subject of the Holocaust is very close to my heart. My formative
life experiences come from growing up in postwar Poland, in the
city of Lodz, the site of the infamous Lodz Ghetto. I still
remember, as a young boy, walking during the 1960s past streets
where remnants of the barbed wire from the Ghetto remained and
from where almost all inhabitants were shipped to their death in
of my parents' friends were Holocaust survivors. As a child, it
was not unusual to see numbers tattooed on the arms of the
adults visiting our home. My parents always feared another war
in Europe, and this fear led us to emigrate from Poland to the
safety of America. I joined The “1939” Club and became a
member of the Board, and in 1999, I was elected as a vice
that the Nazis stole between $230 billion and $320 billion in assets,
in today's dollars, from the Jewish population in Europe. For
over one-half century, most of these losses remained
uncompensated. While since the 1950s postwar West Germany has
paid reparations amounting to approximately $70 billion to
some Jewish victims of Nazi persecution, the amounts to each
individual were small and came nowhere close to compensating for
the suffering endured by the victims and the actual monetary
losses suffered by European Jewry.
financial books of the Holocaust are only being settled now.
Surprisingly, the accounting is not being done in Europe, where
the Holocaust took place, but in the United States. Why here?
answer lies with the American legal system. It is a tribute
to the United States system of justice that our courts can
handle claims which originated over fifty years ago in another
part of the world. Long-established principles of judicial jurisdiction,
choice-of-law, equity, our independent judiciary, the American
belief in jury trials, our system of evaluating damages, the
ability to file class action lawsuits, and American-style
discovery have made the United States the most attractive and,
in most cases, the only, forum in the world where Holocaust-era
claims can be heard today.
individual pleas for justice by Holocaust survivors and various
Jewish organizations for the last fifty years, and even suits
in foreign courts, have not worked. It is only now, with the
intervention of American courts, that elderly Holocaust
survivors (there are approximately 100,000 Holocaust survivors
still alive in the United States and 360,000 in Israel) see
their last great hope to obtain compensation being fulfilled.
beginning date of this phenomenon of Holocaust survivors and
their heirs suddenly bringing successful suits in the United
States' courts to recover compensation for losses suffered
during World War II can be traced to October 1996, with the
filing of three federal class action lawsuits in New York, not
against German companies, but against the three largest Swiss
banks for failure to return money deposited with the banks on
the eve of, or during, World War II.
then, the floodgates of litigation have opened, with over fifty
more civil lawsuits filed in both federal and state courts
against various foreign and American corporate and individual
defendants arising from Holocaust-era events. The number is
still rising. Each month brings news of the filing of another Holocaust-era
lawsuit in the United States. The field is so dynamic that
some law firms have been labeled, depending upon their size, as
now having either the entire firm or an entire department
engaged in a “war crimes practice.” In contrast to the slew
of lawsuits filed in the last two-and-one-half years, between
1945 and October 1996, less than a dozen lawsuits were filed
involving Holocaust claims. Most were dismissed.
filing of such lawsuits only now, over one-half-century after
the events took place, is astounding. As far as I am aware, in
the history of American litigation, a class of cases has
never appeared in which so much time had passed between the
wrongful act and the filing of a lawsuit.
I give a talk on this subject, one question always arises: Why
now? There is no single reason. Rather, the answer involves a
combination of factors that have made these lawsuits possible.
an international human rights lawyer and a law professor, I can
proudly state that an important factor in making a Holocaust
lawsuit brought in the United States viable today was the
victory achieved by the human rights bar in the last two decades
in convincing American courts that human rights victims injured
abroad can sue in the United States. That step began with Filartiga
v. Pena-Irala, the landmark 1980 Second Circuit Court of
Appeals opinion which held that a victim of state-sanctioned torture
can bring suit against the torturer in the United States even
though the torture took place on foreign soil.
