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Defending the Vatican

By Alexandra Brown | Feb. 2, 2008

Law Office Management

Feb. 2, 2008

Defending the Vatican

A Berkeley sole practitioner is the Holy See's unlikely chief defender in U.S. courts. It's a match made in heaven.

Most attorneys with just one client would probably worry about the future of their practices. But when your client is the Vatican, and you're the lead attorney for the Holy See in the United States, there isn't much cause for concern.
      "I keep some other cases, but it's a significant amount of work," says Jeffrey S. Lena, a 49-year-old sole practitioner who since 2000 has represented the Vatican officials and instrumentalities in sexual-abuse, fraud, and Holocaust-era restitution cases.
      Tall, slender, and precise in speech, Lena maintains that his powerful client is often inaccurately portrayed by the news media. The Vatican, Lena says, is itself a misnomer that suggests a single entity that doesn't exist. Indeed, the U.S. State Department defines the Holy See as "the composite of the authority, jurisdiction, and sovereignty vested in the Pope and his advisers to direct the worldwide Roman Catholic Church." But as he discusses the lawsuits he handles, Lena's manner only fosters the mythic notion of an organization shrouded in secrecy.
      A nearly lifelong resident of Berkeley, Lena had been practicing law for just four years when Vatican officials approached him to defend the Vatican Bank in a case filed in San Francisco. That case and others pending against Vatican entities claim more than $1 billion in damages. Should entities of the Holy See be found liable in these cases, their value could be much higher as precedent for other litigants.
      So far, Lena has met with extraordinary success, halting cases with facial defenses or litigating jurisdictional issues. But plaintiffs attorneys have also shown remarkable tenacity, achieving limited success in the federal district and appellate courts following trial court dismissals. "I like Jeff as a person, but I have to say, his client just stinks," says Jonathan H. Levy, a plaintiffs attorney in Cincinnati, Ohio, who has opposed Lena in court since 2000. "The Vatican is one of the most slippery defendants you'd ever want to meet up with."
      Given the stakes, the public controversies surrounding the claims, and his client's reputation for secrecy, it's not surprising that Lena is somewhat circumspect. Citing the attorney-client privilege, he is vague about how he came to be chosen to represent the pope and his Curia. Lena maintains a modest lifestyle, pursuing such solitary interests as reading and metalwork. He refused to be photographed for this article. And though he speaks to the press, he limits his comments to those he deems appropriate for an attorney who is neither the Vatican's general counsel (it has none) nor its spokesperson (as a sovereign state, it maintains a press office).
      "You must be sure to distinguish between what I say as a private person with opinions from what I say on behalf of the client," Lena says.
      The oldest son in an Italian and Irish American family, Lena graduated from UC Berkeley with a degree in history and spent the next few years in the department's PhD program. In 1993 he enrolled at Hastings College of the Law in San Francisco, then spent his second year at the University of Milan in a student-exchange program through UC Berkeley's Boalt Hall. Studying in Italy broadened his understanding of jurisprudence and introduced him to comparative law, which he describes as "a set of analytical tools that allows one to better understand both the system you're a product of, and the system you're studying."
      The training, Lena says, had the unintended effect of preparing him to interpret and defend principles of canon law on behalf of the Holy See. "When I'm in court, I always have this feeling that I'm the only person there who understands the two worlds-the legal culture we're litigating in and the one being hailed into court," he says.
      After graduating from Hastings, Lena passed the California bar exam in 1996 and then returned to Italy, where he taught U.S. torts, contracts, property, and constitutional law as part of comparative law university courses in Milan, Trento, Torino, and Alessandria. He became counsel to the Holy See, Lena says, "through scholarly and professional associations in Italy," and the "completely random" fact that the first Holocaust-era restitution case to name a Vatican entity as a party was filed in the Northern District of California.
