MORRISTOWN, NEW JERSEY, April 21, 2003 The United States Supreme Court will be considering on April 23 the constitutionality of a California law intended to force European insurers to disclose detailed information regarding all insurance policies they sold in Europe before and during the Second World War. The New York office of Morristown, New Jersey-based law firm Riker, Danzig, Scherer, Hyland & Perretti LLP is representing Gerling Global Reinsurance Corp. of America and five other North American companies who face the mandatory suspension of their California licenses due to their inability to produce information in the hands of tangentially-related European affiliate companies. The U.S. Supreme Court agreed to review the case after the Ninth Circuit Court of Appeals in Gerling Global Reinsurance Corp. of America, et al., v. Low, 296 F.3d 832 (9th Cir. 2002) overruled the U.S. District Court for the Eastern District of California's decision that the California statute violates the Due Process Clause.
At issue is whether California may constitutionally regulate transactions that occurred in Europe more than 60 years ago and require the disclosure of policy-holder information regardless of whether the California insurer has access or control of the information sought. California's Holocaust Victim Insurance Relief Act of 1999 attempts to require California insurers to do just that. Riker Danzig partner Frederick W. Reif notes that this case puts the U.S. Supreme Court at the center of over a half-century of international efforts to compensate those victimized in the Holocaust. "The California statute directly interferes with U.S. foreign policy initiatives in this area." In July, 2000, the United States and Germany entered into an agreement resulting in the establishment of a $5 billion fund to pay Holocaust-related claims. Frederick Reif adds, "Under the Constitution, California may not regulate insurance companies and insurance transactions which occurred far beyond its borders."
The Gerling companies involved in this case are six North American insurers, not one of which issued insurance policies in Europe before or during World War II. In fact, five of the six Gerling companies did not even exist at the time of World War II. The district court found that they do not have custody or control over the European insurance information sought by California. Further, the German government has determined that disclosure by the entities that do possess this information would violate German data protection laws. Nevertheless, the Ninth Circuit's decision requires that the Gerling companies provide information or their California licenses will be revoked. The Eleventh Circuit Court of Appeals found Florida's attempts to apply a virtually identical statute to the same six Gerling companies unconstitutional.
The Supreme Court will decide whether the Due Process Clause contained in the Fourteenth Amendment to the U.S. Constitution permits California to regulate insurance transactions that occurred overseas between foreign parties more than a half-century ago. It will also determine whether California's entrance into this arena violates the federal government's Foreign Affairs Power and the Foreign Commerce Clause.
Also submitting briefs in support of the companies and trade association challenging the statute are the United States, the Federal Republic of Germany, and the government of Switzerland. The U.S. State Department and the United States Solicitor General have stated that California has impermissibly interfered with the United
States' foreign affairs policies and could damage ongoing multinational diplomatic efforts to create an effective mechanism to aid Holocaust victims and their heirs. Bush administration attorney Paul Clement stated in court papers that "California's approach interferes with the national government's authority over foreign affairs."
The matter is being heard under the caption American Insurance Association v. John Garamendi, in his capacity as Commissioner of Insurance for the State of California, Docket No. 02-722.
