Elly Gross, Roman Neuberger, John Brand, in Their Individual Capacities as Third-Party Beneficiaries of the Agreements Leading to the Establishment of the German Foundation "Remembrance, Responsibility, and the Future," as Representatives of All German Foundation Beneficiaries v. German Foundation Industrial Initiative, and Its Constituent Managing Companies Allianz Ag Basf Ag Bayer Ag Bmw Ag Commerzbank Ag Daimlerchrysler Ag Deutsche Bank Ag Degussa-Huells Ag Deutz Ag Dresdner Bank Ag Friedr Krupp Ag Hoesch Krupp Hoechst Ag Rag Ag Robert Bosch Gmbh Siemens Ag Veba Ag Volkswagen Ag, Sued Individually, and as Members of the German Foundation Industrial Initiative Barbara Schwartz Lee Bernard Lee v. Deutsche Bank Ag Dresdner Bank Ag
Docket: 04-2744
Court: Court of Appeals for the Third Circuit; August 3, 2006; Federal Appellate Court
The case involves appellants Elly Gross, Roman Neuberger, and John Brand, who are third-party beneficiaries of agreements leading to the establishment of the German Foundation "Remembrance, Responsibility, and the Future," suing various German companies and their managing entities for additional reparations related to Nazi-era wrongs. The appellants argue that these companies owe "interest" on payments made to a reparations fund, which was established with significant involvement from the U.S. and German governments to assist Nazi victims and their descendants.
The District Court previously ruled that the claim was a nonjusticiable political question. However, the Court of Appeals has decided to reverse this ruling and remand the case. The background highlights that during the Nazi era, German companies engaged in severe injustices, including the use of slave labor and appropriation of property, with victims largely barred from seeking legal redress due to international agreements designed to support Germany's post-war recovery. This barrier began to dissolve after the fall of the Berlin Wall and the signing of the Two-Plus-Four Treaty in 1989, which did not address individual claims but led German courts to allow previously barred claims against the government and companies.
Many uncompensated victims of Nazi-era injustices initiated claims against German companies in U.S. courts, targeting banks, insurers, and manufacturers that benefited from slave and forced labor or wrongfully seized assets. In response, seventeen major German corporations formed the German Foundation Industrial Initiative to address these claims. Acknowledging the potential economic repercussions, both the U.S. and German governments facilitated negotiations between victims and the corporations.
In late 1998, the German government requested Deputy Secretary of the Treasury Stuart Eizenstat to mediate the class action lawsuits. Over the following year and a half, Eizenstat led discussions involving victims' attorneys, German companies, and government representatives, including Chancellor Schroeder's envoys. On February 16, 1999, Chancellor Schroeder, along with the German companies, announced plans for formal negotiations aimed at settling all pending U.S. litigation related to Nazi-era conduct.
The negotiations aimed to establish a reparations fund to compensate victims and support projects against intolerance. In return for funding the foundation, the German companies sought legal immunity from current and future claims. A total of twelve plenary sessions occurred in various locations, involving diverse international representatives.
Breakthrough negotiations occurred in December 1999, when German companies proposed an initial funding of DM 8 billion, which plaintiffs countered at DM 10 billion, garnering support from several countries. President Clinton urged acceptance of the counteroffer, which Chancellor Schroeder accepted, leading to a formal announcement on December 15. Subsequently, the parties worked out details regarding fund allocation and eligibility criteria, culminating in the formal establishment of the "Remembrance, Responsibility and the Future" foundation on July 20, 2000.
The Berlin Accords consist of three key documents: the Joint Statement, the Executive Agreement, and the Foundation Law. The Joint Statement aims to provide dignified payments to survivors of the National Socialist era and World War II, with the German government and industry committing to a DM 10 billion capitalization. It mandates that funds from German companies be collected to ensure that the interest accrued reaches at least 100 million DM.
The Executive Agreement outlines the commitments of the U.S. and German governments regarding the Foundation, including the U.S. obligation to file a Statement of Interest in cases against German companies, indicating that such claims should be resolved through the Foundation exclusively. It emphasizes that the U.S. will support the Foundation as the sole remedy for these claims and will oppose any challenges to Germany's sovereign immunity related to the consequences of the National Socialist era.
