no. 12-55733 in the united states court of appeals for … · 2015-05-17 · no. 12-55733 in the...

No. 12-55733

IN THE UNITED STATES COURT OF APPEALSFOR THE NINTH CIRCUIT

__________________________________________________________________

MAREI VON SAHER,

Plaintiff-Appellant,

v.

NORTON SIMON MUSEUM OF ART AT PASADENAAND NORTON SIMON ART FOUNDATION

Defendants-Appellees.__________________________________________________________________

On Appeal from the United States District Courtfor the Central District of California, Case No. CV-07-02866-JFW

The Honorable John F. Walter, United States District Judge__________________________________________________________________

PETITION FOR REHEARING AND REHEARING EN BANCOF DEFENDANTS-APPELLEES

NORTON SIMON MUSEUM OF ART AT PASADENAAND NORTON SIMON ART FOUNDATION

__________________________________________________________________

Ronald L. OlsonLuis Li

Fred A. Rowley, Jr.Eric P. Tuttle

MUNGER, TOLLES & OLSON LLP355 South Grand Avenue, 35th FloorLos Angeles, California 90071-1560

Telephone: (213) 683-9100

Attorneys for Defendants-AppelleesNORTON SIMON MUSEUM OF ART AT PASADENA

and NORTON SIMON ART FOUNDATION

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CORPORATE DISCLOSURE STATEMENT

Defendant-Appellee Norton Simon Art Foundation, a California nonprofit

public benefit corporation, has no parent corporation. No other person or publicly

held corporation owns 10% or more of the stock of the Norton Simon Art

Foundation.

Defendant-Appellee Norton Simon Museum of Art at Pasadena, a California

nonprofit public benefit corporation, has no parent corporation. No other person or

publicly held corporation owns 10% or more of the stock of the Norton Simon

Museum of Art at Pasadena.

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TABLE OF CONTENTS

Page

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CORPORATE DISCLOSURE STATEMENT .........................................................1

INTRODUCTION .....................................................................................................1

STATEMENT............................................................................................................4

REASONS FOR GRANTING THE PETITION.......................................................7

I. The Majority Opinion Contravenes Settled Law by OverridingExecutive-Branch Foreign Policy Pronouncements........................................7

A. The Majority Opinion Upends Executive Branch Foreign Policy........7

B. The Majority Opinion Conflicts with Supreme Court andCircuit Precedent on Deference to Executive Branch ForeignPolicy...................................................................................................12

C. The Majority Opinion Frustrates the Executive’s Conduct ofForeign Relations and Raises Separation of Powers Concerns ..........14

II. The Majority Opinion Announces Unprecedented and UnworkableRules for Analyzing Foreign Policy “Facts” .................................................17

CONCLUSION........................................................................................................19

CERTIFICATE OF COMPLIANCE.......................................................................20

CERTIFICATE OF SERVICE ................................................................................21

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TABLE OF AUTHORITIES

Page(s)

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CASES

Al-Haramain Islamic Found. v. Bush,507 F.3d 1190 (9th Cir. 2007) ............................................................................13

Am. Ins. Ass’n v. Garamendi,539 U.S. 396 (2003).....................................................................................passim

Corrie v. Caterpillar, Inc.,503 F.3d 974 (9th Cir. 2007) ..............................................................................14

Deutsch v. Turner Corp.,324 F.3d 692 (9th Cir. 2003) ................................................................................7

First Nat’l City Bank v. Banco Nacional de Cuba,406 U.S. 759 (1972)............................................................................................16

Inst. of Cetacean Research v. Sea Shepherd Conservation Soc’y,725 F.3d 940 (9th Cir. 2013) ......................................................................3, 8, 13

Johnson v. Eisentrager,339 U.S. 763 (1950)............................................................................................15

Legal Assistance v. Dep’t of State,104 F.3d 1349 (D.C. Cir. 1997)..........................................................................13

Movsesian v. Victoria Versicherung AG,670 F.3d 1067 (9th Cir. 2012) ........................................................................3, 17

Mujica v. Occidental Petroleum Corp.,381 F. Supp. 2d 1164 (C.D. Cal. 2005) ..............................................................15

Munaf v. Geren,553 U.S. 674 (2008).....................................................................................passim

Sarei v. Rio Tinto PLC,221 F. Supp. 2d 1116 (C.D. Cal. 2002),rev’d on other grounds, 671 F.3d 736 ..........................................................17, 18

