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IN RE ASSICURAZIONI GENERALI S.P.A.

October 14, 2004.

IN RE: ASSICURAZIONI GENERALI S.p.A. HOLOCAUST INSURANCE LITIGATION. This Disposition Applies to All Actions.


The opinion of the court was delivered by: MICHAEL MUKASEY, Chief Judge, District

OPINION AND ORDER

Plaintiffs in twenty separate actions have sued Assicurazioni Generali S.p.A. ("Generali"), an Italian insurer that wrote insurance policies in Europe in the years before and during World War II.*fn1 The gravamen of the actions is that Generali failed to pay benefits following the death of the policy holders or damage to their property during the German campaign of genocide known as the Holocaust. Plaintiffs, assertedly the policy beneficiaries or their surviving family members, have advanced numerous claims seeking damages for Generali's nonpayment of benefits, as well as ancillary claims predicated on other alleged misconduct. The claims arise under the statutes and common law of New York, Wisconsin, Florida, and California, as well as customary international law.*fn2 A list of the claims is set forth in the Appendix at the end of this opinion.

  Generali previously moved to dismiss on grounds of forum non conveniens and contractual forum selection. In connection with that motion, Generali argued, inter alia, that the balance of conveniences required dismissal of the actions in favor of the International Commission on Holocaust Era Insurance Claims ("ICHEIC"), a private commission established by several European insurance companies (including Generali), certain nongovernmental Jewish organizations, the State of Israel, and domestic state insurance regulators, to resolve unpaid Holocaustera insurance claims. I denied Generali's motion by opinion and order dated September 25, 2002, finding, with respect to the application to dismiss the actions in favor of ICHEIC, that that body is an inadequate alternative forum for litigation of plaintiffs' claims. See In re Assicurazioni Generali S.p.A. Holocaust Insurance Litig., 228 F. Supp. 2d 348, 355-58 (S.D.N.Y. 2002) (hereinafter, "Generali I"). Familiarity with Generali I is assumed for present purposes.*fn3

  With the court's permission, Generali now moves to dismiss or strike, and/or for judgment, on various additional grounds. In light of the Supreme Court's decision in American Insurance Association v. Garamendi, 539 U.S. ___, 123 S. Ct. 2374 (2003), it appears that the laws supporting litigation of plaintiffs' benefits claims are preempted by a federal Executive Branch policy favoring voluntary resolution of Holocaust-era insurance claims through ICHEIC. Plaintiffs' ancillary claims, in turn, are not actionable because it appears that they do not allege any cognizable injury other than that caused by Generali's non-payment of benefits, redress for which is committed to ICHEIC. Accordingly, Generali's motion to dismiss is granted with respect to all actions. I.

  A. Facts in Garamendi

  At issue in Garamendi was the constitutionality of a California statute, the Holocaust Victim Insurance Relief Act of 1999 ("HVIRA"), which imposed disclosure requirements on all insurers operating in that state that sold insurance policies to persons in Europe between 1920 and 1945. 123 S. Ct. at 2383-84 (citing Cal. Ins. Code Ann. § 13804(a) (West Cum. Supp. 2003)). HVIRA required each such insurer to report to the California insurance commissioner how many policies it had issued during the relevant period, the current status of each policy, and the names of the beneficiaries, and directed the insurance commissioner to place the information in a central public registry. Id. (citing Cal. Ins. Code Ann. §§ 13803, 13804(a)). The mandatory penalty for default was suspension of the insurer's license to do business in the State. Id. (citing Cal. Ins. Code Ann. § 13806).

  The Garamendi plaintiffs, an insurance industry trade association and several insurance companies, sued to enjoin enforcement of HVIRA, arguing, inter alia, that the statute interfered with the foreign policy of the United States, implemented by the Executive Branch, as expressed principally although not exclusively in certain executive agreements between the President and the leaders of Germany, France, and Austria. Id. at 2386. These agreements were the result of efforts at the national level to achieve a mediated settlement of numerous Holocaust-related lawsuits filed in this country's courts against companies doing business in Germany during the Nazi era. Id. at 2381.

