The opinion of the court was delivered by: WALSH
This matter came before the Court on March 11, 1964, on a petition for compromise of class actions under Rule 23(c) of the Federal Rules of Civil Procedure, and on a motion for approval of counsel fees as provided by Section 20 of the Trading with the Enemy Act, 50 U.S.C.App. § 20.
These cases concern claims by depositors who had exchanged dollars for yen certificates with American branches of the Sumitoma Bank, Ltd. and the Yokohama Specie Bank, Ltd. These were branches of Japanese banks and were located in California, Washington, and Honolulu. The transactions took place prior to December 7, 1941. Upon commencement of hostilities, the United States seized the American Branches, and the banks did not open for business thereafter. After the war, several thousand claimants sought redemption of their yen certificates through the Office of Alien Property.
Claims were duly filed and processed, and after a series of hearings in 1955 and 1956, the Hearing Examiner allowed the claims at the yen-dollar exchange rate of 23.4 cents, the pre-war dollar value of the yen. The Director of the Office of Alien Property reversed this finding and held that the post-war rate of 361.55 yen for one dollar was the rate of exchange to be used.
The decision of the Director was upheld by this Court and summary judgment was granted for the Government in Aratani, et al. v. Kennedy, Civil Action No. 3164-58. The decision was affirmed by the United States Court of Appeals for the District of Columbia Circuit, reported in 317 F.2d 161. The Supreme Court granted certiorari on October 21, 1963. However, prior to the submission of the case, counsel for the parties entered into discussions in an effort to settle the case. A tentative compromise agreement was achieved, and the Supreme Court referred the case to this court for the approval of a compromise settlement.
The proposed compromise concerns four cases, all of which are in dispute over the rate of exchange. These are class actions, involving 2,963 claimants, and, as such, cannot be dismissed or compromised without approval of the court pursuant to Rule 23(c) of the Federal Rules of Civil Procedure.
These claims, if paid at the pre-war exchange rate of 23.4 cents would result in total payments of $ 15,433,795.41, or $ 4,909.307.42 to the Sumitomo group and $ 10,524,487.99 to the Yokohama Specie group. If paid at the post-war rate of 361.55 yen per dollar, the total amount would be $ 168,587.46, or $ 54,547.86 to the Sumitomo group and $ 114,039.60 to the Yokohama Specie group.
The assets of the Sumitomo Bank now in the possession of the Office of Alien Property total $ 1,213,808.44. This represents the total amount which can be paid to these claimants, regardless of the rate of exchange to be used.
The proposed compromise would pay a total of $ 6,395,357.56, less counsel fees. This includes the full amount in the Sumitomo bank of $ 1,213,808.44, and $ 5,181,549.12 to the Yokohama claimants.
The $ 1,213,808.44, less counsel fees, which is to be paid to the Sumitomo claimants, represents 100 per cent of the amount which can be paid as it is the total amount of the fund. This amount is 25 per cent of the maximum amount claimed under the pre-war exchange rate of 23.4 cents per yen. However, under the proposed settlement each claimant will receive approximately 43 times the amount which was finally allowed by the Office of Alien Property.
The $ 5,181,549.12, less counsel fees, which is to be paid to the Yokohama Specie Claimants represents 49 per cent of the amount claimed as the maximum under the pre-war exchange rate. This amount is approximately 85 times the amount allowed by the Office of Alien Property.
Counsel for the claimants urge several reasons for approval of the proposed compromise. Among the reasons which are persuasive is the assertion that the total amount to be paid, after deduction of attorneys' fees, represents more dollars than were originally paid by the depositors; the pre-war exchange rate represents 85 times the amount allowed by the Office of Alien Property, and 83 times the amount of the post-war rate. Counsel further assert that the original deposits represented the life savings of many of the claimants, who are now retired, and this amount is a greater asset to them at the present time than an even larger amount at a later date if the results of the litigation were favorable. Counsel also cite the protracted history of this litigation, encompassing more than 17 years, and the 22 years since the assets were seized by the Government.
Counsel for the Government urge that this proposed fifty-fifty settlement is fair and reasonable in the light of the present chances of ultimate victory or defeat. Counsel stated that had certiorari not been withdrawn, that the Government would have urged that the Supreme Court adopt the Director's decision, since there was no rate of exchange on December 8, 1941, and apply the first available rate on the authority of Sutherland v. Mayer, 271 U.S. 272, 46 S. Ct. 538, 70 L. Ed. 943 (1926).
The Government then suggests that a second alternative for the Supreme Court would have been the pre-war rate which was in effect on August 26, 1941, ...