In a surprise legal development that could impact on the Bush administration, a Manhattan federal appeals court last week quietly breathed new life into potential billion-dollar class-action lawsuits by Holocaust survivors against the governments of Poland and Austria over the loss of their property during and after World War II.
Last week, a three-judge panel of the U.S. Court of Appeals for the 2nd Circuit overturned a Brooklyn federal judge’s June 2002 decision to dismiss the case "Garb vs. Poland" on the grounds that Poland was protected by sovereign immunity.
The appeals panel, in a complex ruling, sent the case back to Judge Edward Korman and directed him to conduct what legal observers see as a virtually unprecedented investigation to try and determine what the U.S. Department of State position on sovereign immunity for Poland was after World War II.
Similarly, the appeals panel also sent the Austrian case, "Whiteman vs. Austria," back to Manhattan Federal Judge Shirley Wohl Kram for the same purpose.
The appeals panel apparently feels it is necessary to find out if the State Department would have sided with Poland and Austria, or backed the survivors’ lawsuits had they been filed 60 years ago, before the enactment of a 1976 federal law that spells out the conditions under which foreign countries can be sued in the United States.
The appeals panel directed Korman and Kramm to "coordinate their proceedings as much as possible."
The Whiteman case was brought by former Jewish residents of Austria who lost property under the Nazi regime in Austria from 1938 to 1945.
The Garb case was brought by former Jewish residents of Poland who lost their properties during WWII and then had them confiscated by Poland after the war.
In the appeals court ruling signed Aug. 6, the three judges (Amalya Kearse, Jose Cabranes and Chester Straub) said they are giving Holocaust survivors from Poland and Austria "the opportunity to present particular evidence relevant to the Department of State’s position on the sovereign immunity of the nation whose conduct is in question in their particular cases."
At issue, legal observers told The Jewish Week, is to what extent Poland and Austria were entitled to sovereign immunity during and after the war.
The U.S. government amended its position on "absolute" sovereign immunity in 1952 when the State Department announced that it would no longer recognize sovereign immunity in lawsuits dealing with commercial acts taken by foreign states.
"That eliminated the rule of absolute sovereignty, and said it should be decided on a case-by-case basis," contended Edward Klein, the Manhattan attorney representing the Polish Jewish survivors in the Garb case.
Then in 1976, Congress passed the Foreign Sovereign Immunities Act, or FSIA, where exemptions to sovereign immunity were codified.
"Each of these cases," the appeals court wrote, "raises the threshold questions whether and on what terms the federal courts have jurisdiction under the FSIA … to adjudicate the liability of sovereign states for conduct occurring prior to the statue’s enactment."
The appeals panel said that whether FSIA can be applied retroactively to alleged offenses by Poland and Austria before the law was enacted in 1976 "depended on whether the plaintiffs in a particular case could have legitimately expected to have their claims adjudicated in the United States prior to FSIA’s enactment."
"Such a determination," the panel said, "requires the District Court to conduct a factual inquiry into the sovereign immunity enjoyed by the particular state (Poland and Austria): prior to the enactment of the FSIA."
Attorney Mel Urbach, who also represents the Garb plaintiffs, hailed the appeals court decision.
"It’s a second bite at the apple," he said.
Urbach said the case was basically dead in June after Korman reluctantly dismissed it while sharply criticizing Poland’s actions in confiscating land.
Co-counsel Klein said, "It helps the case enormously. With the dismissal being reversed, the case is back on track.
Klein said a political lobbying effort aimed at the White House would be launched.
"I think it’s important that we explain to President Bush the justice behind the survivors’ claims of property restitution in Poland and to direct the State Department to work together with us to coordinate answers for the appeals court," he said.
So far, the State Department has sided with Poland and Austria against the survivor’s lawsuits.
Owen Pell of the firm White and Case, which represents Poland, called the appeals court directive "an interesting ruling."
But he added: "We believe that the record in this case already has established that Poland had absolute sovereign immunity [when the land was taken], and we believe that if there are further proceedings before Judge Korman that we will again prevail."
Attorney Charles Moerdler, on behalf of the Austrian Jews, said the appeals ruling is highly significant and predicted it will lead to major developments.
Legal observers told The Jewish Week that it was not clear how long the State Department research would take and what will happen after it is completed.