Number range CHAPTER**IN THE UNITED STATES DISTRICT COURT**

**FOR THE SOUTHERN DISTRICT OF NEW YORK**

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IN RE AUSTRIAN AND GERMAN ) Master File No.

BANK HOLOCAUST LITIGATION ) 98 Civ. 3938 (SWK)

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THIS DOCUMENT RELATES TO: )

ALL ACTIONS )

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**STATEMENT OF INTEREST OF THE UNITED STATES**

**PRELIMINARY STATEMENT**

The United States respectfully submits this Statement of Interest and
attached Executive Agreement and Joint Statement for the purpose of
attending to the interests of the United States in connection with these
actions.[^1] Through this statement, the United States expresses both
its foreign policy interests with regard to the German Foundation
"Remembrance, Responsibility, and the Future" (the "Foundation"), which
was created to make payments to former slave and forced laborers and
other victims of the Nazi era and World War II, and the public interest
in the cooperative resolution of claims for restitution and compensation
arising out of the Holocaust. In this statement, the United States takes
no position on the merits of the underlying legal claims or arguments
advanced by plaintiffs or defendants. Of course, the Court need not
resolve these legal issues in the context of a voluntary dismissal, so
long as the requirements of Rule 23(e), Fed. R. Civ. P., are met. The
United States believes that those requirements are met in this instance,
and that analysis of the four questions posed by the Court in its Order
of October 27, 2000, confirms that conclusion. In sum, because of the
United States' strong interests in the success of the Foundation, and
because such success is predicated on the dismissal of this litigation,
the United States recommends dismissal on any valid legal ground.

**BACKGROUND**

**1. United States Policy on Holocaust Claims**

The policy of the United States Government with regard to claims for
restitution or compensation by Holocaust survivors and other victims of
the Nazi era is motivated by the twin concerns of justice and urgency.
[See]{.underline} Declaration of Stuart E. Eizenstat (\"Eizenstat
Decl.\"), attached as Exh. 1, ¶¶ 3, 29. No price can be put on the
suffering that the victims of Nazi atrocities endured. But the moral
imperative remains to provide some measure of justice to the victims of
the Holocaust, and to do so in their remaining lifetimes.
[Id.]{.underline} ¶ 3. Today, 55 years after the Holocaust, the
survivors are elderly and are dying at an accelerated rate.
[Id.]{.underline} ¶ 29. The United States believes, therefore, that
concerned parties, foreign governments, and non-governmental
organizations should act to resolve matters of Holocaust-era restitution
and compensation through dialogue, negotiation, and cooperation, rather
than subject victims and their families to the prolonged uncertainty and
delay that accompany litigation. [Id.]{.underline} ¶ 3.

The creation of the German Foundation "Remembrance, Responsibility, and
the Future" (the "Foundation"), in favor of which most parties now seek
to have this litigation dismissed, is an example of the successful
implementation of this United States policy. [Id.]{.underline} ¶¶ 28-30.
The history of the negotiations that led to the Foundation's creation, a
description of the benefits available through the Foundation and how the
Foundation will operate, and the basis for the United States' conclusion
that it would be in the United States' interests for the Foundation to
be the exclusive remedy for all claims against German companies arising
out of the Nazi era and World War II are set forth in this statement.

**2. History of the Negotiations Leading to Creation of the Foundation**

In the Fall of 1998, then-Under Secretary of State Stuart E. Eizenstat
was asked by the German Government to help facilitate a resolution of
class action lawsuits filed in U.S. courts arising from slave and forced
labor during the Nazi era. Eizenstat Decl. ¶¶ 1, 5. During the
subsequent year and a half, Eizenstat, who later became Deputy Treasury
Secretary, co-chaired a series of formal and informal discussions among
lawyers representing victims, lawyers for German companies, and the
German Government on a proposed initiative to establish a foundation to
make payments to victims of slave and forced labor and all others who
suffered at the hands of German companies during the Nazi era.
[Id.]{.underline}

A number of other participants were involved in the negotiations,
including the State of Israel, the governments of five Central and East
European countries (Belarus, the Czech Republic, Poland, Russia, and
Ukraine), and the Conference on Jewish Material Claims Against Germany,
a non-governmental organization created to negotiate for and administer
compensation for Nazi crimes to Jewish people around the world.[^2]
[Id.]{.underline} ¶ 6. Through these participants and the numerous
plaintiffs' attorneys, the victims' interests -- including those of both
named and absent class members -- were broadly and vigorously
represented. [Id.]{.underline}

