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Agudas Chasidei Chabad of United States v. Russian Federation

December 4, 2006

AGUDAS CHASIDEI CHABAD OF UNITED STATES, PLAINTIFF,
v.
RUSSIAN FEDERATION, ET AL., DEFENDANTS.



MEMORANDUM OPINION

The plaintiff, Agudas Chasidei Chabad of United States ("Chabad"), is a non-profit religious corporation incorporated under the laws of the State of New York. On November 9, 2004, Chabad commenced this action in the United States District Court for the Central District of California against the Russian Federation and several Russian*fn1 state agencies (collectively "defendants").*fn2 Chabad alleges that the defendants violated international law by illegally taking and continuing to hold an invaluable collection of Jewish religious books and manuscripts, a collection that Chabad claims to rightfully own. Chabad seeks declaratory and injunctive relief mandating the return of the collection and damages incurred because of the defendants' violation of international law. The defendants moved to dismiss for lack of jurisdiction under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602 et seq., under the act of state doctrine, and under the doctrine of forum non conveniens.

On July 14, 2005, the U.S. District Court for the Central District of California transferred the present case to this Court pursuant to 28 U.S.C. § 1406(a), declining to rule on the remaining issues raised in the motion to dismiss. (Order [Cal. 56]*fn3 to Transfer Action.) Adhering to this Court's Order [2] of November 23, 3005, the parties filed supplemental briefs to address legal precedent in the District of Columbia Circuit. Now before this Court are: the defendants' motion [Cal. 13] to dismiss, the plaintiff's opposition [Cal. 45] thereto, the defendants' reply [Cal. 46], and the parties' supplemental briefs [14; 15]. This Court heard oral argument on August 30, 2006. Upon consideration of the parties' filings and oral arguments, the applicable law, and the entire record herein, this Court concludes that it has jurisdiction over some, but not all, of Chabad's claims. Therefore, and in accordance with this Memorandum Opinion, this Court shall grant in part and deny in part the defendants' motion to dismiss.

I. BACKGROUND

Long before Chabad was incorporated as a non-profit corporation under the laws of the State of New York, it was an organization of Jewish religious communities located worldwide, with origins in the Russian Empire. The United States District Court for the Eastern District of New York had the occasion to describe the history of Chasidic religious thought and of Chabad Chasidism, see Agudas Chasidei Chabad of United States v. Gourary, 650 F. Supp. 1463, 1464 (E.D.N.Y. 1987), aff'd, 833 F.2d 431 (2d Cir. 1987), which is useful for a fuller understanding of the issues before this Court:

Chasidism, the movement of Chasidim (literally, the "righteous"), was founded in the mid-18th Century in Eastern Europe by Rabbi Israel ben Eliezer, known as the Baal Shem Tov ("Master of the Good Name"). The teachings of the Baal Shem Tov emphasized the presence of God in all things, including the most mundane. The movement was in its origin intensely community oriented and centered on leaders, generally disciples of the Baal Shem Tov, who served as mediators between the Chasid, God and the society outside the community. The movement divided itself into several groups centered on individual leaders and local communities, one of which was Chabad Chasidism, which became known as Lubavitch Chasidism after the town in Russia in which the movement was centered in its early years.

Id. at 1464 n.1 (emphasis added).

Rabbi Schneersohn . . . was until his death the sixth in a line of rabbis who led a movement of Orthodox Jews known as Chabad Chasidism. Chabad is an acronym for the Hebrew words "cochma," "bina" and "daas," meaning wisdom, knowledge and understanding. As its name suggests, Chabad Chasidism has been considered as placing a greater emphasis on the intellect in the study of the Torah and the Kabbale than is the norm in Chasidism.

Chabad Chasidism was formed in 1775 by Rabbi Schneur Zalman, considered the first Lubavitcher Rebbe and known as the Alter Rebbe. The Alter Rebbe was a disciple of the successor of the Baal Shem Tov. The founder's son and successor, Rabbi Dov Baer, who died in 1827 and was known as the Mittler Rebbe, settled in the Russian town of Lubavich and, hence, gave the movement its present name. The third leader of the group was the son-in-law of Dov Baer and the son of the daughter of Schneur Zalman. This Rebbe, known as the Tzemach Tzedek, after the title of his major written work, was Rabbi Menahem Mendel, who died in 1866. The fourth Lubavitcher Rebbe was the youngest son of Menahem Mendel, Rabbi Samuel Schneersohn, known as the Maharash. He was succeeded by his son, [the Fifth Rebbe] Rabbi Shalom Dov Baer, known as the Rashab, who died in 1920. The sixth Rebbe . . . was the son of Rabbi Shalom Dov Baer and succeeded his father on his father's death.