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TABLE OF AUTHORITIES(continued)

Page(s)

iii

Sarei v. Rio Tinto, PLC,671 F.3d 736 (9th Cir. 2011)vacated on other grounds, 133 S. Ct. 1995 (2013)...........................................3, 8

Spectrum Stores, Inc. v. Citgo Petroleum Corp.,632 F.3d 938 (5th Cir. 2011) ..............................................................................15

Underhill v. Hernandez,168 U.S. 250 (1897)............................................................................................15

United States v. Pink,315 U.S. 203 (1942)............................................................................................13

von Saher v. Norton Simon Museum of Art,592 F.3d 954 (9th Cir. 2010) ..........................................................................6, 10

Weixum v. Xilai,568 F. Supp. 2d 35 (D.D.C. 2008)......................................................................18

Williams v. Suffolk Ins. Co.,38 U.S. 415 (1839)..........................................................................................8, 17

Ye v. Zemin,383 F.3d 620 (7th Cir. 2004) ..............................................................................14

RULES

FRAP 35.................................................................................................................2, 3

FRAP 40.................................................................................................................3, 9

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INTRODUCTION

The Majority Opinion usurps the Executive Branch’s exclusive power to

declare the foreign policy of the United States, contravening settled Supreme Court

and Circuit precedent that courts “have no authority…to decide what U.S. foreign

policy is,” Op. 37 (Wardlaw, J., dissenting). As Judge Wardlaw noted in dissent,

the Executive clearly “articulated the foreign policy applicable to the very artwork

and transactions at issue here.” Id. 31. It set forth that policy in a Supreme Court

amicus brief signed by State Department Legal Adviser Harold Koh and Acting

Solicitor General Neal Katyal and filed in this case. Yet, rather than heeding this

“clearly expressed” policy and giving it preemptive force (id. 37), the Panel

Majority discredited it as “not convincing” and unworthy of “too much credence”

(id. 24-25). In challenging the Executive’s statement of foreign policy, the

Opinion not only conflicts with binding authority, but also raises grave separation-

of-powers issues. Rehearing or rehearing en banc should be granted.

Plaintiff asserts state-law claims to recover artworks forcibly purchased by

the Nazis in World War II (“WWII”). After the war, the U.S. returned the

paintings to The Netherlands under an “external restitution” policy giving the

Dutch government sole responsibility for restituting them to their owner. The

Netherlands then conducted multiple restitution proceedings for Plaintiff and her

predecessors. The Executive Branch has concluded that these “artworks and

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transactions…, consistent with U.S. policy, have already been the subject of

external and internal restitution proceedings.” (Excerpts of Record (“ER”) 527.) It

has explained that because The Netherlands “conducted bona fide post-war internal

restitution proceedings,” the U.S. has “a substantial interest in respecting the

outcome of that nation’s proceedings.” (ER530.)

The district court and Judge Wardlaw correctly concluded that this federal

policy preempted Plaintiff’s state-law action. By her lawsuit, Plaintiff seeks to

attack Dutch restitution proceedings and impose her own restitution remedy,

entangling U.S. courts in ownership disputes the Executive intended to avoid. But

the Panel Majority rejected the controlling Executive policy, substituting in its

place a Judicial policy on recovered art. The Majority deemed the Executive’s

appraisal of Dutch restitution “troublesome” and undeserving of “‘serious

weight.’” Op. 23-25. Only through this second-guessing was the Majority able to

decide that the U.S. policy here was not one of restitution finality, but the opposite:

that Plaintiff was “just the sort of heir” who should be “encouraged to come

forward to make claims, again.” Id. 21.

The Majority’s attack on Executive Branch foreign policy statements

warrants en banc review. With the Judicial Branch announcing its own policies on

recovered art and Dutch restitution, the U.S. is now speaking in two inconsistent

voices on important policy matters. See FRAP 35(b)(1)(A). That result flouts

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Supreme Court and Circuit precedent, and creates a conflict with out-of-Circuit

authorities. See Id.(b)(1)(A),(B). This Court has repeatedly held that “[t]he

conduct of foreign affairs is within the exclusive province of the Executive, and we

must defer to its views.” Inst. of Cetacean Research v. Sea Shepherd Conservation

Soc’y, 725 F.3d 940, 947 (9th Cir. 2013); accord Sarei v. Rio Tinto, PLC, 671 F.3d

736, 755 (9th Cir. 2011) vacated on other grounds, 133 S. Ct. 1995 (2013). “[I]t is

for the political branches, not the Judiciary, to assess practices in foreign countries

and to determine national policy in light of those assessments.” Munaf v. Geren,

553 U.S. 674, 700-01 (2008). Instead of “proceed[ing] with…circumspection” on

sensitive foreign policy issues, id. at 689, however, the Majority exercised plenary

review, committing demonstrable errors in the process, see FRAP 40(b)(2).

