Must a federal court hearing state law claims brought under the Foreign Sovereign Immunities Act apply the forum state’s choice-of-law rules or federal common law to determine what substantive law governs the claims at issue?
This case asks the Supreme Court to consider whether a federal court should apply the forum state's choice-of-law rules or federal common law in cases brought against a foreign state under the Foreign Sovereign Immunities Act (“FSIA”). Petitioner David Cassirer contends that the forum state's choice-of-law rules should apply, arguing that Congress intends state law to apply so that results in cases against a foreign national and against a foreign state are the same. Thus, Cassirer argues that, in this case, California substantive law should apply. In response, Respondent Thyssen-Bornemisza Collection Foundation (“TBCF”) contends that federal common law should apply because jurisdiction under FSIA is more analogous to federal question jurisdiction rather than diversity jurisdiction. In this case, TBCF argues that Spanish law should govern. This case has important policy implications for foreign relations, international justice, and the separation of powers.
Questions as Framed for the Court by the Parties
Whether a federal court hearing state law claims brought under the Foreign Sovereign Immunities Act must apply the forum state’s choice of law rules to determine what substantive law governs the claims at issue, or whether it may apply federal common law.
In Nazi Germany, in 1939, Lilly Neubauer—David Cassirer’s great-grandmother—was forced to “sell” a Pissarro painting to a Berlin art dealer. Cassirer v. Thyssen-Bornemisza Collection Foundation at 6. The Nazi government demanded that Lilly sell the painting under threat of imprisoning her in Germany. Id. Both parties and the district court have concluded that the painting was forcibly taken from Lilly. Id. at 7.
Though the painting was believed to be lost for several years, it resurfaced at an auction in Berlin to an unknown buyer. Id. at 9. In 1951, the painting was sold to a collector in California, which was the first time the painting entered the United States. Id. In 1976, the painting was acquired by Baron Hans Heinrich in New York. Cassirer v. Thyssen-Bornemisza Collection Foundation at 10. In 1988, the Baron agreed to loan the painting to Spain through the Thyssen-Bornemisza Collection (“TBCF”). Id. The following year, the Spanish government funded the TBCF buying several works of art, including the painting. Id. at 11.
Upon discovering the painting's location at the Thyssen-Bornemisza Museum in 2001, Cassirer filed a petition in Spain against the Thyssen-Bornemisza Collection Foundation, requesting the return of the Pissarro painting. Id. at 11. After the petition was denied, Cassirer sued TBCF and Spain under the Foreign Sovereign Immunities Act (“FSIA”) in the District Court for the Central District of California (“District Court”). Id. at 11–12. Cassirer argued that California law should apply, making Cassirer the rightful owner of the painting. Id. TBCF countered that the court should apply Spanish law, arguing that Spain’s law of prescriptive acquisition gave it good title to the painting because its ownership was “public, peaceful” and an “uninterrupted possession.” Id. at 27.
Over ten years of litigation in District Court and appeals to the Ninth Circuit Court of Appeals on various claims— including questions of FSIA jurisdiction; the statute of limitations; the application of the Holocaust Expropriated Art Recovery Act (“HEAR” Act) of 2016; whether the Baron and the TBCF were accessories under Spanish law; and whether federal common law or state choice of law rules applied—ensued. See Brief for Petitioners, Cassirer et al. (“Cassirer”).
On the choice of laws issue, the District Court applied federal common law and applied Spanish substantive law to the case. Cassirer v. Thyssen-Bornemisza Collection Foundation at 12–13. Under Spanish law, the District Court determined that TBCF was the rightful owner of the painting under prescriptive acquisition. Id. at 13. As an alternative analysis, the district court also applied California choice of law rules, which required weighing each state’s interest to determine which state is more impaired. Id. at 13, 20–22. Cassirer argued that California’s interests, including both state law against thieves transferring good title and also U.S. policy, were greater than Spain’s interests, which included regulating activity within its borders and enforcing its prescriptive acquisition laws. Id. The District Court found that Spain’s interest outweighed California’s interests, and thus that TBCF was the rightful owner of the painting. Id.