      That "random" San Francisco lawsuit, brought in late 1999, changed Lena's life. Plaintiffs attorneys Levy and Thomas Easton of Eugene, Oregon, had filed suit against the Vatican Bank on behalf of 24 survivors of the Croatian holocaust, their family members, and four holocaust survivor organizations. The suit claimed that after the Allied defeat of Germany in May 1945, the Vatican Bank-known by its official title Istituto per le Opere di Religione (IOR)-illegally converted looted assets and the proceeds of slave labor from the Ustasha, a Nazi-supported regime in Croatia. The complaint relied on declassified documents, released by the U.S. Department of State in 1997, showing that assets from the Croatian treasury were trucked to a Franciscan monastery in Rome and then to the Vatican Bank (Alperin v. Vatican Bank, 410 F.3d 532 (2005)).
      In the spring of 2000, Lena was teaching in Italy when the Alperin case was brought to his attention and he was asked to provide guidance regarding the threshold issues. Prior to that, he had been practicing trust and property law in a three-attorney firm in San Francisco. "The property aspects of that work really played into those first cases, because so much of Alperin related to property claims-the nature of property and the differences between personal and real property," he says. But Lena did not rely on his legal skills alone.
      "You don't get a case like Alperin on your desk and not think carefully on the matter," Lena says. "I read several books on the history of the Balkans and postwar Italy to get the political background. I had to understand what the case was about. It's got allegations coming from a lot of different directions-Orthodox Christians versus Roman Catholic, Nazism, fascism, secret societies, and the CIA. There were so many valences, so much stuff was going on. I felt the gravity of it, the need to understand it well."
      By the time Lena responded to the complaint, he had a better understanding not only of the region's historical and political context but also of the extensive procedural and international issues involved. He concluded that his client had "meritorious jurisdictional and political question defenses."
      The case illustrates one of many difficulties plaintiffs face when attempting to bring Vatican entities within U.S. jurisdiction. Legally, the IOR is not a bank but a "public juridic person" akin to a corporation. It was established by the pope under canon law, the law of the Holy See, and the law of the State of Vatican City-each a separate entity. According to a declaration filed by Vatican law expert Settimio Carmignani Caridi, the purpose of the IOR is "to carry on activities that are pias causas, or for pious purposes, consistent with the sovereign's public purposes" by accepting assets "whose destination is at least in part or in the future" in the service of that purpose. Although the IOR functions similarly to a bank in that it acts "as a fiduciary" with regard to deposited funds, it simultaneously acts "as an autonomous pious foundation that directly carries out the charitable purposes of the Holy See and the State of Vatican City."
      Because of the complexities involved in Alperin, U.S. District Judge Maxine M. Chesney told the parties she would address the defenses one at a time. In Lena's first motion to dismiss, he advanced the defense of nonjusticiability on the political question doctrine. During two hours of oral arguments-which Lena describes as "very solemn and still"-in April 2001, he persuaded Judge Chesney that the case raised a political question that could not be adjudicated by U.S. courts without violating the separation of powers doctrine.
      The plaintiffs appealed. By the time a three-judge panel of the Ninth U.S. Circuit Court of Appeals convened in October 2004 to hear oral argument, news of Alperin's potential significance had spread. The hearing drew a standing-room-only crowd that included attorneys and judges, reporters and camera crews, and even visiting representatives from the Supreme Court of China who were accompanied by the chief judge of the Northern District and a simultaneous translator. Oral arguments by Lena and plaintiffs counsel Kathryn Lee Boyd, an adjunct professor at Pepperdine University Law School in Malibu, lasted about an hour.
      The experience was "amazing," Boyd says. "The judges wanted to be taught the law in this area, and that's exactly what happened." As for her opponent: "Jeff is not intimidating as a lawyer," she says. "He doesn't come in with all of these assistants and tons of briefcases. But regardless, when you go against the Vatican and the Church-with all its known resources and historic power-you really get a sense of David and Goliath."
      For Lena, "It was a very big deal-the weightiness of the thing," he recalls. "Any time the court is asked to deal with the question of its own power, it's inherently dramatic. You're asking the court to concede the limits of its authority. And the issue was particularly acute that day because of the presence of the Chinese Supreme Court."
