] Speaker 04:
But I've made the argument, I think, that this is a core function.

[00:28:12] Speaker 04:
But I want to move on to tell you that our position is, even if it's not a core function, if you regard BVVG as an agency and instrumentality not to be regarded as the state, then the standard which, the statutory standard which you recited a few minutes ago, Judge Wilkins, is twofold.

[00:28:32] Speaker 04:
One, that the property has to be owned or operated.

[00:28:36] Speaker 04:
And two, that with regard to present commercial activity in the United States.

[00:28:45] Speaker 02:
Is it enough on present commercial activity to allege that an entity markets

[00:28:53] Speaker 02:
via the internet to customers in the United States on an ongoing basis?

[00:28:59] Speaker 02:
I don't believe so, Your Honor.

[00:29:00] Speaker 02:
In today's world... Suppose it's marketing accompanying by evidence of a sale, one sale.

[00:29:07] Speaker 02:
Is that enough?

[00:29:09] Speaker 02:
I don't believe so, Your Honor.

[00:29:10] Speaker 02:
And what's your case law support for that?

[00:29:16] Speaker 04:
And I think we put this in a footnote in our brief, that if you look at the minimum, in an analogous of minimum contacts, there are cases that say that simply marketing through the internet is not sufficient to have minimum contacts with the jurisdiction.

[00:29:33] Speaker 04:
Now, I recognize that's not under the Foreign Sovereign Immunities Act, but I think by analogy, you could draw that conclusion.

[00:29:43] Speaker 02:
thinking, if you read it liberally and just for purposes of questioning, they're alleging that there's ongoing marketing efforts via the internet to customers in the United States.

[00:29:55] Speaker 02:
Now just take that as a given for a second and you dispute that.

[00:30:00] Speaker 02:
But if that's what the complaint says, this entity engages in ongoing marketing efforts to customers in the United States,

[00:30:08] Speaker 02:
But there have never been any sales.

[00:30:11] Speaker 02:
Let's just suppose that, too.

[00:30:13] Speaker 02:
But there have never been any sales.

[00:30:14] Speaker 02:
But we're trying.

[00:30:15] Speaker 02:
We're trying to get customers.

[00:30:17] Speaker 02:
And we're marketing with the United States.

[00:30:18] Speaker 02:
Is that, as a legal matter, good enough?

[00:30:20] Speaker 02:
And I'm uncertain about that, actually.

[00:30:23] Speaker 04:
Well, I don't think so.

[00:30:24] Speaker 04:
And I think you have to look at this through the lens of what the pleading standard is.

[00:30:31] Speaker 04:
No, no, no.

[00:30:32] Speaker 04:
OK.

[00:30:33] Speaker 02:
So you want me to accept that as a fact?

[00:30:35] Speaker 02:
Yeah, yeah, yeah.

[00:30:35] Speaker 02:
For present purposes, just accept

[00:30:38] Speaker 02:
We, entity, are marketing to customers in the United States.

[00:30:43] Speaker 02:
We're not good at it.

[00:30:43] Speaker 02:
We don't have a sale.

[00:30:45] Speaker 02:
I mean, you know, it's editorial.

[00:30:47] Speaker 02:
But we don't have a sale yet.

[00:30:48] Speaker 02:
Is that good enough that we're marketing to customers in the United States?

[00:30:52] Speaker 04:
So what I think you're asking me is, marketing without sales, is that commercial activity?

[00:30:56] Speaker 04:
Yes.

[00:30:58] Speaker 04:
And I would say it is not.

[00:31:02] Speaker 04:
Are there any?

[00:31:02] Speaker 04:
Yeah.

[00:31:03] Speaker 04:
No, no.

[00:31:04] Speaker 04:
I can't.

[00:31:05] Speaker 03:
But how could that be?

[00:31:05] Speaker 03:
I mean, what if the marketing was false and deceptive in the Federal Trade Commission?

[00:31:12] Speaker 03:
wanted to exercise a jurisdiction to say stop your false and deceptive marketing.

[00:31:17] Speaker 03:
You're saying that they wouldn't have any jurisdiction because, you know, there hadn't been a sale yet.

[00:31:27] Speaker 04:
Yes.

[00:31:28] Speaker 04:
That is what the position I would take.

[00:31:31] Speaker 04:
And your authority for that?

[00:31:33] Speaker 04:
There has not been a case that I know of where we separate marketing from it.

[00:31:40] Speaker 05:
Let me ask you, in your motion to dismiss, I asked this of your friend, you state that BDVG does not engage in commercial activity in the United States.

[00:31:49] Speaker 05:
Correct.

[00:31:50] Speaker 05:
Is that statement still accurate?

[00:31:53] Speaker 04:
Yes.

[00:31:54] Speaker 04:
Yes.

