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Overview of Litigation and Settlement

In 1996 and 1997, a series of class action lawsuits were filed in several United States federal courts against Swiss banks and other Swiss entities, alleging that financial institutions in Switzerland collaborated with and aided the Nazi Regime by knowingly retaining and concealing assets of Holocaust victims, and by accepting and laundering illegally obtained Nazi loot and profits of slave labor. All of the cases were consolidated in the United States District Court for the Eastern District of New York (“the Court”). The case was supervised by the Honorable Edward R. Korman, United States District Judge.
Historical background to the lawsuits
The lawsuits were filed because in the decades after the Holocaust, Swiss financial institutions had failed to return deposits to the Nazi victims (or their relatives) who had entrusted their assets to the banks. Although the issue of these bank accounts had been raised many times during the decades after the Holocaust, in the late 1990s, the banks’ behavior came under scrutiny of a type that Switzerland had not experienced before. The U.S. Congress held hearings on the subject in 1996 and again in 2000, while in Switzerland, two commissions were established to explore that nation’s actions during and after the Holocaust era. The Swiss Parliament and Federal Council created the Independent Commission of Experts Switzerland — Second World War (“ICE” or “Bergier Commission,” after its Chair). Separately, the Swiss Bankers Association (“SBA”), the World Jewish Restitution Organization (“WJRO”) and the World Jewish Congress (“WJC”), through a May 2, 1996 Memorandum of Understanding, established the Independent Committee of Eminent Persons, led by former Chairman of the Board of Governors of the United States Federal Reserve System Paul A. Volcker (“ICEP” or the “Volcker Committee”).
The Volcker Committee
The Volcker Committee’s two main objectives were to “identify accounts in Swiss banks of victims of Nazi persecution that have lain dormant since World War II or have otherwise not been made available to those victims or their heirs” and “to assess the treatment of the accounts of victims of Nazi persecution by Swiss banks.” The SBA stated that Swiss banking authorities would provide full support to the Volcker audit, and would abide by its results.
On December 6, 1999, the Volcker Committee released its final report. Its research showed that some 6.8 million Swiss bank accounts were open or opened during the relevant period, the Holocaust era (1933-1945). Of these, documents relating to approximately 2.7 million accounts had been destroyed. Despite this massive document destruction, records relating to approximately 4.1 million Holocaust-era Swiss accounts still existed. The Volcker Committee recommended that these 4.1 million accounts should be consolidated into a “Total Accounts Database” (TAD) for use in a claims process.
The Volcker Committee audited approximately 300,000 of these still-existing 4.1 million accounts and determined that 53,886 of the accounts had a “probable or possible relationship to victims of Nazi persecution.” The 53,886 accounts constituted the Accounts History Database (“AHD”). Following the requirements of Swiss banking authorities, the Volcker Committee recommended that approximately 25,000 of the 53,886 AHD accounts should be published. Subsequently, following further review, the AHD was reduced to approximately 36,000 accounts, with the number recommended for publication reduced to approximately 21,000 accounts. The Volcker Committee concluded that the value of the AHD accounts was approximately $643 million to $1.36 billion, including interest. The Volcker Committee’s final report of December 6, 1999 may be accessed here.
On the same date that the Volcker Committee released its report, December 6, 1999, the Swiss Federal Banking Commission (“SFBC”) announced that it was solely responsible for decisions on publishing accounts, and that it would conduct further analysis. The SFBC later announced that it had authorized the Swiss Banks to “publish [the 21,000] accounts that are deemed by the Volcker Committee to have a probability of being related to victims of the Holocaust” and to “create a central database containing [the approximately 36,000] accounts that the Volcker Committee considers to be probably or possibly related to Holocaust victims.” Although banking authorities previously had pledged to abide by the Volcker audit results, the SFBC declined to adopt the Volcker Committee’s recommendation to create a Total Accounts Database for the much larger group for which bank records still existed: the 4.1 million accounts held in Swiss Banks during the Holocaust era.
On February 9, 2000, Paul Volcker testified before the Congressional Committee on Banking and Financial Services, reiterating the publication and data access recommendations of the Volcker Report. His congressional testimony may be accessed here.
