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Agudas Chasidei Chabad of United States v. Russian Fed'n

United States District Court, D. Columbia.

September 10, 2015

AGUDAS CHASIDEI CHABAD OF UNITED STATES, Plaintiff,
v.
RUSSIAN FEDERATION, et al., Defendants

          For AGUDAS CHASIDEI CHABAD OF UNITED STATES, A non-profit religious corporation, Plaintiff: Alyza Doba Lewin, LEWIN AND LEWIN LLP, Washington, DC; Jonathan E. Stern, DREIER STEIN & KAHAN, LLP, Santa Monica, CA; Nathan Lewin, LEWIN & LEWIN, LLP, Washington, DC, Robert P. Parker, Steven Lieberman, ROTHWELL, FIGG, ERNST & MANBECK, PC, Washington, DC.

         For UNITED STATES OF AMERICA, Interested Party: Nathan Michael Swinton, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Washington, DC.

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         MEMORANDUM OPINION

         Royce C. Lamberth, United States District Judge.

         Plaintiff Agudas Chasidei Chabad of the United States (" plaintiff" ) moves for interim judgment of accrued sanctions in the amount of $43,700,000[1] 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" ) (collectively, " defendants" ) reflecting sanctions that have accrued under the Court's January 16, 2013 Order, ECF No. 115. See Plaintiff's Motion for Interim Judgment of Accrued Sanctions, January 28, 2014, ECF No. 127. After considering plaintiff's motion, the United States' second Statement of Interest (" U.S. Statement" ) in this matter, ECF No. 134; plaintiff's response, ECF No. 135; oral argument held on August 20, 2015; Statement of Defendants with Respect to Further Participation[2] ECF No. 71; and applicable law, and for reasons given below, the Court will GRANT the motion and award plaintiff interim judgment of accrued sanctions. The Court will further ORDER plaintiff to provide notice of certain actions to the

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United States as described in separate order.

         I. BACKGROUND[3]

         Plaintiff brought this action in 2004 seeking return of religious books, artifacts and other materials concerning the cultural heritage of its forbearers, 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 defendants believed the Court lacked " authority to adjudicate rights in property that in most cases always has been located in the Russian Federation. . . ." Statement of Defendants, June 26, 2009, ECF No. 71. A year later, this Court entered 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." Id. Defendants failed to comply with this order and on January 16, 2013, the Court granted plaintiff's motion for civil contempt sanctions, ordering monetary sanctions of $50,000 per day, payable to plaintiff. See Agudas Chasidei Chabad of U.S. v. Russian Fed'n (Chabad IV), 915 F.Supp.2d 148 (D.D.C. 2013).

         Defendants continue to disregard the Court's Order and have entered no further appearance since declaring their unwillingness to participate further. Plaintiff requests " entry of an interim monetary judgment in the amount accrued under" the Court's Sanctions Order of January 16, 2013. See Chabad IV.

         II. ANALYSIS

         The Court remains deprived of defendants' participation and can only consider the statement of interest of the United States and plaintiff's motion. See ECF Nos. 87 and 90-1. The United States objects to the requested interim judgment of accrued sanctions on two grounds. First, the United States restates its legal argument against imposition of sanctions that the Court previously rejected. See Chabad IV (finding the United States' argument unpersuasive and sanctions appropriate) and ECF No. 134. Second, the United States argues that interim judgment of accrued sanctions would further damage the United States' foreign policy interests, including its diplomatic efforts to reach a settlement with defendants on plaintiff's behalf. ECF No. 134 at 6-9. The Court agrees with plaintiff's analysis that this is not an enforcement action, and questions related to enforcement are not ripe for adjudication. ECF No 135 at 6. Nonetheless, the Court notes that the mechanism that bridges the action requested by plaintiff today and enforcement remains uncomplicated. Under the provisions of 28 U.S.C. § 1610(c), " no attachment or execution referred to in subsections (a) and (b) of this section shall be permitted until the court has ordered such attachment and execution after having determined that a reasonable period of time has elapsed following the entry of judgment and the giving of any notice required under section 1608(e) of this chapter." As the Court noted in its July 26, 2011 opinion, there are two requirements therein required for a plaintiff

