Federal District Court Opinions
IN RE HOLOCAUST VICTIM ASSETS LITIGATION, (E.D.N.Y. 2003)
In re: HOLOCAUST VICTIM ASSETS LITIGATION, This Document
Relates to: All Cases Case No. CV 96-4849 (ERK)(MDG),
(Consolidated with CV 96-5161 and CV 97-461) United States
District Court, E.D. New York. October 2, 2003
SPECIAL MASTER’S INTERIM REPORT ON DISTRIBUTION AND
RECOMMENDATION FOR ALLOCATION OF EXCESS AND POSSIBLE
UNCLAIMED RESIDUAL FUNDS
EDWARD KORMAN, Chief Judge, District
I. Introduction and Recommendations
A. Summary of Proposal
This Interim Report is submitted to provide the Court and
class members with current information concerning the
status of distributions from the $1.25 billion Settlement
Fund and other relevant developments relating to
implementation of the Plan of Allocation and Distribution of
Settlement Proceeds (“Distribution Plan”). At the Court’s
request, this report also offers a recommendation for
allocation of excess funds currently available, as well as
a request for proposals concerning the ultimate disposition
of any residual unclaimed funds that might remain from the
initial distributions to members of the five Settlement
Classes — Deposited Assets, Slave Labor I, Slave
Labor II, Refugees and Looted Assets.
As a result of Congress’s decision to exempt the Settlement
Fund from federal income taxation, and as a result of
interest income having accrued to the Settlement Fund since
its creation, the fund has increased in value, in August,
2002, the Court “requested that Special Master Gribetz
review the available financial and distribution information
to determine whether there [were] sufficient excess funds
to provide for supplemental distributions to class
members.”[fn1]
On September 25, 2002, the Court, after considering the
financial and distribution information submitted by the
Special Master, approved the Special Master’s Page 2
determination that excess funds existed, and approved his
proposal to distribute any such excess funds in accordance
with allocation principles that had been approved by the
Court, and affirmed by the United States Court of Appeals
for the Second Circuit, in connection with the adoption of
the Distribution Plan. See In re Holocaust Victim Assets
Litig., Case No. CV 96-4849 (ERK) (MDG) 2000 WL 33241660
(E.D.N.Y. Nov. 22, 2000), aff’d., In re Holocaust Victim
Assets Litig., 14 Fed. Appx. 132 (2d Cir. July 26, 2001).
Accordingly, by order of September 25, 2002, the Court
accepted the Special Master’s recommendation that awards to
members of the Slave Labor I, Refugee and Looted Assets
Class each be increased by 45%, adhering to the relative
allocations set forth in the existing Distribution Plan. In
addition, the Court accepted the Special Master’s
recommendation that Ml payment of awards to members of the
Deposited Assets Class be accelerated.[fn2] The Court
agreed with the Special Master that alteration, if any, of
payments to members of Slave Labor Class II must await the
resolution of litigation concerning the precise membership
of that class. Finally, the Court determined that any
excess funds allocated pursuant to the cy pres
administration of the Looted Assets Class should be
distributed in accordance with the criteria that had been
adopted Page 3 by the Court and affirmed by the Second
Circuit to govern the initial Looted Assets Class cy pres
distribution.[fn3]
In August, 2003, the Court once again requested the Special
Master to consider whether excess funds exist that would
permit a second supplemental distribution to class members,
without unduly jeopardizing the rights of any person under
the Distribution Plan. Based upon examination of the most
recent distribution statistics and projections, as well as
investment data concerning the Settlement Fund, it appears
that a second supplemental distribution of excess funds now
can be made.[fn4] At this time, the Special Master
estimates that $60 million is available for immediate
distribution for the benefit of needy victims or targets of
Nazi persecution without impairing the rights of potential
members of the five plaintiff classes. As with the “excess
funds” distribution of September, 2002, the immediate
disbursement of this additional amount will not diminish
Page 4 the sums that prudence requires be reserved for
future distributions to class members in accordance with
the Distribution Plan.
