Holocaust Suit Accusing U.S. Clears Obstacle

Hungarian Holocaust survivors who have filed the only Holocaust reparations lawsuit against the U.S. government have overcome the initial hurdle to winning their case.

The survivors sued in federal district court in Miami in May 2001. They seek compensation for property seized by Nazis in 1944 and recovered by the U.S. Army the following year but never returned to the original owners.

The Justice Department urged that the suit be dismissed on two principal grounds: that the statute of limitations had run out and that the government is entitled to immunity from such a suit.

But U.S. District Judge Patricia A. Seitz ruled last week that the plaintiffs were entitled to have the statute of limitations waived. Seitz also held that the government’s immunity argument was only partially valid.

Her rulings Wednesday paved the way for the case to go forward.

Although there have been dozens of Holocaust-related lawsuits filed in the last five years, the Miami case is considered particularly important because it is the only one in which the United States government, rather than a foreign government or foreign company, is named as a defendant.

Whittier Law School professor Michael Bazyler said Seitz’s ruling, though not guaranteeing victory for the plaintiffs, is very significant. “In Holocaust-related litigation, the most important step other than a trial is the motion to dismiss,” he said. It is a difficult hurdle for the plaintiffs because “the cases are based on events that occurred long ago on foreign soil,” said Bazyler, author of the forthcoming book “Holocaust Justice: The Battle for Restitution in America’s Courts.”

The Miami case stems from the Nazi seizure of more than $200 million in gold, jewelry, Oriental rugs, fabrics and artwork, among them paintings by Durer and Rembrandt. The booty was loaded aboard a train, which came to be known as the Gold Train, headed for Germany. But the train was abandoned by the Nazis in Austria and recovered by the U.S. Army. The treasure trove ultimately vanished, a U.S. commission said two years ago.

The plaintiffs claim that the U.S. knew or easily could have learned the provenance of much of the stolen goods and acted illegally by failing to return them to their rightful owners.

“This is the first suit of its kind that we are aware of and it is highly significant that the court upheld the plaintiffs’ critical legal argument on the statute of limitations” and other issues, said Washington, D.C., attorney Jon Cuneo, one of the plaintiffs’ lawyers.

“We are very happy now that we have won the first round and will have the chance to get the full information that was kept from us all these years,” said plaintiff David Mermelstein, who was 15 when the German Army invaded Hungary in 1944. The suit contends that silver candelabras and cups used in Jewish prayer ceremonies were taken from his parents’ house, then recovered but never returned.

The Justice Department had no comment on Seitz’s decision.

Department attorneys contended that because Hungarian Jews knew as early as 1947 that the U.S. Army had taken possession of the Gold Train, the six-year statute of limitations had expired no later than 1953.

But Seitz said the lawsuit’s allegations were sufficient to justify rolling back the statute of limitations--namely allegations that “plaintiffs were induced or tricked by the Government’s misconduct into allowing the filing deadline to pass.”

The plaintiffs said that starting in the summer of 1946, the U.S. government declared it was not possible to identify the individual owners of the property on the train, or even the appropriate country of ownership. The plaintiffs assert that the Army possessed evidence of ownership, including inventories prepared by the Nazis.

Subsequently, the U.S. government sold, distributed or requisitioned the property, according to the suit. The plaintiffs contend that the property was sold through the Army Exchange Service, donated to international refugee services or used by U.S. military officers as home and office furnishings.

The suit relies in part on reports issued in October 1999 and December 2000 by the President’s Advisory Commission on Holocaust Assets, which cited previously classified U.S. government documents.

The reports state that Maj. Gen Harry J. Collins, the chief U.S. military official in western Austria at the end of World War II, placed orders from a U.S. military warehouse in Salzburg, Austria, for enough china and silver for 45 people, as well as a dozen silver candlesticks, glassware, 30 sets of table linens, carpets and furs for his villa and a personal railroad car.

Collins died in 1963 and is buried in Salzburg. Samuel J. Dubbin, a Coral Gables, Fla., attorney who also represents the plaintiffs, said the whereabouts of the goods Collins received is unknown.

Dubbin said the work of the Holocaust Commission and other archival records “demonstrate that in a significant and inexplicable violation of its own rules, the United States failed to return these assets, did not truthfully respond to requests from Hungarian Jewish community organizations for information about the property and concealed those facts for 50 years.”

Seitz said it wasn’t until 1999, when the Holocaust Commission released its first report, that the facts needed for the plaintiffs’ lawsuit came to light.

Under the rules governing federal lawsuits, Seitz said she was obliged at this stage of the case to accept as true that “plaintiffs and other members of the class have been kept in ignorance of vital information essential to pursue their claims, without any fault or lack of diligence on their part.”

The plaintiffs still face formidable challenges. Thus far, there are 13 plaintiffs, but for the case to be certified as a class-action suit and have a broader reach, the plaintiffs’ attorneys will have to convince Seitz that there is a valid class of similarly affected individuals whose claims should be litigated en masse. Attorney Cuneo said there potentially could be thousands.

Moreover, Seitz noted in her ruling that “it is not clear, based upon the [lawsuit], that [the plaintiffs’] belongings were specifically identifiable Gold Train property. Plaintiffs will need to be prepared to address this issue during discovery,” the judge wrote.