Opinion
98 Civ. 9186 (MBM); 97 Civ. 2262 (MBM).
December 19, 2000.
Melvyn I. Weiss, Esq., Deborah M. Sturman, Esq., Milberg, Weiss, Bershad, Hynes Lerach, New York NY, Michael D. Hausfeld, Esq., Paul T. Gallagher, Esq., Cohen, Milstein, Hausfeld, Toll, Washington D.C., Martin Mendelsohn, Esq., Verner, Lipfert, Washington D.C. Irwin Levin, Esq., Richard Shevits, Esq. Cohen Malad, Indianpolis IN, Arthur R. Miller, Esq. Cambridge MA, Burt Neuborne, Esq., New York University School of Law, New York, NY, Morris A. Ratner, Esq., Robert L. Leiff, Esq., Elizabeth J. Cabraser, Esq., Caryn Becker, Esq., Lieff, Cabraser, Heimann, Bernstein, New York, NY, Joseph D. Ament, Esq., Michael B. Hyman, Esq., Much, Shelist, Freed, Deneberg, Ament, Rubenstein, Chicago, IL, Barry A. Fisher, Esq., Fleishman, Fisher, Moest, Los Angeles, CA, Arnold Levin, Esq., Craig D. Ginsburg, Esq., Daniel Levin, Esq., Levin, Fishbein, Sedran, Berman, Philadelphia, PA, for Plaintiffs.
William M. Brodsky, Esq., Susan R. Kaplan, Esq., Baden, Kramer, Huffman, Brodsky, New York, NY, for Defendant, Winterthur Leben.
Robert M. Raive, Esq., David D. Howe, Esq., Gilbert, Segall, and Young, New York, NY, for Defendant, "Zurich" Versicherungs-Gesellschaft.
James M. Davis, Esq., Anita Tucker Smith, Esq., New York, NY, for Defendants, Basler, Versicherungs-Gesellschaft.
OPINION and ORDER
Plaintiffs have sought to represent a class of persons who were either victims of the German campaign of persecution and genocide against Jews before and during World War II, known as the Holocaust, or the heirs and beneficiaries of such victims. They allege that their assets in insurance and contractual rights under various insurance policies were "sold, confiscated, converted, and . . . unjustly retained" by the defendant insurance companies in the years prior to, during, and following the war. Plaintiffs have claimed that this conduct constitutes several violations of international law, including plundering of private property in connection with war, and crimes against humanity. Plaintiffs have also claimed that the conduct constitutes conversion; unjust enrichment; breach of insurance policies; breach of fiduciary duty; breach of special duty; breach of duty to disclose; and actionable bad faith; they allege conspiracy as well, and seek an accounting.
On October 20, 2000, plaintiffs moved to dismiss this suit voluntarily against most of the defendants because plaintiffs agreed to avail themselves of a non-judicial remedy recently created with the participation of the German and United States governments. Under what the parties refer to as the Berlin Agreements, the German government agreed to establish a foundation to compensate persons harmed by German companies during the Nazi era, as well as those who worked as slaves or forced labor for the Nazi regime. In return, plaintiffs in Nazi-era-based litigation have agreed to dismiss their claims against German companies, as defined in the Berlin Agreements. As applied to this case, the Berlin Agreements constitute, collectively, a settlement agreement. Plaintiffs' voluntary dismissal in this case excluded four defendants which, according to plaintiffs, do not qualify as German companies under the Berlin Agreements. Three of the excluded defendants, Winterthur Leben, "Zurich" Versicherungs-Gesellschaft, and Basler, Versicherungs-Gesellschaft (the "Swiss defendants") — all of which were incorporated in Switzerland and have their headquarters there — now move for an order declaring that they are nonetheless German companies under the Berlin Agreements. For the reasons stated below, the motion is denied.
I.
The Berlin Agreements comprise several documents. The first is the Agreement Between the Government of the Federal Republic of Germany and the Government of the United States of America concerning the Foundation "Remembrance, Responsibility, and the Future" (the "Executive Agreement"). (Def. Mem., Exh. A) The second is the Joint Statement on the Occasion of the Final Plenary Meeting Concluding International Talks on the Preparation of the Foundation. . . . (the "Joint Statement") (Def. Mem., Exh. B) In addition to the German and United States governments, the Joint Statement was signed by several additional nations, the representatives of German companies which participated in creation of the Foundation, the Conference on Jewish Material Claims Against Germany, Inc., and the lawyers representing plaintiffs in various Nazi-era cases against German companies. (Id.) The Berlin Agreements also include a letter from the German and United States governments to the signatories of the Joint Statement — one of several addressing specific aspects of the Executive Agreement — "express[ing] the common understandings" of the German and United States governments regarding the definition of "German companies" as found in the Executive Agreement, Joint Statement, and the newly enacted German law creating the Foundation. (Def. Mem., Exh. C)
The definition of German companies first appears in Annex C of the Executive Agreement, and the definition is repeated in Annex A of the Joint Statement. (Def. Mem., Exh. A B) It explains that German companies include "enterprises" that had their headquarters within the . . . the German Reich or that have their headquarters in the Federal Republic of Germany." (Id.) Annex C further explains that the "parents" of these "enterprises" also qualify as German companies, regardless of whether the parents have ever been headquartered within the German Reich or Federal Republic. (Id.)