and social changes also have had a great deal to do with making
the timing right for filing Holocaust-era suits. In a recent
interview, Abraham Foxman, head of the Anti-Defamation League
and himself a Holocaust survivor, explained:
have to remember why . . . we're dealing with it
now . . . . [T]here are some practical
reasons, and that is, after 50 years, the British opened some of
their books. The Soviet Union's disarray has made [more]
documents available. . . .
there's another reason that we didn't deal with this issue for
50 years—because the trauma of the human tragedy was so
tremendous, so enormous, so gargantuan, that nobody wanted to
talk about material loss for fear that it will lessen the human
tragedy. Because when you begin talking about property, then
what about life? And so for at least two generations—yeah,
Israel decided to take reparations, it needed it—but
individually we didn't deal with it. Not that we didn't know
that there were bank accounts, that there was insurance, that
there was property. My mother's family had a factory in Warsaw.
My father had some stores in Baranowicz. But nobody ever raised
it. Nobody ever said, look what we lost. I don't remember
conversations of material loss. Now I realize how
significant the loss was, but nobody talked about it. Because
what they talked about was that they lost 16 members of their
filed beginning in 1996, with the emergence of Holocaust-era
litigation, can be divided into five types: (1) claims against
the Swiss; (2) claims against the European insurance
companies; (3) claims arising from the use of slave labor; (4)
claims against German and Austrian banks for their dealings with
the Nazis; and (5) claims stemming from Nazi-stolen art.
Against the Swiss
first set of cases are claims filed in the Eastern District of
New York against the three major Swiss banks on behalf of
Holocaust survivors and their heirs who deposited money in
Switzerland for safekeeping.
As the tragedy of World War II began unfolding, Jews
and other persecuted minorities in Europe, under the inducement
of Swiss bank secrecy laws, began to deposit money in neutral
Switzerland. After the war, when the survivors or heirs asked
for their money back, they were refused.
claims filed had a simple legal theory: unjust enrichment. The
Swiss banks held on to the money for over fifty years and should
now give it back. Three lawsuits were filed and consolidated in
April 1997, under the title In
re Holocaust Victims' Assets Litigation, before Judge Edward
Korman, the King Solomon of this litigation. The lawsuits also
sought for the Swiss banks to disgorge profits that they made
from their financial dealings with the Nazis. Specifically,
the claims sought disgorgement of profits from assets looted by
the Nazis, including gold and proceeds from slave labor which
the Nazis “fenced” through Swiss banks to raise Swiss francs
to support the German war effort.
litigation against the Swiss banks has been settled for $1.25
billion, the largest settlement of a human rights case in United
States history. At first, the banks refused to make any
settlement offers. Instead, they filed extensive motions to dismiss,
totaling over 500 pages and covering every possible ground for
dismissal of the suits.
received the lengthy briefs from both sides, Judge Korman did
something brilliant. He did nothing. Rather than ruling on the
motions, he sat on them for close to one year and waited for
the parties to reach a settlement.
State and local governments then put on the pressure by
announcing that if the banks did not negotiate in good faith,
they would withdraw their investments from the Swiss banks and
do business with other financial institutions.
Interestingly, state and local officials made the threat
of sanctions against the advice of our State Department. The
State Department claimed that such actions amounted to interference
with American foreign policy.
gambit worked. The Swiss first announced their
“take-or-leave-it” offer of $600 million, and then one
month later, in mid-August 1998, with the threat of sanctions
looming only two weeks away, they doubled their offer to $1.25
billion. The crucial event was a dinner meeting conducted by
Judge Korman at a Brooklyn restaurant where he persuaded the two
sides to come together and settle for this amount.
far, none of the money has been paid to survivors. The Swiss
banks made the first installment payment of $250 million in
November 1998, but the money is sitting in a trust account
awaiting resolution of how it should be distributed.
Against the European Insurance Companies
second set of cases involves claims against European insurance
companies. The insurers collected extensive premiums from Jews
in the years preceding the Holocaust, but they never paid off on
the policies. In the time between the two world wars, life
insurance policies and annuities were popular investments.
