Helms-Burton Unleashed – Newly-Unfrozen Law Allows U.S. Nationals to Sue Over Trafficking in Propert | Article

In 1959, following the Cubanrevolution, the new Cuban government, led by Fidel Castro, seized landestimated at USD 100 billion (in today’s values). The property owners werelargely left without remedy. But in 1996, the United States legislature passeda new law, the Cuban Liberty and Democratic Solidarity Act (known as the Libertad Act, and commonly referred to as the Helms-Burton Act, named after two ofits sponsors). Title III of the Helms-Burton Act purports to give thoseproperty owners who are U.S. nationals a right to sue persons and entities whotrafficked in property seized by the Cuban governmen

Immediatelyafter the Helms-Burton Act was enacted, then-President Clinton suspended TitleIII, as has every president since, meaning that U.S. nationals could not bringlaw suits under it. But in late 2018, the Trump administration indicated thatit was considering ending the suspension in an attempt to place additionalpressure on the Cuban government by deterring companies from investing in anddoing business with Cuba. On May 2, 2019, the Trump administration allowed thesuspension to lapse, thus unleashing potential extensive litigation.

However,since then, only twenty (20) lawsuits have been filed in United States DistrictCourts using Title III against more than 40 defendants, some of whom areimplicated in more than one complaint. Amajority of these lawsuits have been filed in the United States District Courtfor the Southern District of Florida, with one lawsuit filed in each of the UnitedStates District Court for the District of Columbia, the United States DistrictCourt for the District of Delaware, the United States District Court for theDistrict of Nevada, and the United States District Court for the WesternDistrict of Washington at Seattle.

The Helms-BurtonAct directs courts to presume that claims that were certified by the ForeignClaims Settlement Commission (the “FCSC”) are valid and correct as to theamount of the claims. Approximately 6,000 claims were certified by the FCSC,and approximately 900 of those certified claims are in an amount greater thanthe $50,000 minimum (at the time of confiscation by the Cuban government)required by the Helms-Burton Act.TheFCSC maintains a publicly available list of U.S. claimants whose claims havebeen certified, thus providing guidance as to potential future Title IIIplaintiffs. While certified claims provide plaintiffs an easy tool to prove the validityand amount of their claims, those with uncertified claims may also bring suit,but will face an uphill battle proving those claims. It is estimated that thenumber of uncertified claims can reach up to 200,000.

Many of thelawsuits include uncertified claims, five (5) of which have been brought asclass action suits, but only eight (8) of the lawsuits present certifiedclaims. Inaddition to the 6,000 certified claims, Based on the current lawsuits to datethere are fifty-one (51) plaintiffs (some of whom are plaintiffs in more thanone lawsuit), including the named plaintiffs in the class action suits.Theexact number of plaintiffs is impossible to ascertain because the five (5)class action lawsuits filed could represent numerous unnamed plaintiffs whosenumber could possibly far exceed the few plaintiffs designated asrepresentatives for others who are similarly situated within the class.

The currentand potential plaintiffs include individuals, small businesses, and largeinternational entities. With interest, the approximate current value of allcertified claims is USD 8.5 billion. Ofthe nearly 6,000 certified claims, claims range from trivial amounts of onlyUSD 1 (the smallest certified claim by Sara W. Fishman) to multimillion dollarclaims up to approximately USD 267.5 million (the largest certified claimcontrolled by Office Depot, Inc.). From the twenty lawsuits, plaintiffs are seeking damages ranging from USD 280million to USD 792 million, which damages calculations include the value of thecertified claim plus interest and in certain instances, additional trebledamages and other costs.

From thecurrent twenty lawsuits, five cruise lines, ten travel-related Internet sites,two hotel companies, one bank, two airlines, five Republic of Cubagovernment-operated companies, and Amazon have been named as defendants. It is currently anticipated that other U.S.-based airlines and upwards of fortynon-U.S. based airlines may be named as defendants in existing litigation ornew lawsuits.

The smallnumber of law suits filed so far has come as a surprise to many. Although theroad map to successful Helms-Burton litigation has not yet been written, giventhe newness of its unfreezing, such litigation will likely take the generalform of typical suits in Federal courts – beginning with the filing of acomplaint, describing the factual and legal basis for the plaintiff’s claim,followed by motion practice, discovery, and finally, if the case has nototherwise been resolved, trial. However, potential litigants might be deterredby various hurdles.

For example,in order for a U.S. court to hear any case, including a Helms-Burton case, theplaintiff must first establish that the court has personal jurisdiction overthe defendant. To have personal jurisdiction over a defendant, the defendantmust have some business ties to the U.S. Current defendants include both U.S.and non-U.S. entities. Non-U.S. entities are being named as defendants because theplaintiffs allege that they either regularly transact business within the U.S. orthey caused damages by engaging in solicitation to further the traffickingactivity within the U.S. even though such acts may have been committed abroad. However, establishing personal jurisdictionover defendants who have few business dealings with the U.S., and whosetrafficking activities had no connection to the U.S., is a difficult, andpotentially impossible task.

Additionally,some countries, including Canada, Mexico, the U.K., and the E.U. have enacted“blocking statutes,” which block judgments under the Libertad Act. Althoughforeign assets of a defendant may be protected, plaintiffs may still collect bytargeting a non-U.S. entity’s U.S. assets. However, to the extent that a defendant onlyhas assets in countries that have enacted a blocking statute, any judgmentobtained against such a defendant would be worth very little, if anything.

Further, theHelms-Burton Act may be subject to constitutional challenges, which could causeany litigation to stretch for many years and cost inordinate amounts of money.Some plaintiffs may not be able to afford such litigation, and many attorneysmight be reluctant to invest the resources in a cause of action that has an uncertainfuture.

The lawsuitsthat have already been filed are still in their preliminary phases, so it isdifficult to ascertain how long they will continue and how they will unfold.Generally, all plaintiffs have presented arguments alleging that the specifieddefendants are engaging in unlawful “trafficking” on property that was formerlyowned by such plaintiffs and confiscated from them by the Cuban government.Under Title III, trafficking is defined as profiting from or engaging incommercial activity on confiscated property. The current lawsuits have broadly construed “trafficking” to include not onlydirect use and benefit of confiscated property, but also indirect use byproviding services related to the confiscated property that leads to financialbenefits. For example, defendants operating internet hotel booking sites havebeen accused of profiting from and facilitating reservations at hotels locatedon confiscated property, while banks have been accused of trafficking due to profits earned fromprocessing transactions for and collecting fees from a bank nationalized by theCuban Government, in which plaintiffs claim to have a 10.5% equity interest.

Potentialfuture defendants could include entities that lease property or are engaged inthe hotel, construction, and other travel and tourism industries in Cuba, aswell as banking or any other industry activity that facilitates businessactivities within the Republic of Cuba if they profit from or have an interestin such Cuba-based activities and meaningful financial exposure within theUnited States. Due to the broad language of Title III,affiliates of persons trafficking in such property can be reached in the U.S.even if they themselves do not engage in the trafficking activity, but ratherare part of a foreign conglomerate with entities that have activities in Cuba.As these lawsuits unfold, it will be interesting to see which defendants aredismissed for lack of personal jurisdiction despite Title III’s attempted broadreach.