The initiative was publicly announced on February 16, 1999, by the
Chancellor of Germany, Gerhard Schroeder, and a group of German
companies that conceived the initiative. [Id.]{.underline} ¶ 7. Later
that Spring, Eizenstat and German Chancellery Minister Bodo Hombach led
the first of twelve formal conferences to discuss the initiative.
[Id.]{.underline} Minister Hombach was later replaced by Count Otto
Lambsdorff, Special Representative of the Chancellor, who co-chaired the
talks to their conclusion. [Id.]{.underline}

In December 1999, following the personal involvement of the President of
the United States and of Chancellor Schroeder, the negotiations reached
a major breakthrough. [Id.]{.underline} ¶ 8. The parties agreed on two
key points: that the German Government and companies would establish a
foundation, capitalized by DM 10 billion, to make payments to forced
laborers and others who suffered at the hands of German companies during
the Nazi era and World War II, and that, in exchange, the plaintiffs
would voluntarily dismiss their lawsuits against German companies
asserting claims arising out of the Nazi era and World War II.
[Id.]{.underline} The United States Government further agreed to support
this effort by filing a Statement of Interest indicating its own foreign
policy interests. [Id.]{.underline}

The parties agreed on detailed eligibility requirements and other
procedures to govern the Foundation's operation. [Id.]{.underline} ¶ 9.
The parties also came to agreement on precise allocations of the
Foundation capital to compensate various types of injuries, and on
payment levels for individual victims, described below.
[Id.]{.underline} These agreements were incorporated into draft
legislation being prepared by the German Government to establish the
Foundation.

In July 2000, the German Parliament passed a law creating the
Foundation. [Id.]{.underline} ¶ 11. On July 17, 2000, the parties to the
negotiations gathered in Berlin to sign a Joint Statement concluding the
negotiations, and expressing their support for the Foundation.
[Id.]{.underline} ¶ 12 and Exh. A. Simultaneously the United States and
Germany signed an Executive Agreement, in which Germany committed that
the operation of the Foundation would be governed by principles agreed
by the parties to the negotiations, and the United States committed to
take certain steps to assist German companies in achieving "legal peace"
in the United States for claims arising out of the Nazi era and World
War II. Eizenstat Decl. ¶ 12 and Exh. B.

On August 12, 2000, the law creating the Foundation was promulgated and
entered into effect. Eizenstat Decl. ¶ 13. On October 19, 2000, the
United States and German Governments exchanged diplomatic notes
stipulating, in accordance with Article 5 of the Executive Agreement,
that the agreement entered into force on the date of the exchange of
notes. [Id.]{.underline} Exh. C.

The role played by the United States in this negotiation was unique. The
Executive Agreement negotiated is not a government-to-government claims
settlement agreement, [see generally]{.underline} Eizenstat Decl. Exh.
B, and the United States has not extinguished the claims of its
nationals or anyone else. Instead, the intent of the United States'
participation was to bring together the victims' constituencies on one
side and the German Government and companies on the other to bring
expeditious justice to the widest possible population of survivors, and
to help facilitate legal closure. Eizenstat Decl. ¶ 14. Among these
parties, the United States facilitated the essential arrangement by
which the German side would establish a DM 10 billion foundation to
compensate categories of Nazi era and World War II victims, and the
class action representatives in pending United States litigation (as
well as anyone else who received compensation through the Foundation)
agreed to give up their claims, by voluntary dismissals with respect to
plaintiffs in cases in United States courts. [Id.]{.underline} The
United States further contributed its own commitment to advise U.S.
courts of its foreign policy interests, described in detail below, in
the Foundation being treated as the exclusive remedy for World War II
and Nazi era claims against German companies, and, concomitantly, in
current and future litigation being dismissed. [Id.]{.underline}

**3. Benefits and Operation of the Foundation**

As established under German law, the Foundation will make payments to
persons who suffered at the hands of German companies during the Nazi
era, as well as those who worked as slaves or forced laborers for the
Nazi regime. [Id.]{.underline} ¶ 15; [see also]{.underline} Law on the
Creation of a Foundation "Remembrance, Responsibility and the Future,"
unofficial translation ("German Law"), attached as Exh. 2, at § 2(1).
The DM 10 billion Foundation capital will be used for payments to all
eligible recipients as follows. Payments to former slave laborers --
those who were intended to be literally worked to death -- will be DM
15,000. Eizenstat Decl. ¶ 16; [see also]{.underline} German Law §§ 9(1),
11(1). The payments to other forced laborers -- those for whom living
conditions were somewhat less harsh -- are expected to approach DM
5,000.[^3] [Id.]{.underline} In total, just over DM 8 billion of the
Foundation's capital will be used for dignified payments to former
forced and slave laborers. Eizenstat Decl. ¶ 16; German Law § 9(2).