Left standing, the Opinion would radically change the way courts treat

Executive Branch statements of foreign policy. It would authorize courts to pierce

those policy statements whenever they believed the Executive “misunderstood

some of the facts.” Op. 25. And it would allow plaintiffs to avoid the preemptive

force of foreign policies by pleading around them. The Opinion should be vacated

and the appeal reheard. Cf. Movsesian v. Victoria Versicherung AG, 670 F.3d

1067, 1071 (9th Cir. 2012)(en banc)(reversing same panel majority on foreign

affairs preemption).

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STATEMENT

Plaintiff claims she is the owner of two paintings (the “Cranachs”) that were

part of a collection the Nazis forcibly purchased from her predecessors in The

Netherlands. After WWII, the paintings were recovered by the U.S. Army. As the

Executive Branch explained in its amicus brief, the U.S. adopted and implemented

an express foreign policy with respect to such artworks:

First, the “United States returned property taken by the Nazis and recovered

by Allied forces, including artworks like the Cranachs, to their countries of origin

rather than directly to particular claimed owners.” (ER513.) A key purpose of this

“external restitution” policy “was to prevent the U.S. from becoming entangled in

difficult ownership questions regarding confiscated property.” (ER527.)

Second, when a foreign nation “has conducted bona fide post-war internal

restitution proceedings following the return of Nazi-confiscated art to that nation

under the external restitution policy, the United States has a substantial interest in

respecting the outcome of that nation’s proceedings.” (ER530.)

The U.S. externally restituted the Cranachs to The Netherlands after WWII.

Thereafter, The Netherlands convened multiple internal restitution proceedings for

Plaintiff and her predecessors. Shortly after the war, Plaintiff’s predecessor

availed herself of The Netherlands’ restitution scheme. That predecessor filed and

settled a claim for certain artworks and other property, but chose not to claim a

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group of artworks that included the Cranachs. A decade later, an heir to a Russian

noble family “claimed the Cranachs,” asserting they “belonged to his family and

that the Dutch Government had no right, title or interest to, or in, them.” (ER837.)

The Netherlands transferred the Cranachs to the heir in exchange for a payment,

among other things; he in turn sold them to the Museum. (ER837-38.)

In 1998, Plaintiff filed her own restitution petition in The Netherlands,

challenging the fairness of the 1950s restitution process. (ER138-143.) Contrary

to the Majority’s erroneous assertion (Op. 20 n.1), Plaintiff sought not just the

return of artworks in The Netherlands’ possession, but also monetary restitution for

works The Netherlands “has in the meantime sold.” (ER157.) The Netherlands

rejected her claim, and the Hague Court of Appeals affirmed. That Court held that

Plaintiff’s predecessor made a “conscious and well considered decision” to forgo

claiming the artworks, and that “The Netherlands created an adequately guaranteed

procedure for handling applications for the restoration of rights.” (ER160-61.)

Plaintiff filed a third petition under expanded Dutch restitution laws in 2004.

In 2006, the Dutch Government concluded that the Hague Court of Appeals had

already given “a final decision in this case,” and that Plaintiff’s petition was “not

included in the current restitution policy,” but nonetheless agreed to return 206

works in its possession. (ER187.)

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The Executive Branch has carefully assessed these Dutch proceedings. It

concluded that, “consistent with U.S. policies,” the Cranachs “have already been

the subject of both external and internal restitution proceedings.” (ER527.) It

determined that the Dutch restitution proceedings were “bona fide,” and “afforded

petitioner and her predecessor adequate opportunity to press their claims, both after

the War and more recently.” (ER530.) It also determined that Plaintiff’s 1998

restitution petition “included the Cranachs.” (ER515.)

Plaintiff filed this action in 2007, invoking a special California statute of

limitations for Nazi-looted artworks. The district court invalidated the statute on

foreign affairs field-preemption grounds. This Court affirmed that ruling in a 2-1

decision (Thompson, D.W. Nelson), with Judge Pregerson dissenting. von Saher v.