  The Court's discussion of the executive agreements focused primarily on the agreement with Germany, the Agreement Concerning the Foundation "Remembrance, Responsibility and the Future" (the "German Foundation Agreement"). Pursuant to that agreement, the German government and German companies undertook to contribute 10 billion deutschmarks to the German Foundation, a fund used to compensate persons "who suffered at the hands of German companies during the National Socialist era." Id. at 2381 (quoting German Foundation Agreement, July 17, 2000, U.S.-F.R.G., 39 Int'l Legal Materials ("I.L.M.") 1298, 1298 (2000)). In exchange, the United States government (the "Government") agreed to file in all cases involving Holocaust-era claims against German companies a statement of interest expressing the view that "it would be in the foreign policy interests of the United States for the Foundation to be the exclusive forum and remedy for the resolution of all asserted claims against German companies arising from their involvement in the National Socialist era and World War II." Id. at 2382 (quoting German Foundation Agreement, 39 I.L.M. at 1303). Although the Government declined to guarantee that its foreign policy interests would "in themselves provide an independent legal basis for dismissal," it agreed to tell courts "that U.S. policy interests favor dismissal on any valid legal ground." Id. (quoting German Foundation Agreement, 39 I.L.M. at 1304). The Government pledged also to use its "best efforts, in a manner it considers appropriate," to persuade state and local governments to respect the German Foundation as the exclusive mechanism for resolving Holocaust-era claims against German companies. Id. (quoting German Foundation Agreement, 39 I.L.M. at 1300, 1303-04).

  As to insurance claims specifically, the United States and Germany "agreed that the German Foundation would work with the [ICHEIC]," and Germany stipulated that such claims would be processed in accordance with procedures negotiated with ICHEIC. Id. at 2382. In a supplemental agreement, the German Foundation agreed to set aside funds for claims against German insurers approved by ICHEIC, to contribute additional sums to a humanitarian fund administered by ICHEIC, and to work with German insurers that had joined ICHEIC to publish lists of holders of insurance policies issued by German companies who may have been Holocaust victims. Id. at 2383 (citations omitted).

  The German Foundation Agreement served as the model for similar agreements with France and Austria, although the agreement with France did not address separately the matter of insurance claims. Id. at 2383 & n. 3.*fn4

  B. The Court's Ruling

  The Court ruled that HVIRA was preempted by an Executive Branch policy favoring voluntary resolution of Holocaust-era insurance claims through ICHEIC.

  In reaching this conclusion, the Court began by describing the federal government's supremacy over the States in conducting the Nation's foreign policy and, within the federal government, the President's predominant role in formulating that policy. Id. at 2386 ("There is . . . no question that at some point an exercise of state power that touches on foreign relations must yield to the National Government's policy. . . . Nor is there any question generally that there is executive authority to decide what that policy should be."). Consistent with this allocation of power in the realm of foreign affairs, the Court had upheld in previous cases the President's authority to make executive agreements with other countries that settled individual claims filed against foreign governments.

 
Making executive agreements to settle claims of American nationals against foreign governments is a particularly longstanding practice. . . . Given the fact that the practice goes back over 200 years to the first Presidential administration, and has received congressional acquiescence throughout its history, the conclusion "[t]hat the President's control of foreign relations includes the settlement of claims is indisputable."
Id. at 2387 (quoting United States v. Pink, 315 U.S. 203, 240 (1942) (Frankfurter, J., concurring) (additional citations omitted). The Court reasoned that this executive power to settle claims against foreign governments extends also to claims brought against foreign companies because drawing "a sharp line between public and private acts . . . in defining the legitimate scope of the Executive's international negotiations would hamstring the President in settling international controversies." Id. The Court thus concluded that "[g]enerally, valid executive agreements are fit to preempt state law, just as treaties are. . . ." Id. at 2387-88 (citing United States v. Belmont, 301 U.S. 324, 327 (1937); Pink, 315 U.S. at 223).

  The Court next observed that resolving Holocaust-era insurance claims is a matter "well within the Executive's responsibility," inasmuch as the claims implicated the Nation's foreign affairs. Id. at 2390.