Individuals who had property, including bank deposits or other bank
assets, "aryanized" or otherwise stolen or damaged by German companies
are also eligible to receive payments. Eizenstat Decl. ¶ 17; German Law
§ 11(1). DM 200 million were set aside for pro-rata payments for
property claims, with an additional DM 300 million in a humanitarian
fund for individuals unable to document specific claims. Eizenstat Decl.
¶ 17; German Law § 9(4). Property claims will be processed by a 3-person
committee supervised by the International Organization for Migration.
Eizenstat Decl. ¶ 27; German Law § 9(6). The committee will consist of
one member appointed by the United States Government, a second appointed
by the German Government, and a chair to be chosen by those two members.
German Law § 9(6).

While many with property claims against Germany have received
compensation over the years through one of several German restitution
laws, the Foundation is designed to fill in the gaps in such laws and
provide payments to those whose losses have not previously been
compensated. [See]{.underline} German Law § 11(1)(3). For example, some
who lived in the former Soviet bloc, or who could not obtain evidence
regarding their property because it was located in the former East
Germany, will be able to obtain payments for the first time through the
Foundation. [Id.]{.underline} Similarly, individuals who lived in
countries occupied by the Nazis and had bank deposits or other assets
stolen, but could never prove such assets were taken to Germany, are now
eligible for payments. [Id.]{.underline} The mandate of the property
committee will also allow it to consider other types of claims, see
[id.]{.underline}, and to formulate its own procedures and rules where
not specified in the German law. [Id.]{.underline} at § 9(6). The
committee is expected to complete processing of all applications and
make payments on a pro-rata basis within one year from the close of the
application period. [Id.]{.underline}

The remainder of the Foundation's capital will be devoted to payments to
those with insurance losses and other purposes. DM 500 million, plus DM
150 million from interest and the Future Fund if needed, is set aside
for payments to individuals whose insurance policies were unpaid or
nationalized, as well as humanitarian payments. Eizenstat Decl. ¶ 17;
German Law §§ 9(4), 9(7). The insurance payments will be made through
the International Commission on Holocaust Era Insurance Claims, chaired
by former Secretary of State Lawrence Eagleburger, which was established
to address the issue of unpaid insurance policies issued to victims of
the Holocaust. Eizenstat Decl. ¶ 18. DM 700 million will go into a
Future Fund, the purposes of which will include to promote tolerance and
Holocaust awareness, and to support projects that benefit the heirs of
those forced and slave laborers who did not survive.[^4] Eizenstat Decl.
¶ 19; German Law §§ 2(2); 9(7). The remaining DM 200 million of the
Foundation's initial capital will be used for administration of the
Foundation and for attorneys' fees. Eizenstat Decl. ¶ 19.

A key point regarding the Foundation is that [all]{.underline} victims
who suffered injury at the hands of German companies, including German
banks, or who performed forced or slave labor for German companies or
the Nazi regime, are eligible to apply for its benefits. Eizenstat Decl.
¶ 20. This includes, by definition, the plaintiffs in this litigation.

The Foundation will be run by a Board of Trustees chaired by Dr. Dieter
Kastrup, German Ambassador to the United Nations, and consisting of 26
other people, evenly divided between representatives of the German
Government and companies on the one hand, and representatives of the
victims and the United States on the other. [Id.]{.underline} ¶ 21;
German Law § 5. The Board of Trustees has selected a three-person Board
of Directors to manage the Foundation's day-to-day operations. Eizenstat
Decl. ¶ 21; German Law § 6. Those aspects of the Foundation's operation
that are not mandated by the legislation creating it will be determined
by these two bodies. Eizenstat Decl. ¶ 21. All Foundation operations
will be transparent and the by-laws and similar procedures governing its
operation will be made public. Eizenstat Decl. ¶ 22. The Foundation is
subject to legal oversight by the German Government, and will also be
audited by two agencies within the German Government. [Id.]{.underline};
[see also]{.underline} German Law § 8.

