Posts Tagged 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.

Geert.

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Al Shimari v. CACI: An ATS case found to touch and concern the US with sufficient force.

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!

Geert.

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A death prolonged or hope renewed? The ‘Apartheid’ twist to Kiobel and the ATS.

Update 19 June 2017. SCOTUS held today in BMS and rejected jurisdiction.

Update 8 May 2017. Transcipt of pleadings issued in BMS and background here.

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 19 January 2017. Certiorari granted.

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).

Geert.

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USSC rejects US jurisdiction in Daimler v Bauman. General jurisdiction not easily eastablished lest in a company’s true home.

Update For a September 2017 application see the Illinois Supreme Court in Aspen Insurance v Interstate Warehousing.

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.

Generally,  the USSC held that a state court may exercise general jurisdiction over out-of-state corporations when their “affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.”

(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).

Geert.

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Compensation, nature conservation and New York Law – The USSC in Koontz

In Koontz, the United States Supreme Court further specified the limitations applicable to agencies when they  impose limitations to the use of private property. In Koontz, under the New York State Environmental Quality Review Act (SEQRA), the owner of the land was denied wetland related permits. The relevant agency had demanded that Koontz either reduce the scope of the project and accept limiting conditions of use over the remainder, or finance conservation-related improvements to publicly held land some distance away.

The Supreme Court had earlier held in Nolan per the regulatory taking doctrine, that there must be an “essential nexus” between a “legitimate state interest” and the condition that the reviewing agency seeks to impose. In Koontz, it applies this limitation not just to the restrictions which the owner of the land has to accept vis-a-vis his own property, but also to any other government measure which imposed a financial burden on said owner. The lower courts had argued that the Nolan criteria do not apply to demands for money. The Supreme Court held that they do.

The finer details may escape me (see for excellent analysis Daniel Richmond and in Jeremy Kozin in the New York Law Journal) however it would seem that there is excellent comparative analysis to be made re the laws on regulatory takings and compensation measures in nature conservation.

Geert (thank you to Ludo Veuchelen for alerting me to the judgment).

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That did not take long! DaimlerChrysler v Bauman may clarify Kiobel – Corporate Social Responsibility remains in the Supreme Court spotlight

When I said here that ATS cases might end up at the USSC again, I did not think less than a week later: on Monday, the USSC granted certiorari in DaimlerChrysler AG v Bauman. The issue as summarised over at the SCOTUS blog (which has superb further analysis), is: Whether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based solely on the fact that an indirect corporate subsidiary performs services on behalf of the defendant in the forum state.

Chief Justice Roberts’s and concurring opinions in Kiobel leave room for further distinguishing – which is what might happen in DaimlerChrysler. The Court had presumably seen sitting on the DaimlerChrysler case until it had decided Kiobel. DaimlerChrysler however will probably have a wider impact than the ATS jurisdictional issues. Accepting jurisdiction against corporations on the basis of the actions of a subsidiary present in the forum State but unrelated to the subsidiary which allegedly violated the law elsewhere, can also apply in an internal US setting.

DaimlerChrysler Ag is a German company, and it was sued in federal court in California for alleged human rights violations in Argentina for actions by a subsidiary in that country.  The basis for suing the company in the U.S. was that it has another subsidiary that sells the company’s autos in California.

Of note is also that the Supreme Court vacated Rio Tinto and sent it back to the Ninth Circuit to be decided on the basis of the Kiobel finding.

Geert.

 

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USSC in Kiobel – Foreign policy implications decide the issue.

Update 18 January 2017. Ms Kiobel is now apparently using Dutch courts to try and sue Shell over the case. (Evidently unrelated to the pursuit of Shell in The Netherlands on environmental grounds). See here for background to the case.

The central question in Kiobel   turned out to be this: whether and under what circumstances US courts may 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.

