My Cousin’s Case before the US Supreme Court: Philipp v. Germany

My second Goldschmidt update involves the descendants of Selig Goldschmidt, specifically his great-great-grandson, my fifth cousin, Alan Philipp.

Right now there is a case pending before the United States Supreme Court that was brought by Alan Philipp and two other plaintiffs. They brought a lawsuit against the Federal Republic of Germany and the Stiftung Preussischer Kulturbesitz (“SPK”), or in English, the Prussian Cultural Foundation.

The SPK is described on its website as “the largest employer in the cultural sector in Germany. It is a federal foundation and is shaped by the federal structure of Germany. The federal government and all sixteen federal states support and finance it jointly.” It was formed in 1957 after “the final dissolution of the state of Prussia ten years earlier. As a result, the question of ownership of its important public collections had to be reorganized. These collections were given to the foundation as property by the establishment law.” (translations by Google Translate)

Among those properties that were transferred by the government to the SPK was a very valuable collection of medieval works of art known as the Welfenschatz or in English, the Guelph Treasure. The Welfenschatz had been acquired in 1929 by three art collectors who had formed a consortium (“the Consortium”) to acquire art.

One of those art collectors was the firm of J&S Goldschmidt, founded in the mid-19th century by my cousins Jacob Meier and Selig Goldschmidt; another was Zacharias Hackenbroch, the grandson-in-law of Selig Goldschmidt, the son-in-law of Recha Goldschmidt, and husband of Clementine Schwarzschild. Alan Philipp shared with me a photograph of three of the investors, his grandfather Zacharias Hackenbroch, his cousin Julius Falk Goldschmidt, and Saemy Rosenberg:

Zacharias M. Hackenbroch, Julius Falk Goldschmidt, and Saemy Rosenberg. Courtesy of Alan Philipp

According to the allegations made by the plaintiffs, heirs to the Consortium, in 1935 the Consortium was coerced by economic duress, fraud, and bad faith to sell the Welfenschatz to the Nazis for about a third of its value   After unsuccessfully pursuing their claim for compensation first in Germany, the plaintiffs sued both the Federal Republic of Germany and the SPK in the US District Court for the District of Columbia for either the return of the Welfenschatz, which is currently located in the collection of the SPK in Germany, or for damages equivalent to the current value of the collection, claiming that the property had been wrongfully misappropriated from the Consortium in 1935.

Germany and the SPK moved to dismiss the lawsuit, arguing in part that the United States courts did not have jurisdiction over the plaintiffs’ claims against a foreign state. Before getting too far into the weeds of the legal issues and all their complexities, let me stop here to explain just a few procedural matters.

There has not been a trial in this case. The defendants moved to dismiss the case on the basis of the plaintiff’s pleadings alone; a court can dismiss a lawsuit if it finds that the plaintiffs have no basis for a legal claim even if they can eventually prove every fact they have alleged in their pleadings. So for purposes of this case—at all three levels of the federal court system, the District Court, the Court of Appeals, and the Supreme Court—the courts are assuming the truth of the facts claimed in the plaintiff’s complaint. The only issues the lower courts have determined and the only issues the Supreme Court will decide is whether this case should be dismissed because the American federal courts do not have jurisdiction over these claims even if the plaintiffs can eventually prove the truth of their allegations.

So what were those allegations? The District Court for the District of Columbia summarized them in their opinion (the paragraph numbers are references to the plaintiff’s complaint):

Plaintiffs’ position is that the 1935 sale between the Consortium and the State of Prussia, a political subdivision of the German Weimar Republic and later the Third Reich, was coerced as part of the Nazi persecution of the Jewish sellers of the Welfenschatz and, as such, the Court shall briefly summarize the allegations in the complaint that Plaintiffs rely on in support of this position. Id. ¶ 22. Specifically, Plaintiffs allege the 1935 transaction was spearheaded by Nazi-leaders Hermann Goering and Adolf Hitler, who were involved in explicit correspondence to “save the Welfenschatz” for the German Reich. Id. ¶¶ 2, 9. Further, the 1935 sale resulted in a payment of 4.25 million RM, which Plaintiffs assert demonstrates the lack of an arms’-length transaction because it was barely 35% of the market value of the Welfenschatz. Id. ¶¶ 4, 12.  Further, the money exchanged was never fully accessible to the Consortium because it was split and partly paid into a blocked account, and was subject to “flight taxes” that Jews had to pay in order to escape. Id. ¶¶ 4, 12. Moreover, in November of 1935, Goering presented the Welfenschatz as a personal “surprise gift” to Hitler during a ceremony. Id. ¶¶ 13, 179.

