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TRO Hearing United States District Court
TRO Hearing
Proceedings reported by mechanical stenography Friday July 25th, 1997 2:00 p.m, The Court: Court calls the case 97-2498; Magness versus Russian Federation. Mr. Magness: I do, Your Honor. Lee Magness, The Court: And for the defense? Mr. Cook: Your Honor, Brandon Cook. Verner, Liipfert, Bernhard, McPherson & Hand for the Russian Federation. I do not represent the other named defendants. The Court: All right, apparently there was one attorney who wanted to be put by telephone. What's his name, Mr. Dickinson? Mr. Dickinson in Washington -- in Michigan, that was the number that you dialed and that -- he's now on voice mail; is that correct? Court Clerk: Yes. The Court: Mr. Dickinson, we did the best we can to contact you at this time. We're going to hang up on you. And if you get a chance, if you want to call us to find out what happened, feel free to do so. Would you all turn your microphones towards you. They will pick up. All right, this is an application for a temporary restraining order and a preliminary injunction, but we're here basically on a temporary restraining order which is an emergency matter. This came in yesterday afternoon initially on an ex parts basis. There was nothing wrong with filing it that way, but in most instances we always have a hearing in such matters. All right, Mr. Cook, you can be seated. I want to hear from Mr. Magness as to what this is about. I've read the pleadings. I've done a little research myself into international law, but you're probably much more -- better versed in it than I am. If you would give me your position and what you're asking for at this time. Mr. Magness: Yes, Your Honor. First of all, this is a case of Foreign Sovereign Immunities Act. We're attempting to sue the Russian Federation, the owners of the property that's actually located here in the State of Texas for violation of international law, expropriation of property that belongs to plaintiffs in Russia and was expropriated not once but perhaps twice by the -- most recently by the newest regime. The Court: All right, give me a little background on that, just for two minutes. Mr. Magness: The piano factory was owned by plaintiffs in 1918 at the time of the revolution. It was nationalized - The Court: Piano? Mr. Magness: Piano, yes, Your Honor. The piano factory was nationalized, as well as the other properties in question, in 1918. After that we returned to the Soviet Union. The Court: By "we" you mean - Mr. Magness: Plaintiffs. Myself as well as other plaintiffs. Went to the Soviet Union to discuss possible recovery of the property and/or repurchase of the property. The Court: What year was that? Mr. Magness: 1994. The Court: Okay. Mr. Magness: There were several laws that came into existence allowing foreign investors to purchase or receive property and own property in Russia. At that time we traveled there, had several meetings, letters, correspondence to the mayor of St. Petersburg office, had several meetings, were told that property would be titled, that rightfully belonged to us. We showed them documentation -- I'm sorry, rightfully belonged to plaintiffs. We presented documentation at that time in the government officials. The deputy had external economic relations department. Andrei Brusov agreed at that time that the properties did belong to us and would be titled in our name. Several weeks later we were attempting to visit the properties and manage them, and we were told that the properties were going to be sold for auction by the St. Petersburg land authority. The Court: it just happened when you got up there, or is it something that happened just because you were there looking into it? Mr. Magness: Possibly. Yes, Your Honor, The Court: All right Mr. Magness: At that point we attempted to -- plaintiffs attempted to continue by writing the necessary letters to the mayor of St. Petersburg and the KUGI, the land administration committee in Russia at that time to try and get this taken care of. We were told that properties in St. Petersburg were national treasures and historical monuments, somewhat like historical landmarks here in the states. It's hard to see how any property in St. Petersburg cannot be historical in nature. But under that classification, we were told at that time that they were going to nationalize them again and that they would be put up for auction to the highest bidder. The Court: Were they nationalized at the time that you went up there in '94? Mr. Magness: When you say "nationalized" - The Court: That's -- in other words, we know you say it was nationalized after the Russian revolution - Mr. Magness: Yes, Your Honor. The Court: All right -- let me talk, All right? She can take down just one at a time. Mr. Magness: Yes, Your Honor. The Court: All right. When you say "renationalized," was it renationalized and then put up for auction, or what was it? I see one nationalization, What happened next? Mr. Magness: The second nationalization that I'm referring to would be when the Russian Federation told us that the property was legally ours, and then came back the second time and said this piano factory belongs as a national treasure, and we therefore own it. Again, we can't give it to you. At that point, we came back to the states and