AMERICAN INSURANCE ASSOCIATION V. GARAMENDI
539 U.S. 396 (2003)
NATURE OF THE CASE: American (P), insurance companies and national trade association,
appealed a judgment, wherein the Court of Appeals reaffirmed its prior ruling that the
California's Holocaust Victim Insurance Relief Act of 1999 violated neither the foreign
affairs nor the foreign commerce powers.
FACTS: California passed the HVIRA, which requires any insurer doing business in that
State to disclose information about all policies sold in Europe between 1920 and 1945 by the
company itself or any one 'related' to it. The case gives a short but concise history of
Nazi financial persecution of the Jews from 1933-1945. The end result was many insurance
policies were paid to the Reich treasury. After the war even a policy that had escaped
confiscation was likely to be dishonored, whether because insurers denied its existence or
claimed it had lapsed from unpaid premiums during the persecution, or because the government
would not provide heirs with documentation of the policyholder's death. These confiscations
and frustrations of claims fell within the subject of reparations, which became a principal
object of Allied diplomacy soon after the war. At the Potsdam Conference, the United States,
Britain, and the Soviet Union took reparations for wartime losses by seizing industrial
assets from their respective occupation zones, putting into effect the plan originally
envisioned at the Yalta Conference months before. Eventually from the threat of Communism,
the Allies (ex-Soviet Union) worried that continued reparations would cripple the new
Federal Republic of Germany economically, and so decided to put off 'consideration of claims
arising out of the second World War by countries which were at war with or were occupied by
Germany and by nationals of such countries, against the Reich and agencies of the Reich . .
. until the final settlement of the problem of reparation. Those allies placed the
obligation to provide restitution to victims of Nazi persecution on the new West German
Government. West Germany enacted its own restitution laws. These measures left out many
claimants and certain types of claims, and when the agreement reunifying East and West
Germany, was read by the German courts as lifting the moratorium on Holocaust claims by
foreign nationals, class-action lawsuits for restitution poured into United States courts
against companies doing business in Germany during the Nazi era. The crooks, oops I mean
defendant companies and their governments, complained to the point that the Government of
the United States took action to try to resolve 'the last great compensation related
negotiation arising out of World War II.' This produced the German Foundation Agreement,
signed by President Clinton wherein Germany agreed to enact legislation establishing a
foundation funded with 10 billion deutsch marks contributed equally by the German Government
and German companies. The willingness of the Germans to create a voluntary compensation fund
was conditioned on some expectation of security from lawsuits in United States courts.
President Clinton agreed that whenever a German company was sued on a Holocaust-era claim in
an American court, the Government of the United States would submit a statement that 'it
would be in the foreign policy interests of the United States for the Foundation to be the
exclusive forum and remedy for the resolution of all asserted claims against German
companies arising from their involvement in the National Socialist era and World War II' and
'that U. S. policy interests favor dismissal on any valid legal ground.' The German
Foundation would work with the International Commission on Holocaust Era Insurance Claims
(ICHEIC). The Germans also agreed to nix privacy laws which resulted in the recent release
of the names of over 360,000 Holocaust victims owning life insurance policies issued by
German insurers. California's Department of Insurance began its own enquiry into the issue
of unpaid claims and passed state legislation to force payment by defaulting insurers. The
HVIRA requires 'any insurer currently doing business in the state' to disclose the details
of 'life, property, liability, health, annuities, dowry, educational, or casualty insurance
policies' issued 'to persons in Europe, which were in effect between 1920 and 1945.' The
obligation covers policies sold to anyone during that time and not just Holocaust victims.
The legislature acknowledged that 'the international Jewish community is in active
negotiations with responsible insurance companies through the [ICHEIC] to resolve all
outstanding insurance claims issues,' it still thought the Act 'necessary to protect the
claims and interests of California residents, as well as to encourage the development of a
resolution to these issues through the international process or through direct action by the
State of California, as necessary.' Ps, several American and European insurance companies
and the American Insurance Association (a national trade association), filed suit for
injunctive relief against Garamendi (D), insurance commissioner of California, challenging
the constitutionality of HVIRA. The District Court issued a preliminary injunction against
enforcing the Act. The Ninth Circuit left the preliminary injunction in place until the
District Court could consider whether Ps were likely to succeed on their due process claim.
On remand, the District Court held the Act to be within the State's 'legislative
jurisdiction,' as it applied only to insurers licensed to do business in the State, and it
granted summary judgment to Ps on the ground of a procedural due process violation in
'mandating license suspension for non-performance of what may be impossible tasks without
allowing for a meaningful hearing.' The Ninth Circuit reversed. It rejected the conclusion
that procedural due process required an opportunity for insurers to raise an impossibility
excuse for noncompliance with the law. It reaffirmed its prior ruling that the Act violated
neither the foreign affairs nor the foreign commerce powers. The Supreme Court granted
certiorari.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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