Opposition Brief — Goldberg & Feldman Fine Arts, Inc. v. Autocephalous Greek-Orthodox Church of Cyprus

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No. 91-440 OCT

OFFICE OE THE acu |

IN THE |

Supreme Court of the United States

OCTOBER TERM, 1991

GOLDBERG & FELDMAN FINE ARTS, INC.,

and PEG GOLDBERG,

Petitioners,

Vv.

AUTOCEPHALOUS GREEK-ORTHODOX CHURCH OF CYPRUS

and THE REPUBLIC OF CYPRUS,

- Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION

THOMAS R. KLINE JOHN DAVID HOOVER

(Counsel of Record) SALLY F. ZWEIG

THOMAS E. STARNES JOHNSON, SMITH, DENSBORN,

ANDREWS & KURTH L.L.P. WRIGHT & HEATH

1701 Pennsylvania Avenue, N.W. One Indiana Square,

Suite 200 Suite 1800

Washington, D.C. 20006 Indianapolis, Indiana 46204

(202) 662-2700 (317) 634-9777

Attorneys for Respondents

oS

i

PARTIES TO THE PROCEEDING

All parties to the proceeding are identified in the caption.

The respondent, the Autocephalous Greek-Orthodox Church of

Cyprus, is a religious corporation under the laws of Cyprus. It

has no stock, however, and no parent corporations or subsidiaries

within the meaning of Supreme Court Rule 29.1.

TABLE OF CONTENTS

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REASONS WHY THE PETITION SHOULD BE DENIED.......

1. The Decisions Below Fully Accord With the

Decisions of this Court, the Constitution and All

Pertinent Federal Statutes...... ree, ns yee

II. The Petition Raises Arguments Not Presented to the

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TABLE OF AUTHORITIES

CASES

_ Banco Nacional de Cuba v. Sabbatino,

I OUD. oo oe cee cc cnee

C.H. Nichols Lumber Co. v. Franson,

CL

Delta Airlines v. August,

CR UMNED Soe ccc esse eccne.

Guaranty Trust Co. of New York v. United

States,

a

Hennessy v. Richardson Drug Co.,

I Ds svc ccc ccc ccc ce ss

Puerto Rico v. Russell & Co.,

ee

Romero v. International Terminal Operating Co..

ee

The Sapphire v. Napoleon IIT,

78 U.S. (11 Wall.) 164 (1871) ...........

Stone v. Powell,

meee ee CO PO).............. heanes

United States v. Mendenhall,

CUM 55 5c ccc cece sense

United States v. Atkinson,

I OI cos cece eseces

Verlinden B.V. v. Central Bank of Nigeria,

ee

Youakim v. Miller.

es

CONSTITUTIONS

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Page

iv

Page

STATUTES

Foreign Sovereign Immunities Act of 1976,

Pub. L. No. 94-583, § 3, 90 Stat. 2891

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11, 13

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Judicial Improvements and Access to Justice Act,

Pub. L. No. 100-702, Title II, §§ 201-203,

102 Stat. 4646 (1988) .................. 3

I Seas rod poe Ce oa ean bane oe I

10, 12, 14

es ERE Son ec ce veebecssanecaeeal 13

SUPREME COURT RULES

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2 Ty: a enn i

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No. 91-440

IN THE

Supreme Court of the United States

OCTOBER TERM, 1991

GOLDBERG & FELDMAN FINE ARTS, INC.,

and PEG GOLDBERG,

Petitioners,

¥.

AUTOCEPHALOLS GREEK-ORTHODOX CHURCH OF CYPRLS

and THE REPUBLIC OF CYPRUS,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION

Respondents, the Autocephalous Greek-Orthodox Church

of Cyprus (“Church of Cyprus”) and the Republic of Cyprus,

respectfully request that the Court deny the petition for a writ of

certiorari filed by petitioners Goldberg & Feldman Fine Arts,

Inc., and Peg Goldberg (collectively, “Goldberg’’), which seeks

review of the judgment of the United States Court of Appeals for

the Seventh Circuit in this case. Because Goldberg’s petition

(‘‘Petition’’) is frivolous and advances arguments not previously

raised by Goldberg, the Republic and the Church of Cyprus also

seek an award of just damages and double costs pursuant to

Supreme Court Rule 42.2.