The Foundation Law, effective August 12, 2000, establishes the Foundation as a legal entity and instrumentality of the German government, ensuring it is subject to oversight by German authorities, specifically the Ministry of Finance.
The Foundation is established with DM 10 billion in funding, split equally between the German government and the German Foundation Industrial Initiative. It comprises a 27-member Board of Trustees, responsible for fundamental decisions akin to a corporate board, and a three-member Board of Directors, which handles day-to-day operations and represents the Foundation in legal matters. The U.S. is allowed to appoint two members to the Board of Trustees: one government representative and one attorney for victims' interests.
The Berlin Accords link the Foundation's funding to the dismissal of all pending and future WWII-era claims against German companies in U.S. courts. At the time of signing on July 17, 2000, it was anticipated that dismissals would occur within six months. In August 2000, the Judicial Panel on Multi-District Litigation consolidated 53 cases relating to slave and forced labor before Judge Bassler in New Jersey. Other claims involving unpaid insurance policies were handled in the Southern District of New York.
Following the consolidation, the parties requested to dismiss the claims with prejudice due to expected payments from the Foundation. Judge Bassler approved the dismissal of 49 cases on December 5, 2000, but expressed concern that full funding might not be realized, potentially leaving plaintiffs without compensation after dismissing their claims. To address this, the dismissals were made subject to Federal Rule of Civil Procedure 60(b), allowing for relief if full funding was not achieved. Judge Mukasey approved the dismissal of claims against German insurance companies on December 14, 2000, while Judge Kram denied voluntary dismissal of claims against German banks on March 8, 2001, citing the risk of detrimental implications for absent class members.
Judge Kram granted a conditional dismissal of claims in the In re German and Austrian Bank litigation on May 10, 2001, pending changes to the Foundation's allocation schedule. Following a writ of mandamus from the Second Circuit on May 17, 2001, Judge Kram was compelled to dismiss all claims unconditionally, which he did on May 18 and 21, 2001. The German legislature subsequently declared "legal peace," obligating the German government and companies to each pay DM 5 billion to the Foundation. This payment was fulfilled in two installments on October 31, 2000, and December 31, 2000.
Disputes arose regarding the German Foundation Industrial Initiative's payments towards its DM 5 billion obligation, with the Initiative transferring its collected contributions in June 2001 and making additional contributions by December 2001, totaling DM 5.1 billion. The central issue in the dispute involves the obligation of the Initiative to pay "interest" on the DM 5 billion contribution. According to Section 4(d) of the Joint Statement, this contribution becomes due once all related lawsuits are dismissed. It also stipulates that interest earned before and after delivery to the Foundation should total at least DM 100 million.
Claimants argue that the term "at least" indicates a minimum, suggesting that additional interest is owed based on earnings from third-party contributions held by the Initiative before their transfer. They further contend that interest should compensate for delays in fulfilling the payment obligation and assert that a four percent interest rate should apply to all funds collected, leading to claims for amounts exceeding the stipulated DM 100 million.
The claimants assert that the "interest" amount of DM 100 million referenced in the Joint Statement was calculated based on the July 2000 German statutory default interest rate of four percent, anticipating resolution within six months. They argue that applying this rate to DM 5 billion results in DM 100 million. Regarding the commencement of "interest" obligations, they propose that additional payments were owed either from Judge Kram's refusal to dismiss the case until the German Foundation Industrial Initiative fulfilled its principal obligation or from the Bundestag's declaration of legal peace until final payment.
In contrast, the German Foundation Industrial Initiative argues that no payments are owed beyond the DM 5.1 billion already paid by German companies. It maintains that the DM 100 million was a maximum limit for "interest," intended as extra funding to resolve negotiation deadlocks among victims' representatives, rather than actual interest earned. This amount was designated as "interest" to avoid exceeding the DM 10 billion cap, which was crucial for maintaining the expectations of German companies and the German government. The Initiative references a letter from President Bill Clinton to Chancellor Gerhard Schroeder that identifies the DM 10 billion as a consensus ceiling.
Additionally, the German Foundation Industrial Initiative claims that the matter presents a nonjusticiable political question, asserting that the Joint Statement is a diplomatic rather than enforceable contract, and that U.S. courts lack the authority to modify it. They argue for dismissal under the act of state doctrine or international comity if the court does not recognize the political nature of the dispute.