 
Since claims remaining in the aftermath of hostilities may be "sources of friction" acting as an "impediment to resumption of friendly relations between the countries involved," . . . there is a longstanding practice of the national Executive to settle them in discharging its responsibility to maintain the Nation's relationships with other countries. . . . The issue of restitution for Nazi crimes has in fact been addressed in Executive Branch diplomacy and formalized in treaties and executive agreements over the last half century, and although resolution of private claims was postponed by the Cold War, securing private interests is an express object of diplomacy today, just as it was addressed in agreements soon after the Second World War. Vindicating victims injured by acts and omissions of enemy corporations in wartime is thus within the traditional subject matter of foreign policy in which national, not state interests are overriding, and which the National Government has addresssed.
Id. (citations omitted).
  Turning to the constitutionality of HVIRA, the Court held that the statute was preempted by an executive policy reflected in the executive agreements with Germany, Austria and France, and in various statements by Executive Branch officials. With respect to Holocaust claims generally, the Court found in the "negotiations toward the three settlement agreements," a "consistent Presidential foreign policy" of "encourag[ing] European governments and companies to volunteer settlement funds in preference to litigation or coercive sanctions." Id. at 2390. With respect to insurance claims specifically, the Court found that "the national position, expressed unmistakably in the executive agreements signed by the President with Germany and Austria, has been to encourage European insurers to work with ICHEIC to develop acceptable claim procedures, including procedures governing disclosures of policy information." Id. (citing provision in German Foundation Agreement declaring German Foundation to be "exclusive forum" for demands against German companies and agreeing to have insurance claims resolved through procedures negotiated with ICHEIC; and same in agreement with Austria). The Court observed further that "this position, of which the agreements are exemplars, has also been consistently supported in the high levels of the Executive Branch," and cited statements by Deputy Treasury Secretary Stuart Eizenstat, the Government's principal representative on Holocaust issues in the Clinton administration, and Ambassador Randolph Bell, Special Envoy for Holocaust issues in the Bush administration, to the effect that ICHEIC is the only effective means of processing unpaid Holocaust-era insurance claims quickly and completely and thus should be considered the "exclusive remedy" for resolving such claims. Id. at 2390-91. Here, the Court explicitly rejected the view, expressed by the dissent, that Executive Branch statements by sub-Cabinet level officials are insufficient as a basis for determining the Executive Branch's position. See id. at 2391 n. 13 (noting that "[t]here is no suggestion that these high-level executive officials were not faithfully representing the President's chosen policy, and there is no apparent reason for adopting [a] `nondelegation' rule to apply within the Executive Branch"). In contrast to the executive policy favoring voluntary settlement of Holocaust-era claims through ICHEIC, the Court found that the California legislature, in enacting HVIRA, "ha[d] taken a different tack of providing regulatory sanctions to compel disclosure and payment, supplemented by a new cause of action for Holocaust survivors if the other sanctions should fail." Id. at 2391. By reducing the President's economic and diplomatic leverage, HVIRA's disclosure requirement "`compromise[d] the very capacity of the President to speak for the Nation with one voice in dealing with other governments' to resolve claims against European companies arising out of World War II." Id. at 2391-92 (quoting Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 381 (2000)). Although HVIRA and the Executive Branch shared the goal "of obtaining compensation for Holocaust victims," the statute was "an obstacle to the success of the National Government's chosen `calibration of force' in dealing with the Europeans using a voluntary approach." Id. at 2392 (quoting Crosby, 530 U.S. at 380). The Court concluded:
The basic fact is that California seeks to use an iron fist where the President has consistently chosen kid gloves. We have heard powerful arguments that the iron fist would work better, and it may be that if the matter of compensation were considered in isolation from all other issues involving the European allies, the iron fist would be the preferable policy. But our thoughts on the efficacy of the one approach versus the other are beside the point, since our business is not to judge the wisdom of the National Government's policy; dissatisfaction should be addressed to the President or, perhaps, Congress. The question relevant to preemption in this case is conflict, and the evidence here is "more than sufficient to demonstrate that the state Act stands in the way of [the President's] diplomatic objectives."
Id. at 2393 (quoting Crosby, 530 U.S. at 386) (alteration in Garamendi).

  II.

  The Supreme Court's decision in Garamendi compels dismissal of plaintiffs' claims seeking damages for Generali's non-payment of policy benefits. The dispositive force of the ruling is most evident in relation to plaintiffs' benefits claims arising under state Holocaust statutes, like HVIRA, designed to foster litigation of Holocaust-era insurance claims. Cf. Tex. Atty. Gen. Op. GA-0116, 2003 WL 22451383, at *6 (Oct. 20, 2003) (concluding on basis of Garamendi that Texas statute featuring "virtually identical provisions" to HVIRA "interferes with the President's conduct of foreign affairs, and is thus preempted by the United States Constitution").*fn5 However, the Court's decision requires dismissal also of the benefits claims arising under generally applicable state statutes and common law as well as customary international law. Litigation of Holocaust-era insurance claims, no matter the particular source of law under which the claims arise, necessarily conflicts with the executive policy favoring voluntary resolution of such claims through ICHEIC. The salient fact for present purposes is that plaintiffs seek to obtain redress for Generali's non-payment of policy benefits by filing lawsuits in this country's courts; the legal justification for such claims is irrelevant. Cf. Boyle v. United Technologies Corp., 487 U.S. 500, 508 (1988) (noting that in some cases where uniquely federal interest displaces state law, "the entire body of state law applicable to the area conflicts and is replaced by federal rules") (citing Clearfield Trust v. United States, 318 U.S. 363, 366-67 (1943)). In short, following Garamendi, it appears that plaintiffs cannot use the courts to obtain recovery of benefits due under Holocaust-era policies, regardless of the theory of recovery.