2

OPINIONS BELOW

The opinions and judgments challenged in, and included in

the appendix to, the Petition are not the only opinions and

judgments that have been rendered in this case or that have

addressed the existence of subject matter jurisdiction. On Octo-

ber 24, 1990, the United States Court of Appeals for the Seventh

Circuit affirmed an August 3, 1989 decision by the United States

District Court for the Southern District of Indiana awarding

possession of the Byzantine mosaic fragments at issue in this case

to the Church of Cyprus. That opinion by the court of appeals,

which receives scant mention by Goldberg, specifically addressed

the issue of subject matter jurisdiction, is reported at 917 F.2d

278, and is reprinted in the appendix hereto. (Appendix (““App.”’)

at A-5.)' The district court’s opinion is reported at 717 F. Supp.

1374, and is reprinted in the appendix hereto. (App. at A-43.) In

addition, Goldberg's appendix reprints the Final Judgment and

Order issued by the district court on May 3, 1991, but omits the

memorandum opinion issued by the district court on the same

date. That opinion is not reported, but is reprinted in the appen-

dix hereto. (App. at A-1.)?

' As explained below, the court of appeals denied Goldberg's petition for

rehearing and suggestion for rehearing en banc on November 21, 1990. (App. at

A-41.) On February 20, 1991, Justice Stevens denied Goldberg's application

for an extension of time within which to file a petition for a writ of certiorari

seeking review of the court of appeals’ October 1990 decision. (App. at A-109.)

?In addition to failing to include several opinions in her appendix.

Goldberg has violated Supreme Court Rule 14.1(k)(ii) by failing to append

numerous other orders, judgments and opinions issued by the lower courts,

including (a) the Seventh Circuit’s November 21, 1990 denial of Goldberg's

petition for rehearing and suggestion for rehearing en banc (App. at A-41);

(b) the district court's Order of November 9, 1990, denying a motion by

Goldberg to set aside the judgment of possession based on alleged newly-

discovered evidence (App. at A-111); (c) the court of appeals’ March 19, 1991

dismissal of Goldberg's appeal of that Order for failure to prosecute (App. at

A-125); and (d) the letter from the Clerk of this Court indicating that Justice

Stevens had, on February 20, 1991, denied Goldberg's application for an

extension of time to file a petition for a writ of certiorari seeking review of the

court of appeals’ October 1990 decision. (App. at A-109.) Because reference to

these prior orders and judgments is necessary to a full understanding of the

extent to which the issue of subject matter jurisdiction has been raised and

resolved in the courts below, the Church and the Republic of Cyprus have

incurred the substantial expense of including these orders and judgments in

(Footnote continued on next page)

3

JURISDICTION

The Church and the Republic of Cyprus take no issue with

Goldberg’s statement of the basis for this Court's jurisdiction.

The facts demonstrating the existence of federal subject matter

jurisdiction, which Goldberg claims is lacking, are set forth

below in the Statement of the Case.

STATUTES INVOLVED

Goldberg's statement of the statutes involved omits subpara-

graph “(4)” of 28 U.S.C. § 1332(a). When this action was filed,

the pertinent parts of 28 U.S.C. § 1332(a) read:

(a) The district courts shall have original

jurisdiction of all civil actions where the mat-

ter in controversy exceeds the sum or value of

$10,000, exclusive of interest and costs, and is

between—

o B eB

(2) citizens of a State and citizens or

subjects of a foreign state;

6 * =

(4) a foreign state, defined in section

1603(a) of this title, as plaintiff and citi-

zens of a State or of different States.

28 U.S.C. § 1332(a).’

STATEMENT OF THE CASE

The Church of Cyprus and the Republic of Cyprus filed this

action in the United States District Court for the Southern

District of Indiana on March 29, 1989. They sought principally

(Footnote continued from previous page)

their appendix to this brief. However, because Supreme Court Rule 14.1 (k)(ii)

required Goldberg to include all opinions, orders and judgments rendered in

this case in her appendix, the Church and the Republic of Cyprus seek an

award of the costs they have incurred to correct Goldberg's omissions in this

regard.

Z ’ This action was filed before May 18, 1989, which was the effective date of

1988 amendments to 28 U.S.C. § 1332 that, among other things, increased the

“amount in controversy” requirement from $10,000 to $50,000. Judicial

Improvements and Access to Justice Act, Pub. L. No. 100-702, Title II, §§ 201-

203. 102 Stat. 4646 (1988).

