BILL ANALYSIS                                                                                                                                                                                                    Ó



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          ASSEMBLY THIRD READING
          AB 173 (Gatto)
          As Amended March 30, 2011
          2/3 vote.  Urgency 

           JUDICIARY           10-0                                        
           
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          |Ayes:|Feuer, Wagner, Atkins,    |     |                          |
          |     |Dickinson, Silva, Huber,  |     |                          |
          |     |Huffman, Jones, Monning,  |     |                          |
          |     |Wieckowski                |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
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           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 








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            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 








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          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" 








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          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 








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          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 


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