  There is little question that an executive policy can have such broad preemptive effect over the laws on which plaintiffs' benefits claims are based. As discussed above, the Court observed in Garamendi that resolving Holocaust-era insurance claims is a matter "well within the Executive's responsibility for foreign affairs," and that that responsibility includes the power to settle claims against foreign companies pending in this country's courts. 123 S. Ct. at 2387, 2390. More generally, the Supreme Court has endorsed repeatedly, including in Garamendi, the notion of executive primacy in the sphere of foreign affairs. See, e.g., Garamendi, 123 S. Ct. at 2386 (noting that "the historical gloss on the `executive Power' vested in Article II of the Constitution has recognized the President's `vast share of responsibility for the conduct of our foreign relations") (quoting Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 610-11 (1952) (Frankfurter, J., concurring)); Sale v. Haitian Centers Council, Inc., 509 U.S. 155, 188 (1993) (the President has "unique responsibility" for the conduct of "foreign and military affairs"); Dep't of the Navy v. Egan, 484 U.S. at 518, 529 (1988) (noting "the generally accepted view that foreign policy [is] the province and responsibility of the Executive") (quoting Haig v. Agee, 453 U.S. 280, 293-94 (1981)); Chicago & Southern Air Lines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, 109 (1948) ("The President . . . possesses in his own right certain powers conferred by the Constitution on him as Commander-in-Chief and as the Nation's organ in foreign affairs. . . ."); United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 320 (1936) (1936) (referring to "the very delicate, plenary and exclusive power of the President as the sole organ of the federal government in the field of international relations — a power which does not require as a basis for its exercise an act of Congress"). Certain plaintiffs argue that giving such broad preemptive effect to the executive policy favoring ICHEIC resolution is improper because "the wholesale destruction of [their] claims implicates constitutionally protected due process, property, and contract rights." (Surreply of Plaintiffs Lantos, More, Pioro, Sorter, Ungar, Weiss-Friedman, and Zada (hereinafter, "Surreply of Plaintiffs Lantos et al."), at 7-8) They point to a footnote in Garamendi stating that executive preemption of state law is "subject . . . to the Constitution's guarantees of individual rights." (Id. at 7 (quoting Garamendi, 123 S. Ct. at 2387 n. 9)). To be sure, it is a "well-established" principle in preemption doctrine that "`no agreement with a foreign nation can confer power on the Congress, or on any other branch of Government, which is free from the restraints of the Constitution.'" Boos v. Barry, 485 U.S. 312, 324 (1988) (quoting Reid v. Covert, 354 U.S. 1, 16 (1957)). However, to assert this general principle, without more, is merely to raise the question of whether executive preemption of state laws on which plaintiffs rely causes constitutional harm; it does not settle that inquiry in plaintiffs' favor. In view of the President's settled authority to extinguish legal claims that have a bearing on the Nation's foreign relations, discussed above, plaintiffs' objection fails. Thus, whatever the `individual rights' limitations on executive preemption intended by the Garamendi footnote, no such rights are implicated in holding that the state laws under which plaintiffs' benefits claims arise are preempted by the executive policy favoring ICHEIC resolution.*fn6

