Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-02782/USCOURTS-cand-3_07-cv-02782-3/pdf.json

Parties Involved:
Hana Hilsenrath
Plaintiff
Lior Hilsenrath
Plaintiff
Nama Hilsenrath
Plaintiff
Oliver Hilsenrath
Plaintiff
Isaiah Benjamin Hilsenrath
Plaintiff
Ella Hope Hilsenrath
Plaintiff
Saul Nathaniel Hilsenrath
Plaintiff
Brent Holtkamp
Defendant
Gerard Sautebin
Defendant
The Federal Attorney General of Switzerland
Defendant
The Living Trust of Melanie and Andre Hilsenrath
Plaintiff
The Swiss Confederation
Defendant

Document Text:

United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

HANA HILSENRATH, OLIVER

HILSENRATH, NAMA HILSENRATH,

LIOR HILSENRATH, ELLA HOPE

HILSENRATH, ISAIAH BENJAMIN

HILSENRATH, SAUL NATHANIEL

HILSENRATH, and THE LIVING TRUST OF

MELANIE AND ANDRE HILSENRATH,

Plaintiffs,

 v.

THE SWISS CONFEDERATION, THE

FEDERAL ATTORNEY GENERAL OF

SWITZERLAND, GERARD SAUTEBIN,

BRENT HOLTKAMP, and DOES 1–10,

Defendants. /

No. C 07-02782 WHA

ORDER GRANTING

DEFENDANTS’ MOTION TO

DISMISS AND VACATING

HEARING

INTRODUCTION

Pro se plaintiffs sued defendants for freezing plaintiffs’ assets during a criminal

investigation. Defendants the Swiss Confederation, the Federal Attorney General of

Switzerland, Gerald Sautebin, and Brent Holtkamp (the “Swiss Defendants”) move to dismiss

the complaint. Plaintiffs are Hana Hilsenrath, Oliver Hilsenrath, Nama Hilsenrath,

Lior Hilsenrath, Ella Hope Hilsenrath, Isaiah Benjamin Hilsenrath, Saul Nathaniel Hilsenrath,

and the Living Trust of Melanie and Andre Hilsenrath. The Swiss Defendants claim that

(i) the Court lacks personal jurisdiction over them because of improper service by plaintiffs;

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(ii) the Court lacks subject matter jurisdiction over plaintiffs’ claims because the Swiss

Defendants are entitled to sovereign immunity under the Foreign Sovereign Immunities Act;

(iii) the Court lacks personal jurisdiction over defendants Sautebin and Holtkamp due to these

defendants’ lack of sufficient contacts with the United States and California; (iv) plaintiffs’

claims are barred under the Act of State Doctrine; and (v) plaintiffs’ constitutional claims fail

because the acts complained of were taken by a foreign government in Switzerland. For the

reasons stated below, defendants’ motion to dismiss is GRANTED. 

STATEMENT

Plaintiffs are United States citizens who reside in California (Compl. at ¶ 16). 

In April 2005, the Swiss authorities issued an international arrest warrant for Oliver Hilsenrath

(id. at ¶¶ 121–22). In May 2005, the Swiss Confederation ordered the freezing of assets held by

the Hilsenraths in two banks (Credit Suisse and UBS) because it was suspected that the assets

were stolen from a California-based company. Defendant Holtkamp, working on the behalf of

the Swiss Confederation, seized documents held by the two banks to trace allegedly illicit

financial dealings and business relationships in numerous countries (id. at ¶¶ 40–42, 56). 

According to the complaint, in May 2005, this Court first sent Mr. Holtkamp its finding

that the Hilsenraths’ funds in Switzerland were not, in fact, the ill-begotten gains of theft. 

Mr. Holtkamp and his colleagues nonetheless continued to investigate the Hilsenraths’ business

partners and maintain its freeze on their assets. In July and August 2005, Oliver Hilsenrath

traveled from the United States to Switzerland and was interrogated by Swiss officials. At the

conclusion of the interrogations, Mr. Holtkamp sent letters to the United States and

Mr. Hilsenrath stating that he did not have reason to believe that the Hilsenraths had illegally

transferred stolen funds to Switzerland. In those letters, Mr. Holtkamp promised to lift the

freeze on the Hilsenraths’ assets within three days; the funds, however, have remained frozen

until this day (id. at ¶¶ 43–48).

