Dubbin v. Union Bank of Switzerland (In Re Holocaust Victim Assets Litigation) , 424 F.3d 132 ( 2005 )

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2004
(Argued: May 16, 2005 Decided: September 8, 2005)
Errata Filed: October 4, 2005)
Docket No. 04-1898(L), 04-1899(CON)
IN RE HOLOCAUST VICTIM ASSETS LITIGATION
SAMUEL J. DUBBIN ,
Plaintiff-Appellant,
PINK TRIANGLE COALITION , KARL LANGE and PIERRE
SEEL,
Interested Parties-Cross-Appellants,
-v.-
UNION BANK OF SWITZERLAND, SWISS BANK CORP ., also
known as Swiss National Bank, BANKING INSTITUTION S #1-
100, JOHN DOES #1-100, CERTAIN SWISS BANK ACCOUNTS
described as follows, Swiss Bankers Assoc., Swiss Bankers
Association, and Bank of International Settlements,
Defendants-Appellees,
PLAINTIFFS’ EXECUTIVE COMMITTEE SETTLEMEN T CLASS,
Interested-Party-Appellee,
JUDAH GRIBETZ,
Special Master,
GIZELLA WEISSHAUS, on behalf of herself and all other
persons of all national origins, ethnic groups, races, creeds
and colors, similarly situated as victims and survivors of the
Nazi Holocaust and JACOB FRIEDMAN ,
1
Plaintiffs,
WORLD JEWISH RESTITUTION ORGANIZATION , SOUTH
FLORIDA HOLOCAUST COALITION and THOM AS WEISS,
Intervenor-Plaintiffs,
WASHINGTON STATE INSURANCE COMMISSIONER,
GREGORY TSVILICHOVSKY, MATVEY YENTUS, SOFIYA
BLOSHTEYN, OLGA TSVILIKHOVSKYA, LARISA RYABAYA,
ROSA YENTUS, PAVEL ARONOV, LUBOV STARODINSKAYA,
and ELIAZAR BLOSHTEYN,
Interested-Parties,
POLISH AMERICAN DEFENSE COMMITTEE, INC ., a non-profit
California Corporation, IRVING WOLF , DISABILITY RIGHTS
ADVOCATES AND DIRECTOR OF INTERNATIONAL AFFAIRS
AND REPRESENTATIVE TO THE UNITED NATIONS OF
AGUDATH ISRAEL WORLD ORGANIZATION ,
Movants,
G.K., a Holocaust Survivor and member of the New
American Jewish Club of Miami, L.K., a Holocaust Survivor
and member of the New American Jewish Club of Miami,
F.K., a Holocaust Survivor and member of the New
American Jewish Club of Miami, HOLOCAUST SURVIVORS
FOUNDATION USA, INC . (HSF), DAVID SCHAECTER,
individually and as President of the Holocaust Survivors
Foundation-USA, Inc., LEO RECHTER, individually and as
President of the National Association of Jewish Holocaust
Survivors (NAHOS), NATIONAL ASSOCIATION OF JEWISH
HOLOCAUST SURVIVORS (NAHOS), DAVID MERM ELSTEIN ,
individually and as President of the New American Jewish
Club of Miami and President of the South Florida Holocaust
Survivors Coalition, NEW AMERICAN JEWISH CLUB OF
MIAMI, SOUTH FLORIDA HOLOCAUST SURVIVORS
COALITION , ALEX MOSKOVIC , individually and as President
of the Child Survivors/Hidden Children of the Holocaust,
Inc., CHILD SURVIVORS/HIDDEN CHILDREN OF THE
HOLOCAUST , ESTHER WIDMAN , individually as member of
the National Association of Jewish Holocaust Survivors
(NAHOS), FRED TAUCHER, individually and as President of
the Survivors of the Holocaust Recovery Project (SHARP),
SURVIVORS OF THE HOLOCAUST RECOVERY PROJECT
2
(SHARP), NESSE GODIN , individually and as President of the
Jewish Holocaust Survivors and Friends of Greater
Washington, JEWISH HOLOCAUST SURVIVORS AND FRIENDS
OF GREATER WASHINGTON , HENRY SCHUSTER, individually
and as President of the Holocaust Survivors Group of
Southern Nevada, HOLOCAUST SURVIVORS GROUP OF
SOUTHERN NEVADA, HERBERT KARLINER , individually and
as a member of the Holocaust Survivors Foundation-USA,
Inc. and the South Florida Holocaust Survivors Coalition,
LEA WEEMS, individually and as President of the Houston
Council of Jewish Holocaust Survivors, HOUSTON COUNCIL
OF JEWISH HOLOCAUST SURVIVORS, SAM GASSON ,
individually and as President of the Habonim Cultural Club,
Survivors of the Holocaust, HABONIM CULTURAL CLUB,
SURVIVORS OF THE HOLOCAUST , HOLOCAUST SURVIVORS OF
SOUTH FLORIDA, DENA AXELROD , individually and as a
member of the Child Survivors of the Holocaust, South
Florida Group and the South Florida Holocaust Survivors
Coalition, SAUL BIRNBAUM , individually and as President of
the Holocaust Survivors Club of Boca Raton (Century
Village), HOLOCAUST SURVIVORS CLUB OF BOCA RATON
(CENTURY VILLAGE), MIRIAM RUBIN , Individual Holocaust
Survivor, DORIS FEDRID , Individual Holocaust Survivor,
HELGA GROSS , Individual Holocaust Survivor, NATIONAL
FEDERATION OF THE BLIND , USA, GERMAN COUNCIL OF
CENTERS FOR SELF-DETERMINED LIVES, Finist, Russia,
EQUAL ABILITY LIMITED, United Kingdom, THROUGH THE
LOOKING GLASS, USA, DISABLED PERSONS
INTERNATIONAL, CANADA, WORLD INSTITUTE ON
DISABILITY , USA, CENTER FOR INDEPEN DENT LIVING,
BULG ARIA , DISABILITY RIGHTS EDUCATION AND DEFENSE
FUND , US, CENTER FOR INDEPEN DENT LIVING, BERKELEY,
USA, CALIFORNIA FOUNDATION FOR INDEPENDENT
LIVING CENTER, INDEPEN DENT LIVING RESOURCE
CENTER, SAN FRANCISCO, COMPUTER TECHNOLOGIES
PROGRAM , USA, RAGGED EDGE /AVACADO PRESS , USA,
LEGAL ADVOCACY FOR THE DEFENSE OF PEOPLE WITH
DISABILITIES, NATIONAL CONFEDERATION OF DISABLED
PERSONS, GREECE AND DE JU RE ALAPITVANY, HUNGARY ,
Appellants.
3
Before: MESKILL, NEWMAN , and CABRANES, Circuit Judges.
Appeal from a memorandum and order of the United States District Court for the Eastern
District of New York (Edward R. Korman, Chief Judge) allocating settlement funds in the Holocaust
Victim Assets Litigation. Appellants challenge the geographic distribution of funds earmarked for
needy Jewish Holocaust victims.
