American Insurance Ass'n v. Garamendi

PETITIONER: American Insurance Ass'n
LOCATION: United States District Court, C.D. California

DOCKET NO.: 02-722
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 539 US 396 (2003)
ARGUED: Apr 23, 2003
DECIDED: Jun 23, 2003

Edwin S. Kneedler - Department of Justice, argued the cause for the United States, as amicus curiae, supporting the petitioners
Frank Kaplan - Argued the cause for the respondent
Kenneth Steven Geller - Argued the cause for the petitioners

Facts of the case

In 1999 the California legislature enacted the Holocaust Victim Insurance Relief Act (HVIRA) in an attempt to facilitate Holocaust-era insurance claims by California residents. The Act required all insurance companies doing business in California that sold policies to people in Europe between 1920 and 1945 to make public all of those policies, including the names of policy owners and the status of the policies. A group of insurance companies and a trade organization sued, saying that only the federal government, with its jurisdiction over commerce and foreign affairs, had the right to enact such legislation. They also said the law violated the Due Process and Equal Protection clauses of the U.S. Constitution because the companies, if they failed to comply, could lose their insurance licenses. The District Court ruled for the insurance companies; the 9th Circuit Court of Appeals reversed.


Did California's passage of the HVIRA interfere with the federal government's sovereignty over foreign affairs established by Article I of the Constitution?

Media for American Insurance Ass'n v. Garamendi

Audio Transcription for Oral Argument - April 23, 2003 in American Insurance Ass'n v. Garamendi

Audio Transcription for Opinion Announcement - June 23, 2003 in American Insurance Ass'n v. Garamendi

William H. Rehnquist:

The opinion of the Court in No. 02-722, American Insurance Association versus Garamendi will be announced by Justice Souter.

David H. Souter:

This case comes to us on writ of certiorari of the Court of Appeals for the Ninth Circuit.

In 1998, the State of California passed the Holocaust Victim Insurance Relief Act which requires any insurance company operating in California to disclose certain information about policies at or any affiliated companies sold in Europe between 1920 and 1945 or else lose its license to do business in the State of California.

The law's objective is to help Holocaust victims find out about policies issued by European insurers, who has not paid the value or benefits of the policies to their true owners or beneficiaries for reason related to the criminality of the German Nazi regime and the disruption of the World War II.

In 1999, the petitioners, a group of European and American Insurance Companies filed suit challenging the law's constitutionality on the ground that it is preempted by the National Government's diplomatic position on the specific matter of unpaid claims under the European insurance policies in issue.

The Ninth Circuit held the law valid and we now reverse.

The problem with insurance debt by European corporations during World War II has been an object of American diplomacy for over half a century.

The trigging in effect during the cold war put a moratorium on Holocaust claims by foreign nationals, but when that moratorium was lifted in 1990, class action suits against European companies poured into American Courts.

Those suits brought protest by the defendant companies leading the President to enter into any negotiations with allied European nations to establish a mechanism for resolving insurance claims related to the Holocaust.

The Executive Branch position in these negotiations was to encourage European Governments and companies to volunteer both information about unpaid policies and funds to settle claims brought under them.

The principle exemplars of the American position in our Executive Agreement signed by President Clinton with Germany and Austria which declares that all insurance claim should be processed through a voluntarily settlement organization known as The International Commission on Holocaust Era Insurance Claims.

This American position has consistently been maintained with respect to all European insurers.

The petitioner’s argument for preemption is that the California law interferes with the President's foreign policy as expressed in the formal executive agreement and statements originating in the State Department.

The claim rests on two premises, each of which is supported by our cases: the first is that the President has some independent constitutional authority to determine what the nation’s foreign policy should be, the principle established in our President’s recognizing that the President plays the lead role in representing the United States on international issues; the second premise is that state law must yield to the President’s foreign policy if the two are in serious conflict.

The principal authority for that preposition is our decision in Zschernig v. Miller in 1968.

In that case we found and Oregon probate statute touching on foreign affairs to be preempted on the theory that the field of the foreign affairs is an exclusively federal domain even in the absence of any express federal policy in the area of the state law and even though the State Department itself brought there that there was no objectionable conflict of state law in national position.

Justice Harlan disagreed with the majority's field preemption theory, but all members of the Court agreed that preemption is required if state law conflicts with an expressed foreign policy of the National Government.

Here, the evidence leaves no doubt about the conflict.

In contrast to the President’s endorsement of the International Commission's voluntary approach to disclosure of insurance information, California’s economic compulsion to make disclosure a far more information than the International Commission requires undermines the President’s discretion in dealing with European allies and the choice he has made in exercising it.

The California law also threatens to frustrate the President’s objectives in making it more difficult to persuade foreign companies to participate in voluntary organizations like the International Commission.

Indeed, shortly after the California law was passed, the officials of the Executive Branch wrote to California officials saying that the state law threatened the success of the President’s diplomatic initiatives.

The evidence presented is enough to make clear that the California law interferes with the President’s articulated foreign policy with the consequence that it is preempted.

Justice Ginsburg will announce the dissenting opinion.

Ruth Bader Ginsburg:

For over five decades, the Holocaust survivors and their descendants have tried with little success to collect the insurance proceeds unpaid since the Holocaust Era.

Inadequate access to information has impeded those efforts.

Documents ordinarily used to backup insurance claims, policies issued to insured person and death certificate were often unavailable to families of policy holders who perished in concentration camps.

European insurers were notably resistant, they rarely volunteered information needed to identify rightful holders of unpaid Holocaust Era claims.

The California statute at issue, the Holocaust Victims Insurance Relief Act which I will call HVIRA, was enacted in 1999 to address that half century of silence.

A direct insurance company is operating in California to disclose basic facts about policies they or their affiliates wrote in Europe between 1920 and 1945.

More than five thousand Holocaust survivors reside in California, information disclosed pursuant to the HVIRA could reveal to survivors or their heirs, the existence of a viable insurance claim. The HVIRA at bares emphasis does not authorize litigation of Holocaust Era claims in any court.