Inside a Class Action: The Holocaust and the Swiss Banks (review)

Jane Schapiro is a freelance writer and poet who lives in the Washington area. During the late 1990s she gained access to one of the legal teams that brought a class action against Swiss banks accused of pocketing the "dormant" accounts of Jews who perished at the hands of the Nazis and profiting from slave labor and transactions that helped the Third Reich wage war and genocide. To reconstruct the class action she draws on congressional hearings, court transcripts, and documents collected for the case as well as interviews with several lawyers on both sides. Some lawyers, especially in Switzerland, declined to assist her; others preferred to remain anonymous. Her chief informant was Michael Hausfeld, and this book is very much his tale.

It is not a rounded account of the furor that engulfed Switzerland in 1995–2000. Although Schapiro deftly sketches in the background, key players such as Stuart Eizenstat do not appear until midway through the saga. We learn a lot about Hausfeld's emotional gyrations, but little about the state of mind of Ed Fagan, who assembled the other major legal team in the action. Schapiro presents a sympathetic portrait of Hausfeld, whom Eizenstat describes as "unpredictable and at times unreasonable."

Hausfeld had an impressive record of litigating against big corporations and was sensitized to Nazi-era issues. The plight of elderly survivors rebuffed by implacable bankers enraged him, and he was prepared to work pro bono to help them achieve justice. But he had wider ambitions, too. He wanted to prove that Swiss banks had knowingly benefited from genocide and helped to prolong the war.

Hausfeld was beaten to the court room by Ed Fagan, who filed a similar class action, although more narrowly focused. Fagan and Hausfeld eventually joined forces, but it was a fractious relationship. Hausfeld disliked Fagan's flamboyant style. Fagan suspected that Hausfeld was content to litigate endlessly because he didn't have to worry about collecting fees. Hausfeld wanted to prove that Switzerland violated "customary international law," while Fagan had far more limited objectives. Hausfeld was prepared to work with the WJC, while Fagan feared it wanted to monopolize the distribution of any court settlement. It was not without reason that Eizenstat described the lawyers' joint team as "a witches brew of egos and mutual jealousies."

Schapiro explains how Hausfeld and his colleagues built their case, and she is frank about its weaknesses. For all the labor of researchers in the National Archives the lawyers for the plaintiffs had no idea how many "dormant" accounts there might be. Nor could they prove how much wealth actually flowed into Switzerland as a result of Nazi looting, the exploitation of slave labor, and profits on wartime transactions. The connections between Swiss banks and slave labor were tenuous. Under pressure from the WJC the banks conceded an independent audit, but its chairman, Paul Volcker, refused to share its findings with the class action lawyers. They might obtain documents via the process of "discovery," but only if Judge Edward Korman, appointed to hear the case, let it go to trial. Needless to say, a high-powered corps of lawyers hired by the Swiss banks pressed for it to be dismissed, and Korman took his time weighing the arguments by either side.

Hausfeld hoped to force the banks to reach an out-of-court settlement, but to achieve this the class action lawyers had to maintain pressure on the Swiss, which they could only do by mobilizing public opinion and using the threat of extra-judicial sanctions. Yet these weapons were in the hands of others, and there was always the danger that the Swiss might regard a court battle as no worse than their current imbroglio. Hausfeld certainly did not prevail by force of legal argument. Indeed, Schapiro reveals that several times he suspected he would lose.

Roger Witten, the lead attorney acting for the banks, made a powerful case when he...