Norton Simon Museum of Art, 592 F.3d 954, 958 (9th Cir. 2010)(“von Saher I”).

After the U.S. filed its amicus brief opposing certiorari, the Supreme Court denied

certiorari.

Plaintiff amended her complaint under a new statute-of-limitations provision

adopted by the California Legislature in response to von Saher I. (ER578.) The

district court dismissed the complaint, holding that “the United States’ policy of

external restitution and respect for the outcome and finality of The Netherlands’

bona fide restitution proceedings, as clearly expressed and explained by the

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Solicitor General in his amicus curiae brief, directly conflicts with the relief sought

in Plaintiff’s action.” (ER9.)

Plaintiff appealed. The Panel Majority reversed, holding that Plaintiff’s

“claims against the Museum and the remedies she seeks do not conflict with

foreign policy.” Op. 25. Judge Wardlaw dissented.

REASONS FOR GRANTING THE PETITION

I. The Majority Opinion Contravenes Settled Law by OverridingExecutive-Branch Foreign Policy Pronouncements

The Majority Opinion openly second-guesses federal foreign policy on a

matter that goes to the Executive’s core “power to…resolve war claims.” Deutsch

v. Turner Corp., 324 F.3d 692, 713-14 (9th Cir. 2003). The Executive has already

established the U.S.’s policy on recovered art and Dutch restitution—including the

restitution proceedings convened for this Plaintiff. By failing to follow that policy,

and articulating its own Judicial restitution policy, the Opinion disregards settled

Supreme Court and Circuit precedent requiring deference to Executive-Branch

statements of foreign policy. The Opinion would leave the U.S. speaking in two

voices on these matters, raising serious separation-of-powers concerns and inviting

more judicial incursions into foreign affairs.

A. The Majority Opinion Upends Executive Branch Foreign Policy

The conflict preemption issue raised by Plaintiff’s claim is straightforward.

Plaintiff invokes California law to obtain the Cranachs, works the U.S. recovered

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and externally restituted to The Netherlands. But “the United States has clearly

stated its foreign policy position that it will not be involved in adjudicating

ownership disputes over the Cranachs.” Op. 32 (Wardlaw, J., dissenting).

Plaintiff’s “attempt to recover the Cranachs in U.S. courts directly thwarts the

central objective of U.S. foreign policy in this area: to avoid entanglement in

ownership disputes over externally restituted property if the victim had an adequate

opportunity to recover it in the country of origin.” Id. 33.

As Judge Wardlaw observed, that conflict “should be the end of the matter.”

Op. 37. The Constitution commits the “‘vast share of responsibility for the

conduct of our foreign relations’” to the Executive Branch, and state claims

conflicting directly with Executive policy must “‘give way.’” Am. Ins. Ass’n v.

Garamendi, 539 U.S. 396, 414 (2003)(citation omitted). Because “[t]he conduct of

foreign policy is not the role of the courts,” Sarei, 671 F.3d at 755, our

constitutional structure requires the Judicial Branch to “defer to [the Executive’s]

views” on such matters, Cetacean, 725 F.3d at 947 (citing Williams v. Suffolk Ins.

Co., 38 U.S. 415, 420 (1839)). Of course, it is for the Judiciary to decide whether

a foreign policy preempts state laws or state-law claims. But here, there is a patent

conflict between Plaintiff’s action—which challenges Dutch restitution—and U.S.

foreign policy as stated by the Executive. Even the Panel Majority does not

question that.

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Instead of respecting these Executive policies, the Majority announced

conflicting, erroneous policies, see FRAP 40(a)(2):

Recovered Art: The Executive has clearly stated: “[w]hen a foreign nation,

like the Netherlands here, has conducted bona fide post-war internal restitution

proceedings following the return of Nazi-confiscated art to that nation under the

external restitution policy, the United States has a substantial interest in respecting

the outcome of that nation’s proceedings.” (ER530.) The Executive explained that

it “has a continuing interest in [external restitution’s] finality when appropriate

actions have been taken by a foreign government concerning the internal restitution

of art that was externally restituted.” (ER528.) Addressing the Washington

Principles and Terezin Declaration, two nonbinding multinational statements on

Nazi-looted art, the Executive noted that “contemporary U.S. policy supports the

fair and just resolution of claims involving Nazi-confiscated art, while also

respecting the bona fide internal restitution proceedings of foreign governments.”

