BILL ANALYSIS Ó AB 173 Page 1 ASSEMBLY THIRD READING AB 173 (Gatto) As Amended March 30, 2011 2/3 vote. Urgency JUDICIARY 10-0 ----------------------------------------------------------------- |Ayes:|Feuer, Wagner, Atkins, | | | | |Dickinson, Silva, Huber, | | | | |Huffman, Jones, Monning, | | | | |Wieckowski | | | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : Permits Armenian Genocide victims, as defined, or their heirs or beneficiaries, who are residents of this state, to file suit in a California court against certain insurers to recover proceeds due under specified insurance policies until December 31, 2016. Specifically, this bill : 1)Defines "Armenian Genocide victim" to include any person of Armenian or other ancestry living in the Ottoman Empire during the period of 1915 to 1923, inclusive, who died, was deported, or escaped to avoid persecution during that period. 2)Defines "insurer" to mean any insurance provider doing business in California, or that is otherwise subject to California jurisdiction, that sold insurance policies covering persons or property in Europe or Asia at any time between 1875 and 1923. 3)Permits, notwithstanding any other provision of law, an Armenian Genocide victim, or the heir or beneficiary of an Armenian Genocide victim, who resides in this state and has a claim arising out of an insurance policy or policies purchased or in effect in Europe or Asia between 1875 and 1923, to bring an action or continue a pending action in a California court, which shall be deemed the proper forum for that action until its completion or resolution. 4)Provides that any action described above shall not be dismissed for failure to comply with the applicable statute of limitation, provided the action is filed on or before December AB 173 Page 2 31, 2016. 5)Contains an urgency clause, allowing this bill to take effect immediately upon enactment. FISCAL EFFECT : None COMMENTS : The author introduced this bill to ensure that victims of the Armenian Genocide, and their heirs or beneficiaries, would be provided an opportunity to resolve their insurance claims on the merits. During the late nineteenth and early twentieth centuries, insurance companies marketed insurance policies to Armenians living in historic Armenia, then part of the Ottoman Empire. It is estimated that approximately 10,000 polices were sold at that time. From 1915 until 1923, most scholars agree, approximately 1.5 million Armenians were subject to forced marches, torture, and murder. Families were separated and those who were not killed were either deported or fled persecution. Although the number of persons residing in California who directly experienced the Armenian Genocide is of course dwindling, many heirs and beneficiaries entitled to proceeds under insurance policies purchased by the victims still reside in the state. Although many California families have sought to resolve these claims, the dislocation caused by war and diaspora has made it difficult for them to document that their family members were insured. Additionally, as the author of the original legislation noted, there is evidence that insurers demanded that the survivors produce death certificates, even though neither the Ottoman or Turkish governments ever issued death certificates for the hundreds of thousands of Armenian victims. Finally, even when families overcame these obstacles and gathered the necessary evidence and documents, they found that their claims were barred by a four-year statute of limitation on bringing claims for liabilities based on a written document. In order to address this problem, SB 1915 (Poochigian, Chapter 543, Statutes of 2000) gave victims, heirs, and beneficiaries of the Armenian Genocide until December 31, 2010, to bring their causes of action, even if those actions were otherwise barred by the applicable statute of limitation. Code of Civil Procedure (CCP) Section 354.4, the original statute extending the time for bringing actions to victims of AB 173 Page 3 the Armenian Genocide and their heirs, was one of a series of measures enacted between 1998 and 2002 that extended the statute of limitation for victims of wartime atrocities. All of these statutes permitted claimants to bring their actions until December 31, 2010. CCP Section 354.3 permits persons to bring claims to recover "Holocaust-era artworks" taken by the Nazis during World War II. CCP Section 354.5 permits victims of the Holocaust, or their heirs or beneficiaries, to bring claims based on insurance policies issued in Europe before 1945. CCP Section 354.6 permits victims of Nazi slave and forced labor programs to recover compensation for labor from any entity, or its