Holocaust litigation: asking the courts to right a historic wrong.

More than 50 years after the end of World War II, the U.S. civil justice system has become the focus of efforts to recover Holocaust-era assets and obtain redress for Nazi atrocities. Lawsuits have been filed in U.S. courts by attorneys representing Holocaust survivors, their heirs, and the families of those who did not survive Hitler's regime.

Holocaust litigation emerged in 1996, when three federal class action lawsuits were filed in New York against the three largest Swiss banks on behalf of Holocaust survivors and their heirs. In 1997, these cases were consolidated as In re Holocaust Victim Assets Litigation. (No. 96 Civ. 4849 (E.D.N.Y. Apr. 1997).)

Plaintiffs sought the return of monies that Jews and other persecuted minorities in Europe had deposited in Switzerland for safekeeping before or during World War II. After the war, the banks refused to return the money, sometimes turning away family members trying to recover lost assets.

The banks also lost track of a large number of accounts. The Volcker Commission--an independent panel established in 1996 by the Swiss Bankers Association, the World Jewish Congress, and other Jewish organizations to conduct an independent audit of Swiss banks to identify accounts that might have belonged to victims of Nazi persecution--discovered nearly 54,000 accounts linked to victims of the persecution.

The lawsuits also sought profits from assets looted by the Nazis, including gold and proceeds from slave labor that the Nazis "fenced" through several Swiss banks to raise Swiss francs to support the German war effort.

The banks initially refused to make any settlement offers. Instead, they filed motions to dismiss on various grounds, ranging from lack of jurisdiction to statute of limitations. State and local governments in the United States then pressured the banks to settle by announcing that the governments would withdraw their investments if the banks did not negotiate in good faith.

In August 1998, the case settled for $1.25 billion. The deal not only releases dormant account claims against Swiss banks, it also releases all claims that have been made against the Swiss government and Swiss industry.

Another condition of the settlement is that plaintiffs publicly call for all elected officials to drop their threat of sanctions against Swiss financial interests. Although Judge Edward Korman of the Eastern District of New York has yet to approve the settlement, a decision is expected soon and all sides hope that payments to heirs can begin this year.

Austrian and German banks have also been sued. A series of individual and class actions charged the banks with profiting from the looting of Jewish-owned assets and participating in and profiting from the use of slave labor during the war. (In re Austrian and German Bank Holocaust Litigation, No. 98 Civ. 3938 SWK (S.D.N.Y. consolidated Feb. 19, 1999).)

These lawsuits were resolved in January of this year when Judge Shirley Wohl Kram of the Southern District of New York approved a $40 million settlement. The ruling allows payments to be made to thousands of plaintiffs.

Insurance companies

Another type of Holocaust litigation involves claims against European insurance companies. These insurers collected sizable premiums for life insurance policies and annuities from Jews before the Holocaust, but refused to pay out on the policies.

Many of the firms have disclaimed legal liability, arguing they no longer have obligations on the policies because their Eastern European offices were taken over by the Communists after the war and, thus, the Communist government assumed all of their assets and liabilities. The insurers have also been able to avoid paying out on the policies by demanding claimants to produce death certificates, which do not exist.

Last November, a confidential settlement was reached in the first lawsuit ever filed by an individual family against a European insurer over unpaid Holocaust insurance claims. (Stern v. Generali, No. BC185376 (Cal., Los Angeles County Super. Ct. Nov. 23, 1999).) The case was brought against an Italian insurance company--Assicurazioni Generali--by the family of Mor Stern, a Holocaust victim whose life insurance policies were purchased at the company's Prague office before he was killed in a gas chamber at Auschwitz. After trying to collect on Stern's policies for more than 50 years, the family sued Generali in 1998 for $135 million, alleging breach of contract and bad faith.

The lawsuit became a test case for victims and their heirs when Generali appealed a ruling granting California courts jurisdiction to resolve Holocaust claims. A state appellate court affirmed, and the California Supreme Court refused to review the case, allowing Californians to pursue their claims under the state's Holocaust Victims Insurance Act.

Enacted in 1998, the law allows bad faith claims to be brought in state courts if the plaintiffs can prove that the insurance company conducts business or litigation in California. It also extends the statute of limitations for these claims until 2010. Generali had claimed that the law was unconstitutional and that the lawsuits should fall under the jurisdiction of the country where the policies were purchased.

