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IBM AND THE HOLOCAUST: The Book, The Suit, And Where We Go From Here

Monday, Mar. 12, 2001

On Saturday, February 9, the law firm of Cohen, Milstein, Hausfeld & Toll filed an unusual class action suit in U.S. District Court in Brooklyn, New York, on behalf of five Holocaust survivors. The suit alleges that IBM's American parent corporation sold, maintained, and controlled the punch card machines that were used by the German Government between 1933 and 1945.

The same day, IBM posted a notice on its electronic bulletin board, warning of the imminent arrival of a new book entitled IBM and the Holocaust by Edwin Black. Two days later, the book was published. It has caused a bit of a stir, attracting significant media coverage.

It is very likely that Michael Hausfeld, one of the lead attorneys for the lawsuit, timed his filing to coincide with Black's book. However, it is not clear to what extent Hausfeld and Black are cooperating: Hausfeld's complaint does not refer to Black's book, and Black has said recently that he wishes the lawyers would "disappear."

This new episode in the ongoing effort to determine who was and is responsible for the Holocaust reveals certain recurring themes. Black's book and Hausfeld's suit represent two very different ways of trying to confront the moral and legal legacy of large-scale evil. But are the two approaches complementary, or in tension?

IBM and the Holocaust: The Book

Black's book is worth reading even if, as some historians suggest, he is not a very good historian. Black's great contribution is that he has tenaciously collected a lot of information, and combined it in an original way; few others have thought to place this information in the same context, to see what inferences can be drawn.

Black's history makes two chilling observations. First, that the Holocaust was possible because the Nazis had access not only to guns and gas, but also to cutting-edge census technology. Second, that the Nazis had access to this technology because IBM, in its paranoid zeal, worked very hard to maintain its market dominance of the global market in data processing — even in Germany and other Axis nations, even during the Holocaust, and even if that meant working through dummy corporations and corporate shells in neutral nations like Sweden and Switzerland.

It is hard to read IBM and the Holocaust's description of Thomas Watson, IBM's iron-willed founder and president for over thirty years, and not think about fellow monopolist Bill Gates. Like Gates, Watson was obsessed with preventing any other company from entering the data processing market.

IBM's predecessor corporation had purchased the patent of the "Hollerith" machine—a simple mechanical, punch-card driven tabulator. Watson saw the potential for the Hollerith machine and throughout the late 20's and '30's, IBM helped governments and companies around the world develop new applications for it. IBM engineers worked with railway companies, manufacturers, and mines from South America to Europe to devise new uses for data management.

One set of customers that Watson coveted was government bureaucrats. IBM helped the governments of the United States, as well as most major European nations, exploit the Hollerith system for their national censuses. As war grew more likely, IBM sold Hollerith machines to the War Ministries of Yugoslavia, Rumania, Hungary, Poland, Sweden, Holland, and France.

Black shows in great detail how the German government worked with IBM's German subsidiary to use the Hollerith system to manage demographic information. Starting with the 1933 Prussian census, Nazi data processors began to gather more and more information about who lived where.

The 1937 and '39 censuses, designed with the assistance to IBM through its German subsidiary, could calculate the degree of Jewish heritage for any given citizen. By 1942, the data processing was more macabre: IBM's German subsidiary (now cut off from New York by the war) was helping to maintain Hollerith machines that could record a concentration camp inmate's identity (Jewish, homosexual, etc.), treatment in the camp, and, often inevitably, method of death.

IBM and the Holocaust: The Lawsuit

Hausfeld's suit asks for two things. First, it asks that IBM be enjoined from destroying any documentation related to its role in the Holocaust; second, it asks that IBM disgorge any ill-gotten gains it acquired from its conduct. The basis of the claim is that by abetting the Nazi government, IBM may be sued under the Alien Tort Claims Act, which permits anyone (including but not limited to U.S. citizens) to sue a foreign entity in federal court claiming the commission of certain torts that are governed by U.S. treaty or the law of nations.

For the Hausfeld suit, there is a statute of limitations problem. The complaint acknowledges this problem and answers it, but in a very unsatisfying way — asserting that IBM has, since the end of the war, actively concealed the information upon which the complaint is based. Granted, concealment by the defendant can toll (effectively, extend) the statute of limitations. But I do not think that the question raised by this suit should or will be decided on such a technicality. The real question is, did IBM commit a crime against humanity, as the complaint claims?

Did IBM Abet the Holocaust?

One of the most contentious issues related to this question is whether IBM in America ever "lost control" over its subsidiary in Germany. Black suggests Watson at least fought to retain control — documenting the extreme lengths to which Watson went to resist efforts by his German managers to "Aryanize" IBM's German subsidiary at the end of 1940.

Watson was able to maintain legal ownership of the subsidiary. However, from a practical point of view, the German government enforced its control over the company. Nonetheless, the U.S. Government began to suspect that, as late as 1943, IBM was continuing to communicate with its German subsidiary.

Hausfeld's suit and Black's book leave one with the impression that the best case that can and should be made against IBM would not be based upon human rights offenses, but rather of treason. It is clear that the Hollerith system was used by the entire Nazi war machine, in contexts ranging from the coordination troop transports, to Luftwaffe raids, to slave labor. One suspects that Watson knew very well what the War Ministry of Germany was hoping to do with the systems that IBM energetically sold to Germany and the other Axis nations. One is left with the impression that until the war broke out, IBM intended to continue to "arm" Germany as long as it could.

It will be very hard to prove that IBM, the American corporation, had that type of specific intent before 1940, and it will be even harder to prove that the American corporation exercised much control over Germany's IBM after that date. Hausfeld's main point seems really to be that, regardless of its intent or control, IBM profited from its relationship with an extremely immoral and murderous state. But that is not illegal under the ATCA, even if it is a failure of corporate character and individual morality.

Black's point, as I understand it, is that the lesson that we should take from the IBM story is moral, not legal. IBM seems to have allowed itself, partly through the individual decisions of its top management, to become a tool of evil. In this its actions is different in degree, but not in kind, from those of many international actors just before (and during) the Second World War.

One of the consequences of "litigating" the Holocaust is that actions are painted in very stark terms: a company's acts are either illegal or legal, which often translates into their being either intentionally evil or innocent. This area of law is like that: it needs clearly defined states of mind in order to make sense of the past. But the truth is, some of the guilty parties involved in the Holocaust are not so easy to pigeonhole. If Black's account is correct, then IBM seems to have developed a certain sort of blindness in its obsessive desire to maintain a monopoly on a new form of technology. It is not clear that we have legislated, or ever could legislate, against this sort of blindness. I would rather that we think hard about how such blindness comes about, and recognize that it is a quality that many of us, and not just certain especially "evil" actors, may develop.

Anthony J. Sebok, a FindLaw columnist, is a Professor of Law at Brooklyn Law School.

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