Searching for Justice

If true, if the half-century of futility and injustice Alan and Lisa Stern describe is accurate, the gall of the Italian insurance company Assicurazioni Generali SpA boggles the mind.

For 54 years the descendants of Mor and Regina Stern have been trying to collect on insurance policies purchased from the international insurance giant in the years before Mor, Regina and other relatives, including an 11-month-old grandson, perished in the gas chambers at Auschwitz. One of the couple’s sons made the first attempt. A destitute survivor of the concentration camps, he walked into a Generali office in Prague in 1945 and tried to collect. He says a Generali agent told him to produce a death certificate. He couldn’t, of course, and was unceremoniously ushered out into the street. The surviving sons tried several other times at various Generali offices in Europe. The company would not pay a cent. Instead, the Sterns say, Generali consistently balked or stalled, refusing for decades to acknowledge that the policies ever existed.

On Dec. 9, 1996, in response to renewed efforts mounted by a new generation of Sterns, the company wrote a letter saying it had no legal or moral obligation to the family. The next day, long before the letter was delivered, the fax machine whirred at Alan’s mother’s house in London. Out came a photocopy of a policy dated April 23, 1929, and issued to Mor Stern in Prague. It had been found by a clerk at a Generali warehouse in Trieste, Italy.

‘Ironic,” says Lisa, a Los Angeles lawyer.

*

Gov. Gray Davis has called the quest by Holocaust survivors to recoup insurance benefits a “sacred pilgrimage.” An estimated 20,000 survivors live in California, the second-largest group in the nation. Alan and Lisa Stern have filed a $135-million lawsuit against Generali, becoming the first family to ever file a Holocaust-related lawsuit in an American court against an insurance company. If they succeed, their case is likely to help shape the course of two class-action Holocaust-era insurance cases filed in federal courts on the East Coast; it’s also likely to influence an international commission created last year to try to establish a nonjudicial way to resolve unpaid claims.

Generali maintains it is no longer responsible for such policies. It says its liability ceased when its East European branch offices were nationalized by Communist governments shortly after World War II ended. And it estimates the value of the Sterns’ policies, accounting for currency devaluation over the decades, at $300.

As hard as it may be to believe, Alan, 44, and Lisa, 40, aren’t fighting Generali for money or fame. He’s a commodities trader; her solo law practice has been successful. They’re quite well-off already. They allowed me to feature them in this story only after I urged them repeatedly to do so. Even so, they have concerns. Lisa’s father was shot and severely wounded in a botched hold-up several years ago, and the assailant has never been caught. They worry that publicity might bring them unwanted attention. They eventually agreed to talk because they believe a story might embolden the families of other Holocaust survivors to seek a final accounting before it’s too late.

Because what is at stake is memory--how we define what really happened in the Holocaust and how we tell it to our children.

And something more.

Alan and Lisa are observant Jews and live their lives according to the framework of the 613 commandments spelled out in the Torah, the Jewish bible. And on this issue, the Torah could not be more clear. For emphasis, it repeats the moral imperative: “Justice, justice you shall pursue . . . .”

*

The mind reels at the scope of the Shoah, as Jews call the Holocaust. Six million people, dead. Why?

More than 50 years later, public discourse about the crime tends to focus on the 6 million, on the big picture. With the exception of Anne Frank, can you name even one other person who was shot dead and then dumped in a mass grave or gassed in the camps? Unless you are a survivor or know one, odds are you can’t. This remains one of the lingering injustices of the crime. In a way, it gives Hitler the kind of victory he sought when his troopers robbed Jews of their possessions, when Nazi guards shaved their victims’ hair and tattooed numbers on Jewish forearms. Hitler was intent on dehumanizing his victims before killing them. This was no accident. One of the central tenets of Judaism is that each individual has infinite value, infinite worth. What better way to strike at a core Jewish belief? And what better way, now, to reclaim the memory of the dead than by remembering their individuality?

Mor Stern was born in 1889. He grew to be tall. He had a white beard and piercing blue eyes. His wife, Regina Weisz Stern, was born in 1892. She was a great cook, a whiz at chicken soup with noodles who would insist on regularly feeding poor students from the yeshiva, the local school. They must have sat around a large table, for Mor and Regina had seven children: six boys and a girl. Their names were Adolf, Rudy, Herman, Aron, Bart, Edith and David. They lived in the town of Uzhorod, which was then in Hungary. (Now the town is part of the Ukraine.) Mor became a successful wine merchant. His business was called “Rum and Liquer Fabrik” and could be found at this address: Radvanska Uleca 80. The telephone number was 194.

