Court Opinion

ID: 3031204
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:45:36.828118+00
Date Added: 2024-06-11T11:44:42.868808
License: Public Domain

FILED
                            NOT FOR PUBLICATION                              DEC 29 2009

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

EMIL ALPERIN; et al.,                            No. 08-16060

             Plaintiffs - Appellants,            D.C. No. 99-cv-04941-MMC

  v.
                                                 MEMORANDUM *
VATICAN BANK, aka Institute of
Religious Works aka Instituto per le Opere
Di Religione (IOR),

             Defendant - Appellee.

                   Appeal from the United States District Court
                      for the Northern District of California
                   Maxine M. Chesney, District Judge, Presiding

                     Argued and Submitted December 10, 2009
                             San Francisco, California

Before: B. FLETCHER, THOMAS and N.R. SMITH, Circuit Judges.

       Survivors and descendants of victims of the Holocaust, and associated

organizations (collectively referred to herein as “Alperin”), appeal the dismissal of

their purported class action lawsuit against the Vatican Bank, also known by its

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
official title Istituto per le Opere di Religione (the “IOR”). On a previous appeal,

we held that the political question doctrine barred broad allegations of violation of

international law but did not bar certain property claims. Alperin v. Vatican Bank,

410 F.3d 532 (9th Cir. 2005). We are now asked whether the IOR is a foreign

sovereign protected by the Foreign Sovereign Immunity Act (the “FSIA”), and if

so, whether Alperin’s claims fall within the international takings exception or

commercial takings exception to the FSIA’s jurisdictional bar. We have

jurisdiction under 28 U.S.C. § 1291, and we affirm.

       “The existence of sovereign immunity and subject matter jurisdiction under

the [FSIA] are questions of law that [this Court] review[s] de novo.” Af-Cap, Inc.

v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080, 1085–86 (9th Cir. 2007)

(internal quotation marks and citation omitted) (alteration in original). A District

Court’s interpretation of foreign law is also reviewed de novo. Brady v. Brown, 51
F.3d 810, 816 (9th Cir. 1995). On a motion to dismiss, the court “assume[s] that [it

has] truthful factual allegations before [it].” Saudi Arabia v. Nelson, 507 U.S. 349,

351 (1993). “To survive a motion to dismiss, a complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

face.’” Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 1937, 1949 (2009) (quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

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                                           I

      The district court did not err in holding that the IOR is an organ of a foreign

state entitled to FSIA immunity. In assessing whether an entity is

an organ of a foreign state, see 28 U.S.C. § 1603(b)(2), we “[t]ak[e] a holistic

view” of the defendant, Cal. Dep’t of Water Res. v. Powerex Corp., 533 F.3d 1087,

1102 (9th Cir. 2008). In doing so, we examine

      “[1] the circumstances surrounding the entity’s creation, [2] the purpose
      of its activities, [3] its independence from the government, [4] the level
      of government financial support, [5] its employment policies, and [6] its
      obligations and privileges under state law. An entity may be an organ of
      a foreign state even if it has some autonomy from the foreign
      government.”

Powerex, 533 F.3d at 1098 (quoting EIE Guam Corp. v. Long Term Credit Bank of

Japan, Ltd., 322 F.3d 635, 640 (9th Cir. 2003)) (internal quotation marks omitted).

      A showing of organ status may be based exclusively on foreign law. See,

e.g. Gates v. Victor Fine Foods, 54 F.3d 1457, 1460–64 (9th Cir. 1995) (using

Alberta statutes and regulation to determine defendant’s organ status). But see

EOTT Energy Operating Ltd. P’ship v. Winterthur Swiss Ins. Co., 257 F.3d 992,

999 (9th Cir. 2001) (remanding for “factual inquiry” where record “incomplete[]”

and contained “ambiguities”). The defendant bears the burden of establishing a

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prima facie case of immunity. Phaneuf v. Republic of Indonesia, 106 F.3d 302,

306 (9th Cir. 1997).

      Through its affidavit showing its status, structure, and role under Vatican

law, the IOR made a prima facie case that it is an agency or instrumentality of the

Vatican, and thus entitled to FSIA immunity. The affidavit shows that the modern

IOR was created by the Pope as a public and independent juridic entity that is

responsible for managing assets placed in its care for the purpose of supporting

religious or charitable works. The highest administrative level of the IOR is

composed of high-ranking government officials all appointed by the Vatican. The

IOR has exclusive control over several obligations created and assigned by Vatican

law. See Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 848 (9th Cir.

2000) (emphasizing monopoly over task); Corporacion Mexicana de Servicios

Maritimos, S.A. de C.V. v. M/T Respect, 89 F.3d 650, 655 (9th Cir. 1996) (same).

And the IOR is immune from suit in Italy as a foreign sovereign. Alperin did not

challenge the affidavit or provide a counter-affidavit. Therefore, we conclude that

the district court correctly held that the IOR established a prima facie case that it

was an organ of a foreign state entitled to FSIA immunity.