The claimants counter that the case is justiciable as a contract dispute, claiming that the Joint Statement constitutes a contract and that obligations arose from the Initiative's commitments to pay DM 5 billion and representations made to U.S. judges regarding funding. The U.S. government's stance on the "interest" issue is reflected in letters, particularly one from Deputy Secretary of State Richard Armitage, which emphasizes that a political resolution is preferable and that the U.S. takes no position on the obligation for additional funds.
President Bush reaffirmed U.S. support for the German Foundation "Remembrance, Responsibility and the Future" during Chancellor Schroeder's visit in March 2001, emphasizing the U.S. commitment to achieving enduring legal peace for German companies in the U.S. This commitment, established in the Executive Agreement of July 17, 2000, includes an obligation to file statements of interest in individual cases. The U.S. Government intends to continue collaborating with Germany to ensure the Foundation's success, viewing issues related to interest payments as political matters to be resolved through diplomacy rather than judicial means.
The Joint Statement and the Executive Agreement do not clearly dictate the handling of interest earned prior to the industry's contribution transfer to the Foundation, and there is currently no consensus among the negotiating parties on this issue. The German Finance Ministry and the Foundation Board have stated that the Foundation Initiative has fulfilled its financial obligations, confirming that German companies have contributed DM 5 billion plus interest, with additional interest earned after the transfer.
The U.S. Government lacks definitive information to resolve disputes regarding the interest issue and is not in a position to assert that further funds beyond the DM 5.1 billion are required from German industry. In any potential U.S. court cases against German entities concerning pre-transfer interest, the U.S. Government will uphold its diplomatic stance. Progress of the Foundation is noted, with $1.3 billion paid to approximately 750,000 survivors of forced labor, highlighting the role of German-American cooperation in reconciling with victims of National Socialism, particularly in Central and Eastern Europe, and reinforcing a shared commitment to human dignity.
German-American collaboration aims to rectify past injustices while promoting democratic values, tolerance, and economic freedom. Richard L. Armitage expresses hope for a resolution regarding insurance issues and future achievements of the Foundation. William R. Kirschner, a trial attorney from the U.S. Department of Justice, communicated with Judge Bassler on July 22, 2002, concerning the dispute over whether the German Foundation "Remembrance, Responsibility, and the Future" was adequately funded by German companies, specifically regarding the interest on a promised DM 5 billion contribution. The U.S. Government did not take a definitive stance on the justiciability or merits of the case but acknowledged a lack of conclusive information on the interest issue and the potential for additional funding.
The procedural history outlines ongoing litigation related to the interest dispute. Claimants filed a Rule 60(b) motion to enforce a settlement and seek declaratory relief, but to protect the broader resolution of DM 10 billion payments to victims, they refrained from reopening the case. The District Court ruled it lacked jurisdiction to enforce the settlement. Previous attempts to restrict the U.S. from filing interest statements in related cases were dismissed, and a lawsuit seeking payment of alleged interest was withdrawn in favor of negotiations with the German Foundation. Additionally, a state court action regarding unlawful business practices linked to the interest dispute was dismissed in January 2003, emphasizing principles of international comity given the foreign country's interest and legal framework.
In Widerynski v. Deutsche Bank AG, the case initiated in June 2002 involved claims by Elly Gross, Roman Neuberger, and others as third-party beneficiaries alleging breach of contract against the German Foundation Industrial Initiative and its founding companies. A similar action was filed in July 2003 by Bernard and Barbara Schwartz Lee against Deutsche Bank AG and Dresdner Bank AG. Both sets of claimants were associated with Nazi-era cases against German corporate defendants. On June 8, 2004, the District Court dismissed both cases, citing nonjusticiable political questions.
The District Court possessed diversity jurisdiction under 28 U.S.C. § 1332(a)(2), while appellate jurisdiction was based on 28 U.S.C. § 1291. The appellate court conducted a plenary review due to the political question doctrine's application. The German Foundation argued for dismissal based on the assertion that the President's decision regarding the foundation's governance, the Joint Statement being a political document rather than a contract, and the judiciary's role in not altering such political statements supported their nonjusticiability claim.