The Foundation will not make direct payments to individuals. Instead,
the Foundation will work with seven "partner organizations," which in
turn are responsible for collecting and processing applications and
making payments. Eizenstat Decl. ¶ 23; German Law § 2(1). The partner
organizations include five geographically-based foundations in Central
and Eastern Europe (to process applications from residents of those
countries), the CJMC (which will handle applications of Jews in the rest
of the world), and the International Organization for Migration
(responsible for all other applications). Eizenstat Decl. ¶ 23; German
Law § 9(2). Each of these organizations has been allocated specific
funds, based on estimated numbers of applicants, to distribute.
[Id.]{.underline}

The Foundation has begun the process to ensure that all eligible
applicants worldwide are notified of its existence and their opportunity
to apply for benefits. Eizenstat Decl. ¶ 24. First, the Foundation's
creation in July 2000 received extensive publicity around the world.
Second, the Foundation is working in conjunction with the partner
organizations to create application forms that will be mailed to
extensive, existing lists of potentially eligible individuals. Third,
the Foundation Board has directed each partner organization to develop a
plan for publicity designed to reach the maximum number of potentially
eligible individuals. [Id.]{.underline}

The application process will be short, simple, and non-bureaucratic.
[Id.]{.underline} ¶ 25. In most cases, applicants have until April 2001
to apply (although this period can be extended if the Board determines
it to be necessary). [Id.]{.underline} Determinations of eligibility are
to be made on relaxed standards of proof, and the process will be
non-adversarial. [Id.]{.underline}; [see also]{.underline} German Law §
11(2). Each partner organization must also set up an independent and
free of charge appeals process. Eizenstat Decl. ¶ 25; German Law § 19.

The Foundation also permits expedited payments to victims. Once a slave
laborer, for example, is determined to be eligible, the partner
organization may immediately pay half of the expected total payment
(i.e., up to DM 7,500), with the balance to be paid at the end of the
claims period, once all applications have been processed. Eizenstat
Decl. ¶ 26; German Law § 9(9). Similarly, a forced laborer may receive
35% of the expected total payment immediately upon application.
[Id.]{.underline} In addition, the Board of Trustees has specific
authority to increase the amount of the first installment payments if it
deems it appropriate. [Id.]{.underline} In any case, under this system
the Foundation's goal is to begin payments to victims during calendar
year 2000. Eizenstat Decl. ¶ 26.

**4. This Litigation**

The consolidated actions before the Court raise claims that the
Defendant German banks "aryanized" and converted for their own profit
the bank deposits and assets of Holocaust victims before and during
World War II. Similar claims against Austrian banks were previously
settled. Motions to dismiss all actions by the German bank Defendants
are pending. Subsequent to the creation of the Foundation, however, many
of the Plaintiffs have now moved, or will shortly move, to dismiss their
claims voluntarily.[^5] Pursuant to this Court's Order of October 27,
2000, those motions are now before the Court.

**DISCUSSION**

**1. Dismissal of this Litigation Would Be in the United States' Foreign
Policy Interests**

The President of the United States has concluded that it would be in the
foreign policy interests of the United States for the Foundation to be
the exclusive forum and remedy for the resolution of all asserted claims
against German companies arising from their involvement in the Nazi era
and World War II, including without limitation those relating to
compensation for slave and forced labor, "aryanization" or other
confiscation of, damage to, or loss of property (including banking
assets and insurance policies), subjection to medical experimentation,
placement in children\'s homes, and other cases of personal injury.
[See]{.underline} Letter of President Clinton to Chancellor Schroeder,
Dec. 13, 1999 (attached as Exh. 3); [see also]{.underline} Eizenstat
Decl. ¶ 28 and Exh. B at Art. 1(1). Accordingly, the United States
believes that all asserted claims should be pursued through the
Foundation instead of the courts. The United States' interests in
supporting the Foundation are explained below.

First, it is an important policy objective of the United States to bring
some measure of justice to Holocaust survivors and other victims of the
Nazi era, who are elderly and are dying at an accelerated rate, in their
lifetimes. Eizenstat Decl. ¶ 29. Over one hundred thousand Holocaust
survivors, and tens of thousands of other Americans who were forced
laborers during World War II, live in the United States.
[Id.]{.underline} As noted earlier, the United States believes the best
way to accomplish this goal is through negotiation and cooperation.

The Foundation is an excellent example of how such cooperation can lead
to a positive result. The Foundation will, without question, provide
benefits to more victims, and will do so faster and with less
uncertainty, than would litigation, with its attendant delays and legal
hurdles. Moreover, the Foundation will employ standards of proof that
are more relaxed than would be the case with litigation. Litigation,
even if successful, could only benefit those who could prove that their
property was taken by German banks or other German companies subject to
the jurisdiction of U.S. courts. By contrast, the Foundation will
benefit all who may have been injured by German banks or other
companies, whether or not they still exist today. Indeed, as a result of
the participation in the Foundation not only by the German Government
and German companies that existed during the Nazi era, but also by
German companies that did not exist during the Nazi era, the Foundation
will be able to comprehensively cover slave and forced laborers and
other victims of the Nazi era and World War II. Eizenstat Decl. ¶ 30.