proceeded through other legal means to try and go through the appropriate legal channels. The Court: it may sound obvious, but what does the company manufacture, what does it - Mr. Magness: The piano factory currently manufactures pianos. The Court: And anything else? Mr. Magness: I've heard furniture of other types as well. The Court: Okay. Mr. Magness: The second portion of my filing concerns actual property that was purchased, namely pianos, that were built around 1910, several of which at the consideration for, while I was there, the government had agreed to allow plaintiffs to export these. Then when the proper documentation was sent, once again, the Ministry of Culture said this property will not be allowed to leave Russia; it is a national treasure. The Court: And you paid for it? Mr. Magness: Yes, Your Honor. The Court: Did you ever get your money back? Mr. Magness: No, Your Honor. The Court: How much? Mr. Magness: $1800 for one, $900 for another. And I believe the last one that I purchased was around $2200. The value on those pianos, those particular pianos, is over $100,000 a piece. They were legally purchased from a refabrication plant in St. Petersburg. The Court: I'll get to you in a moment. I want to know why he hasn't been paid his money back. I'll get to you in a moment. But that's one thing I'm going to want to know. Because there are two separate things here; in other words, one looks like it's international law, the other thing looks like that he paid some money, and he never got his money back. He wants the goods; but, even so, he doesn't get his money back. Go on. Mr. Magness: Yes, Your Honor. At that point the plaintiffs pretty much gave up on trying to go through the legal channels until I got back here to Houston. The Court: When was that? Mr. Magness: That was 1994. The Court: Go on. Mr. Magness: On arrival here in Houston, I immediately hired Bracewell and Patterson, Attorney Greg Vojack, to proceed through legal means to contact the Ministry of Culture who had taken the property. I'm speaking of the pianos now. And he had several conversations with the Ministry of Culture. Once again, received all the export documentation signed by the Ministry of Culture, signed by the Russian Federation. He's currently in possession of those documents. On a trip to St. Petersburg, he went to pick up the property, collected, had it shipped; and, once again, he was denied, even with legitimate papers, to be able to remove the property. The Court: Why? What do you think -- because we're down here on an emergency matter. Mr. Magness: Yes, sir. The Court: we're not taking evidence, in effect. Mr. Magness: Yes, Your Honor. The Court: We're giving the other side an opportunity to be heard, and -- why should a TRO be granted on those grounds? What were the reasons they gave your counsel when he went up there for not turning it over again? Mr. Magness: He was told that the pianos no longer were there, that they were no longer in existence. The Court: is this how they do business over there now? Mr. Magness: In 1994, Your honor. Right now I understand it's a little different. The Court: How so? Mr. Magness: I understand they've passed a property code in the end of last year that now for, civil practice code as well. At the time that I was there, it was pretty much chaos. The government did whatever they wanted to do. The different ministries were unsure who had jurisdiction over each other. From what I understand now and because of investment, in foreign investment, the business climate is a little bit better with the exception of the gentleman that got shot. The Court: Have you -- who was that? Mr. Magness: The man that owned the hotels in Moscow that was gunned down, a foreign investor. The Court: Okay. Have you contacted the embassy at all, the state department? Mr. Magness: The U.S. Embassy? The Court: That's correct. Mr. Magness: Yes, Your Honor. In 1994 I contacted the embassy while I was there, with the problem, and I was told that -- a rather unusual thing to do. The Court: What? Mr. Magness: I was told to get a rental truck and drive my property through Finland. The Court: Just load it and do it yourself. Mr. Magness: Yes, Your Honor. The Court: Somebody at the embassy suggested that to you. Mr. Magness: Yes, Your Honor. The Court: Okay. Mr. Magness: As far as the other property, the residential and real estate -- The Court: Are they still doing business like that over there, you think, to some extent? Mr. Magness: Yes, Your Honor The Court: Okay, go on. Mr. Magness: That's pretty much all I've got on that. As far as the TRO goes here in Houston, the irreparable harm that my clients will suffer immediately is, if the property is allowed to leave, there is no guarantees that it will stay here in the country pending this suit. The irreparable harm is not monetary but rather that there is no other recourse. There will never be any property as large as this that might be able to proximate the property that was nationalized. The Court: How much are you suing for, in effect? Mr. Magness: In 1918 the property was worth $162 million. My current estimate, and inflation, it's over $650 million. I have no documentation of the current market value of all the properties. The Court: What about the requirement -- and don't take this one way or the another, but it's a question