Judge Blocks Holocaust Victims Act

A federal judge on Friday temporarily blocked the state from forcing insurance companies to hand over lists of policies sold in Europe before World War II to assist Holocaust victims seeking compensation.

In a 34-page opinion, U.S. District Court Judge William B. Shubb in Sacramento said insurance companies had presented a compelling case that the state Holocaust insurance law, enacted in 1999, “interferes with the federal government’s control over foreign affairs.”

As a result, the judge ordered that California Insurance Commissioner Chuck Quackenbush not enforce the Holocaust Victim Insurance Relief Act before the court has an opportunity to render a final judgment on whether the law violates the U.S. Constitution.

“None of the plaintiffs deny that the Holocaust was a terrible atrocity,” Shubb wrote. “And none of the plaintiffs deny that the victims and their heirs and beneficiaries should be compensated . . . [but] this goal may not be achieved through unconstitutional means.”

The Legislature passed the law to help Holocaust survivors and heirs collect on claims that some insurers have been unwilling to pay. The law would allow state regulators to suspend the licenses of insurance companies that fail to honor valid claims by Holocaust survivors and the heirs of Jews murdered by the Nazis.

Assemblyman Wally Knox (D-Los Angeles), who wrote the law, and other advocates for Holocaust victims, believe the disclosure law was important because most survivors no longer have their policies. Others are heirs of those who perished in the Holocaust and may not be aware that their parents had ever purchased policies.

Knox said he was terribly disappointed in the federal court ruling.

‘This is a definitely a setback, not only to California’s law, but to any honest resolution of the international settlement negotiations,” Knox said. “California law has been one of the driving forces [behind] any honest international resolution.”

Linda Dakin-Grimm, an attorney for Winterthur International American Insurance Co., praised the ruling as a step toward resolving victims’ claims.

Winterthur and several other insurance companies argued that the federal government and international organizations are the proper agencies to settle any claims.

They contended that the state law was preempted when the U.S. and German governments opened negotiations to resolve the claims of Holocaust victims. The negotiations led to a $5-billion fund that would compensate victims of slave and forced labor and other claims.

Furthermore, they point out the efforts of the International Commission on Holocaust Era Insurance Claims to settle these cases. The commission, headed by former Secretary of State Lawrence Eagleburger, is a voluntary organization that includes insurers.

“This is actually a good decision for Holocaust victims,” Dakin-Grimm said. “I’m hoping it will not be inaccurately portrayed as an effort by the insurance industry to delay payment. Instead, it’s a decision that will assist the [international commission] in getting money to Holocaust victims more quickly.”

Frank Kaplan, an outside counsel representing the insurance commissioner, declined comment until he could analyze the judge’s ruling.