## Facts

- Arnold Bernstein, a German-Jewish shipowner, alleged he owned stock in the Red Star Line, a German corporation.
- He alleged that in 1937 Nazi authorities imprisoned him and compelled him, under duress, to execute documents transferring his shares to a Nazi designee.
- He alleged the designee later transferred the shares and corporate control to N.V. Nederlandsche-Amerikaansche Stoomvaart-Maatschappij (Holland-America Line), which ultimately acquired Red Star Line assets.
- Bernstein sued in the Southern District of New York asserting conversion and related claims based on the asserted invalidity of the Nazi-compelled transfer.
- In an earlier appeal in the same litigation, the Second Circuit directed Bernstein to refrain from pleading allegations that would require a U.S. court to pass on the validity of acts of officials of the German government, citing the absence of a definitive expression of executive policy.
- After that earlier decision, the State Department issued Press Release No. 296 (including an April 13, 1949 letter from Acting Legal Adviser Jack B. Tate) stating U.S. opposition to discriminatory confiscations, a policy of undoing Nazi forced transfers and restituting identifiable property, and an executive policy to relieve U.S. courts from restraint in passing on the validity of Nazi officials’ acts in such restitution claims.
- Bernstein petitioned the Second Circuit to amend its prior mandate in light of the State Department’s statement.

## Issues

1. Whether an explicit executive-branch policy statement regarding restitution for Nazi forced transfers justified amending a prior appellate mandate that had restricted pleadings to avoid passing on the validity of Nazi governmental acts under act-of-state concerns.

## Decision

- The Second Circuit granted the petition to amend its prior mandate.
- The court held that the newly articulated executive policy removed the basis for the earlier restraint and that the prior mandate should no longer constrain the district court from considering allegations challenging Nazi officials’ acts.

## Legal Principles

- Act-of-state-based judicial restraint may be informed by the absence or presence of a definitive executive policy bearing on foreign-relations consequences.
- Where the Executive expressly indicates that U.S. courts should be free to adjudicate restitution claims involving identifiable property taken through Nazi forced transfers, courts may proceed without the earlier act-of-state restraint tied to foreign-policy concerns.
- Appellate mandates restricting pleadings can be amended when the predicate for the restriction—here, the lack of a definitive expression of executive policy—materially changes.

## Conclusion

The Second Circuit amended its earlier mandate after the State Department expressly stated that U.S. courts should not be restrained from adjudicating the validity of Nazi forced transfers in restitution claims, thereby permitting Bernstein to proceed without the prior act-of-state pleading limitation.


Bernstein v. N.V. Nederlandsche-Amerikaansche Stoomvaart-Maatschappij, 210 F.2d 375 (2d Cir. 1954)