      In June 2005 the Ninth Circuit reversed in part, holding that private, restitutionary claims that the IOR illegally received and profited from property stolen during World War II could not be barred by the political question doctrine. "In contrast," the court held, "the broad human rights allegations tied to the Vatican Bank's alleged assistance to the war objectives of the Ustasha present nonjusticiable controversies" (410 F.3d at 538).
      The case was remanded to the district court for consideration of additional initial defenses. Lena's second motion to dismiss argued that the Foreign Sovereign Immunities Act (FSIA) precludes the suit, and that the plaintiffs lack standing. Should he need further arguments, Lena says, he will challenge the suit as barred by the statute of limitations, by treaty, by forum non conveniens, and by the doctrine of abstention under international comity.
      "The judge is taking it piecemeal-she wants to take the defenses one by one," says plaintiffs attorney Easton. "So this case could go on for 10 or 15 or 20 years. It's very disappointing to have to wait so long."
      In late December, Judge Chesney dismissed the fourth amended complaint, ruling that the IOR had established a prima facie case that it is an organ of a foreign sovereign. The court did not reach the plaintiffs' other arguments, or Lena's remaining defenses.
      Although Lena personally manages every U.S. case that names a Vatican entity as a defendant, he does not work entirely alone. He relies on a small coterie of lawyers who work with him steadily, including Alexis Haller and Mary McNamara of San Francisco's Swanson, McNamara & Haller, and sole practitioner Byron Done of Walnut Creek.
      Defending the Vatican also occasionally requires Lena to consult with attorneys outside the Bay Area. In 2003, for example, Lena retained a New Yorkbased specialist in racketeering law when five state insurance commissioners filed a civil suit against a former Vatican official and the Holy See in the Southern District of Mississippi. As part of a $200 million insurance-fraud suit, the commissioners had included a claim for treble damages under the Racketeering Influenced and Corrupt Organizations Act (RICO). (Dale v. Colagiovanni, 443 F.3d 425 (2006).)
      The lawsuit arose from a complex scheme by Martin Frankel, a financier who had set up real and sham companies in the late 1990s to steal money from insurance companies in the South. Aware that he was under investigation in 1999 by the Mississippi Department of Insurance, Frankel created a charity, called the St. Francis of Assisi Foundation, to launder the stolen money. He developed a relationship with Emilio Colagiovanni, a retired Vatican judge who was then a senior member of the Curia and president of the Monitor Ecclesiasticus Foundation (MEF), an autonomous entity that publishes a journal of canon law.
      As investigators closed in, the insurance commissioners of Mississippi, Tennessee, Oklahoma, Missouri, and Arkansas froze the assets of the Frankel-controlled companies. Frankel fled the country, but not before pleading guilty to criminal fraud and racketeering charges. The commissioners then sought to recover the millions of dollars lost to Frankel's fraud. They named Colagiovanni, the MEF, and, ultimately, the Holy See as defendants on the theory that Colagiovanni was acting as the Vatican's agent when he met and conferred with Frankel and later appeared at an insurance hearing regarding the sham charity.
      As in Alperin, the district judge in Mississippi instructed Lena to "sequence" his motions to dismiss, beginning with "purely legal" issues that included the RICO claim and three agency theories-actual authority, apparent authority, and ratification by a state. First, the judge knocked out the RICO claim because the defendant wasn't indictable-a requirement under the statute. Then, without considering Lena's other agency theories, the judge concluded that the case could proceed because Colagiovanni had engaged in commercial activity while possessing apparent authority to do so on behalf of the Vatican.
      Lena appealed to the Fifth U.S. Circuit Court of Appeals, which determined that apparent authority was not a valid basis for asserting jurisdiction over a foreign sovereign. The court vacated the district court ruling and remanded the case for a determination of Colagiovanni's actual authority, and whether the Holy See had ratified his conduct.
      "The ruling was not surprising, but it was quite gratifying," Lena says. "Accepting an apparent authority theory would have meant a significant expansion of U.S. judicial power over foreign sovereigns and, I believe, would likely encourage foreign courts to expand their jurisdictional grasp on United States entities."
      As the jurisdictional questions in the case were pending, Colagiovanni was deposed to preserve his testimony, and plaintiffs sought leave to file a fifth amended complaint to bolster their allegations. If they prevail, Lena says, he will file a fourth motion to dismiss to address the new facts alleged.