California has enacted other legislation designed to crack down on insurance companies that have refused to pay out on policies bought before World War II. The Holocaust Registry Law, which was enacted last fall, requires European insurance firms to publish a list of unpaid Holocaust-era insurance policies. The law bans companies that do not comply from doing business in California.

Insurance companies have fought back. Some have filed federal lawsuits against California's insurance commissioner, Chuck Quackenbush, arguing that he has no authority to enforce the law and carry out its punitive measures.

In the midst of this controversy, litigation against the insurance companies based on Holocaust victims' policies continues. William Shernoff of Claremont, California, ATLA member and cocounsel in the Stern case, recently filed three more lawsuits against European insurers.

Shernoff believes that hundreds--if not thousands--of insurance claims may be filed once the names of Holocaust victims who bought life insurance policies become known and are posted on the Internet. "Insurance companies have been dragging their feet in making this information public," he said.

Slave labor

There have also been several class action lawsuits against German companies--including Siemens, Daimler-Benz (now Daimler Chrysler), Audi, Leica, and Volkswagen--that allegedly used slave labor during the Nazi era. An estimated 12 million people were put to work against their will to help in the war effort. Slave laborers often were worked to death, whereas forced laborers were compelled to work but were not part of the Nazis' genocide program.

These cases settled in December 1999, when the companies and the German government agreed to distribute a multibillion dollar fund to the survivors of the slave and forced-labor camps. The government and industry will each contribute about $2.6 billion to compensate those forced to work for Hitler's war machine.

U.S. Deputy Treasury Secretary Stuart Eizenstat--who led the American delegation of negotiators seeking to establish a fund for survivors of Nazi-era labor camps --said the money would be spread among an estimated 240,000 survivors of Nazi slave labor operations and a far larger number of forced laborers, mostly people from the former Soviet Union and Eastern Europe who were put to work making war goods. Some lawyers working on the settlement have estimated that former slave laborers will receive about $8,000 each and that former forced laborers will get between $2,000 and $3,000. A foundation will be established to administer the fund, and payments may begin this year.

In exchange for creating the fund, the companies will receive legal protection from lawsuits in the United States--backed up by a promise from the U.S. government to formally ask courts to refer pending cases to the foundation.

Payments from the foundation will mark the first time Germany has compensated the millions of people put to work to help the Nazi war effort.

The settlement with Germany has not ended this type of litigation. Lawyers representing Holocaust victims recently filed a lawsuit against the Austrian government and 80 of Austria's leading companies. The suit seeks $18 billion for former slave laborers under the Nazis and for people whose property was confiscated after the Nazi annexation of Austria in 1938.

Stolen art

A less common type of litigation involves art stolen by the Nazis. These lawsuits have been brought as individual suits rather than class action litigation since each lawsuit involves a specific work of art.

The issues in these cases are also more complex than in cases involving dormant Swiss accounts or the use of slave labor--where the perpetrators either knew or should have known they were engaging in unlawful activities. Many current owners of Nazi-looted art bought the artworks without knowing their history.

In Goodman v. Searle, the grandchildren of a Holocaust victim whose Edgar Degas painting was stolen by the Nazis sued the present owner of the painting, who claimed to have bought it in good faith. The parties settled before trial by agreeing to divide the ownership of the painting and turn it over to the Chicago Art Museum, which gave the grandchildren half the painting's value. (No. 96 C 6459 (N.D. Ill. Feb. 9, 1998).)

In another case, the heirs of French Jewish art dealer Paul Rosenberg, whose collection of modern art was stolen by the Nazis, sued the Seattle Art Museum to recover a painting that had been donated to the museum. (Rosenberg v. Seattle Art Museum, No. C98-1073D (W.D. Wash. July 31, 1998).) The case was resolved when the museum's board of trustees voted to return the painting to the plaintiffs after a report by the Holocaust Art Restoration Project proved that the Nazis took the painting from the vault where Rosenberg had hidden his collection.

Other museums have followed suit. The North Carolina Museum of Art recently announced that it would return a painting stolen by the Nazis to its rightful owners. Last year, two German museums returned impressionist paintings to the families of the original owners.

Attorneys handling Holocaust litigation argue that justice requires the pursuit of these claims. Los Angeles attorney Lisa Stern, cocounsel with Shernoff in several lawsuits against European insurers, said, "This campaign to right a historic wrong is driven by a sense of destiny. Hitler attempted to rob people of their individuality. Some insurance companies, I believe, tried to exploit this tragedy. Private lawsuits are intended to restore survivors' individuality, dignity, and sense of justice by forcing their insurers to account for their Holocaust-era conduct."