They have, in fact, been called the “poor man's Swiss bank
account.” It has been estimated that in the prewar years,
Jewish families bought policies worth an estimated $2 billion
to $2.5 billion in today's dollars, and that the insurance
companies made a fortune on these policies.
European insurers have made a number of arguments in support of
their denial of legal liability. First, like the Swiss banks,
the companies have argued that U.S. courts lack subject matter
jurisdiction over these claims. Even if jurisdiction exists
because the companies do extensive business in the United
States, the companies argue that any dispute about the policies
should be settled in the courts of the Eastern European
countries where the policies were written.
the insurance firms have argued that because the postwar
Communist governments of Eastern Europe nationalized their
branch offices where the policies were issued, their
obligations on the policies have ended. Finally, the companies
claim that the policies, denominated in then hyper-inflated
currencies, presently have little or no value.
March 1997, a class action lawsuit was filed in the Southern
District of New York against sixteen European insurance
companies. The lawsuit sought $1 billion from each company for
refusing to pay out on their policies. Judge Michael Mukasey
in Manhattan borrowed Judge Korman's approach from the Swiss
bank cases. In response to the insurance companies' motions to
dismiss, he has not ruled on the motions, hoping that the matter
will settle instead.
a number of individual heirs of policy holders have filed their
own individual actions. One of those, Stern
v. Assicurazioni Generali S.p.A., was filed in California before
a state judge in Los Angeles, who recently ruled that she has
subject matter jurisdiction over the suit. In March 1999, she
also fined Generali, the defendant insurance company, more than
$14,000 for hiding from the court that the company had been a
plaintiff in California courts in over two dozen lawsuits.
the business of insurance is regulated individually by each
state, the various state insurance commissioners have entered
the picture. Under the threat of being expelled from the United
States insurance market, five of the European insurance
companies, who are parents to some of the most well-known insurance
companies in the United States, have agreed with the National
Association of Insurance Commissioners to set up an
International Commission on Holocaust Era Insurance Claims,
headed by former U.S. Secretary of State Lawrence
Eagleburger. The companies are discussing the establishment
of a fund, ranging from $90 million to $2 billion, to pay on the
disputed policies through the Commission. The insurance companies
hope that the International Commission process will
supersede the class action litigation.
set of cases involves suits against German companies that
utilized slave laborers during World War II. Between eight to
ten million persons were forced to work as slave laborers
in factories in Germany and throughout occupied Europe during
World War II. (The term slave
is a misnomer, however. As explained by Benjamin Ferencz, one
of the American prosecutors at Nuremberg, “The Jewish
concentration camp workers were less than slaves. Slavemasters
care for their human property and try to preserve it; it was the
Nazi plan and intention that the Jews would be used up and then
burned.”) Historians estimate that approximately 700,000 of
these forced slave laborers are still alive, and some estimates
place the number of slave labor survivors as high as 1.6
postwar West Germany paid reparations to some Jewish victims
of Nazi persecution
(since the 1950s, Germany has paid approximately $70 billion
slave laborers were specifically excluded from receiving
payment and no German
industrialist was brought to trial at Nuremberg for use of slave
German slave laborers found themselves in a catch-22
situation. The German government claimed that it was not
obligated to make payments to them because the laborers worked
during the war for private German industry. German industry,
on the other hand, argued that any payments should come from
government coffers because the postwar German regime was the
legal successor to the Third Reich. The German firms maintained
that the Nazi regime forced them to use slave laborers to
support the German wartime economy during World War II.
October 1998, the new center-left Chancellor of Germany,
Gerhard Schroeder, reversed his predecessor, Helmut Kohl, and
announced the creation of a joint German government-industry
fund to compensate former slave laborers and others not covered
under existing German reparation law. Schroeder
appointed his key aide, Bodo Hombach, to head the joint
government-industry group. Among those participating in the
group are heads of Allianz Insurance Company, the Dresdner and
Deutsche banks, the auto giants BMW and Volkswagen, and the
Siemens, Krupp, Degussa, and BASF industrial concerns.