      Perhaps the most well known of the U.S. Vatican cases are those alleging papal liability for clergy sexual abuse. The first such lawsuit was filed in 2002 by Jeffrey R. Anderson, a St. Paul, Minnesota, attorney who has represented thousands of plaintiffs in sexual-abuse cases nationwide against clergy, dioceses, and archdioceses. (Doe v. Archdiocese of Portland, CV-02-430 (2002).) "We had long believed that the Vatican should be held accountable," says Anderson. "But we were swimming upstream. Most observers said it couldn't be done. I've been criticized by legal scholars for grandstanding."
      Anderson says that with Doe, however, "we had both a hope and a prayer-and I believed a solid legal argument-that the Church was liable." The suit alleges that the Holy See had transferred a priest who had admitted to committing sexual misconduct in Ireland, and later in Chicago, to Portland, Oregon, where he molested the Doe plaintiffs in the mid-1960s.
      Anderson argues that although the Foreign Sovereign Immunities Act applies to the Holy See, cases alleging that priests committed sexual abuse fall within two exceptions to the statute-one for tortious conduct and another for commercial activities-set forth in the FSIA. Lena argues that neither exception applies.
      "When we sued the granddaddy of all granddaddies, the prince of princes, I expected the largest firm with the whitest gloves," Anderson says. "When I saw that a sole practitioner was representing the Vatican, I was aghast. And then I started to see him work."
      In the first round, district Judge Michael Mosman found both attorneys half right. The judge rejected application of the FSIA's commercial-activities exception but found that sexual-abuse cases fell within the tort exception-giving U.S. courts jurisdiction regarding those allegations. "It was a pioneering decision, and one of the most significant legal victories that I've been a part of," Anderson says. "We were giddy that the ironclad wall had been finally cracked."
      Lena was undaunted. He immediately appealed to the Ninth Circuit, where both the tort-exception issue and a cross-appeal filed by Anderson on the commercial-activities exception remain briefed and waiting a date for oral argument. Anderson is optimistic: "Sovereign immunity is the primary barrier and the major legal hurdle," he says. "In terms of precedent, Mosman's decision is as far-reaching in importance as any."
      Anderson's early success may have set a different type of precedent as well. In the first years of the Doe litigation, the publicity spurred a number of similar filings. "There were attorneys who seemed to name the Holy See just to get publicity for their cases," Lena says. "At one point I believe I counted 20 cases, largely alleging sex abuse. But there's a huge difference between naming an entity and effecting service and actively involving the Holy See."
      Those cases went away on their own, Lena says, without the Holy See ever receiving service of the complaint. "I hear about them in the news, and then it's just a watch-and-wait mode. Most plaintiffs attorneys don't take serious subsequent steps to involve the Holy See."
      One lawsuit that did not simply disappear was a sexual-abuse case filed in early 2005 in Texas state court targeting the pope himself. The suit alleged that then-Cardinal Joseph Ratzinger conspired with the Archdiocese of Galveston-Houston to cover up alleged sexual abuse committed by a seminarian against three boys during counseling sessions. While the case was pending, the priest was indicted by a grand jury in Harris County, Texas, but fled before he could be tried. In April 2005 Cardinal Ratzinger was elected Pope Benedict XVI.
      Even though both the filing of the lawsuit and the underlying acts occurred before Ratzinger became pope, Lena argued that Pope Benedict, as a sitting head of state, was entitled to absolute immunity. He obtained a dismissal in district court, aided by the U.S. Department of Justice's filing of a Suggestion of Immunity in the case.
      Currently, the only sexual-abuse case other than Doe pending against the Vatican is a putative class action in the Western District of Kentucky (O'Bryan v. Holy See, 471 F. Supp. 2d 784 (2007)). The plaintiffs allege that the Holy See is responsible for creating and perpetuating a secret policy for dealing with sexual-abuse claims-which includes covering them up. The plaintiffs seek damages for sexual abuse by unidentified Catholic priests in the United States that allegedly occurred primarily in the 1960s and 1970s.