      Contrary to Alperin’s argument, the historical origins and activities of the

IOR are not relevant to this inquiry. Dole Food Co. v. Patrickson, 538 U.S. 468,

                                           4
480 (2003) (“[I]nstrumentality status is determined at the time of the filing of the

complaint.”). Accordingly, this court has not considered evidence pertaining to the

IOR’s organ status prior to 1999, when the first Complaint was filed. The IOR

need not be the Vatican Central Bank for it to have a public purpose. See Powerex,
533 F.3d at 1098. Its involvement in commercial affairs does not automatically

render the IOR non-governmental. EIE Guam, 322 F.3d at 641. Nor is it

necessary that the Vatican maintain day-to-day control over the IOR’s activities.

Gates, 54 F.3d at 1461. Notwithstanding the IOR's commercial activities and

arms-length supervision by the Vatican, the record, viewed holistically, supports

the district court's conclusion that the IOR is an agency or instrumentality of the

Vatican.

                                           II

      The district court did not err in holding that the international takings

exception does not apply to remove FSIA immunity. Where the defendant

sovereign succeeds in “establish[ing] a prima facie case of immunity, the burden of

production shifts to the plaintiff to offer evidence that an exception applies.”

Phaneuf, 106 F.3d at 307.

      FSIA’s international taking exception provides that:

                                           5
      A foreign state shall not be immune from the jurisdiction of the courts
      of the United States . . . in any case . . . (3) in which rights in property
      taken in violation of international law are in issue and [1] 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 [2] 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).

      Of critical importance to any analysis under this exception is that plaintiffs

not only must plead a right to property taken in violation of international law—and

we do not reach the question of whether they have in this case—but that they must

plead a jurisdictional nexus to the United States. Under either prong of

§ 1605(a)(3), this involves pleading the current status of the property at issue (or

any property exchanged for such property)—that it either is present in the United

States or is owned or operated by an agency or instrumentality of the foreign state.

      While we recognize that it could be difficult to prove that a fungible article

such as the gold alleged to have been taken in this case is currently present in the

United States, Alperin did not even make such an allegation in the pleadings.

Therefore, assuming without deciding that plaintiffs may meet their burden under

the first prong through pleadings about the commercial activities of an agency or

instrumentality of a foreign state rather than the foreign state itself, Alperin failed

                                            6
to do so in this case. Cf. Garb v. Republic of Poland, 440 F.3d 579 (2d Cir. 2006)

(holding that only the first clause of the takings exception applies where the

jurisdictional nexus is based on allegations regarding the commercial activity of

the Ministry of the Treasury, since the Ministry is the state itself, not an agency or

instrumentality). But see 28 U.S.C. § 1603(a) (“A ‘foreign state’ . . . includes . . .

an agency or instrumentality of a foreign state . . . .”).

       Nor, under the second prong of § 1605(a)(3), did Alperin sufficiently plead

that the IOR has current ownership of the expropriated property or property

exchanged for expropriated property. At most, Alperin asserted that “defendants”

(in this multi-defendant case) “retained” some portion of the Ustasha Treasury,

after other portions were laundered in the 1940s. They never allege that the

expropriated property “retained” by the defendants includes property that properly

belongs to the named plaintiffs. This is insufficient where the FSIA requires

present ownership of the expropriated property (or any property exchanged for

such property).

                                            III

       The district court also did not err in determining that the commercial activity

exception does not remove FSIA immunity in this case. A second exception to

FSIA is for cases “in which the action is based upon a commercial activity carried

                                             7
on in the United States by the foreign state” or based “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).

      Nor does Alperin’s complaint meet either prong of the commercial activities

exception. Plaintiffs allege that a different defendant used funds laundered by the

IOR to establish publishing houses and other commercial activities in Chicago, and

they argue that the IOR was enabled to store gold in the United States and trade it

on U.S. markets because its gold collection was enhanced by the Ustasha Treasury.

These alleged commercial activities in the United States are too tangentially related

to their legal claims to be considered “the basis for [the] suit.” Nelson, 507 U.S. at

358; see also Alder v. Fed’l Republic of Nigeria, 219 F.3d 869, 874–75 (9th Cir.

2000) (analyzing claim based on money-laundering under direct effects prong

only). Nor are the effects that Alperin alleges—the cumulative impact of Ustasha

gold on the IOR’s holdings and on its commercial activities in the United States

over a decade later; and the results of another party allegedly investing laundered

funds in Chicago—sufficiently direct to fall within this exception. See Corzo v.

Banco Cent. de Reserva del Peru, 243 F.3d 519, 525 (9th Cir. 2001) (holding that

“secondary or incidental results” do not count under direct effects prong).

                                           8
                                        IV

      The district court correctly dismissed the complaint. Given our reasoning,

we need not–and do not–reach any other issue raised by the parties. All motions

for judicial notice filed by both parties are DENIED.

      AFFIRMED.

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