AFFIRMED .
EDWARD LABATON, Goodkind Labaton Rudoff & Sucharow,
LLP, New York, NY (Arthur J. England, Jr., Charles
M. Auslander, and Brenda K. Supple, Greenberg
Traurig, P.A., Miami, FL; Samuel J. Dubbin, Dubbin
& Kravetz, LLP, Coral Gables, FL; Stephen Burbank,
Philadelphia, PA, of counsel) for Appellants.
BURT NEUBORNE , New York, NY, and ROBERT A. SWIFT,
Kohn Swift & Graf, PC, Philadelphia, PA (Melvyn I.
Weiss, Deborah M. Sturman, Milberg Weiss Bershad
& Schulman LLP, New York, NY; Morris A. Ratner,
Caryn Becker, Lieff Cabraser Heimann & Bernstein,
LLP, New York, NY) for Appellees.
Alan S. Jaffe (Charles S. Sims, Gregg M. Mashberg, and Frank
R. Scibilia, of counsel), Proskauer Rose LLP, New York,
NY for amici curiae The American Jewish Joint Distribution
Committee and Idud Hasadim.
Marshall Beil, McGuire Woods LLP, New York, NY (Joseph
S. Kaplan, and Christine M. Fecko, McGuire Woods
LLP, New York, NY; Michael D. Lissner, Lissner &
Lissner, New York, NY, of counsel) for amici curiae The
Association of Jewish Family & Children’s Agencies, Inc.,
The Blue Card, Inc., The Nachas Health and Family
Network, Inc., and the Margaret Tietz Nursing and
Rehabilitation Center.
4
JOSÉ A. CABRANES, Circuit Judge:
The Holocaust Survivors Foundation-U.S.A., Inc. (“HSF”), and several individuals and
organizations, appeal from the March 9, 2004 memorandum and order of the United States District
Court for the Eastern District of New York (Edward R. Korman, Chief Judge).1 The District Court
rejected the HSF’s objections to the Court’s earlier orders, which had allocated supplemental funds
to one of the settlement classes in the litigation styled as the Holocaust Victim Assets Litigation. On
appeal, the HSF continues to object to the manner in which the District Court allocated funds
among class members. In particular, the HSF asserts that needy Holocaust survivors residing in the
United States have received a disproportionately small allocation, relative to the needy survivors
residing in the former Soviet Union (“FSU”).
Because the District Court acted well within the bounds of its discretion in allocating the
settlement fund, we affirm.
BACKGROUND
I. Swiss Bank Settlement
The Holocaust Victim Assets Litigation began in 1996 and 1997, when several class actions
against leading Swiss banks were filed in the District Court and subsequently consolidated. See In re
Holocaust Victim Assets Litig., 105 F. Supp. 2d 139, 141 (E.D.N.Y. 2000). The District Court has
described the principal claims of these class actions as follows:
Plaintiffs alleged that, before and during World War II, they
were subjected to persecution by the Nazi regime, including
genocide, wholesale and systematic looting of personal and business
property and slave labor. Plaintiffs alleged that, in knowingly
retaining and concealing the assets of Holocaust victims, accepting
and laundering illegally obtained Nazi loot and transacting in the
1
This appeal was consolidated with an appeal from the District Court’s denial of attorney’s fees brought by
Sam uel J. Du bbin, HSF’s coun sel. W e ad judicate Du bbin’s appeal in a separate opinion. See In re Holocaust V ictim Assets
Litig., ___ F.3d ___ (2d C ir. 2005).
5
profits of slave labor, Swiss institutions and entities, including the
named defendants, collaborated with and aided the Nazi regime in
furtherance of war crimes, crimes against humanity, crimes against
peace, slave labor and genocide. Plaintiffs also alleged that
defendants breached fiduciary and other duties; breached contracts;
converted plaintiffs’ property; enriched themselves unjustly; were
negligent; violated customary international law, Swiss banking law
and the Swiss commercial code of obligations; engaged in fraud and
conspiracy; and concealed relevant facts from the named plaintiffs
and the plaintiff class members in an effort to frustrate plaintiffs’
ability to pursue their claims. Plaintiffs sought an accounting,
disgorgement, compensatory and punitive damages, and declaratory
and other appropriate relief.
Id. at 141-42. In May 1997, defendant banks moved to dismiss the litigation or, in the alternative, to
stay the proceedings. Id. at 142.
While defendants’ motions were pending, the parties engaged in settlement discussions
facilitated by Stuart E. Eizenstat, then Under Secretary of State and Special Representative of the
President and Secretary of State on Holocaust Issues. Id. In August 1998, after the District Court
became involved in the discussions, the parties agreed in principle to settle the litigation for $1.25
billion to be distributed for the benefit of “Jews, homosexuals, Jehovah’s Witnesses, the disabled
and Romani—groups recognized by the United Nations as having been the targets of systematic
Nazi persecution.” Id. at 142-43. On January 26, 1999, the parties formally executed the Class
Action Settlement Agreement (“Settlement Agreement”), subject to the District Court’s approval.
On March 30, 1999, the District Court provisionally approved the Settlement Agreement
and certified, pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3),2 five settlement classes:
2
Fed. R. Civ. P. 23 provides, in relevant part:
(a) Prerequisites to a Class Action. One or more mem bers of a class may sue or be
sued as representative parties on behalf of all only if
(1) the class is so nu merous that joinder of all members is impracticable,
(2) there are qu estion s of law or fact common to the class,
(3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class, and
6
Deposited Assets Class, Looted Assets Class, Slave Labor Class I, Slave Labor Class II, and Refugee
Class. Id. at 143-44. Membership in all except the Slave Labor Class II is limited to members of
groups targeted for Nazi persecution.3
Two of the classes are particularly relevant to this appeal. The Deposited Assets Class, as its
name suggests, consists of Nazi persecution victims and their heirs whose claims are grounded in
assets that were deposited by the victims with Swiss banks. 4 See id. at 143. The Looted Assets Class,
by contrast, includes principally “those who claim their property was looted by Nazis and then disposed
(4) the rep resentative parties will fairly and adequately pro tect the interests
of the class.
(b) Class Actions Maintainable. An action may be maintained as a class action if the
prerequisites of subdivision (a) are satisfied, and in addition:
...
(3) the court finds that the questions of law or fact common to the
mem bers of the class predominate over any question s affecting only
indiv idual mem bers, and that a class action is superior to oth er av ailable
methods for the fair and efficient adjudication of the controversy. The
matters pertinent to the findings includ e:
(A) the interest of mem bers of the class in ind ividu ally
controlling the prosecutio n or defense of separate actions;
(B) the extent and nature of any litigation concerning the
controversy already commenced by or against members of the
class;
(C) the desirability or undesirability of concentrating the
litigation of th e claims in the partic ular forum;
(D) the difficulties likely to be encountered in the management
of a class action.
3
Membership in those four classes was limited to “Victim[s] or Target[s] of Nazi Persecution,” a phrase that
encompassed individuals or entities “persecuted or targeted for persecution by the Nazi Regime because they were or
were believed to be Jewish, Rom ani, Jehovah’s Witness, homosexual, or physically or mentally disabled or handicapped.”