4

to recover from Goldberg possession of four fragments of a

Byzantine mosaic © len from the apse of the Church of the

Panagia Kanakaria (“Kanakaria Church”) in Lythrankomi,

Cyprus, where the mosaic had been installed in the early part of

the Sixth Century.‘ The complaint, which appears in the appen-

dix hereto, also sought the recovery of damages attributable to

the loss of use of the mosaics and any physical damage Goldberg

may have caused to the mosaics. (App. at A-127.)

The complaint invoked federal diversity jurisdiction pursu-

ant to 28 U.S.C. § 1332. (App. at A-128.) The complaint stated

that the amount in controversy exceeded $10,000. (App. at

A-128.) The complaint identified the Church of Cyprus as “an

autonomous and independent branch of the Christian Orthodox

Church,” with its principal offices in Nicosia, Cyprus. (App. at

A-127.) The Republic of Cyprus was identified in the complaint

as a foreign state. (App. at A-127.) Goldberg & Feldman Fine

Arts, Inc., was identified as an Indiana corporation having its

principal place of business in Indiana. Peg Goldberg was

described in the complaint as a citizen of Indiana. (App. at

A-127.)

Goldberg answered the complaint on April 19, 1989. (App.

at A-137.) The answer admitted that the Republic cf Cyprus is a

foreign state; that Peg Goldberg is an Indiana citizen; that

* Goldberg erroneously states that the mosaic fragments were taken from

“an abandoned church in the far northern portion of the Turkish Federated

Republic of Cyprus.” (Petition at 5.) In a finding Goldberg has never ques-

tioned on appeal, the district court held that neither the Kanakaria Church, nor

its mosaic, was ever abandoned. (App. at A-86.) Moreover, the Kanakaria

Church is located in the town of Lythrankomi, which is part of the Republic of

Cyprus. There is no record of any “Turkish Federated Republic of Cyprus.”

(Petition at 5.) Likely, Goldberg meant to refer either to the so-called “Turkish

Federated State of Cyprus” (“TFSC”). or to the so-called “Turkish Republic of

Northern Cyprus,” successive regimes that have purported to govern northern

portions of Cyprus since it was invaded and occupied by Turkish troops in 1974.

As the Seventh Circuit held, these alleged “governments” were recognized only

by Turkey; “all other nations in the world—including the United States—

have never recognized them, and continue to recognize the Republic of

Cyprus... as the only legitimate government for all Cypriot people.” (App. at

A-7-A-8.) Indeed, the court of appeals rejected Goldberg's contention that

certain “TFSC™ edicts had affected the Church of Cyprus’ title to the mosaics,

refusing to honor “TFSC™ decrees because the “Republic of Cyprus remains

the only recognized Cypriot government, the sovereign nation for the entire

island.” (App. at A-32.)

5

Goldverg & Feldman Fine Arts, Inc., is an Indiana corporation

having its principal place of business in Indiana; and that subject

matter jurisdiction existed pursuant to 28 U.S.C. § 1332. (App.

at A-137-A-138.)

Before the trial, the issue of money damages was severed

from the issue of right to possession of the mosaics. (App. at

A-46.) Trial on the issue of possession began on May 30, 1989,

and lasted six days, except for one witness who testified later by

deposition. On August 3, 1989, the district court issued a Memo-

randum of Decision and Order awarding possession of the mosa-

ics “to the true and rightful owner, the Church of Cyprus.” (App.

at A-99.) Although Goldberg was not then challenging subject

matter jurisdiction, the district court determined that Peg

Goldberg and her corporation are Indiana citizens; that the

Republic of Cyprus is a sovereign nation; and that the Church of

Cyprus is a religious organization with its principal offices in

Nicosia. (App. at A-46.) Thus, the district court explicitly ruled

that it had subject matter jurisdiction pursuant to 28 U.S.C.

§ 1332(a), because of the diversity of citizenship of the parties.

(App. at A-46.)

On August 21, 1989, Goldberg appealed the district court's

judgment on the issue of possession to the United States Court of

Appeals for the Seventh Circuit. Goldberg's initial jurisdictional

statement and initial brief to the Seventh Circuit made no argu-

ment that subject matter jurisdiction was lacking. (App. at

A-15.) On November 17, 1989, however, Goldberg filed an

amended jurisdictional statement, which argued that the trial

record did not establish that the Church of Cyprus was a “citizen

or subject of a foreign state” within the meaning of 28 U.S.C.

§ 1332(a)(2). (App. at A-15-A-16.) Goldberg claimed that the

record lacked evidence that the Church of Cyprus was “incorpo-

rated” under the laws of Cyprus. (App. at A-16.) According to

Goldberg, if the Church of Cyprus was a voluntary association,

not a corporation, and if the church had members in Indiana,

complete diversity would not exist. /d.° The parties then filed

separate briefs on this jurisdictional issue.

