Gerling Global Reinsurance Corp. of America v. Low

• Decision Date: 02 October 2001
• Docket Number: No. CIV.S-00-0779 WBS JFM.,No. CIV.S-00-0875 WBS JFM.,No. CIV.S-00-0613 WBS JFM.,No. CIV.S-00-0506 WBS JFM.,CIV.S-00-0506 WBS JFM.,CIV.S-00-0613 WBS JFM.,CIV.S-00-0779 WBS JFM.,CIV.S-00-0875 WBS JFM.
• Citation: 186 F.Supp.2d 1099
• Parties: GERLING GLOBAL REINSURANCE CORP. OF AMERICA, et al., Plaintiffs, v. Harry LOW, in his capacity as the Insurance Commissioner of the State of California, Defendant.
• Court: U.S. District Court — Eastern District of California

186 F.Supp.2d 1099

GERLING GLOBAL REINSURANCE CORP. OF AMERICA, et al., Plaintiffs, v. Harry LOW, in his capacity as the Insurance Commissioner of the State of California, Defendant.

No. CIV.S-00-0506 WBS JFM.

No. CIV.S-00-0613 WBS JFM.

No. CIV.S-00-0779 WBS JFM.

No. CIV.S-00-0875 WBS JFM.

United States District Court, E.D. California.

October 2, 2001.

Louis H. Castoria, Debra S. Sturmer, Wilson Elser Moskowitz Edelman and Dicker, San Francisco, CA, Frederick W. Reif, James P. Donovan, Wilson Elser

Moskowitz Edelman and Dicker, New York City, Michael W. McConnell, Mayer Brown and Platt, Chicago, IL, Neil M. Soltman, Mayer Brown and Platt, Los Angeles, CA, Kenneth S. Geller, Mayer Brown and Platt, Washington, DC, Martin S. Checov, O'Melveny and Myers, San Francisco, CA, Stephen M. Shapiro, Mayer Brown and Platt, Chicago, IL, Chandra L. Gooding, Milbank Tweed Handley and McCloy, Los Angeles, CA, Peter Simshauser, Skadden Arps Slate Meagher and Flom, Los Angeles, CA, for plaintiffs.

Frank Kaplan, Alschuler Grossman and Pines, Los Angeles, CA, Andrew W. Stroud, Mennemeier Glassman and Stroud, Sacramento, CA, for defendants.

MEMORANDUM AND ORDER

SHUBB, Chief Judge.

In October 1999, California enacted the Holocaust Victim Insurance Relief Act ("HVIRA"). See Cal. Ins.Code §§ 13800-13807 and accompanying regulations, Cal. Code Regs. Tit. 10 §§ 2278-2278.5. HVIRA relates to claims asserted by Holocaust victims or their heirs or beneficiaries for coverage under insurance policies issued in Europe between 1920 and 1945. The stated purpose of HVIRA is to ensure that insurance companies doing business in the State of California disclose to the state "any involvement they or their related companies may have had with insurance policies of Holocaust victims." Cal. Ins. Code § 13801(e). HVIRA further declares that insurers in California have a responsibility to "ensure the rapid resolution of these questions [regarding unpaid Holocaust-era insurance policies], eliminating further victimization of these policyholders and their families." Id.

After briefing and a hearing regarding various constitutional challenges to the statute, this court found, in June of 2000, that plaintiffs had shown a probability of success on the merits of two of their claims: (1) that HVIRA interferes with the federal government's control over foreign affairs; and (2) that HVIRA violates the Commerce Clause, and therefore granted a preliminary injunction enjoining enforcement of the statute. The Ninth Circuit reversed the holdings upon which that injunction was based, but left the injunction in place, specifically referencing the "possibility" that HVIRA violates the Due Process Clause. Gerling Global Reins. Corp. of Am. v. Low, 240 F.3d 739, 754 (9th Cir.2001), petition for cert. filed (U.S. June 26, 2001) (No. 00-1926).

The matter is now before this court on the parties' cross motions for summary judgment. All plaintiffs jointly move for summary judgment on the grounds that HVIRA violates the Due Process Clause because: (1) it is an extraterritorial regulation enacted in excess of California's legislative jurisdiction; and (2) it mandates the performance of impossible tasks and provides for automatic license revocation upon non-performance. Defendant moves for summary judgment, and for the preliminary injunction to be dissolved, on the grounds that: (1) the Ninth Circuit's decision precludes any claim that HVIRA violates either the Foreign Affairs Power or the Commerce Clause; (2) HVIRA does not violate the Due Process Clause; and (3) HVIRA is not unconstitutional for any other reason raised in any plaintiff's complaint.