Settlement Agreement § 1.
4
Specifically, the Deposited A ssets Class includes “Victims or Targets of N azi 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.” Settlement Agreement § 8.2(a). It should be noted that
the term “Releasees” under the Settlement Agreement is not limited to Swiss bank defendants, and that the Settlement
Agreement resolv ed legal claim s against, inter alia, the Swiss governm ent, the Sw iss National Ba nk (that is, Sw itzerland’s
central bank), and certain Swiss b usinesses. Id. at § 1.
7
of through the Swiss Banks.”5 In re Holocaust Victim Assets Litig., 413 F.3d 183, 185 (2d Cir. 2001)
(emphasis added).
The Settlement Agreement provided for the appointment of a Special Master to “develop a
proposed plan of allocation and distribution of the Settlement Fund, employing open and equitable
procedures to ensure fair consideration of all proposals for allocation and distribution.” Settlement
Agreement § 7.1. As Lead Settlement Counsel, Professor Burt Neuborne of the New York
University Law School,6 explained:
[t]he decision to utilize a Special Master to propose a plan of
allocation and distribution was motivated by a desire to spare
Holocaust survivors from being forced into an adversarial
relationship that would have required them to squabble over a
settlement fund that, while substantial, is necessarily insufficient to do
full justice to all members of each plaintiff class. It was hoped that a
neutral Special Master, acting with the guidance of the affected
community, could conduct a serious inquiry into the facts and law,
and propose a plan of allocation and distribution that would do non-
adversarial justice to the claims of all class members.
In re Holocaust Victim Assets Litig., Submission of Lead Settlement Counsel in Support of the Special
Master’s Proposed Plan of Allocation and Distribution of Settlement Proceeds, No. CV 96-4849, at
5
The Se ttlement Agre eme nt defined m emb ers of the Looted Assets Class as “V ictims or Targets of N azi
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.” Settlem ent A gree ment § 8.2(b). The term “Looted Assets” refers to assets “actu ally or allegedly belonging in
whole or in part to Victims or Targets of Nazi Persecution that were actually or allegedly stolen, expropriated, Aryanized,
confiscated, or that were otherwise wrongfully taken by, at the request of, or under the auspices of, the Nazi Regime.”
Id. at § 1. The term “Cloaked Assets,” by contrast, refers to assets belonging to, inter alia, entities and individuals
“associated with the N azi Regim e . . . , the identity, value or ownership of which w as in fa ct or allege dly d isguised by . . .
any Releasee.” Id.
6
Although the Lead Settlement Counsel does not represent any party in the context of these appeals, he has
played a nu mbe r of important roles in this litigation, both as a representative of the plaintiffs and as “som ething of a
general counsel to the administration of the settlement fund.” In re Holocaust Victim Assets Litig., No. CV 96-4849, slip op.
at 3 (E.D.N.Y. Sept. 13, 2004). The District Court has authorized the Lead Settlement Counsel to provide “an
adv ersarial defense” of the District C ourt’s position in this Court. Id., slip op. at 1.
8
3 (E.D.N.Y. Nov. 20, 2000). On March 31, 1999, the District Court appointed The Honorable
Judah Gribetz as Special Master for this litigation.7
Under the District Court’s direction, an extensive plan was implemented to give notice of
the Settlement Agreement to members of the settlement classes. 105 F. Supp. 2d at 144-45. This
notice plan included “(i) world-wide publication, (ii) press coverage, (iii) an extensive community
outreach program, (iv) a direct mail program that included the sending of more than 1.4 million
notice packages directly to potential class members in at least 48 countries and (v) an Internet notice
effort.” Id. The District Court then conducted two fairness hearings—one in its Brooklyn
courtroom on November 29, 1999 and another by telephone connection with Jerusalem on
December 14, 1999. Id. at 145.
On August 9, 2000, the District Court’s final order and judgment approving the Settlement
Agreement was entered.8 In discussing the procedural fairness of the settlement, the District Court
observed:
[B]ased upon my extensive personal involvement in the process, I
know that the compromise was reached as the result of lengthy, well-
informed and arm’s-length negotiations by competent and dedicated
counsel who provided loyal and effective legal representation to all
7
As the D istrict Court later underscored , Mr. Gribetz
is an extraordinarily able lawy er with a long re cord of distinguish ed pub lic service.
He has serv ed as C ounsel to the G overnor of the State of New Y ork an d as D eputy
Ma yor of the City of New Y ork. H e has contributed his tim e and energy to
charitable and community organizations too numerous to recite. Most importantly,
he has a deep understanding of all issues related to the Holocaust. He is a member
of the Board of the Museum of Jewish Heritage—A Living Memorial to the
Holocaust, which is located in New York. He is also the author of The Timetables
of Jew ish History (199 3).
In re Holocaust Victim Assets Litig., 2000 U.S. Dist. LEXIS 20817, at *5-*6, 2000 WL 33241660, at *1 (E.D.N.Y. Nov. 22,
2000).
8
The Settlement Agreement was approved by the District Court as amended by the parties, most recently on
on August 9, 2000. Subsequent references to the Settlement Agreement are to the amended version granted final
appro val by the District Cou rt.
9
parties. Counsel for the plaintiff settlement classes are experienced
plaintiffs’ advocates and class action lawyers. One could not assemble
a more capable group. Among the lawyers for the plaintiffs who are
serving without fee are Professor Burt Neuborne of New York
University Law School, a brilliant scholar and advocate, who
developed the class’s legal theories and who presented legal argument
on behalf of plaintiffs, and Melvyn H. Weiss and Michael D.
Hausfeld, leading members of the class action bar, who ably led
plaintiffs’ negotiating team. While I have independently evaluated the
fairness of the settlement, the unanimous support of this group in
favor of final approval is entitled to great weight.
Id. at 146. The Court declined, however, to embrace at that point any specific
method of allocating and distributing the $1.25 billion fund, explaining the sequence
of its decisions as follows:
[O]rdinarily, it is preferable to provide specific information to class
members concerning their likely recovery prior to the fairness hearing
in order to permit criticism and challenge, if appropriate. However,
the special circumstances of this litigation, involving five worldwide
settlement classes arising out of events that transpired approximately
60 years ago, make it virtually impossible to provide specific
information to individuals about their precise recovery prior to the
completion of the elaborate claims processes contemplated by the
Settlement . . . .
. . . . [O]nce I have approved the basic fairness of the settlement and
its attendant procedures, the Special Master will promptly issue his
recommendations concerning allocation and distribution and those
recommendations will be transmitted for comment and criticism to
the members of the plaintiff classes. Only after I approve the plan of
allocation and distribution will a claims process capable of generating
specific figures be possible.
Id. at 150-51.