On October 24, 1990, the Seventh Circuit affirmed the

district court’s judgment awarding possession of the mosaics to

* There is no evidence in the record indicating that any Indiana citizens are

members of the Church of Cyprus.

6

the Church of Cyprus. In an opinion by Chief Judge Bauer for a

unanimous panel, the court of appeals also expressly rejected

Goldberg's challenge to subject matter jurisdiction. The court

held that the evidence at trial “sufficiently established that the

Church is recognized under and by the laws of the Republic of

Cyprus as a distinct juridical entity. and thus is a ‘citizen or

subject’ of that state” for the purposes of diversity jurisdiction.

(App. at A-17.) The court of appeals based this holding upon

trial evidence (a) that the Constitution of the Republic of Cyprus

recognizes the existence of the Church of Cyprus and explicitly

accords it the exclusive right of regulating and administering its

own internal affairs and property in accordance with the Holy

Canons and its Charter; (b) that a statute of the Republic of

Cyprus permitted religious corporations such as the Church of

Cyprus to own and register property in their own names; and (c)

that the Church of Cyprus had, pursuant to that statute, regis-

tered its title to the Kanakaria Church in the Land Registry

Office of the Republic of Cyprus. (App. at A-17.) The court of

appeals denied Goldberg's petition for rehearing and suggestion

for rehearing en banc on November 21, 1990. (App. at A-41.)

On February 19, 1991, the ninetieth day after the denia! of

rehearing, Goldberg, acting through new counsel, filed an appli-

cation with the Supreme Court seeking a 60-day extension of

time to file a petition for a writ of certiorari to review the court of

appeals’ October 1990 decision. A copy of that application is

included in the appendix hereto. (App. at A-145.) That applica-

tion announced only one issue which Goldberg would submit for

review by the Supreme Court: “whether and when the courts of

the United States should give effect to the domestic acts of a

foreign government noi recognized by the United States govern-

ment.” (App. at A-146.) The application made no mention of

any intent to challenge the court of appeals’ holding that subject

matter jurisdiction existed* On February 20, 1991, Justice

* The application also made no reference to an Agreed Order. entered by

the district court on August 8, 1989, which reflected Goldberg's agreement not

to seck an extension of time in connection with any appeal. (App. at A-105.)

After Justice Stevens denied the application, Goldberg's counsel filed a reply

brief indicating that counsel would not have filed the application for an

extension of time had they known about the order barring Goldberg from

doing so.

7

Stevens denied, without opinion, the application for an extension

of time within which to file a petition for a writ of certiorari.

On August 6, 1990, while her first appeal was pending in the

Seventh Circuit, Goldberg filed a motion in the district court to

set aside the judgment of possession based on alleged newly-

discovered evidence. The district court denied that motion on

November 9, 1990 (App. at A-111), and Goldberg filed a notice

of appeal of that decision on December 7, 1990. That appeal was

dismissed by the court of appeals on March 19, 1991, for failure

to prosecute, Goldberg having failed to file a brief or to respond

to an order to show cause as to why the appeal should not be

dismissed. (App. at A-125.)

Having exhausted all appeals on the judgment of possession,

and having abandoned her second appeal to the Seventh Circuit,

Goldberg, acting without counsel, filed a motion in the district

court on April 11, 1991, seeking dismissal of the case for lack of

subject matter jurisdiction.” Incomprehensibly, Goldberg argued

that the Republic of Cyprus was not a “foreign state” within the

meaning of 28 U.S.C. §§ 1332 or 1603(a), and, again, that the

Church of Cyprus was not a “citizen or subject of a foreign

state.” Goldberg also appeared to argue that neither she nor her

corporation were citizens of a “State” within the meaning of 28

U.S.C. § 1332. On April 25, 1991, the Church and the Republic

of Cyprus opposed the motion to dismiss, sought sanctions for its

filing, and moved to dismiss voluntarily its claim for damages.

On May 3, 1991, the district court denied Goldberg's

motion to dismiss, holding that “this Court has subject matter

jurisdiction under any rational reading of the diversity statute.”