[00:31:56] Speaker 04:
That statement is accurate.

[00:31:58] Speaker 04:
What BVVG does is they have a website which is available worldwide, and part of it's in English.

[00:32:07] Speaker 04:
And that's it.

[00:32:12] Speaker 02:
Excuse me.

[00:32:14] Speaker 02:
I mean, the point is, at any moment, there could be a sale effectuated with someone in the United States.

[00:32:21] Speaker 02:
Well, there could be.

[00:32:22] Speaker 04:
But the complaint no longer is sufficient if it's the not implausible standard.

[00:32:33] Speaker 04:
Under the hemorrhagic drilling by the Supreme Court and this court's opinion in Owens, you now need to flesh out

[00:32:42] Speaker 02:
But it's not implausible just, I don't think, you tell me if this is wrong, it's not implausible just as a general matter that this website with its marketing efforts would generate a sale in the United States.

[00:32:55] Speaker 02:
Is that implausible?

[00:32:56] Speaker 04:
No, but that's not the standard anymore.

[00:32:58] Speaker 04:
The standard is you need to provide facts

[00:33:01] Speaker 04:
And in the words of Justice Breyer's opinion, and then as picked up by Owens in this court after that, the word is you need to prove these allegations.

[00:33:12] Speaker 05:
OK, so if they had put in their complaint what they now say in their briefing, in other words, that there was $1.65 billion in sales through 2008,

[00:33:23] Speaker 05:
a contract with Kimonix in 2010, and a presentation regarding that contract in Washington, D.C.

[00:33:30] Speaker 05:
in 2014.

[00:33:31] Speaker 05:
If those had been in the complaint, that's sufficient to allege commercial activity efforts.

[00:33:36] Speaker 04:
Well, I don't think that that last piece is, because this was... The last piece, the presentation in D.C.

[00:33:42] Speaker 04:
Yes.

[00:33:43] Speaker 04:
I don't believe a presentation to an international organization in the District of Columbia about a contract dealing with agricultural efforts in Egypt

[00:33:52] Speaker 04:
is enough to be commercial activity.

[00:33:55] Speaker 05:
How about the other two, though?

[00:33:57] Speaker 05:
If the complaint had alleged $1.65 billion in sales through 2008 and the 2010 contract with the USAID subcontractor?

[00:34:07] Speaker 04:
If those sales, if they were alleging... If that had been in the complaint?

[00:34:12] Speaker 04:
Yeah.

[00:34:13] Speaker 04:
If it alleged it in the current, in the present tense, then I think if they could have established that, that would be commercial activity.

[00:34:23] Speaker 04:
But the other piece which Judge Wilkins read before we started is that BVVG has to

[00:34:31] Speaker 04:
own or operate the property.

[00:34:34] Speaker 04:
And what's alleged here is sort of an interesting construct.

[00:34:37] Speaker 04:
What they're suing for is the fact that Mrs. Schubarth did not get sufficient compensation from a state, not the federal German apparatus, but the state of Thuringer, issued a compensation award, which she regards as inadequate.

[00:34:56] Speaker 04:
By analogy, I would say what they've really alleged here is that the

[00:35:01] Speaker 04:
They are suing the federal government of the United States because the city of Alexandria took two feet of their front lawn to widen the road, and the city of Alexandria or Commonwealth of Virginia didn't give them fair and adequate compensation.

[00:35:15] Speaker 04:
That's what they are alleging in this complaint.

[00:35:18] Speaker 04:
The agency, the state agency of Germany, the state of Thuringer, which is not a party in this case,

[00:35:28] Speaker 04:
They are alleging that there was not sufficient compensation issued by the state of Thuringer.

[00:35:34] Speaker 04:
And they are seeking to hold BVVG responsible and Germany responsible for that.

[00:35:43] Speaker 04:
And that is antithetical to the notion that BVVG owns or operates the property.

[00:35:51] Speaker 04:
What they're saying is we filed for compensation

[00:35:55] Speaker 04:
We got an award, we're dissatisfied with the award, and now we want to sue the Federal Republic of Germany and the agency that sells the property.

[00:36:08] Speaker 04:
That doesn't square with the notion that BVVG owns or operates this property, which is a requirement of the expropriation exception.

[00:36:23] Speaker 04:
So what I would say to you is that when you look at it as a whole, the allegations dealing with a non-party issuing a compensation award and what they're asking for in terms of relief is more money.

[00:36:40] Speaker 04:
That's what this case is about.

[00:36:41] Speaker 04:
We want more money than the state of Thuringer issued as fair and just compensation.

[00:36:49] Speaker 04:
And therefore, we're going to sue the Federal Republic of Germany and an agency that's charged with sale of expropriated property.

