Commercial Activity Exception

The commercial activity exception provides, in pertinent part, that a foreign state shall not be immune from jurisdiction in any case in which the action is “based ... upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.” 28 U.S.C. § 1605(a)(2) (LexisNexis 2014). The “threshold step” in assessing the applicability of the commercial activity exception is to “identify the act of the foreign sovereign State that serves as the basis for plaintiffs' claims.” Garb, 440 F.3d at 586 (2d Cir. 2006). An action is “based upon” the “particular conduct that constitutes the gravamen of the suit.” OBB Personenverkehr AG v. Sachs, 136 S.Ct. 390, 395 (2015); see also MMA Consultants 1, Inc. v. Republic of Peru, 719 Fed. App'x 47, 52 (2d Cir. 2017) (“Gravamen is defined as the basis or foundation of a claim, that is, those elements that, if proven, would entitle a plaintiff to relief. In other words, [the Court] must zero in on the core of the suit and determine a lawsuit's foundation”) (internal citations, quotations, and emphasis omitted). An effect is “direct” within the meaning of the commercial activity exception if it “follows as an immediate consequence of the defendant's ... activity.” Weltover, 504 U.S. at 618 (internal quotations omitted). The Second Circuit has held that “ ‘the requisite immediacy’ is lacking where the alleged effect ‘depend[s] crucially on variables independent of’ the conduct of the foreign state.” Guirlando v. TC Ziraat Bankasi A.S., 602 F.3d 69, 75 (2d Cir. 2010) (quoting Virtual Countries, Inc. v. South Africa, 300 F.3d 230, 238 (2d Cir. 2002) ).

*4 Plaintiffs argue that the commercial activity exception is applicable here because Germany's “bone activities” and the “construction and operation of, e.g., the railway to Grootfontein in what is now Namibia” are primarily commercial in nature. (Docket entry no. 49, Opp. at 18-19.) Plaintiffs' characterization of these activities as commercial is not, however, sufficient to demonstrate that the commercial activity exception to the FSIA applies. At their core, Plaintiffs' conversion, unjust enrichment, and restitution claims are not centered upon the collection, sale, and display of Ovaherero and Nama bones, nor does the AC predicate Germany's liability upon the construction of railways in German South West Africa. As Plaintiffs conceded at oral argument, the gravamen of the AC is the taking of Plaintiffs' land, livestock, and personal property in connection with the Ovaherero and Nama genocide. (See docket entry no. 58, Hr'g Tr. at 23:7-24:8.) Thus, even if Germany's “bone activities” and railway construction are “commercial activities” within the meaning of the FSIA, the commercial activity exception is inapplicable because Plaintiffs' claims are not sufficiently “based upon” those allegations.

Separately, the AC alleges that Germany's actions caused a “direct effect” in the United States because (1) members of the class who were injured by the genocide currently reside in the United States (AC ¶¶ 295-96), (2) certain human remains collected by German anthropologist Felix von Luschan are present at the AMNH (AC ¶¶ 297-301), (3) a copy of the “Blue Book” is located in the New York Public Library (AC ¶¶ 302-303), and (4) New York has become a leading research and conference center for the study of the genocide (AC ¶¶ 304-308). These allegations appear to assume that the acts of genocide and expropriation which form the basis of Plaintiffs' claims can themselves fairly be considered as acts “in connection with a commercial activity” of Germany, an argument that Plaintiffs do not expressly make. However, assuming without deciding that this is the case, Plaintiffs have still failed to allege facts sufficient to support their contention that Germany's conduct caused a “direct effect” in the United States.

First, the location of some class members in the United States is insufficient to constitute a “direct effect.” See Guirlando, 602 F.3d at 78 (“[T]he mere fact that a foreign state's commercial activity outside of the United States caused physical or financial injury to a United States citizen is not itself sufficient to constitute a direct effect in the United States.”). Plaintiffs' allegations regarding the presence of a copy of the “Blue Book” at the New York Public Library and New York's role as a leading research and conference center for the study of the Ovaherero and Nama genocide similarly fall far short of the types of “direct effects” required to support jurisdiction. Although the efforts of scholars and descendants to document and study the genocide are important and laudable, these activities bear no direct and immediate causal connection to Germany's actions in South West Africa and are thus insufficient to give rise to subject matter jurisdiction.

The presence of human remains at the American Museum of Natural History is also insufficient to constitute a “direct effect” of the Ovaherero and Nama genocide because the transfer of those remains to the AMNH was not an immediate consequence of the acts upon which Plaintiffs' claims are based. According to the AC, the remains were part of a “private collection” belonging to a German anthropologist, and they were sold by the anthropologist's wife to the AMNH following his death in 1924, more than a decade after the events alleged in the AC. (AC ¶¶ 298-300.) Plaintiffs have thus failed to demonstrate that the alleged transfer of the remains was the result of any act by a foreign state, or that it flowed directly from Germany's conduct in South West Africa. #$%2 On the contrary, the transfer “ ‘depend[ed] crucially on variables independent of’ the conduct of the foreign state,” Guirlando, 602 F.3d at 75. In this sense, the transportation of remains to New York is more akin to a “subsequent commercial transaction[ ] involving expropriated property,” which is generally insufficient to give rise to subject matter jurisdiction under the commercial activity exception. See Garb, 440 F.3d at 587 (finding subsequent commercial treatment of expropriated property not sufficiently “in connection with” the prior expropriation to satisfy the commercial activity exception). #$%3

*5 Because Plaintiffs' causes of action are based primarily upon the extermination of the Ovaherero and Nama people and the expropriation of their property, and because Plaintiffs have failed to allege facts sufficient to support their allegation that Germany's acts of expropriation caused a direct effect in the United States, the Court cannot exercise subject matter jurisdiction of Plaintiffs' claims pursuant to FSIA's commercial activity exception. Accordingly, the Court proceeds to consider whether Plaintiffs' claims fall within the FSIA's takings exception.