High Court Strikes Down Calif. Holocaust Law

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By Steven Brostoff, Washington Editor

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NU Online News Service, June 23, 3:11 p.m. EDT,Washington?The United States Supreme Court has struck downa California law requiring insurance companies doing business inthe state to disclose claims payment and other information relatingto Holocaust-era insurance policies.

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In a 5-4 decision, the high court ruled that the Californialaw?called the Holocaust Victim Insurance Relief Act (HVIRA)interferes with the conduct of foreign policy by the President ofthe United States and thus is preempted.

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The court said that the White House has negotiated executiveagreements with Germany, Austria and France aimed at resolvingcontroversies surrounding Holocaust-era insurance policies thatrely on voluntary settlement funds and disclosure of policyinformation.

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However, the court said, HVIRA takes a different approach bythreatening to revoke the license of any insurance company thatdoes not follow the law's disclosure requirements.

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This undercuts the White House's diplomatic discretion, thecourt said in an opinion written by Justice David Souter.

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In a dissent, Justice Ruth Bader Ginsburg argued that HVIRAresponds to the long-frustrated efforts of Holocaust victims andtheir descendents to collect unpaid insurance proceeds.

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The federal government, she wrote has become more active in thisarea recently, undertaking foreign policy initiatives aimed atresolving these claims.

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While the federal approach differs from California's approach,Justice Ginsburg wrote, no executive agreement or other formalexpression of foreign policy disapproves of state laws likeHVIRA.

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Absent such a statement, she said, the California law shouldstand.

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The Washington-based American Insurance Association, whichchallenged HVIRA, praised the Supreme Court majority'sdecision.

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"We are gratified by the Supreme Court's decision," said CraigBerrington, senior vice president and general counsel with AIA.

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"As both the Clinton and Bush administrations made clear duringthis long litigation process, the issues remaining from theHolocaust are matters for the United States government, notindividual states," he said.

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In the case of American Insurance Association v.Garamendi, AIA, joined by several American and Europeaninsurers, challenged the constitutionality of HVIRA, arguing thatit violates the authority of the president to conduct foreignpolicy.

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A federal district court ruled in favor of AIA, stating thatHVIRA violates the due process rights of insurance companies. Thedistrict court said that HVIRA mandates license suspension fornon-performance of what may be impossible tasks without allowingfor a meaningful hearing.

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But the 9th Circuit Court of Appeals reversed, stating that dueprocess does not require states to grant insurers the opportunityto raise an impossibility excuse for noncompliance with thelaw.

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In reversing the 9th Circuit's decision, the Supreme Courtoutlined the various efforts of the federal government to resolveHolocaust-era claims and contrasted them to California'sapproach.

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"The basic fact is that California seeks to use an iron fistwhere the President has consistently chosen kid gloves," the courtsaid. While there are powerful arguments that the iron fist worksbetter, the court said, that is beside the point. It is not thecourt's business to judge the wisdom of federal government policy,the court said.

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The question, the court said, is whether the state law conflictswith the federal approach. In this case, the court said, theevidence is more than sufficient to demonstrate that HVIRA standsin the way of the president's diplomatic objectives.

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Justice Ginsburg, however, said that allowing HVIRA to standwould not compromise the ability of the President to speak with onevoice for the nation.

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She said that the President has not taken a clear stand on thisissue and courts should not presume to preempt state laws onforeign policy grounds when they rely not on legislative orexecutive text, but only on inference and implication.

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