Conversely, the claimants maintained that the case was justiciable as a contract interpretation issue involving the Joint Statement, asserting that an enforceable contract existed based on the Joint Statement and prior oral promises. The court rejected considering the oral statements from December 1999 and those made before U.S. judges, stating they did not influence the analysis of justiciability concerning the Joint Statement. The central legal question revolved around the interpretation of the term "at least" regarding interest payments tied to a deferred payment of DM 5 billion. The court concluded that if the Berlin Accords did not stipulate additional interest payments, promises made in U.S. courts could not impose such obligations independently.
Promises made before judges may serve as evidence for the German Foundation Industrial Initiative's obligation to pay additional "interest" under Section 4(d) of the Joint Statement, although this pertains to the merits of the dispute rather than its justiciability. The focus is on whether the Joint Statement establishes enforceable obligations, qualifying the case as a basic contract dispute.
The political question doctrine restricts judicial review of controversies that are constitutionally entrusted to Congress or the Executive Branch, particularly regarding foreign relations, which are primarily the responsibility of the Executive. While foreign policy is generally beyond judicial intervention, the Court has indicated that not every foreign relations-related case is nonjusticiable.
The judiciary has a role in interpreting statutes, treaties, and executive agreements, even if the outcome influences foreign relations. To determine if a case presents a nonjusticiable political question, six factors from Baker v. Carr are considered:
1. A constitutional commitment of the issue to a political branch.
2. A lack of judicial standards for resolution.
3. The necessity of an initial policy determination.
4. The impossibility of independent resolution without disrespect to other government branches.
5. A need for adherence to a prior political decision.
6. The risk of embarrassment from multiple governmental pronouncements.
Presence of any factor indicates a political question, but the case's specifics will ultimately determine nonjusticiability. A careful, case-by-case analysis is essential, moving beyond mere labels to understand the nuances of each situation.
The District Court evaluated the case under two Baker factors: the fourth, concerning respect for coordinate branches of government, and the sixth, regarding embarrassment from conflicting statements. The court identified the "interest" dispute as part of the broader context of Holocaust-era restitution, emphasizing that such matters should ideally be resolved through dialogue rather than litigation. It noted that the dispute is not about the legitimacy of restitution, but rather the amount of interest owed. Additionally, the court referenced a letter from Deputy Secretary of State Armitage, indicating that the U.S. government views diplomacy as the appropriate means for resolving this issue, rather than judicial intervention.
The analysis highlighted that a strong history of executive management over Nazi-era reparations claims is relevant to the Baker factors, suggesting that judicial interference could undermine executive authority. For over sixty years, U.S. policy has favored diplomatic resolutions over court litigation regarding compensation for Nazi-era injuries, which has been formalized through treaties and agreements. Thus, while historical executive management is not one of the six Baker factors, it is acknowledged as an important consideration in determining justiciability in foreign relations cases.
Ultimately, the conclusion differs from the District Court, asserting that adjudicating the "interest" dispute does not present a nonjusticiable political question.
Many courts have deemed Holocaust reparations cases as nonjusticiable, raising questions about the relevance of prior executive management of such claims in the current analysis under the Baker factors. The key issue is whether the "interest" dispute is a final yet inseparable aspect of previous nonjusticiable claims or a distinct matter. The District Court viewed the "interest" dispute as part of a long history of international negotiations, which would influence the Baker analysis heavily. However, this dispute is characterized not as a reparations claim but as a specific disagreement over an "interest" provision in a recent agreement, suggesting it differs from cases dismissed under the political question doctrine.
A judgment favoring claimants would necessitate payment to the Foundation, thus impacting victims' compensation; yet, the lawsuit focuses on the agreed amount of "interest" rather than the propriety of restitution itself. The District Court’s perspective that the "interest" issue is intertwined with prior nonjusticiable claims is contested, as the current dispute is not rooted in that historical context.
Furthermore, if the "interest" dispute were truly connected to the executive's historical management, one would expect some form of communication or intervention from the United States Executive, which has not occurred. The only relevant communication—the Armitage letter—was not directed to a U.S. court. There is also no indication of ongoing diplomatic efforts to resolve the "interest" issue. The absence of U.S. government engagement in negotiations contrasts with other cases like Alperin v. Vatican Bank, which highlighted the lack of political questions due to ongoing government discussions. Lastly, the Supreme Court's opinion in Garamendi does not significantly impact the justiciability analysis in this context.