that time, however, plaintiffs' lawyers in the Swiss bank
litigation, buoyed by the success of their $1.25 billion
settlement, already began filing suits in American courts
against various German and even American companies. The
lawsuits sought damages for the companies' use of slave labor
during World War II.
who thought that the Swiss bank settlement marked the end of
the campaign by Jewish organizations for restitution has had
a rude awakening. Far from dying down, the number of
European banks, insurance companies and industrial companies
that are under pressure to make similar settlements is
Even announcements by some German companies in late 1998 that
they would set up commissions to investigate their role during
the Nazi era and voluntarily make payments to their former slave
laborers who were still alive did not dissuade “slave
labor” plaintiffs and their lawyers from continuing with their
to stop the litigation in its tracks, German government and
industry announced in February 1999, the establishment of a $1.7
billion fund to compensate slave laborers. German Chancellor
Gerhard Schroeder made it obvious that the fund was being
established as a means to shortcut lawsuits filed against
German industry in the United States. Such an admission is astounding
because it explicitly demonstrates the strength of the American
system of justice. Fear of American litigation led the Germans
to capitulate and agree to pay the slave laborers.
slave labor fund is being financed entirely by German
industry, with twelve prominent German companies participating
(including three German automotive giants, DaimlerChrysler,
Volkswagen and BMW). The German
government made no contribution to the fund but is expected to
establish a state “German Federal” fund in the future. But
to the distress of the German government and industry, the
announcement of the fund did nothing to stop the lawsuits. In
fact, on the very day the fund was announced in Germany, a new
federal class action lawsuit was filed in the United States
against Bayer, one of the twelve fund companies, alleging that
it had participated in cruel medical experiments conducted by
the infamous Dr. Josef Mengele at Auschwitz.
Germans, however, still want to avoid repeating the mistakes of
the Swiss. Rather than dragging through prolonged litigation and
the attendant bad publicity and threat of sanctions experienced
in the Swiss bank litigation, the Germans made the offer to
settle soon after the suits against them were filed. The
expectation is that the ongoing suits will not reach the trial
stage and will be resolved in the near future. It is also
expected that the global “rough justice” payout that the Germans
will have to make will be sufficiently greater than the $1.7
billion now on the table.
Labor Action Against Ford Motor Company
the first slave labor action filed was not against a German
company, but against the American automotive giant Ford Motor
Company. In a federal class action in Newark, New Jersey,
filed in March 1998, Ford Motor Company and its German
subsidiary Ford Werke were accused of “knowingly accepting
substantial economic benefits” from the use of forced labor in
Nazi Germany during World War II and to have “knowingly earned
enormous profits from the aggressive use of forced labor under
to the complaint, Ford Werke, doing business in Germany since
1925 and headquartered in Cologne, was an aggressive bidder
for forced laborers dragooned into Germany by the Nazi war
machine from occupied Europe. The complaint indicated that
“[b]y 1942, 25% of the work-force utilized by Ford Werke A.G.
were unpaid, forced laborers. By 1943, the percentage of
unpaid, forced laborers at Ford Werke A.G. had grown to 50%,
where it remained for the remainder of the war years.”
The suit claims that Ford Werke, unlike subsidiaries of
other American-owned companies, was never nationalized or
confiscated by the Nazis, and that the parent, Ford,
maintained a controlling 52% interest in the German subsidiary
during the war years.
a public response to the lawsuit, Ford countered that “the
plant was under Nazi control during the war and that, although
‘dividends were accumulated from German operations’ on the
parent company's behalf, Ford never received them. A company
spokesperson added, “It must be said that by anyone's measure
this was one of the darkest periods of history mankind has
filed a motion to dismiss. The motion was not heard until March
8, 1999, almost exactly one year after the filing of the lawsuit.