Cassirer appeal to the Ninth Circuit Court of Appeals, arguing that California choice of law applied, and that under California substantive law, he is the rightful owner of the painting. Id. The Ninth Circuit held that jurisdiction based on FSIA requires the application of federal common law. Id. at 23. Applying federal common law, the Ninth Circuit found that Spanish substantive law controlled. Id. However, it disagreed with the district court’s interpretation of Spanish law, finding a triable issue of material fact, and remanding the case to determine whether the Baron and TBCF were accessories to the theft of the painting. Id. at 26–28. The District Court found that while the Baron and TBCF should have been suspicious, they did not have “actual knowledge” that the painting was stolen. Brief for Petitioners, Cassirer et al. (“Cassirer”) at 16–18.
Cassirer filed a petition for certiorari in May 2021, asking the Supreme Court to re-examine the choice of forum law question, arguing that there is a circuit split over whether federal common law’s choice of laws or forum’s choice of laws test should hold in situations, such as the present case, where there is an FSIA claim. Petition for a Writ of Certiorari. The Supreme Court granted cert in September 2021. Id.
INTERPRETATION OF SECTION 1606 OF FSIA
Petitioners David Cassirer et al. (“Cassirer”) argues that the text of Section 1606 of FSIA demonstrates Congress’ intent to prescribe state choice-of-law rules in FSIA cases. Brief for Petitioners, Cassirer et al. (“Cassirer”) at 20. According to Cassirer, a foreign state must be “liable in the same manner and to the same extent as a private individual under like circumstances.” Id.; See also 28 U.S. C. § 1606. Cassirer contends that the statute means that the choice-of-law rules are the same for cases against a foreign state and cases against a foreign national. Id. Therefore, in a case against a foreign national, Cassirer argues that if the case is heard in state courts, state choice-of-law rules apply. Id. Comparatively, Cassirer contends that if the case is heard in a federal district court under diversity jurisdiction—which grants federal courts subject-matter jurisdiction in cases between a U.S. citizen and a foreign national—state choice-of-law rules apply. Id. Cassirer points out that, under the Erie Doctrine, federal courts must apply state substantive laws, including choice-of-law rules, in cases brough through diversity jurisdiction. Id. Therefore, Cassirer argues that state choice-of-law rules must also apply to cases against a foreign state. Id. Cassirer points out that the Second, Fifth, Sixth and D.C. Circuits all endorse this interpretation. Id.
Respondent the Thyssen-Bornemisza Collection Foundation (“TBCF”) argues that Cassirer misinterprets Section 1606. Brief for Respondent, Thyssen-Bornemisza Collection Foundation (“TBCF”) at 15. According to TBCF, Section 1606 is not outcome driven: it does not warrant that the foreign state and a private individual will be subject to the same level of liability. Id. TBCF maintains that Section 1606 text merely requires that after the substantive law is determined, a foreign state does not get special treatment that a private individual does not get, like sovereign immunity. Id. at 16–17. According to TBCF, the lower courts satisfied Section 1606 requirement when it applied Spanish law “in the same manner and to the same extent” to the TBCF as it would to a private individual. Id. at 17. Further, TBCF asserts out that Cassirer's interpretation ignores the plain language of Section 1606: there can never be "like circumstances" between a private individual and a sovereign state when the court is examining the state's liability for its sovereign acts, such as Germany's expropriation in violation of international law. Id. at 22. According to TBCF, this is contrasted with the commercial activity exception of FSIA, which holds that when a sovereign state is engaging in commercial activities, “like circumstances” between a sovereign state and a private individual may exist. Id.
APPLICABILITY OF FEDERAL COMMON LAW
Cassirer argues that any ambiguity should be interpreted in favor of state choice-of-law rules. Brief for Petitioners at 22. According to Cassirer, Congress is presumed to be aware of the Supreme Court's precedents when it legislates. Id. Based on the Supreme Court's precedents, Cassirer argues that federal common law is limited to the instances (1) where it is necessary to protect federal interests; and (2) where Congress explicitly authorizes the courts to develop substantive laws. Id. at 22–23. Cassirer then contends that neither category applies to the present case because FSIA does not authorize the creation of federal common law, and therefore federal common law cannot apply. Id. at 24. Moreover, Cassirer emphasizes that the Ninth Circuit fails to cite any decision by the Supreme Court in support of its decision. Id. at 23.