(App. at A-4.) Under that statute, the district court held,

Goldberg and her corporation are clearly citizens of a State and

the Republic of Cyprus is clearly a foreign state. (App. at

A-3-A-4.) Moreover, the district court held that the Seventh

Circuit, in a decision binding under the “law of the case” doc-

trine, had already conclusively determined that the Church of

Cyprus is a citizen or subject of a foreign state under the

"In this motion for dismissal, Goldberg also inexplicably sought dismissal

for lack of personal jurisdiction As the Petition raises no challenge to the

existence of personal jurisdiction, Goldberg apparently does not seek this

Court's review of that issue In any event, the district court's rejection of

Goldberg's attack on persona! jurisdiction was correct (App. at A-2), and no

reason exists to warrant review of that ruling by this Court.

8

diversity statute. (App. at A-4.) Having denied the motion to

dismiss, the district court authorized the voluntary dismissal of

the damages claim, thereby dispensing with the only remaining

claim in the case, and issued a final judgment confirming resolu-

tion of all issues in favor of the Church and Republic of Cyprus.’

(Petitioners’ App. at A-3.)

On May 10, 1991, Goldberg appealed the district court's

May 3 decision to the Seventh Circuit. On June 21, 1991, after

receiving only Goldberg's brief, the court of appeals summarily

affirmed the district court's judgment. ( Petitioners’ App. at A-1.)

The court of appeals held that it had decided the jurisdictional!

issues in its earlier opinion and that Goldberg “cannot collater-

ally attack that decision by challenging subject matter jurisdic-

tion in this case.”’ (Petitioners’ App. at A-2.)

Acting through yet another attorney, Goldberg filed the

Petition in this Court within 90 days of the Seventh Circuit's

most recent decision. With that filing, Goldberg has commenced

the second proceeding in this Court, the fifth appellate proceed-

ing overall (not including motions for stay and petitions for

rehearing), and the seventh post-trial proceeding to attack the

district court's initial judgment awarding possession of these

priceless, sacred and ancient mosaics to their rightful owner, the

hurch of Cyprus. For the reasons set forth below, the Church

and the Republic of Cyprus ask that this vexatious and frivolous

petition be denied, and that an award of just damages and double

costs be imposed upon Goldberg.

* The district court denied the motion for sanctions filed by the Church and

the Republic of Cyprus, but granted their motion to vacate a stay previously

entered by the district court, which had limited movement of the mosaics

during the pendency of the litigation. (App. at A-4.) Subsequent motions to

“impound” the mosaics pending appeal of the district court's May 3 decision

were denied by both the district court and the court of appeals, and the mosaics

were returned to Cyprus.

9

REASONS WHY THE PETITION SHOULD BE DENIED

I. The Decisions Below Fully Accord With The Decisions Of

This Court, The Constitution And All Pertinent

Federal Statutes

Goldberg argues that this Court should grant the Petition

because the rulings of the courts below regarding subject matter

jurisdiction purportedly conflict with this Court's prior decisions

and with limits placed on federal jurisdiction by the Constitution

of the United States and the Foreign Sovereign Immunities Act

of 1976. Apparently abandoning prior rationales, and based

entirely on a misreading of Verlinden B.V. v. Central Bank of

Nigeria, 461 U.S. 480 (1983), Goldberg now advances the argu-

ment that diversity jurisdiction is lacking solely because the

Church and the Republic of Cyprus are “foreign plaintiffs.”

(Petition at 11-14.)

Goldberg’s arguments are meritless. Federal jurisdiction

based on diversity of citizenship unquestionably exists in this

case, and the lower courts’ holdings to that effect comport fully

with the Constitution, with this Court’s prior decisions and with

all pertinent federal statutes.

Article ILI, Section 2, of the Constitution provides that

federal judicial power extends to all controversies “between a

State, or the Citizens thereof, and foreign States, Citizens or

Subjects.” U.S. Const. art. II], § 2. Pursuant to this constitu-

tional authority, Congress has granted federal district courts

jurisdiction over all civil actions which satisfy the “amount in

controversy” requirement and are between (a) “citizens of a

State and citizens or subjects of a foreign state,” or (b) “a

foreign state, defined in section 1603(a) of this title, a» plaintiff

and citizens of a State or of different States.” 28 U.S.C.

§§ 1332(a)(2), (4).

* Section 1603(a) provides that a “foreign state,” subject to an irrelevant

exception, “includes a politica! subdivision of a foreign state or an agency or

instrumentality of a foreign state as defined in subsection (b).” 28 USC.

§ 1603(a). Since no “agency or instrumentality of a foreign state” is a party in

this case, section 1603(b) is irrelevant.

