## Facts

- Jewish art dealers in Frankfurt formed a consortium that purchased the Welfenschatz, a collection of medieval religious art, in 1929.
- The consortium exhibited the collection internationally, sold some pieces, and stored the remainder in Amsterdam.
- After the Nazi rise to power, the dealers allegedly suffered targeted persecution and severe economic pressure.
- In 1935, the consortium allegedly made a coerced sale of the Welfenschatz to the Nazi-controlled State of Prussia for about 35% of its asserted value.
- The collection ultimately came under German cultural institutions and was held and displayed by Stiftung Preussischer Kulturbesitz (SPK) in Berlin.
- The heirs sought restitution through German processes, including an advisory commission, without success.
- The heirs sued Germany and SPK in federal court in the District of Columbia on state-law property and restitution theories, seeking return of the collection or compensation.
- Germany and SPK moved to dismiss based on FSIA immunity, failure to exhaust remedies in Germany, and foreign-policy preemption; the district court denied the motion.

## Issues

1. Whether the FSIA expropriation exception, 28 U.S.C. § 1605(a)(3), applied because the suit concerned “rights in property taken in violation of international law.”
2. Whether the domestic takings rule barred FSIA jurisdiction where the alleged taking involved a state’s conduct toward its own nationals, and whether allegations connecting the taking to genocide altered that analysis.
3. Whether plaintiffs were required to exhaust remedies in German courts before proceeding in a U.S. court.
4. Whether federal foreign policy regarding Holocaust-era restitution preempted the plaintiffs’ state-law claims.

## Decision

- The D.C. Circuit largely affirmed the denial of the motion to dismiss.
- The court held the complaint plausibly alleged a taking “in violation of international law” for purposes of § 1605(a)(3) because the coerced sale was alleged to be part of genocidal persecution.
- The court concluded the domestic takings rule did not defeat jurisdiction on the pleadings where the taking was alleged to be integral to genocide against German Jews.
- The court rejected any jurisdictional or prudential exhaustion requirement absent a statutory mandate in the FSIA.
- The court rejected foreign-policy preemption, finding no clearly controlling federal policy that displaced state-law restitution claims at the pleading stage.

## Legal Principles

- Under the FSIA, sovereign immunity can be overcome at the pleading stage if a complaint plausibly fits an enumerated statutory exception, including § 1605(a)(3) for certain property takings.
- For § 1605(a)(3), a plaintiff may satisfy the “taken in violation of international law” element by plausibly alleging the taking was integral to genocide or similar international-law violations, not merely a routine domestic taking.
- The domestic takings rule does not categorically foreclose FSIA expropriation-exception jurisdiction when the alleged taking is inseparable from genocide perpetrated by a state against its own nationals (as pleaded).
- The FSIA does not impose a general exhaustion requirement for claims proceeding under the expropriation exception; courts should not add one without congressional direction.
- State-law restitution and property claims are not preempted absent a specific, clearly applicable federal policy or scheme that conflicts with, or displaces, the asserted state-law causes of action.

## Conclusion

The court permitted heirs’ claims over Holocaust-era art to proceed past dismissal, holding that the complaint plausibly alleged an FSIA expropriation-exception taking tied to genocide, and that neither exhaustion nor foreign-policy preemption warranted dismissal at the pleading stage.


Philipp v. Federal Republic of Germany, 894 F.3d 406 (D.C. Cir. 2018)