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Agudas Chasidei Chabad of United States v. Russian Federation

January 16, 2013

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



The opinion of the court was delivered by: Royce C. Lamberth, Chief Judge

MEMORANDUM OPINION

Plaintiff Agudas Chasidei Chabad of the United States ("Chabad") has moved for civil contempt sanctions against defendants the Russian Federation ("Russia"), the Russian Ministry of Culture and Mass Communication (the "Ministry"), the Russian State Library ("RSL"), and the Russian State Military Archive ("RSMA") based on their failure to comply with this Court's July 30, 2010 Order, ECF No. 80. See Pl.'s Mot., Apr. 4, 2011, ECF No. 92. After considering plaintiff's motion, the United States' Statement of Interest ("U.S. Statement"), ECF No. 111, plaintiff's response, ECF No. 112, applicable law, and for reasons given below, the Court will GRANT the motion and will hold defendants in contempt of Court. The Court will enter civil contempt sanctions against defendants in the amount of $50,000 per day until defendants comply with this Court's Order.

I. BACKGROUND*fn1

Chabad brought this action in 2004 seeking return of religious books, artifacts and other materials concerning the cultural heritage of its forebearers, which fell into defendants' hands in the early 20th century. See Agudas Chasidei Chabad of U.S. v. Russian Fed'n (Chabad III), 798 F. Supp. 2d 260, 263 (D.D.C. 2011). In 2009, after losing on jurisdictional arguments, defendants' lawyers informed the Court that they would no longer be participating in the case as they believed the Court lacked "authority to adjudicate rights in property that in most cases always has been located in the Russian Federation . . . ." Statement of Defs., June 26, 2009, ECF No. 71. A year later, this Court entered a default judgment in favor of Chabad, see Agudas Chasidei Chabad of U.S. v. Russian Fed'n (Chabad II), 729 F. Supp. 2d 141 (D.D.C. 2010), and ordered defendants to "surrender to the United States Embassy in Moscow or to the duly appointed representatives of . . . Chabad . . . the complete collection." See Order, July 30, 2010, ECF No. 80.

Defendants failed to comply. Nearly a year after the order was issued Chabad moved for civil contempt sanctions, seeking "the entry of a monetary penalty for every day that the defendants continue to disobey this Court's Order." Pl.'s Mot. 3, Apr. 4, 2011, ECF No 92. The Court noted that it possessed the authority to issue the requested sanctions in the FSIA context. See Chabad III, 798 F. Supp. 2d at 272 (citing FG Hemisphere Assocs., LLC v. Democratic Republic of Congo, 637 F.3d 373, 377-78 (D.C. Cir. 2011)). Further, because defendants had failed to take "any steps necessary towards compliance with the Court's order," id. at 273, and had actually made affirmative statements to the Court that made it "clear that they have no intention of complying with the Court's prior order," Id. (citing Statement of Defs.), the Court concluded that "plaintiff has demonstrated defendants' non-compliance 'to a reasonable certainty,' as required to warrant the entry of civil contempt sanctions." Id. (quoting SEC v. Bilzerian, 613 F. Supp. 2d 66, 70 (D.D.C. 2009)). However, before issuing such sanctions, the Court directed Chabad to serve copies of its motion along with the Court's Order to Show Cause, July 26, 2012, ECF No. 102, on defendants via mail service and provided that defendants would have 60 days to respond. Id. Chabad effectuated service of these documents, see Affidavit of Seth M. Gerber, Aug. 19, 2011, ECF No. 103, and defendants failed to respond within 60 days.

Chabad subsequently twice requested temporary stays of its motion in order "to facilitate [its] attempts to commence negotiations with the Russian Government, and to encourage the Russian Government to rethink its position of refusing to comply with the Court's judgment." Pl.'s Request, Oct. 19, 2011, ECF No. 104; see also Pl.'s Second Request, Dec. 16, 2011, ECF No. 105. But despite "multiple meetings at the Russian Embassy in Washington, D.C.," the parties were unable to reach a settlement, and Chabad renewed its motion for sanctions in early 2012. Pl.'s Statement, Mar. 5, 2012, ECF No. 106.

Noting "the serious impact such an order could have on the foreign policy interests of the United States," the Court solicited the views of the United States, See Order Soliciting the Views of the United States, May 23, 2012, ECF No. 107, who submitted a statement urging the Court not to enter sanctions. U.S. Statement, ECF No. 111. Chabad responded, Pl.'s Response, Sept. 28, 2012, ECF No. 112, and a hearing was conducted before the undersigned judge on January 9, 2013.

II. ANALYSIS

The United States objects to the requested sanctions on both legal and pragmatic grounds. First, the United States argues that civil contempt sanctions are unavailable to enforce judgments issued against foreign states under the FSIA. U.S. Statement 4-10. Second, the United States argues sanctions would damage the United States' foreign policy interests, including its diplomatic efforts to reach a settlement with defendants on Chabad's behalf. U.S. Statement 10-13. As discussed below, the Court rejects both arguments and will issue civil contempt sanctions against defendants.

A. The Court Has Authority to Issue Sanctions

As this Court noted in Chabad III, "[f]ederal courts enjoy inherent contempt power . . . ." 798 F. Supp. 2d at 272 (citing FG Hemisphere, 637 F.3d at 377-78). "Civil contempt . . . is designed to coerce compliance with a court order . . . ." Id. (quoting SEC v. Bilzerian, 613 F. Supp. 2d 66, 70 (D.D.C. 2009) (citing In re Fannie Mae Sec. Litig., 552 F.3d 814, 823 (D.C. Cir. 2009))). To determine whether civil contempt is appropriate, the Court must evaluate whether "the putative contemnor has violated an order that is clear and unambiguous," and whether such a violation has been "proved by clear and convincing evidence." Id. (quoting Broderick v. Donaldson, 437 F.3d 1226, 1234 (D.C. Cir. 2006)).

The Court already concluded that defendants' non-compliance with this Court's July 30, 2010 Order has been "demonstrated . . . 'to a reasonable certainty,' as required to warrant the entry of civil contempt sanctions." Id. (quoting Bilzerian, 613 F. Supp. 2d at 70). And, it already concluded that these sanctions were available in this case based on FG Hemisphere Associates, LLC v. Democratic Republic of Congo, in which the D.C. Circuit affirmed a district court's issuance of sanctions against a foreign state for refusing to comply with a Court's discovery orders. Id. (citing FG Hemisphere, 637 F.3d at 377-78).

While the United States concedes that "Russia has not complied with the Court's order," it now insists that the FSIA "does not authorize the Court to award relief" in the form of contempt sanctions for this non-compliance-notwithstanding this Court's earlier statement to the contrary. U.S. Statement 3-4; cf. Chabad III, 798 F. Supp. 2d at 272. Because the Court did not have the U.S. Statement when it issued its opinion in Chabad III, it will now inquire as to whether anything in that Statement requires it to reconsider any of the conclusions it reached in that earlier opinion.

As this Court noted in Chabad III, the authority of district courts to issue civil contempt sanctions against foreign states under the FSIA was recently confirmed by the D.C. Circuit. Id. In FG Hemisphere, the circuit affirmed a district court's order imposing civil contempt sanctions against defendant, the Democratic Republic of Congo (DRC), for failing to comply with discovery orders. 637 F.3d 373. The court squarely rejected the argument advanced by the United States in that case as Amicus Curiae that FSIA's "carefully crafted execution scheme" precluded these sanctions, finding "not a smidgen of indication in the text [or legislative history] of the FSIA that Congress intended to limit a federal court's inherent contempt power." Id. at 378 (citing ...


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