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Federal Judge Shirley Wohl Kram of the U.S. District Court for the Southern District of New York has been ordered to strike conditional language from her dismissal of 10 class actions brought by plaintiffs who had their assets looted by German banks during the Nazi era Aryanization program. Taking the highly unusual step of granting petitions for writs of mandamus, the 2nd U.S. Circuit Court of Appeals on Thursday agreed with lawyers for both the German bank defendants and plaintiffs that Kram exceeded her authority in a May 11 order granting a request for voluntary dismissal of the cases. The decision brings to a close the last of a series of class actions seeking compensation for Holocaust-related crimes — and appears to clear the way for the payment of $4.5 billion to victims through a German-created foundation, “Remembrance, Responsibility and Future.” The German Bundestag, as well as the German companies who will fund the foundation, have made the settlement of all outstanding claims a prerequisite to the release of funds. “Achieving their dismissal was an essential precondition to any form of global peace,” said Jeffrey Barist of Milbank, Tweed, Hadley & McCloy, who represented the German banks and filed one of the four petitions for a writ of mandamus with the 2nd Circuit. “It’s for the German Bundestag and government to decide what is adequate legal security.” The ruling came only two days after David Boies of Boies, Schiller & Flexner, representing Judge Kram, told the 2nd Circuit that her order of dismissal was properly phrased, and that the judge was on solid ground when she said she would entertain a motion to vacate the dismissal if certain actions were not taken by the German government and a 27-country body that will oversee payments from the foundation. Plaintiffs’ lawyer Burt Neuborne said that with the 2nd Circuit’s decision, he believed that “money should be flowing” to Holocaust victims as early as next month. “This is everything we could have possibly asked for,” said Neuborne, a professor at New York University School of Law. “And for the court to act this fast is astonishing.” Judge Kram had held open the possibility of vacating the dismissal if eligibility criteria were not changed to allow for the compensation of plaintiffs who reached a settlement with Austrian banks in a separate case in 1999. As part of that settlement, those plaintiffs were assigned claims that the Austrian banks themselves had against German banks for the looting of assets in World War II. Opinions on the value of those claims vary wildly, with some lawyers characterizing them as worth $300 million and others viewing them as essentially worthless. At oral arguments on Tuesday, a panel of Senior Judge James L. Oakes and Judges Amalya Kearse and Jose A. Cabranes questioned lawyers for both sides about the finality of Kram’s order. And yesterday, the three judges said they had “considerable difficulty with two portions of the May 11 order.” TIME IS OF THE ESSENCE The appeals court said it was granting the “extraordinary remedy,” of mandamus — and departing from the ordinary course of waiting for a timely appeal — because “there is strong public interest in expeditiously deciding the issues presented and a direct appeal would occasion inappropriate delay.” That “strong public interest” is the release of money to victims of the German banks, and also to plaintiffs in already-settled class actions brought by those forced into slave labor by the Nazi regime and its accomplices in German industry, and to those with claims against German insurance companies as well. As lawyers for the plaintiffs have said, and Kram has acknowledged, the 2nd Circuit said time was of the essence. “Further delay in these judicial proceedings is to be avoided,” the appeals court said. “Survivors of the Holocaust are elderly; [and some petitioners] estimate that more that 1,000 potential beneficiaries of the German foundation die each month.” THREE CONCERNS Kram’s initial refusal to dismiss the cases was prompted by three concerns. The first was that the judge wanted assurances the foundation would be fully funded, an issue that was later satisfied. Second, Kram said she was worried about the interests of absent class members. In an international compact that set the stage for the formation of the foundation, the U.S. government pledged that in the event a civil action related to the Holocaust is filed in a U.S. courtroom, the government would submit a “statement of interest” saying that it was in the foreign policy interests of the United States to dismiss the suit. Finally, Kram was most concerned about prejudice to the so-called “assigned claims” plaintiffs in the Austrian bank case. The judge twice refused to dismiss the cases, but by May 11, the plaintiffs had fashioned settlement language that satisfied the judge on the issues concerning absent class members and the assigned-claims plaintiffs in the Austrian bank case. Her order apparently rendered moot the mandamus petitions that Barist and lawyers for three classes of plaintiffs had filed in the 2nd Circuit prior to May 11. FOREIGN SOVEREIGN ISSUE But after reading Kram’s written order, the Germans blanched at what they felt was language that made the dismissal less than final — and they renewed their petition in the 2nd Circuit. Plaintiffs, concerned that the language of the dismissal would also lead the German government to withhold approval for the beginning of payments, also renewed their petitions, albeit on different grounds. In granting the writs Thursday, the 2nd Circuit focused on two sections of Kram’s seven-page order. One paragraph stated that it was understood that “the order would remove all material obstacles preventing the German Bundestag from making a finding of final ‘legal peace’ so that the German Foundation monies can be authorized to be paid to claimants by the close of the present session of the Bundestag.” That paragraph, the 2nd Circuit said, “seemingly requires the German legislature to make a finding of legal peace and to do so before the summer recess.” “It would be beyond the authority of the court to so trammel on the prerogatives of a legislature in the United States,” the appeals court said. “Much less does the court have the power to require such actions of the legislature of a foreign sovereign.” The court then said it had “several difficulties” with the last page of Kram’s order, which referred to a declaration drafted by attorney Michael Hausfeld, of Cohen, Milstein, Hausfeld & Toll, on the eve of the May 11 hearing. Hausfeld said that five Central and Eastern European countries who were part of the 27-country body that will oversee foundation payments were committed to urging the rest of the body to accommodate the assigned-claims plaintiffs. The so-called “Hausfeld Declaration” also said that those same five countries were committed to urging the German government to effect any changes needed to expand the eligibility criteria to include the assigned-claims plaintiffs. In her order, Kram said she would entertain a motion to vacate the order of dismissal if neither of those two events came to pass. But the 2nd Circuit said that Kram’s assumptions “rest on quicksand.” “Even if we read the Hausfeld Declaration as giving any assurance that eligibility criteria would actually be revised, which we do not, this provision takes the court well beyond the bounds of its authority, for it is plain from the Compact that any decision as to the eligibility criteria is governed by German law,” the appeals court said. The court said it was not for the district court to invite a motion to vacate a final order. “It is not the office of the court, however, to decide what legislation should be enacted,” the court said. “[A]nd the refusal of a legislature, within the scope of its own authority, to enact or change a law is not a valid ground for vacatur of a final judgment.” The 2nd Circuit then ordered Kram to remove the offending language and dismiss the cases. “This does the trick,” said plaintiffs’ lawyer Stephen Whinston of Berger & Montague. “I think we will see a very quick turnaround by the Germans. It is in their interests as well as ours that the payments begin as soon as possible.”

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