It is true that no amount of money could truly compensate plaintiffs for
the wrongs done to them. But the payments they will receive through the
Foundation will serve as a recognition of their suffering and will
enable them to live with less difficulty than would be the case without
the payments. In addition, creation of the Foundation will allow
creation of the Future Fund, which will be dedicated in part to efforts
to ensure that crimes like the Holocaust never happen again, and will
also fund projects that serve to benefit the heirs of victims that did
not survive. Eizenstat Decl. ¶ 31; [see also]{.underline} Statement of
Secretary of State Madeleine K. Albright ("Albright Statement"),
attached as Exh. 4, at ¶ 9.

The United States, together with the participating lawyers for the
victims and all other parties to the negotiations, therefore believes
that the Foundation is the best means to quickly bring some measure of
justice to the plaintiffs before this Court. Indeed, the United States
hopes that the creation of the Foundation will serve as an example to
other nations and in other cases where resolution of claims by victims
of the Nazi era for restitution and compensation has not yet been
achieved.

Second, "establishment of this Foundation will strengthen the\[\] ties"
between the United States and its important European ally and economic
partner, Germany. Albright Statement ¶ 4; [see also]{.underline}
Eizenstat Decl. ¶ 33. One of the most important reasons the United
States took such an active role in facilitating a resolution of the
issues raised in this litigation is that it was asked by the German
Government to work as a partner in helping to make the Foundation
initiative a success. Eizenstat Decl. ¶ 33. Since 1945, the United
States has sought to work with Germany to address the consequences of
the Nazi era and World War II through political and governmental acts,
beginning with the first compensation and restitution law in post-war
Germany that was passed by U.S. occupation forces. In recent years,
German-American cooperation on these and other issues has been very
close, and the joint effort to develop the Foundation has helped
solidify the close relationship between the two countries, a
relationship which is "central to American interests in Europe."
Albright Statement ¶ 4.

Germany today is a key to the security and prosperity of the broader
North Atlantic Community. Eizenstat Decl. ¶ 34. Germany has been a
partner of the United States in promoting and defending democracy for
the last fifty years, and is vital to both the security and economic
development of Europe. Germany has been a leader in efforts to create
stability in Europe through expansion of NATO to include the former
communist countries of Central Europe, and through the building of
bridges between NATO and Russia. Germany has also been a leader in
supporting integration of the European Union, and in the effort to
assure that the former communist countries of Central and Eastern Europe
continue their democratic development within a market economy. Our
continued partnership with Germany is important to helping achieve these
United States interests.

Third, the Foundation helps further the United States' interest in
maintaining good relations with Israel and with Western, Central, and
Eastern European nations, from which many of those who suffered during
the Nazi era and World War II come. Eizenstat Decl. ¶ 35. As a result of
the close cooperation between the United States and the participating
Central and Eastern European governments, a large percentage of the
money allocated will go to the too-long forgotten "double victims" of
Nazism and Communism. Albright Statement ¶ 6. Some one million citizens
of Central and Eastern Europe were forced into labor by the Nazis, and
then lived for over four decades under the iron rule of Communist
governments and were denied compensation from Germany until recent
years. Eizenstat Decl. ¶ 35. The Foundation represents the first
comprehensive effort to assist surviving laborers in these former Iron
Curtain countries, and, indeed, in other European countries.

The Government of Israel, which also was directly involved in the
negotiations to create the Foundation, will see many of its citizens
benefit from the Foundation's programs and has recognized and indicated
its appreciation for U.S. efforts in support of the Foundation.
Moreover, "by bringing together the Central and Eastern European states
and the State of Israel, the Foundation will begin a new relationship
among nations and peoples who suffered so severely under Nazi terror."
Albright Statement ¶ 7.

Fourth, as the President has said, dismissal of this litigation, which
touches on the foreign policy interests of the United States, would be
in the foreign policy interests of the United States. [See]{.underline}
Exh. 3 at 2. The overwhelming majority of plaintiffs, the defendants,
victims' representatives, and various concerned governments are united
in seeking dismissal of this litigation in favor of the remedy provided
by the Foundation, and the United States strongly supports this
position. The alternative to the Foundation would be years of litigation
whose outcome would be uncertain at best, and which would undoubtedly
last beyond the expected life span of the large majority of survivors.
Ongoing litigation could lead to conflict among survivors' organizations
and between survivors and industry, conflicts into which the United
States and German governments would inevitably be drawn. There would
likely be threats of political action, boycotts, and legal steps against
corporations from Germany and other nations, setting back
European-American economic cooperation. Eizenstat Decl. ¶ 36; [see
also]{.underline} Albright Statement ¶ 8.

