The plaintiffs in Steinberg submitted claims to the ICHEIC under Holocaust era insurance policies issued by Assicurazioni Generali ("Generali"), an Italian insurer. They claimed the ICHEIC's claims handling guidelines were being used by insurers like Generali to diminish or deny valid claims. They objected to the ICHEIC's guidelines permitting the use of "negative evidence," which allegedly allowed claims to be denied if there was no evidence of an applicable policy in the insurer's files. The ICHEIC demurred successfully to the California complaint on the grounds that the claims under California's Unfair Competition Law and Civil Code Section 354.5 were preempted by United States foreign policy favoring the resolution of Holocaust era insurance claims through the ICHEIC.
The Court of Appeal affirmed. Justice Croskey, who wrote the opinion for the Court, said the preemption issue was governed by the United States Supreme Court's decision in American Ins. Assn. v. Garamendi (2003) 539 U.S. 396. In Garamendi, the Supreme Court held that California's Holocaust Victims Insurance Relief Act ("HVIRA"), which required insurers doing business in California to disclose information about Holocaust era policies, was preempted by the United States' foreign policy interest in encouraging settlement of Holocaust era insurance claims through the ICHEIC. This foreign policy was reflected in executive agreements signed by the President with the governments of Germany and Austria stipulating that insurers in those countries should use the ICHEIC's claims handling guidelines to process Holocaust era claims. HVIRA conflicted with U.S. foreign policy by requiring the disclosure of more information than required by the ICHEIC guidelines.
The Steinberg Court of Appeal held that California Civil Code Section 354.5, like HVIRA, imposed duties on European insurers beyond those of the ICHEIC, and was therefore preempted by U.S. foreign policy favoring the resolution of claims through the ICHEIC. In doing so, the Court rejected the plaintiffs' argument that no foreign policy interest was implicated because there was no executive agreement signed by the United States with Italy or Generali. To have preemptive effect, the specific interest of the United States does not have to be expressly set forth in an official agreement, so long as the interest is "reflected in" such an agreement. The United States government's policy favoring resolution of claims under the ICHEIC guidelines is reflected in its agreements with Germany and Austria. "[S]ubmitting the ICHEIC's claims procedures to review under California law would express a lack of respect due the Executive Branch in the diplomatic determination that Holocaust era insurance claims are to be resolved through the agreed-upon claim procedures of the ICHEIC.