In those days, businessmen did not have retirement plans. Instead, many people bought insurance policies, either to provide for their families if they retired or to redeem upon death. The Generali salesman was a common sight on Mondays and Thursdays in the food markets of Eastern Europe, making the rounds of his Jewish clients and collecting a small weekly premium. Generali developed a large Jewish clientele because it had been founded by Jewish merchants in 1831, in Trieste, then part of the Austro-Hungarian empire. Except for a brief period during World War II, Jews have been in management positions ever since. Riccardo Nicolini, CEO and president of the company’s U.S. operations, was raised in Trieste and says his “best friends were Jewish. I grew up with this culture. For me the Holocaust has been always a very important issue. It was a subject we’ve been discussing all our lives.”

Beginning in 1929, according to the Sterns’ lawsuit, Mor bought a number of policies and annuities from Generali. Ten years later, he sensed disaster ahead for the Jews in Europe. He sent his second son, Rudy, to England, as a guarantee that the family name would live on. And he sent Adolf, the oldest son, then 22, to Prague. There, according to the lawsuit, he collected money from some of the Sterns’ customers, then proceeded to a local Generali office to prepay several years of policy premiums. Speaking under oath in the court case, Adolf Stern says he prepaid for “five, six years.” He also recalls that there were five or six policies. In all, Mor’s policies were worth about 400,000 krona, or $15,000, a small fortune in 1939.

Hungary’s Jews were among the last to be rounded up by the Nazis. It wasn’t until the spring of 1944 that troops arrived in Uzhorod. Mor, Regina and the six children, along with Adolf’s wife, Sarah, and their baby, Avrohom, 11 months old, tried to hide in one of the cavernous wine cellars. It didn’t work. After capture, the family was placed in a Jews-only ghetto, then packed into railroad freight cars for a three-day trip to Auschwitz. Upon arrival, they were separated. The next day, Adolf says, he saw the chimneys smoking and learned that his parents and youngest brother were dead. So were Sarah and the baby. For the duration of the war, he would not see his other brothers or his sister. Neither Aron nor Herman survived to see liberation.

Adolf somehow managed to stay alive. He recalls the precise moment he was freed. It was 2:30 p.m. on April 11, 1945. He was in Buchenwald, his sixth camp. American soldiers entered the camp as U.S. planes dropped bread like manna from heaven. When he got out of a hospital in May, he hitched a ride to Prague on a truck with some U.S. soldiers, hoping to find Generali’s office. It turned out to be in the city’s Watslovsky Namiesty section, he says.

Disheveled and gaunt, Adolf walked into the office, announced his name and told a clerk he wanted to collect on his father’s insurance policies.

The clerk asked if he had the policy.

Adolf replied, “I don’t have the insurance. I came just from Buchenwald.”

The clerk said, “Do you have a death certificate?”

Adolf answered, “Hitler don’t give us death certificates.”

“So I start to cry and I stayed there,” Adolf recalls in a deposition. “So one of the guys got so nasty. He pushed me out--he take me and put me out on the street. Because I don’t want to move out. Because I don’t have nothing. What kind of clothing I have? Nothing. So I figure maybe this going to help me. I feel very bad, very upset.”

Generali officials maintain that the situation in Prague in May, 1945, was chaotic and that the company was not in control of its offices. An attorney for the company says of Adolf’s account: “We just don’t think there was anybody in responsible authority at Generali who dealt with him. But who can reconstruct it?”

In August of 1945, according to the complaint, Rudy approached Generali through the Czechoslovakian Embassy in London to make a second claim. Time was of the essence because Bart needed lung surgery; he’d contracted tuberculosis while in the concentration camps. The lawsuit says Rudy was told that Generali refused to look for the policies. In 1946, Bart made a third claim. Like Adolf, he went to an office in Prague. Like Adolf, he was turned down, unable to produce a death certificate. In 1947, Rudy and his wife, Celia, journeyed to Prague from London, hoping to make another claim. Generali, according to the lawsuit, refused to even grant them an appointment.