Id. at 1464 (emphasis added). The court noted that the "family relationship between the . . . succeeding Lubavitcher Rebbes may explain why . . . the distinction between property of the religious institutions of Chabad Chasidism and the personal property of the Rebbe is not a distinction which has had to be made with any regularity in the movement's history." Id.

At issue in this case are two distinct sets of property: the "Library" and the "Archive."*fn4 The Library, the origins of which date back to 1772, consists of more than 12,000 books and 381 manuscripts. (Id. ¶ 11(a).) It "was established, maintained and augmented by the first Five Chabad Rebbes . . . ." (Id. ¶ 11(a).) The Archive is comprised of over 25,000 pages of Chabad Rebbes' handwritten teachings, correspondence, and other records. (Id. ¶ 11(b).) The contents of the Archive passed down from Rebbe to Rebbe, and the Gourary court quoted testimony exemplifying its significance:

[T]he ksovim that are original manuscripts or manuscripts used by the Rebbe himself, assume a sanctity about them, that they are kind of the essential legacy. I would compare it to the crown jewels. It's something concrete that is passed on in a symbolic way, and in a way incorporates in itself both the sanctity, the very presence, the very personality of the Rebbe himself.

650 F. Supp. at 1465. The term "Collection," as used by the parties and in this memorandum, is primarily a term of convenience and refers to both the Library and the Archive.

In 1915, the Fifth Rebbe, Rabbi Shalom Dov Baer, fleeing Lubavitch from the advancing German army, took some books and manuscripts from the Library with him and sent the rest to be stored in a private warehouse in Moscow. (Compl. ¶ 13; Defs.' Request [Cal. 18] for Judicial Notice in Support Mot. Dismiss Ex. 1 [hereinafter "Defs.' RJN"] at 32, 41.) The upheavals associated with the Bolshevik Revolution of 1917 and the Russian Civil War prevented the Fifth Rebbe from reclaiming the Library during that time. (Compl. ¶ 13; Defs.' RJN 32, 41.) In early 1920, the Soviet Department of Scientific Libraries ("SDSL") moved the Library to a state facility. (Opp'n [Cal. 45] Mot. Dismiss 4; Compl. ¶ 14; Defs.' RJN 32-43.) The Fifth Rebbe passed away in 1920 and his son, Rabbi Joseph Isaac Schneersohn, succeeded him as the Sixth Rebbe. (Opp'n Mot. Dismiss 4.) In 1921, the SDSL approved the return of the Library to the Sixth Rebbe, who, however, lacked the funds for its return.*fn5 (Id. at 4.) The Library thus remained in the possession of the SDSL. In 1927, the Soviet authorities arrested the Sixth Rebbe and sentenced him to death; later that year, bowing to international pressure, they allowed him to leave Russia for Latvia, then an independent nation, where he became a citizen. (Id. at 5; Compl. ¶ 15.) While the Sixth Rebbe brought the Archive with him to Latvia, the Library remained behind. (Opp'n Mot. Dismiss 5; Compl. ¶ 7.) In 1933, the Sixth Rebbe moved from Latvia to Poland, bringing the Archive with him. (Opp'n Mot. Dismiss 5; Defs' RJN 57-60)