The Bergier Commission
The Bergier Commission was established on December 13, 1996 by the Swiss Parliament. The Parliament’s decree mandated a committee of experts to “examine the period prior to, during and immediately after the Second World War,” specifically investigating how money and assets found their way into Switzerland in connection with Nazi politics. The Bergier Commission issued two interim reports and, ultimately, a final report.
In its first interim report, issued in July 1998, the Bergier Commission offered its preliminary assessment of wartime gold transactions between Switzerland and Germany. The Bergier Commission concluded that the Swiss National Bank played a significant role in handling Reichsbank gold, and the commercial banks also were involved in such transactions. This interim report may be accessed here.
In its second interim report, issued on December 10, 1999, a few days after the December 6, 1999 Volcker Report, the Bergier Commission addressed Switzerland’s Holocaust-era refugee policy. The Bergier Commission condemned the Swiss decisions to encourage Germany to mark the passports of Jewish persons with a “J” stamp in 1938, and to seal the Swiss borders from entry by “racially” persecuted persons in 1942. The report noted that while many refugees were granted asylum by Switzerland during the Holocaust, Switzerland “declined to help people in mortal danger,” and a more humanitarian policy might have saved thousands of refugees from being killed. This interim report may be accessed here.
The Bergier Commission issued its final report on March 22, 2002. As part of its final report, the Bergier Commission also released a number of detailed studies of the behavior of the Swiss banks and other institutions during the Holocaust period. In particular, the Bergier Commission observed in its final report that the Swiss Banks had permitted account owners to make forced transfers to Nazi entities, although the owners were acting under duress. The Bergier Commission also was critical of the banks’ post-War failure to adequately survey dormant accounts, or to locate heirs of unclaimed accounts. The final Bergier Report may be accessed here.
The Settlement Agreement:
Against the background of the Volcker Commission and Bergier Committee investigations, the litigation in the U.S. courts continued, spearheaded by leading U.S. class action attorneys and by Professor Burt Neuborne of New York University School of Law.
In August, 1998, the parties reached an agreement in principle to settle the lawsuits for $1.25 billion (“Global Settlement”). Following several months of continued negotiation and drafting, the Settlement Agreement was signed on January 26, 1999. In exchange for the settlement amount paid by the Swiss banks (“Settlement Fund”), the plaintiffs and class members agreed to release and forever discharge Swiss banks, the Swiss government and other Swiss entities from any and all claims relating to the Holocaust, World War II, and its prelude and aftermath.
As a condition to the Settlement, the defendant banks required seventeen major worldwide Jewish organizations to sign “organizational endorsements.” The last organizational endorsement was executed on March 30, 1999, thus finalizing the Settlement Agreement. A sample organization endorsement may be accessed here.
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 persecution by the Nazi regime. A “Victim or Target of Nazi Persecution” was defined as “any individual, corporation, partnership, sole proprietorship, unincorporated association, community, congregation, group, organization of other entity” persecuted or targeted by the Nazis. The Settlement Agreement also created five classes of eligible claimants: the Deposited Assets Class; Slave Labor Class I; Slave Labor Class II; the Refugee Class and the Looted Assets Class.
The Settlement Agreement defined the five classes as follows:
  • "The Deposited Assets Class consists of Victims or Targets of Nazi Persecution and their heirs, successors, administrators, executors, affiliates, and assigns who have or at any time have asserted, assert, or may in the future seek to assert Claims against any Releasee for relief of any kind whatsoever relating to or arising in any way from Deposited Assets or any effort to recover Deposited Assets."
  • "Slave Labor Class I consists of Victims or Targets of Nazi Persecution who actually or allegedly performed Slave Labor [‘work for little or no remuneration’] for companies or entities that actually or allegedly deposited the revenues or proceeds of that labor with, or transacted such revenues or proceeds through, Releasees, and their heirs, executors, administrators, and assigns, and who have or at any time have asserted, assert, or may in the future seek to assert Claims against any Releasee for relief of any kind whatsoever relating to or arising in any way from the deposit of such revenues or proceeds or Cloaked Assets or any effort to obtain redress in connection with the revenues or proceeds of Slave Labor or Cloaked Assets."
