One of the sad, final battles of Vietnam is being fought in the suburbs of Detroit. At stake are four young Vietnamese brothers now living with two American families. What happens to them could shape the future of some 1,650 other refugees in the U.S.

The Dao brothers have become the focus of a landmark lawsuit brought by the American Civil Liberties Union on behalf of their 68-year-old widowed grandmother Huynh Thi Anh, who wants custody of the boys. The million-dollar action names 21 defendants, including U.S. Attorney General Edward Levi.

Since July 1975, the Daos have stayed with two families who want to adopt them. Three brothers, Dong, 12, Hein, 10, and Tarn, 8, live with Dennis and Margaret Arvidson in a simple frame house on a lake in Highland, Mich. He is a contractor and she is an elementary school teacher. The fourth brother, Due, 9, was sent to the home of Jay and Beth Donaldson in nearby Saline. Jay is an executive for a data management company, and Beth is also an elementary school teacher. Due was believed to be estranged from his brothers and emotionally battered, but under the Donaldsons' care he has become a lively child who does well in school and plays on a local boys' hockey team.

The lawyer for the two U.S. families, Donald Shelton, argues that the grandmother has no means of support and that the brothers are happy and should be left with their foster parents. "The custody battles are between the bureaucrats and the ACLU," Shelton says. "What we are interested in is the best interests of the boys."

In rebuttal, Howard Simon, head of the Michigan chapter of the ACLU, argues that in order for Vietnamese refugee children to be eligible for adoption, they must be orphans or abandoned or voluntarily surrendered by their parents.

In the chaotic last days of the war, the Dao brothers and some 2,000 other children were airlifted to the U.S. But the ACLU contends that more than half of them were placed in American hands for safekeeping only, not for adoption. In the Dao case specifically, the ACLU will argue that the boys' father, an air force noncom, and mother are still alive in Vietnam. There has been, however, no message from them since the fall of Saigon.

A further international complication is that Vietnamese law recognizes the grandmother as guardian, with a legal claim on her four grandsons, while Michigan statute puts the welfare of a child above anything but a parental claim.

The ACLU says the Dao brothers were placed in a Vietnamese orphanage by their mother and airlifted to a Catholic convent in Mount Angel, Oreg. The grandmother and other relatives followed, but the boys had already been transferred to Michigan under the authorization of Michael Hall, an official in the state's Department of Social Services. Hall, one of the defendants in the lawsuit, says he did not believe either the grandmother or the other relatives could care for the four brothers.

Michigan offered to sponsor the whole family so they could live close to the boys. Mrs. Anh, in fact, visited her grandsons in their American homes last September and seemed satisfied with their living arrangements. But, as a friend later observed, she began to miss the boys, and the legal action followed soon after.

The grandmother now lives in Woodburn, Oreg. with a son, Dao Thanh Linh, 25, a refugee who has found work as a cabinetmaker, and his wife. Two other sons and two of her four daughters live in the U.S. "If we get them back," she says in Vietnamese of her grandsons, "we will find a big house. The four boys would be happier here. I need the boys. When they come back, we will all be very happy."