Three days after it was announced in November, the $10 billion merger between Bankers Trust Corp. and Deutsche Bank AG faced an unusual threat.
It came not from antitrust authorities, not from plummetting stocks and not from disagreements over future control.
The potential obstacle to the merger of Deutsche Bank and the parent of Baltimore's BT Alex. Brown arose from events more than 54 years ago in Nazi Germany.
Holocaust survivors asked U.S. regulators to delay approving the merger until Deutsche Bank settled claims that it looted assets and profited from slave labor during World War II.
"Deutsche Bank cannot be permitted to obtain the benefits and protections of doing business in the United States without a full accounting and disgorgements of these assets," lawyers for survivors said.
The claims, in two suits against Deutsche Bank filed in U.S. District Court in New York, are part of a spate of lawsuits aimed at those suspected of committing decades-old wrongs.
The most publicized claims are related to the Holocaust. Survivors have won $1.25 billion from Swiss banks to settle wartime claims. Germany's leading industrial giants, including Volkswagen, Siemens, Daimler-Benz and BMW, face claims connected to wartime slave labor.
U.S. companies are not exempt from war-crimes suits. Chase Manhattan Bank and J. P. Morgan & Co. were named last month as defendants in a lawsuit claiming that their branch banks in Paris joined with the Nazis to steal millions of dollars in Jewish assets. Ford Motor Co. faces a suit in New Jersey federal court over a German subsidiary's use of forced labor.
Elsewhere, Asian-American groups are looking for potential plaintiffs among survivors of the Japanese army's 1937 massacre of civilians in Nanking, China. They hope to bring class action lawsuits in the United States against the Japanese government and Japanese companies.
Asian "comfort women" who were forced to work as sexual slaves to Japanese soldiers in World War II have sued the Tokyo government in Japanese courts.
It's impossible to say for sure whether litigation over historical grievances has increased, because no one tracks such suits. Japanese-Americans who were interned in the United States in World War II and many American Indian tribes have used the courts to press their grievances.
Historians and lawyers offer a variety of reasons for war-crimes class action lawsuits -- ranging from the idealistic (based on the United Nations' postwar universal code of human rights) to the cynical (lawyers getting big bucks from old wrongs). Also contributing to the apparent legal trend are previously untapped historical records.
The impact of such claims can be serious and far-reaching. Companies not only pay millions, but face business losses by being associated with history's most horrific episodes.
Encouraged by the success against the Swiss banks, lawyers could well burrow into other pockets of history, even those that predate the Holocaust. "There are a lot of interesting questions," said Charles Gustafson, a law professor at Georgetown University. "If you can sue for slave labor in [Nazi] Germany why not sue for slave labor in the U.S. 150 years ago?"
Michael Hausfeld, a Washington attorney at Cohen, Milstein, Hausfeld & Toll, who sued the Swiss banks and Deutsche Bank, views the suits as finishing the work of the Nuremberg war crimes trials of prominent Nazis.
"There are whole groups of individuals who were not prosecuted at Nuremberg and clearly entities -- corporations for the most part -- that had a close collaboration with the objectives of the Nazi regime which were never brought to any form of justice," he said.
Others see less lofty motives. "This is being done for money," said Lawrence Schonbrun of Berkeley, Calif., a lawyer and a prominent critic of class action suits. "I believe lawyers -- these people who turned O. J. Simpson into Martin Luther King and the LAPD into Nazis -- are not the kinds of people who should be making historical judgments."
In the lawsuit filed by Hausfeld against Deutsche Bank, the bank is accused of profiting from a "genocidal system of slave labor inflicted by the Nazi regime," obtaining, concealing and profiting from assets seized by Nazis; and otherwise helping the "Nazi regime prepare for its illegal war of aggression."
One plaintiff is Martin Lowenberg, a Michigan resident born in Germany in 1928, who went with his father to deposit valuables at the Deutsche Bank branch in Fulda, Germany, after Jewish families there were instructed to prepare for relocation. Lowenberg's family never recovered the items, which included gold watches, earrings, rings, necklaces, crystal and silver.
"Systematic plundering was an integral part of genocide," said Hausfeld, whose father lost 68 of 70 relatives in Poland during the war, including an uncle for whom he is named. "What's sad here or tragic is the fact that many people who were exterminated essentially paid for their own extermination."
Quoting from U.S. Treasury reports, the plaintiffs charge Deutsche Bank and five other major German banks "conspired with the Reich to dominate the world, in turn profiting from the operations of Hitler's war machine by further consolidating their financial-economic power."
Slave labor alleged
The suit also alleges the Frankfurt bank financed and controlled large German companies that employed slave labor during the war.
Deutsche Bank concedes its participation in "Aryanization" -- the transfer of Jewish property to the Nazis -- but said the bank had no choice. Customers holding accounts that still existed at the end of the war in 1945 were able to reclaim their assets. Deutsche Bank denies that it employed slave labor.