Unlike the first distribution of excess funds in 2002,
however, the Special Master recommends that the current
excess distribution of $60 million should be allocated
wholly to the Looted Assets Class. The distribution should
be made in accordance with the cy pres principles that have
successfully governed the administration of the initial
$100 million allocation and distribution to the Looted
Assets Class in 2001, and the first supplemental allocation
and distribution of $45 million in 2002.[fn5] Thus, the $60
million in excess funds should immediately be allocated
proportionately among the same “Victim or Target” groups
and the same geographic regions enunciated in the
Distribution Plan, and administered on the Court’s behalf
by the same three agencies: the American Jewish Joint
Distribution Committee (“JDC”); the Conference on Jewish
Material Claims Against Germany (“Claims Conference”); and
the International Organization for Migration (“IOM”). As
with the prior allocations, funds received on behalf of the
Looted Assets Class should be used only to augment, and not
replace, existing funds the organizations Page 5 already
receive from other sources.[fn6] Allocation of this amount
and in this manner is a matter within the discretion of the
District Court after the plan of allocation has been
approved. In re “Agent Orange” Product Liability Litig.,
818 F.2d 179, 184 (2d Cir. 1987). These distribution
principles and administrative agencies are, of course,
described at length in the Distribution Plan and have been
approved by the District Court and the Second Circuit.
In addition to seeking the Special Master’s views on
allocation of excess funds, in August, 2003, the Court also
requested the Special Master to consider whether residual
funds from those amounts initially allocated to members of
the five plaintiff classes might remain unclaimed at the
close of the administration period. If so, the Court asked
for recommendations concerning the ultimate distribution of
such residual funds.
At the current time, the Special Master is unable to
estimate with confidence whether residual unclaimed funds
will in fact exist at the close of the claims process. As
the Court is aware, any such residual unclaimed funds would
be derived primarily from the up to $800 million allocated
to the Deposited Assets Class. As described below, a variety
of information technology improvements in Zurich and New
York are under way, most importantly improved computer
software for use by the Claims Resolution Tribunal Page 6
(“CRT”), which processes Deposited Assets Class claims on
behalf of the Court under the supervision of Special
Masters Paul A. Volcker and Michael Bradfield. Further, an
experimental program is under negotiation with the
defendant banks which would match certain bank account
claims against the Total Accounts Database that includes
all 4.1 million accounts open during the relevant period
for which records survive[fn7] — not merely the
36,000 accounts listed on the database made available to
the CRT.[fn8] These processes are expected to yield
reliable final estimates on the Deposited Assets Class
distribution process within the foreseeable future.
It is impossible at this time to predict with certainty
whether the availability of improved information resources
will result in a significant increase in the ability of the
CRT to identify Holocaust-era bank accounts for return to
their owners, or even whether current efforts to supplement
the information available to CRT officials will succeed.
It Page 7 appears prudent, then, to recognize that despite
the best efforts of the Volcker Committee (which
investigated Holocaust-era Swiss bank accounts) and the CRT
(which administers the claims process), many Holocaust-era
bank accounts will remain unclaimed, thereby establishing a
pool of residual unclaimed funds. Given this likely
possibility, it seems appropriate to begin the process of
developing guidelines governing the ultimate distribution
of any such funds even if the amounts are not yet known.
The Special Master recommends that as with the excess
funds, residual unclaimed funds, if any, should likewise be
re-allocated to the Looted Assets Class for distribution to
needy Nazi victims in accordance with the cy pres
principles governing the administration of that class.
However, since such a distribution would involve residual
unclaimed funds, the disposition of which has not yet been
the subject of discussion by class members, the Special
Master recommends that the Court solicit proposals from a
broad array of interested persons and organizations as to
how best to identify and to benefit the neediest survivors.
Once an adequate opportunity has been provided for the
submission of proposals, the proposals should be the subject
of public discussion and, at the Court’s discretion, public
hearing.
By the end of the proposed filing and comment period in
connection with such proposals, the Special Master believes
that a reasonably firm Deposited Assets Class distribution
assessment should be available, rendering it possible to
estimate the amount, if any, of unclaimed residual funds
for cy pres distribution. At that point, at the Court’s
request, the Special Master can make a final allocation
recommendation after considering the information and
suggestions submitted by the interested members of the
community. Page 8 The final determination as to the
distribution of any residual unclaimed funds, as always,
will be made by the Court.
