U.S. Courts Rejects California Law on Insurance Claims for Armenians

August 24, 2009

A federal appeals court invalidated a California law Thursday that allowed heirs of Armenians killed in the Turkish Ottoman Empire nearly a century ago to seek payment on the life insurance policies of dead relatives.

The 9th U.S. Circuit Court of Appeals in San Francisco said the law amounted to unconstitutional meddling in U.S. foreign policy.

It based its 2-1 ruling on a 2003 U.S. Supreme Court decision that struck down another California law designed to help Holocaust survivors collect on Nazi-era insurance policies.

The federal government does not recognize the mass killings of Armenians during World War I as genocide, but the California Legislature did in 2000 when it enacted the disputed law.

About half of the people of Armenian descent living in this country reside in California.

Lawyer Brian Kabateck, who represents Armenian-American heirs, plans to appeal.

“The ruling is wrong. It’s a disaster,” Kabateck said. “The one million Armenians that live in California today have been told by the court that even the use of the word ‘genocide’ by a government is illegal.”

If the ruling is not set aside, it would prevent Armenian heirs from claiming inheritances and prohibit California and other states from marking the anniversary of the onset of the ethnic bloodshed that claimed the lives of up to 1.5 million Armenians between 1915 and 1919 in what is now eastern Turkey, Kabateck said.

He alleges European banks and insurers illegally retained assets valued in 1915 at about $15 million, a sum worth substantially more at today’s value.

The California Legislature passed the law giving heirs of Armenians who died or fled to avoid persecution until the end of next year to file claims for old bank accounts and life insurance policies.

Class-action lawsuits brought by Armenian descendants in California and other states led to a $20 million settlement with New York Life Insurance Co. in 2005 and a $17 million settlement the same year with French life insurer AXA.

William Werfelman, a spokesman for New York Life, said the company had no intention of trying to get back any of the money it paid out under the 2005 settlement.

“By acting honorably, and in keeping with our company values of humanity and integrity, New York Life made many friends in the Armenian community and we cherish these friends,” Werfelman said.

Thursday’s ruling reversed a lower court judge who refused to dismiss another class-action suit against the German life insurance companies.

Turkey long has denied the loss of so many Armenian lives constituted genocide and instead describes the deaths as resulting from civil unrest that accompanied the collapse of the Ottoman Empire.

The appeals court agreed with the German companies that California’s policy improperly conflicted with the federal government’s foreign policy aims.

Neil Soltman, the lawyer who represented the German insurance companies that prevailed in the case, said his clients had stood to lose in payouts to Armenian-Americans in California. Soltman said it was not clear the companies ever sold life insurance policies to victims of the Ottoman Empire violence.

“We are very pleased with the decision. We think it is entirely consistent with recent Supreme Court cases and 9th Circuit cases which have held that California and other states should not be passing legislation that deals with questions of foreign affairs,” he said.

The court recounted successful efforts by former presidents Bill Clinton and George W. Bush to defeat congressional legislation that would have recognized an Armenian genocide.

U.S. Rep. Adam Schiff, who as a state assemblyman co-wrote the law that was overturned by the 9th Circuit, was perplexed by the court’s reasoning.

“You have a group of people that has a government that hasn’t had the will to recognize the genocide and as a result of that failing, are being told they don’t have valid insurance claims,” he said.

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