The German Foundation Industrial Initiative argues that the Garamendi case supports the notion that the U.S. Executive has an exclusive role in handling matters related to Nazi-era claims against German nationals. The Garamendi decision concerned a California law mandating insurers to disclose information about Holocaust-era policies sold in Europe from 1920 to 1945. The Supreme Court indicated that restitution for Nazi crimes is within the Executive's powers, noting that such issues have been addressed through diplomacy and treaties over the past fifty years. The California statute aimed to provide information to enable lawsuits regarding these insurance policies, which the Foundation was established to resolve.
The analysis under the Baker factors distinguishes between the "interest" dispute and the underlying reparations claims that led to the Foundation's creation. The emphasis on executive management of Nazi reparations is less pronounced than in the District Court's assessment. A key factor in the analysis is the United States Executive's expression of interest in this dispute, primarily through the Armitage letter, which suggests that political resolutions are preferable, but remains ambiguous regarding the Berlin Accords' support for private claims.
The discussion raises critical questions about whether a Statement of Interest was required from the U.S. Executive and how that impacts the weight of the Armitage letter. If such a statement was necessary and not filed, it may indicate alignment with judicial resolution, thereby reducing the letter's significance. Conversely, if it was not required, the letter could be given more weight as the sole expression of the Executive's position. The final consideration is whether the Armitage letter should be viewed as a definitive expression of interest warranting deference, given the absence of a formal Statement of Interest from the U.S. Executive.
The United States is not obligated to file a Statement of Interest under the Berlin Accords regarding the current dispute, as the provisions specifically pertain to certain claims asserted against German companies arising from the National Socialist era and World War II. The Executive Agreement mandates the U.S. to file such a statement only when notified of claims described in Article 1(1), which encompasses reparations and restitution claims like slave labor, wrongful asset retention, and related insurance claims. The District Court clarified that the claims in this case differ from those intended to be resolved through the Foundation, which the United States recognizes as the exclusive remedy and forum for these specified claims. Consequently, the interpretation of claims "arising from" the National Socialist era does not extend to the additional "interest" claim in this dispute, which does not trigger the obligation to file a Statement of Interest. The Foundation is designated as the exclusive forum to resolve claims directly associated with the historical injustices of that period, reflecting U.S. foreign policy interests in promoting dismissal of such cases.
The United States Executive's failure to file a Statement of Interest in the current case is contrasted with its past interventions in similar cases, suggesting that such a statement was unnecessary here. In the Whiteman v. Dorotheum GmbH case, the U.S. government submitted a statement that emphasized the benefits of diplomatic resolution over litigation regarding Nazi-era property damage claims against Austria. The Second Circuit Court relied on this statement to highlight that the General Settlement Fund fosters positive relations and represents decades of diplomatic efforts, asserting that litigation outcomes are uncertain. The court deemed it appropriate to defer to U.S. foreign policy interests in dismissing claims against foreign sovereigns when an executive agreement establishes an alternative claims forum deemed superior to litigation.
Additionally, the Armitage letter distinguishes the current "interest" dispute from situations where the Executive Agreement mandates a Statement of Interest, acknowledging that the Executive was not obligated to act in this instance. The letter, directed to a member of the Foundation’s Board and not to a court, suggests that the resolution should be political rather than legal, while leaving the substantive issues regarding the "interest" dispute unresolved. Thus, it does not serve as an authoritative expression of U.S. executive policy.
The Armitage letter does not indicate that the United States Executive will seek intervention or dismissal in the case, which leads to the conclusion that it does not warrant deference based on foreign policy interests. The Supreme Court cases cited establish that courts may defer to the Executive's foreign policy judgments, but the current correspondence lacks any commitment or position from the Executive regarding justiciability or merits of the case. The Kirschner letter, sent prior to oral arguments, does not alter this position as it also avoids stating a stance on the merits and does not express an opinion on the justiciability of the dispute. While the United States has the statutory authority to file a statement of interest, intervene, or participate as amicus curiae, it has chosen not to engage formally in the case or declare its position on the "interest" dispute. Consequently, the lack of a formal position from the United States Executive indicates that the "interest" dispute has not been committed to a political branch. Lastly, claimants characterize the Joint Statement as a contractual settlement agreement, noting it exhibits characteristics of an enforceable contract, with parties having exchanged promises and acted to their detriment based on those promises.