that I'm going to have to deal with, because I'm getting a ruling out today on this. Mr. Magness: Yes, Your Honor. The Court: Because you say they're leaving on is that correct? You don't have to talk into the microphone Mr. Magness: To the best of my knowledge. The Court: All right. And what about the success on the merits? Mr. Magness: As far as success on the merits, I have documentation here, who the plaintiffs are, that they are in the chain of title. I've got deeds; I've got documents of each of the committees that I had meetings with, including the Committee for City Property, The Property Funding Committee for External Relations, The Committee for Culture and Tourism. I've got -- it's extremely hard to get these documents translated as you can imagine; but I have the Russian and handwritten translations of letters sent to the mayor of St. Petersburg and documentation proving that plaintiffs are the rightful heirs to the property, that they do own the property. I've got newspaper articles and clippings from the Soviet Union that also states such. The Court: All right, has the property been sold, since you say it was put up at auction? Mr. Magness: Not to my knowledge, Your Honor. The Court: Let me ask you this, what's the applicability of the act of state doctrine to the facts in this case? Mr. Magness: The act of state doctrine, as far as I can understand it, we are not allowed to -- the U.S. government is not allowed to interfere with the acts of a sovereign state. So the first nationalization of the property, I believe, would be exempted from -- or the act of state doctrine would apply to. The second nationalization or expropriation of the property is more of a current act. The act that the government took for the Ministry of Culture and a different ministries was more of commercial nature rather than a federal or a governmental nature as well as the expropriation of the pianos. That was also more of a commercial deal. The pianos wre sold. The government went in, in violation of international law, and took those from an individual. The Court: But does the act of state doctrine apply? Mr. Magness: I would argue that the act of state doctrine does not apply. The Court: Why? Once again, I know you've covered it. Hammer it, if you would, right on the nose - Mr. Magness: Okay. The Court: -- exactly why doesn't it. Mr. Magness: Well, we're not asking for the Court to judge the validity of the acts of foreign sovereign states and what they performed; we're merely asking for the return of the property to the individuals, The Court: Is that an exception to the act of state doctrine? Mr. Magness: I believe so. The Court: Now, let me ask you this. You are with a term of what a Bernstein Letter is. Mr. Magness: I've heard of it, but I'm not that with it. The Court: I believe -- now, I believe that it's a stating from the state department that the act of state doctrine does not apply. would that be necessary, sort of a statement, before I can adjudicate the plaintiff's claims? Mr. Magness: Yes, Your Honor. The Court: All right. Let me ask you this. There is anothe alternative, again, just so -- this is -- the quick research that was done. Is there any treaty in existence between the U.S. and Russia that sets forth a controlling legal standard for the compensation for the taking of property? Mr. Magness: Not to my knowledge. The Court: All right, thank you. Response, please. Mr. Cook: Yes, Your Honor. First of all, a few preliminary observations. I've been on this matter an hour and a half now. So the Court and my adversary are well ahead of me. I got this petition about 12:30, and so my research is -- The Court: Well, they knew yesterday. They knew yesterday. It was out yesterday afternoon. Mr. Cook: Their counsel, the fellow in Michigan told me about -- The Court: Well, you tell him that -- and again, I'm not jumping you -- but he wasn't even available. All he had was voice mail. Who does he represent? Mr. Cook: He represents the Russian Federation, as I do, Your Honor. The Court: What's his name? Mr. Cook: Tim Dickinson. The Court: Tim Dickinson. What firm in Michigan? Mr. Cook: He's actually out of a Washington, D.C., firm. He's got his own firm. His name is on the letterhead, and I don't know the name at this juncture. The Court: Because, you know, what I'm doing is giving you a chance to be heard. Mr. Cook: I understand. The Court: In a classic TRO, if I wanted to, I could have done that yesterday and seized everything and shut it down. So it's not your fault. You've been in for an hour and a half, but somewhere the other firm had all night and this morning -- it's not a lot of time -- but certainly it more time than my just signing an order without notice. Mr. Cook: The Court's point is well taken. I do know folks are scrambling around trying to retain a counsel for the other defendants, the Russian Ministry of Culture, The Russian State Diamond Fund and the American-Russian Cultural Cooperation Foundation; and as you may expect, there's phone calls and conflicts, checks and all of that stuff. But for whatever it's worth, I'm the only body here, so I would address some of the Court's concerns. First of all, based on what I do understand and what I heard, a lot of the discussion about the piano factory, the CM Schroeder Piano Factory business, which has nothing to do with