In all of the hubbub over the affirmative action cases today, the Court's opinion in the California Holocaust-Era Insurance case (
American Insurance v. Garamendi) will undoubtedly be overlooked. But it's an interesting read, and it takes an important step in federal-state relations that should not go unnoticed.
The nub of it is this: after many decades when it made no political sense for the WWII Western Allies to press West Germany and German companies to come clean about the extent of their fleecing of Jews, the fall of the Soviet Union enabled the WWII Allies finally to begin to apply some pressure. That pressure produced, among other things, an executive agreement signed by President Clinton that recognized an international commission for the resolution of claims on insurance policies held by the Nazis' victims. The insurance companies (that spent over 50 years stonewalling victims' efforts at payment) pressed for language in the executive order that would
force the dismissal of claims against them in state courts (so that those claims could be adjudicated by the commission), but Justice Department lawyers resisted that. The order ended up with some wishy-washy language to the effect that the federal government would "seek dismissal" of lawsuits against insurance companies in state courts on "any valid legal ground," but it explicitly noted that whether those suits would be dismissed would be up to the courts.
The international commission is, by the way, to put it mildly, a disaster. After three years of operation, in November of 2001, it had processed only about 800 claims (out of 77,000 that had been filed). Since then it has done only modererately better. My father has been wrangling with it for several years now over a life insurance policy for his father's brother, who was murdered in a camp in Poland in 1942. He is no closer to satisfaction now than he was two years ago.
At this point, enter the State of California--a state with lots of Holocaust survivors and surviving relatives of Holocaust victims. Dissatisfied with the difficulties of the claims process, California adopted a policy that any insurance company wishing to do business in the state must, if it did business in relevant parts of Europe from 1918 through 1945, disclose to the state lists of its policyholders from that time period.
The insurance companies sued, claiming (among other things) that the California law was invalid because it conflicted with the President's executive agreement and was therefore preempted.
The Court agreed in a 5-4 vote.
Here's why the decision is remarkable: the executive agreement said nothing at all about disclosure by private insurance companies wishing to do business in the United States; indeed, the agreement did not even purport to require the
dismissal of lawsuits against those companies. In addition, the executive agreement did not seek to protect foreign governments or governmental or even quasi-governmental agencies. (To the extent it "protected" anyone or anything overseas, the agreement protected private insurance companies.) Given all of this, you'd think that a court (especially
this Court, as protective as it usually is of state power as against federal power) would have upheld California's law. The Court would not have had to say that a president is powerless to insulate foreign companies from these sorts of disclosure requirements; it could have said simply that a president who wants to negotiate such an unusual protection for a foreign entity needs to do it clearly and explicitly, and displace state laws clearly and explicitly.
But the Court instead chose to infer--to read into the executive agreement--preempting provisions that were not actually there, and this out of fealty to the Court's extremely deferential stance toward the president's powers to run the nation's foreign affairs.
The Court majority's incredibly broad and fuzzy understanding of the President's powers in the international arena is a worrisome development.