10

These constitutional and statutory provisions permit no con-

clusion but that federal subject matter jurisdiction based on

diversity of citizenship exists in this case. Goldberg has never

denied that the amount in controversy exceeds $10,000. Nor does

she dispute—indeed, her answer to the complaint admitted—

that both she and Goldberg & Feldman Fine Arts, Inc., are

citizens of Indiana. (App. at A-137.)"° In addition, although she

briefly argued the contrary to the district court, Goldberg now

concedes that the Republic of Cyprus is a “foreign state’ and

that the Church of Cyprus is a “citizen or subject of a foreign

state.” Thus, with a foreign state and a citizen thereof aligned as

plaintiffs against citizens of Indiana, subject matter jurisdiction

based upon diversity of citizenship is supported by the diversity

clauses contained in both the Constitution and Section 1332(a)

of Title 28.

This Court has repeatedly affirmed the existence of diversity

jurisdiction in actions brought by foreign states, or citizens or

subjects thereof, against citizens of the United States. Banco

Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964) (action by

instrumentality of the Cuban government against an American

commodities broker); Romero v. International Terminal Operat-

ing Co., 358 U.S. 354 (1959) (claims by Spanish subject against

New York and Delaware corporations); Guaranty Trust Co. of

New York v. United States, 304 U.S. 126 (1938) (action by

Russian sovereign against a New York banking corporation);

C.H. Nichols Lumber Co., v. Franson, 203 U.S. 278 (1906)

(action by citizen of Sweden against Washington State corpora-

tion); Hennessy v. Richardson Drug Co., 189 U.S. 25 (1903)

(suit by citizens of France against citizen of Nebraska); The

Sapphire v. Napoleon III, 78 U.S. (11 Wall.) 164 (1871) (action

by French sovereign against the American ship Sapphire).

As indicated previously, Goldberg argued in her April 1991 motion to

dismiss that neither she nor her corporation were citizens of a “State” within

the meaning of 28 US.C. § 1332(a). This argument, though difficult to

comprehend, was apparently based on a contention that the statute's use of a

capital “S” indicated that the term “State” did not refer to any of the fifty

states in the United States. As her answer to the complaint reflects, however,

Goldberg has never denied that both she and Goldberg & Feldman Fine Arts,

Inc., are Indiana citizens. (App at A-137).

Despite this precedent and the plain meaning of the consti-

tutional and statutory diversity clauses, Goldberg argues that the

absence of subject matter jurisdiction is “confirmed” by the fact

that jurisdiction was predicated on the Church of Cyprus “being

‘a citizen or subject of a foreign state’ and the Republic of

Cyprus being a foreign state. (Petition at 11-12 (emphasis in

original)). According to Goldberg, the Church and the Republic

of Cyprus, as “foreign plaintiffs,” could not invoke federal diver-

sity jurisdiction without running afoul of this Court's decision in

Verlinden. (Petition at 11-14.)

The Verlinden decision, however, provides no support for

Goldberg's position. In that case, a Dutch corporation filed an

action for anticipatory breach of contract in federal district court

against an instrumentality of the Federa! Republic of Nigeria.

Verlinden, 461 U.S. at 483. The plaintiff predicated subject

matter jurisdiction upon the Foreign Sovereign Immunities Act

of 1976 (“the Act”), 28 U.S.C. § 1330(a)."' Reversing a decision

by the United States Court of Appeals for the Second Circuit,

this Court held that the “arising under” clause of Article III of

the Constitution supported jurisdiction under the Act in actions

by foreign plaintiffs against foreign states, even when the rule of

decision may be provided by state law.'* 461 U.S. at 494, 497-98.

In language relied upon by Goldberg, however, the Court agreed

with the Second Circuit that the Constitution's diversity clause

did not support jurisdiction over a foreign plaintiffs claim

against a foreign state or an instrumentality thereof. Because the

diversity clause permits the exercise of jurisdiction over contro-

versies between “a State, or the Citizens thereof, and foreign

States, Citizens or Subjects,” the Court wrote that “diversity

In its entirety, 28 U.S.C. § 1330(a) provides: “The district courts shall

have origina! jurisdiction without regard to amount in controversy of any

nonjury civil action against a foreign state as defined in section 1603(a) of this

title as to any claim for relief in personam with respect to which the foreign

state is not entitled to immunity either under sections 1605-1607 of this title or

under any applicable international agreement.”