That same summer, two unidentified agents of the Swiss Confederation visited various

countries to investigate Hilsenrath business partners allegedly engaged in money-laundering. 

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These agents told local authorities that they were investigating an international money

laundering ring, where eleven million illegally obtained American dollars were laundered

through Switzerland. This investigation caused substantial financial damage and

embarrassment to plaintiffs. In 2006, the United States government and district court sent

letters to the Swiss government, notifying them that the freeze was not warranted by any

prosecution pending in the United States. The Swiss Defendants remained silent and the funds

were never released to their owners (id. at ¶¶ 49–55). 

On February 6, 2007, however, Mr. Hilsenrath entered into a written plea agreement

with the government. Mr. Hilsenrath promised in the plea agreement he would “repatriate all

remaining money and assets presently held by the Swiss authorities or frozen by the Swiss

authorities in other jurisdictions, which [he estimated] as approximately $2,000,000. [He would]

deposit the money in an escrow account with the Court pending further order of the Court

distributing the assets. [He would] withdraw any claim to these assets and [would] file no

further actions in the future concerning the funds” (CR 03-00213, Doc. 366). He then pled

guilty to securities fraud and tax evasion.

Plaintiffs commenced action on May 27, 2007, alleging the following causes of action

against the Swiss Defendants: (i) deprivation of their assets collectively and indiscriminately in

violation of the Fourth and Fifth Amendments; (ii) unreasonable search and seizure in violation

of the Fourth and Fifth Amendments; (iii) recovery of lost property in violation of the Fifth

Amendment; (iv) recovery of lost business opportunities abroad in violation of the Fifth

Amendment; (v) personal damages to Hana Hilsenrath, such as fear, anguish, illness, and the

loss of the majority of her personal wealth; (vi) recovery of damages as the result of a breach in

due process in violation of the Sixth Amendment; (vii) recovery of legal fees in relation to the

Swiss freezes; (viii) deprivation of plaintiffs’ right to liberty in violation of the Fifth and

Fourteenth Amendments; and (ix) losses as the result of the forced liquidation of trust funds in

violation of the Fifth Amendment (id. at ¶¶ 89–134). The Hilsenraths seek millions of dollars

due to loss from the frozen funds, loss of business, legal fees, and personal damages (id. at ¶¶

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138–47). No lawyer represents any plaintiff. Mr. Hilsenrath is reminded once again that he

cannot represent anyone but himself. The other pro se plaintiffs must speak for themselves.

On July 9, 2007, the Court entered judgment against Mr. Hilsenrath in the criminal case. 

He was convicted of committing securities fraud and income tax evasion (CR 03-00213,

Doc. 387). 

ANALYSIS

Defendants claim that plaintiffs lack subject-matter jurisdiction. The Court agrees. A

motion to dismiss may be asserted on grounds of lack of subject-matter jurisdiction. FRCP

12(b)(1). Plaintiffs erroneously argue that it is the district court’s discretion to award sovereign

immunity (Opp. at 3). The Supreme Court has held that the Foreign Sovereign Immunities Act

is “the sole basis for obtaining jurisdiction over a foreign state in our courts.” Argentine

Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989). The FSIA provides that

“a foreign state shall be immune from the jurisdiction of the courts of the United States and of

the States,” except as provided in Sections 1605 (general exceptions to the jurisdictional

immunity of a foreign state) and 1607 (counterclaims). 28 U.S.C. 1604. The FSIA “presumes

immunity. Jurisdiction is limited to cases in which the foreign state is not entitled to immunity

either under one of the enumerated exceptions contained in 28 U.S.C 1605 and 1607, or under

any applicable international agreement. If the claim does not fall within one of the exceptions,

the court cannot entertain the action and must dismiss the action against the foreign state for

lack of jurisdiction.” Security Pacific Nat. Bank v. Derderian, 872 F.2d 281, 285 (9th Cir.

1989).

