Criminal Justice & the Rule of Law

Suits Under Title III of the Helms-Burton Act Suffer Their First Significant Setback

John Bellinger, Sean Mirski
Thursday, June 11, 2020, 9:11 AM

One year ago, President Trump allowed Americans with claims to property confiscated by the Cuban government to sue any entity that “traffics” in that property. But a recent decision by a Florida district court has pruned the list of potential plaintiffs substantially.

Wilkie D. Ferguson Federal Court Building Downtown Miami (Phillip Pessar, https://flic.kr/p/dXkb69; CC BY 2.0, https://creativecommons.org/licenses/by/2.0/)

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Congress passed the Helms-Burton Act in 1996 to put economic pressure on the Castro regime. One of the act’s most important components, Title III, allows U.S. nationals to sue persons and entities that “traffic” in property confiscated by the Cuban government, with “traffic” being defined expansively to include not only engaging “in a commercial activity using or otherwise benefiting from confiscated property” but also profiting from any trafficking done by anyone else. If a European hotel chain, for example, decided to open a resort on property confiscated from a Cuban American, Title III would potentially allow the former owner to sue the chain for, at a minimum, the value of his claim. Every past president until President Trump used his statutory authority to suspend Title III’s operation because of vigorous opposition from allies whose companies might be targeted and the prospect of clogging federal courts with Cuba-related lawsuits. Bucking that bipartisan trend, however, Trump allowed the provision to go into effect for the first time on May 2, 2019.


John Bellinger reported last month on developments during the first year of the Trump administration’s activation of Title III. Over that year, 26 suits were filed against purported traffickers, a smaller number than many experts anticipated. Surprisingly, most of these suits were filed against U.S. companies, rather than the European, Canadian and Mexican companies that Congress apparently intended Title III to target.


Because no suits had been filed under Title III before May 2, 2019, U.S. courts have been struggling to interpret many of the statutory terms, including who qualifies as a claimant and what constitutes “trafficking.” On May 11, a district court in Florida dealt a significant setback to prospective Title III plaintiffs, holding in Gonzalez v. Amazon, Inc. that plaintiffs may bring an action under Title III only if they acquired ownership of their claim to confiscated property in Cuba before March 12, 1996. The court’s holding, if followed by other courts, could significantly reduce the number of Title III lawsuits.


The court in Gonzalez was interpreting a provision in Title III stating that “[i]n the case of property confiscated before March 12, 1996, a United States national may not bring an action under [the Act] ... unless such national acquires ownership of the claim before March 12, 1996.” Read naturally, that language suggests that someone who inherits a claim on or after March 12, 1996, does not have a Title III claim. But until recently, that was an open question, and two of the legislators intimately involved with Title III’s enactment—including Rep. Dan Burton—have argued that Congress never intended for Title III to be limited in this way.


In Gonzalez, the court adopted the straightforward reading of the text and held that Title III plaintiffs must “already own the interest in the confiscated property on March 12, 1996 when the Act was passed,” and must also “already [be] United States citizens at the time the Act was passed.”


Going forward, that ruling will have major implications for Title III lawsuits:


First, a number of defendants in other Title III cases have raised this exact defense. If other district courts follow Gonzalez’s lead, then we should expect the first wave of Title III suits to be culled significantly.


Second, this ruling may end up barring numerous suits by noncorporate plaintiffs. It seems likely that many claimants to confiscated property in Cuba have died since 1996. If Gonzalez is adopted widely, none of their heirs will be able to bring a Title III case.


Third, and closely related, Gonzalez suggests that Title III’s potency will fade over time. We should see fewer and fewer Title III suits as the pool of potential plaintiffs gets smaller and smaller. Of course, corporate plaintiffs—who live forever—will still be able to rely on the act, but they face unique disincentives to filing suit, including the desire to avoid antagonizing potential business partners.


It remains to be seen whether other district courts will adopt Gonzalez’s reasoning and whether that reasoning is upheld on appeal. Gonzalez filed a notice of appeal on June 8, so this dispute is far from over.


John B. Bellinger III is a partner in the international and national security law practices at Arnold & Porter in Washington, DC. He is also Adjunct Senior Fellow in International and National Security Law at the Council on Foreign Relations. He served as The Legal Adviser for the Department of State from 2005–2009, as Senior Associate Counsel to the President and Legal Adviser to the National Security Council at the White House from 2001–2005, and as Counsel for National Security Matters in the Criminal Division of the Department of Justice from 1997–2001.
Sean A. Mirski practices a combination of appellate and international law at Arnold & Porter in Washington, DC, with a focus on public international, national security and foreign relations law. He is also a Visiting Scholar at the Hoover Institution. He clerked for Justice Samuel A. Alito, Jr., on the United States Supreme Court, and for then-Judge Brett M. Kavanaugh on the United States Court of Appeals for the D.C. Circuit. He also served as Special Counsel to the General Counsel of the U.S. Department of Defense. He graduated magna cum laude from Harvard Law School, where he served as Supreme Court Chair for the Harvard Law Review.

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