At the hearing and in its motion papers, Ford argued, like the
German companies, that the German government, rather than
the private automaker, should pay compensation to its former
slave laborers. Ford also contended that the question of
compensation, having arisen from World War II, is nonjusticiable
and should be dismissed. Finally, Ford argued that the statute
of limitations barred the plaintiff (a citizen and resident of
Belgium) Elsa Iwanowa’s action.
district court took the extraordinary step of holding a full-day
hearing on the motion and requested further documentation
and briefing from the parties. No decision on the motion to
dismiss has been issued as of May 1999.
the filing of the lawsuit against Ford, over 30 more lawsuits
have been filed by former slave laborers against individual
German, Austrian, and American companies for their use of slave
labor in Nazi-occupied Europe.
In July, 1999, the State of California enacted a new law,
allowing such suits to be filed in California state courts, and
extending the time limit for filing such suits. This should bring a slew of new lawsuits being filed in our
of Filing the Slave Labor Actions
filing of the suits against German companies has led to
enormous positive effects. First, until the lawsuits in the United
States were filed, German industry denied for over a
half-century the slave laborers' claims. Only after the German
industrialists began to feel the pressure of American
litigation did they agree to pay their still-uncompensated slave
the filing of the lawsuits led directly to exposing the
widespread complicity of German, Austrian, and even American
industry with the Nazi war machine. Facts about participation
of these industrialists with the Nazis, solely for the sake of
profit, either came to light for the first time, or were
resurrected from the long-forgotten Nuremberg trials of a
half-century ago, as a result of the accusations made against
these corporate defendants in the lawsuits filed in the United
German corporations' argument that they had no choice but to
participate in the economic crimes should be rejected on the
same basis as the argument by the ordinary foot soldier that he
was merely “following orders” and even more so, because
the soldier, in contrast to the industrialist, does not profit
from his acts. The slave labor lawsuits, dealing with the
nefarious past conduct of the world's corporate giants, sets
an important precedent for the corporate behavior of multinationals
in the future.
Against German and Austrian Banks
fourth set of claims involve German and Austrian banks. During
the Second World War, these banks maintained close business
relationships with the Nazi war machine and appear to have
profited handsomely from such dealings.
February 1999, Deutsche Bank, Germany's largest bank, issued an
explosive announcement that an independent historical
commission reviewing the bank's wartime activities discovered
that Deutsche Bank financed the building of Auschwitz. (Deutsche
Bank disclosed that officials discovered documents showing a
branch of the bank in Nazi-occupied Katowice, Poland, had provided
loans to construction companies with contracts for facilities at
Auschwitz, as well as an adjacent IG Farben chemicals plant.) Earlier,
in August 1998, the historical commission confirmed that
Deutsche Bank profited from gold plundered from Holocaust
victims. A historical report of the Dresdner Bank, the
second-largest bank in Germany, found that in Nazi-occupied
lands the saying went, “Right after the first German tank comes
Dr. Rasche from the Dresdner Bank.”
first class action filed against the German banks for their
wartime activities was filed in June 1998 in federal court in
Manhattan. Plaintiffs, three elderly Holocaust survivors and
all United States citizens, sued on behalf of themselves and on
behalf of 10,000 Holocaust survivors and victims' relatives.
Named as defendants were Deutsche Bank and Dresdner Bank AG,
both headquartered in Frankfurt, Germany. The lawsuit
charged the two banks with profiting from the looting of gold
and other personal property from Jews. The complaint sought a
total of $18 billion in compensatory damages and unspecified
October 1998, the lawsuit was amended to add as defendants two
Austrian banks, Creditanstalt and its parent bank, Bank Austria.
Creditanstalt was accused both of profiting from the proceeds of
slave labor during the war and of participating and profiting
from the looting or “Aryanization” of Jewish-owned assets
in Austria. The Austrian banks claimed that they should not
be held legally responsible for participating in the theft of
gold and other assets of Jewish victims because
Creditanstalt was taken over by Deutsche Bank in 1938 as part of
Germany's annexation of Austria.
that same month, the German banks were hit by a second class
action lawsuit filed in federal court in Brooklyn, New York, by
a another group of attorneys representing a different set of
Holocaust survivors and heirs. The lawsuit named Germany's
Deutsche Bank, Dresdner Bank, and Commerzbank as defendants.