Plaintiffs argue that they would not have agreed to dismiss their cases with prejudice without a contractual obligation from the German government and industry to fund the Foundation, as outlined in the Joint Statement. They assert that Section 4(d) resembles a contract, despite the presence of precatory language in other sections. In contrast, the German Foundation Industrial Initiative views the Joint Statement as a political document reflecting diplomatic commitments rather than legal obligations, emphasizing the role of high-level diplomacy in establishing the arrangement between private litigants and the German government and industry.
Ronald J. Bettauer, a Deputy Legal Adviser with the U.S. State Department, characterized the Joint Statement as a summary of political rather than legal commitments, indicating the steps parties would take rather than binding obligations. The Joint Statement is likened to a resolution from an international organization, developed through negotiations among various participants.
The document's text supports the German Foundation Industrial Initiative's stance, containing diplomatic commitments and principles rather than enforceable agreements. For instance, it states that the U.S. and Germany "will" sign an Executive Agreement and that certain governments "will implement" measures for legal peace. Additionally, broad declarations in the Joint Statement indicate a consensus on the fairness of fund distribution and the humanitarian objectives of the Foundation, lacking specific legal guarantees among private parties. Notably, the Preamble explicitly states that the establishment of the Foundation does not create grounds for claims against the German government or its nationals.
Claimants assert that the payment to the Foundation did not imply an admission of liability, adhering to standard settlement provisions. The term "Claims" may also refer to Nazi-era reparations rather than just additional interest. The parties’ interpretations of the Joint Statement primarily affect the merits of the interest dispute rather than its justiciability. The court does not need to determine whether the diplomatic negotiations influence the binding nature of Section 4(d) but must assess if a U.S. court can address these issues. The court will minimally consider the parties’ characterizations in its justiciability analysis, focusing instead on the significant role of U.S. officials in negotiations and the Joint Statement's text, which will guide its evaluation of the manageable standards for resolving the interest dispute and avoiding inappropriate policy determinations.
The analysis will utilize the six Baker factors to explore the interest dispute, concluding that it does not present a political question. The first Baker factor examines whether the issue is constitutionally committed to a political department. The German Foundation Industrial Initiative fails to cite specific constitutional text mandating Executive control over the issues at hand, although these matters fall within the Executive's foreign affairs authority as established in Garamendi. While the Executive has broad powers in foreign affairs, this breadth cautions against deeming the matter nonjusticiable. The Executive has not resolved the interest issue or settled the claim, and labeling any issue that the Executive could potentially resolve as nonjusticiable risks excluding all foreign relations-related cases from judicial review.
The Executive's authority to extinguish claims from foreign entities does not make those claims nonjusticiable simply because they are addressed to a co-equal branch of government. The second Baker factor evaluates whether judicial standards exist for resolving the case. The judiciary is deemed competent to address the legal and factual questions surrounding the "interest" dispute, particularly in interpreting the Berlin Accords and Section 4(d) of the Joint Statement to ascertain if a binding, contractual "interest" obligation exists.
Two key questions arise: (1) whether the Joint Statement is enforceable as a contract, and (2) if so, what "interest" obligation was intended for the German Foundation Industrial Initiative. Courts have established methods to determine contract enforceability, utilizing the text and permissible parol evidence, and can address issues of agency, third-party beneficiaries, and damages. The complexity of international agreement law does not preclude judicial standards, as demonstrated in past cases involving international elements.
Even cases with significant foreign policy implications do not automatically present political questions if they hinge on standard legal interpretations of constitutional provisions or statutory construction. The judiciary retains the authority to interpret treaties, executive agreements, and congressional legislation, distinguishing this case from others lacking judicial standards, such as those related to immigration enforcement.