On September 11, 2000, the Special Master submitted to the District Court a proposal for
the allocation and distribution of settlement proceeds. See In re Holocaust Victim Assets Litig., No. CV
96-4849 (E.D.N.Y. Sept. 11, 2000) (Special Master’s Proposed Plan of Allocation and Distribution
of Settlement Proceeds) (“Special Master’s Proposal”), at J.A. 714. The Special Master reported that,
10
in the course of developing his proposal, he had consulted with dozens of individuals, “reviewed
many formal proposals submitted from around the world,” and received thousands of letters,
primarily from Holocaust survivors. Id. at 2; at J.A. 720. The suggestions received by the Special
Master shared several “common themes”:
that the task before the Special Master and, ultimately, the [District]
Court, is daunting; that the settlement of the litigation against the
Swiss banks represents, in some small fashion, another historic
opportunity in the attempt to redress the indescribable wrongs that
have been wrought against the victims of the Holocaust; and that the
allocation and distribution of the $1.25 billion settlement fund should
be meaningful, with some lasting impact upon class members.
Id. (footnote omitted). Many of those who communicated with the Special Master, especially
Holocaust survivors, viewed the Swiss Bank settlement as “a further step along the often tortuous
path toward accountability and remembrance.” Id. Furthermore, the Special Master undertook his
task—the “daunting” task of allocating and distributing “an historic, yet limited, settlement fund in a
manner which is fair, equitable and consistent with governing legal principles”—with the
recognition that
no amount of money could begin to compensate the millions of
victims of Nazi persecution for the horrors they suffered during the
Holocaust, that no amount of money could restore the generations
that were lost, and that no amount of money could right the injustice
perpetrated by Nazi Germany that has been termed “one of the
greatest thefts by a government in history.”
Id. at 2-3 (quoting Stuart E. Eizenstat, Foreword to Stuart E. Eizenstat & William Z. Slany, U.S. Dep’t
of State, U.S. and Allied Efforts to Recover and Restore Gold and Other Assets Stolen or Hidden by Germany
During World War II—Preliminary Study at iii, iii (1997), available at http://www.state.gov/www/
regions/eur/ngrpt.pdf), at J.A. 720-21.
In allocating the $1.25 billion settlement fund among the five settlement classes, the Special
Master concluded that the Settlement Agreement accorded “priority” to distributions directed to
11
members of the Deposited Assets Class. Id. at 10-12, at J.A. 728-30. The Special Master
underscored that
[m]ore than three years after the complaints were filed in this lawsuit,
the unprecedented forensic accounting investigation conducted by
the Independent Committee of Eminent Persons (“ICEP,” also
known as the “Volcker Committee” after its Chairman, [the former
Chairman of the Federal Reserve Board] Paul A. Volcker), concluded
that some 54,000 Swiss bank accounts are “probably” or “possibly”
related to Holocaust victims, and, accordingly, that these accounts
can be returned to their proper owners, virtually all of whom by now
are the original owners’ heirs.
Id. at 11 (footnote omitted), at J.A. 729. Even before the Special Master submitted his proposal, the
District Court noted that “the report of the Volcker Committee, which included three members
appointed by the Swiss Bankers Association, . . . provided legal and moral legitimacy to the claims
asserted . . . on behalf of the members of the Deposited Assets Class.” In re Holocaust Victim Assets
Litig., 105 F. Supp. 2d at 153. Relying on the report of the Volcker Committee and on consultations
with that Committee’s members, the Special Master estimated that “the value of all bank accounts
that will be repaid is within the range of $800 million,” and allocated that amount to the Deposited
Assets Class. Special Master’s Proposal at 15; at J.A. 733.
The remainder of the $1.25 billion fund became available for, inter alia, allocation to the
other four settlement classes, including the Looted Assets Class. Id. In addition, the Special Master
noted that some of the initial $800 million allocation to the Deposited Assets Class may remain
unclaimed after the conclusion of the claims process, and may therefore be reallocated to other
settlement classes. Id.
The Special Master then explained that allocation and distribution of funds to the Looted
Assets Class posed unusual challenges:
There is scarcely a victim of the Nazis who was not looted, and on
nearly an incomprehensible scale. . . .
12
...
With only limited exceptions, however, the current historical
record simply does not permit precise determinations even as to the
material losses in total, much less the nature and value of the loot
traceable to Switzerland or Swiss entities. . . .
It is neither justifiable nor appropriate to select which looting
victims may be entitled to recompense from this $1.25 billion
Settlement Fund based entirely upon the happenstance of where the
Nazi Regime chose to direct which loot, which records of the
plunder happen to survive, and which items one may hazard a guess
may have found their way to or through Switzerland. Every
surviving “Victim or Target” was looted—many hundreds of
thousands of people excluding heirs.
Special Master’s Proposal at 111-14 (emphasis in original), at J.A. 829-32. In light of these
considerations, the Special Master rejected a distribution process consisting of individualized
valuations of Looted Assets Class members’ claims, concluding that such a case-by-case approach
would create “an unwieldy and enormously expensive apparatus” and would generate administrative
expenses that “would [have] unjustifiably deplete[d] the Settlement Fund.” Id. at 114-15, at J.A. 832-
33. The Special Master also recommended against distributing settlement proceeds to all Looted
Assets Class members on a pro rata basis, since each class member would then receive “little more
13
than a few dollars”—a result the Special Master considered “obviously untenable.”9 Id. at 115, at
J.A. 833.
Instead, the Special Master recommended that (at least during the first stage of payments
from the settlement fund) distributions target the surviving victims of Nazi persecution rather than
the victims’ heirs. Id. at 17-19, at J.A. 735-57. Even more significant for this appeal is the Special
Master’s recognition that the settlement fund, while insufficient to “repay even a small fraction of
what was looted in the Holocaust,” presented “an opportunity to provide meaningful assistance to
the Looted Asset Class members who are in the greatest financial need.” Id. at 116, at J.A. 834. He
therefore proposed “an initial allocation of $100 million to cy pres programs10 designed to benefit the
neediest elderly survivors of the Holocaust—who perhaps would be less in need today had their
9
As the Special Master explained,
The estimate of Jew ish survivors of N azi persecution alone ra nges fro m 832,000 to
960,000, a num ber increased by the varied estim ates of Rom a, Jehovah’s W itness,
disabled and homosexual survivors. M oreover, each of the five classes includes,
among others, “heirs,” a term undefined in the Settlement Agreement but governed
by New York law. New York law does not limit “heirs” to children, spouses or
even near relatives. Rather, the definition of “heirs” extends well beyond even
great-grandchildren of grandparents—and, moreover, must be determined at the
time of the decedent’s death. Under this definition, the Special Master believes that
heirs of Nazi victims, all apparently class memb ers, easily number in the millions.
Spe cial M aster’s Proposa l at 9 (internal citation and footn otes om itted), at J.A. 727.
10
The cy pres doc trine takes its nam e from the N orm an F rench expression, cy pres
comme possible, which means “as near as possible.” The doctrine originated to save
testamentary c haritable gifts that would otherwise fail. Unde r cy pres, if the testator
had a general charitab le intent, the court will look fo r an alternate re cipient that will
best serve the gift’s original purpose. In the class action context, it may be
appropriate for a court to use cy pres principles to distribute unclaimed fun ds. In
such a case, the unclaimed funds should be distributed for a purpose as near as
possible to the legitimate objectives underlying the lawsuit, the interests of class
mem bers, and the interests of those similarly situated .