(ER517-18.)

The Executive’s explication of foreign policy is absent from the Panel

Majority’s account of “Federal Policy on Nazi-Looted Art.” Op. 16-18. Instead,

the Majority offered its own policy statement:

U.S. policy on the restitution of Nazi-looted art includes the followingtenets: (1) a commitment to respect the finality of “appropriate actions”taken by foreign nations to facilitate the internal restitution of plundered art;(2) a pledge to identify Nazi-looted art that has not been restituted and to

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publicize those artworks in order to facilitate the identification of prewarowners and their heirs; (3) the encouragement of prewar owners and theirheirs to come forward and claim art that has not been restituted; (4)concerted efforts to achieve expeditious, just and fair outcomes when heirsclaim ownership to looted art; (5) the encouragement of everyone, includingpublic and private institutions, to follow the Washington Principles; and (6)a recommendation that every effort be made to remedy the consequences offorced sales.

Id. 18.

This policy statement reformulates the Executive’s policy in critical and

erroneous respects. The Majority shifts the policy’s focus from the process

afforded a claimant to the outcome of the proceedings. As Judge Wardlaw noted,

the “relevant issue” under U.S. policy (Op. 33), is whether the Cranachs were

“subject (or potentially subject) to bona fide internal restitution proceedings in the

Netherlands” (ER528). The Executive has explained that Dutch internal restitution

is entitled to respect because “the Dutch government has afforded petitioner and

her predecessor adequate opportunity to press their claims.” (ER530.)

In recasting the Executive’s concern with process and the “opportunity” for

restitution, the Majority ignores a central objective of external restitution:

“prevent[ing] the United States from becoming entangled in difficult ownership

questions” posed by individual restitution. (ER527.) As von Saher I recognized,

external restitution left it to “the individual countries to handle restitution in

whatever way they see fit,’” with the U.S. “play[ing] no further role” once “the art

was returned to the country of origin.” 592 F.3d at 962. This finality concern is

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carried forward by the Washington Principles and Terezin Declaration. These non-

binding principles, the Executive has explained, address Nazi-looted artworks “not

subsequently restituted or available to be restituted through bona fide

proceedings,” and “do[] not support relitigation of all art claims in the U.S.

Courts.” (ER529.)

Dutch Internal Restitution: The Panel Majority challenged the Executive’s

specific “policy judgment” on the scope and adequacy of Dutch restitution. Op. 35

(Wardlaw, J. dissenting). The Executive’s assessment is that “this case concerns

artworks and transactions that, consistent with U.S. policies, have already been the

subject of both external and internal restitution proceedings.” (ER527.) The

Dutch internal restitution proceedings are “bona fide” for purposes of federal

policy because The Netherlands gave Plaintiff and her predecessors an “adequate

opportunity to press their claims, both after the War and more recently.” (ER530.)

Again, however, the Majority disagreed with the Executive. It rejected the

Executive’s assessment that the U.S. had “a substantial interest in respecting the

outcome of [Dutch] proceedings” because The Netherlands had “conducted bona

fide restitution proceedings.” (ER530.) Instead, it found the opposite—that

Plaintiff “is just the sort of heir that the Washington Principles and Terezin

Declaration encouraged to come forward to make claims.” Op. 21. The Majority

based this conclusion on the view that “the Cranachs were never subject to postwar

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internal restitution proceedings and that the 1998 and 2004 proceedings excluded

the Cranachs.” Id. 25.

These determinations contradict two express foreign policy judgments by the

Executive. First, federal recovered art policy requires only that externally-

restituted artwork be “potentially subject” to bona fide restitution proceedings.

(ER528 n.3 (emphasis added).) Because even the Majority recognizes that “the

paintings were potentially subject to restitution” under The Netherlands’ “postwar

internal restitution process” (Op. 25), that should be the end of the preemption

analysis. Second, even if one reaches the question whether the paintings were

actually subject to internal restitution, the Majority’s supposition that the Dutch

proceedings “excluded the Cranachs” contradicts the Executive’s determination

that Plaintiff’s 1998 petition “included the Cranachs.” (ER515.) That

determination is supported by Plaintiff’s request that the Hague Court of Appeals

“order the State to pay the[] sales prices” for artworks it had sold (ER157), and

Plaintiff’s allegation that The Netherlands sold the Cranachs to the Russian heir in

1966 (ER837).

