This resolves a lawsuit filed 15 years ago over events in the 1940s.

The Supreme Court handed down three opinions this morning. While some dealt with more compelling subjects than the others, they all basically turned on questions of process and statutory permissions to sue. One, Wisconsin Bell v. U.S. ex rel Heath, is a victory for False Claims Act lawsuits against fraud on the government, with the Court unanimously concluding (in an opinion by Justice Elena Kagan) that fraudulent “claims” on the government covered by the statute can include a reimbursement request in a program to subsidize classroom and library internet, so long as the government pays part of the reimbursement. Justice Clarence Thomas wrote a concurring opinion noting his skepticism that “the FCA applies to funds that private parties pay to other private parties,” an implication he found in the government’s argument. Justice Brett Kavanaugh also wrote a short concurring opinion reiterating separation of powers concerns he has about qui tam lawsuits, in which private parties sue on the government’s behalf.

A second, Williams v. Reed, was more divisive: Kavanaugh wrote in a 5–4 opinion that states can’t defend lawsuits under 42 U. S. C. §1983 on grounds that the plaintiffs failed to exhaust their state administrative remedies before filing suit (in this case, over alleged failures of Alabama to pay timely unemployment claims) when the basis of the lawsuit was precisely that the state’s process had imposed undue delay. To Kavanaugh, this “created a catch-22: Because the claimants cannot sue until they complete the administrative process, they can never sue under §1983 to obtain an order expediting the administrative process.” But to Thomas, joined in dissent by Justices Samuel Alito, Neil Gorsuch, and Amy Coney Barrett, this was a federalism issue: “As a matter of first principles, States have unfettered discretion over whether to provide a forum for §1983 claims in their courts. And, Alabama’s exhaustion rule does not transgress the limitations that our precedents have recognized. . . . Our precedents establish [only] that States must exercise this jurisdictional latitude only through ‘neutral’ rules that do not embody any ‘policy disagreement’ with federal law.”

The headliner was Republic of Hungary v. Simon, which resolves a lawsuit filed 15 years ago over events in the 1940s. At first glance, the case is a sympathetic one: Hungarian Jewish Holocaust survivors and their heirs sued the Hungarian government for taking their property during the Holocaust. But there were two related problems. One is that foreign governments enjoy sovereign immunity from suit; the other is that the American legal system is rightly hesitant to assert worldwide jurisdiction over things that didn’t happen here. Congress, in 1976, enacted the Foreign Sovereign Immunities Act (FSIA) to permit and regulate suits against foreign sovereigns (including foreign ambassadors, state-owned companies, and the like) in specified circumstances. The FSIA has been amended a few times since, usually to add new categories of suits and remedies (such as rules specifically related to museums touring artworks stolen by the Nazis), but it is a famously abstruse statute that provides a feast of ambiguities and complexities for lawyers and headaches for judges. One of its provisions [28 U.S.C. §1605(a)(3)] allows suits against foreign governments for expropriating property “in violation of international law,” but only if “that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state,” or “that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.” (Got it?)

The expropriations in this case were carried out by the Hungarian railway as Hungarian Jews were herded onto trains to be sent to their deaths, so Hungary does not have a moral or legal leg to stand on as to the underlying conduct. But connecting any of this to commercial activities within the United States was a long-shot. The argument by the victims and their families sounds more like a reparations claim: that Hungary and its railway “commingled” the proceeds of these expropriations back in the 1940s with their general assets, and thus this can be tied to bonds issued by Hungary in the 2000s and travel bookings taken by the railway in the United States to this day. That’s just not how Anglo-American law typically works, and the Court was not about to stretch that far without clear direction from Congress to do so. Justice Sonia Sotomayor wrote the Court’s unanimous opinion concluding that the “commingling” theory departed too far from those bedrock principles of legal remedies. The lawsuit must trace the property stolen to the property or commerce used in the United States:

As a general matter, . . . §1605(a)(3) tasks plaintiffs with identifying specific property, or particular property exchanged for that property, “present in the United States in connection with a commercial activity . . . by the foreign state,” or owned by a foreign state agency engaged in commercial activity in the United States. . . . Specifically, plaintiffs must identify either the expropriated property itself (“that property”) or “any property exchanged for such property.”. . . Doing so inevitably requires that plaintiffs show a tracing of some sort that explains the property’s lineage and how it found itself in the United States (or in the possession of a foreign sovereign agency that does commercial activity here).

When the property at issue is tangible expropriated property itself, a plaintiff must allege some facts that give rise to a plausible inference that the property is in the United States. Suppose a foreign sovereign expropriates and retains for its collection a piece of art from a plaintiff. To bring suit . . . the plaintiff would have to put forth some facts that support tracing that artwork to a location in the United States or to the possession of an agency of the sovereign with commercial activities in the United States. A complaint would fail if it instead identified another unrelated artwork expropriated by the foreign state, even if that other artwork had the requisite commercial nexus to the United States. No one disputes that the phrase “that property” in §1605(a)(3) refers only to the specific piece of property taken from the plaintiff. . . .

The same tracing requirement would exist if the foreign sovereign were to exchange the plaintiff ’s artwork for another tangible item. . . . For example, suppose that the sovereign trades the expropriated artwork for a different piece of art. That transaction would not extinguish the plaintiff ’s ability to sue: the other piece of art is, of course, property, and§1605(a)(3) permits suit based on “any property exchanged” for the expropriated property. [Emphasis added; citations omitted]

The victims argued that, once property is converted into money, money is fungible, so “the plaintiff need only identify any fund that was, at any time, no matter how remote, commingled with the proceeds of the foreign sovereign’s sale of the expropriated property. This commingling theory thus does away with the tracing requirement implicit in the phrase ‘exchanged for.’” (Emphasis in original.) The Court found no such exception in the statutory language, and warned of the implications of the

fiction that commingling funds in an account, even if done decades earlier, means the account today still contains funds attributable to the sale of expropriated property. The problem with such a fiction becomes especially clear when a foreign sovereign has used commingled funds not just for commercial activities in the United States but also for commercial and governmental operations all over the world, as is the case here…In the intervening decades, however, Hungary has made countless transactions throughout several institutional collapses and regime changes, resulting in billions in revenues flowing in and out of its treasury. Against this historical backdrop, it is implausible to say that the commingling Hungary did in the 1940s, on its own, establishes that the money it spent in the United States in the 2000s was “exchanged for” the property Hungary allegedly expropriated from respondents. The same is true for the assertion that any of [the railway’s] current possessions were “exchanged for” respondents’ property based solely on the fact that it allegedly liquidated respondents’ property in the 1940s and then commingled the proceeds with its general revenues, given that [the railway] has used those commingled funds in the intervening decades for countless transactions as well. To say otherwise stretches “exchange” to the point of breaking.

The Court did not shut the door on all theories of tracing commingled assets. But, as it has done in other contexts, it refused to create an exception to the rules that would simply excuse the plaintiffs — even sympathetic plaintiffs such as Holocaust victims and their families — from the obligation to trace their harms with evidence.

This item has been edited for clarity since publication.