B. Special Master’s Procedural Obligations: (1) Assuring
That Survivors Are Heard; (2) Adhering to the Rule of Law
In offering a recommendation for the disbursement of any
excess or residual unclaimed funds, the Special Master
remains mindful of an ongoing responsibility to serve as a
“neutral third party” and thereby “obviate[] the concern
that hypothetical conflicts among class members relating to
allocation and distribution would require separate
representation, and thus call into question the adequacy of
representation.” In re Holocaust Victim Assets Litig., 105
F. Supp.2d at 149-50. The Special Master has continued to be
available to meet informally with interested persons.
Moreover, in performing his functions, the Special Master
continues to be assisted by Court-appointed Lead Settlement
Counsel who is pledged to aid all class members in placing
their concerns before the Special Master and the Court.
Another of the Special Master’s core obligations has been
to ensure that the distribution of the Settlement Fund
among the five classes comports with the rule of law. As
Lead Settlement Counsel Burt Neuborne observed at the
November 20, 2000 hearing on the Distribution Plan:
None of us, not the Judge, not the [S]pecial [M] aster,
not the lawyers, not the victims are free to do with this
money exactly what we wish. This is not a humanitarian
fund, the $1.25 billion, that we can allocate any way we
want. It isn’t a charity that could be allocated in
accordance with the principles of abstract justice. It’s
the settlement of a lawsuit.
And therefore, in order to allocate the proceeds of the
settlement of the lawsuit, the [S]pecial [M]aster was
obliged to consider one very, very important criteria and
it’s a criteria that doesn’t necessarily correspond to
abstract justice or to morality. The [S]pecial [M] aster
was obliged to consider the relative legal strength of the
claims of the five plaintiff Page 9 classes, the
relative strength of [the] deposited assets class, the
relative strength of the slave labor one class and the
slave labor two class, the relative strength of the looted
assets class, and the relative strength of the refugee
class.
The allocation that he suggests is not intended as a
reflection of the relative suffering of those classes. It
is not intended as a reflection of . . . even the relative
losses of those classes. What it is intended to do is to
reflect the relative strength of the legal and factual
[underpinnings] of each of those classes so that the
allocation that we will make of those funds will be
consistent with law. Because after all, this is the final
step in a lawsuit, not a process of abstract justice.[fn9]
C. Legal Priority to Deposited Assets Claims
In accordance with the Special Master’s responsibilities,
the Distribution Plan and the claims process, like the
Settlement Agreement itself, have placed “priority upon
returning to their rightful owners `the sums that Swiss
banks have been holding for them for more than half a
century,'” a priority this Court determined to be
“appropriate” in its November 22, 2000 decision adopting
the Distribution Plan in its entirety.[fn10] The United
States Court of Appeals for the Second Circuit similarly
recognized the preeminence of the Deposited Assets claims
in its July 26, 2001 decision upholding the November 22,
Page 10 2000 order, confirming that the allocation to that
class of up to $800 million was proper because the
existence and estimated value of the claimed deposit
accounts was established by extensive forensic accounting.
. . . [T]hese claims are based on well-established legal
principles, have the ability of being proved with concrete
documentation, and are readily valuated in terms of tune
and inflation. . . . [B]y contrast, the claims of the
other four classes are based on novel and untested legal
theories of liability, would have been very difficult to
prove at trial, and will be very difficult to accurately
valuate. Any allocation of a settlement of this magnitude
and comprising such different types of claims must be
based, at least in part, on the comparative strengths and
weaknesses of the asserted legal claims.[fn11]
More recently, in its November 4, 2002 decision on certain
plaintiffs’ attorneys’ fees, this Court explicitly stated
that the Deposited Assets Class claims were and remain the
core of this lawsuit:
The heart of this case and the only cause of action
capable of surviving a motion to dismiss turned on the
failure of Swiss banks to honor their contractual and
fiduciary duties to their depositors. In re Holocaust
Victim Assets Litigation, 14 Fed. Appx. 132, 135 (2d Cir.
July 26, 2001). The other claims against the Swiss banks,
while not without a moral basis, were not sustainable,
Id.. . . .[fn12]
The Court of Appeals, as well as this Court, has made it
abundantly clear, then, that however morally compelling the
looted assets, slave labor and refugee claims may be, they
are significantly weaker legally than the bank account
claims at the “heart of this case,” Id. Page 11
D. Possible Residual Funds: Request for Proposals
As of the date of this interim report, approximately $485
million has been distributed or allocated to class members,
as described in greater detail below. Almost $203.5 million
has been distributed to members of the two slave labor
classes; approximately $131.5 million has been returned to
members of the deposited assets class; nearly $4.6 million
has been distributed to members of the refugee class; and
$145 million has been distributed or committed for the
relief of needy Nazi victims under the cy pres principles
governing administration of the looted assets class.
