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A Fresh Take

Insights on M&A, litigation, and corporate governance in the US.

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Eleventh Circuit Limits Some Claims Under Title III of the Helms-Burton Act

Last week, the Eleventh Circuit Court of Appeals became the first Court of Appeals to interpret Title III of the Helms Burton Act, which provides for a private right of action for U.S. nationals whose property was confiscated by the Cuban government.  In Gonzalez v., the Eleventh Circuit held that claims that arose prior to March 12, 1996—the day on which the Helms-Burton Act was enacted—are not actionable if brought by an individual plaintiff who did not already “possess” the claim to the confiscated property on that date.  Specifically, in Gonzalez, the plaintiff asserted a claim based on Cuba’s nationalization of land owned by his grandfather in 1959, which plaintiff acquired in 2016.  The District Court dismissed Mr. Gonzalez’s claim as barred by the temporal restrictions of the Helms-Burton Act, a decision that the Eleventh Circuit affirmed.  

Key Takeaways

  • The Eleventh Circuit held that the Helms-Burton Act bars claims that arose before March 12, 1996, and which were “acquired,” including via a gifted inheritance, by a prospective plaintiff after that date.
  • The Eleventh Circuit ruling is likely to provide defendants in Helms-Burton cases with a powerful tool, particularly against claims brought by individuals (as opposed to corporate entities), who are likely to have acquired their claims via inheritance.
  • The Eleventh Circuit ruled on a case brought by a pro-se plaintiff, and so it is possible that a claim litigated by professional counsel in a different court may turn out differently.  The same issue is currently pending in the Fifth Circuit, which will likely provide additional guidance on this issue.

Helms Burton Litigations

Title III of the Helms-Burton Act allows U.S. nationals to bring suit against a party who “traffics” in property that was confiscated from U.S. nationals by the Cuban government.  This right of action was suspended until May 2, 2019.  Since that date over 30 cases have been filed seeking compensation for property confiscated by the Cuban government.  These claims have targeted a wide variety of industries, including hotels, shipping, airlines, hydrocarbons, and banking.  The Act authorizes damages equivalent to the greater of the property’s current market value, or the value when confiscated plus interest.  Further, if the defendant is on notice of the claim, damages can be trebled—meaning that some claims are for hundreds of millions of dollars.

Many of these cases have been brought by individuals who allege that the Cuban government expropriated property owned by their parents or grandparents in Cuba.  The largest wave of expropriations took place in 1959 and 1960, meaning that in many cases the original claim-holder is deceased, and the claim is brought by an inheritor.  In a few cases, however, the claims have been brought by corporate entities.  It remains to be tested whether Helms-Burton claims held by corporate entities that hold their claims because, for example, of a merger or purchase of equity that took place after March 12, 1996, are valid, in light of the restrictions contained in the Helms Burton Act.  The Gonzalez case—which is not directly applicable since it was brought by an individual plaintiff who acquired his claim from his mother who in turn inherited from her deceased husband—offers some hints at the way courts may look at this issue.

The Gonzalez Case

In the case at hand, Mr. Gonzalez brought a claim against Amazon and Shusshi International, alleging that the defendants sell charcoal produced on land that was confiscated from Mr. Gonzalez’s grandfather by the Cuban government in 1959.  Mr. Gonzalez’s grandfather passed away in 1988, at which point Mr. Gonzalez’s father inherited the claim.  Mr. Gonzalez’s father passed away in 2016, leaving the claim to the confiscated property to his wife, Ms. Adia Gonzalez, who in turn gifted the claim to the plaintiff.

Amazon moved to dismiss, arguing that the Helms-Burton Act provides that, for claims arising before March 12, 1996, a plaintiff “may not bring an action [unless he] acquires ownership of the claim before March 12, 1996.”  22 U.S.C. § 6082(a)(4)(B).  The District Court ruled that this provision bars claims that were given to a plaintiff after the cutoff date.  The Eleventh Circuit affirmed, finding that Congress’ language is “clear and unambiguous.”

While the statute’s language may be “clear and unambiguous,” plaintiffs in various Helms Burton claims have begun to deploy various strategies to get around this restriction.  For example, one claim was recently brought by the estate of a deceased plaintiff, rather than the inheritor.  In addition, plaintiffs may also try to argue that the statutory deadline should be equitably tolled, an argument the Eleventh Circuit declined to address because Mr. Gonzalez had not alleged equitable tolling in the District Court and therefore waived the argument. 

Whether any of these strategies succeed remains to be seen.  In the meantime, however, what is clear is that for claims regarding property confiscated before March 12, 1996, defendants should closely inquire into how and when the plaintiff came into possession of the claim.