Tuesday, September 15, 2009
The U.S. Court of Appeals for the Ninth Circuit recently issued a decision holding that a California law intended to benefit victims of the Armenian Genocide is preempted by the federal "foreign affairs power" despite the fact that the U.S. Constitution does not expressly grant such a power to the federal government. See Movsesian v. Victoria Versicherung AG, No. 07-56722 (Aug. 20, 2009). The law at issue is California's Code of Civil Procedure, which extended the statute of limitations until 2010 for claims arising out of life insurance policies issued to victims of the Armenian Genocide who lived in the Ottoman Empire between 1915 and 1923 and who died, were deported, or escaped to avoid persecution during that period. Movsesian filed a class action seeking damages against Victoria and two other insurance companies claiming that he and other members of the class are persons of Armenian descent who claim benefits under policies issued by the defendant companies for breach of contract, unjust enrichment and related claims.
The Ninth Circuit held that the CA statute directly conflicts with the Executive Branch's foreign policy refusing to provide official recognition to Armenian Genocide and impinges on the federal government's ability to conduct foreign affairs. In reaching this conclusion, the court acknowledged that no international agreement existed that preempted the state law. Instead, the court ascertained a federal foreign policy from statements made by the Executive Branch to Congress opposing various proposed congressional resolutions recognizing the Armenian Genocide on the basis that such resolutions would interfere with the United States' efforts to bring peace and stability to the Middle East.
This decision is a significant extension of the Supreme Court's 2003 decision in Am. Ins. Assoc. v. Garamendi, which involved another CA law intended to force disclosure by insurance companies of information relating to claims by Holocaust victims. Garamendi recognized that presidential foreign policy may preempt state law, even if the absence of a controlling international agreement or federal statute. However, in Garamendi, the foreign policy was reflected in various sources, including an international executive agreement establishing a compensation fund for Holocaust victims. Thus, even though the executive agreement did not directly preempt CA state law, it at least reflected an express public policy. In Movsesian, there is no executive agreement, presidential proclamation, or federal statute which clearly expresses an official foreign policy. Rather, the Court's sole evidence of a federal foreign policy consisted of a series of letters to Congress from the Executive Branch. Thus, this case may come closer to recognizing an implied foreign affairs power than any that have previously been decided.