      In O'Bryan, the district court initially quashed service of the summons and complaint because it found that plaintiffs had mailed the documents to the wrong Holy See official. After plaintiffs made another attempt at service, Lena raised a second challenge to its propriety, arguing among other things that the documents did not include a comprehensible Latin translation. This time the district court denied the motion to dismiss, permitting plaintiffs to allege that bishops and clergy in the U.S. could be considered Holy See employees whose misconduct brought the Holy See within the tort exception to the FSIA. The court held that while sexual abuse did not itself confer jurisdiction because it is outside the scope of employment under Kentucky law, jurisdiction could be conferred by alleged negligent hiring or supervision by the bishops. Lena challenged the court's ruling on FSIA.
      In January 2007 the district court concluded that some of the claims, premised on the acts and omissions of the defendant's officials and employees within the United States, fit within the court's jurisdiction under FSIA. It dismissed negligence and deceit and misrepresentation claims. But it permitted claims against the Holy See for negligent failure to report, negligent failure to warn, breach of fiduciary duty, outrage and emotional distress, violations of the customary law of human rights, and claims under the doctrine of respondeat superior.
      Once again, Lena challenged the court's ruling. Cross-appeals over the applicability of the tort- and commercial- activities exceptions are pending in the Sixth U.S. Circuit Court of Appeals, along with a novel issue raised by the plaintiffs' counsel that the FSIA as applied to the Holy See is unconstitutional because it constitutes a violation of the Establishment Clause.
      While Lena finds this argument "resourceful," he thinks the plaintiffs are wrong. "If the Establishment Clause precluded applications of the FSIA as to any particular foreign sovereign, it would for the first time transfer to the judicial branch an issue that has been the sole province of the political branches. It's a nonjusticiable political question."
      Lena adds, "The Holy See is a recognized foreign sovereign, and the act of recognizing it is a foreign policy decision-which is a core executive function. The issue is whether the judiciary can limit the scope and effect of the executive's constitutional authority to recognize a foreign sovereign."
      Indeed, the potential of O'Bryan to limit executive authority has not gone unnoticed by the Bush administration. In September the Justice Department, after obtaining approval from both the State Department and the solicitor general, filed a brief as amicus and intervenor. The administration essentially argued Lena's position-that the government recognizes an entity, which it identifies as a foreign sovereign, and that act triggers the availability of the law of foreign sovereign immunity. In that view, consideration of the sovereign's "activity" or "capacity" are irrelevant. Oral argument in the Sixth Circuit is expected to take place this spring.
      Lena's appeal to the Ninth Circuit in the Doe case should also be heard in spring. Anderson-once intrigued by Lena's status as a sole practitioner-welcomes the fight. "He's committed to it, he understands it, and he's very well informed," Anderson says, adding that, "Jeff has a humility about him" that most defense lawyers lack. That trait, he says, combined with Lena's knowledge and commitment, makes him "more formidable an adversary than any 500-lawyer law firm we've ever encountered."
      Not all of Lena's adversaries are so respectful. "Jeff is the dirty hand of the Vatican in the U.S.," says Cincinnati plaintiffs attorney Levy. "He really is the Vatican's man of confidence."
      Levy's co-counsel on the Alperin case, Pepperdine's Professor Boyd, agrees with that assessment. "The Vatican takes a hard line fighting, and will only fold if absolutely pushed by public and political pressure," she says. "They hold out as long as possible, and I think that's inconsistent with what I understand the Church should be. There is no spirit of reconciliation. There is a spirit of fighting, even when the underlying issues involve the victimization of children and Holocaust victims. That's their strategy, and Jeff Lena is their guy to do it."
      For his part, Lena says the Alperin case is not about contesting alleged Ustasha atrocities, but rather whether "loot" collected by the Ustasha government was transferred across postwar Europe and ended up in the Vatican Bank. "It's not about challenging the loss," he says. "It's about the legitimacy of attributing to the IOR blame and liability for that loss."
      "If a U.S. court is going to take jurisdiction over a foreign sovereign," Lena continues, "it has to do so with great care. It cannot start to casually presume
      Deborah R. Rosenthal is a practicing attorney in Berkeley and a former
      senior editor of California Lawyer.

Alexandra Brown

Daily Journal Staff Writer

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