Over the next few years, Mor and Regina’s surviving children resettled. Adolf moved to New York, then to Florida. Edith moved to Israel. Rudy and Celia decided to stay in London. Bart eventually moved to the United States. In August 1972, Edith submitted a written claim to Generali. On Aug. 31, the company responded with a letter. It said it could find no documents “in the local records of our former Czechoslovakia [branch]” to prove “any [insurance] effected on the life of a Mr. Mor Stern.”

*

The years passed. Mor and Regina’s surviving children got on with life. Rudy, for instance, eked out a living in the whiskey business before investing his savings in London real estate and making it big. He and Celia had three children: Martin, Alan and Rhona. Rudy died in 1988. Eight years later, Bart died. In September 1996, attending a memorial service for Bart in Jerusalem, Martin overheard Adolf and Edith discussing their lingering frustrations in dealing with Generali. Something clicked in his mind--this was the same company that was about to pay $320 million to gain control of Migdal, one of Israel’s largest insurance companies. Migdal was then a subsidiary of Israel’s Bank Leumi. Martin dashed off a letter to the bank’s chief executive, demanding that any sale “be conditional upon full disclosure” of the fate of his grandfather’s policies.

Three weeks later, on Oct. 11, Generali replied. It said its business in Czechoslovakia had been nationalized in October 1945. Even so, Generali said, it had tried to find Mor’s policies but “unfortunately, no such records were found, as the documents and details relating to specific policies were normally kept in the Prague branch office.” Two months later, on Dec. 9, 1996, a Generali executive mailed another letter saying that the company could not “relate to your claim as a legal claim” nor, even allowing for the “tragic circumstances,” entertain it on “moral grounds.” The next day, the fax machine at Celia’s house in London whirred. Out came a copy of the first page of Generali policy number 115285, issued in Prague in April 1929 to Mor Stern--a combination annuity and life insurance policy. It had been faxed by a clerk at the direction of Generali’s general counsel, the same executive who had written the letter the day before.

How could this have happened? There are conflicting explanations.

Martin, a real estate entrepreneur, says he had been calling friends in Israel’s parliament, stirring up a national campaign against the Migdal sale (which eventually did go through). During that time, he says, he received an anonymous telephone call telling him that records had been found, in a warehouse in Trieste. Another source, he says, told him that the warehouse was located not far from Generali headquarters--which made sense, the source said, because a warehouse had to be close enough so that in the old days records could be ferried from the main office by horse, perhaps even by wheelbarrow.

Robert Hagedorn is a senior lawyer with the California Department of Insurance, which has filed a friend-of-the-court brief in support of the Sterns. Hagedorn visited the warehouse after the discovery and describes it as a huge structure--”it feels like a Costco or Price Club-type building”--with boxes of records occupying three levels of storage. The Holocaust-era records, he says, are stored in steel cabinets in a back room on the third level.

Amihud Ben-Porath, Generali’s lawyer and representative in Israel, insists that the discovery was not made in response to the Migdal clamor there. He also says senior executives had no idea the copies existed and “did not knowingly deny anything.” And the timing of the fax, he says, is a “historical accident.” In a telephone interview, Ben-Porath said he had been in Trieste in the fall of 1996 to talk with Generali officials about the Migdal sale, and he suggested that someone ought to ask the company historian how its records from the East European branches were kept. Someone did, Ben-Porath said, and the historian answered that for years reports from those branches had been sent back to the head office, adding that it would be little problem to find the reports from 1920-45. “All you can say is, ‘We’re sorry,’ ” a Generali source says, speaking on condition of anonymity. “We said what we knew at the time. We were unaware of the warehouse.”

*

With evidence in hand, Alan and Lisa decided to take action in California. They met with attorney William M. Shernoff, whom Lisa had known for years, then filed suit--on behalf of Adolf, Edith, Celia, Martin, Alan and Rhona, as well as Bart’s wife, Anne, and their two children. Generali was named as the sole defendant. Of the $135 million they seek, $10 million represents their estimate of the value of the policies. The rest is to punish Generali. It’s a sum so enormous as to seem wholly implausible were it not for Shernoff’s record: His Claremont firm has made a habit over the past 25 years of winning big in court from insurance companies that acted in bad faith.

