Posts Tagged USSC
Jesner v Arab Bank. Corporate culpability, the substantive question ignored in Kiobel, makes certiorari.
Thank you, Ludo Veuchelen, for alerting me to Adam Liptak’s reporting on Jesner v Arab Bank, in which certiorari was granted by the United States Supreme Court early April. The case may finally have us hear SCOTUS’ view on the question which led to certiorari in Kiobel but was subsequently ignored by the Court: whether corporations can be culpable for violation of public international law. ‘May’ is probably the keyword in the previous sentence.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 8, Heading 8.2.
Update 21 June 2016 see also application with respect to the extraterritorial impact of the US ‘Rico’ (anti-racketeering) Act in RJR Nabisco, Inc. V European Community.
In Ranza v Nike, the Court of Appeal for the ninth circuit confirmed the high hurdle to establish personal jurisdiction over foreign corporations in the US, following the Supreme Court’s decisions in Kiobel and Bauman /Daimler. Trey Childress has good summary here and I am happy largely to refer.
Loredana Ranza is a US citisen, resident in the EU (first The Netherlands; Germany at the time of the court’s decision). She seeks to sue against her Dutch employer, Nike BV, and its parent corporation, Nike inc. for alleged violation of federal laws prohibiting sex and age discrimination. The Dutch equality Commission had earlier found the allegations unfounded under Dutch law.
Of particular interest are the Court’s views on the attributability test /piercing the corporate veil following Daimler and Kiobel. The Court held (p.15 ff) that prior to Daimler, personal jurisdiction over the mother company could be established using either the agency or the alter ego test, with the former now no longer available following Daimler. Under the Agency test, effectively a type of abus de droit /fraus /fraud, plaintiff needed to show that the subsidiary performed services which were sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation’s own officials would undertake to perform substantially similar services. Daimler, the Court suggested in Ranza, held that the agency test leads to too broad a jurisdictional sweep. That leaves the alter ego test: effectively, whether the actions prima facie carried out by the subsidiary, are in fact carried out by the mother company for it exercises a degree of control over the daughter which renders that daughter the mother’s alter ego. Not so here, on the facts of the case: Nike Inc, established in Oregon, is heavily involved in Nike BV’s macromanagement, but not so ‘enmeshed’ in its routine management of day-to-day operation, that the two companies should be treated as a single enterprise for the purposes of jurisdiction.
For good measure, the Court also confirmed application of dismissal of jurisdiction on the basis of forum non conveniens.
764 F. 3d 129, Alien Tort Statute, alter ego, attributability, Comity, Corporate social responsibility, CSR, DaimlerChrysler, DaimlerChrysler v Bauman, daugther company, Extraterritoriality, FNC, Forum non conveniens, http://cdn.ca9.uscourts.gov/datastore/opinions/2015/07/16/13-35251.pdf, http://www.supremecourt.gov/opinions/13pdf/11-965_1qm2.pdf, https://www.law.cornell.edu/supremecourt/text/15-138?utm_source=@USSupremeCourt, Human rights, Jurisdiction, Kiobel, Mother company, Nike, Piercing the corporate veil, Regulation 1215/2012, Rio Tinto, RJR NABISCO, INC. v. EUROPEAN COMMUNITY, SC, United States Supreme Court, USSC
Doe v Nestle and Tiffany v China Merchants Bank et al: The concertina effect of the Alien Torts Statute
I may yet have to insert a special category ‘ATS’ in the ‘Categories’ on the right hand side of this blog. Distinguishing, and precedent application alike keep on stretching cq enforcing the USCC’s decision in Kiobel.
On the precedent side of the debate, Tiffany v China Merchants Bank et al , the US Second Circuit Court of Appeals took the application of Kiobel in Daimler as cue for a refusal of the recognition of Asset Restraints and Discovery Orders against a Bank with merely branch offices in New York. The Bank’s sites of incorporation and principal places of business are all outside of the US. With reference to Daimler, the Court held that there is no basis on which to conclude that the Bank’s contacts in New York are so ‘continuous and systematic’ judged against their national and global activities, that they are ‘essentially at home’ in the State.
