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Just in time for the picking of a new pope, the 9th U.S. Circuit Court of Appeals decided Monday that Holocaust survivors can pursue the Vatican Bank for profiting from a Nazi puppet regime. The decision in Alperin v. Vatican Bank, 05 C.D.O.S. 3216, revives a class action that had been dismissed by San Francisco U.S. District Judge Maxine Chesney. Groups of Ukrainian, Russian and Belarusian Holocaust victims — potentially hundreds of thousands, according to plaintiffs attorneys — had sued the Vatican Bank, the Franciscan Order, the Croatian Liberation Movement and various banks in 1999. Plaintiffs allege the defendants “profited from the genocidal acts of the Croatian Ustasha political regime,” which was installed by the Nazis during World War II, according to the opinion. The Ustasha regime operated death camps where as many as 700,000 Serbs died. After the Croatian government collapsed at the end of the war, its leaders fled to Italy and some assets went into Vatican control, according to a State Department report. Plaintiffs allege that the Vatican Bank, an arm of the sovereign Vatican government, essentially laundered the money, said plaintiffs lawyer Thomas Easton of Eugene, Ore. Easton said he believed it was “just a coincidence” that the decision came on the first day cardinals deliberated who will be the next pope. However, Easton hopes the Catholic church takes advantage of the timing and agrees to settle the case. “I would think a new pope might want to clean the decks of this kind of stuff,” Easton said. “I’m thinking we have a good chance to settle now.” The claims could exceed $100 million, according to a press release put out by Easton’s partner in the case, Jonathan Levy of Ohio. Pepperdine University School of Law Professor Kathryn Lee Boyd argued the plaintiffs case at the 9th Circuit. Chesney had granted a motion to dismiss because she believed the case wasn’t justiciable under the political question doctrine. That legal test requires courts to stay out of business normally conducted by the executive and legislative branches. Monday’s divided 9th Circuit panel said Chesney was right, but only regarding the so-called “war objective” claims. Two of the three panel judges — 9th Circuit Judge M. Margaret McKeown and Senior Illinois District Judge Milton Shadur, sitting by designation — said they would allow the more “garden variety” tort of conversion claims. “In the landscape before us, this lawsuit is the only game in town with respect to claimed looting and profiteering by the Vatican Bank,” McKeown wrote for the majority. “No ongoing government negotiations, agreements or settlements are on the horizon. The outside chance that the executive branch will issue a statement in the future that has the ‘potentiality of embarrassment’ when viewed against our decision today does not justify foreclosing the Holocaust survivors’ claims.” But the third panelist, 9th Circuit Judge Stephen Trott, said that’s not good enough. “With all respect to my valued colleagues, I see it as a mistake to measure this issue of justifiability by a ‘this lawsuit is the only game in town’ standard,” Trott write in dissent. “This is not our ‘game,’ period, and we do not become vested with jurisdiction by default of the other branches.” The defendants have not yet decided whether to appeal, said Paul Vallone of San Francisco’s Hinshaw & Culbertson, who represents the Franciscan Order. Although Monday’s decision was a setback for his client, Vallone pointed to sections of the opinion that tell the plaintiffs they are by no means home free. “There are several other obstacles that plaintiffs need to get through,” Vallone said. Indeed, several times the judges noted the complexity and difficulty of the massive case, calling it a “behemoth” and comparing the district court’s work on it to Sisyphus, the mythological figure who rolled a boulder up a hill only to have it roll back down for eternity. Easton, on the other hand, found those comments encouraging. “Those are signals to both sides to settle the case,” he said. The lawyer for the Vatican Bank, Jeffrey Lena of Berkeley, Calif., could not be reached for comment.

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