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On Sept. 22, 1997, 67-year-old Rudy Rosenberg sat down in front of a group of state insurance commissioners and told the following story: In March or April of 1942, a pair of insurance agents came to his family’s home in Brussels. The agents came from the Winterhur insurance company with a special offer for his father, Hilel — buy an insurance policy and pay half the premium now, and the other half in a year. “At the time I thought it was very nice of them that someone was willing to insure us, even though we were doomed at the time,” Rosenberg told the commissioners. “Of course, those were the thoughts of a 12- year-old boy who didn’t necessarily realize how callous they were.” Before they could make the second payment, the Rosenbergs spent 27 months in a basement hiding from genocide. They eventually fled to New York. A half-century later, Rosenberg found himself wondering what became of the policy. He isn’t alone. On Wednesday, the U.S. Supreme Court will hear arguments over a California law designed to make it easer for Rosenberg and thousands like him to find out if they are owed money on long-lost insurance policies. What may stand in their way is one of the more unusual cases in the Supreme Court’s jurisprudence: a Cold War-era ruling on an anti-CommunistOregon probate law that Supreme Court justices had worried at the time might hasten World War III. Lawyers for the insurance industry argue that California’s law — requiring insurers doing business in the state to disclose details of policies sold in Europe between 1920 and 1945 — meddles in foreign affairs in the same troublesome way as the Oregon probate law. “The California legislature passed the [Holocaust law] in an open and deliberate effort to second-guess and modify the results of complex international negotiations,” wrote Mayer, Brown, Rowe & Maw partner John Sullivan, representing the insurance companies. “The premise of this state legislation — facilitation of litigation — is directly contrary to the negotiated approach taken by federal officials.” If the Supreme Court relies on the Oregon precedent to decide American Insurance Association v. Low, 02-277, as the Office of the Solicitor General is urging, the president could end up with broad powers to upend state laws — and potentially litigation — aimed at foreign companies. The government says the California law interferes with its right to speak on matters subject to international negotiations “with one voice.” It argues that the law has more than an incidental or indirect effect on foreign affairs, the threshold established in the Oregon case. But a lawyer for the state, Frank Kaplan of Alschuler Grossman Stein & Kahan, says the Holocaust Victims Insurance Restitution Act doesn’t interfere with the foreign policy goals of the United States and has another purpose — allowing California insurance consumers to make informed choices about insurers. In that respect, he argues, the law is similar to any other regulatory requirement. “We don’t want companies in this state that have stonewalled elderly Holocaust survivors, because if they can stonewall them they can stonewall anyone,” Kaplan said. COLD WAR RELIC? The foreign-affairs doctrine first emerged in 1968′s Zschernig v. Miller, 389 U.S. 429. The Cold War was heating up, and Oregon passed a law preventing heirs living in communist countries from claiming property rights in Oregon unless Oregonians had the same rights in THOSE communist countries. Which, of course, they didn’t — as Oregon judges made clear in anti-communist diatribes dressed up as rulings. Though the law didn’t conflict with any federal statute or treaty, the Supreme Court struck it down anyway. The court held, in essence, that Oregon could not make an official habit of antagonizing the communist world, since, if the Soviet Union were to attack, that would have very bad consequences for the other 49 states. Zschernig has been called a Cold War relic, and in the 35 years since it was decided the Supreme Court has never squarely relied on it. But the solicitor general’s office is asking it to do just that to overturn California’s law. “This case arises out of an attempt by a single state to extend its regulatory authority into other nations, thereby undermining the foreign policy of the United States,” lawyers from the State Department and the SG’s office argue in their brief. The government argues that the Holocaust occurred during an international conflict, and that the responsibility of dealing with any claims arising out of war belongs to the executive branch. Enacted in 1999, the California law requires any insurer doing business in California to turn over records of insurance policies issued between 1920 and 1945, or have their license to do business in the state revoked. The insurance companies counter that not only is California interfering with an international agreement, but that compliance would require the companies to violate European privacy laws. Some history is in order. For years, Holocaust victims who inquired about life and property insurance policies were met with closed doors and professions of ignorance. Some were even told that the policy benefits had been collected by the Nazis and were therefore deemed paid. The United States became a hotbed of Holocaust insurance litigation in the 1990s. Congress convened hearings, and the U.S. State Department, in an effort to resolve claims for the victims and bring “legal peace” to the multinational insurance companies, helped create the International Commission on Holocaust Era Insurance Claims. Several hundred insurance companies have now pledged billions for claims. Around the same time, individual states began enacting their own laws. California’s law is comparatively benign — it simply asks for information. Florida’s law called for treble damages on the claims; it was struck down by the Eleventh Circuit. Meanwhile, victims, and some in Congress, became troubled by the ICHEIC’s inability to get insurance companies to turn over the names of policyholders. Because of the slow pace in unearthing policies, the deadline for filing claims was recently extended until September. The ICHEIC relies on insurers to comb through policies and identify those that may have been sold to victims of the Holocaust — a task critics say the companies are ill-equipped to do. Simply looking at a name on a policy does not tell you whether the policyholder was a Holocaust victim, said Leslie Tick, a lawyer with the California Department of Insurance. “The companies didn’t have a big red ‘Jew’ stamped on the policies,” she said. State insurance commissioners and Jewish groups have weighed in on the California law’s behalf, saying it will speed the process of identifying claimants. Tick says the case has nothing to do with foreign affairs. “It’s not anything like Zschernig. It’s not criticizing any foreign government.” In 2000, the U.S. Supreme Court struck down a Massachusetts law that barred state companies from doing business with Burma — but the decision wasn’t based on Zschernig. The U.S. Supreme Court has also ruled that the president can shut down entire lines of litigation in the interest of foreign affairs. In 1981 the Supreme Court upheld then-President Jimmy Carter’s decision to block all lawsuits seeking Iranian assets during the hostage crisis. Carter wanted the hostages returned safely. But Kaplan says this case is vastly different from Dames & Moore v. Regan, 453 U.S. 654, a case which Chief Justice William Rehnquist said “touched fundamentally on the manner in which our Republic is governed.” “It’s clearly not the same situation as now, where there’s no crisis existing,” Kaplan said. The government argues, though, that there is something of a crisis. The solicitor general’s office warned the Supreme Court that because of the war in Iraq and German Chancellor Gerhard Schroeder’s opposition to it, the relationship between Germany and the U.S. isn’t as solid as it used to be, and California shouldn’t be allowed to make it worse. Peter Spiro, an international law expert at Hofstra University School of Law, said the case is big in terms of international law. But he added that the situation isn’t as serious as the one presented in Zschernig. “I don’t think [the California law] poses any threat to international foreign relations,” Spiro said. “If Germany has a problem with what California does, they can go talk to the governor.” Others worry that a broad reading of Zschernig would give the federal government veto power over state laws that apply to foreign companies — a big concern in an era of globalization. For example, if Mercedes-Benz objected, could state vehicle-emissions standards be struck down? “Are you banned from suing because your wine was bad, if the French get upset that their wine is being criticized?” asks Lieff Cabraser Heimann & Bernstein associate Scott Nealy, who has worked extensively on Holocaust-era and World War II slave labor litigation. “The Supreme Court pays attention to questions like this. It’s a principle without limits.”

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