In Guerrero v. Clinton, the Ninth Circuit held that the Secretary of Commerce's response to a congressional reporting mandate lacked judicially manageable standards due to the absence of legal consequences tied to the reports. The court referenced prior cases indicating that without clear standards, it could not adequately assess claims. The decision also analyzed the applicability of the Baker test for political questions. Specifically, the second Baker factor was addressed, indicating that the complexities of the case, including foreign involvement in the Berlin Accords, did not render it a political question. The third Baker factor was considered, which assesses whether resolving the case would require an initial policy determination reserved for the Executive branch. The court noted that while the resolution could affect foreign relations, it could still adjudicate the dispute without infringing on the Executive’s discretion. The court concluded it could interpret the Joint Statement to ascertain enforceable obligations without displacing the Executive in foreign policy formulation, focusing on the legal interpretation of agreements rather than on public policy.
A court is not required to make an initial policy determination typically reserved for nonjudicial discretion to resolve the issues in this case. The "interest" dispute is considered separate from WWII reparations claims, allowing courts to assess whether the Joint Statement includes a private enforceable agreement without engaging in foreign policy. Consequently, this matter is not deemed a political question according to the third Baker factor.
Under the fourth Baker factor, courts can independently resolve the issue without disrespecting the Executive Branch, as the United States Executive has not formally expressed an interest in the case or requested dismissal. Although the Armitage letter suggests a preference for diplomatic resolution, it does not indicate an official Executive position warranting deference. There is currently no ongoing diplomatic effort regarding this matter.
The fifth Baker factor assesses whether there is an unusual need for adherence to a prior political decision. While the Armitage letter may reflect a political decision favoring diplomacy, it does not present an unusual need for unquestioning adherence, especially since the case does not involve urgent issues like the cessation of armed conflict.
Lastly, the sixth Baker factor considers the possibility of embarrassment from conflicting statements by various governmental departments on the same issue. The excerpt does not provide specific details regarding this factor but implies its relevance in the context of the case.
Judicial resolution of a question is relevant only when it would contradict prior political branch decisions that could interfere with significant governmental interests. The principle emphasizes that foreign governments should trust U.S. diplomatic pronouncements. However, in this case, there was no authoritative statement from the U.S. Executive, and the Armitage letter did not suggest U.S. intervention or dismissal. Instead, it implied that a Statement of Interest would not be filed. The U.S. Government has an obligation to file statements of interest under the Executive Agreement, but no such document indicating U.S. interests was submitted in this case.
The absence of definitive governmental action regarding the termination of a treaty allows the court to interpret the treaty's implications. Moreover, neither the German companies nor the German government identified any U.S. statements whose contradiction would cause embarrassment. Therefore, declaring this case justiciable does not conflict with any formal positions taken by political branches, nor does it overlook any related foreign relations positions. The German Foundation Industrial Initiative misinterprets the Armitage letter, which suggests that political matters, such as interest payments, should be resolved outside of court. The concept of "multifarious pronouncements" pertains to conflicting merits rather than justiciability. The judiciary ultimately holds the authority to resolve these questions, even if they conflict with Executive assertions, as illustrated in Supreme Court cases like Clinton v. Jones and United States v. Nixon.
Conflicting views exist between the Executive and the Judiciary regarding the obligation to pay "interest" on the "contract," which raises a political question. The absence of a definitive statement from the Executive leads to the conclusion that the sixth Baker factor does not render the case nonjusticiable under the political question doctrine. The District Court refrained from deciding on the act of state or international comity doctrines after determining that the claimants' actions constituted a nonjusticiable political question.
Under the act of state doctrine, U.S. courts are barred from questioning the validity of public acts carried out by a recognized foreign sovereign within its territory. This doctrine is invoked when a case would require a U.S. court to invalidate a foreign sovereign's official act. However, it does not grant blanket immunity for all foreign government conduct. A predicate sovereign act is necessary for the doctrine's application, which is absent in this case.
The German Foundation Industrial Initiative and the German government provided letters indicating that no further "interest" is owed, but these do not constitute official acts of a foreign sovereign. The German officials' communications clarify Germany's position on the interest issue but lack definitive authority. The court emphasizes that it has not been asked to declare any foreign sovereign act invalid, but rather to weigh the significance of statements from certain Foundation officers and the German Minister of Finance regarding the fulfillment of obligations under the Joint Statement.