[00:36:57] Speaker 04:
There is no indication anywhere in the complaint that BVVG owns or operates this property.

[00:37:05] Speaker 04:
So even if the commercial activity leg of the construct is one, but the other equally important one is that BVVG owns or operates the property.

[00:37:19] Speaker 04:
And if you look at that first paragraph of the complaint, basically all it does is recite the statute.

[00:37:27] Speaker 04:
It rewords it in more common language, but all it is is saying they own or operate the property.

[00:37:34] Speaker 04:
There is not one iota of evidence presented.

[00:37:39] Speaker 02:
And the sales marketing to potential buyers in the United States.

[00:37:43] Speaker 02:
Is that the first paragraph of the complaint?

[00:37:45] Speaker 04:
Right.

[00:37:46] Speaker 04:
The point is, it also alleges, and just repeating the statutory language, that this agency owns or operates the property.

[00:37:54] Speaker 04:
Other than saying it, there is no flesh on the bones with regard to that.

[00:38:00] Speaker 04:
That is an absolute requirement.

[00:38:02] Speaker 04:
Even if BVG was engaging in commercial activity in the United States every day,

[00:38:08] Speaker 04:
if they don't own or operate this property.

[00:38:12] Speaker 02:
Sorry, that's your separate argument.

[00:38:15] Speaker 04:
Yes, that's my separate argument.

[00:38:18] Speaker 04:
With regard to

[00:38:22] Speaker 04:
Just a couple of other points.

[00:38:23] Speaker 04:
The appellant argues that the judge, that their motion to strike was improvidently denied.

[00:38:34] Speaker 04:
They also argue that they should have, under rule 59, been able to get some relief.

[00:38:41] Speaker 04:
And I'd like to point out, I know the court knows this, but I want to say it, that the standard of review for that is different than the de novo standard.

[00:38:48] Speaker 04:
It's abusive discretion.

[00:38:50] Speaker 04:
Judge Cooper said with regard to the motion to strike, he said basically, I didn't consider anything that Mrs. Shubarth wants me to strike when I made my decision.

[00:39:08] Speaker 04:
And the answer to that by Mr. Shubarth is that we don't really, you know, that's what the judge says, but we don't believe it.

[00:39:16] Speaker 04:
We think that Judge Cooper said what he meant and meant what he said.

[00:39:21] Speaker 04:
Secondly, that was only presented in our reply after the opposition dumped in a hundred and something pages of material that wasn't attached to the complaint, and if they wanted it considered in the complaint, it should have been.

[00:39:37] Speaker 04:
So my time is up.

[00:39:39] Speaker 04:
Thank you very much.

[00:39:40] Speaker 04:
Thank you very much.

[00:39:45] Speaker 01:
Let me correct some very serious misstatements by opposing counsel.

[00:39:51] Speaker 01:
First of all, the complaint alleges that Germany, in violation of international law, took the property.

[00:39:58] Speaker 01:
Under the theory of state responsibility, it doesn't matter that it delegated activities to the BBBG or to a state agency, as it did to the agencies in all of the former East German states.

[00:40:11] Speaker 01:
to handle requests A for restitution and B for compensation.

[00:40:16] Speaker 01:
De Cepo says that absent an agency relationship, the court lacks subject matter jurisdiction over the foreign state for acts of its instrumentality.

[00:40:29] Speaker 01:
But in this case, we have the alleged agency relationships alleged in the complaint.

[00:40:35] Speaker 01:
Germany's denial that it's an agency isn't enough to overcome the allegation.

[00:40:40] Speaker 01:
It had to come forward with declarations of documents to show it.

[00:40:45] Speaker 01:
The complaint alleges that there were specific

[00:40:52] Speaker 01:
transactions continuing at the present time if you give the inference that the complaint's entitled to.

[00:40:58] Speaker 02:
Can I ask the question that is for me the heart of this at the moment, which is, is marketing via an internet site, even ongoing marketing via an internet site, to buyers all over the world, including potential buyers in the United States, good enough to say that you're engaged in commercial activity in the United States if you have no such buyers in the United States?

[00:41:20] Speaker 01:
absolutely.

[00:41:22] Speaker 02:
If you blow a hole in this limitation because any

[00:41:27] Speaker 02:
Any entity engaged in sales anywhere in the world could be construed as engaging in commercial activity in the United States?

[00:41:36] Speaker 01:
Not on the basis of this complaint.

[00:41:38] Speaker 01:
This complaint says the US market was a wildly successful market.

[00:41:42] Speaker 02:
On that point, it was.

[00:41:44] Speaker 01:
It's not plausible to say that on one day it is and the next day it isn't.

[00:41:49] Speaker 01:
The complaint alleges that that valuable market continued to be marketed

[00:41:54] Speaker 01:
through the website right up to the present day, and as the question was posed earlier, one single sale would be enough.

