Two insurance companies, New York Life Insurance Co. and AXA, S.A., previously agreed to settle the cases for $37.5 million, according to Brian Kabateck, an attorney for Movsesian and others.
The case, Movsesian vs. Victoria Verischerung, continued against two German insurance companies owned by a single parent company known as Munich Re.
Last year, the federal court panel said the lawsuit should be tossed out because only the federal government, not states, can craft policies that affect foreign affairs
But the court subsequently agreed to rehear the case, and on Friday, the panel voted 2-1 to reverse their 2009 decision.
Noting that Congress has several times failed to act on resolutions recognizing the Armenian Genocide — including a pending resolution authored by Rep. Adam Schiff (D-Burbank) — the court said the federal government has failed to establish a policy and the families are free to sue in state court.
"While some 40 states recognize the Armenian Genocide, the federal government has never expressed any opposition to any such recognition," Judge Harry Pregerson wrote in his majority opinion. "Considering…federal inaction in the face of explicit state support for such recognition, we cannot conclude that a clear, express federal policy forbids the state of California from using the term 'Armenian Genocide.'"
In his dissent, Judge David Thompson cited numerous comments from presidents of the United States from Ronald Reagan to Barack Obama acknowledging the atrocities. He said the federal government has effectively weighed in and that California law should be preempted.
Kabateck said the case has a far-ranging impact.
"This decision transcends the mere question of whether you can file a lawsuit relating to the Armenian Genocide," Kabateck said. "The 9th Circuit says states can redress the genocide and can enact laws regarding the genocide because the federal government has not occupied the field."
Neil Soltman, an attorney for the insurance firms, could not be reached Friday afternoon.
Zanku Armenian, a Glendale resident and a member of the Armenian National Committee of America advisory board, said the ruling should help spur Congress to act on the genocide recognition resolution.
"The 9th Circuit decision supports states' rights to speak truthfully about the genocide and allows them to pursue their claims," he said. "It is now time for the U.S. government to get aligned with the truth."