B. The Majority Opinion Conflicts with Supreme Court and CircuitPrecedent on Deference to Executive Branch Foreign Policy

By overriding the Executive Branch on an important foreign policy matter,

the Majority Opinion sets this Circuit at odds with Supreme Court precedent, its

own case law, and the law of other Circuits. The Supreme Court has stressed that

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“[i]t is for the political branches, not the Judiciary, to assess practices in foreign

countries and to determine national policy in light of those assessments.” Munaf,

553 U.S. at 700-01. This flows from foundational separation-of-powers principles,

which teach that “[t]he conduct of foreign affairs is within the exclusive province

of the Executive.” Cetacean, 725 F.3d at 947. When it comes to stating U.S.

foreign policy, the Executive’s judgment “is not open to judicial inquiry.” United

States v. Pink, 315 U.S. 203, 222-23 (1942). In Judge Wardlaw’s words, the courts

“have no authority…to decide what U.S. foreign policy is.” Op. 37.

The Panel Majority disregarded those admonitions. Its Opinion not only

recasts the controlling foreign policy, but deems the Executive’s policy statements

unworthy of “too much credence” or “‘serious weight.’” Op. 24-25, 23. Even

though the selfsame policy statements were before the Supreme Court when it

dened certiorari, the Opinion characterizes them as “worrisome,” “troublesome,”

and “not…convincing,” and criticizes the Executive for “misunderst[anding] some

of the facts,” id. 24-25. This is just the sort of “second-guess[ing]” of Executive

foreign policy pronouncements that the Supreme Court, see Munaf, 553 U.S. at

702, this Court, e.g., Al-Haramain Islamic Found. v. Bush, 507 F.3d 1190, 1203

(9th Cir. 2007), and other Circuits, e.g., Legal Assistance v. Dep’t of State, 104

F.3d 1349, 1353 (D.C. Cir. 1997), have rejected. And the risks of such aggressive

review are on full display in the Majority’s numerous errors (supra at 9-12), as

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well as its acknowledgment of having “misunderstood federal policy” in von

Saher I, Op. 16.

That the Executive’s policy was “presented in a brief in a different iteration

of this case that raised different arguments” (Op. 25) is “immaterial” (id. 36

(Wardlaw, J.)). Because the amicus brief was a “collaborative effort of the State

Department and the Department of Justice,” its policy statements are “more than

simply the advocacy position of the government”; they constitute “the official

position of the Executive Branch.” Ye v. Zemin, 383 F.3d 620, 623 n.6 (7th Cir.

2004). The Majority’s suggestion that official foreign policy requires more than a

brief signed by “high-level executive officials” who “faithfully represent[] the

President’s chosen policy” is refuted by Garamendi, 539 U.S. at 423 n.13, and the

many cases deferring to such statements, e.g., Munaf, 553 U.S. at 702.

C. The Majority Opinion Frustrates the Executive’s Conduct ofForeign Relations and Raises Separation of Powers Concerns

Left uncorrected, the Majority’s foray into diplomatic waters would invite

courts to substitute their own foreign policy statements for the Executive’s. Courts

would feel free to disagree with the President’s diplomatic judgment on matters

such as Iraq’s treatment of prisoners, cf. Munaf, 553 U.S. at 702, or the sale of

tractors to Israel, cf. Corrie v. Caterpillar, Inc., 503 F.3d 974, 978 (9th Cir. 2007).

That could draw the judiciary into conflict with the Executive not just in war

reparations cases, but in a wide range of matters implicating foreign relations,

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including Alien Tort cases, e.g., Mujica v. Occidental Petroleum Corp., 381 F.

Supp. 2d 1164 (C.D. Cal. 2005), and cases involving foreign trade, e.g., Spectrum

Stores, Inc. v. Citgo Petroleum Corp., 632 F.3d 938 (5th Cir. 2011).

The Majority Opinion thus portends a serious separation-of-powers problem,

one warranting immediate intervention. It pits a divided federal court panel against

the Executive on foreign policy matters within the Executive’s province. The

President “is exclusively responsible” for the “conduct of diplomatic and foreign

affairs,” Johnson v. Eisentrager, 339 U.S. 763, 789 (1950), and it is not the

business of courts “to judge the wisdom of the National Government’s policy,”

Garamendi, 539 U.S. at 427. Here, however, the Majority has vocally criticized

the Executive’s assessment of an ally’s war-remedies process. The existence of

conflicting Executive and Judicial-Branch policies on recovered art and Dutch

restitution cannot but “‘compromise[] the very capacity of the President to speak

for the Nation with one voice in dealing with other governments.’” Id. 424.

