Mr Papon, 87, was released from custody by the court on Friday, in deference to his great age and medical condition. He was taken ill with heart trouble in jail on Thursday night.
On Friday evening, he was discovered with his son and daughter eating a celebration dinner in a top-class restaurant in Margaux, in the wine country 20 miles from Bordeaux.
The restaurant, the Pavillon Margaux, was cleared of all other customers. Mr Papon and his family spent the weekend at an exclusive, chateau-hotel nearby, the Relais Margaux. Mr Papon's weekend activities compounded the fury of relatives of some of the 1,484 jews allegedly arrested and deported on his orders in the Bordeaux area in 1942-44.
Gerard Welzer, a lawyer representing two Bordeaux families, said: "Deported Jews did not get the chance to stay in a chateau."
Mr Welzer announced that his clients were dropping out of the case because of the court's decision to allow Papon to go free.
A similar decision was made on Saturday by another lawyer, Arno Klarsfled, representing the association of sons and daughters of deported Jews. The trial, expected to last another ten weeks, resumes today.