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seeking to enforce judgment against a foreign state. Chabad III, 798 F.Supp.2d at 266. Specifically, notice that judgment has been entered and adequate opportunity to respond. Id. That analysis dealt with default judgment ordering specific performance requested by plaintiff. The enforcement question implicated in this instance is attachment and execution of defendants' property that may be identified within the United States. Therefore, the Court notes that as stipulated by plaintiff, concerns related to such enforcement are premature until such time as plaintiff has identified property to attach and execute, provided notice to defendants of such attachment and execution, and given defendants " reasonable time" to respond. Id. Given that defendants have had notice of plaintiff's efforts to liquidate monetary sanctions for more than a year, it is likely that plaintiff will be able to pursue attachment and execution[4].

         A. The Court's Authority to Issue Interim Judgment of Accrued Sanctions

         The Court has authority to issue sanctions. See Chabad III, 798 F.Supp.2d at 272-3, and again in Chabad IV. The Court has been asked to issue interim judgment, reducing accrued sanctions to a sum certain as of a specific date. Recalling that the Foreign Sovereign Immunities Act of 1976's (" FISA" ), Pub.L. No. 94-583, 90 Stat. 2891 (codified as amended at 28 U.S.C. § § 1330, 1332(a), 1391(f), 1441 (d), 1602-1611) " provisions governing jurisdictional immunity, on the one hand, and execution immunity, on the other, operate independently," Walters v. Industrial and Commercial Bank of China, Ltd., 651 F.3d 280 (2d. Cir. 2011), the Court here examines a predicate to execution immunity analysis[5]. The Court is not persuaded that the law should be applied differently now than when it ordered sanctions under the authority of the FSIA, as applied in FG Hemisphere Associates, LLC v. Democratic Republic of Congo, 637 F.3d 373, 394 U.S. App.D.C. 439 (D.C. Cir. 2011).

         The United States argues that the Court has reached the limit of the Court's authority under the FSIA. The United States offers no additional persuasive law, facts, or argument to show that the issue of enforcement is specifically ripe. ECF No. 134 at 7. The Court may be more proximal to the question of enforcement than when it ordered sanctions, and while it has not yet reached the question of enforcement, the Court notes the implications of this decision with regard to such.

         The United States argues further that plaintiff intends to pursue enforcement action and suggests that the Court should consider such intentions in ruling on this matter. The United States further admonishes " [t]he Court should be aware that these further enforcement actions would cause even greater harm to the United States' foreign policy interests, including the United States' interest in promoting a resolution of [this] dispute." ECF No. 134 at 7. The Court takes notice of the United States' concerns of foreign policy interests and discusses them more fully below.

         It is noteworthy that the United States does not address defendants' willful withdrawal from this matter and continued failure to either appear or comply with the Court's orders. Conversely, in every case cited by the United States in its statement

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of interest, defendants (or the party invoking protections under the FSIA) participated in litigation. SeeArgentine Republic v. Amerada Hess Shipping Corp, 488 U.S. 428, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989); FG Hemispheres Associates, LLC v. Democratic Republic of Congo, 637 F.3d 373, 394 U.S. App.D.C. 439 (D.C. Cir. 2011); Autotech Technologies LP v. Integral Research and Development Corp., 499 F.3d 737 (7th Cir. 2007); Connecticut Bank of Commerce v. Republic of Congo, 309 F.3d 240 (5th Cir. 2002) (The Democratic Republic of the Congo did not appear in an initial action, but then subsequently appeared and took part in litigation); S& S Machinery Co., v. Masinexportimport, 706 F.2d 411 ...


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