Friday, March 10, 2006

Second Circuit Finds No Subject Matter Jurisdiction over Claims against Republic of Poland re Mistreatment of Jews

Per Garb v. Republic of Poland, --- F.3d ----, 2006 WL 515500 (2d Cir. Mar. 3, 2006):

Plaintiffs appeal from a judgment of the United States District Court for the Eastern District of New York (Edward R. Korman, Chief Judge ) dismissing their claims against the Republic of Poland and the Ministry of the Treasury of Poland for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1). See Garb v. Republic of Poland, 207 F.Supp.2d 16 (E.D.N.Y.2002). Plaintiffs' claims, which at the pleadings stage we accept as true in all respects, see, e.g., Hallode v. Bonner, 387 F.3d 147, 150 (2d Cir.2004), arise from the mistreatment of Jews in Poland after the Second World War--mistreatment that Chief Judge Korman properly described as "horrendous" Garb, 207 F.Supp.2d at 17. In particular, plaintiffs challenge the Polish Government's expropriation of their property following the asserted enactment of post-war legislation designed for that purpose. Id. at 18.

. . . Despite the severe injuries asserted by plaintiffs, the capacity of United States courts to exercise jurisdiction over plaintiffs' claims hinges on a legal inquiry narrowly circumscribed by statute. It is well settled that the only source of subject matter jurisdiction over a foreign sovereign in the courts of the United States is the Foreign Sovereign Immunities Act of 1976 ("FSIA"), 28 U.S.C. §§ 1330, 1602-1611, which codifies several exceptions to the long-established doctrine of foreign sovereign immunity.

. . . [T]he question of the FSIA's retroactivity has been resolved in the affirmative, see Republic of Austria v. Altmann, 541 U.S. 677, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004). Accordingly, we now apply the FSIA retroactively to claims arising from events that took place prior to that statute's 1976 enactment.

We hold that none of the FSIA's exceptions to foreign sovereign immunity applies here and that subject matter jurisdiction is therefore lacking. First, we hold that plaintiffs have not satisfied the "commercial activity" exception of the FSIA, 28 U.S.C. § 1605(a)(2), because (a) a state's confiscation of property within its borders is not a "commercial" act, (b) the subsequent commercial treatment of expropriated property is not sufficiently "in connection with" the prior expropriation to satisfy the "commercial activity" exception, and (c) we decline to credit plaintiffs' recharacterization of what are in essence "takings" claims as "commercial activity" claims. Second, we hold that plaintiffs have not satisfied the "takings" exception of the FSIA, 28 U.S.C. § 1605(a)(3), because (a) plaintiffs seek to recover property that is not "present in the United States," (b) in such circumstances, plaintiffs must show that the property "is owned or operated by an agency or instrumentality of the foreign state," (c) plaintiffs allege that the property is "owned by" the Ministry of the Treasury of Poland, Appellants' Br at 15, and (d) the Ministry of the Treasury of Poland is not an "agency or instrumentality" of the Republic of Poland because its "core function" is governmental rather than commercial.


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