  Nor is there any serious doubt that the executive policy favoring ICHEIC resolution of Holocaust-era insurance claims extends to claims against Generali in particular. The Garamendi opinion refers generally to "European insurers" in describing the policy at issue, see 123 S. Ct. at 2390 ("As for insurance claims in particular, the national position . . . has been to encourage European insurers to work with the ICHEIC to develop acceptable claim procedures. . . ."), and nowhere distinguishes between Generali and other European insurers that wrote Holocaust-era policies. This is significant because Generali was one of the petitioners in Garamendi and the respondent, the California insurance commissioner, referred to Generali repeatedly in its briefs and at oral argument. (See excerpts from Respondent's Briefs and Transcript of Oral Argument, Generali's Response to Plaintiffs' Surreply Memoranda Ex. 3, passim) Moreover, Generali arguably is the most prominent insurance company defendant in Holocaust-era lawsuits filed in U.S. courts. See Michael Bazyler, Trading with the Enemy: Holocaust Restitution, the United States Government, and American Industry, 28 Brooklyn J. Int'l Law 683, 705 (2003) (describing Generali as "[t]he European insurance company with the most notoriety in the field of Holocaust-era restitution"); Michael Bazyler, Nuremberg in America: Litigating the Holocaust in United States Courts, 34 U. Rich. L. Rev. 1, 97 n. 388 (2000) ("Because Generali was the largest seller of insurance to Jews prior to World War II, it is listed as either the lead or only defendant in most of the Holocaust-era insurance lawsuits filed in the United States. It has now become well-known in the arena of human rights litigation and among the American Jewish community."). In view of Generali's involvement in Garamendi and its significant role in Holocaust-era litigation generally, the lack of any articulated "Generali exception" in the Court's opinion strongly suggests that the executive policy favoring ICHEIC resolution applies equally to Generali and other European insurers that wrote Holocaust-era policies. Additional support for the conclusion that the executive policy encompasses claims against Generali may be found in Executive Branch statements promoting ICHEIC resolution as the exclusive remedy for all Holocaust-era insurance claims. For example, in a November 2000 letter from Deputy Secretary Eizenstat to ICHEIC Chairman Eagleburger, the Deputy Secretary acknowledged Generali's agreement to make a contribution to ICHEIC for payment of Holocaust-era insurance claims and "commend[ed] the ICHEIC's untiring efforts to provide a measure of justice to Holocaust survivors and their heirs." (Nov. 28, 2000 Eizenstat Ltr., Generali's Response to Plaintiffs' Surreply Memoranda Ex. 1) In the same letter, the Deputy Secretary observed:
The U.S. government has supported ICHEIC since its inception in 1998 and believes it should be recognized as the exclusive remedy for resolving all insurance claims that relate to the Nazi era. ICHEIC helps further the United States' interest in maintaining good relations with Israel and with Western, Central and Eastern European nations from which many of the [sic] those who suffered during the Nazi era and World War II come.
(Id.) This letter, expressing no hint of a distinction between Generali and other European insurers, suggests that claims against Generali are within the scope of the executive policy.

  This conclusion is buttressed by other unequivocal pronouncements of the executive policy cited in the Garamendi opinion, see 123 S. Ct. at 2390-91 (citing, inter alia, Hearing before the Committee on House Banking and Financial Services, 106th Cong., 2d Sess., 173 (2000) (Eizenstat statement that "[t]he U.S. Government has supported [the ICHEIC] since it began, and we believe it should be considered the exclusive remedy for resolving insurance claims from the World War II era"); Hearings on H.R. 2693 before the Subcommittee of Government Efficiency, Financial Management and Intergovernmental Relations of the House Committee on Government Reform, 107th Cong., 2d Sess., 24 (2002) (Bell statement to the same effect); Hearing on the Legacies of the Holocaust before the Senate Committee on Foreign Relations, 106th Cong., 2d Sess., 23 (2000) (Eizenstat testimony that a company's participation in ICHEIC should give it "`safe haven' from sanctions, subpoenas, and hearing relative to the Holocaust period"),*fn7 as well as numerous submissions to this court. (See, e.g., Sept. 16, 2003 Hearing before the House Committee on Govt. Reform, Generali's Response to Plaintiffs' Surreply Memoranda Ex. 2, at 3 (Bell testimony that "ICHEIC process enjoys today the full support of survivors' groups, of major Jewish-American NGOs, and of the Government of Israel, as well as of the Administration"); Nov. 13, 2001 Ltr. from James Bindenagel, Department of State Special Envoy for Holocaust Issues, to William Shernoff, Surreply of Plaintiffs Lantos et al., Ex. B, at 1 ("As a matter of policy, the United States Government believes that the resolution of Nazi-era restitution and compensation matters, including those related to insurance, should be handled through dialogue, negotiation, and cooperation, rather than subject victims and their families to the prolonged uncertainty and delay that accompany litigation. Our longstanding policy of support for ICHEIC is based on U.S. interests in obtaining a measure of justice for victims, while preserving and protecting our political and economic relations with our European friends and allies and the State of Israel."); Jun. 18, 2001 Ltr. from Deputy Secretary Richard Armitage to Eagleburger, Simshauser Decl. in Support of Generali's Motion to Dismiss, filed in Anderman action, Ex. 2 ("I am pleased to affirm that the United States ...


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