The definition of German companies next appears in the "German companies" letter. (Def. Mem., Exh. C) This definition elaborates on the meaning of "enterprises that had their headquarters within . . . the German Reich or that have their headquarters in the Federal Republic." (Id.) The letter explains that "[a]ny enterprise incorporated or otherwise organized under German law shall be deemed . . . to have its headquarters in Germany." (Id.) It then explains that an "enterprise" includes its "current or former shareholders," but "only with respect to claims in [their] capacity as such . . . ." (Id.)
The letter also explains that such enterprises include the "branch offices" of non-German companies. (Id.) Because, as set forth in Annex C, the "parents" of "enterprises" qualify as German companies, the "German companies" letter goes on to say that the non-German company to which the branch belongs "shall be deemed a parent. . . ." (Id.) However, the letter adds, the non-German company to which these a branch belongs "shall be deemed a parent," and thus, a German company, "only with respect to the actions or inactions" of its German branches. (Id.)
The Swiss defendants argue that "it is a matter of common sense that at least some of [their] wrongdoing must be connected with the activities of their German branch offices." (Def. Mem. at 9) They contend for that reason that they qualify as German companies and "should be included in plaintiffs' voluntary dismissal" of their suit. (Id. at 10) The Swiss defendants might be correct that "at least some of [their] wrongdoing" is connected to the activities of their German branch offices. However, that would qualify them as German companies only with respect to that wrongdoing. It would not, as Swiss defendants appear to suggest, qualify them as German companies with respect to all of the plaintiffs' claims against them in this case.
The Swiss defendants' assertion that if some of their wrongdoing is connected to the activities of their German branch offices, then they should qualify as German companies with respect to all of their wrongdoing stems from an apparent misreading of part of the Executive Agreement's definition of German companies. The third paragraph of the Executive Agreement says, "'German companies' does not include foreign parent companies . . . in any case in which the sole alleged claim arising from National Socialist injustice or World War II has no connection with the German affihate and the latter's involvement in National Socialist injustice . . . ." (Def. Mem., Exh. A) The Swiss defendants suggest on the basis of that language that the only circumstance in which a non-German parent company does not qualify as a German company is when there is only one claim against the non-German parent, and that claim has no connection to the parent's German branch office. (Def. Mem. at 8) The more natural reading of that paragraph is that one circumstance in which a non-German parent does not qualify as a German company is when there is only one claim against that parent, and it has no connection to its German affiliate. Moreover, Swiss defendants' reading implies that when there is more than one claim against a non-German parent, and at least one of the claims relates to the activities of its German affiliate, the parent qualifies as a German company with respect to all claims against it. That result would contradict squarely the statements in the German companies letter that shareholders of German enterprises are German companies "only with respect to claims in [their] capacity as such . . .," and that the parents of German branch offices are German companies "only with respect to the actions or inactions" of their German branches.
Plaintiffs argue that their complaint alleges that the Swiss defendants engaged in "misconduct distinct from their German subsidiaries and which does not arise solely out of the misconduct of their German subsidiaries." (Pl. Mem. at 5) Plaintiffs cite several of the allegations in their complaint which, they contend, give rise to independent liability of the Swiss defendants. (Id.) For example, plaintiffs' cite their charge that although defendants retained premiums paid by Jews for health insurance, they stopped paying Jews' medical bills. (Id., Comp. ¶¶ 92-94) Plaintiffs do not specifically allege that the Swiss defendants stopped paying bills; the allegation refers to "Defendants" generally. That broad allegation, however, encompasses the Swiss defendants acting independent of their subsidiaries. In addition, plaintiffs intend to file an amended complaint which will "make it even clearer and more explicit" that the Swiss defendants engaged in misconduct independent of their German branches. (Comp. ¶ 6)
The Swiss defendants respond that plaintiffs' citation of several of the allegations in their complaint is "entirely conclusory," and that the complaint "lacks any factual allegations that the [Swiss] defendants engaged in any of th[ose] activities, or even that they issued one or more of the types of insurance listed, much less that they did so in a manner entirely separate and apart from the activities of their German branches and affiliates." (Def. Reply at 3) The Swiss defendants are correct that the complaint does not specifically allege that they stopped paying Jews' medical bills, for example — or that they even issued health insurance, or did so independent of their German branches. However, at this stage in plaintiffs' lawsuit, plaintiffs' allegations are specific enough. Fed.R.Civ.Pro. 8(a)(2) requires a "short and plaint statement of the claim showing that the pleader is entitled to relief . . . ." 2 Moore's Federal Practice, § 8.04(1) (Mathew Bender 3d ed.) Plaintiffs are not required to "set out in detail the facts on which the claim is based." (Id. They must only "provide a sufficient statement to put the opposing party on notice of the claim." (Id.) Here, Swiss defendants have notice that plaintiffs believe that, to use the same example, they sold health insurance to Jews, stopped paying their medical bills and that the Swiss defendants did so independent of their German branches. Moreover, plaintiffs' amended complaint will provide additional notice. That is enough information for Swiss defendants to prepare an answer as well as for trial. See Salahuddin v. Cuomo, 861 F.2d 40, 42 (2d Cir. 1988) ("The . . . principal function of pleadings under the Federal Rules is to give the adverse party fair notice of the claim asserted so as to enable him to answer and prepare for trial.") If there is discovery, and plaintiffs cannot produce evidence substantiating their claims that Swiss defendants committed unlawful acts independent of their German branch offices, then Swiss defendants can move for summary judgement with respect to those claims. Accordingly, Swiss defendants' motion for an order declaring that they qualify as German companies under the Berlin Agreements is denied.
Plaintiffs will serve and file an amended complaint by January 26, 2001.
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SO ORDERED.