The Ninth Circuit Court of Appeals in Doe v Nestle reversed the lower court’s decision to dismiss ATS claims and arguably indeed adopted an extensive view of ‘aiding and abetting’ within the context of ATS: ‘Driven by the goal to reduce costs in any way possible, the defendants allegedly supported the use of child slavery, the cheapest form of labor available. These allegations explain how the use of child slavery benefitted 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.’ : these allegations were considered to even meet the supposedly stricter ‘purpose’ test. Defendant’s market power and control over operations abroad seemed to have played an important role.
Applicants have now been allowed to re-plead given the intervening judgments by the USSC (the Doe v Nestle case has been running for a while)- watch this space, yet again.
Alien Tort Statute, Asset Restraints and Discovery Orders, Comity, Corporate social responsibility, CSR, DaimlerChrysler, DaimlerChrysler v Bauman, Doe v Nestle, Extraterritoriality, http://cdn.ca9.uscourts.gov/datastore/opinions/2014/09/04/10-56739.pdf, Human rights, Inc. v. Bank of China, Jurisdiction, Kiobel, Nestle, Piercing the corporate veil, Recognition, Recognition and enforcement, Regulation 1215/2012, Rio Tinto, SC, SCOTUS, Tiffany, Tiffany (NJ) LLC v. China Merchants Bank and Gucci America, Touch and concern, United States Supreme Court, USSC
‘Apartheid’ dismissed and Al-Shimari distinguished: The bar is high for the ATS’ touch and concern test
For readers unfamiliar with earlier posts on the Alien Torts Statute and its role in the corporate social responsibility debate, the title of this piece may sound like gobbledygook. Review of the interim ruling in Apartheid probably helps. As I noted in that piece, Scheindlin USDJ instructed counsel to brief on the ‘touch and concern’ test put forward by the Supreme Court in Kiobel, with the warning that they must show in particular that the companies concerned acted ‘not only with the knowledge but with the purpose to aid and abet the South African regime’s tortious conduct as alleged in these complaints’.
Having now reviewed those extra briefs, she has decided that the high bar set by the USCC in Kiobel was not met in current case. She distinguished (at p.18) the case from Al-Shimari, for the alleged violation of international law was inflicted by the South African subsidiaries of the US defendant corporations, over whom defendants may have exercised control however control alone, it transpires, is not enough to create sufficient link with the US to meet the Kiobel test.
Applicants had previously already argued that critical policy level decisions were made in the US, and that the provision of expertise, management, technology and equipment essential to the alleged abuses came from the US. This has now, so it would seem, been further backed up by detailed facts however even these facts did not graduate so to speak the US companies’ involvement from management and effective control to ‘aiding and abetting’ as Scheindlin USDJ had instructed counsel to show.
Similarish issues are at stake in trying to subject activities taking place outside the EU, to EU law by virtue of companies’ EU headquarters.
02-md-1499, Alien Tort Statute, Apartheid, Comity, Corporate social responsibility, CSR, DaimlerChrysler, DaimlerChrysler v Bauman, Extraterritoriality, Human rights, In re South African Apartheid Litigation, Jurisdiction, Kiobel, Lungisile Ntsebeza et al v Ford General motors and IBM, Piercing the corporate veil, Regulation 1215/2012, Rio Tinto, SC, SCOTUS, Touch and concern, United States Supreme Court, USSC
Regular or indeed occasional readers of the blog will have been following developments in US case-law since SCOTUS issued its ruling in Kiobel. In Al Shimari v. Caci, the fourth circuit Court of Appeal held in early July that plaintiffs’ claims “touch and concern” the territory of the United States with sufficient force to displace the presumption against extraterritorial application of the Alien Tort Statute: that is the test which SCOTUS set in Kiobel.