A “foreign state” includes “a political subdivision of a foreign state or an agency or

instrumentality of a foreign state.” 28 U.S.C. 1603(a). An “agency or instrumentality of a

foreign state” means any entity that is “a separate legal person, corporate or otherwise,” “an

organ of a foreign state or political subdivision thereof,” and “is neither a citizen of a State of

the United States.” 28 U.S.C. 1603(b). Here, the Swiss Confederation, which is the federal

government of Switzerland, is a foreign state. The Office of the Attorney General is an agency

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or instrumentality of Switzerland. Similarly, Defendants Holtkamp, who is a Federal Attorney

employed by the Office of the Attorney General, and Sautebin, who is a Federal Examining

Magistrate, are agencies or instrumentalities of a foreign state. None of them is a United States

citizen (Holtkamp Decl. at ¶¶ 2, Sautebin Decl. at ¶¶ 2–3). If plaintiffs’ claims do not fall into

one of the exceptions, this Court cannot exercise jurisdiction over defendants.

Defendants claim that, because plaintiffs fail to allege any facts demonstrating that any

exception to the FSIA applies, plaintiffs’ claims should be entirely dismissed. The exceptions

to sovereign immunity are: (i) the foreign state has waived its immunity; (ii) the action is based

upon a commercial activity; (iii) rights in property were taken in violation of international law

and the property had some nexus to commercial activity in the United States; (iv) rights in

property in the United States acquired by succession or succession are in issue; (v) money

damages are sought against a foreign state for personal injury or death, or damage to or loss of

property occurring in the United States; (vi) the action is brought to enforce an arbitration

agreement between plaintiffs and defendants; and (vii) money damages are sought against a

foreign state for personal injury or death that was caused by torture, extrajudicial killing,

aircraft sabotage, or hostage taking. 28 U.S.C.1605(a)(1)–(7). This order does not discuss the

other exceptions under 28 U.S.C. 1605 and 1607 because they deal with maritime liens,

mortgages, and counterclaims.

Exceptions (iv), (vi), and (vii) clearly do not apply. The rights in property in the

United States acquired by succession or gift or rights in immovable property situated in the

United States are not in issue. This action is not being brought to enforce an arbitration

agreement between plaintiffs and defendants. Finally, plaintiffs are not seeking money damages

for personal injury or death caused by torture, extrajudicial killing, aircraft sabotage, or hostage

taking.

Under 28 U.S.C. 1605(a)(1), a federal court would have jurisdiction if “the foreign state

has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of

the waiver which the foreign state may purport to effect except in accordance with the terms of

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the waiver.” In their moving papers, the Swiss Defendants claim that they did not waive their

sovereign immunity. Plaintiffs counter that defendants waived their immunity on

August 27, 2007, when the Swiss Confederation “served Plaintiffs with an appealable order in

the matter of its so-called criminal action against Plaintiffs via the US Department of

Justice/Criminal Division” (Opp. at 8). Plaintiffs cite Siderman de Blake v. Republic of

Argentina, 965 F.2d 699 (9th Cir. 1992), which held that a foreign state implicitly waived its

sovereign immunity when evidence showed that it deliberately involved United States courts in

its efforts to persecute the plaintiff. 

The Ninth Circuit, however, draws a distinction between Siderman and cases like the

one before this Court. Diplomatic processes carried out through the powers of the executive —

not the judicial — branch do not constitute a waiver of sovereign immunity. Blaxland v.

Commonwealth Director of Public Prosecutions, 323 F.3d 1198, 1206 (9th Cir. 2003). 

In Blaxland, “the Australian government did not itself apply to our courts for assistance but

instead invoked its rights under the Extradition Treaty by applying to the executive branch of

our government [to secure the plaintiff’s extradition].” Ibid. Here, the Swiss Department of

Justice and Police transmitted a request for service to the United States Department of Justice,

the executive branch, pursuant to Article 22 of the Treaty Between the United States of America

and the Swiss Confederation on Mutual Assistance in Criminal Matters (Opp. Exh. H). 

This order finds that the request was part of a diplomatic process carried out through the powers

of the executive branch and therefore did not constitute a waiver of sovereign immunity.