In addition, although the resolution of this litigation is not part of a
"settlement" in name, the German companies have insisted on dismissal of
all pending litigation in the United States in which Nazi era and World
War II claims are asserted against German companies as a precondition to
allowing the Foundation to make payments to victims. Eizenstat Decl. ¶
37. The United States strongly supports the creation of the Foundation,
and wants its benefits to reach victims as soon as possible. Therefore,
in the context of the Foundation, it is in the enduring and high
interest of the United States to vindicate that forum by supporting
efforts to achieve dismissal of (i.e., "legal peace" for) all Nazi era
and World War II claims against German companies. [Id.]{.underline}

Fifth, and finally, the Foundation is a fulfillment of a half-century
effort to complete the task of bringing justice to victims of the
Holocaust and victims of Nazi persecution. "\[I\]t is in the foreign
policy interests of the United States to take steps to address the
consequences of the Nazi era, to learn the lessons of, and teach the
world about, this dark chapter in Germany's history and to seek to
ensure that it never happens again." Albright Statement ¶ 9. Since its
founding, the Federal Republic of Germany has made compensation and
reconciliation for wrongs committed during the Nazi era an important
part of its political agenda. Although no amount of money will ever be
enough to make up for Nazi-era crimes, the German Government has created
significant compensation, restitution, and pension programs for Nazi-era
acts that have resulted in payments of nearly \$100 billion in today's
dollars. The Foundation adds another \$4.3 billion to that total, and
complements these prior programs. Eizenstat Decl. ¶ 38.

The United States does not suggest that these policy interests described
above in themselves provide an independent legal basis for dismissal.
Moreover, in this Statement, the United States takes no position on the
merits of the underlying legal claims or arguments advanced by
plaintiffs or defendants. Because of the United States' strong interests
in the success of the Foundation, however, and because such success is
predicated on the dismissal of this litigation, the United States
recommends dismissal on any valid legal ground. In the context of a
voluntary dismissal, the Court need not ultimately resolve the validity
of the underlying claims and arguments advanced by the parties. As we
explain in the next section, it is sufficient if the Court concludes
that the requirements of Rule 23(e) of the Federal Rules of Civil
Procedure are satisfied.

2\. The Foundation Provides a Fair Remedy For Victims of the Nazi Regime
and German Companies during the Nazi Era and World War II

Because many of the cases pending before the Court were filed as class
actions, they may not be dismissed without the approval of the Court.
[See]{.underline} Fed. R. Civ. P. 23(e). As the Court has already noted,
[see]{.underline} Order dated Oct. 27, 2000, at 3, before approving the
dismissal, the Court is to "inquire into the terms and circumstances" of
the dismissal and "ensure that it is not collusive or prejudicial."
[Diaz v. Trust Territory]{.underline}, 876 F.2d 1401, 1408 (9th Cir.
1989). Because no class has yet been certified, however, the court need
not "perform the kind of substantive oversight required when reviewing a
settlement binding on the class." [Id.]{.underline} Rather, Rule 23(e)
is satisfied if absent class members are provided such notice of the
impending dismissal so as to avoid the potential prejudice from having
relied on the pendency of a class action to protect their rights, and if
the Court is satisfied that the interests of the class have not been
conceded in order to further the interests of class representatives or
counsel. [Id.]{.underline} at 1408-09.

The Court has framed this inquiry in four questions. With respect to the
first, as noted earlier, dismissal of Plaintiffs' claims is a condition
placed by German companies on creation of the Foundation.
[See]{.underline} Eizenstat Decl. ¶ 37 and Exh. A at 5. But this applies
only to the claims of named plaintiffs. No claims of absent class
members have been compromised.

As to the second question, the United States believes strongly that the
named Plaintiffs and class counsel have [not]{.underline} used the class
action device for their private benefit or to the detriment of absent
class members. One of the main reasons the United States supports the
Foundation is that it will allow for potential payments to all class
members, each of whom is eligible to apply under the same criteria as
are any other applicants, including named class representatives. This is
one manifestation of the vigorous representation of the interests of
absent class members during the negotiations leading to creation of the
Foundation. [See]{.underline} Eizenstat Decl. ¶ 20. Indeed, far from
sacrificing the interests of absent class members for their own, the
class representatives are in fact sacrificing their own interests for
the absent class members. While the class representatives and their
counsel have been instrumental in helping to create a Foundation to
which absent class members have equal opportunity to apply for payments,
only the named representatives in the cases before this Court must
dismiss their claims with prejudice before applying to the Foundation.
[See]{.underline} Joint Statement (Eizenstat Decl. Exh. A) at 6. Other
claimants, including absent class members, need not waive their claims
until they receive a payment from the Foundation. [See]{.underline}
German Law § 16(2).

