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The 2nd U.S. Circuit Court of Appeals last week upheld the $1.25 billion class action settlement of Holocaust-related claims against the Swiss government and businesses. The court, in an unsigned summary order, rejected an attack by three class members on the fairness of the settlement. The settlement had been approved by Judge Edward R. Korman of the U.S. District Court for the Eastern District of New York last November. The 2nd Circuit’s ruling was its second in two months to bring finality to a Holocaust-related settlement. In May, the court ordered federal Judge Shirley Wohl Kram of theU.S. District Court for the Southern District of New York to unconditionally dismiss 10 class actions seeking damages for Holocaust victims from German entities. The order, which lifted two conditions upon the dismissals imposed by Kram, cleared the way for the payment of $4.5 billion under an international agreement negotiated with the German government and businesses. The principal objection raised by the challengers in the Swiss litigation attacked the allocation of more than half the settlement amount, $800 million, to survivors or their heirs who lost funds they had deposited in Swiss banks during the years the Nazis were in power. In rejecting the challenge, the appeals panel noted that the existence of the lost bank accounts had been established by “extensive forensic accounting.” By contrast, the panel noted, the other claims asserted by the class were “based on novel and untested legal theories,” and would be “very difficult” to prove and “accurately valuate.” The panel consisted of Chief Judge John M. Walker Jr. and Judges Pierre N. Leval and Jose A. Cabranes. It is estimated that as many as 36,000 survivors may file claims for lost bank accounts, according to New York University School of Law Professor Burt Neuborne, who was lead counsel in defending the settlement for the plaintiff class. The distribution plan also sets aside $200 million to be distributed to persons who worked during the war as slave laborers. The plan would pay $1,000 to each of an estimated 170,000 survivors who had been sent to concentration camps or worked as slave laborers for Swiss companies, Neuborne said. Neuborne said that Judah Gribetz, a former counsel to New York Gov. Hugh Carey, whom Judge Korman appointed to formulate the distribution plan, had worked “painstakingly” to establish business ties between Swiss banks and German companies that used laborers from concentration camps. The settlement allocates another $200 million to compensate refugees from the Holocaust who were either expelled from Switzerland or refused entry at its borders. The payments, which will range from $500 to $2,500, are expected to go to more than 50,000 persons. The final provision of the agreement — representing compensation for “looted assets” — sets aside $100 million to provide blankets, food and other necessities to the neediest Holocaust survivors, many of them living in Eastern Europe. Professor Neuborne explained that since virtually all Holocaust victims had looted assets, a gross amount of humanitarian aid was set without making an effort to link individual losses to a Swiss-related entity. The three objectors were represented by Bernard V. Kleinman of White Plains.

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