There is also the commercial-activity exception. The foreign state is not immune if

“the action is based upon a commercial activity carried on in the United States by the foreign

state; or upon an act performed in the United States in connection with a commercial activity of

the foreign state elsewhere; or upon an act outside the territory of the United States in

connection with a commercial activity of the foreign state elsewhere and that act causes a direct

effect in the United States.” 28 U.S.C. 1605(a)(2). The Supreme Court has held that “a state is

immune from the jurisdiction of foreign courts as to its sovereign or public acts . . . but not as to

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those that are private or commercial in character.” Saudi Arabia v. Nelson, 507 U.S. 349,

359–60 (1993). A foreign state engages in commercial activity when it exercises “only those

powers that can also be exercised by private citizens, as distinct from those powers peculiar to

sovereigns. Put differently, a foreign state engages in commercial activity for purposes of the

restrictive theory [of foreign sovereign immunity] only where it acts in the manner of a private

player within the market.” Id. at 360 (quotations omitted). The Swiss Defendants did not act as

private players in the market. Rather, they exercised powers peculiar to sovereigns —

they investigated Mr. Hilsenrath’s criminal activities in Switzerland and other countries, issued

a warrant for his arrest, and froze his assets pending criminal investigation. Plaintiffs’ claims

do not fall under the commercial-activity exception.

Another exception to foreign sovereign immunity is the “takings exception” —

when there were “rights in property taken in violation of international law are in issue and that

property or any property exchanged for such property is present in the United States in

connection with a commercial activity carried on in the United States by the foreign state;

or that property or any property exchanged for such property is owned or operated by an agency

or instrumentality of the foreign state and that agency or instrumentality is engaged in a

commercial activity in the United States.” 28 U.S.C. 1605(a)(3). The Ninth Circuit has held

that, “[a]t the jurisdictional stage, we need not decide whether the taking actually violated

international law; as long as a claim is substantial and non-frivolous, it provides a sufficient

basis for the exercise of our jurisdiction.” Altmann v. Republic of Austria. 317 F.3d 954, 968

(9th Cir. 2002). Here, plaintiffs’ claims are not “substantial and non-frivolous.” The Swiss

Defendants froze plaintiffs’ asset during the course of a criminal investigation. Mr. Hilsenrath

later entered a written plea agreement with the government in which he pled guilty to securities

fraud and tax evasion. According to the terms of his plea agreement, Mr. Hilsenrath would

“repatriate all remaining money and assets presently held by the Swiss authorities or frozen by

the Swiss authorities in other jurisdictions, which [he estimated] as approximately $2,000,000.

[He would] deposit the money in an escrow account with the Court pending further order of the

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Court distributing the assets. [He would] withdraw any claim to these assets and [would] file no

further actions in the future concerning the funds.” It is frivolous to claim that freezing assets

during a legitimate criminal investigation violated international law. 

Furthermore, the frozen assets remained in Switzerland and other European countries;

they were not “present in the United States in connection with a commercial activity carried on

in the United States by the foreign state.” Nor were they “owned or operated by an agency or

instrumentality of the foreign state and that agency or instrumentality is engaged in a

commercial activity in the United States.” Credit Suisse and UBS held the assets when the

Swiss Defendants ordered the freeze. These two private banks are not agencies or

instrumentalities of Switzerland because they are not organs of a foreign state.

According to 28 U.S.C. 1605(a)(5), another possible exception is when “money

damages are sought against a foreign state for personal injury or death, or damage to or loss of

property, occurring in the United States and caused by the tortious act or omission of that

foreign state or of any official or employee of that foreign state while acting within the scope of

his office or employment; except this paragraph shall not apply to — (A) any claim based upon

the exercise or performance or the failure to exercise or perform a discretionary function

regardless of whether the discretion be abused.” Under the plain language of the statute, this

exception does not apply if the plaintiff’s claim were based upon the exercise of discretion by

the foreign state (or official or employee while acting within the scope of his office or

employment). In determining whether the acts of the foreign state or officials are within the

discretionary function exception, the Ninth Circuit considers two factors: (i) whether the

government employee had any discretion to act or if there were an element of choice as to

appropriate conduct; and (ii) whether the decisions were grounded in social, economic, and

political policy, concentrating on the nature of the conduct, rather than the status of the actor. 