Third, as noted before, this Court need take no action with respect to
the claims of absent class members for the Foundation to come into
being. Moreover, most such class members have already learned, or will
soon learn, of the Foundation. In the Executive Agreement, the German
Government committed to ensure that the Foundation provides
appropriately extensive publicity. [See]{.underline} Executive Agreement
(Eizenstat Decl. Exh. B) Art. 1(2). This provision, which commits the
Foundation to broad public notice of its existence, objectives, and the
availability of funds, was created with the requirements of Rule 23(e)
in mind. The Foundation has already begun taking steps to ensure that
such publicity is provided. [See]{.underline} Eizenstat Decl. ¶ 24.

Finally, with respect to the fourth question, there is no evidence to
support a conclusion that absent class members' interests were
sacrificed to collusive efforts. The United States, as a facilitator of
the deal, is uniquely qualified to speak objectively to this issue. As
the head of the United States negotiating team has stated, the
negotiations to create the Foundation were "extremely difficult," hard
fought, and long. See Eizenstat Decl. ¶ 10. The Plaintiffs and
Defendants did not see eye to eye on any issue, and the negotiations, as
a result, were the very definition of "arms length." The Court should
find, therefore, that dismissal under Rule 23(e) is proper.[^6]

Although substantive consideration of the fairness of the dismissal is
not required, [see]{.underline} [Diaz]{.underline}, 876 F.2d at 1408,
the United States, together with all other participants in the
Foundation negotiations, has reached the conclusion that the results of
the negotiations as embodied in the Foundation are fair under all the
circumstances. [See]{.underline} Joint Statement (Eizenstat Decl. Exh.
A) at 4. The circumstances that lead the United States to this
conclusion are described below.

Given the advancing age of the plaintiffs, it is of the highest
importance that their claims are resolved quickly, non-bureaucratically,
and with minimum expenditures on litigation. As noted earlier, survivors
are dying at an accelerated rate, and the Foundation offers the victims
of Nazi atrocities who are represented in this case a measure of justice
for their past suffering, without additional time-consuming litigation
that could delay any recovery beyond many class members\' remaining
lifetimes. Judge Edward Korman recently reached the same conclusion in
approving a settlement between Holocaust survivors and Swiss banks.
[See]{.underline} [In re Holocaust Victim Assets
Litigation]{.underline}, 105 F. Supp.2d at 149. This is the very sort of
outcome that U.S. policy seeks to achieve in matters of unresolved
Holocaust-era claims.

Other criteria important in evaluating the Foundation include its level
of funding, allocation of its funds, payment system, and eligibility
criteria. As to the level of funding, the words of a Holocaust survivor
who spoke in favor of the Swiss Bank settlement, cited by Judge Korman
in approving that settlement, have equal force here:

> I have no quarrel with the settlement. I do not say it is fair,
> because fairness is a relative term. No amount of money can possibly
> be fair under those circumstances, but I'm quite sure it is the very
> best that could be done by the groups that negotiated for the
> settlement. The world is not perfect and the people that negotiated
> I'm sure tried their very best, and I think they deserve our
> cooperation and . . . that they be supported and the settlement be
> approved.

[In re Holocaust Victim Assets Litigation]{.underline}, 105 F. Supp.2d
at 141.

The allocation of funds was the subject of extensive negotiation, and
was approved by all parties to the negotiations. [See]{.underline} Joint
Statement (Eizenstat Decl. Exh. A) at 4 and Annex B. Similarly, the
parties have pledged that Foundation payments should be made quickly and
in a non-bureaucratic manner, [id.]{.underline} at 4, and under relaxed
standards of proof. Finally, through extensive effort, the parties to
the negotiations ensured that the Foundation will provide a potential
remedy for all who suffered at the hands of German companies during the
Nazi era and World War II. [See]{.underline} Eizenstat Decl. ¶ 20. With
these agreements, the Foundation will be able to make speedy, dignified
payments to many deserving victims -- indeed, as noted earlier, many
more than could possibly recover through litigation.

