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Long-running Nazi art case returns to DC Circuit

The heirs of Jewish art dealers say their case can be heard in U.S. courts because their ancestors were not German nationals at the time of a forced sale to the Nazis.

WASHINGTON (CN) — Heirs of Jewish art dealers and Holocaust victims argued before the D.C. Circuit on Tuesday that Nazis took their ancestors' prized collection for a below-market rate. 

The long-running lawsuit alleges a forced sale of the Guelph Treasure — called the Welfenschatz in Germany — from a consortium of Jewish art dealers to the Prussian state in 1935 at the direction of the Nazi leader of Prussia, Hermann Goering, violated international law.

The treasure is a collection of religious relics that once belonged to the German royalty. It includes altars, crosses and various gilded vessels to store Christian relics. The collection contains German medieval-era relics dated between the 11th and 15th centuries. 

The Welfenschatz has been displayed at the Museum of Decorative Arts in Berlin for decades. The Prussian Cultural Heritage Foundation – or Stiftung Preussischer Kulturbesitz, as it is referred to in Germany – owns the collection and runs the museum. The German federal agency denies the heirs' assertions that the artifacts were sold during the Holocaust at below-market value and should be returned.

The case filed in 2015 by Alan Philipp, Gerald G. Stiebel and Jed R. Leiber marked the first time that a court required Germany to defend itself in the U.S. against charges of looted Nazi art. A federal judge ruled in 2017 that the case could be heard by American courts because it falls under an exception to the Foreign Sovereign Immunities Act involving property taken in violation of international law.

Though the D.C. Circuit would go on to advance the case, the Supreme Court in 2021 found no basis for the suit to have been filed in a U.S. court, but left it to the lower court to decide a different issue.

Senior U.S. District Judge Colleen Kollar-Kotelly considered on remand a new theory raised by the Holocaust victims' descendants, which hinged on the claim that their ancestors were not German nationals at the time of the sale because of how Jews were treated in the country. Kollar-Kotelly, a Bill Clinton appointee, dismissed the case last August, finding the descendants failed to provide adequate evidence supporting their contention.

On appeal again to the D.C. Circuit, the heirs contend that the case can be heard in U.S. courts because two of the art dealers who owned one of the consortium's member companies were Dutch nationals and the other dealers should be considered stateless.

"The Nazi state took the Welfenschatz by forced sale because the consortium of dealers were Jews," their brief to the D.C. Circuit states. "That expropriation violates international law because, in 1935, there was no legal or colloquial definition of 'German' that could conceivably include these victims."

The descendants argue that once Adolf Hitler became chancellor of Germany in 1933, Jews were legally no longer German nationals.  

"If you were to ask what the view of the expropriating state was in 1935 as to whether these three men were German nationals, the question answers itself," attorney Nicholas O'Donnell of Sullivan & Worcester, representing the plaintiffs, told a three-judge panel on Tuesday. "Germany could not be more emphatic that this group of people were constitutionally ineligible." 

U.S. Circuit Judge A. Raymond Randolph, a George H. W. Bush appointee, challenged O'Donnell's assertion that the individuals' nationality was at issue. 

"These individuals did not own anything, and their heirs didn't own anything except the interest in a corporation," Randolph said of the consortium. "The three corporations were German corporations that sold the artwork." 

U.S. Circuit Judge Cornelia Pillard, a Barack Obama appointee, asked O'Donnell whether he believed stateless individuals can assert expropriation claims. O'Donnell contended that because two of the art dealers had fled to the Netherlands before the sale, they were Dutch nationals who were taken advantage of by the German Nazis. 

Attorney Jonathan Freiman of Wiggin and Dana, representing the Prussian Cultural Heritage Foundation, or SPK by its German initials, focused on whether the heirs had even preserved the nationality argument. 

"Having lost in the Supreme Court, plaintiffs now try to revive their suit with new jurisdictional theories," the SPK's brief states. "Plaintiffs forfeited these alternative arguments years ago. Regardless of whether their complaint's allegations could support these arguments, litigants must do more than gesture at possible legal theories with vague allegations." 

Freiman told the three-judge panel that over the last eight years of litigation, the option to assert that the descendants do not fall under the domestic takings rule because the dealers were not Germans was available but not used. 

"They didn't address it," the attorney said. "They didn't say 'we're Dutch' or 'we're stateless.'"

Freiman emphasized Randolph's point regarding whether the art was taken or sold from the dealers or their companies. 

"It's clear that three German companies were the consortium members that own the property that was allegedly taken," Freiman said. "The plaintiffs themselves have admitted that this property was owned by German companies in Frankfurt." 

U.S. Circuit Judge J. Michelle Childs, an appointee of President Joe Biden, also sat on the panel. The judges did not indicate when a decision would be released. 

O’Donnell said in a statement after the hearing that his clients have maintained since the case was filed in 2015 that the Nazi government did not consider Jews as Germans.

"We are optimistic that the court will agree that a transaction such as this violates international law, consistent with the Supreme Court’s opinion from 2021," the attorney said. "For Germany, of all countries, to argue on Yom HaShoah that its Nazi predecessors regarded Jews as members of the German nation, or that Plaintiffs have not said so consistently for years, is outrageous. We look forward to the Court’s decision.”

Freiman did not immediately respond to a request for comment. 

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