American Insurance Association v. Garamendi

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 anyone '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 inquiry 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.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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