Gerling Global Reinsurance Corp. v. Gallagher

Decision Date02 October 2001
Docket NumberCORPORATION-U,No. 00-16542,00-16542
Citation267 F.3d 1228
Parties(11th Cir. 2001) GERLING GLOBAL REINSURANCE CORPORATION OF AMERICA , d.b.a. GERLING GLOBAL REINSURANCES. BRANCH, , GERLING GLOBAL LIFE REINSURANCE COMPANY, etc., et al., Plaintiffs-Appellees , v. TOM GALLAGHER, Defendant-Appellant
CourtU.S. Court of Appeals — Eleventh Circuit

Before CARNES and MARCUS , Circuit Judges, and PROPST*, District Judge .

MARCUS, Circuit Judge:

Defendant Tom Gallagher (the "Commissioner"), in his capacity as the Insurance Commissioner of the State of Florida, appeals the district court's entry of summary judgment against him on the Plaintiffs' challenge to the constitutionality of Florida's Holocaust Victims Insurance Act, Fla. Stat. § 626.9543 (the "Act"). Plaintiffs -- several insurers operating in Florida with corporate affiliations to German insurers who may have issued policies to Holocaust victims prior to 1945 -- brought this suit alleging that the Act violates the Due Process Clause and other provisions of the U.S. Constitution. The district court agreed that the Act violates Due Process because it effectively regulates a subject and transactions that have an insufficient connection with Florida. The court therefore granted summary judgment in Plaintiffs' favor, denied the Commissioner's cross-motion for summary judgment, and entered a narrow injunction relieving the Plaintiffs of any consequences stemming from their refusal to comply with certain disclosure obligations created by the Act and imposed via subpoenas. The Commissioner now appeals, disputing the district court's legal analysis. Because we agree that this Act, as applied to these Plaintiffs on these facts, violates Due Process, we affirm the district court, and uphold the limited remedy provided by that court. We do not address the Plaintiffs' other objections to the Act, and do not decide whether other provisions of the Florida Insurance Code may in some circumstances authorize this kind of inquiry into the affairs of an insurer's affiliate.

I.

This action concerns Florida's Holocaust Victims Insurance Act, which took effect in 1998. The sole explicit purpose of the Act is to ensure that "potential and actual insurance claims of Holocaust victims and their heirs and beneficiaries be expeditiously identified and properly paid and that Holocaust victims and their families receive appropriate assistance in the filing and payment of their rightful claims." Fla. Stat. § 626.9543(2). To that end, the Act includes a number of provisions affecting the rights of German insurers and their German insureds under policies issued in Germany between 1920 and 1945.1

The Act contains two key sets of provisions. The first set (the "reporting provisions") imposes a reporting requirement upon insurers doing business in Florida ("Florida insurers"). Specifically,

[a]ny insurer doing business in this state shall have an affirmative duty to ascertain to the extent possible and report to the department within 90 days after the effective date of this section and annually thereafter all efforts made and results of such efforts to ascertain:

(a) Any legal relationship with an international insurer that issued an insurance policy to a Holocaust victim between 1920 and 1945, inclusive.

(b) The number and total value of such policies.

(c) Any claim filed by a Holocaust victim, his or her beneficiary, heir, or descendant that has been paid, denied payment, or is pending.

(d) Attempts made by the insurer to locate the beneficiaries of any such policies for which no claim of benefits has been made.

(e) An explanation of any denial or pending payment of a claim to a Holocaust victim, his or her beneficiary, heir, or descendant.

Id. § 626.9543(7). As the text explains, a Florida insurer has a duty to report not only regarding its own Holocaust-era policies, but also regarding the policies of companies with which it has or had any "legal relationship." The statute defines "legal relationship" as "any parent, subsidiary, or affiliated company with an insurer doing business in this state." Id. § 626.9543(3).2 Violation of the reporting requirement, or any other requirement imposed by the Act, subjects an insurer to "an administrative penalty of $1,000 per day for each day such violation continues." Id. § 626.9543(9).

The second set of provisions (the "claims recovery provisions"), as interpreted by the Commissioner in an administrative rule, requires Florida insurers to pay all valid Holocaust-era policy claims asserted against them as well as all valid claims asserted against any of their parents, subsidiaries, or corporate affiliates. Fla. Stat. § 626.9543(5); Fla. Admin. Code 4-137.010(6). The Act requires payment of all claims established under "a reasonable, not unduly restrictive, standard of proof." Fla. Stat. § 626.9543(5)(b). The Act also declares inapplicable to Holocaust-era policy claims any foreign statute of limitations, and creates a new ten-year statute of limitations for the presentation of these claims. Id. § 626.9543(6).