That the policy at issue concerns actions by a foreign sovereign only

exacerbates this inter-branch tension. The Executive’s foreign policy power is at

its apex, and judicial authority at its low-point, when it comes to assessing and

addressing a foreign state’s conduct. See Munaf, 553 U.S. at 700. That is why the

act of state doctrine bars courts from “sit[ting] in judgment” on the validity of

actions by foreign sovereigns, see Underhill v. Hernandez, 168 U.S. 250, 252

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(1897), and thereby “embarrass[ing] the conduct of foreign relations by the

political branches of the [American] government,” First Nat’l City Bank v. Banco

Nacional de Cuba, 406 U.S. 759, 765 (1972).

The Majority Opinion flips these principles, selectively quoting a foreign

government’s statements about its conduct and using them to challenge the U.S.

Executive’s appraisal of that conduct. The Majority poses “serious questions”

about whether The Netherlands took “appropriate action” in the 1950s restitution

proceedings. Op. 19. While purporting to reserve judgment, it credits Plaintiff’s

allegations that Dutch post-war restitution “made it difficult for Jews like

[Plaintiff] to recover their property.’” Id. It endorses a Dutch committee report

characterizing the restitution process as “‘legalistic, bureaucratic, cold and often

even callous’” (id.), but fails to acknowledge the Hague Court of Appeals’ holding

that the proceedings were “adequately guaranteed” or the Dutch Government’s

reaffirmance of that ruling (ER161). And the Majority “strongly suggests” that

the district court “should determine the bona fides of the Netherlands’ 1951

internal restitution process” on remand. Op. 36 (Wardlaw, J., dissenting).

Both precedent and separation-of-powers principles foreclose this searching

review of Dutch restitution, and make clear that the Court “may not displace the

Executive’s assessment that the Netherlands’ postwar proceedings were adequate.”

Id. 35. In challenging that assessment and criticizing Dutch restitution, the

OT\UN EFBIIKGG DKCEKCFDEH RPN MEKFLLD PX]QY][^N IIBE STWUN FE ZV FJ BFE ON JKC

- 17 -

Majority injects this Court into a “highly politicized inquiry into the conduct of a

foreign nation,” Movsesian, 670 F.3d at 1076, realizing the Supreme Court’s

concern with the Judicial Branch “‘disparag[ing] certain foreign regimes,’”

Garamendi, 539 U.S. at 417.

II. The Majority Opinion Announces Unprecedented and UnworkableRules for Analyzing Foreign Policy “Facts”

The Panel Majority took the position that it could override the Executive’s

assessment of Dutch restitution because “the [Solicitor General] goes beyond

explaining federal foreign policy and appears to make factual determinations.” Op.

24. Even though the Executive supported its policy judgments with citations to

official Dutch records of undisputed authenticity (ER126-28), the Majority showed

them no deference, and indeed credited Plaintiff’s allegations over the Executive’s

assessment (Op. 24). This novel pleading rule, and the Majority’s artificial

distinction between policy and fact, is contrary to precedent. If upheld, it would

leave courts uncertain about how to treat Executive foreign policy statements.

As Judge Wardlaw explained, U.S. foreign policy “often relies on factual

assumptions inseparable from the policy itself.” Op. 39 n.4. For example, courts

treat the Executive’s assessment of facts grounding its recognition of foreign

sovereigns as “conclusive on the judicial department,” Williams, 38 U.S. at 420,

and consistently decline to examine whether the Executive’s foreign policies rest

on “misinformation or faulty reasoning,” cf. Sarei v. Rio Tinto PLC, 221 F. Supp.

OT\UN EFBIIKGG DKCEKCFDEH RPN MEKFLLD PX]QY][^N IIBE STWUN FF ZV FJ BFF ON JKC

- 18 -

2d 1116, 1181-82 (C.D. Cal. 2002), rev’d on other grounds, 671 F.3d 736. This is

illustrated by Munaf, where the Court accepted not just the Executive’s statement

“that it is the policy of the United States not to transfer an individual in

circumstances where torture is likely to result,” but also the Executive’s

application of that policy to the facts. 553 U.S. at 702. The Court refused “to

second-guess” the State Department’s “‘determin[ation] that the [Iraqi] Justice

Ministry…ha[s] generally met internationally accepted standards for basic prisoner

needs.’” Id.