? The “arising under” clause provides that federal “judicial Power shall

extend to all Cases, in Law and Equity, arising under this Constitution, the

Laws of the United States, and Treaties made, or which shall be made, under

their Authority... .” U.S.Const. art. III, § 2.

12

jurisdiction is not sufficiently broad to support a grant of jurisdic-

tion over actions by foreign plaintiffs, since a foreign plaintiff is

not ‘a State, or [a] Citize[n] thereof.’ ” 461 U.S. at 492.

Goldberg wrongly construes this language from Verlinden as

holding that diversity jurisdiction can never exist in actions by

“foreign plaintiffs.” The context of the Verlinden decision makes

it plain, however, that the Court was explaining that the Consti-

tution’s diversity clause does not extend federal jurisdiction to

actions by foreign plaintiffs against foreign defendants. Because

the Constitution authorizes federal diversity jurisdiction only

when one or more of the United States or its citizens is aligned

against a foreign state or its citizens, diversity jurisdiction is

lacking ' hen, as in Verlinden, all of the parties are foreign states

or instrumentalities or citizens thereof. The plain language of the

Constitution and the diversity statute, however, clearly extend

federal jurisdiction over suits by foreign plaintiffs (including a

foreign state) against citizens of one or more of the United

States. Neither Verlinden, nor any known decision of any federal

court, has ever held to the contrary.

Goldberg also argues that Verlinden supports an argument

that the Act “bars The Republic of Cyprus and

the . . . Church of Cyprus from invoking the Diversity Clause

of the U.S. Constitution in order to bring an action against either

an individual citizen or a corporate citizen of the state of Indi-

ana.” Petition at 12-13. Yet, neither Verlinden nor the Act

supports this baseless argument. The Act authorizes, but limits,

the exercise of federal jurisdiction with respect to claims against

foreign states. 28 U.S.C. §§ 1330, 1602-1611. The Act simply

has no application to, and imposes no limitations on, claims

against citizens of the United States.” Likewise, Verlinden

involved claims against an instrumentality of a foreign state and

placed no constraints on suits against U.S. citizens. Thus, since

“The 1976 passage of the Act did result in a change to the diversity

statute. In Section 3 of the Act, Congress added subparagraph (4) to 28 U.S.C.

§ 1332(a) to make clear that diversity jurisdiction would not extend to disputes

between US. citizens and a foreign state unless the foreign state is the plaintiff.

Foreign Sovereign Immunities Act of 1976, Pub. L. No. 94-583, § 3, 90 Stat.

2891 (1976).

13

the Church and the Republic of Cyprus sued only citizens of

Indiana, neither the Act, nor Verlinden, can plausibly be con-

strued as undermining the existence of subject matter jurisdic-

tion in this case."

In short, the Constitution, the decisions of this Court and all

pertinent statutes support an exercise of diversity jurisdiction

when, as in this case, a foreign state and a citizen thereof sue

citizens of the United States. Goldberg’s arguments to the con-

trary are completely unsupported and are based solely on a

misreading of case law. Accordingly, because there is no conflict

with the decisions of this Court, with the Constitution, or with

federal law, there is no basis for granting the Petition.

Il. The Petition Raises Arguments Not Presented To The

Courts Below

It is well established that the Supreme Court generally

“does not decide questions not raised or involved in the lower

court.” Youakim v. Miller, 425 U.S. 231, 234 (1976); Delta

Airlines v. August, 450 U.S. 346, 362 (1981) (question not

presented in the court of appeals is not properly before the

“The Church and the Republic of Cyprus can make no sense of

Goldberg's argument that “(t]he definitional parameters allowable under 28

U.S.C. § 1332 are clearly elaborated in 28 U.S.C. § 1332(d) and 28 USC.

§§ 1603(a) and (b) and cannot reasonably be construed to include a ‘third

country’ such as Cyprus.” (Petition at 13.) In 28 U.S.C. § 1332(d), the term

“State” is defined as including “the Territories, the District of Columbia, and

the Commonwealth of Puerto Rico.” Unless Goldberg is again making the

frivolous argument that Indiana is not a “State” within the meaning of the

diversity statute, there is no occasion for reference to 28 U.S.C. § 1332(d).