The Sterns face one obvious problem in pursuing their lawsuit. In California, you typically must go to court within four years of the date a contract is breached. Assuming Adolf’s request in 1945 started the clock running, four years from then would have been--well, still in the Truman Administration. Shortly after filing the lawsuit, Lisa ran into Assemblyman Wally Knox, a Los Angeles Democrat. He urged her to draft a law that would extend the statute of limitations on Holocaust-era claims. So she did, along with help from Shernoff’s office and, finally, Knox’s staff. It passed the Legislature unanimously, and then-Gov. Wilson signed it into law on May 22, 1998.

At a hearing in January, Los Angeles Superior Court Judge Florence-Marie Cooper reviewed the law and pronounced it constitutional. Immediately, however, she invited Generali to appeal, which the company has done. Generali’s lawyers have said in court papers that Alan and Lisa’s case “has virtually nothing to do with the Holocaust” while at the same time arguing that the California courts are not the proper forum to resolve Holocaust-related disputes.

Cooper also rejected Generali’s bid to dismiss the case on other grounds. Generali’s lawyers had claimed that the company did so little business in California, less than 1% of its overall revenue, that it would be unfair to Generali to be hauled into the state’s courts. That 1%, the judge noted, amounted to “millions of dollars in premiums paid by California residents--$27 million in 1997 alone.” In a bid to emphasize the unfairness, a Generali executive also declared under oath that the company could not locate any records that it had ever availed itself of the California courts by filing even as much as one lawsuit. Shernoff, however, said in court that preliminary research found nine such suits. In a later court filing, he said more research had uncovered 15 more. “Lies,” Shernoff told Judge Cooper that morning. “Total lies. Knowing lies. Why should they get away with it? They’ve been getting away with murder for years and it’s time it stops.” At a court hearing in March, a Generali lawyer admitted that he had located even “a few more” cases. Cooper subsequently ordered the company to pay $14,126 in sanctions.

The Sterns’ case, particularly the demand for punitive damages, has bewildered and offended Generali lawyers and company officials. Generali has also pointed out that in 1997, the company announced it would be contributing $12 million to an independently administered fund in Israel for Holocaust-survivor claimants. Generali has also pledged at least $15 million to the international commission. In addition, the company has turned over the names of more than 300,000 of its wartime Eastern European policy holders to Yad Vashem, the Holocaust center in Israel.

Critics belittle such actions, noting that Generali is a conglomerate with nearly $100 billion in investments worldwide, and that the $12-million fund has so far produced relatively modest payouts to about 1,500 claimants and that the names were turned over to Yad Vashem with a caveat--that they be kept confidential, for fear of opening the doors to more claims.

Generali officials say such criticisms miss the point. The point, Nicolini says, is that Generali has taken such steps voluntarily. He says, “It’s totally unacceptable that people are criticizing Generali for our good faith.” On top of which, he and others say, the company is supposed to pony up $135 million? And just to one family?

Shortly after losing the first rounds in Superior Court, the company hired a new lawyer--Kenneth J. Bialkin, a partner at the powerhouse New York firm of Skadden, Arps, Slate, Meagher & Flom. During his lengthy career, Bialkin has also led several prominent Jewish institutions, among them the Anti-Defamation League. “In part,” Bialkin says, “I’m in it to see if we can bring it to closure, and everybody gets out of it in a dignified way.”

Shernoff replies: “I just think there’s something wrong here, that these pillars of the Jewish community-type of people, well-connected, well-respected, are taking money [in legal fees] from this insurance company to try to beat down and destroy the claims of these survivors. What the hell am I missing here?”

Settlement talks do not appear imminent. The reality of litigation is that each day an appeal drags on is a win for Generali. How much longer, for instance, can Adolf live? He’s 82. Last November he had a heart attack.

If the appeals ultimately go against the company, then what? At a hearing in late May, Cooper set a trial date for next Feb. 9. It seems inconceivable that Generali would risk a trial before a jury. If Adolf is still scrapping, imagine the courtroom as he walks to the witness stand, puts his hand on the Bible and swears to tell the truth.

“Maybe there are no accidents,” Shernoff says. “Maybe it’s meant to be that they take a hard line and force us to litigate, which will then culminate in a jury trial, and they will get what they deserve. They will have brought it upon themselves. God works in strange ways.”