Slavery Lawsuits Overruled

A federal appeals court Tuesday declared unconstitutional a 1999 California law giving World War II victims of forced labor the right to sue for compensation in state court.

The ruling had the effect of dismissing hundreds of cases filed by individuals who toiled as slave laborers in Nazi Germany and Japan. The plaintiffs included elderly Jews and American prisoners of war as well as Korean and Chinese civilians pressed into labor after being captured by the Japanese army.

The 3-0 decision by the U.S. 9th Circuit Court of Appeals in San Francisco, saying the federal government has exclusive province over foreign affairs, upheld rulings by federal trial judges in Los Angeles and San Francisco. The cases were consolidated for appeal.

Tuesday’s decision was diametrically at odds with a ruling issued just six days earlier by a California appeals court in Los Angeles, which upheld the state law written by former state Sen. Tom Hayden (D-Los Angeles).

A lawyer for some of the victims of slave labor said they would ask for a review of Tuesday’s ruling by a larger panel of 9th Circuit judges. Lawyers for the companies that the state court ruled against are expected to appeal that decision to the California Supreme Court.

Normally, federal appeals court decisions are not binding on a state court and vice versa, said USC constitutional law professor Erwin Chemerinsky.

He added, however, that for the moment the 9th Circuit decision ruling the California law unconstitutional “makes the state court decision practically irrelevant.” Ultimately, he said, the U.S. Supreme Court may have to resolve the dispute.

Foreign Policy at Issue

On Tuesday, the 9th Circuit held that permitting the plaintiffs to use California courts to seek damages would trample on U.S. foreign policy.

“California lacks the power to create a right of action for war-related claims against our former enemies and those [corporations] who operated in their territories,” Judge Stephen Reinhardt wrote for the majority.

While acknowledging that the workers suffered terrible abuses and that he came to the decision reluctantly, Reinhardt said the California law “runs afoul of the [Constitution’s] restriction on the exercise of foreign affairs powers by the state.

“The United States has already exercised its own exclusive authority to resolve the war [by treaties], including claims arising out of it,” added Reinhardt. “It did not choose, however, to incorporate into that resolution a private right of action against our wartime enemies or their nationals.”

The state statute gave California courts jurisdiction to hear World War II-era slave labor cases and allowed such claims to be filed until Dec. 31, 2010.

The law, which also permits victims’ heirs to sue, states that it was enacted because “California has a moral and public policy interest in assuring that its residents and citizens are given a reasonable opportunity to claim their entitlement to compensation for forced or slave labor performed prior to and during the Second World War.”

The 9th Circuit and the state appeals court decisions differ on two fundamental issues.

The federal court found that California had created an entirely new cause of action for the plaintiffs. In contrast, the state appeals court ruled that California had simply enacted a procedural statute that gave plaintiffs more time to file claims for uncompensated labor they could have lodged sooner but for a state statute of limitations.

“The claims of victims like [plaintiff Jae Wong] Jeong for unpaid labor and personal injuries existed prior to,” the 1999 law’s enactment “and would have been viable common law claims under California law, both when they arose and today, had they not been time-barred,” Judge Paul Boland wrote last week.

“Establishing a statute of limitations is a state prerogative,” Boland wrote, noting that the state periodically enacts laws extending statutes of limitations for filing lawsuits. For example, in the most recent term of the Legislature, California lawmakers enacted a statute lengthening the time that alleged victims of sexual abuse have to file their cases -- a law that stems from the Catholic Church pedophilia scandals.

But the 9th Circuit ruling said that regardless of existing state law, “the California Legislature chose to create a specific cause of action for persons subjected to slave labor by the Nazis and their allies and sympathizers.”

Ninth Circuit Judge Reinhardt emphasized that the 1999 law defines the class of plaintiffs who may sue, sets the method for measuring damages and “establishes a special rule regarding liability of corporations affiliated with the wrongdoer.”

The courts also clash over whether California improperly invaded the federal government’s exclusive preserve of foreign affairs.

“While neither the Constitution nor the courts have defined the precise scope of the foreign relations power that is denied to the states, it is clear that matters concerning war are part of the inner core of this power,” Reinhardt wrote.

“Of the 11 clauses of the Constitution granting foreign affairs powers to the President and Congress ... seven concern preparing for war, declaring war or settling war. Most of the Constitution’s express limitations on states’ foreign affairs powers also concern war,” Reinhardt said, adding that the 1999 law specifically “seeks to redress wrongs committed in the course of the Second World War.” Judges Barry Silverman and Stephen Trott joined the opinion.

In contrast, the California appeals court said the state law does not have an improper direct impact on U.S. foreign relations. The statute “does not involve the type of wide-ranging government scrutiny or criticism of a foreign government’s practices that the Supreme Court found objectionable,” when it overturned an Oregon law in 1968, the state court said.

California’s law “does not have more than an ‘incidental or indirect effect’ on the federal government’s current or future relations with any foreign country, such as Japan or Korea, because the statute applies retroactively, not prospectively, to claims against private companies,” Boland wrote. Judges Candace D. Cooper and Laurence D. Rubin joined the opinion.

Lawyers who represent the Japanese and German companies that prevailed in the 9th Circuit hailed Tuesday’s ruling. “It’s a victory for the supremacy of the Constitution over state laws in matters of affairs,” said San Francisco attorney David Balbanian, who represents Mitsui & Co. “These are painful cases, but in the end, it’s not feasible for us to have 50 different foreign policies.”

Hearing Requested

San Diego attorney Eric Isaacson, who represented some of the plaintiffs, said he would ask the 9th Circuit to rehear the case and take the California appeals court decision into consideration. “To say that the California Legislature interfered with foreign policy by passing this law is the equivalent of saying it interfered with religion when it passed the law extending the statute of limitations for cases involving child molestation.”

Plaintiff Josef Deutsch of Studio City, who alleges his brother was killed and he was “beaten mercilessly” by an employee of a German construction firm at Auschwitz, said he was “terribly upset” by the ruling. “I have had to live with this unjust murder for 59 years, and now I have to swallow this on top of it.”

Deutsch sued a German construction firm. The San Francisco plaintiffs sued a bevy of large Japanese corporations, including Mitsui, Japan Energy Corp., Mitsubishi Corp. and Nippon Steel Corp., all of which allegedly used slave laborers during World War II.