While each of the five classes has been allocated and has
in fact received substantial funds from the $1.25 billion
settlement, neither the slave labor, refugee nor looted
assets classes has a powerful claim to any excess or
residual unclaimed funds from this legal proceeding
because, unlike the deposited assets class, their legal
claims to the settlement funds are tenuous. It is equally
true that the losses sustained by each of the five
plaintiff classes are incalculable. The entire $1.25
billion Settlement Fund — much less the far smaller
excess or potential residual unclaimed funds — was
never “sufficient to satisfy the claimed losses of every
class member,” see In re “Agent Orange” Product Liability
Litig., 818 F.2d at 158.
Under these circumstances, where available funds are
limited and the legal merits of the underlying claims
uncertain, it is “equitable to limit payment to those with
the most severe injuries” and to “give as much help as
possible to individuals who, in general, are most in need
of assistance.” Agent Orange, 818 F.2d at 158. Accordingly,
as previously stated, the Special Master recommends that
the $60 million in excess funds currently available for
immediate distribution, as well as any residual unclaimed
funds, should be Page 12 distributed to those Jewish,
Roma, Jehovah’s Witness, homosexual and disabled Nazi
victims who are “most in need of assistance,” Id. The
Special Master recommends that disbursement of such excess
or residual unclaimed funds should be made through programs
dedicated to the provision of food, shelter, medicine and
comparable services to needy elderly Nazi victims
throughout the world in rough proportion to their need.
The organizations that have administered the cy pres
multi-year programs now serving the Looted Assets Class
— the JDC, Claims Conference and IOM — have
performed with great efficiency and expertise. As noted
above and more fully described at Section III(B)(5) below,
under the Court’s ongoing supervision and guidance, the
three agencies already have reached approximately 100,000
individuals around the globe, in major cities and remote
villages, providing these needy Nazi victims with a variety
of critical services. Under the Distribution Plan, these
programs are to continue for several more years.[fn13]
In addition to the agencies now serving the Court, there
may be other worthy programs and providers capable of
assisting large numbers of needy Nazi victims in an
efficient and cost-effective manner. Accordingly, it is
recommended that by December 31, 2003, any person or
organization, including those currently operating under the
auspices of the Court, wishing to deliver services to needy
Nazi victims utilizing residual unclaimed funds file with
the Court a detailed plan describing the Page 13 nature of
any proposed aid program, the size, location and nature of
the benefited population, and a proposed budget describing
administrative costs and the cost of service delivery. The
funds for such programs would be derived primarily from any
unclaimed amounts that might remain from the up to $800
million allocated to the Deposited Assets Class, of which
approximately $668.5 million remains as of the date of this
report. This amount could range from several million
dollars, to several hundred million dollars.[fn14]
Each proposal should specify at least the following
information:
1. Number and location of Nazi victims for the proposed
“Victim or Target” group to be served (e.g., Jewish, Roma,
Jehovah’s Witness, homosexual and/or disabled), including
(a) estimates of victims in Israel, the Former Soviet
Union, Europe (including nation-by-nation), the United
States (including state-by-state); Australia; South
America and elsewhere; and (b) source materials upon which
the data is based, including any expert opinion(s) relied
upon;
2. Number and location of needy Nazi victims among the
proposed “Victim or Target” group to be served, in
accordance with the criteria set forth in item 3 below,
including (a) estimates of victims in Israel, the Former
Soviet Union, Europe Page 14 (including
nation-by-nation), the United States (including
state-by-state); Australia; South America and elsewhere;
and (b) source materials upon which the data is based,
including any expert opinion(s) relied upon;
3. Assessment of survivor needs, including (a) analysis
of specific requirements (e.g., medication, food, nursing
care), taking into account different social safety nets
available by geographic location and availability of
other sources of assistance; (b) survivor longevity
estimates by geographic location; and (c) absolute and
relative poverty levels by geographic location,
specifying, among other data, national statistics, United
Nations and comparable non-governmental organization
information;
4. Recommendation for distribution, specifying types of
assistance, estimated number of recipients, length of
program(s), and estimated costs (using percentages rather
than specific dollar amounts where necessary);
5. Recommended distribution agency or agencies, including
(a) description of prior experience with humanitarian aid
distribution in general and programs serving Nazi victims
in particular; (b) estimated administrative expenses
(using percentages where necessary); and (c) where
available, attach latest financial and/or other
programmatic reports for recommended agency; and
6. Names, addresses and affiliations of all persons and
organizations associated with or endorsing the proposal.
