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Ruling May Threaten Restitution Efforts

A Supreme Court ruling striking down a California law to aid Holocaust survivors seeking compensation appears to have very broad implications that critics say could undo restitution efforts in all states of the union.

The Supreme Court this week reversed a California statute that was meant to pressure insurance companies to turn over lists of their Holocaust-era insurance policies. The law threatened to remove insurers’ license to do business in the state.

The high court’s ruling is angering Holocaust survivors and Jewish organizational leaders, who say it will prevent thousands from collecting on insurance policies from the Nazi era. The law was meant to help survivors and heirs who lacked proof or knowledge of their families’ policies.

The court decision could invalidate similar laws in five other states, said the former Clinton administration special envoy on Holocaust issues, Stuart Eizenstat. Several top legal scholars in the field agreed, adding that the ruling might also invalidate other state laws intended to help survivors and other victims of World War II seeking redress.

The legal experts, law professor Michael Bazyler and Burt Neuborne, who represented survivors in negotiations with European countries, both strongly criticized the decision, saying it goes further to protect insurance companies than any agreement struck between the United States and European countries.

By contrast, Eizenstat, the former deputy treasury secretary under Clinton who struck Holocaust restitution deals with European countries totaling $10 billion, said he was pleased with the decision, arguing that it was the job of the federal government to pressure the insurers. But he criticized the Bush administration for not doing more to pressure European insurance companies to publish the names of policyholders.

“We need more high level visibility from the Bush administration,” Eizenstat said.

Eizenstat acknowledged that the high court has, in effect, tied the hands of states that seek remedies for human rights violations previously addressed, even if inadequately, by the federal government. But he said that is how it should be.

“The [Supreme Court] is indicating that states have a much more limited capacity to act, even for the most justified Holocaust cases, when the U.S. government has already acted,” Eizenstat said.

This is the third restitution legal case in which a ruling was issued against survivors’ interests. The rulings by all three courts — two others were in 1999 slave labor cases in New Jersey federal court — are meant to inhibit the ability of states and courts to conduct their own foreign policy and thereby usurp the prerogative of the federal executive branch.

In the California case, the Supreme Court ruled by a 5-to-4 vote that the law was unconstitutional because it improperly interfered with America’s ability to conduct foreign policy. The Bush administration had raised this argument in a court brief, saying the law hurts the government’s effort to speak “with one voice” in international affairs.

Neuborne, a constitutional lawyer who has represented survivors in restitution agreements between the United States and European countries, strongly denounced the Supreme Court ruling. He said it protects European companies more comprehensively than was stipulated in the global restitution agreements struck between the United States and Germany, Austria and France. He claimed that those agreements only sought to dismiss lawsuits in American courts but did not preclude states from demanding lists of insurance policyholders.

“This [California law] wasn’t about going to court,” Neuborne said. “All California did was say there has to be some information.”

The ruling, Neuborne said, sets a dangerous precedent where similar agreements struck by the federal government would prohibit the states from seeking remedies not addressed in the agreement.

“European companies will now argue that whatever the states do — whenever they do something to help a Holocaust survivor — it somehow upsets the balance of the original negotiations and is inconsistent with the foreign policy of the United States,” Neuborne said.

Bazyler, a Whittier Law School professor and fellow with the Center for Holocaust Studies, said the court decision appears to have been based more on the current president’s approach to restitution than on actual agreements struck with European countries and the previous administration.

Bazyler cited this passage from the Supreme Court’s opinion as evidence of his argument: “The basic fact is that California seeks to use an iron fist where the president has consistently chosen kid gloves.”

The ruling, Bazyler said, “is saying now that even when the president implicitly — not explicitly — has taken a foreign policy

approach, or expressed a desire to have a certain foreign policy approach — at that moment the states must bow out.”

By contrast, Eizenstat praised the ruling and said that the $5 billion German restitution agreement with the United States was meant to put the California law to rest. “We agreed to support efforts to dismiss state actions” as part of the German agreement, he said.

Eizenstat pointed out that the deal required German insurance companies to pay some $275 million to survivors and their heirs. Other European insurers from Italy, France and Switzerland also agreed to pay out policies through the International Commission on Holocaust Era Insurance Claims.

The commission, headed by former American secretary of state Lawrence Eagleburger, has come under criticism by some Jewish groups for being ineffective. Although German insurers recently released a list of some 400,000 names, Eizenstat said they had dragged their feet for two years while the administration stood silently by. With the dismissal of the law, Eizenstat said, the onus falls squarely on the Bush administration to hold the companies’ feet to the fire to publish a complete list of names.

Spokesmen for the international commission and for European insurance companies were pleased with the decision. Insurance companies maintain that many of their records have been destroyed since the Nazi era and that their country’s privacy laws prohibit them from turning over policies without a client’s consent.

Other states with laws that apply pressure to insurance companies to publish policy lists include Washington, Minnesota, Texas, Maryland and, to a lesser extent, New York. Although passed into law, they have not been put into effect. Other state laws that could be affected include those that permit slave labor lawsuits and others that extend the statute of limitations for suits brought by victims of forced labor by the Axis Powers. Both have come under attack, but the latter has been the only recourse for American prisoners of war to sue Japanese companies. The court decision imperils it further, according to Neuborne and Eizenstat.

Lawmakers, attorneys and some Jewish organizations have pledged to continue the fight to pressure companies to disclose insurance policies. Federal legislation aimed at pressuring insurers has been introduced by Democratic Rep. Henry Waxman of California, Republican Rep. Mark Foley of Florida and Republican Senator Norm Coleman of Minnesota. Waxman said in a statement that he had signed up 50 co-sponsors for the House bill and that he believed the court’s ruling would spur congressional action.

John Garamendi, the California insurance commissioner, said he will join Waxman’s effort and “encourage in all ways” the European subsidiaries doing business in California to publish policies. The Jewish Council for Public Affairs said in a press release that it would join the congressional effort. The Simon Wiesenthal Center decried the court decision.

Lawyers suing the Italian insurance firm Generali in a New York court said the high court decision would not hurt their case because unlike the German insurers, Generali was never part of a global agreement. One lawyer involved in the case, Bob Swift, denounced the decision: “It will have an adverse impact on the regulatory and insurance structure that tries to regulate the conduct of foreign carriers doing business in different states.”

Survivors say that California’s law to disclose lists of policyholders would have helped survivors obtain the evidence they need to file a claim.

“If a list was public, then maybe, maybe I could have found my name,” said Roman Rakover, a survivor living in Los Angeles who has vivid prewar memories of paying insurance premiums to Generali. “Now I have nothing.”

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