Philipp v. Fed. Republic of Ger., 248 F. Supp. 3d 59, 65 (D.D.C. 2017)

The District Court’s opinion then listed the plaintiff’s allegations describing some of the specific steps the Nazis took to coerce and defraud the Consortium into selling them the Welfenschatz, knowing the enormous economic pressure they were under as a result of the Nazi persecution of Jews at that time.

The defendants moved to dismiss on numerous grounds, but the ones that are still being pressed at the Supreme Court boil down to two arguments:  one, that the US courts have no jurisdiction to adjudicate the claims based on a federal statute, the Federal Sovereign Immunity Act (“FSIA”), and two, that US courts should not allow such a claim out of respect for the laws and procedures of a foreign country under principles of comity.

For lawyers, these issues are fascinating. But this is not a blog about legal matters, and there are many resources out there for those who are interested in all the ins and outs of the issues presented. (See the list below for a few.) I just want to say a little more about the issues involving the FSIA.

The FSIA generally grants immunity from liability to foreign states, preventing lawsuits against those states and their agents (in this case SPK) in American courts. But there are exceptions provided in the statute; the plaintiffs are relying on one of those exceptions as the basis of the court’s jurisdiction over their claims, the so-called “expropriation exception.” It provides that a party can proceed against a foreign state where their claim is one “in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state….” 28 U.S.C. § 1605(a)(3).

The defendants raised several arguments against the application of this exception to the plaintiffs’ claims, but I want to focus on just one of those arguments—whether or not this was a taking of the Consortium’s property that violated international law. The plaintiffs argued, relying on an earlier decision of the Court of Appeals of the District of Columbia, that when a taking of property bears a “sufficient connection” to genocide, the taking is itself a violation of international law.

The District Court agreed, focusing on the plaintiffs’ allegations that “the coerced sale of the Welfenschatz was accomplished to deprive the Consortium of their ability to earn a living and the motivation for the taking was to deprive the Consortium of resources needed to survive as a people in furtherance of the genocide of the German Jews during the Holocaust.” Philipp v. Fed. Republic of Ger., 248 F. Supp. 3d 59, 71 (D.D.C. 2017) The District Court also concluded that the plaintiffs had satisfied the commercial nexus requirement of the expropriation exception and that therefore the case should not be dismissed.

A work from the Guelph Treasure
Reliquary of the arm of Saint Blaise (Herzog Anton Ulrich Museum, Dankwarderode Castle). User:Brunswyk, CC BY-SA 3.0 <http://creativecommons.org/licenses/by-sa/3.0/&gt;, via Wikimedia Commons

The defendants appealed this decision to the Court of Appeals of the District of Columbia, and the Court of Appeals agreed with the District Court on the issue of whether there was a taking of property in violation of international law, reasoning in part:

Congress has twice made clear that it considers Nazi art-looting part of the Holocaust. In enacting the Holocaust Victims Redress Act, which encouraged nations to return Nazi-seized assets, Congress “f[ound]” that “[t]he Nazis’ policy of looting art was a critical element and incentive in their campaign of genocide against individuals of Jewish … heritage.” Holocaust Victims Recovery Act, Pub. L. No. 105-158, § 201, 112 Stat. 15, 15 (1998). And in the Holocaust Expropriated Art Recovery Act (HEAR Act), which extended statutes of limitation for Nazi art-looting claims, Congress again “f[ound]” that “the Nazis confiscated or otherwise misappropriated hundreds of thousands of works of art and other property throughout Europe as part of their genocidal campaign against the Jewish people and other persecuted groups.” Holocaust Expropriated Art Recovery Act of 2016, Pub. L. No. 114-308, § 2, 130 Stat. 1524, 1524 (emphasis added)

Philipp v. Fed. Republic of Germany, 894 F.3d 406, 411-12 (D.C. Cir. 2018)

The Court of Appeals, however, disagreed with the District Court with respect to the application of the expropriation exception to Germany based on the second requirement of the exception: that for a claim against a foreign state to fit within the exception, the property that was confiscated must be located in the United States, which was not the case here with the Welfenschatz. Thus, the appellate court dismissed the claim against Germany itself.

