American Insurance Association v. Garamendi

Brief Fact Summary.

Insurance companies sued the state of California for infringing on the United States foreign policy regarding reparations to Holocaust Victims.

Synopsis of Rule of Law.

Federal law preempts state law if federal and state law conflict.

Facts.

Germany and the United States entered into an agreement whereby Germany agreed to make reparations to Holocaust victims. The United States made agreements with Austria and France not to interfere with International Commission on Holocaust Era Insurance Claims (ICHEIC) efforts to make reparations to Holocaust victims. California, however, required any insurance company that conducts business in California to disclose insurance policies that existed between 1920 and 1945 under the Holocaust Victim Insurance Relief Act (HVIRA). Insurance companies argued that the federal law preempted state law, and the district court granted summary judgment to the plaintiffs. The court of appeals reversed and the Supreme Court granted certiorari.

Issue.

Whether federal preempts state law if federal and state law conflict?

Held.

Reversed. The HVIRA is preempted by the ICHEIC. State laws should not undermine federal policy.

Dissent.

(Ginsburg, J.) None of the agreements made by the federal government touch on disclosure and the failure for the President to explicitly state a policy on disclosure should allow the HVIRA to stand.

Discussion.

Federal law will always preempt state law where a state enacts legislation that conflicts with federal law. For preemption to stand at its strongest, a clear conflict must exist. The federal government made clear negotiations with the ICHEIC and the HVIRA undermined those negotiations by requiring that foreign insurance companies disclose more information than required by the ICHEIC. The HVIRA is preempted by federal policy.