Due to a shortage of trained military interrogators, the US hired civilian contractors to interrogate detainees at Abu Ghraib, Iraq – context will be known to readers. During the time period relevant to the civil action, those private interrogators were provided exclusively by CACI Premier Technology, Inc. (CACI), a corporation domiciled in the US. Plaintiffs in the case are foreign nationals who allege that they were tortured and otherwise mistreated by American civilian and military personnel while detained at Abu Ghraib. Plaintiffs allege that CACI employees “instigated, directed, participated in, encouraged, and aided and abetted conduct towards detainees that clearly violated the Geneva Conventions, the Army Field Manual, and the laws of the United States.”
The Court of Appeal noted among many things that SCOTUS in Kiobel broadly stated that the “claims,” rather than the alleged tortious conduct, must touch and concern United States territory with sufficient force, suggesting in the view of the CA that courts must consider all the facts that give rise to ATS claims, including the parties’ identities and their relationship to the causes of action. It found that the claims do concern US territory, pointing to the fact that:
‘the plaintiffs’ claims allege acts of torture committed by United States citizens who were employed by an American corporation, CACI, which has corporate headquarters located in Fairfax County, Virginia. The alleged torture occurred at a military facility operated by United States government personnel.
In addition, the employees who allegedly participated in the acts of torture were hired by CACI in the United States to fulfill the terms of a contract that CACI executed with the United States Department of the Interior. The contract between CACI and the Department of the Interior was issued by a government office in Arizona, and CACI was authorized to collect payments by mailing invoices to government accounting offices in Colorado. Under the terms of the contract, CACI interrogators were required to obtain security clearances from the UnitedStates Department of Defense. Finally, the allegations are not confined to the assertion that CACI’s employees participated directly in acts of torture committed at the Abu Ghraib prison. The plaintiffs also allege that CACI’s managers located in the United States were aware of reports of misconduct abroad, attempted to “cover up” the misconduct, and “implicitly, if not expressly, encouraged” it.‘
(The case nb is not home and dry: whether the claims present non-justiciable political questions still needs to be determined by the district court).
Many out there must be writing PhDs on related issues: a moving target indeed!
Abu Ghraib, Al Shimari v. CACI, Alien Tort Statute, Apartheid, ATS, Comity, Corporate social responsibility, CSR, extraterritorial, Extraterritoriality, Fourth Circuit, Human rights, Iraq, Jurisdiction, Kiobel, SC, SCOTUS, United States Court of Appeals for the Fourth Circuit, United States Supreme Court, USSC
Update 12 January 2017 Bristol-Myers, if certiorari will be granted, will further define the limits to the Daimler case-law. Notice how Bristol-Myers, in their certiorari submission, emphasise predictability for the defendant: a sentiment often found in EU private international law.
Update 6 January 2017 a new case has just been launched in New York, against Germany, re its colonial past in Namibia, which one imagines will test both sovereign immunity and ATS.
(Update 3 September 2014: case dismissed end of August). Previous Update 25 July 2014: Docket still shows active case but no further development).
(Update on linked development: in April 2015, SCOTUS denied certiorari in Chiquita, in whuich the CA had applied Kiobel restrictively).
In Kiobel, the USSC /SCOTUS held on the basis of extraterritoriality: under what circumstances may US courts recognize a cause of action under the Alien Torts Statute, for violations of the law of nations, occurring within the territory of a sovereign other than the United States? In focusing on this question (and replying in the negative), the SC did not entertain the question which actually led to certiorari, namely whether the law of nations recognises corporate liability.
Soon after the same USSC held in Daimler that general jurisdiction other than in the State of incorporation applies only (in the case of foreign companies) when a foreign company’s “continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.”
In the ‘Apartheid litigation’ [Lungisile Ntsebeza et al v Ford General motors and IBM], the Southern District of New York picked up the issue where SCOTUS had left it: can corporations be held liable under the Alien Tort Statute (“ATS”) for violations of “the law of nations”‘? Scheindlin USDJ held they can on 17 April last [Xander Meise Bay has a good overview of the successive litigation here]. She firstly held that it is federal common law that ought to decide whether this is so – not international law itself (ATS being a federal US Statute). Next she argued that the fact in particular (withheld by Jacobs J in Kiobel) that few corporations were ever held to account in a court of law for violations of public international law was not instrumental in finding against such liability.