In re Airline Ticket Comm’n Antitrust Litig., 307 F.3d 679, 682-83 (8th Cir. 2002) (internal citations omitted). We have
previously approved a district court’s allocation, pursuant to the cy pres doctrine, of settlement fund s to those class
mem bers “‘most in need of help.’” In re “A gent Orange” Prod. Liab . Litig., 818 F .2d 145, 158 (2d Cir. 1987).
14
assets not been looted and their lives nearly destroyed.”11 Id. at 117 (footnote added), at J.A. 835.
Needy Jewish survivors would receive 90% of the $100 million fund, and the remaining 10% would
be distributed to needy Roma, Jehovah’s Witness, disabled, and homosexual survivors.12 Id. at 188,
at J.A. 836.
Of particular significance to the instant appeal is the Special Master’s proposed geographic
allocation of funds earmarked for needy Jewish Holocaust survivors. This allocation was guided not
by the geographic distribution of the Jewish survivors generally, but by the geographic distribution of
that group’s neediest members. In this regard, the Special Master observed:
The Jewish survivor community is concentrated primarily in Israel,
the former Soviet Union, North America and Europe, with additional
concentrations in other regions including Australia, Argentina and
elsewhere. Their post-War experiences have been extraordinarily
diverse. In most Western nations, Nazi victims generally have
benefitted from relatively strong economies and “social safety net”
programs intended to assist the needy and the ill. Equally significant,
Nazi victims in the United States and Israel, as in most Western
nations, have been eligible for a wide range of indemnification and
restitution programs intended to provide modest to sometimes
significant recompense for the material losses suffered at the hands
of the Nazis and their accomplices. However, notably absent from
most post-Holocaust compensation programs are the victims of Nazi
persecution who remain behind what was once the Iron Curtain.
Id. at 119 (footnotes omitted). The Special Master then “earmarked” 75% (or $67.5 million) of the
funds allocated to needy Jewish Holocaust survivors “for programs assisting destitute, elderly Jewish
victims of Nazi persecution in the former Soviet Union,” id. at 120, and approximately 4% “to
11
An additional $10 million allocation would “benefit . . . all members of all five classes” by creating “a
comprehensive list, available to all, of all the ‘Victims or Targets of Nazi Persecution’, and all of their murdered
ancestors.” Sp ecial Ma ster’s P roposal at 115-16, at J.A. 833-34.
12
As the Special Master explained, this 90/10 ratio was “based upon precedent” from previous allocations of
recov ered assets “dating back to 1945” and w as “warranted by current dem ographics . . . of surviving ‘Victim s or Targets
of N azi Persecutio n’ as define d under the Settlem ent A gree ment.” Special M aster’s Proposa l at 118-19, at J.A. 836-37.
15
needy survivors in the United States,” In re Holocaust Victim Assets Litig., 302 F. Supp. 2d 89, 97
(E.D.N.Y. 2004).
The District Court again implemented a notice plan and received “approximately 754
communications” in response to the Special Master’s Proposal. See In re Holocaust Victim Assets Litig.,
2000 U.S. Dist. LEXIS 20817, at *7 (E.D.N.Y. Nov. 22, 2000). Nonetheless, “the overwhelming
majority of the Settlement Class members—more than 99 percent—did not submit any comment
regarding the Proposed Plan and presumably had no objection.” Id. at *7-*8. In an order of
November 22, 2000, the District Court, “[a]fter carefully considering all of the comments and
objections,” found the Special Master’s Proposal “carefully reasoned and well supported,” and
adopted the proposal in its entirety. Id. at *9-*10.
Several individuals who are not appellants here pursued an appeal from the District Court’s
November 22, 2000 order, challenging, inter alia, “(1) the inadequacy of the total settlement amount
of $1.25 billion; (2) the allocation of $800 million to the ‘Deposited Assets’ class, including
adjustments for interest, fees, and inflation; (3) the application of the doctrine of cy pres to resolve the
claims of the ‘Looted Assets’ class, rather than require—or permit—claimants to put forth
documentary evidence of their actual losses.” In re Holocaust Victim Assets Litig., 413 F.3d at 186.
On July 26, 2001, we affirmed. Id. at 187. In doing so, we concluded
that the district court did not abuse its discretion in allocating $800
million to the “Deposited Assets” class. The existence and estimated
value of the claimed deposit accounts was established by extensive
forensic accounting. In addition, these claims are based on well-
established legal principles, have the ability of being proved with
concrete documentation, and are readily valuated in terms of time
and inflation. By contrast, the claims of the other four classes are
based on novel and untested legal theories of liability, would have
been very difficult to prove at trial, and will be very difficult to
accurately valuate. Any allocation of a settlement of this magnitude
and comprising such different types of claims must be based, at least
16
in part, on the comparative strengths and weaknesses of the asserted
legal claims.
Id. at 186. We also found no “legal merit” in the claims that the cy pres doctrine had been
inappropriately applied to the Looted Assets Class and that members of that class “should be
allowed to provide proof of their actual loss of property.” Id.
On August 19, 2002, the Special Master informed the District Court that, “[a]s a result of
unanticipated interest and other income to the Settlement Fund . . . there are sufficient excess funds
to provide for supplemental distributions to class members.” Letter of Judah Gribetz, Special
Master, Holocaust Victim Assets Litigation, to The Hon. Edward R. Korman, Aug. 19, 2002, at 1.
The Special Master proposed that the allocation to the Looted Assets Class be increased by $45
million, and that “[t]he proportions allocated among various ‘Victim or Target’ groups and
geographic regions . . . remain the same.” Id. at 3-4.
In a motion dated September 23, 2002, the HSF objected to the Special Master’s proposed
supplemental distribution, “principally advocating for an allocation of a proportionate (25%) share of
all unclaimed funds—including those now available and those that will be remaining from the $800
million set aside to pay bank account claims—for the needs of U.S. Survivors.” In re Holocaust Victim
Assets Litig., Objections of U.S. Survivor Groups to Special Master’s Recommendations Concerning
Allocation of Accumulated Interest on Settlement Funds, No. CV 96-4849, at 3 (E.D.N.Y. Sept. 23,
2002) (footnote omitted) (emphasis in original).
On September 25, 2002 the District Court adopted the Special Master’s recommendation. In
re Holocaust Victim Assets Litig., No. CV 96-4849 (E.D.N.Y. Sept. 25, 2002) (ordering a 45% increase
in “annual requests for funding from the three administrative agencies distributing humanitarian cy
pres funds to needy members of the Looted Assets Class”).
17
In a memorandum of September 28, 2002, the District Court informed the HSF that its
objection was received only after the District Court’s order had been filed, and that the objection
was, in any event, untimely. In re Holocaust Victim Assets Litig., No. CV 96-4849 (E.D.N.Y. Sept. 28,
2002) (handwritten memorandum on a copy of HSF’s objection). The HSF then moved for
reconsideration.