Risk v. Halvorsen, 936 F.2d 393, 395 (9th Cir. 1991). The Ninth Circuit further held in Risk

that, “[a]lthough these acts may constitute a crime under California law, it cannot be said that

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every conceivably illegal act is outside the scope of the discretionary function exception.” Id. at

397.

Here, the Swiss Confederation, the Federal Attorney General of Switzerland,

Mr. Sautebin, and Mr. Holtkamp froze plaintiffs’ assets in the course of a criminal

investigation. Mr. Sautebin and Mr. Holtkamp were acting within the scope of their offices;

they were in charge of the criminal investigation against the Hilsenraths. They had discretion in

deciding whether they would conduct the investigation and whether or not to effect the freeze. 

Furthermore, the decision to enforce Swiss criminal law was grounded in social, economic,

and political policy. Because this order finds that defendants’ actions were discretionary and

grounded in public policy, the tortious activity exception to the FSIA does not apply.

Aside from these statutory exceptions, plaintiffs argue that the principle of jus

cogens and the Second Hickenlooper Amendment, 22 U.S.C. 2370(e)(2), prohibit the Swiss

Defendants from asserting sovereign immunity in violation of international law. This order

finds that plaintiffs’ arguments are misplaced. First, the Ninth Circuit has explicitly stated that

“[t]he fact that there has been a violation of jus cogens does not confer jurisdiction under the

FSIA.” Siderman, 965 F.2d at 719. Second, the Second Hickenlooper Amendment also does

not apply. The Hickenlooper Amendment states:

Notwithstanding any other provision of law, no court in the United

States shall decline on the ground of the federal act of state

doctrine to make a determination on the merits giving effect to the

principles of international law in a case in which a claim of title or

other right to property is asserted by any party including a foreign

state (or a party claiming through such state) based upon (or traced

through) a confiscation or other taking after January 1, 1959, by an

act of that state in violation of the principles of international law, including the principles of compensation and the other standards

set out in this subsection: Provided, That this subparagraph shall

not be applicable (1) in any case in which an act of a foreign state

is not contrary to international law or with respect to a claim of

title or other right to property acquired pursuant to an irrevocable

letter of credit of not more than 180 days duration issued in good

faith prior to the time of the confiscation or other taking, or (2) in

any case with respect to which the President determines that

application of the act of state doctrine is required in that particular

case by the foreign policy interests of the United States and a

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suggestion to this effect is filed on his behalf in that case with the

court.

The italicized portions indicate why the Hickenlooper Amendment does not apply to the facts of

this case. Plaintiffs’ assets were not frozen in violation of the principles of international law;

the Swiss Defendants had ordered the freeze because Mr. Hilsenrath was under a criminal

investigation. Moreover, even though the Ninth Circuit has not directly addressed this issue,

other circuits have held that the Hickenlooper Amendment only applies to property located in

the United States. See, e.g., Empresa Cuvana Exportadora De Azucar y Sus Derivados v.

Lamborn & Co., 652 F.2d 231, 237 (2d Cir. 1981); Compania de Gas de Nuevo Laredo, S.A. v.

Entex, Inc., 686 F.2d 322, 327 (5th Cir. 1982). Here, the property has remained in Switzerland

and the other European countries.

Given the Court’s conclusion that defendants are immune from suit under the FSIA,

it does not need to reach defendants’ other arguments regarding improper service,

insufficient contacts, the Acts of State Doctrine, and plaintiffs’ failed constitutional law claims.

CONCLUSION

The FSIA provides the exclusive means for a United States federal court to exercise

jurisdiction over a foreign state and its instrumentalities. Unless a claim falls under one of the

numerous FSIA exceptions, a court will lack subject-matter jurisdiction over the claim. 

Here, plaintiffs’ claims did not fall under any of the statutory exceptions. The Court has no

subject-matter jurisdiction over their claims. Defendants’ motion to dismiss is therefore

GRANTED with prejudice. The hearing set for November 1, 2007, is hereby VACATED.

IT IS SO ORDERED.

Dated: October 23, 2007. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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