Second Circuit Dismisses Holocaust Compensation Class Action Lawsuit

The Second Circuit in Whiteman v. Dorotheum GmbH & Co. KG, --- F.3d ----, 2005 WL 3117196 (2d Cir. Nov. 23, 2005) per Judge Cabranes, has just dismissed a class action filed on behalf of victims of the Nazi regime for Holocaust-era deprivations. The dismissal was on the ground that the federal courts lacked subject matter jurisdiction over the case based on the view of the Executive Branch that the matter would be better resolved in an alternate forum through an international agreement between the relevant sovereign nations involved. The key question facing the court was how much deference should be accorded to views of the Executive Branch in asserting jurisdiction over a foreign sovereign under the Foreign Sovereign Immunities Act of 1976 (“FSIA”):

We consider [that] question today. The past two presidential administrations, notwithstanding their differences in political affiliation, have committed the United States to a policy of resolving Holocaust-era restitution claims through international agreements rather than litigation. Consistent with that policy, the United States has engaged in extensive international negotiations culminating in a 2001 executive agreement with Austria to establish a fund to compensate Austrian Jews (and their heirs and successors) whose property was confiscated during the Nazi era and the Second World War. Distributions from the Austrian compensation fund remain, however, contingent on the dismissal of this case. Accordingly, the United States has submitted a Statement of Interest urging dismissal.

In light of the Supreme Court's political question jurisprudence, as well as its recent rulings directing “case-specific deference” to the expressed foreign policy interests of the United States, Sosa v. Alvarez-Machain, 124 S.Ct. 2739, 2766 n. 21 (2004); see also Altmann, 541 U.S. at 702, we hold that deference to a statement of foreign policy interests of the United States urging dismissal of claims against a foreign sovereign is appropriate where, as here, (1) the Executive Branch has exercised its authority to enter into executive agreements respecting the resolution of those claims; (2) the United States Government (a) has established through an executive agreement an alternative international forum for considering the claims in question, and (b) has indicated that, as a matter of foreign policy, the alternative forum is superior to litigation; and (3) the United States foreign policy advanced by the executive agreement is substantially undermined by the continuing pendency of the claims. Mindful of the Supreme Court's recent emphasis (albeit in a different legal context) on preserving the “ ‘capacity of the President to speak for the Nation with one voice in dealing with other governments' to resolve claims ··· arising out of World War II,” Am. Ins. Ass'n v. Garamendi, 539 U.S. 396, 424 (2003) (quoting Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 381 (2000)), we dismiss plaintiffs' claims against Austria in deference to the stated foreign policy interests of the United States.