Cassirer further argues that the FSIA is subject to the Rules of Decision Act, which compels the federal courts to apply state law in cases involving state claims. Brief for Petitioners at 25. Cassirer contends that the absence of relevant federal common law supports the reading that state law applies. Id. at 26. According to Cassirer, the Ninth Circuit's ruling that the FSIA does not require the federal courts to apply state law is based on its preference only and therefore contrary to any standard way of interpretation. Id. at 27. Cassirer further maintains that the presumption is that state law applies because there is no general federal common law. Id. at 29. According to Cassirer, in the absence of any specific instruction by Congress that federal common law applies, the default should be that state law applies on choice-of-law questions. Id. at 30.
TBCF argues that Section 1606 is best effectuated by using federal common law when federal question jurisdiction applies. Brief for Respondent at 24. According to TBCF, Section 1330 of the FSIA, which outlines when federal courts can exercise jurisdiction over a foreign state and therefore gives jurisdiction to this case, is analogous to federal question jurisdiction, rather than diversity jurisdiction. Id. TBCF argues that the Supreme Court has already recognized that Section 1330 jurisdiction is closely tied to federal question jurisdiction, in which case the federal common law applies. Id. at 26. TBCF also contends that because Congress removed all actions brought against a foreign state from diversity jurisdiction, it intends those cases to be treated differently from cases against a foreign individual. Id. at 20.
TBCF counters that the Rules of Decision Act does not apply here because jurisdiction is not based on diversity. Brief for Respondent at 46. According to TBCF, the language of the Rules of Decision Act also precludes its application here because the Rule of Decision Act is subject to limitation imposed by other congressional statutes. Id. TBCF also points out that when the Rules of Decision Act was created in 1789 there was no exception to sovereign immunity and therefore cannot apply to the present case. Id.
BALANCING STATE AND FEDERAL INTERESTS
Cassirer points out that the absence of any developed federal common law reinforces the notion that state choice-of-law rules apply. Brief for Petitioner at 26. Since there is no relevant federal common law at hand, according to Cassirer, ruling in favor of federal common law can lead to disparate and highly questionable results across the country. Id. at 27. For example, Cassirer further argues that the lower courts gave no weight to California's interest in protecting its citizens' property rights. Id. at 28. Cassirer also contends that, by applying Spanish law under the federal choice-of-law rules, the court gave no weight to U.S. law and policy and international agreements relating to Nazi looted art. Id. On the other hand, according to Cassirer, the lower courts gave too much consideration to Spain’s financial interests in the Thyssen-Bornemisza Museum. Id. Cassirer argues that, under state choice-of-law rules, courts would be able to adequately consider state interest in property rights, U.S. law and policy, and financial interest of foreign actors. Id.
Cassirer further asserts that federalism and the doctrine of constitutional avoidance conflicts with the application of federal common law. Brief for Petitioners at 31. According to Cassirer, since FSIA governs both federal and state cases against a foreign state, the application of federal common law will compel state courts to apply federal law, and thereby undermine the principles of federalism, under which the federal government should refrain from interfering with domains of the states unless explicitly authorized. Id. Cassirer argues that the Supreme Court should apply the doctrine of constitutional avoidance, i.e., to avoid ruling on constitutional issues and resolve the cases on other possible grounds, as a tool of interpretation in the present case. Id. at 32.
TBCF contends that the case involves unique federal interests that require the exercise of federal common law because it impacts relationships with other states. Brief for Respondent at 28. TBCF argues that both the district court and the appellate court discussed at length California's laws and policies before holding that Spain had the more significant relationship with the case, and that Spain's governmental interest will be harmed if Spanish law does not apply. Id. at 35. Moreover, TBCF points out that only a consistent federal policy, which mandates the application of federal common law, can serve the interests stemming from federal law and international agreements. Id. at 39.