the Romanov jewels, I don't believe there is any claim, at least that I can discern from reading the pleadings and listening to the argument of counsel that would track any claim of title running interest in the Romanov jewels per se, so I do think we're talking about apples and oranges to some extent in that regard. I also believe that the act of state doctrine and perhaps was conceded in discussion with opposing counsel that indeed the act of state doctrine does apply but a Bernstein letter would be required and that conditions precedent -- The Court: slow down a bit -- Mr. Cook: Conditions precedent for establishing a exception have not been fulfilled. I have some materials here, and I don't purport to have exhaustive knowledge or have read all of these materials at this juncture, but from what I understand the Foreign Sovereign Immunities Act at 22 USC Section 2459 exempts from judicial seizure cultural objects imported for temporary exhibition, and that's what we've got here with the - The Court: Say that again. Just repeat that. Foreign sovereign immunities does what? Mr. Cook: It exempts from judicial seizure cultural objects imported for
temporary exhibition. The Court: Well, you might try. What's the key section? Mr. Cook: The key language reads as follows: "No court of the United States and any state, the District of Columbia or any territory or in possession of the United States may issue or enforce any judicial process or enter any judgment decree of order for the purpose of having the effect of depriving such institution or any carrier engaged in transporting such work or object within the United States of custody or control of such object if before the importation of such object the president or his designee has determined that such object is of cultural significance and that the temporary exhibition or display thereof within the United States is in the national interest." And a notice to that effect has been published in the Federal Register. Indeed, such a notice was published in the Federal Register at Volume 61, No. 213, on Friday, November 1st, 1996. That notice establishes the cultural significance of the objects to, with the Romanov jewels imported for exhibition. it also -- there are two other salient points we're underscoring. First of all, the jewels are not leaving the country anytime soon. As spelled out in the Federal Register -- The Court: Well, isn't there a question as to whether they're going on to the next stop? Mr. Cook: San Diego. The Court: San Diego? Some negotiations -- just what I read in the paper -- that in effect they might stay here or go home unless some sort of an additional deal could be worked out? Mr. Cook: my understanding is that, it is contemplated that they're on their way to San Diego. In fact, one of the things that is being discussed at this point is the city of San Diego is seeking counsel to intervene in the lawsuit. The Court: In this lawsuit? Mr. Cook: Yes, Your Honor. So, they have some standing and some interest and economic interest, if you will, in protecting their position. The objects, the Romanov jewels themselves as detailed in the federal register are also subject to loan agreements with foreign lenders, who ostensibly have an interest, and that's being sorted -- The Court: Of course any kind of seizure of any item, even domestically, on post judgment turnover of receivership, is always taken subject to existing leaves. Mr. Cook: That's correct, Your Honor. But I think the point is, simply stating it, is that the law is pretty clear that these kind of objects and assets are indeed immune from judicial seizure. The Court: What about -- if we don't seize it, we just freeze it here, pending a preliminary injunction hearing, because this is only an emergency hearing with no evidence in effect, some documentary evidence. Mr. Cook: Well, I would submit to the Court that the language is pretty clear-cut and express and would also preclude that result. The Court: Well, what about a court of equity? Because we're sitting as a court of equity, not necessarily court of law. Mr. Cook: The language that's used as any judicial proceeding, I would submit, it's splitting some pretty fine hairs, and it is sort of a distinction without a difference as far as the legislation is concerned. Our position would be that the assets that we're talking about, the Romanov jewel, are indeed exempt from judicial seizure. It's probably also worth noting that according to the pleadings we've had a chance to review, there are really two objects that are sought to be imposed upon here. One is the jewels, themselves; and, two, are the proceeds generated from the display that's been held in Houston over the last few weeks. I believe there's $400,000 or thereabouts that they're also seeking to seize or freeze at that juncture as well. Simply stated, as I could state it, the jewels aren't implicated by nature of the claims that had been raised in the petition. Indeed, it's very hard to discern in reading the petition what the gravelment of the complaint is, what the theories or causes of action are that had been raised that would establish a substantial likelihood of success on the merits. But if you go one step further, under the act of state doctrine, under the Foreign Sovereign Immunities Act, and under the Federal Register language and