In considering the fairness of the Foundation, it is also important to
consider the difficult legal hurdles faced by plaintiffs and the
uncertainty of their litigation prospects. Although the United States
takes no position here on the merits of the underlying legal claims
advanced by the parties, and the Court need not ultimately resolve those
questions in the context of a voluntary dismissal, it is beyond dispute
that Plaintiffs in these cases face numerous legal hurdles in the
defenses raised against their claims, such as justiciability,
international comity, statutes of limitation, jurisdictional issues, and
forum non conveniens, as well as difficulties of proof inherent in
claims originating more than 50 years ago and the various potential
practical and legal obstacles to certification of a class of heirs.[^7]
Recovery in litigation is therefore by no means assured.
[Cf.]{.underline} [In re Holocaust Victim Assets
Litigation]{.underline}, 105 F. Supp.2d at 148-49; [In re Austrian and
German Bank Holocaust Litigation]{.underline}, 80 F. Supp.2d 164, 177
(S.D.N.Y. 2000).

**CONCLUSION**

The Foundation not only fulfills the foreign policy interests of the
United States, but also provides benefits to the public interest that
reach beyond the scope of any single litigation. In other countries,
claims for restitution and compensation arising out of Nazi-era
atrocities have yet to be resolved. The successful compromise reached in
these negotiations, like the Swiss Bank settlement, can be expected to
serve as an example of the advantages for all concerned when the legal
and moral claims of Nazi-era victims are dealt with through dialogue,
negotiation, and cooperation, instead of prolonged litigation and
controversy.

Dated: November 8, 2000 Respectfully submitted,

DAVID W. OGDEN

Assistant Attorney General

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DAVID J. ANDERSON (DA4138)

DAVID O. BUCHHOLZ (DB0874)

Attorneys

> United States Department of Justice

Federal Programs Branch

Civil Division

901 E Street, N.W., Room 952

Washington, DC 20530

Tel: 202/514-3330

Fax: 202/616-8202

Attorneys for the United States

CERTIFICATE OF SERVICE

I hereby certify that on this 8th day of November, 2000, the attached
Statement of Interest of United States was served by first class mail on
all persons on the attached service list.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

David O. Buchholz

[^1]: ^[?]{.underline}/^ \"The Solicitor General, or any officer of the
    Department of Justice, may be sent by the Attorney General to any
    State or district in the United States to attend to the interests of
    the United States in a suit pending in a court of the United States,
    or in a court of a State, or to attend to any other interest of the
    United States.\" 28 U.S.C. § 517.

[^2]: ^[?]{.underline}/^ The Conference on Jewish Material Claims
    against Germany ("CJMC") is an umbrella organization under which
    various Jewish groups and organizations of Holocaust survivors are
    represented. Among the participating groups and organizations are
    the American Gathering/Federation of Jewish Holocaust Survivors, the
    American Jewish Committee, the American Jewish Congress, B'nai
    B'rith International, the Centre of Organizations of Holocaust
    Survivors in Israel, and the World Jewish Congress.

[^3]: ^[?]{.underline}/^ At current exchange rates, DM 15,000 is about
    \$6,600 and DM 5,000 is about \$2,200. The payments will be made in
    German marks.

[^4]: ^[?]{.underline}/^ Up to DM 100 million of the Future Fund's
    capital can be used to supplement the funds needed to pay insurance
    claims if the DM 200 million set aside for such claims is not
    sufficient.

[^5]: ^[?]{.underline}/^ The motion filed by the Watman Plaintiffs
    suggests that the Court's dismissal order should be subject to four
    enumerated terms and conditions. The Watman plaintiffs subsequently
    amended their motion to remove one of the conditions -- with respect
    to an assignment of certain claims of Austrian banks -- so that
    condition should no longer be an issue. Nevertheless, the United
    States does not believe that such a condition, nor any other of the
    conditions identified in the Watman Plaintiffs' motion, is necessary
    or appropriate.

[^6]: ^[?]{.underline}/^ As further evidence against such a hypothesis,
    counsel representing the victims are eligible to receive less, on a
    percentage basis, of the Foundation capital than the notably low
    percentage that attorneys in the recently-approved settlement
    between Holocaust victims and Swiss Banks can receive from that
    settlement fund. [See]{.underline} Eizenstat Decl. ¶ 19; [In re
    Holocaust Victim Assets Litigation]{.underline}, 105 F. Supp.2d 139,
    146 (E.D.N.Y. 2000).

[^7]: ^[?]{.underline}/^ In light of the particular difficulties
    presented by the claims of heirs of victims who did not survive, it
    is worth noting that at least 10 percent of the funds in the Future
    Fund will be dedicated to programs to benefit heirs and others.
    [See]{.underline} Joint Statement (Eizenstat Decl. Exh. A) Annex B,
    at n.7.