[00:42:02] Speaker 01:
In answer to the question that Judge Wilkins put, Section 1603 of the statute defines commercial activity either as a single transaction or as a course of transactions.

[00:42:13] Speaker 01:
It doesn't say that that single transaction had to occur three days before the complaint was filed.

[00:42:18] Speaker 02:
Obviously... But the complaint doesn't refer even to a single transaction.

[00:42:21] Speaker 01:
The complaint refers to the ongoing provision of commercial marketing activities in the U.S.

[00:42:28] Speaker 01:
And it does not allege a single sale.

[00:42:30] Speaker 01:
It is a plausible inference that having sold so many properties to Americans, they continued to sell the properties to Americans.

[00:42:38] Speaker 01:
They just didn't need an office in a tower.

[00:42:40] Speaker 02:
So let me – let me – this is a – I'm trying to be helpful with this question.

[00:42:44] Speaker 02:
So your point would be reading the complaint in the light most favorable to you.

[00:42:47] Speaker 02:
There's ongoing marketing activity, including the buyers in the United States.

[00:42:51] Speaker 02:
There may or may not be buyers in the United States, but we've alleged sufficiently to get past the motion to dismiss that there are buyers in the United States.

[00:43:02] Speaker 02:
That may turn out to be false, in which case it will be properly tossed.

[00:43:06] Speaker 01:
Correct.

[00:43:06] Speaker 01:
And that's what factual development does.

[00:43:09] Speaker 01:
But even if the commercial activities that BBBG engaged in were limited to the sale of consulting services, and I can give you three references to the record to show that that's what they were doing in the demonics contract,

[00:43:24] Speaker 01:
unrelated to the sale of expropriated properties, that would be enough.

[00:43:29] Speaker 01:
And that's why it was so wrong for the court not to focus on the outcome determinative aspect of that evidence.

[00:43:37] Speaker 01:
If he'd let it in, he would have seen that the BBBG was selling consulting services on a USAID contract to a US company.

[00:43:47] Speaker 01:
That's all that was required.

[00:43:48] Speaker 02:
So even if this is in your 59E,

[00:43:51] Speaker 01:
correct.

[00:43:52] Speaker 01:
So even if you side with the with the analysis of the district court, we said he didn't need to consider that because it was should have been presented earlier.

[00:44:00] Speaker 01:
He didn't consider it because he failed to focus on the part of the rule that said even if it could have been presented earlier,

[00:44:09] Speaker 01:
If in the interest of justice it's necessary to let it in, he should have, and that's what this court held in several cases, the PETA case, the people for the ethical treatment of animals, and then good luck nursing, where the evidence, the court said the evidence could have been found earlier.

[00:44:27] Speaker 01:
But we can't let this decision lie as is, because it would be wrong.

[00:44:32] Speaker 01:
It would come out the wrong way.

[00:44:34] Speaker 01:
If you let the evidence in, now the outcome is different.

[00:44:37] Speaker 01:
That's all that we ask that this court do, is find that the district court, by failing to acknowledge that in the interest of justice exception,

[00:44:47] Speaker 01:
to evidence that could have been found earlier, he failed to properly carry out his discretion.

[00:44:54] Speaker 03:
He didn't recognize he had it.

[00:44:58] Speaker 03:
the court has to articulate all of the grounds that may permit it to take an action before it denies taking the action to therefore believe that the court really considered all of its options, right?

[00:45:21] Speaker 01:
You're correct, but here there's no doubt.

[00:45:23] Speaker 01:
The district court said, I'm not doing it because I think you could have found it earlier.

[00:45:28] Speaker 01:
And it isn't true that the information that was put in with the motion to reconsider was out there to be seen just by going to the internet page.

[00:45:38] Speaker 01:
The internet page did not say Keymonics, a US company, has purchased consulting services from the BBBG.

[00:45:46] Speaker 01:
And it's in connection with that that they came to the US and did what they did.

[00:45:52] Speaker 01:
But the joint appendix pages 206, 146, and 226 say exactly that.

[00:45:59] Speaker 01:
You have a representative of the BBBG giving her consulting services report to Keymonics, delivered in Washington, and on the last page of the report,

[00:46:10] Speaker 01:
She describes what the BVG does for consulting.

[00:46:14] Speaker 01:
And on this contract, it was consulting about their knowledge of privatization of properties in Egypt.

[00:46:19] Speaker 01:
That's enough.

[00:46:21] Speaker 01:
On the BVG's website, page 146.

[00:46:25] Speaker 01:
We have your argument, Mr. Mervin.

[00:46:26] Speaker 01:
Thank you very much.

[00:46:27] Speaker 01:
Thank you very much.