  • "Slave Labor Class II consists of individuals who actually or allegedly performed Slave Labor at any facility or work site, wherever located, actually or allegedly owned, controlled, or operated by any corporation or other business concern headquartered, organized, or based in Switzerland or any affiliate thereof, and the individuals’ heirs, executors, administrators, and assigns, and who have or at any time have asserted, assert, or may in the future seek to assert Claims against any Releasee other than Settling Defendants, the Swiss National Bank, and Other Swiss banks for relief of any kind whatsoever relating to or arising in any way from such Slave Labor or Cloaked Assets or any effort to obtain redress in connection with Slave Labor or Cloaked Assets."
  • "The Looted Assets Class consists of Victims or Targets of Nazi Persecution and their heirs, successors, administrators, executors, affiliates, and assigns who have or at any time have asserted, assert, or may in the future seek to assert Claims against any Releasee for relief of any kind whatsoever relating to or arising in any way from Looted Assets or Cloaked Assets or any effort to recover Looted Assets or Cloaked Assets."
  • "The Refugee Class consists of Victims or Targets of Nazi Persecution who sought entry into Switzerland in whole or in part to avoid Nazi persecution and who actually or allegedly either were denied entry into Switzerland or, after gaining entry, were deported, detained, abused, or otherwise mistreated, and the individuals’ heirs, executors, administrators, and assigns, and who have or at any time have asserted, assert, or may in the future seek to assert Claims against any Releasee for relief of any kind whatsoever relating to or arising in any way from such actual or alleged denial of entry, deportation, detention, abuse, or other mistreatment."
The Settlement Agreement did not establish a specific method of allocating the Settlement Fund among these diverse victim groups and classes. Rather, the agreement provided for the Court to appoint a Special Master to employ “open and equitable procedures to ensure fair consideration of all proposals for allocation and distribution.” The Plaintiffs’ Executive Committee on December 15, 1998 unanimously endorsed Judge Korman’s proposal to appoint Judah Gribetz as Special Master, responsible for devising the distribution plan. On March 31, 1999, Judge Korman issued an order appointing Judah Gribetz as Special Master, setting forth the terms of appointment, including responsibilities, deadlines and compensation. Subsequently, Judge Korman appointed Special Master Gribetz’s colleague, Shari C. Reig (who had worked with the Special Master from the time of his appointment) as Deputy Special Master.
In accordance with United States class action law, the Court was required to provide notice of the proposed settlement, and to determine whether the settlement was fair. Beginning in June, 1999, worldwide notice of the settlement commenced, including mailings in 27 different languages to survivors, heirs and other interested persons. The parties sought written comments as well as relevant personal information from potential class members through “Initial Questionnaires,” and approximately 600,000 Initial Questionnaires ultimately were received from around the world. As part of his analysis of the fairness of the settlement, Judge Korman presided over two “fairness hearings”: one held in New York on November 29, 1999 and the other held in Israel on December 14, 1999.
After considering objections to, and comments on, the proposed Settlement Agreement at the fairness hearings, at the Court's direction, the parties agreed to certain modifications of the Settlement Agreement. First, the defendant banks agreed to modify the Settlement Agreement with respect to looted artwork. Second, a de facto sixth class of beneficiaries was created who could file insurance claims against participating insurance carriers. Third, additional modifications were made to the Settlement Agreement concerning the Deposited Assets Class, including provisions relating to the publication of Holocaust-era bank accounts, as well as access to bank records. These modifications were memorialized in Amendment No. 2 to the Settlement Agreement.

On July 26, 2000, the Court determined that the proposed settlement of the class action was fair, reasonable and adequate. The Court granted final approval to the Settlement Agreement. This approval was conditioned upon the banks’ compliance with a variety of requirements, including good faith cooperation with the distribution process. On August 4, 2000, defendants banks advised the Court that they intended to execute Amendment No. 2 and, thereafter, the Court entered final judgment granting approval to the Settlement Agreement as amended.
The Distribution Plan and its Results
On September 11, 2000, the Special Masters filed the Proposed Distribution Plan. After a period of notice and public comment, and following a hearing on November 20, 2000, the Court adopted the Special Masters' recommendations in their entirety by order dated November 22, 2000, a decision the United States Court of Appeals for the Second Circuit affirmed on July 26, 2001.