On September 1, 1939, Nazi Germany attacked Poland; the Soviet Union invaded Poland shortly thereafter. When the Sixth Rabbi fled to the United States in 1940, he was unable to bring the Archive. (Opp'n Mot. Dismiss 6; Compl. ¶¶ 16-17.) He arrived in the United States on March 19, 1940. (Compl. ¶ 16). On July 25, 1940, Agudas Chasidei Chabad was incorporated in New York. (Id. ¶ 1.) The Sixth Rebbe made numerous efforts to retrieve the contents of the Archive left behind in Poland, affirming Chabad's ownership of the Archive. (Pl.'s Suppl. Br. 7 (citing Gourary, 833 F.2d 435-37); Defs.' RJN 61.) A portion of the Archive's contents arrived in the United States in unknown circumstances in 1941. (Pl.'s Suppl. Br. 7 (citing Gourary, 833 F.2d. at 435).) The rest of the Archive was taken by Nazis in Poland and moved to a "Gestapo-controlled castle in Germany." (Id.) In 1945, the Archive was taken by the Soviet Army as German "trophy documents" or "war booty" and transferred to the RSMA in Russia. (Opp'n Mot. Dismiss 6-7; Pl.'s Suppl. Br. 7-8; Compl. ¶ 19.) A portion of the Archive found in Poland that was not taken by the Soviet Army was returned to Chabad by the Polish government in 1974.*fn6 (Opp'n Mot. Dismiss 7; Compl. ¶ 19.)

In 1990, Chabad formed the Jewish Community of Lubavitch Chassidim ("JCLC") as its representative in the Soviet Union. (Compl. ¶ 21.) According to Chabad, on September 6, 1991, Soviet President Mikhail Gorbachev instructed the RSL to return the Library to Chabad. (Id. ¶ 22; Pl.'s Suppl. Br. 8.) On September 26, 1991, the JCLC petitioned an arbitration court to order the RSL to return the Library; the same day the court placed a lien on the Library. (Compl. ¶ 23; Defs.' RJN 68.) On October 8, 1991, a State Arbitration Tribunal of the RSFSR*fn7 held that the Soviet government had failed to prove that the Library "acquir[ed] a status of National property." (Opp'n Mot. Dismiss 8; Compl. ¶ 25; Defs.' RJN 70-71.) The tribunal further held that the Library "cannot be declared ownerless, as for a number of years, starting from 1922, the owner of books and manuscripts applied to various bodies of the Soviet State, requesting their return." (Defs.' RJN 71.) The court ordered the return of the Library to Chabad within one month. (Id.) Chabad stresses that on November 18, 1991, the Chief State Arbiter of the RSFSR affirmed this decision on appeal. (Opp'n Mot. Dismiss 8.) In fact, the Chief State Arbiter reversed in part the lower tribunal, holding that Chabad had failed to show that it, rather than the Rebbe, owned the Library, and ordered the Lenin State Library (the RSL's predecessor) to transfer the Library to the Jewish National Library. (Defs.' RJN 74-77.)

The Soviet Union dissolved on December 25, 1991, and was replaced by the Russian Federation. Chabad alleges that "[o]n January 29, 1992, the Deputy Chairman of the Russian Federation ordered the [RSL] to give the Library to the Chabad Delegation."*fn8 (Compl. ¶ 29.) The Delegation, however, encountered a group of anti-Semitic hooligans incited by an RSL director when it attempted to take possession of the Library. (Id.) Shortly thereafter, on February 14, 1992, the Deputy Chief State Arbiter of the Russian Federation nullified the previous court orders that mandated the RSL's relinquishment of the Library and closed the case. (Id. ¶ 30; Pl.'s Suppl. Br. 10; Defs.' RJN 83-85.) Chabad argues that this ruling was made "unilaterally and secretly" and was procedurally defective. (Pl.'s Suppl. Br. 10; Decl. [Cal. 40] Veronika R. Irina-Kogan Opp'n Mot. Dismiss [hereinafter "Irina-Kogan Decl."] ¶ 12.) On February 19, 1992, the Supreme Soviet of the Russian Federation abolished the January 29, 1992, order and decreed that "the safety, movement and use of the holdings available to the [RSL be effectuated] solely on the basis of the legislation of the Russian Federation and the provisions of international law." (Irina-Kogan Decl. Ex. J at 54.) Chabad claims that this decree divested Russian courts of jurisdiction to hear Chabad's claims by only allowing the legislative branch to authorize any movement of books in the RSL's possession. (Opp'n Mot. Dismiss 15; Pl.'s Suppl. Br. 10; Irina-Kogan Decl. ¶ 15.)

