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California had cleared the way for Armenian Americans to collect on life insurance policies purchased by "Armenian genocide victims" in Ottoman Empire violence in the early 1900s. But the U.S. 9th Circuit Court of Appeals has decided the law is preempted by U.S. policy that doesn't recognize the mass killings from 1915 to 1918 as genocide.

The opinion 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 judges were primarily concerned with whether California's law encroaches on U.S. foreign-policy issues. "We conclude that it does, and accordingly, we hold that the California statute is preempted," read the 2-1 opinion.

"We're very pleased with the opinion," said Neil Soltman, the attorney for the defendant companies. "We think it is consistent with an increasingly long line of cases out of the Supreme Court and the 9th Circuit which have held that states may not use legislation to weigh in on questions relating to foreign affairs." He also said he'd never seen copies of policies demonstrating the plaintiffs insurance claims.

The California legislature had provided formal recognition that the Armenians killed during that period were victims of genocide, writing in its legislative findings: "During the period from 1915 to 1923, many persons of Armenian ancestry residing in the historic Armenian homeland then situated in the Ottoman Empire were victims of massacre, torture, starvation, death marches, and exile." But the federal government has not declared it a genocide. Congressional attempts seeking recognition have been blocked by more than one White House, citing foreign-relations reasons. Present-day Turkey, national heir to what was the Ottoman Empire, strongly opposes such a distinction.

There were other elements in the legal case, but the foreign-relations question was decided first. The majority judges, Dorothy W. Nelson and David R. Thompson, decided the California law "impermissibly impairs the president?s ability to speak with one voice for the nation in the realm of foreign affairs, and undermines his diplomatic authority."

"I thought the opinion was outrageous," said Brian Kabateck, an attorney representing the Armenian American plaintiffs in the case. "I thought the two judges in the majority not only got it wrong but got it way wrong -- incredibly wrong."

The court had relied on 2003 Supreme Court ruling that had tossed out a state law for insurance recoveries in World War II-era Holocaust cases. "They perverted it by saying that it applied to the Armenian genocide," Kabateck said.

The dissenting judge, Harry Pregerson, wrote of the majority claim that California had overstepped its interests: "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." He wrote, "There is no express federal policy forbidding California from using the term 'Armenian Genocide' in the course of exercising its traditional authority to regulate the insurance industry."

In 2000, then-Gov. Gray Davis had signed the law that would have allowed 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).

Though it wasn't considered an element in the legal case, according to written opinion, the court received a diplomatic letter from Turkey, expressing opposition to the California statute and asking the court to overturn it.

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).

Kabateck intends to file a petition to have the case reconsidered by the entire 9th Circuit. Barring that, he said he'd seek a Supreme Court review.

Soltman pointed out that achieving either is statistically unlikely. Kabateck countered, saying he understood the rarity of getting it reconsidered, but he said the legal question itself is a rarity. "This is a one-of-a-kind case."