NH Hotels Of Spain Files Motion To Dismiss In Capri Hotel Libertad Act Lawsuit

On 27 September 2019, John S. Shepard Family Trust, through John S. Shepard and Lawrence Jaffe, as Co-Trustees, filed a lawsuit using the Title III provision of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as “Libertad Act”) against v. NH Hotels USA, Inc., NH Hotel Group, S.A., and Jolly Hotels U.S.A., Inc. The lawsuit was filed in the United States District Court For The Southern District In New York.

LINK To Initial Filing

LINK To Memorandum Of Law In Support Of Defendant’s Motion To Dismiss

Excerpts:

Defendants NH Hotels USA, Inc. (“NH USA”), Jolly Hotels, USA, Inc. (“Jolly”) and NH Hotel Group, S.A. (“NH Spain”) (collectively, “Defendants,” and NH USA and Jolly together the “U.S. Defendants”) respectfully submit this Memorandum of Law in support of their motion to dismiss the Amended Civil Action Complaint, dated January 17, 2020 (“Compl.”) pursuant to Fed. R. Civ. P. 12(b)(1), (2), (5) and (6).

While the Amended Complaint provides scant details of the public records maintained by
the Foreign Claims Settlement Commission, those records show that in late 1956, Julius J. (“Skip”)
Shepard signed an agreement to manage a hotel to be built in Havana. He executed that agreement
as president of a Cuban corporation he formed to operate the proposed hotel. Shepard’s Cuban
company had the right to manage the hotel pursuant to a 20-year lease that was to begin on
November 1, 1957, and end on October 31, 1977.4 The hotel was named the Capri and opened in
late 1957. On January 1, 1959 the dictator Fulgencio Batista fled Cuba and U.S. tourism dried up
overnight. Julius Shepard borrowed from a Cuban bank to keep the Hotel Capri open by pledging
as security the shares in his Cuban company, which were forfeited when he defaulted on the loans.
Insolvent, Shepard returned to the United States in mid-1960. On October 24, 1960, the
Government of Cuba nationalized Shepard’s Cuban corporation pursuant to Resolution 3 of Law
851.5

The Amended Complaint confirms that Shepard had an ownership interest in an entity that
briefly operated but never owned the Hotel Capri in Havana. See Compl. ¶ 20. An Amended
Proposed Decision of the FCSC, attached as Exhibit 1 to the Amended Complaint, confirms this.

Under no principle of law or equity should Defendants be compelled to compensate Plaintiff for the acts of third parties, such as a Cuban military unit and a foreign government. The Helms-Burton Act’s cause of action may only be construed justly if it is read in conformity with Article III of the Constitution to provide a cause of action solely to those who allege standing to sue based on an articulated and demonstrated causal connection between a defendant’s conduct and a plaintiff’s injury. See United States v. Jin Fuey Moy, 241 U.S. 394, 401 (1916) (“A statute must be construed, if fairly possible, so as to avoid not only the conclusion that it is unconstitutional, but also grave doubts upon that score.”). Defendants respectfully submit the Court should dismiss the Complaint in this case pursuant to Rule 12(b)(1) for lack of standing and therefore lack of subject matter jurisdiction.