information that I've here cited, there certainly isn't a reasonable basis to enter the kind of emergency relief that is contemplated and being requested in this hearing at this time. The Court: Mr. Magness, Foreign Sovereign immunity Act, you want to discuss that in detail now after Mr. Cook made his presentation, please. Mr. Magness: Yes, Your Honor. Under the Foreign Sovereign Immunities Act, the property that has been appropriated, I would concede is not the exact property, but would come under the exception that says the property is, that property which is - The Court: All right, hold on one second, Mr. Dickinson is now on hold. All right, you tell him we're going to call him back on his voice mail line right now, okay? We'll give you a minute till he gets on the line. Helen, do you want to put this up here now? And give him about a minute to tell him to hang up so we can dial, or we'll all get a busy signal. Mr. Dickinson? Mr. Dickinson: Yes, sir. The Court: Where were you a half hour ago? Mr. Dickinson: I apologize, Your Honor, I was waiting for the call, and I'm afraid I thought the call came in, and I thought it must have been yours, and it must have thrown it in the voice mail. The Court: Well, we called you a couple of times and enrolled into voice mail. Mr. Dickinson: I only had one message. The Court: You got -- I'm talking to my case manager. You got voice mail before and just hung up? Court Clerk: Yes, sir The Court: Right. The only time we put a message on voice mail was when I was in open court and waiting on you. But in any event, we've gone on now for about 30 minutes, and I'll allow you just to pick up as we run, and then I'll get your input. We're listening, now, again, after Mr. Magness and Mr. Cook representing the defendant has had an opportunity to speak. Mr. Magness is picking up as to some points he needs to discuss. Go right ahead, sir. Speak up. Now just get to where you can -- the microphones can pick you up. Mr. Magness: Yes, Your Honor. The Court: Speak up louder. Mr. Magness: Specifically under the Sovereign Immunities Act we're filing under 1605(a)(2), which is an exception, the Foreign Sovereign Immunities Act starts from the presumption that the government is immune unless there is an exception. In this case we're filing -- and it makes provisions for those exceptions. In this case we're filing under Exceptions 1605(a)(2). The Court: Which says -- Mr. Magness: Which says specifically that in the event of a commercial activity carried on in the U.S. by the sovereign, it will not be immune from jurisdiction of U.S. courts. The Court: What's the commercial activity? Mr. Magness: The commercial activity is the actual charging of a fee to view the exhibit. The Court: So, you're talking about -- how much money is in the depository that you're looking for? Mr. Cook says it's about 400,000; is that correct? Mr. Magness: My estimate, Your Honor, is -- there is 400,000 that was paid to the Cultural Foundation or that the Cultural Foundation paid to the Russian government, No. l. No. 2, as of April 22nd it was reported that in Washington, D.C., 80,000 people had seen the exhibit at $9 per person; and here, from the Houston Chronicle, I believe it was reported that a 150,000 people in Houston had seen it at about $6 per person. The Court: What does that come to? Mr. Magness: Probably almost $2 million, Your Honor, I don't have the exact number. The Court: Mr. Cook, response, please. Mr. Cook: Your Honor, this is not a commercial activity. Referring again to the Federal Register in the implementing legislation, it states expressly that the jewels are being imported from abroad for the temporary exhibition, quote unquote, "without profit" within the United States. The Court: What do you mean without profit? There seems to be a lot of money floating around. It's not whether it was without profit. Mr. Cook: There is, but there are costs incurred, there are loans that are taken for the purpose of transporting, insuring and putting on these exhibitions. The Court: Well, did anybody earn any money from this? Mr. Cook: Mr. Dickinson may be able to better address that than I can, Your Honor; but the contemplation is that this is a none-for-profit activity, and that's spelled out in the legislation in the accompanying information with the Federal Registry. The Court: Okay, Mr. Dickinson, now is your time. Go right ahead. Mr. Dickinson: Well, first, Your Honor, with respect to the fact that this is clearly not a commercial activity, as Mr. Cook has just stated, the statement in public register or the Federal Register makes it very clear that these jewels Romanov were imported for a cultural exhibition. I am unaware of the fact that there would be a form of for-profit as to any of this. The funds that have been referred to, the two main sponsors of this, the Russian Organizing Committee and the American-Russian Cultural Cooperation Foundation are both significantly in the hole in terms of the revenues that have been generated. The funds that had been collected by the museums, there are, of course, agreements between the museums and the parties for revenue sharing, and some of those revenues have gone to the museum, and I'm quite confident that they all have not-for-profit status, and so there is certainly no profit here. And in terms of the FSIA - The Court: Meaning -- just for the record -- Foreign Sovereign Immunities Act? Mr. Dickinson: Yes, sir. The Court: Go on. Mr. Dickinson: There is a requirement that the gentleman was just citing the commercial activity. This is not a commercial activity; and, in fact, the Federal Register notice states that these, that these properties were imported specifically for this cultural exhibition, and I believe I'm not sure if Mr. Cook cited the executive order, and the Public Law 89-259 that states very clearly that the courts don't -- I'm not sure -jurisdiction procedure over object that had quite a cultural significance with that notice being granted. The Court: Let me ask you this, just for the record, again, who do you represent? Mr. Dickinson: I represent the Russian Federation. The Court: All right, the government, in effect. Mr. Dickinson: Yes, sir. The Court: Okay. What about the point that Mr. Magness brought up that he's been up there a number of tim es and he has documents showing that he paid export fees or transportation fees, and he's not even gotten his money back, and they said they can't take these items out of the country even though he purports -- and I haven't seen the document -- right here in court, saying he's entitled to some of these items to be shipped out. Mr. Dickinson: Of course I would be very sympathetic to Mr. Magness for those issues. The Court: So what can be done about that? Mr. Dickinson: Well, I think that he should take those grievances to a number of parties; number one, to the state department. The Court: He's taken it to everybody. They jus say we don't know anything about it. Mr. Dickinson: Well, my practice happens to be to help people of that sort. The Court: So you're offering to help him? Mr. Dickinson: I'm offering to look over his matter for him, if he'd like me to, sure. The Court: All right. Then, regardless of how I rule, he's going to get in touch with you on this. What firm are you with? Mr. Dickinson: I was with the firm of Hippins & Crucher, which is a national firm for the last 17 years, and I've recently started a new firm of my own, Dickinson Lanmyer (phonetically spelled). The Court: Where is it located? Mr. Dickinson: Washington, D.C. The Court: What else -- what input do you have? What about the act of state doctrine? Mr. Dickinson: Well, Your Honor, I think I would approach this back from the fact that obviously there are many grievances that many of our citizens have against many foreign governments for various seizures. Again, that's part of my practice, is representing American companies when their funds have been expropriated overseas. I've done work, in fact, for many companies, and I was briefly at the state department in the legal advisors office. The issue here, if we were to allow an American citizen to come in and disrupt this situation, it would have irreparable damage between the countries. For one thing, this is, this exhibit is an exhibit that's intended to foster friendship between the countries, cultural exchanges between the countries. The Court: By the way, has it been agreed that it was leaving Houston and going to San Diego? Because I understand additional negotiations were underway, because they're requesting seizure. Is the exhibit actually going to leave on schedule? Mr. Dickinson: It is intended to leave on schedule. The Court: No, no, not "intended"; will it be leaving on schedule Mr. Dickinson: As of this time, yes. The Court: Okay. Mr. Dickinson: And, Your Honor, we would also be happy to give you representation that these properties are going to be in the United States through next winter, through sometime in February. The properties are going to San Diego, and going to Memphis; and we're a little dismayed, of course, that the plaintiff came in on the last weekday o our exhibit; because if he had come to us in advance, then - and told us he was going to file these papers, we would have had the Attorney General's office and the state department down there, and they're currently working on papers right now. The Court: To what, relative to this? Mr. Dickinson: Yes, sir. The Court: Well, let me ask, Mr. Magness, how come you waited till the Friday before the Sunday that these items were to depart? I know they've been in Houston for a number of months. MR. MAGNESS! Yes, Your Honor. I'm a sole practitioner, I don't even have a clerk, It took me all this time to get this together. As you can imagine, this is a novel argument, it's a new argument, using a Foreign Sovereign Immunities Act. There is not a lot of case law that goes by analogy in this case, and I had to do significant research just to get to this point, as well as the collection of translation of the documents into -- from Russian into English. Had to make sure exactly what each document said that we had from the government of Russia before I could file this. And then it was further hastened and the request for the TRO was made specifically because I was under the impression that the exhibit could leave and could be taken back to the Soviet Union. If the U.S. government is willing to present documentation that states that these items will not leave the United States or U.S. soil, then, I guess, I would be willing to agree that such property -- that maybe the TRO is somewhat unnecessary. The Russian government historically has said one thing and