Ruling on the merits of the case will not undermine the official acts of the German government, indicating that the act of state doctrine does not warrant dismissal. The doctrine of international comity allows for recognition of foreign governmental acts within the U.S., balancing international obligations with the rights of U.S. citizens. U.S. courts typically refrain from reviewing foreign acts and defer to foreign proceedings unless such deference would harm U.S. interests. The German Foundation Industrial Initiative claims that ongoing lawsuits conflict with the Berlin Accords and that any ruling would necessitate a review of German government actions. However, no ongoing proceedings in Germany have been identified. The Supreme Court has ruled that without a foreign judgment or ongoing foreign proceedings, true conflicts between U.S. and foreign law must exist for comity to apply. Absent such conflicts, U.S. courts seldom abstain from case merits based on international comity. Recognition of foreign judgments also requires reciprocity and adherence to specified criteria, while comity principles may apply in cases with parallel foreign proceedings.
International comity is conditioned on reciprocity, taking into account the foreign court's jurisdiction, the nature of the proceedings, and due process indicators. There is an instance where comity principles were applied without a foreign judgment or a "true conflict" in Ungaro-Benages v. Dresdner Bank AG, where the Eleventh Circuit differentiated between retrospective and prospective applications of comity, particularly in Holocaust-era property claims. The court outlined that prospective application should consider the interests of the U.S. government, the foreign government, and the international community, although skepticism remains regarding this broad application. The obligation to exercise jurisdiction is emphasized, asserting that not all cases involving foreign relations are beyond judicial reach. The court expresses doubt that Germany's interest in resolving disputes outweighs U.S. interests in adjudicating them domestically, particularly given the lack of assurance that claimants would have access to a forum in Germany. Consequently, the court declines to abstain from the case under the comity doctrine, reverses the District Court's judgment, and remands for further proceedings.
Claimants assert various dates for calculating "interest" owed due to delays, including December 14, 1999 (oral agreement on the Berlin Accords), July 17, 2001 (signing of the Joint Statement), when the German Foundation Industrial Initiative received funds, and when founding members took a tax credit under German law. The legal context involves prior cases examining nonjusticiability, with the Baker Court analyzing the political question doctrine based on factors like historical management by political branches, susceptibility to judicial handling, and consequences of judicial action. Prior district court rulings, including Burger-Fischer and Iwanowa, determined that Nazi-era claims were nonjusticiable, while later cases, like Ungaro-Benages and Whiteman, navigated similar issues but reached different conclusions on the applicability of the political question doctrine. The Ninth Circuit's Alperin case distinguished itself by noting the Executive's lack of involvement, contrasting it with the present case where the Executive played a significant role in negotiating the Berlin Accords. Other Holocaust-era claims have been settled before addressing the political question.
The signing of the Berlin Accords does not determine the appropriate forum for enforcing the "interest" provision of the Joint Statement. Defendants' claim that the Joint Statement designates the Foundation as the authority for interest obligations is deemed incorrect. A July 11, 2005, letter from Burt Neuborne indicates the State Department informed him that no diplomatic negotiations regarding the "interest" issue with Germany were ongoing. At a subsequent oral argument, neither the claimants nor the German Foundation challenged this assessment. If a Statement of Interest had been warranted, it could have indicated a breach of the Executive Agreement by the U.S. However, the U.S. is compliant with the Foundation Agreement as long as it submits a Statement of Interest to courts advocating for the Foundation as the exclusive venue for these claims.
The conclusion that the Berlin Accords do not mandate a Statement of Interest is based on the language and context of the Executive Agreement and Joint Statement, supported by practical considerations. These include issues unique to WWII-related cases, such as missing evidence and legal barriers like statutes of limitations. The term "nationals" pertains to German companies, and a referenced case, InJoo, highlighted that the U.S. intervened with a Statement of Interest in a WWII-related torture case, which the court acknowledged. Although the Statement of Interest from the Executive Agreement does not guarantee dismissal, it suggests U.S. policy interests favor dismissal on any valid legal grounds. Promising dismissal would exceed the Executive Agreement's intent. It is likely that filing a Statement of Interest would lead to dismissal on political question grounds or similar reasons.