The entire 900-page Distribution Plan can be accessed here. Its key elements were as follows:
  • 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 of two-thirds of the Settlement Fund to these claims was based upon the priority accorded to the bank accounts under the Settlement Agreement and under fundamental principles of U.S. law, which recognized the unpaid bank accounts as basic contractual obligations. The allocation of up to $800 million also was premised upon the Volcker Committee’s investigation. As noted previously, the Volcker Committee auditors identified approximately 54,000 accounts (subsequently reduced to approximately 36,000), as “probably” or “possibly” belonging to Nazi victims or their heirs. The auditors determined the value of these accounts to be between $642 million and $1.36 billion. Although the midpoint of that range was approximately $1 billion, the Distribution Plan conservatively recommended setting aside a lower amount of up to $800 million for the Deposited Assets Class, given the passage of so many decades since the Holocaust, and the likelihood that many account owners and heirs would not or could not file claims. The Distribution Plan provided for Deposited Assets claims to be administered on the Court’s behalf by the Claims Resolution Tribunal in Zurich (“CRT-II”), which already had been processing claims against Swiss bank accounts under a separate process pre-dating the Settlement (“CRT-I”). The CRT was to be overseen by Court-appointed Special Masters, initially Paul Volcker and ICEP counsel Michael Bradfield, and later by Dr. Helen Junz, along with Zurich-based Secretaries General Mary B. Carter and Dov Rubinstein, and a large staff of attorneys and legal assistants.
  • Slave Labor Class I: The Distribution Plan provided for payments of $1,000 each (later increased to $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 payments to all surviving slave laborers were warranted, because historical research demonstrated that virtually every major slave labor-using entity maintained banking and other financial relationships with Switzerland. Accordingly, all proceeds of slave labor could be presumed to have been transacted through Switzerland. In the interest of efficiency, and to minimize survivor confusion, the Distribution Plan provided for the same administrative agencies, processing mechanisms and deadlines utilized by the German Foundation “Remembrance, Responsibility and the Future”(“German Foundation”). This was 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. The German Foundation legislation came into force before the Swiss Banks Settlement was approved. Following the lead of the German Foundation, which designated the Conference on Jewish Material Claims Against Germany, Inc. (“Claims Conference”) and the International Organization for Migration (“IOM”) to process the claims of, respectively, Jewish and non-Jewish former slave laborers, the Court adopted the Special Master’s recommendation, and appointed those two organizations to perform the same functions on behalf of Slave Labor Class I.
  • Slave Labor Class II: The Distribution Plan provided for payments of $1,000 (subsequently increased to $1,450) to former slave laborers for Swiss entities, or the heirs of those slave laborers who died on or after February 16, 1999. As noted previously, this was the one class that was open to all Nazi victims; it was not limited to the five designated “victim or target” groups specified in the Settlement Agreement. All Slave Labor Class II claims were processed by the IOM.
  • Refugee Class: The Distribution Plan designated the Claims Conference to process the claims of Jewish claimants, and the IOM to process 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 later were increased respectively to $3,625 and $725. As a result of knowledge gained during the claims process, it became clear that some individuals had suffered both types of injury, and they received compensation for each category of harm ($4,350).
  • Looted Assets Class: The Distribution Plan provided that the neediest class members were to benefit from humanitarian aid programs providing food, medicine, shelter and similar assistance. The Court agreed with the Special Masters’ observation that the Looted Assets Class potentially included millions of people, since all Holocaust victims and their heirs had been looted. The vast size of the class, coupled with the impossibility of determining whether specific property was transacted through a Swiss entity, rendered an individualized claims process impracticable. Instead, the Court agreed with the Special Masters’ recommendation of a “cy pres” remedy (the “next best thing”) targeting the neediest Holocaust survivors. The Distribution Plan initially allocated $100 million, and ultimately, a total of more than $256 million, over a 10-year period, later increased to 15 years. The payments were distributed with the understanding that the assistance would augment, but not replace, already-existing humanitarian aid programs overseen by the American Jewish Joint Distribution Committee (“JDC”) and the Claims Conference. The program also funded new programs for Roma and other non-Jewish class members, to be implemented and monitored by the IOM.