successor in interest, who benefitted from that labor. All of these statutes have been successfully challenged on preemption grounds, although the ruling originally striking down the Armenian Genocide statute was subsequently reversed upon rehearing. ÝSee Von Saher v. Norton Simon Museum of Art of Pasadena (2010) 592 F.3d 954 (holding that CCP Section 354.3, on recovery of art, was preempted under the foreign policy field preemption doctrine); Steinberg v. International Commission on Holocaust Insurance Claims (2005) 133 Cal. App. 4th 944 (holding that CCP 354.5, on Holocaust-era insurance claims, was preempted by a federal policy favoring settlement of such claims through the International Commission on Holocaust Era Insurance Claims); Deutsch v. Turner Corp. (2003) 317 F.3d 1105 (holding that CCP 354.6, on slave labor, was preempted under foreign policy field preemption doctrine); Movsesian v. Victoria Versicherung AG (2009) 578 F.3d 1052 (holding that CCP 354.4, on Armenian Genocide insurance claims, was preempted by federal law); reversed upon rehearing, Movsesian v. Victoria Versicherung AG (Dec. 10, 2010) 629 F.3d 901; 2010 US App LEXIS 24225.] In its recent reversal on the Armenian Genocide statute, the 9th Circuit Court of Appeal distinguished its ruling from its prior holding in Deutsch v. Turner, the 2003 opinion that voided the slave labor compensation statute. In Deutsch, the 9th Circuit held that any state effort to create a private right of action for "war related injuries" intruded upon the federal government's "exclusive powers of matters related to war." The court distinguished the Armenian Genocide insurance cases, on the other hand, holding that these were private claims against private insurance companies, and therefore were not matters relating to war. Moreover, the post-World War I agreements created a commission to settle claims of "American citizens" AB 173 Page 4 against "the German government or German nationals." It did not cover claims by Armenian citizens of the Ottoman Empire, or their heirs, against private insurance companies. In addition, the court noted that the Legislature defined the period of the Armenian Genocide as extending from 1915 to 1923, revealing the Legislature's understanding that the genocide continued after the end of the War by five years, and even after the relevant post-war agreement by one year, and therefore claims arising as a result of the genocide could not have been included in agreements ending the war. Although the court did not expressly distinguish the latest case from Von Saher - the 9th Circuit ruling invalidated CCP 354.3 on recovery of Holocaust art - it did note that the Nazi art case also involved "field preemption" and a "matter of war," whereas the Armenian insurance actions were private claims in an area of traditional state concern. While one can distinguish rulings voiding the slave labor and Nazi art theft statutes, the Court's reversal of the Armenian Genocide insurance claims might, at first glance, suggest that CCP 354.5, relating to Holocaust insurance claims, could be also salvaged - since it too deals with "private" insurance claims and not strictly speaking "matters of war." However, in Steinberg v. Int'l Comm. on Holocaust Era Insurance Claims (2005), the 9th circuit found an express federal policy in a United States executive agreement with several European nations to the effect that all insurance- related claims should be processed through the International Commission on Holocaust Era Insurance Claims (ICHEIC). So even though the Nazi era insurance claims could also be seen as private matters and not "matters of war," the United States has nonetheless entered into an international agreement dealing expressly with Nazi-era insurance claims. There was no such international agreement that the United States signed pertaining to the Armenian Genocide insurance claims. With or without the contrary court rulings, the original statute would have expired by its own terms on December 31, 2010. However, it is possible that some claimants who intended to file an action before 2010, but who had still not done so by the time of the 2009 ruling striking down the statute, abandoned those actions after the first ruling. When the Court reversed itself on December 10, 2010, those claimants would have had only three AB 173 Page 5 weeks, assuming they were even aware of the ruling, to revive their abandoned causes of actions. Because many claimants may have abandoned their claims in reliance on the first ruling, it seems fair to give those persons additional time to re-file those claims. Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334 FN: 0000142