On September 10, 2003, the HSF also moved in the District Court for an order “authorizing
the immediate allocation of the sum of $200 million to be used to meet the human services needs of
Class members who are currently being under served, or who would be eligible to be served, by the
existing Jewish social service agencies in the United States, Israel, Europe, and other places where
Survivors are in need.” In re Holocaust Victim Assets Litig., Motion for Immediate Interim
Distribution of Swiss Settlement Proceeds, No. CV 96-4849, at 1 (E.D.N.Y. Sept. 10, 2003). The
HSF requested that a “minimum” of 25% of that allocation—that is, $50 million—be earmarked for
Holocaust survivors residing in the United States. Id. (emphasis omitted).
On October 2, 2003, the Special Master submitted to the District Court a report estimating
that an additional $60 million was “available for immediate distribution for the benefit of needy
victims or targets of Nazi persecution.” In re Holocaust Victim Assets Litig., Special Master’s Interim
Report on Distribution and Recommendation for Allocation of Excess and Possible Unclaimed
Residual Funds, No. CV 96-4849, slip op. at 3 (E.D.N.Y. Oct. 2, 2003). The Special Master then
proposed that the entire $60 million be allocated wholly to the Looted Assets Class “in accordance
with the cy pres principles that have successfully governed the administration of the initial $100
million allocation and distribution to the Looted Assets Class in 2001, and the first supplemental
allocation and distribution of $45 million in 2002.” Id. at 4 (footnote omitted). In other words, an
18
additional $54 million (90% of the $60 million allocation) would be allocated to needy Jewish
survivors, and 75% of that amount would be earmarked for needy Jewish survivors in the FSU.
The HSF filed its objection to the Special Master’s recommendation on October 31, 2003,
urging the Court to adopt instead the HSF’s proposal of September 10, 2003. In re Holocaust Victim
Assets Litig., Response of Holocaust Survivors Foundation-USA, Inc. to Special Master’s Interim
Recommendation, No. CV 96-4849 (E.D.N.Y. Oct. 31, 2003). According to the HSF, “[t]he Special
Master’s recommendation embodies a standardless ‘rough justice’ paradigm in which the extreme
conditions under which many elderly Nazi victims in the FSU live is deemed to override the rights
of all other Looted Assets class members who also have economic need and cannot obtain vital
home and health care and emergency services in their declining years.” Id. at 3.
On November 17, 2003, the District Court adopted the Special Master’s October 2, 2003
recommendation, allocating an additional $60 million to the Looted Assets Class and ordering that
such funds “be allocated proportionately among the same ‘Victim or Target’ groups and the same
geographic regions enunciated in” the original Special Master’s Proposal. In re Holocaust Victim Assets
Litig., No. CV 96-4849, slip op. at 2 (E.D.N.Y. Nov. 17, 2003). The District Court’s November 17,
2003 order noted that the HSF’s objection was overruled, for reasons that would be explained in “an
opinion to follow.” Id.
II. Opinion of the District Court
In a memorandum and order filed on March 9, 2004, the District Court addressed the merits
of the HSF’s objections to supplemental allocations ordered by the Court on September 25, 2002
and November 17, 2003. In re Holocaust Victim Assets Litig., 302 F. Supp. 2d 89 (E.D.N.Y. 2004).
The District Court summarized the substance of HSF’s objections as follows:
[The HSF] agrees that funds allocated to the Looted Assets Class
should be distributed through a cy pres distribution to the neediest
19
survivors, but only after distributing the funds pro rata among
countries. Put differently, [the HSF] argues that a survivor
community in a given country should be allocated (for the benefit of
its neediest survivors only) a percentage of the Looted Assets Class
funds equal to whatever percentage of the world survivor community
it represents.
Id. at 95.
The Court then provided an extensive account of historical reasons why “the population of
needy survivors is distributed quite differently than the population of survivors.” Id. at 98 (emphasis
in original). According to the most reliable demographic statistics available to the District Court,
approximately 19% to 27% of Holocaust survivors live in the FSU, while 14% to 19% live in the
United States. Id. at 97. Yet, of the over $53 billion in restitution funds distributed since the end of
the Second World War, “$14.8 billion, or just shy of 28% . . . has gone to survivors in the United
States,” while “just under $444 million, or 0.8% . . . has gone to survivors in the FSU.” Id. at 98
(emphasis omitted).
Quite apart from this history of disproportionate restitution efforts, the lives of survivors in
the FSU have differed drastically from the lives of survivors in Western societies. As the District
Court aptly summarized, “[a]s brutal as life was under Communism, . . . the situation for many
elderly pensioners has become even worse with its collapse.” Id. at 99. In part because “the
personal savings of many individuals in the FSU were wiped out by hyperinflation after the collapse
of the Soviet Union, . . . approximately 60% of all elderly now living in the FSU are impoverished.”
Id. (internal quotation marks omitted).
The District Court then marshaled further statistical evidence and first-hand accounts to
demonstrate that the “financial situation of individual survivors in the FSU . . . is woeful in
comparison to that of survivors in the United States.” Id. at 100-07. For example,
20
[t]he survivor community in the FSU constitutes between 32% and
40% of the total Jewish population in the FSU. The survivor
community in the United States, on the other hand, makes up only
2.5% of the Jewish population. While at first blush this statistic may
appear insignificant, . . . “[t]he high percentages [of survivors] in the
FSU mean that there is a comparatively small Jewish community
available to support victims.” This problem is exacerbated by the
fact that while 56% of survivors in the United States are married and
96% have children, only 41% of survivors in the FSU are married
and only 44% have children. In sum, family and community support
networks are stretched thin in the FSU.
Id. at 100 (alterations in original) (citations omitted) (quoting and citing Andrew Hahn et al., Jewish
Elderly Nazi Victims: A Synthesis of Comparative Information on Hardship and Need in the United States, Israel,
and the Former Soviet Union (2004) (a report prepared for the American Jewish Joint Distribution
Committee by researchers from Brandeis University), available at
http://www.cmjs.org/pdf/JDCBrandeisReport01-26-04Final.pdf).
The District Court likewise emphasized the significant differences in the social safety nets
available to survivors residing in the FSU relative to those residing in the United States. Id. at 100-
07. Thus, the District Court acknowledged that a significant number of survivors in the United
States are poor, but found that “the need faced [in the United States] is of a different kind than that
faced by survivors in the FSU,” where 55% of the settlement funds distributed by the American
Jewish Joint Distribution Committee (“JDC”) had been spent on hunger relief programs. Id. at 102,
106. The District Court concluded that the 135,000 identified destitute Jewish Holocaust victims in
the FSU suffer from “particularly” acute need; indeed, they are “barely surviving.” Id. at 99.