"The Deutsche Bank dealt in victim gold and thus became implicated in the harvest of the Holocaust," said a panel of historians appointed by Deutsche Bank in a report posted on the bank's World Wide Web site.
"Through its ingenuity and professionalism, it became an instrument in the German war effort. It employed no slave labor and in some ways performed services which were not in themselves either criminal or illegal."
The bank has filed a motion to stay the case until the court decides whether to consolidate it and the other lawsuit. Deutsche Bank has filed a motion to dismiss the other case.
Last week, Rolf Breuer, Deutsche Bank's chairman, said he did not expect the claims to delay the Bankers Trust deal.
"The approvals process is proceeding to plan," he said. "It will not be hindered or slowed by issues such as the Holocaust."
Hausfeld said the Holocaust cases are intended not only to redress wrongs, but also to establish standards of fundamental human rights. If lawsuits aimed at historical grievances are increasing, he said, it's because of increasingly global standards of morality.
"There is a greater sense of unity in the law," he said. "I don't think anyone questions any longer the globalization of business, which means that what occurs in one country will affect citizens in another country."
'Way to make money'
Schonbrun admires lawyers like Hausfeld, who refused compensation in the suit against the Swiss banks. Still, he said, the cases reek of opportunism by plaintiffs eager to exploit public relations-conscious companies. "Calling someone a Nazi or a racist or tarring a company with that brush has become a relatively painless way to make money," he said.
Schonbrun, who also had relatives who were Holocaust victims, questions whether U.S. courts should be determining the culpability of Swiss banks in the handling of German gold.
"I don't see a legal principle that allows one to see where these cases begin and end," he said. "You can push the logic of this anywhere you want to if you're relying on sympathies of historical grievances."
Legal observers say courts have become more receptive in recent years to human rights lawsuits that cross international borders.
Jonathan Weisgall, a lawyer who won millions of dollars in reparations from the U.S. government for Bikini islanders displaced by American atomic tests in 1946, had serious doubts about filing a case in 1981 over an event that occurred 35 years earlier.
"Did I feel that I was swimming upstream? Yes," said Weisgall, a Baltimore native. But, he added, "As more of these kinds of cases are brought, I think courts are less surprised by them."
Easier to sue
Courts also have removed barriers to class action lawsuits. "There is more willingness of courts to entertain suits that might not have been contemplated earlier," said Stephen Yeazell, a law professor at the University of California at Los Angeles and the author of a history of class action suits.
He said a change in civil procedures in 1966 loosened rules for class action lawsuits, allowing some suits that would otherwise be individual actions to be pursued as class actions.
Rulings in later cases -- against manufacturers of asbestos, tobacco and Agent Orange -- expanded opportunities for class action lawsuits even more, Yeazell said.
Statutes of limitations have a limited effect on such litigation if a defendant used fraud and concealment to hide wrongdoing.
But few businesses in the 1990s want to win a case based on a technicality such as the statute of limitations. "If I'm Daimler-Benz, do I want to base my defense on saying that we really did it but it's too late?" Yeazell asked.
Class action status can itself be a victory for plaintiffs, said Kent Syverud, dean of Vanderbilt University law school. Class action suits immediately force defendants to start thinking about a settlement. "If you aggregate the claims of 10,000 people, the potential liability is magnified 10,000 times," he said.
Having seen the success of the Holocaust suits, more law firms might start to build a war-crimes practice. "Up until now, the class action bar was classified by corporate and securities law, product liability and fraud," he said. "Recently, it is those lawyers who have been moving into what you might call reparations lawsuits."
Lawyers search history
No where is that movement more clear than at the National Archives in College Park.
Greg Bradsher, director of the Archives' Holocaust assets records project, said about 40 of 400 people who attended a seminar on the records last month were lawyers. "I just got off the phone with the general counsel of a major Fortune 500 company," he said. "They are sending a research team this winter.
Hausfeld filed his suit against the Swiss banks only after his firm employed 13 researchers over eight months to dig through historical records in College Park. That research led to other cases, including the one against Deutsche Bank.
"The U.S. government did reports on Deutsche and Dresdner banks, where the front pages of the reports said these banks should be liquidated," said Miriam Kleiman, a researcher who works for Hausfeld.
Historians and lawyers say the flow of records has helped fuel lawsuits aimed at historical grievances -- and it's bound to continue. The 1998 Nazi War Crimes Disclosure Act is making public tens of thousands of documents classified from World War II through the Cold War.
Nobody's sure what litigation will come next.
"One interesting ethical question is whether a corporation owned today by people who didn't live in 1938 have to pay damages for something that happened then?" said Gustafson, the Georgetown law professor.
Eric Foner, a history professor at Columbia University, said success of litigation aimed at historical wrongs could make courts a popular political forum. "I think the danger is that every group with a grievance will be going to court. It used to be if you had a grievance, you took to the street. Now if you have a grievance you hire a lawyer."
Pub Date: 1/17/99