It is suggested that all such proposals should be filed
with the Court by December 31, 2003, and that the Court
authorize the proposals to be posted on the Internet site
for this litigation, www.swissbankclaims.com, and made
available for public scrutiny and comment. All comments on
the proposals should be filed with the Court by February
15, 2004, and likewise posted on the Internet. The Special
Master will file a report on March 15, 2004, updating
information concerning distributions and, if the Court so
requests, assessing the filed proposals and offering final
allocation recommendations. By that time, significant
additional data should be available concerning the
implementation Page 15 of the Deposited Assets Class
claims process and the estimated total amount of the
residual unclaimed funds that may be available for
distribution.
Once a final recommendation has been made by the Special
Master, the Court may wish to hold a public hearing on any
issues raised by the proposals prior to reaching a final
determination.
II. Summary of Distribution Plan and Post-Plan Developments
A. Overview of Distribution Plan
To place the recommendations described above into
appropriate context, it is useful to summarize the
Distribution Plan, and to highlight some of the
developments that have followed its adoption.
The Special Master’s Proposed Plan of Allocation and
Distribution of Settlement Proceeds was filed on September
11, 2000 and, following a public hearing, was adopted by
the Court in its entirety on November 22, 2000.[fn15] The
approximately 900-page Distribution Plan sets forth the
recommendations, and respective rationales, for allocation
of the Settlement Fund among the five classes and five
“Victim or Target” groups designated in the Settlement
Agreement. To briefly recap the key elements of the
Settlement Agreement and Distribution Plan:
— The Settlement Agreement designated five
categories of “Victims or Targets of Nazi Persecution”
eligible for compensation: Jewish, Roma, Jehovah’s
Witnesses, disabled and homosexual persons persecuted or
targeted for Page 16 persecution by the Nazi regime. The
definition of “Victim or Target of Nazi Persecution”
includes “any individual, corporation, partnership, sole
proprietorship, unincorporated association, community,
congregation, group, organization, or other entity”
persecuted or targeted by the Nazis. (Settlement
Agreement, Section 1). The Settlement Agreement also
created five classes of claimants eligible under the $1.25
billion settlement: the Deposited Assets Class; the
Refugee Class; Slave Labor Class I; Slave Labor Class II;
and the Looted Assets Class.
— For the Deposited Assets Class, the Distribution
Plan allocated up to $800 million to repay the claims of
those who owned bank accounts and other assets deposited
in Swiss financial institutions. The allocation was based
upon the priority accorded to these claims under the
Settlement Agreement and general legal principles, as well
as the results of the Volcker Committee’s three-year
investigation of Holocaust-era Swiss bank accounts.[fn16]
The Volcker Committee identified at least 36,000 accounts
“probably” or “possibly” belonging to Nazi victims or
their heirs. Calculating known and estimated account
values, the 36,000 accounts — now compiled in an
“Accounts History Database” (“AHD”) — were
estimated to be worth a total of approximately $800
million in then-current dollars.[fn17] The Distribution
Plan provided for Deposited Assets claims to be
administered on behalf of the Court by the CRT in Zurich,
which already had been processing claims against Swiss
bank accounts prior to the finalization of the settlement.
Pursuant to the Court’s order of December 8, 2000, Paul A.
Volcker and Michael Bradfield, who had served as counsel
to the Volcker Committee, were appointed as Special
Masters of the CRT. Under the Distribution Plan and
subsequently-adopted Rules of the Claims Resolution
Process, bank accounts were to be adjusted for interest
and fees and repaid in full using the known value of the
account, or, if actual value was unavailable, using the
Page 17 estimated value based upon the type of account
(such as savings account, demand deposit and so forth).
