Ninth Circuit: Armenian Heirs May Seek Life Insurance of Victims of Ottoman Empire

American heirs of Armenians killed during the early 1900s "Armenian genocide" in the Ottoman Empire can seek to collect payments from life insurance policies bought by those relatives, a federal appeals court ruled, reversing its earlier decision.

California law extends the statute of limitations until 2010 for claims arising out of life insurance policies issued to "Armenian Genocide victims," according to the latest decision by the Ninth Circuit U.S. Court of Appeals.

The main issue was whether the California law conflicted with a clear federal executive policy. "We conclude there is no express federal policy forbidding states to use the term 'Armenian Genocide,'" Circuit Judge Harry Pregerson held in writing the 2-1 decision. California code is not pre-empted by federal law, he wrote. "California's effort to regulate the insurance industry is well within the realm of its traditional interests."

Nothing in the California law operates to limit the proper defendants "nor does it limit standing to any particular group," he also ruled.

In August 2009, a divided three-judge panel of the Ninth Circuit had decided the law was pre-empted by U.S. policy that doesn't recognize the mass killings from 1915 to 1923, as genocide (BestWire, Aug. 25, 2009). The 2009 ruling also reversed earlier legislative and court approvals that would have granted the American descendants standing to sue foreign companies -- in particular, three German corporations listed as defendants: Victoria Versicherung, Ergo Versicherungsgruppe and parent company Munich Re.

The 2009 decision "had produced a lot of public outcry" so the plaintiffs asked for and received a rare rehearing with the three judges, said Brian Kabateck, the attorney who represents the Armenian heirs.

Neil Soltman, the attorney for the defendant companies, including Munich Re, said one judge" decided to reconsider and change her vote from the August 2009 decision, referring to Judge Dorothy W. Nelson.

Nothing new was presented to the court, Soltman said. The decision, however, means the plaintiffs can continue to try to collect the money. They never indicated how many policies they have or their value, Soltman said.

The class-action lawsuit involves a few hundred plaintiffs and about $1 million is at issue, said Kabateck, noting that figure is in 1915 dollars.

Kabateck called the latest ruling "a big decision that transcends the life insurance case but can be heralded by American Armenians for recognizing that states can acknowledge the Armenian genocide and makes laws concerning the Armenian genocide."

In the decision, Pregerson upheld a California federal district court's earlier order denying Munich Re's motion to dismiss.

The next step is deciding whether the defendants appeal to the entire Ninth Circuit or the U.S. Supreme Court, Soltman said. "We haven't decided which avenue we are going to take."

In 2000, then-Calif. Gov. Gray Davis had signed the law that allows victims of Armenian genocide and their heirs to sue insurance companies to recover delinquent claims. The Ottoman Empire is accused of killing more than 1.5 million men, women and children of Armenian heritage. The law was similar to one allowing Holocaust victims and their heirs to sue insurers in California that may have European affiliates or parent companies that owe outstanding claims (BestWire, Oct. 5, 2000).

In another case in 2004, New York Life Insurance Co. agreed to settle a multinational class-action lawsuit, paying $20 million to more than 2,500 descendents of those who died (BestWire, Nov. 14, 2006).

The Turkish government disputes the historical accounts, and some countries -- including the United States, United Kingdom, and Israel -- do not formally recognize the period as a genocide. However, the period is acknowledged as a genocide by the governments of Canada, Germany, France, Italy, Belgium, the Netherlands, Russia, and Greece, as well as the vast majority of U.S. states (BestWire, Nov. 14, 2006).

Munich Reinsurance Co. currently has a Best's Financial Strength Rating of A+ (Superior).

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])