On December 16, 1993, Leon Fuerth, the national security advisor to Vice President Al Gore, entered into an agreement, entitled Memorandum of Understanding ("MOU"), with the Minister of Culture of Russia, Evgeny Sidorov. (Decl. [Cal. 37] Leon Fuerth Opp'n Mot. Dismiss [hereinafter "Fuerth Decl."] ¶ 9.) The MOU provided for the transfer of the Library to a new facility, where RSL staff with the assistance of Chabad, would catalog the Library's contents. (Pl.'s Suppl. Br. 11-12.) The MOU was an interim agreement between the Russian and United States governments and Chabad was not a party to it. (Fuerth Decl. ¶ 9.) Although Chabad claims that the Russian side failed to live up to its obligations under the MOU, that does not bear on the present case as the MOU was agreed to be non-prejudicial to any future resolution of the Library's fate. (Id.)

II. DISCUSSION

A. Standard of Review

When reviewing a Rule 12(b)(1) motion to dismiss, a court must assume the truth of all factual allegations in the complaint, construing them in the light most favorable to the plaintiff, even if some are subject to dispute by the opposing party. See Republic of Austria v. Altmann, 541 U.S. 677, 681 (2004); Saudi Arabia v. Nelson, 507 U.S. 349, 351 (1993); Kalil v. Johanns, 407 F. Supp. 2d 94, 96-97 (D.D.C. 2005). A court may rely on materials outside the pleadings to determine whether it has jurisdiction. See EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 n.3 (D.C. Cir. 1997); Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987) ("[I]t has been long accepted that the judiciary may make appropriate inquiry beyond the pleadings to satisfy itself on authority to entertain the case." (citation and internal quotation marks omitted)).

B. Jurisdiction under the FSIA

1. Legal Standard for FSIA's Expropriation Exception

The Foreign Sovereign Immunities Act provides the exclusive basis for asserting jurisdiction over a foreign state in a United States court. See Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434-35 (1989) (citing 28 U.S.C. § 1604 and 28 U.S.C. § 1330(a)); accord Peterson v. Royal Kingdom of Saudi Arabia, 416 F.3d 83, 85 (D.C. Cir. 2005) [hereinafter Peterson II]. In enacting the FSIA, Congress codified the longstanding tradition of foreign sovereign immunity, see Amerada Hess, 488 U.S. at 434 n.1; accordingly, unless one of the statutory exceptions enumerated in § 1605 is satisfied, a foreign state is immune from suit in United States courts. See § 1604; Amerada Hess, 488 U.S. at 434-35 & n.3 (clarifying that in an action against a foreign state, a district court cannot have subject matter jurisdiction, unless one of the general exceptions to immunity in § 1605 applies).

The defendant-state has the ultimate burden of establishing immunity under the FSIA. Princz v. Fed. Republic of Germany, 26 F.3d 1166, 1171 (D.C. Cir. 1994). Once the defendant makes a prima facie showing that it is a foreign state, the plaintiff bears the burden of asserting at least some facts showing that one of the FSIA exceptions applies. Crist v. Republic of Turkey, 995 F. Supp. 5, 10 (D.D.C. 2000) (Lamberth, J.). The burden then shifts back to the defendant to prove, by a preponderance of the evidence, that the alleged exception does not apply.*fn9 Id.

Chabad relies on the FSIA's expropriation exception, § 1605(a)(3), to challenge the defendants' assertion of sovereign immunity. This exception consists of two distinct clauses and Chabad maintains that this Court has jurisdiction under the second clause.*fn10 (Compl. ¶ 37; Pl.'s Suppl. Br. 15.) Thus, in order to have jurisdiction, this Court must find that: (1) "rights in property" are at issue; (2) the property was "taken in violation of international law"; and (3) "the property at issue (or any property exchanged for it) [is] . . . 'owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality' engages in commercial activity in the United States." Peterson II, 416 F.3d at 86-87 (quoting § 1605(a)(3)). This Court will first address the second prong of the expropriation exception before moving on to the other two.

2. Taking in Violation of International Law

The second requirement of the FSIA's expropriation exception is that the property in question must have been "taken in violation of international law." 28 U.S.C. § 1605(a)(3); see also Peterson II, 416 F.3d at 86. A taking violates international law if: (1) it was not for a public purpose; (2) it was discriminatory; or (3) no just compensation was provided for the property taken.*fn11 See Crist, 995 F. Supp. at 10-11 (citing Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 711 (9th Cir. 1992), andRESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES ยง 712 (1987) [hereinafter RESTATEMENT]); see also H.R. REP. NO. 94-1487, at 19-20 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6618 (providing the legislative history of the FSIA). At the jurisdictional stage, this Court is not required to determine whether the ...


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