— For Slave Labor Class I, applicable to those who
may have performed slave labor for German and other
companies which transacted their profits through Swiss
entities, the Distribution Plan originally provided for
payments of $1,000 each (now $1,450) to surviving slave
laborers, or to their heirs if the former slave laborer
died on or after February 16, 1999. The Plan determined
that payment to all surviving slave laborers was
warranted because historical research demonstrated that
virtually all major slave labor-using entities had banking
and other financial relationships with Switzerland.[fn18]
In the interest of efficiency and minimization of survivor
confusion, the Plan provided for the same administrative
agencies and processing mechanisms as utilized by the
German Foundation “Remembrance, Responsibility and the
Future” (“German Foundation”), a $5.2 billion foundation
created on July 17, 2000, partly in response to class
action litigation in the United States arising from the
claims of uncompensated Jewish and non-Jewish victims who
performed slave labor for German industrial and
governmental enterprises during the Nazi era. Following
the lead of the German Foundation, which already had
designated the Claims Conference and the IOM to process
the claims of, respectively, Jewish and non-Jewish former
slave laborers, the Court adopted the Special Master’s
recommendation and appointed the Claims Conference and IOM
to perform the same functions on behalf of Slave Labor
Class I.
— The Refugee Class, applicable to those denied
entry into or expelled from Switzerland, or admitted into
Switzerland but abused or mistreated, follows a similar
distribution mechanism. The Claims Conference processes
the claims of Jewish claimants and the IOM processes the
claims of Roma, Jehovah’s Witness, homosexual and disabled
claimants. Surviving refugees (or the heirs of refugees
who died on or after February 16, 1999) originally were
to receive $2,500 if they were denied entry into or
expelled from Switzerland, while those admitted but
mistreated were to receive $500. Those payments have been
increased, respectively, to $3,625 and $725.
— Under the Settlement Agreement, Slave Labor
Class II, applicable to those who performed slave labor
for Swiss entities, is the one class that is not limited
to the five “Victim or Target” groups but rather is open
to all Nazi victims. The Distribution Plan provided for
payments of $1,000 to former slave laborers or the heirs
of those who died on or after February 16, 1999. All
claims are processed by the IOM. Until recently,
litigation continued over Page 18 whether slave
labor-using entities acquired by Swiss companies
subsequent to World War II qualify for releases as Swiss
entities.[fn19]
— For the Looted Assets Class, applicable to those
whose assets were looted by the Nazis and disposed of or
transacted through Switzerland or Swiss entities, the
Distribution Plan provides that the neediest class members
(all of whom are presumed to have been victims of Nazi
looting, the proceeds of which may have been transacted
through Switzerland)[fn20] are to benefit from
humanitarian aid programs providing food, medicine,
shelter and similar assistance. As noted above, the Court
adopted the Special Master’s recommendation that the size
of the Looted Assets Class, coupled with the impossibility
of determining whether specific property was transacted
through a Swiss entity, rendered individualized
administration of the class impracticable. The Plan
initially allocated $100 million (now $145 million) over a
ten-year period to augment — not replace —
already-existing assistance programs implemented, managed
and/or monitored by the JDC and Claims Conference, as
well as to fund programs to be implemented and monitored
by the IOM.
— On behalf of all class members, the Distribution
Plan provided for the creation of a $10 million Victim
List Foundation to memorialize all Victims or Targets of
Nazi Persecution, those who survived and those who
perished.
— In a separate negotiation, and distinct from the
Distribution Plan, plaintiffs and defendants established a
modest claims resolution process for certain Holocaust-era
Insurance Claims involving two named Swiss insurers, to be
administered by the CRT. The payment of the insurance
claims process is partially funded from the Settlement
Fund, and partially funded by the participating insurance
companies.
B. Post-Approval Procedural Developments
As noted above, the Court adopted the Distribution Plan in
its entirety on November 22, 2000, and immediately
undertook steps to begin implementation of the Plan’s
recommendations, although with the exception of the
Deposited Assets Class, no Page 19 funds could be
distributed until the appeals from the Court’s order
adopting the plan — as well as one appeal from the
Court’s order approving the Settlement Agreement itself
— had been resolved.[fn21] As of the date the
proposed plan was filed, approximately 564,000 individuals
from around the world had expressed interest in
participating in the Settlement by filing “Initial
Questionnaires.”[fn22] After the Court adopted the Special
Master’s recommendations, a total of six appeals were filed
from the Court’s order approving the Distribution Plan (in
addition to the one appeal against the approval of the
Settlement Agreement). All but two of the appeals were
withdrawn, and only one of the two remaining appellants,
for whom counsel was appointed by the Second Circuit, filed
briefs on the merits and argued his appeal before the
Second Circuit on July 19, 2001. The appeal challenged the
appointment of the Claims Conference to assist with
administration of the distribution process, questioned the
allocation of approximately two-thirds of the settlement
fund to the Deposited Assets Class, and challenged the
decision to utilize cy pres principles to administer the
Looted Assets Class.
