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January 6, 2000


The opinion of the court was delivered by: Kram, District Judge.


In this consolidated class action alleging various torts and violations of international law, plaintiff class representatives Rudolfine Schlinger, Ernestine Schwarz Wasyl, Marian Salomon Elkan, Paul Schwarz, Elisabeth Bishop, Roman Neuberger, Nathan Gutman, Johanna Mason, Bezalel Kahn, Miriam Deutsch, Ludewig Schaffer, Gisela Bertysch and Greta Kleinman*fn1 and defendants, Bank Austria AG, ("Bank Austria") and Creditanstalt AG, ("Creditanstalt") (collectively, the "Austrian Banks") seek (1) approval of a proposed partial settlement agreement (the "Settlement") between plaintiffs and the Austrian Banks, and (2) dismissal of all claims against the Austrian Banks. Purported class member and pro se litigant, Peter Georgi ("Georgi"), also moves, pursuant to Federal Rule of Civil Procedure 24, to intervene. For the reasons set forth below, the Settlement is approved, all claims against the Austrian Banks are dismissed, and Georgi's motion to intervene is denied.


I. The Action

Beginning in or about October 1998, a number of individual and class actions were filed against the Austrian Banks and certain German banks in the United States District Courts for the Southern and Eastern Districts of New York (the "Actions"). The plaintiffs in the Actions alleged that the defendant banks committed various torts and violations of international law arising out of the activities of the Nazis during and after World War II. In December 1998, the Actions were transferred to this Court. By Order dated, February 19, 1999, the Actions were consolidated for all purposes.*fn2 The February 19, 1999 Order also provided that any actions filed in the future determined to be related to the Actions would also be consolidated unless the parties to the new action objected within 10 days of receiving notice of the consolidation. See Order, dated Feb. 19, 1999. On March 17, 1999, plaintiffs filed a consolidated class action complaint (the "Consolidated Complaint") against Deutsche Bank, Dresdner Bank, Commerzbank, Hypo Bank (collectively, the "German Banks") and the Austrian Banks.

The Consolidated Complaint alleges that the Austrian and German banks converted the assets of those persecuted by the Nazis and profited from their forced and slave labor. Consolidated Complaint, passim. The Consolidated Complaint defines the class as:

All persons worldwide, their heirs, executors, administrators, successors, beneficiaries and/or assigns, who do not timely elect to be excluded from the Class who are or were, directly or indirectly (i) Victims or Targets of Nazi Persecution and (ii) during the Class Period January 1, 1933 to (but not including) January 1, 1947:
(A) had moneys, securities or other assets on deposit with any of the Austrian Banks which were converted by any of the Austrian Banks, transferred as a direct or indirect result of Nazi persecution, laws or actions by any of the Austrian Banks to non-owners, including governmental entities, and/or never returned to rightful owners; or
(B) had personal and/or private property looted or through any means converted from them or seized by or through the Nazis or their co-conspirators and transferred to any of the Austrian Banks or by or through any of the Austrian Banks to others; or
(C) sent assets through any of the Austrian Banks destined for concentration camps inmates but that never reached such inmates and/or were not returned or forwarded to the rightful owner or from which any of the Austrian Banks benefitted financially, directly or indirectly; or
(D) were injured, directly or indirectly, by the actions of the Austrian Banks in tortious violation of customary international law, including profiting and/or facilitating the use by others of slave labor, the transfer of gold, precious metals and gems to the Nazi Regime and disguising the true ownership of companies or assets owned by German entities between 1933 and 1947.

Consolidated Complaint ¶ 97.

II. The Negotiations

On December 16, 1998, the Court appointed Alfonse M. D'Amato as Special Master to supervise and conduct settlement discussions between the parties. Order, dated Dec. 16, 1999. On January 4, 1999, Special Master D'Amato, his colleague, Professor Viet D. Dinh, and representatives of plaintiffs and the Austrian Banks first met to discuss a possible resolution of the action. In addition, they met several times over the course of several months and spoke at length by telephone in an attempt to negotiate a settlement.*fn3 Declaration of Charles G. Moerdler ("Moerdler Dec."), ¶ 6. On March 15, 1999, the Austrian Banks and counsel for the plaintiff class reached the Settlement. Id., ¶ 9.

III. Preliminary Certification and Notice

On June 24, 1999, the Court granted preliminary certification of the above-defined class for settlement purposes (the "Settlement Class"). Order, dated June 24, 1999. The Court also granted preliminary approval to the Settlement and scheduled a hearing to commence on November 1, 1999 to determine whether the Settlement is fair, reasonable and adequate (the "Fairness Hearing"). Id.

On July 28, 1999, the Court approved the proposed form of notice and notice campaign. Order, dated July 28, 1999. The notice contained the following information: (1) the key terms of the settlement (2) how to obtain a claim form; (3) that members of the Settlement Class would be bound by the Settlement if they did not inform class counsel that they wished to opt-out by October 18, 1999; and (4) that members of the Settlement Class were permitted to comment on or object to the Settlement in writing and at the Fairness Hearing so long as written objections were received by the Court post-marked no later than October 18, 1999. Id.