Finally, the District Court overruled the HSF’s objections to the calculations underlying the
geographic allocation of settlement funds:
Of the Looted Assets and excess funds, I have thus far allocated to
needy survivors in the FSU 18.75 times the amount I have allocated
to needy survivors in the United States. If I were to assume that
21
every needy survivor deserved the same amount of money, that
would mean that there should be 18.75 times more needy survivors
in the FSU than there are in the United States. There are at least that
many. The JDC has clearly documented at least 135,000 survivors in
the FSU who are in desperate need, more than the entire survivor
population in the United States. Thus, even in [the HSF’s] terms, the
18.75 number would be subject to challenge only if there were more
than 7,200 survivors in the United States who are in comparable
distress. The empirical evidence that has been produced has not
identified 7,200 such people.
Id. at 108.
After overruling the HSF’s objections on the merits, the District Court inquired whether, in
any event, the HSF had standing to raise such objections. The Court held that the HSF lacked
standing, principally because the HSF failed to prove that it is a “membership corporation” with
“standing to litigate on behalf of its members.” Id. at 115-17.
The HSF, joined by several individuals and organizations, now appeals the District Court’s
March 9, 2004 memorandum and order.
DISCUSSION
Before considering the merits of appellants’ challenge to the District Court’s allocation and
distribution orders,13 it is helpful to specify the aspects of the District Court’s opinion that appellants
are not challenging. Appellants do not dispute that the District Court may, as a general matter and in
the appropriate circumstances, distribute settlement proceeds to the neediest class members,
13
Lead S ettlem ent C oun sel challenges the stan ding of all appellants to appeal the D istrict C ourt’s orders.
Although the District Court held that the HSF lacked standing, the standing of other appellants was neither raised
before, nor addressed by, the District Court. Upon review of the record of this case, we are satisfied that at least one
individual appellant, “G.K.”, a needy Holocaust survivor residing in the United States, has met minimal standing
requ irements. We would ordinarily re mand this cause to the D istrict Cou rt for a determ ination (1) w hether appellants
(other than the HSF and “G.K.”) have standing to appeal from the District Court’s orders; and (2) whether our decision
that “G.K.” h as standing affects the stand ing of the H SF because “G .K.” m ay be a m em ber of an organization that, in
turn, may be a member of the HSF. However, such a remand is not necessary here, since we address the claims of
“G .K.” o n the me rits, and the m erits of her claim are id entical to the m erits of othe r app ellants’ claim s. See In re Holocaust
Victim A ssets Litig., 225 F.3d 191, 197 n.7 (2d Cir. 2000) (declining to remand the question of a party’s standing to the
district court when the merits of that party’s claims were fully adjudicated in the course of addressing claims brought by
parties w ith standing).
22
pursuant to the cy pres doctrine. See, e.g., Appellants’ Br. at 33. Rather, they question whether the
District Court exceeded the bounds of that general principle in this case by allocating funds partly
on the basis of geographic disparities in the provision of basic needs.
Appellants also do not dispute the findings that underlie the District Court’s initial decision
to distribute the settlement funds in this case to the neediest class members—namely, the findings
that (1) a case-by-case valuation of Looted Assets Class members’ claims, “would have resulted in an
unwieldy and enormously expensive apparatus,” and (2) “[a] pro rata distribution would have resulted
in the payment of literally pennies to each of the millions of individuals who would fall into” the
Looted Assets Class. In re Holocaust Victim Assets Litig., 302 F. Supp. 2d at 96 (internal quotation
marks omitted). In any event, we have previously affirmed the District Court’s use of a cy pres
remedy in this case.
Instead, appellants ask us to review only the manner in which the cy pres distribution of funds
to the neediest Looted Assets Class members was accomplished by the District Court—namely, they
ask us to consider whether the District Court properly allocated the funds earmarked for needy
Jewish Holocaust survivors by directing 75% of those funds to the FSU and only 4% to the United
States.
As we recognized in an earlier appeal related to this litigation, “[t]he district court has broad
supervisory powers with respect to the administration and allocation of settlement funds, and we
‘will disturb the scheme adopted by the district court only upon a showing of an abuse of
discretion,’” In re Holocaust Victim Assets Litig., 413 F.3d at 185 (citing Beecher v. Able, 575 F.2d 1010,
1016 (2d Cir. 1978), and quoting In re “Agent Orange” Prod. Liab. Litig., 818 F.2d 179, 181 (2d Cir.
1987)). “A district court ‘abuses’ or ‘exceeds’ the discretion accorded to it when (1) its decision rests
on an error of law (such as application of the wrong legal principle) or a clearly erroneous factual
23
finding, or (2) its decision—though not necessarily the product of a legal error or a clearly erroneous
factual finding—cannot be located within the range of permissible decisions.” Zervos v. Verizon
N.Y., Inc., 252 F.3d 163, 169 (2d Cir. 2001) (footnotes omitted).
Appellants argue that the District Court inappropriately relied on geographic differences in
Holocaust survivors’ needs because these needs are largely a function of historical events that
followed the injuries inflicted by the Nazi regime and by the Swiss bank defendants. We recognize
that, in a traditional class action brought to remedy an injury that had occurred shortly before the
initiation of suit, the amounts allocated among claimants would normally vary primarily by the effect
of the injury upon different claimants, rather than by the current financial needs of the claimants.
But, in the circumstances presented by this case, we think the equitable principles of the cy pres
doctrine permit the geographic variation that the District Court adopted. As that Court pointed out,
survivors residing in the FSU had been cut off by the Soviet regime from the ten prior major efforts
at Holocaust reparations, and of the $53 billion that has been provided to Holocaust victims
through these prior efforts, $14.8 billion or 28% has gone to survivors in the United States and only
$444 million or 0.8% has gone to survivors in the FSU. See In re Holocaust Victim Assets Litig., 302 F.
Supp. 2d at 98. This extraordinary circumstance understandably prompted the District Court to
consider the variation in current financial need in making the geographic allocation.
Appellants further contend that the District Court exceeded its discretion because “[n]o
court” has previously allocated settlement funds by consulting the same “factors” the District Court
applied here. Appellants’ Br. at 32. The “factors” in question include the history of previous
compensation efforts, material deprivations associated with decades of life under a Communist
regime and the effects of that regime’s collapse, and access to family and community support
networks. In re Holocaust Victim Assets Litig., 302 F. Supp. 2d at 97-107. Like appellants, we are
24
unaware of any other court that has relied on this particular combination of factors in allocating
settlement funds. But, unlike appellants, we believe that consideration of these factors, in the
circumstances presented, was entirely appropriate and well within the wide discretion afforded to the
District Court.
Appellants also argue that the District Court’s “totally subjective” allocation of settlement
funds exceeded the bounds of proper discretion set forth in two appellate decisions concerning the
scope of the cy pres doctrine, In re Airline Ticket Commission Antitrust Litigation, 268 F.3d 619 (8th Cir.
2001) (“Airline Ticket Commission I”), and In re Airline Ticket Commission Antitrust Litigation, 307 F.3d
679 (8th Cir. 2002) (“Airline Ticket Commission II”). Apellants’ Br. at 32-33.