Similarly, 28 U.S.C. § 1603(a), which is incorporated by reference in the

diversity statute, defines “foreign state” to include any “political subdivision”

thereof and any “agency or instrumentality” thereof, terms which are defined in

28 U.S.C. § 1603(b). There is no contention in this case that any party is a

political subdivision, or an agency or instrumentality, of a forcign state. Thus.

unless Goldberg is arguing that the Republic of Cyprus is not a “foreign state,”

28 U.S.C. §§ 1603(a) and (b) are equally irrelevant. (The reference in 28

U.S.C. § 1603(b) to a “third country” appears designed to bar claims of

sovereign immunity when the purported agency or instrumentality of one

foreign state is, in fact, an entity “created under the laws of any third country.”

That provision clearly has no application in this case.)

14

Supreme Court); United States v. Mendenhall, 446 U.S. 544,

551-52 n. 5 (1980). The Court departs from this principle only in

exceptional cases involving important questions or “plain errors”

by the lower courts that “seriously affect the fairness, integrity or

public reputation of public proceedings.” United States v. Atkin-

son, 297 U.S. 157, 160 (1936); see also Stone v. Powell, 428 U.S.

465, 481 n. 15 (1976).

The Petition in this case violates this fundamental principle

by advancing theories to attack subject matter jurisdiction that

were never raised in the lower courts. Goldberg has never previ-

ously argued that subject matter jurisdiction is lacking because

the Church and the Republic of Cyprus are “foreign plaintiffs.”

In her first appeal to the Seventh Circuit, Goldberg based her

challenge to subject matter jurisdiction on a contention that the

trial record lacked evidence to establish that the Church of

Cyprus is a “citizen or subject of a foreign state’ under 28

U.S.C. § 1332(a)(2). Based on a fact-specific review of the trial

record in this case, the Seventh Circuit rejected that argument

because the evidence amply supported a finding that the Church

of Cyprus is a distinct juridical entity under Cypriot law. (App.

at A-17.) That holding was consistent with the test for determin-

ing the citizenship of foreign entities adopted by this Court in

Puerto Rico v. Russell & Co., 288 U.S. 476, 479-482 (1933),

and Goldberg failed, in any event, to seek the Court’s review of

that holding in a timely fashion.’ Instead, she raised a new

attack on subject matter jurisdiction by filing a motion to dismiss

in the district court after all appeals of the district court’s first

judgment had been exhausted. Even then, however, Goldberg

never argued that the existence of “foreign plaintiffs” barred the

assertion of subject matter jurisdiction. Rather, she argued solely

that she and her corporation are not citizens of a “State,” that

the Republic of Cyprus is not a “foreign state,” and, again, that

the Church of Cyprus is not a “citizen or subject of a foreign

state.” Not surprisingly, the district court and the court of

'S Indeed, Goldberg never sought review of that holding. As indicated

previously, her application for an extension of time to seek review of the court of

appeals’ first decision in this case made no mention of any desire to present a

question regarding subject matter jurisdiction. (App. at A-145.)

ee ee On tel at Mis

|

:

15

appeals summarily rejected these absurd arguments. (App. at

A-3-4; App. at A-17.)

No basis exists for allowing Goldberg to present yet another

theory for attacking subject matter jurisdiction in this case.

Goldberg’s new argument raises no important questions that

must be reviewed in the interests of justice. Rather, to put an end

to Goldberg's obsessive protraction of this litigation, the interests

of justice demand that the Petition be categorically denied and

that the Church and the Republic of Cyprus be awarded just

damages and double costs.

i6

CONCLUSION

Goldberg has presented no issue that warrants this Court's

review. There is no rational basis for her belated argument that

subject matter jurisdiction is lacking because the Church and the

Republic of Cyprus are “foreign plaintiffs.” All of the prerequi-

sites for federal diversity jurisdiction clearly exist in this case.

The lower courts’ decisions in this regard conflict with no deci-

sions of this or any other court, with no provision of the Constitu-

tion and with no federal statute. For all of the foregoing reasons,

the respondents respectfully request that Goldberg's Petition be

denied in its entirety. Moreover, given the frivolous nature of the

Petition, the respondents respectfully request that they be

awarded just damages and double costs pursuant to Supreme

Court Rule 42.2.

Respectfully submitted,

THOMAS R. KLINE

(Counsel of Record)

THOMAS E. STARNES

ANDREWS & KURTH L.L.P.

1701 Pennsylvania Avenue, N.W.

Suite 200

Washington, D.C. 20006

(202) 662-2700

JOHN DAVID HOOVER

SALLY F. ZWEIG

JOHNSON, SMITH, DENSBORN,

WRIGHT & HEATH

One Indiana Square, Suite 1800

Indianapolis, Indiana 46204

(317) 634-9777

Attorneys for Respondents