State law in conflict with with federal foreign policy is incompatible with federal constitutional principles, the United States Court of Appeals for the Ninth Circuit confirmed in Movsesian et al. v. Victoria Versicherung AG et al., docket number 03-09407. Therefore, §354.4 of the California Code of Civil Procedure improperly interferes with the national government's power to conduct foreign affairs.

While the Turkish government denies the Armenian genocide, Congress has sought to recognize it, and the California statute seeks to provide redress to its victims by way of rules affecting the defendant insurance companies of Germany. To avoid conflict with the Turkish government, however, former United States presidents opposed congressional resolutions recognizing the Armenian genocide. These actions, the court concluded, formed an American foreign policy and stand in the way of state legislative recognition of the genocide.

Justice Pregerson's dissenting opinion does not perceive a conflict where no foreign policy explicitly prohibits the use of specific legislative action:

California's interest in ensuring that its citizens are fairly treated by insurance companies over which the State exercises jurisdiction is hardly a superficial one. The strength of this traditional state interest weighs against preemption in a case, such as the case before us, where there is doubt about the clarity of the conflict between state law and federal policy. Indeed, there is no conflict. I can find no evidence of any express federal policy forbidding states from using the term Armenian Genocide.