  • Insurance Claims: Separately from the Distribution Plan, plaintiffs and defendants established a claims resolution mechanism for certain Holocaust-era insurance policies, a program to be administered by CRT-II, but directed in considerable measure by the specific insurance companies that agreed to participate in the Settlement.
  • Victim List Project: On behalf of all class members, the Distribution Plan provided for the creation of a $10 million project (later increased to $14.5 million) to memorialize all Victims or Targets of Nazi Persecution, those who survived and those who perished. The project funded new research by Yad Vashem and the USHMM to collect and digitize the names of millions of Holocaust victims, whose identities had not previously been known.
What has the Swiss Banks Holocaust Settlement claims process accomplished?
  • It has resulted in the payment of nearly $1.285 billion — an amount exceeding the $1.25 billion settlement fund — to over 457,000 Holocaust victims and their heirs in every U.S. state, and in more than 80 nations.
  • Of the almost $1.285 billion distributed, nearly $720 million represents payments to owners of Swiss bank accounts and their heirs (the “Deposited Assets Class”). The bank account claims program resolved more than 100,000 claims to the accounts of over 415,000 potential account owners (“claimed account owners” or “CAOs”). The Court-supervised claims administrators issued a written opinion for every award. Each award describes the claimant’s relation to the victim; the victim’s life circumstances before, and fate in, the Holocaust; and what happened to the victim’s Swiss accounts. These awards, as well as decisions in which awards were not recommended, can be accessed here.
  • The distribution process also has compensated more than 198,000 members of Slave Labor Class I; the vast majority were slaves at the hands of the Nazis and their allies (and the remainder were the heirs of survivors who passed away after the settlement was reached). Because of the evidence of the pervasive ties among the Nazi government, German industry, and Swiss financial institutions, it was presumed that the proceeds of all slave labor had ended up in Switzerland. These survivors received a total of over $280 million. Summaries of many of these awards can be accessed here (Jewish victims) as well as here (Roma, Jehovah’s Witness, homosexual and disabled victims).
  • The claims process has paid nearly $700,000 to another 570 individuals under Slave Labor Class II. These victims, and the historical research conducted on their behalf, revealed a previously little-known aspect of the Holocaust: that Swiss companies benefited from slave labor. Summaries of the awards can be accessed here, and summaries of claims not recommended for awards can be accessed here.
  • The Court’s programs additionally have recognized and paid over $11.5 million to 4,158 persons under the Refugee Class claims process. These were survivors who sought refuge in Switzerland but were turned away or expelled, or who managed to gain admission into Switzerland, but suffered mistreatment. Summaries of the awards can be accessed at the following links: Jewish victims; Roma victims; Jehovah’s Witness victims; homosexual victims; and disabled victims.
  • Although nothing in the settlement negotiated by the parties was directed at the plight of needy survivors, the Distribution Plan nevertheless made it possible for the Court to provide over $256 million in food, medicine, medical devices, home health care, heating supplies, and other basic needs for more than 236,000 Holocaust survivors living at the edge of subsistence. All were looted during the Nazi era (the Looted Assets Class); some portion of their property or its proceeds might have been transacted through Switzerland; and all were needy when the case settled.
  • Under Amendment No. 2 to the Settlement Agreement, the parties agreed to the de facto creation of a sixth class of beneficiaries who would be entitled to file claims against certain participating insurance carriers (the Insurance Class), which resulted in awards of over $1.4 million.
  • The Victim List Project was established to encourage and help organize the compilation and greater accessibility worldwide of the names of individuals whom the Settlement Agreement was intended to benefit – Jewish, Romani, Jehovah’s Witness, homosexual, and disabled victims or targets of Nazi persecution, those who perished and those who survived. The $14.5 million (1.1% of the amount distributed by the Settlement Fund) allocated to this project has helped to locate and identify archival and testimonial sources. It also has improved access to archives, and it enabled names of victims and other information to be digitized and made available online. The Yad Vashem Central Database of Shoah Victims’ Names, created with significant support from the Victim List Project, is accessible here, and the Holocaust Survivors and Victims Database of the United States Holocaust Memorial Museum, also supported by the Victim List Project, is accessible here.
Please refer to the individual Classes and related links, for specific information relating to that Class.