Counsel have now been instructed to brief on the ‘touch and concern’ test put forward by the Supreme Court in Kiobel, with the warning that they must show in particular that the companies concerned acted ‘not only with the knowledge but with the purpose to aid and abet the South African regime’s tortious conduct as alleged in these complaints’. A strict timetable for arguments has been laid down whence the wait for further development should not be too long. (Update 25 July 2014: Docket still shows active case but no further development; Update 3 September 2014: case dismissed end of August).
02-md-1499, Alien Tort Statute, Apartheid, Bristol Meyers, Colonialism, Comity, Corporate social responsibility, CSR, Daimler, DaimlerChrysler, DaimlerChrysler v Bauman, Extraterritoriality, Germany, http://opiniojuris.org/wp-content/uploads/17-Apr-SDNY-Opinion.pdf, Human rights, In re South African Apartheid Litigation, Jurisdiction, Kiobel, Lungisile Ntsebeza et al v Ford General motors and IBM, Namibia, Piercing the corporate veil, Regulation 1215/2012, Rio Tinto, SC, SCOTUS, United States Supreme Court, USSC
USSC rejects US jurisdiction in Daimler v Bauman. General jurisdiction not easily eastablished lest in a company’s true home.
The United States Supreme Court on 14 January rejected US jurisdiction in Daimler v Bauman. See previous posting on this case here and ultra-short reference here. Chief Justice Roberts’ and concurring opinions in Kiobel leave room for further distinguishing. Daimler does less so. The Court in the end did not focus too much on the issue of agency and attributability of a subsidiary’s actions to the mother company (Daimler is a German corporation that was sued in California by Argentinian plaintiffs for human rights violations in Argentina. The Californian link was a subsidiary which distributes cars there but which is not incorporated there: its corporate home is Delaware).
As William Baud points out, the USSC (as indeed do highest courts of the land elsewhere) does not necessarily decide on the points which counsel would like it to decide. Instead, the USSC generally upholds a restrictive view of general jurisdiction. Per International Shoe [see also Dwight Healy and Owen Pell], general jurisdiction other than in the State of incorporation applies only (in the case of foreign companies) when a foreign company’s “continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.”
If you want to sue a company on the basis of its having its ‘home’ in the forum, then that home better be exactly that. Not, as here, merely a condo in the US when its true home lies in Germany.
(Writing for the majority) Judge Ginsburg (p.23) noted the difference between the Court of Appeal’s approach and the EU approach when it comes to overall personal jurisdiction over corporations (she referred to the recast Brussels I Regulation, 1215/2012, which is yet to apply but which in substance on this issue does not differ from the previous version). However in reality there is quite a different direction (compared to Daimler) which the EU takes vis-a-vis foreign corporations, in the particular context of B2B consumer contracts as well as employment contracts (an entirely different subject-matter, I appreciate).
Alien Tort Statute, Comity, Corporate social responsibility, CSR, DaimlerChrysler, DaimlerChrysler v Bauman, Extraterritoriality, http://www.supremecourt.gov/opinions/13pdf/11-965_1qm2.pdf, Human rights, Jurisdiction, Kiobel, Piercing the corporate veil, Regulation 1215/2012, Rio Tinto, SC, United States Supreme Court, USSC
- Spizz v Goldfarb. Applying the US presumption against extraterritoriality in bankruptcy cases. 26/04/2017
- Turkish Supreme Court rejects choice of court agreement on basis of ‘good faith’. Accepts asymmetric clauses. 24/04/2017
- Asymmetric clauses, exclusivity, torpedoes and lis alibi pendens: The High Court in Commerzbank v Liquimar Tankers. 21/04/2017
- From well to wheel. But not for Australia’s mines and their climate impact. 19/04/2017
- AMT v Marzillier: UK Supreme Court sides with relucant Court of Appeal on inducement to breach choice of court agreement. 17/04/2017
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