done another. In the previous case, in Washington, D.C., they said that the exhibit was going to be here at a certain percentage and that they're going to share revenue. I don't know why they're saying they're sharing revenue when this gentleman is saying it's not for profit, but apparently they were sharing revenue. The Russian government didn't like the amount of percentage of contract that they were getting, and they renegotiated the contract. So here you have an example of, can we really believe what they say. If you ask my plaintiffs if they trust the Russian government, I think they'd say no. The Court: Mr. Cook, anything further? Mr. Dickinson: Could I respond to that, first, Mr. Cook? The Court: Yes, go ahead. Mr. Dickinson: Two things. First, again, as we go back to the Foreign Sovereign Immunities Act under which the gentleman was just referring, again, this is an act intended to deal with commercial activity. There is nothing indicative in these facts relating to commercial activities. The Houston Museum of Fine Arts is a none-for-profit enterprise that is putting on this exhibit; the executive orders and the law in this area is very clear; the statements that had been published in the Federal Register with respect to the importation of these properties is clear, and the FSIA, the citations that this gentleman has made refer very clearly to commercial activities such as if we were a government coming into the United States and setting up an active enterprise for profit, that would be a different situation. That's not what we have here today. An example that I'd give is perhaps commercial airlines. If this gentleman were to want to file this action in New York where there may be an air flight enterprise or something of that sort, that would be a different situation for me, but that's not what we have here. And FSIA is very clear on that, as are the other laws and the Federal Register notice and the citatio that the State department had given to the Russian government. And, again, I'd just like to emphasize, I apologize for being unavailable to get into this earlier, and I'm sure Mr. Cook made this point, but there will be enormous damage to this exhibit if we are not able to proceed as planned, and all the parties -- we are currently bringing five people from Russia today who will be in Houston over the weekend to prepare the exhibits for its next location, and so, we are, you know, obviously, very upset that this actiion has been filed today, and that -- again, the only other question that I'd like to raise very quickly is, I'm not sure of the legal theory with respect to the 1918 seizure as opposed to the 1994 activity, and I couldn't quite understand that from the pleading. The Court: All right, you want to go over that just briefly? Mr. Magness: Yes, Your Honor. I believe we spoke earlier, when you weren't on the phone, Mr. Dickinson, that the first expropriation occurred in 1918, and I do believe that that expropriation is not the one that allows us jurisdiction under the Foreign Sovereign Immunities Act. The plaintiffs are more relying on the second expropriation which occurred when the government had signed documents and approved that the property was actually going to be titled and owned by the plaintiffs. The expropriation that occurred in 1994 at that point was, they said the property no longer belonged to plaintiffs and that the property would be sold at an auction, because they had the right to do that. In response to two or three of your other points, I'd like to say that it's totally inappropriate for my clients, plaintiffs to file a suit in New York concerning an Aeroflot Airliner, because it's exactly the nature of the kind of property that we're talking about in this case. Under the Foreign Sovereign Immunities Act it's very specific that if it's not the exact property, meaning it's not the Romanov jewels that we're trying to get; it has to be a property that is somehow tied to or related or in exchange for, specifically the Russian Ministry of Culture is the same agency or instrumentality of the Russian Federation that nationalized the property. Commercially owned Aeroflot airliner has no relation whatsoever and could not be used as property exchanged under the Foreign Sovereign Immunities Act. The other thing that hasn't been discussed is -- I was merely on 160(a)(2). If we go to Foreign Sovereign Immunities Act 1605(a)(3), we're also concerned with rights -- an issue where rights in property are taken in violation of international law without just compensation, and that that property or the property exchange for such is in the United States. My argument would be that the State Diamond Fund and the Ministry of Culture and the Russian Federation, one of them has to own this property. Those are the parties that expropriated the property, and their property is in the United States. There is a lot of case law on the commercial activity exception. I'm not quite sure how the treaty that was signed or the executive order gets into this, but I would like to say that the Russian government is not going to set aside any property, internationally, that we would be able to seize or hold as potential security or a collateral in a federal case such as this. Specifically we have an exception where the Foreign Sovereign Immunities Act allows plaintiff to, once