I have a paper with Charlotte Luks over on ssrn, which discusses the ATS (and related developments in the EU). The Alien Tort Statute, a product of the United States’ first congress, creates a domestic forum for violations of international law. The relevant text reads,  “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”

Since the path-breaking Doe v. Unocal litigation in 1997, more than 50 cases have been brought in the United States against companies under the Alien Tort Statute alleging corporate involvement in human rights abuse abroad. However In Kiobel v Royal Dutch Petroleum, the United States Court of Appeals for the Second Circuit held that corporations cannot be sued under the Alien Tort State for violations of customary international law because “the concept of corporate liability […] has not achieved universal recognition or acceptance of a norm in the relations of States with each other.” In denying re-hearing, Chief Judge Jacobs argued in February 2011 that

All the cases of the class affected by this case involve transnational corporations, many of them foreign. Such foreign companies are creatures of other states. They are subject to corporate governance and government regulation at home. They are often engines of their national economies, sustaining employees, pensioners and creditors–and paying taxes. I cannot think that there is some consensus among nations that American courts and lawyers have the power to bring to court transnational corporations of other countries, to inquire into their operations in third countries, to regulate them–and to beggar them by rendering their assets into compensatory damages, punitive damages, and (American) legal fees. Such proceedings have the natural tendency to provoke international rivalry, divisive interests, competition, and grievance–the very opposite of the universal consensus that sustains customary international law.

Certiorari at the Supreme Court was keenly awaited by the corporate social responsibility (CSR) community, for ATS litigation by default had become the flag bearer for pursuing alleged violations of international law (whether in human rights or environment) by multinational corporations.

Extraterritorial application of US law was most recently the issue in Morrison v National Australia Bank, in the area of securities. In Kiobel, the SC relies on its extensive review of exterritoriality in Morrison. It did so even if in Morrison (and other cases before it), the question of exterritoriality was one of merits (aka jurisdiction to prescribe): i.e. whether an Act of Congress regulating conduct, applies abroad. By contrast, in Kiobel, the question concerns jurisdiction pur sang (aka jurisdiction to adjudicate). For the SC, this did not dent precedent value of Morrison: ‘we think the principles underlying the canon of interpretation similarly constrain courts considering causes of action that may be brought under the ATS’.

In Morrison, the SC held that when a statute gives no clear indication of an extraterritorial application, it has none. In Kiobel, the Court did not find convincing argument in either text, history, or purpose of the ATS, which could rebut the presumption against extraterritoriality. The closest such rebuttal arguably lay in the historic (and more current) examples of employing ATS against piracy: as the SC notes, ‘piracy normally occurs on the high seas, beyond the territorial jurisdiction of the United States or any other country, [however] applying U. S. law to pirates does not typically impose the sovereign will of the United States onto conduct occurring within the territorial jurisdiction of another sovereign, and therefore carries less direct foreign policy consequences.

The latter of course is where the core of the argument lies, and where public, and private international law principles of comity come into play: the degree to which in upholding jurisdiction, the courts in ordinary might be obstructing US foreign policy. As an aside and not having completed my thinking on this: Judge Jacobs’ frank assessment of the respective roles of public and private international law, referred to above, is particularly interesting when one considers the communis utilatis roots of modern conflict of laws The conviction in Dutch conflict of laws in the 17th century (later exported via Scotland to the US), that foreign laws needed to be applied if and when they so wanted, on the basis of reciprocity, and in line with communis utilitatis has now been turned on its head: comity is now being used as a presumption against such application of foreign laws or, here, public international law.

The SC concludes as follows:

On these facts, all the relevant conduct took place outside the United States. And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application. See Morrison, 561 U.S. ___ (slip op. at 17–24). Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices. If Congress were to determine otherwise, a statute more specific than the ATS would be required.

The Court therefore answers Kiobel-type cases (a foreign plaintiff suing a foreign defendant for acts or omissions occurring wholly outside of the United States that allegedly violate the law of nations), however it does leave open many questions which fall outside the factual Kiobel box. Does the reference to ‘claim’ and ‘territory’ of the US refer to the tortious action (thus requiring that to take place in the US) or would a US defendant suffice (in all likelihood: no)? What ‘link’ would be enough for the action to take place in the US: in particular, lack of corporate oversight over foreign subsidiaries? In all likelihood, further distinguishing will take place by lower courts (and might eventually end up at the SC again), however it is clear that the scope for ATS litigation has been severely diminished. This means that attention may now be re-ignited in what has been brewing in the EU for some time: using national courts to apply national law for conduct abroad: in other words, classic private international law /conflict of laws coming to the limelight once again.

Geert.

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