1. U.S. citizens who were descendants of victims of the Holocaust (the mass murd
ID: 390165 • Letter: 1
Question
1. U.S. citizens who were descendants of victims of the Holocaust (the mass murder of 6 million Jews by the Nazis during World War II) in Europe filed a claim for breach of contract in the United States against an Italian insurance company, Assicurazioni Generali, S.P.A. (Generali). Before the Holocaust, the plaintiffs’ ancestors had purchased insurance policies from Generali, but Generali refused to pay them benefits under the policies. Due to certain agreements among nations after World War II, such lawsuits could not be filed for many years. In 2000, however, the United States agreed that Germany could establish a foundation—the International Commission on Holocaust-Era Insurance Claims, or ICHEIC—that would compensate victims who had suffered losses at the hands of the Germans during the war. Whenever a German company was sued in a U.S. court based on a Holocaust-era claim, the U.S. government would inform the court that the matter should be referred to the ICHEIC as the exclusive forum and remedy for the resolution. There was no such agreement with Italy, however, so the fed- eral district court dismissed the suit. The plaintiffs appealed. Did the plaintiffs have to take their claim to the ICHEIC rather than sue in a U.S. court? Why or why not?
Explanation / Answer
Plaintiffs are beneficiaries of insurance policies purchased by their ancestors in the years leading up to the Holocust from defendant Assicurazioni Generali, S.P.A. [“Generali”], an Italian insurance company. Plaintiffs brought state law claims alleging breach of insurance contracts, based on Generali’s refusal to pay under those policies. Cases were consolidated for pre-trial proceedings. The district count granted Generali’s motion to dismiss based on the Supreme Court’s decision in American Insurance Association v. Garamendi, 539 U.S. 396 (2003), which held that the Plaintiffs’ state-law claims were preempted by the foreign policy of the United States, which favors resolution of Holocust-era insurance claims in the International Commission on Holocst Era Insurance Claims [“ICHEIC”], an international claims resolution organization founded by private insurance companies and supported by the United States and other foreign government entities. The Second Circuit affirmed. In affirming the district court’s decision the Second Circuit analyzed the applicability of Garamendi. In Garamendi, the Supreme Court explained that state law “must give way” to the foreign policy of the United States, as set by the President, where there is “evidence of clear conflict between the policies adopted by the two.” Based on the amicus brief of the United States and statements made during negotiations between the United States and Germany, Austria, and France regarding Holocst-era insurance claims, the Court concluded that the “consistent Presidential foreign policy has been to encourage European governments and companies to volunteer settlement funds in preference to litigation or coercive sanctions,” and, in the insurance context specifically, “to encourage European insurers to work with the ICHEIC to develop acceptable claims procedures.” The cases before the Court essentially seek enforcement of the plaintiffs’ claimed contract rights against Generali under State law. The Court determined that such law suits are directly in conflict with the Government’s policy that claims should be resolved exclusively through the ICHEIC.Plaintiffs made several arguments in an effort to distinguish Garamendi. First, they argue that Generali is an Italian Company and that Italy, unlike Germany, Austria, and France, had not entered into an executive agreement with the President of the United States regarding Holocst-era insurance claims. After reviewing the evidence and taking into account policy considerations the Second Circuit notes that the Supreme Court in Garamendi did not view the existence of an executive agreement especially since Generali was one of the plaintiffs in Garamendi and was not excluded from the judgment on the ground that it is an Italian company and that Italy is not a party. In addition the Court sought the advice of the Secretary of State on the foreign policy of the United States [both Condoleezza Rice and Hillary Rodham Clinton] and it was made clear that “it has been and continues to be the foreign policy of the United States that the ICHEIC should be regarded as the exclusive forum and remedy for claims within its purview”, and that this policy applies to claims against Generali.
Plaintiffs next argue that strong state interests underlie the laws that form the basis for their suit, and therefore, unlike in Garamendi, the balance between state and federal policy tips in their favor. The Second Circuit disagreed stating that in this case, the conflict between the federal policy that the ICHEIC should be the exclusive forum for resolving Holocst-era insurance claims and Plaintiffs’ attempt to adjudicate their Holocst-era insurance claims under state law is even more clear than the conflict in Garamendi, which involved only a disclosure requirement, and not a state law suit to enforce the insurance claim. The court held that state law must yield to the federal policy, regardless of the importance of the interests behind the state law. Finally, plaintiffs argued that the ICHEIC’s December 31, 2003 deadline for accepting claims has passed, so that dismissal of their claims will deny them the opportunity to pursue those claims in any forum. The Court determined that this argument was premised on a misunderstanding of the government’s policy. It was never the foreign policy of the United States that claims should merely be held in abeyance pending conclusion of the ICHEIC process. The policy is that the ICHEIC “should be regarded as the exclusive forum and remedy for claims with its purview.” Permitting state-law claims to proceed after the ICHEIC has ceased operations directly conflicts with that policy goad. It would undermine future efforts to secure voluntary compensation agreements if ICHEIC participants became subject to litigation as soon as ICHEIC had concluded.In conclusion, the court held that under the authority of Garamendi the Plaintiffs’ claims, which fall within the scope of the ICHEIC process, are preempted by the foreign policy of the United States.
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