Runners-Up: Holocaust Attorneys

This was the year Holocaust reparations cases came to a head. A few trial lawyers tackled the greatest evil in history and forced a resolution. Beyond providing money for Polish peasants and Florida retirees with a painful past, these pacts established a new principle: Abetting genocide doesn't pay. It was about "going after the guy who sells the barbed wire," says NYU Law School's Burt Neuborne.

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This was the year Swiss, Austrian and German Holocaust reparations cases came to a head. A few trial lawyers tackled the greatest evil in history and, for better or worse, forced a resolution that had eluded diplomats for half a century. In July, a roughly $5 billion German agreement was struck, resolving all private claims against the German government and industry. Later that month, a judge approved a $1.25 billion class action settlement resolving all non-Slavic Holocaust claims against the private Swiss banks. In October, Austria signed a roughly $400 million agreement to resolve slave labor claims. Beyond providing money for Polish peasants and Florida retirees with a painful past, these pacts established a new principle: Abetting genocide doesn’t pay. “We established the legal component to what was thought of as solely a moral wrong,” says Michael Hausfeld of Cohen, Milstein, Hausfeld & Toll, one of the lead plaintiffs’ lawyers. It was about “going after the guy who sells the barbed wire,” says Burt Neuborne, the New York University law professor who made the crucial oral arguments. “We’re taking the profit motive out of war profiteering.” The lawyer for the Swiss and Germans, Roger Witten of Wilmer, Cutler & Pickering, is skeptical of any impact on international law. “The Holocaust is so singular it doesn’t necessarily translate,” he says. Maybe so — but courts have seen a new wave of human rights claims, based on atrocities everywhere from Bosnian Serbia to Japanese Manchuria. One reason is Deborah Sturman, who, when the Berlin Wall fell in 1989 and debate was being revived over Holocaust reparations, was tooting the French horn for the West German Broadcast Orchestra. While in Germany, Sturman developed a hobby of helping elderly Jews with their reparation claims and thus became a leading expert on outdated reparations law — along with a few German octogenarians. Sturman kept dabbling in her reparations hobby during law school at UCLA. In 1997, as the Swiss cases were winding along, she pitched a novel legal theory to New York class action giant Mel Weiss. German slave labor cases, she argued, were not time-barred because — based on her reading of German law — the 1953 London Debt Agreement tolled the 10-year statute of limitations; the clock didn’t start ticking again till 1991. Weiss hired Sturman and threw behind her the weight of Milberg Weiss Bershad Hynes & Lerach, Neuborne and their allies. Milberg filed 18 suits. One of their main targets was Degussa A.G., which allegedly supplied Zyklon B gas to the death camps and processed the gold teeth from the dead. But Weiss targeted Ford Motor Co. first. He found it galling that the anti-Semitic Henry Ford was leading in Time magazine’s “industrialist of the century” poll. The choice of Ford also underscored the universal nature of the suit: Here was an American company that used primarily Slavic laborers. Ultimately, the Ford and Degussa cases were dismissed in full opinions by federal judges in New Jersey, in part on grounds of nonjusticiability. Neuborne believes he would have won an appeal based on assurances of U.S. support, but other lawyers were dubious. The negotiations quickly advanced. The main stumbling block was the Germans’ almost religious unwillingness to accept a class action settlement, as the Swiss banks had. Witten crafted an innovative way to assure legal peace for the Germans outside the class action structure. What the parties signed was an intergovernmental agreement — contingent on the dismissal of the lawsuits — in which the U.S. promised to file a “statement of interest” in any future Holocaust suit, urging dismissal. Is the German agreement, then, a work of law or one of diplomacy? Witten suggests that the crucial impetus to talks was the ascension, in late 1998, of Gerhard Schroeder as German chancellor, noting that Schroeder’s parties’ platforms had long promised reparations. The trial lawyers point with equal conviction to the decisive impact of their filings, also in late 1998. “The only thing of importance to the Germans, as far as I could see, was legal closure,” says plaintiffs’ lawyer Mel Weiss. “I don’t think they were bargaining for humanitarian Brownie points.” Deputy Treasury Secretary Stuart Eizenstat, the American negotiator, takes a middle position: “Had the suits not been filed at all, it is doubtful that this issue would have received the attention from the private sectors that it did. But diplomacy was indispensable to a solution. Without diplomacy, the lawsuits would have drawn on with an uncertain outcome.” At best, litigation could have won recovery for tens of thousands, says Robert Swift of Kohn, Swift & Graf, a top negotiator for the plaintiffs. The diplomatic resolution extends to more than a million people, including slaves of the state. Maybe the process is best seen as a strange new hybrid. Call it “plaintiffs’ diplomacy.” In a Foreign Affairs article of that name, Harvard Law School’s Anne-Marie Slaughter argues that foreign policy fashioned by profit-driven trial lawyers may not always accord with the national interest. Plaintiffs’ lawyers readily admit that they can be undiplomatic as a group. (“That other guy is no diplomat,” says one, “but I have negotiated successfully with several heads of state.”) “Greedy” is one thing the lawyers have been called, in particular Edward Fagan of Fagan & D’Avino, who filed the first Swiss case. But Eizenstat says that with respect to the lawyers as a group, that criticism is unfair. In the Swiss, Austrian and German matters, fees are expected to amount to about 1 percent of the payout. In the Swiss matter, Neuborne and Hausfeld worked for free, and Milberg Weiss and Lieff, Cabraser, Heimann & Bernstein have pledged their fees to charity. Neuborne argues that the “plaintiffs’ diplomacy” hybrid represented by the German reparation talks has much to recommend it. History shows that diplomacy alone, speaking the language of national self-interest, could not vindicate the rights of survivors. At the same time, he admits, courts wear blinders in their logical application of law, and “that could have terrible consequences for foreign policy.” The achievement of the Holocaust lawyers, he says, is that “we created a matrix where national self-interest and rights talk could play out simultaneously.”

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