TBCF asserts that Cassirer's federalism concerns are largely overstated. Brief for Respondent at 46. TBCF points out that, by enacting FSIA, Congress deliberately channels cases against a foreign state from state courts to federal courts. Id. at 47. According to TBCF, even when the case does end up in state courts, state courts can apply federal common law because (1) states often apply federal common law where it governs the analysis; and (2) the majority of the states have already adopted the federal common law test as the forum's choice-of-law rule. Id.
UNIFORMITY IN FOREIGN AFFAIRS
A collection of law professors (“Law Professors”), in support of Cassirer, argue that the Ninth Circuit’s decision in this case to, in effect, create a federal common law rule for choice of law, has serious implications for foreign affairs. Brief of Amici Curiae 14 Professors of Law, in support of Petitioners at 4. In this case, the Law Professors argue that this would mean that the courts should have applied California law. Id. at 7. To do otherwise, the Law Professors argue, engender unambiguous conflicts for U.S. military and foreign affair operations. Id. The Law Professors argue, the Ninth Circuit’s approach creates too much inconsistency for foreign relation issues, a set of issues that should be provided with clear guidance instead of inconsistency. Id. The 1939 Society, et al. (“Society”), in support of Petitioners, agrees about the serious foreign affairs implications of this specific case. Brief of Amici Curiae of the 1939 Society, et. al, in support of Petitioners at 6. The Society argues that allowing the Ninth Circuit ruling to stand—and therefore applying Spain’s general interest prescription law—would allow “Spain to violate, with impunity, third party rights under international law.” Id. at 6. This, the Society argues, would violate norms of international justice surrounding Holocaust property. Id. The application of California law, the Society contends, would better promote international harmony and cooperation, by allowing victims of the Holocaust to be heard and given justice. Id. at 15.
Respondents TBCF argue that it is precisely because of the importance of uniformity in cases where a foreign sovereign has been stripped of its immunity, that the Ninth Circuit approach must be upheld. Brief in Opposition at 2. Respondents contend that the Ninth Circuit approach—while differing from other circuits—is the longer-held approach and thus more consistent. Id. TBCF argues further that the statute on point here, the FSIA, has its primary purpose in the need to establish and follow national uniform standards for disputes including sovereign entities. Id. at 25. TBCF argues that following the Ninth-Circuit longer-held approach would uphold this purpose and goal of uniform standards far more than allowing California law to hold sway here. Id.
SEPARATION OF POWERS
The Law Professors, in support of Cassirer, also argue that the creation of federal common law here, by the Ninth Circuit, erodes the balance of a separation of powers. Brief of Amici Curiae 14 Professors of Law, in support of Petitioners at 13. The Law Professors contend that the Ninth Circuit’s decision gives too much power to federal courts to make law, rather than Congress. Id. at 14. Petitioner Cassirer agrees and argues that this narrowed scope for federal common law has been made clear for decades prior to the statute at issue here. Brief for Petitioners at 22. Importantly, the Law Professors argue, there is a federal statute on point here, and thus federal common law should be subject to the powers and authority of Congress. Brief of Amici Curiae 14 Professors of Law, in support of Petitioners at 13–15. Further, the Law Professors highlight, the foreign affairs nature of this case and issue should put it squarely in the purview of Congress, rather than the judiciary. Id.
Respondent TBCF argues that the separation of powers debate here is over-dramatized because the outcome of this case would be the same whether federal common law is applied or if the forum’s choice of law test is applied. Brief in Opposition at 12. TCBF argues that the modern approach to choice of laws tests highlight flexibility and a connection beyond the site of the injury. Id. at 16. Thus, in this case, TCBF contends that the outcome would likely be the same as when the federal common law was applied. Id.
- Sarah Cascone, The U.S. Supreme Court Will Offer the Final Word in a Two-Decade Battle Over a Nazi-Looted Pissarro Painting, Artnet News (Dec. 20, 2021).
- Timothy Chung, Case Review: Cassirer v Thyssen-Bornemisza Collection Foundation, Center for Art Law (June 12, 2019).