Notice was mailed directly to 27,883 current or former Austrian Citizens, in 68 countries, determined to be victims of Nazi persecution by the National Fund of the Republic of Austria for Victims of National Socialism. See Declaration of Robert A. Swift ("Swift Dec."), ¶¶ 3-4; Declaration of Edward D. Fagan ("Fagan Dec."), ¶¶ 4-8. The notice campaign also utilized (1) paid advertisements in newspapers in certain countries with significant populations of World War II survivors who were in Austria before and during World War II; (2) promotional announcements in key foreign cities; (3) direct mailings to 15,000 individuals and organizations; (4) and establishment of a worldwide web "home page." Swift Dec., ¶¶ 3-4; Fagan Dec., ¶¶ 4-8.

IV. The Settlement*fn4

A. The Settlement Fund

Pursuant to the Settlement, the Austrian Banks will pay a total of $40 million for the benefit of the members of the Settlement Class. Of that sum, $38 million will be paid in three installments. The remaining $2 million will be paid by Bank Austria directly to support the work of a historical commission created for, inter alia, investigating and publishing a report regarding the activities of the Austrian Banks during the Nazi era and attempting to identify members of the class. Eight million dollars of the first installment has been paid into escrow. The second installment of $15 million will be paid within twenty Austrian business days after the effective date of the Settlement (the "Effective Date").*fn5

B. Interim Allowed Claims Fund

"In an effort to expedite the processing of claims by or on behalf of those with allowable claims, the Austrian Banks have initiated, and will continue until the Effective Date, an Interim Allowed Claims Settlement process whereby claims are referred for review and award to The Hon. Theodore R. Kupferman (and/or any other person as may be appointed by the Court upon the recommendation of lead counsel and the Austrian Banks if Justice Kupferman is unable to serve)." Settlement, ¶ 21. All sums awarded by Justice Kupferman and his expenses shall be deducted from any sum due for funding of Administrative and Interim Allowed Claims Fund. Id. Any challenge to the reasonableness of awards granted or fees paid shall be made to the Court. The Court may elect to continue the Interim Allowed Claims process in lieu of or in addition to the process described in Section IV(C) below.

C. Individual Claims Settlement — The Claims Committee

The processing of claims will be supervised by the Claims Committee. The members of the committee will be: (1) Chairman Paul D. Wachter; (2) Senator Guy Vellala; and (3) The Hon. Theodore Kupferman. See Order, dated Aug. 4, 1999. The Claims Committee will establish standards to determine (a) which claims shall be allowed; (b) the amount of each allowed claim; and (c) the amount to be paid on each claim. The Claims Committee shall also establish standards for evaluating all claims, taking into consideration the age of the claimants, the nature of the claims, the class members' secondary and anecdotal evidence, and the quality and availability of Austrian Banks' archival material. Furthermore, the Claims Committee will itself make such determinations or will appoint a panel of independent masters to determine the same in accordance with such standards. Subject to Court approval, the Claims Committee shall have the discretion to pay all or a portion of any claim of any individual who demonstrates an immediate need for funds on an expedited basis. The Claims Committee may elect, by majority vote, to continue the Interim Allowed Claims settlement process. The Claims Committee shall complete its mandate within nine months from the bar date for claims established by the Court, unless the time is extended by the Court.

Individual claims officers ("Claims Officers") shall be appointed by the Individual Claims Committee. The Claims Officers shall process and value each claim, subject to review on appeal by the Individual Claims Committee, which will review the determination of Claims Officers at the request of claimants.

D. Historical Commission — $2 Million

In order to preserve documentation and information relating to the acts alleged in the complaint and the conduct of the banks during the period covered by the Settlement, to create and maintain a permanent and public archive of these materials, and to identify the class members and unpaid deposited assets, a Historical Commission will be created consisting of three members. The members shall be: (1) Chairman Dr. Heinrich Senfft; (2) Prof. Oliver Rathkolb; and (3) Dr. Theodore Venus. See Order, dated Aug. 4, 1999. The Historical Commission shall investigate and publish a report regarding the activities of Austrian Banks during the Nazi era, and attempt to identify class members.

The Historical Commission may expend a sum up to $2 million. On June 7, 1999, the Austrian Banks delivered to the Court an undertaking to bear the reasonable costs incurred by the Historical Commission up to a maximum of $2 million. Sums expended in researching the history of, and in locating and translating documents pertaining to, the Austrian Banks prior to the Effective Date shall be deemed to have funded the work of the Historical Commission for purposes of the $2 million maximum.

E. Restitution Fund — $30 million

The Austrian Banks shall fund a Restitution Fund to be paid in installments as follows: (1) $15 million within twenty Austrian business days after the Effective Date; and (2) $15 million within one year of prior payment. After payment of Allowed Claims or any shortfall in the Administrative and Interim Allowed Claim Fund, any moneys remaining in the Restitution fund shall "be distributed for the benefit of Holocaust survivors and/or their memory." Settlement, ¶ 14.

The Restitution Fund shall be administered by three persons: (1) Chairman Simon Wiesenthal; (2) Miriam M. Robinson, Esq.; and (3) Rabbi Gilbert S. Rosenthal (the "Restitution Committee"). See Order, dated Aug. 4, 1999. In providing for the expenditure of such funds, the Restitution Committee shall consider the importance of providing for Austria-based activities or related concerns, and give ...

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