The lawsuit accuses the banks of refusing to return assets of
Jewish survivors and of financing and profiting from Nazi
Eventually, a total of eight cases were filed against the German
and Austrian banks.
Involving Nazi-Stolen Art
fifth and, to date, final set of claims stems from art looted by
the Nazis. The Nazis stole an estimated 220,000 pieces of art
from both museums and private collections throughout Europe.
The value of this plundered art exceeded the total value of all
artworks in the United States in 1945. The worth of the art
stolen by the Nazis is astounding: an estimated $2.5 billion
in 1945 prices, or $20.5 billion today.
suspected of currently possessing Nazi-stolen art include the
Louvre in Paris and the Hermitage in St. Petersburg, Russia.
Museums in the United States also have not been immune. Since
1997, a number of prominent American museums have been embarrassed
to discover that their collections include Nazi-stolen
art which made its way to the United States after the war.
To deal with the problem of Nazi-stolen art, the U.S.
Department of State and the U.S. Holocaust Museum hosted a
conference in November 1998, in Washington, D.C. Forty-four
nations sent representatives to the conference.
to experts, the disposition of art looted during World War II is
even more complex than the issue of Nazi-stolen gold and other
Holocaust-era claims. First, so much art is at stake that a
large-scale return of such World War II-looted art could disrupt
the art market, especially for French Impressionist paintings,
which were a favorite target of the Nazis. Second, unlike in
the claims of Nazi-stolen gold, dormant Swiss accounts, or
use of slave labor, where the perpetrators knew, or at least
should have been substantially aware that they were engaging
in wrongful activities, many (though not all) present owners of
Nazi-looted art bought the artworks in good faith and without
any knowledge or suspicion of their controversial heritage.
Finally, these good faith purchasers are often pitted
against claimants who may not even be the original owners from
whom the artworks were stolen, but surviving and sometimes
distant relatives of the victims. To date, unlike in the other
Holocaust-era claims litigation, less than a handful of lawsuits
have been filed in the United States involving World War
II-looted art. Because each lawsuit involves a specific
artwork, all have been individual lawsuits rather than class
August 1998, the first case to reach trial for Nazi-stolen art, Goodman
v. Searle, settled on the eve of trial. The case involved a
Nazi-stolen Degas painting which made its way to the United
States. The plaintiffs, grandchildren of the Jewish owner whose
art was taken and who was murdered by the Nazis, and the present
owner of the painting, a Chicago pharmaceutical magnate who
claimed to have bought the painting in good faith, agreed to
divide the ownership of the painting and to donate it to the
Chicago Art Museum, with the grandchildren receiving one-half
value of the painting from the museum.
case, this one involving a Nazi-stolen Matisse, filed against
the Seattle Art Museum also recently settled.
The Seattle Museum agreed to give up the painting to the
Holocaust victims’ rightful heirs.
A third case filed against the New York Museum of Modern
Art (MOMA) by New York District Attorney Robert Morgenthau, has
prevented the departure from New York of two Egon Schiele
paintings loaned by an Austrian museum for a MOMA exhibition.
The Schiele paintings are believed to have been stolen during
World War II. The highest court in New York is now considering
whether the paintings should be returned to Austria.
editorial in the Israeli newspaper Ha’aretz
succinctly explained the impact of various revelations being
made today about the financial misdeeds stemming from the
Holocaust proved that the murder of the Jews and the
annihilation of whole communities was not only an outlet for
monstrous anti-Semitism, it was also good business.
But it is precisely the willingness of the world’s
nations today, some 55 years after the end of World War II, to
make the material calculations and search for stolen property
and return it, that raises questions which in the past were
possible to ignore.
additional Holocaust lawsuits will be filed in the future.
As long as one Holocaust survivor is alive and an
individual or corporation doing business in the United States is
discovered to have been involved in misdeeds during World War
II, litigation of the Holocaust will continue in our courts.
floodgates of Holocaust litigation will remain open into the 21st
Bazyler is a professor of international law at Whittier Law