On or about May 30, 2001, the Settlement Agreement became
final upon the withdrawal of the single appeal challenging
its fairness. On July 26, 2001, the Second Circuit upheld
the Distribution Plan, In addition to acknowledging the
unique nature of Page 20 the Deposited Assets claims and
the propriety of reserving up to $809 million for that
class, the Court of Appeals also recognized that the
“Claims Conference was chosen because of its lengthy
experience with similar programs and because it had already
been chosen to process” German Foundation claims, and the
“efficacy of having one organization process the claims of
individuals entitled to recover from both programs cannot
be gainsaid.”[fn23]
To implement the Distribution Plan, the Court, among other
things, issued orders that appointed Special Masters
Volcker and Bradfield to supervise the Deposited Assets
Class distribution process and the CRT; extended the
appointment of Special Master Gribetz to assist with the
Deposited Assets Class process and oversee distributions to
the two Slave Labor, Refugee and Looted Assets Classes, and
also appointed Shari Reig as Deputy Special Master;
authorized hearings on and approved the proposed CRT rules,
and supervised the February 5, 2001 publication of a list
of 21,000 Swiss bank accounts determined by the Volcker
Committee “probably” to belong to Holocaust victims;
announced the commencement, and oversaw the implementation,
of the claims processes for the respective classes;
extended the claims filing deadlines partly to conform to
those of the German Foundation; adjusted the payment
mechanisms following assessment of preliminary claims data
to provide for one-time payments in full to Deposited
Assets recipients as well as to former slave laborers and
refugees, rather than the originally anticipated two
installment payments; authorized payments to class members
on a “rolling” basis in a series of implementation orders
beginning in July, 2001 and Page 21 continuing to
date;[fn24] authorized distributions from the Settlement
Fund to certain of the class representatives “whose efforts
materially aided the plaintiff class”;[fn25] and approved
appellate processes for the Deposited Assets, Slave Labor
I, and Refugee Classes.
Significantly, as previously described, the Court also
increased allocations to many class members. By Order dated
September 25, 2002, the Court increased by 45% the payments
under Slave Labor Class I, the Refugee Class and the Looted
Assets Class, and also authorized an acceleration in the
amounts paid to members of the Deposited Assets
Class.[fn26]
In another important development, the Swiss Fund for Needy
Victims of the Holocaust/Shoa (also known as the “Swiss
Humanitarian Fund”), a separate Swiss program unconnected
with this case and created in early 1997 to make payments
to Nazi victims, announced in 2002 that it had completed
its distributions. The Swiss Humanitarian Fund was
established by a February 26, 1997 Executive Ordinance of
the Swiss Federal Council “in connection with the public
debate on the role of Switzerland in the Second World
War.”[fn27] The “financial endowment consisted of a total
273 million Swiss francs donation [approximately $176
million] on the part of the three major Swiss banks at the
time (today the Credit Suisse and the UBS), the Swiss
National Bank, and Page 22 the private industrial
sector.”[fn28] The Fund stressed that it intended to
provide “humanitarian” assistance rather than “compensation”
to survivors.[fn29] It identified several victim groups as
beneficiaries, among them Jewish, Roma, Jehovah’s Witness,
homosexual and disabled Nazi victims, as well as other
groups such as “political victims” and the “Righteous among
the Nations” (Christian rescuers) living in Eastern Europe.
(In the latter case, applications were put forward by the
World Jewish Restitution Organization, charged with
overseeing distributions to Jewish survivors.) 88% of the
fund was allocated to Jewish victims and 12% to all other
victim groups.[fn30]
In its 2002 Final Report, the fund announced that “[f]ive
years after its creation, the Swiss Fund has distributed
the entirety of its endowment — a total of 295
million Swiss francs including interest — to roughly
312,000 needy Holocaust survivors worldwide.”[fn31] The
Special Master has been assisted by the experience of the
Swiss Humanitarian Fund in formulating the Distribution
Plan and assisting the Court in its implementation. Page
23