This contention is without merit. In Airline Ticket Commission I, the Eighth Circuit held that a
cy pres allocation of settlement funds exceeds the bounds of the District Court’s discretion when the
district court (1) fails to offer any “indication” of having “carefully weighed all of the
considerations” relevant to the allocation; and (2) makes “no findings” in connection with its
distribution of funds. 268 F.3d at 626 (internal quotation marks omitted). Upon review of the
record of this case, we find that the opinions of the District Court and the reports of the Special
Master are not susceptible to the same criticisms. Indeed, the allocation challenged by appellants
here—earmarking 75% of Looted Assets Class funds allocated to all needy Jewish survivors to
needy Jewish survivors in the FSU—was rendered after the District Court carefully weighed all
relevant considerations and made numerous factual findings. See In re Holocaust Victim Assets Litig.,
302 F. Supp. 2d at 97-107. Under the standard set forth in Airline Ticket Commission I, the District
Court acted well within its discretion, and we find no support in the record of this case for
appellants’ suggestion that the Court acted in a “totally subjective” manner.
25
In Airline Ticket Commission II, the Eighth Circuit again reversed the district court’s allocation
of the same settlement funds because, on remand, the district court had allocated the funds to an
entity that could not “claim any relation to the substantive issues” of the underlying litigation. 307
F.3d at 683. Furthermore, an alternative allocation rejected by the district court in Airline Ticket
Commission II “would [have] relate[d] directly” to the injuries alleged in that case. Id. Contrary to
appellants’ view, the circumstances of Airline Ticket Commission II bear no resemblance to the instant
litigation. The suffering of Holocaust survivors everywhere relates directly to the looting they
suffered at the hands of the Nazis and their accomplices. More significantly, the claims of needy
American Holocaust survivors, whose interests the HSF purports to advocate, are no more related
to the underlying litigation against Swiss banks than the claims of needy survivors in the FSU. In
short, appellants’ reliance on the Airline Ticket Commission decisions is entirely misplaced.
Finally, we inquire whether the District Court acted within the bounds of its discretion by
rejecting the HSF’s proposed alternative to the District Court’s allocation methodology. The HSF,
it must be recalled, challenges the District Court’s decision to distribute funds in accordance with
the geographic distribution of needy Holocaust survivors. Instead, the HSF proposes the following
methodology: (1) “allot[ ] funds geographically,” presumably in proportion to total survivor
population and without regard to need; and (2) “within” each “geographical region,” distribute
funds “according to need.” Appellants’ Br. at 33.
There are at least two reasons why the District Court did not exceed its discretion by
rejecting the HSF’s proposed allocation methodology. First, the HSF’s methodology implies that
Jewish Holocaust survivors who reside in the United States today are legally entitled to a particular
share of the settlement fund based on their total number (rather than the number of needy survivors
among them). We find no legal or equitable support for this view. Members of the Looted Assets
26
Class (whether they currently reside in the United States, the FSU, or elsewhere) were persecuted
sixty years ago, principally in Europe, but it is well-documented that their experiences in the
intervening decades have differed dramatically. As the Lead Settlement Counsel aptly argues, “[t]he
accident of current residence is utterly unconnected with the events giving rise to this litigation, and
is irrelevant to any principled basis for allocating the funds.” Lead Settlement Counsel’s Br. at 47.
Second, the District Court articulated a compelling equitable reason to reject the HSF’s
proposed allocation methodology. As a logical matter, this methodology “is tailored to benefit
individuals who are a part of a small group of needy survivors within a large nationwide survivor
population.” In re Holocaust Victim Assets Litig., 302 F. Supp. 2d at 95. Needy survivors in the United
States are precisely the group that stands to gain, since the United States’ share of needy Holocaust
survivors is substantially less than United States’ share of all Holocaust survivors. Id. But from the
perspective of the worldwide population of needy Holocaust survivors—the population for the
benefit of which the funds allocated to the Looted Assets Class are being distributed—there is
nothing equitable about an allocation methodology that provides the “relatively few needy
survivors” in the United States “with a disproportionate benefit solely because of the overall size of
the survivor community in the United States.” Id. at 109. Accordingly, the District Court concluded
that the HSF’s allocation methodology is “arbitrary and unreasonable.” Id. We need not decide
today whether appellants’ proposal is indeed so inequitable as to be “arbitrary and unreasonable,”
for our standard of review is far more deferential. We may merely inquire whether the District
Court had the discretion to adopt a different allocation plan. For the reasons set forth above, we
hold that it did.14
14
One of plaintiffs’ class counsel in this litigation, Robert Swift, has requested that we remand this cause to the
District Court “w ith instructions barring any further cy pres distributions until [the District Court] has rendered a decision
as to the final distribution” of all Deposit Assets Class funds likely to remain unclaimed— funds Swift estimates at $600
million. Appellee Class Br. at 4, 9. At this time, it is neither necessary nor appropriate for us to interfere in the
27
CONCLUSION
The allocation and distribution of this historic settlement began with “a desire to spare
Holocaust survivors from being forced into an adversarial relationship that would have required
them to squabble over a settlement fund that, while substantial, is necessarily insufficient to do full
justice” to the victims of Nazi persecution. In re Holocaust Victim Assets Litig., Submission of Lead
Settlement Counsel in Support of the Special Master’s Proposed Plan of Allocation and Distribution
of Settlement Proceeds, No. CV 96-4849, at 3 (E.D.N.Y. Nov. 20, 2000).
More than six years after the creation of the settlement fund, the desired harmony among its
beneficiaries has not been achieved. Indeed, the instant appeal is but one of a series of challenges to
the District Court’s allocation and distribution orders. Yet the objections raised by appellants
here—and the zeal with which these objections have been pursued15—have in no way undermined
the thoughtful analysis and scrupulous fairness with which Chief Judge Korman has approached
every step of this litigation.
We have carefully considered all arguments raised by appellants and we find each of them to
be without merit. Accordingly, the District Court’s memorandum and order of March 9, 2004 is
hereby affirmed.
discretionary judgments of the District Court in the manner Swift suggests. Without comm enting on the merits of
Swift’s request, we deny it, but we do so without prejudice to a similar request being made to the District Court in due
course.
15
The HSF’s appellate brief averts to the District Court’s “flawed judicial process,” referring principally to (1)
the District Court’s approval of the Settlement Agreement before adopting a plan for distributing and allocating
settlement funds; and (2) alleged “assurances by the Lead Class Counsel and the court that the initial allocation
imbalance would be rectified with subsequent distributions of larger amounts” for the benefit of survivors residing in the
United States. Appellants’ Br. at 26. The HSF characterizes these purported procedural irregularities as “examples” by
which this Court’s “examination” of the merits of this appeal would be “informed.” Id. at 17, 20.
Upon carefully reviewing the record of this case, we find no evidence whatsoever of a “flawed judicial process.”
To the contrary, the careful consideration that the District Court, the Special Master, and the Lead Settlement Counsel
have accorded to every step in the allocation and distribution of this historic settlement are exemplary.
28