they have sued, allows plaintiff to attach the property before there is any judgment. And in this case we're not able to go to the Soviet Union, we've already tried that, we've tried the state department, we've been told to do illegal things by our own 'government, which is, you know, who do you go to? The Court: I don't think Mr. Dickinson was aware of the advice you got, how to get those pianos out of the country. You missed this, Mr. Dickinson. Mr. Magness: Sorry, Mr. Dickinson. The U.S. Embassy in St. Petersburg gave me the advice to, what I thought was break the law, and that was to hire a rental truck, load the pianos up, and drive them through the border into Finland and from Finland have them shipped out. I didn't think that was good advice. Mr. Dickinson: I obviously don't have any knowledge of that. I would like to respond briefly. Number one, it appears, then, that you have an admission that the 1918 acts are not those under which you're suing under the F.S.I.A.; you're suing under the 1994 act, and the 1994 act, according to your pleading, appear to be something that you would then have a different type of a standing to sue the government directly, because that would be something that has happened in 1994, and you believe that you had an agreement that was, that had not been honored. That's quite different than the allegations in the complaint relating to the 1918 allegations. The Court: All right, Mr. Cook, do you want to add anything? Mr. Cook: The only thing I would add, Your Honor, and it may be a rehash, but the general counsel for the United States information Agency has also concluded that with respect to these contemplated schedule for displaying the Romanov jewels, that this is also a matter of a national interest. And, obviously, our position would be that any order restricting or restraining the ability to comply with that schedule, and pointedly to get these jewels off to San Diego would be as well an infringement on the national interest. The Court: All right, anything further, Mr. Magness? Mr. Magness: As far as I know, for a temporary restraining order, what happens to the national interest is not necessarily the test in this case. Maybe for a temporary injunction, but not for a temporary restraining order. And, secondly, I would argue that it's in the national interest of this country to protect the rights of its citizens in foreign countries no matter whether they're dealing in commercial activities or purchasing or trying to inherit, no matter what their activities are, U.S. has a vested interest as well as the Soviet Union in establishing clear law and not violating international law. The Court: All right, anything further from the defense? Mr. Cook: Your Honor, just a small procedural point based on the papers that we have seen as well, as far as the requisites for a temporary restraining order. We have seen no verification affidavit or anything else other than what would basically be hearsay evidence through counsel who, incidently is the star witness in this case, and we would submit that to be taken into account as well. Mr. Dickinson: I'd like to make one final point as well, and that is, that with respect to, if we assume that the 1918 events are not those under which the F.S.S.I. is being used for jurisdiction here, it sounds to me more that what we have here is a contract issue; and, Your Honor, it's not unusual for an American citizen or any other citizen to go into a country and attempt to buy something that's deemed important cultural heritage from which they are then unable to get an export license. That happens all over the world. The Court: Hold it one second. Let me ask you, Mr. Magness, do you have an export license for these pianos? Mr. Magness: Not in my possession. Gracewell & Patterson attorney, Greg Vojack has them in his possession. The Court: So, in other words, these export licenses were issued for these items; is that correct? Mr. Magness: Yes, Your Honor. The Court: Mr. Dickinson, he did have an export license Mr. Dickinson: That's very important, and Your Honor, if that's the case, I'd like to see all those documents, and I think that's very helpful. The Court: Anything further from the defense? Mr. Cook: Nothing further, Your Honor. The Court: Anything further from the plaintiff? Mr. Magness: One more thing, Your Honor, both expropriations are alleged for a TRO hearing. The standard is not to try the case on the merits; obviously, it is mere to prevent the irreparable harm. The Court: All right, if you would be seated, give me about two or three minutes up here to make some notes, and I'm going to announce this right from the bench. (Brief pause.) The Court: All right, this is the ruling of the Court. Based upon the pleadings before me, together with the arguments and admissions of counsel and the applicable law, the plaintiff's request for a temporary restraining order is denied. If either party requests a hearing on the preliminary injunction in this case, please put such request in writing and deliver it to my case manager next week. We'll stand adjourned. (Proceedings concluded.) C E R T I F I C A T E I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter. 3/9/1999 (signature) |
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Created: Sunday, August 22, 1999. Last Updated: Sunday, August 22, 1999. |
