United States: Alien Tort Case Developments: Three Recent Decisions

Last Updated: September 25 2014
Article by Sarah A. Altschuller

In July, we posted about two recent decisions by federal appellate courts that sought to define the parameters of the "touch and concern" standard established by the Supreme Court in its 2012 decision in Kiobel v. Royal Dutch Petroleum.

Since that earlier post, several other federal courts have issued decisions in cases filed against U.S.-based corporations pursuant to the Alien Tort Statute ("ATS"). These latest decisions make clear, as one judge noted in her opinion, that Kiobel "drastically limits the viability of ATS claims based on conduct occurring abroad."

Decision in In re: South African Apartheid Litigation

In August, the District Court for the Southern District of New York dismissed plaintiffs' claims against Ford and IBM in In re: South African Apartheid Litigation. Plaintiffs alleged that the companies had aided and abetted tortious conduct by South Africa's apartheid regime.

The court's decision dismissing the claims against Ford and IBM was issued in response to plaintiffs' motion for leave to amend their complaints against the American defendants. Plaintiffs had sought to demonstrate that defendants had engaged in actions that "touched and concerned" the United States with sufficient force so as to rebut the presumption against extraterritoriality established in Kiobel. The court had previously dismissed claims against all remaining foreign defendants in this case, Rheinmettal AG and Daimler AG, finding that plaintiffs had "failed to show that they could plausibly plead that [the companies'] actions...touch and concern the United States with sufficient force" so as to overcome the hurdle established by the Kiobel decision.

In denying plaintiffs' motion to amend, Judge Scheindlin observed that Kiobel "drastically limits the viability of ATS claims based on conduct occurring abroad." The opinion also noted that in Balintulo v. Daimler (2d Cir. 2013), an earlier decision in the apartheid litigation, the Second Circuit had held that "corporate citizenship" in the United States is an "irrelevant factual distinction" in assessing the parameters of the "touch and concern" standard when all relevant conduct occurred outside the United States.

In Balintulo, the Second Circuit had also rejected the notion that a theory of vicarious liability by which defendants could be held liable for "actions taken within South Africa by their South Africa subsidiaries" was not recognizable under the ATS. Judge Scheindlin therefore found that "Balintulo requires plaintiffs to plead 'relevant conduct within the United States' that itself 'give rise to a violation of customary international law.'"

Ultimately, the court concluded that any alleged international law violations asserted by plaintiffs were by Ford's and IBM's South African subsidiaries. The Court distinguished the facts of the case from those in Al Shimari v. CACI, in which the Fourth Circuit found that plaintiffs' claims against a U.S. government contractor that provided certain interrogation-related services to the U.S. military in Iraq did "touch and concern" the United States with sufficient force to overcome the presumption against extraterritoriality. The court found that the facts in Al Shimari "involve much greater contact with the United States government, military, citizens, and territory." In this case, however, the court found that

any alleged violations for international law norms was inflicted by the South Africa subsidiaries over whom the American defendant corporations may have exercised authority and control. While corporations are typically liable in tort for the actions of their putative agents, the underlying tort must itself by actionable. However, plaintiffs have no valid cause of action against the South African subsidiaries...because all of the subsidiaries' conduct undisputedly occurred abroad.

Ultimately, the court found that the fact that "plaintiffs are left without relief in an American court is regrettable" but mandated by the Supreme Court's decision in Kiobel and the Second Circuit's decision in Balintulo.

Decision in Doe v. Cisco Systems, Inc.

In early September, the District Court for the Northern District of California dismissed plaintiffs' claims against Cisco Systems in case that alleged that the company knowingly assisted human rights abuses against Falun Gong practitioners in China. Specifically, plaintiffs alleged that the company providing Chinese authorities with substantial assistance through the creation of a customized security system, "the Golden Shield", knowing that that system would be utilized in the commission of human rights abuses, including torture and forced conversion.

The court found that Cisco's alleged actions did not "touch and concern" the United states because plaintiffs could not show that the human rights abuses committed against them in China were "planned, directed, or committed in the United States or directed against the United States." While plaintiffs offered evidence demonstrating that Cisco "customized, marketed, designed, and implemented" the security system that was used in China, the court found that this did not sufficiently demonstrate that the human rights abuses that occurred in China touched and concerned the United States with sufficient force to overcome the presumption against extraterritoriality, even if the company's actions occurred with knowledge that Falun Gong members were subject to persecution in China.

The court also found that plaintiffs had not alleged sufficient facts to find that Cisco could be liable for aiding and abetting abuses in China. The court stated that even if Cisco "knew that the Golden Shield was used by Chinese authorities to apprehend individuals, including Plaintiffs, there is no showing that Defendant also knew that Plaintiffs might then be tortured or forcibly converted."

Decision in Doe v. Nestle USA

Finally, in another early September decision, the Ninth Circuit Court of Appeals, in contrast to the two decisions discussed above, ruled that plaintiffs should have an opportunity to amend their complaint in a case against Nestle USA, Archer Daniels Midland, and Cargill. Plaintiffs allege that the companies aided and abetted child slavery in the Ivory Coast by providing certain assistance to Ivorian farmers from which the company sourced cocoa. The Ninth Circuit held that such an amendment should be allowed unless it is clear that the amendment would be futile. The court observed that plaintiffs "contend that part of the conduct underlying their claims occurred within the United States" and that it would therefore be "imprudent to attempt to apply and refine the touch and concern test where the pleadings before us make not attempt to explain what portion of the conduct underlying the plaintiffs' claims took place within the United States."

Beyond its consideration of the touch and concern standard, the Ninth Circuit also found that corporate liability given the specific allegations in the case, noting that "the prohibition against slavery is universal" and therefore could be asserted against corporate defendants.

In addition, the Ninth Circuit also evaluated whether plaintiffs had properly alleged the elements of an aiding and abetting claim. The court noted that appellate courts in the United States have split as to whether plaintiffs must allege only that defendants had knowledge that their acts would facilitate the commission of an offense of whether plaintiffs must show that defendants acted with the purpose of facilitating the offense. The court ultimately found that "we need not decide whether a purpose or knowledge standard applies" because, reading the allegations in the light most favorable to the plaintiffs, "plaintiffs' allegations satisfy the more stringent purpose standard."

Specifically, the court found that "the allegations explain how the use of child slavery benefited the defendants and furthered their operational goals in the Ivory Coast, and therefore, the allegations support the inference that the defendants acted with the purpose to facilitate child slavery." The court also that "[a]ccording to the complaint, the defendants had enough control over the Ivorian cocoa market that they could have stopped or limited the use of child slave labor by their suppliers" and that "[v]iewed alongside the allegation that the defendants benefited from the use of child slavery, the defendants' failure to stop or limit child slavery supports the inference that they intended to keep that system in place."Finally, the court found that the allegation that the companies had lobbied against U.S. federal legislation that would have required certification of chocolate as "slave free" served to "corroborate the inference of purpose."

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