The Majority’s “distinction between ‘explaining federal foreign policy’ and

‘mak[ing] factual determinations’” contradicts Munaf, and is “unworkable.” Op.

39 n.4 (Wardlaw, J.). To take Judge Wardlaw’s example, “the federal foreign

policy that ‘Iran’s pursuit of nuclear weapons is unacceptable’ entails a factual

assumption that Iran is pursuing nuclear weapons.” Id. Similarly, the Executive’s

head-of-state immunity determinations entail the factual assumption that a foreign

officer “functioned as an official diplomatic envoy.” E.g., Weixum v. Xilai, 568 F.

Supp. 2d 35, 38 (D.D.C. 2008). Distinguishing policy from fact in such situations

is something courts are “not suited” to do. Munaf, 553 U.S. at 702.

By crediting Plaintiff’s “factual allegations” over the Executive’s assessment

of Dutch restitution (Op. 13), the Majority departs yet further from Munaf,

adopting a pleading rule that threatens to work mischief in preemption cases. The

OT\UN EFBIIKGG DKCEKCFDEH RPN MEKFLLD PX]QY][^N IIBE STWUN FG ZV FJ BFG ON JKC

- 19 -

Munaf Court credited “the Executive’s assessment of the foreign country’s legal

system” over the petitioner’s “allegation” that his “transfer to Iraqi custody [was]

likely to result in torture.” 553 U.S. at 702, 700. If district courts were instead

bound to credit allegations contradicting Executive foreign policy, they would be

hamstrung in their ability to dismiss preempted claims. District courts could not

resolve a foreign affairs preemption defense before summary judgment or trial,

requiring them to assess competing evidence of U.S. foreign policy. Such

protracted litigation would defeat the purpose of the foreign affairs doctrine, which

is to prevent state law from “plac[ing] the Government at a disadvantage” in

diplomatic relations. See Garamendi, 539 U.S. at 424.

CONCLUSION

Panel rehearing and/or rehearing en banc should be granted.

DATED: July 17, 2014 MUNGER, TOLLES & OLSON LLPRONALD L. OLSONLUIS LIFRED A. ROWLEY, JR.ERIC P. TUTTLE

By: /s Fred A. Rowley, Jr.FRED A. ROWLEY, JR.

Attorneys for Defendants-AppelleesNORTON SIMON MUSEUM OF ARTAT PASADENA and NORTONSIMON ART FOUNDATION

OT\UN EFBIIKGG DKCEKCFDEH RPN MEKFLLD PX]QY][^N IIBE STWUN FH ZV FJ BFH ON JKC

- 20 -

CERTIFICATE OF COMPLIANCE

I certify pursuant to Federal Rules of Appellate Procedure 35(a) and 40(b)

and Ninth Circuit Rules 35-4(a) and 40-1(a) that the attached brief is

proportionately spaced, has a typeface of 14 points, and contains 4,199 words.

Dated: July 17, 2014

/s Fred A. Rowley, Jr.Fred A. Rowley, Jr.

OT\UN EFBIIKGG DKCEKCFDEH RPN MEKFLLD PX]QY][^N IIBE STWUN FI ZV FJ BFI ON JKC

CERTIFICATE OF SERVICE

I hereby certify that on July 17, 2014, I caused to be electronically filed the

foregoing PETITION FOR REHEARING AND REHEARING EN BANC OF

DEFENDANTS-APPELLEES NORTON SIMON MUSEUM OF ART AT

PASADENA AND NORTON SIMON ART FOUNDATION with the Clerk of

the Court for the United States Court of Appeals by using the appellate CM/ECF

system. Participants in the case who are registered CM/ECF users will be served

by the appellate CM/ECF system.

I further certify that some of the participants in the case are not registered

CM/ECF users. I caused to be mailed the foregoing document by Federal Express

(overnight delivery) to the following non-CM/ECF participants:

Donald S. BurrisE. Randol Schoenberg

Burris, Schoenberg & Walden LLP12121 Wilshire Boulevard, Suite 800

Los Angeles, CA 90025-1168

Dated: July 17, 2014

/s Fred A. Rowley, Jr.Fred A. Rowley, Jr.

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no. 12-55733 in the united states court of appeals for … · 2015-05-17 · no. 12-55733 in the...

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