In addition, the Act creates a private cause of action for individuals harmed by a violation of the Act, and authorizes the recovery of treble damages, costs, and attorney's fees. Id. § 626.9543(10). This provision establishes a remedy for any person alleging non-payment on a Holocaust-era policy by any insurer doing business in Florida or by any parent, subsidiary, or corporate affiliate of such an insurer. Accordingly, a Florida insurer could be liable for treble damages, attorney's fees, and costs based upon the non-payment of a Holocaust-era policy by a separate foreign company that it does not control, but with which it happens to be affiliated.

II.

Plaintiffs are six related insurers licensed to do business in Florida: Gerling Global Reinsurance Corp. of America f/k/a Constitution Reinsurance, a New York company; Gerling Global Reinsurance -- U.S. Branch, a German company; Gerling Global Life Reinsurance, a California company; Gerling Global Life Insurance, a Canadian company; Gerling America Insurance, a New York company; and Constitution Insurance f/k/a Gerling Global, a New York company. There is no suggestion that any Plaintiff issued any policies to Holocaust victims prior to 1945; only one of the Plaintiffs was in existence, and that insurer did not become affiliated with the Gerling group until much later.

Although not corporate alter egos and apparently not direct parents or subsidiaries, the six Plaintiffs are affiliates of two German insurers, Gerling-Konzern Lebensversicherungs-AG ("GKL") and Gerling-Konzern Allgemeine Versicherungs-AG ("GKA"), who issued Holocaust-era policies in Germany. GKL and GKA are German companies based in Cologne; they are not registered to do business in Florida, they have no offices or employees in the state, and there is no evidence that these German insurers have any independent contacts with Florida other than to the extent that some current Holocaust-era policyholders or their beneficiaries may currently reside in the state. There is no record evidence that the Plaintiffs have possession, custody, or "control" -- in the legal or practical sense -- over the records or activities of GKL or GKA.

The trigger for this lawsuit was a set of subpoenas sent, under authority of the Act and the implementing Rule, to five of the Plaintiffs by the Florida Insurance Commissioner. The subpoenas are expansive, calling upon the Plaintiffs to produce an array of records regarding any Holocaust-era policies issued not only by the Plaintiffs themselves, but also by their German affiliates. The Plaintiffs had previously advised the Florida Department of Insurance that none of them had issued any policy that was in force in Europe between 1920 and 1945, and that they could not provide information regarding GKL and GKA because they had no direct knowledge of the activities of their German affiliates. The Plaintiffs did attach copies of reports voluntarily supplied by GKL and GKA addressing some of the matters covered by the Act's reporting requirement; both GKL and GKA reported that, to the extent relevant records remain, there is no indication of any unpaid claims relating to the Holocaust era.

The Commissioner thought those responses inadequate. In the subpoenas, therefore, he sought a wide range of documents, including copies of policies, reinsurance contracts, checks, and financial statements, covering essentially all of the German affiliates' European transactions during a twenty-five year span early last century. The subpoenas also defined the subpoenaed companies as including as well "any and all other entities that . . . now have or have in the past had any organizational, managerial, or operational connection with [them], including but not limited to as a parent company or as a subsidiary." The Commissioner then issued a press release asserting that the subpoenas were issued because the Plaintiffs had not fully complied with the Act.

Rather than contest the subpoenas, the Plaintiffs filed this lawsuit for declaratory and injunctive relief. The complaint seeks relief under 42 U.S.C. § 1983 based on the Act's alleged unconstitutionality. The Plaintiffs eventually moved for summary judgment in their favor; the Commissioner cross-moved for summary judgment in his favor.3

In an order dated November 11, 2000, the district court granted the Plaintiffs' motion and denied the Commissioner's cross-motion. 123 F. Supp. 2d 1298 (N.D. Fla. 2000). The court did so on the basis of one of Plaintiffs' asserted objections: denial of Due Process. Relying on our opinion in American Charities for Reasonable Fundraising Regulation, Inc. v. Pinellas County, 221 F.3d 1211 (11th Cir. 2000), the court initially explained that the Act "is subject to review under the jurisdictional...

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