I. Facts

A. The Statututory Framework

After the National Socialist (NAZI) party came to power in Germany, it enacted a series of statutes authorizing governmental confiscation of Jewish property and other assets. These laws included insurance proceeds among the types of property that the government was authorized to seize from Jews. Under the NAZI statutes, German insurers were required to pay the proceeds of insurance policies of Jewish residents to "blocked accounts" controlled by the NAZI government. A 1943 statute also ordered confiscation of the estates of deceased Jews. Furthermore, although many Holocaust victims had insurance policies, many lost the papers during their imprisonment. In many cases, the persons most knowledgeable about the policy were killed, leaving heirs without a paper trail. As a result, many Holocaust victims and their descendants and heirs have never collected on their insurance policies.

HVIRA requires insurance companies doing business in California to file reports disclosing policies issued in Europe during the period 1920-1945. See Cal. Ins.Code §§ 13800-13807. Other enabling statutes extend the statute of limitations for filing such claims (Cal.Civ.Proc.Code § 354.5), and provide procedures for the suspension of licenses of insurance companies who have not paid valid claims (Cal. Ins.Code § 790.15).¹

B. The Challenged Statute: California Insurance Code §§ 13800-13807 ("HVIRA")

HVIRA obligates insurers doing business in California to file reports identifying insurance policies (life, property, liability, health, annuities, dowry, educational, or casualty) sold to persons in Europe between 1920 and 1945 directly or through a "related company." Cal. Ins.Code § 13804(a). A "related company" is defined as "any parent, subsidiary, reinsurer, successor in interest, managing general agent, or affiliate company of the insurer." Cal. Ins.Code § 13802(b).

Specifically, the statute requires the insurer or related company to file with the registry: (1) the number of those insurance policies; (2) the holder, beneficiary, and current status of those policies; and (3) the city of origin, domicile, or address for each policy holder. Cal. Ins.Code § 13804(a). Filing false information under this section is punishable by civil penalties of up to $5,000.00 per policy.

Further, with regard to each policy, the insurer must certify one of the following: (1) that the proceeds of the policies have been paid to the designated beneficiaries or their heirs where that person or persons, after diligent search, could be located and identified; (2) that the proceeds where the beneficiaries or heirs could not, after diligent search, be located or identified, have been distributed to Holocaust survivors or to qualified charitable nonprofit organizations for the purpose of assisting Holocaust survivors; (3) that a court of law has certified in a legal proceeding resolving the rights of unpaid policyholders, their heirs, and beneficiaries, a plan for the distribution of the proceeds; or (4) that the proceeds have not been distributed and the amount of those proceeds. Cal. Ins.Code § 13804(b).²

The statute also directs that, if the reports are not filed by the 210th day after the HVIRA becomes effective, the Commissioner "shall suspend the certificate of authority to conduct insurance business in the state...." Cal. Ins.Code § 13806. (emphasis added).

C. The Parties

Defendant is Harry Low in his capacity as the Commissioner of Insurance of the State of California. Plaintiffs are insurance companies licensed to do business in California. Four sets of plaintiffs originally filed separate complaints against then-Insurance-Commissioner Chuck Quackenbush. Those cases were consolidated as the present action and the plaintiffs now move jointly.

1. Gerling Global Reinsurance Corporation of America ("the Gerling plaintiffs")

The Gerling plaintiffs are five insurance companies licensed to do business in California. They are "related to" or "affiliated" with two German companies (Gerling-Konzern Allgemenine Versicherungs-AG ("GKA") and Gerling-Konzern Lebensversicherungs-AG ("GKL")) that issued policies in Europe during the proscribed time period.

GKA and GKL do not conduct any business in the State of California either directly or through the Gerling plaintiffs. None of the Gerling plaintiffs is in possession, custody or control of records pertaining to any insurance policies in force in Europe at any time between 1920 and 1945. Further, the Gerling plaintiffs contend that they have no means to compel such information from their German affiliates. GKA and GKL believe that if they produce the information demanded by the HVIRA, they will face criminal and civil penalties under German law.³

2. American Insurance Association and American Re-Insurance Co. (the "American plaintiffs")

The American plaintiffs are American Insurance Association ("AIA") and American Reinsurance Company ("AmRe"). AIA is a national trade association of insurers, some of whom do business in California. AIA principally represents American insurance companies that did not issue insurance policies in Europe during the relevant period and do not own or control any companies that did.⁴ Several members of AIA are, however, "related to" European companies that issued policies during the relevant time period. AIA's affected members contend that they lack the corporate authority to compel their related European companies to produce the information required by the HVIRA. Further, plaintiffs believe that the law of the related European company's country forbids the disclosure of the kind of information required by HVIRA.

AmRe is a large insurance company licensed to do business in California. Neither AmRe, nor any subsidiary or affiliate over which it has control, issued insurance policies that were in effect in Europe from 1920 to 1945. AmRe is subject to the HVIRA's reporting requirements because it is "related," through its parent corporation, Munich Re, to two European insurers that issued insurance policies in Europe from 1920 to 1945. AmRe contends that neither AmRe nor Munich Re has the corporate authority to compel these European companies to produce the information required by the HVIRA. Further, according to AmRe, Munich Re believes it would have...