With respect to the claim against the SPK, the appellate court concluded that the requirements of the statute were different with respect to an instrumentality of a foreign state and that because there was a “sufficient commercial nexus” between the SPK, an instrumentality of Germany, and the United States, the case against the SPK could go forward even though the disputed property was in Germany, not the United States.

A work from the Welfenschatz in the Bode Museum in Germany
User:FA2010, Public domain, via Wikimedia Commons

It will be very interesting to see how the Supreme Court rules in this case. The issues go beyond this one case, of course. Sadly, genocide has occurred and continues to occur in all parts of the world, and those who have been damaged—whose property has been stolen, as was the case with so much of the art owned by German Jews—may want to seek recourse in American courts.

Foreign policy concerns and the principles of comity lie behind the arguments of the defendants that these matters should be pursued in the country where the wrongful acts occurred. One argument made by the defendants was that if claims against a country by a national of that country can be brought in other countries, foreign courts could end up litigating claims by US nationals against the US, e.g., claims brought by Japanese-Americans who were interned during World War II against the US might be litigated outside the US or claims brought against the US by African-Americans for reparations for slavery could be litigated in another country.

The plaintiffs distinguish those cases by pointing out that Nazi Germany stripped their ancestors of their citizenship as part of their persecution of Jews and that therefore they were no longer nationals of Germany but stateless. Thus, these are not claims against Germany or its agents by German nationals. They also argue that the Holocaust has been treated as unique by both American law and international law, and thus special treatment needs to be provided for those seeking redress for harms done as part of the Holocaust.

I listened to the oral arguments made by the lawyers before the Supreme Court on December 7, and although I thought that the defendant’s lawyer was persuasive with regard to the meaning and scope of the statutory language, the plaintiffs’ arguments have the stronger moral position. I will be watching carefully to see whether the heirs of my Goldschmidt cousins are able to pursue their claims and ultimately obtain compensation for the harm that was done to their ancestors almost 90 years ago.

For those who want to learn more about the case, I suggest the following resources:

I have included links to the lower court opinions in the body of the text of the blog.

Here is a link to a recording of the oral arguments made before the Supreme Court on December 7, 2020.

The Scotus Blog has links to the briefs filed by the parties and by amicus curiae.

The Art Newspaper has a recent article about the case.

The New York Times has a good summary of the case.

This is a short piece written by the plaintiffs’ lawyer Nicholas O’Donnell of Sullivan & Worcester.

For more in-depth analysis of the FSIA and the international law regarding Nazi appropriation of art, see the following law review articles about FSIA:

Vivian Grosswald Currana, “THE FOREIGN SOVEREIGN IMMUNITIES ACT’S EVOLVING GENOCIDE EXCEPTION, ” UCLA Journal of International Law and Foreign Affairs, Spring, 2019

Michael J. Birnkrant, “THE FAILURE OF SOFT LAW TO PROVIDE AN EQUITABLE FRAMEWORK FOR RESTITUTION OF NAZI-LOOTED ART, ” Washington University Global Studies Law Review, 2019

Ugboaja, Ikenna (2020) “Exhaustion of Local Remedies and the FSIA Takings Exception: The Case for Deferring to the Executive’s Recommendation,” University of Chicago Law Review: Vol. 87 : Iss. 7 , Article 5.
Available at: https://chicagounbound.uchicago.edu/uclrev/vol87/iss7/5

 

 

6 thoughts on “My Cousin’s Case before the US Supreme Court: Philipp v. Germany

  1. What a complex legal case in getting compensation for the Welfenschatz expropriated by the Nazis! And looking at the photos of some of the pieces of the Welfenschatz, I am amazed by the beauty of this priceless cultural treasure.

    Liked by 1 person

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