Judge Scheindlin Dismisses Remaining ATS Claims Against Ford and IBM in Long-running Apartheid Litigation

As Lawfare readers may have seen from press reports, on Thursday, SDNY Judge Shira Scheindlin dismissed the Alien Tort Statute suit against Ford Motor Company and IBM in connection with their business activities in Apartheid-era South Africa, thus ending the granddaddy of all ATS litigation and what may have been the largest, longest-running, and most expensive lawfare battle in history. Judge Scheindlin denied the plaintiffs’ motion to amend their complaint in light of the Supreme Court’s decision in Kiobel, holding that they could not show that their claims “touch and concern the territory of the United States” with sufficient force to overcome the presumption against extraterritorial application of the ATS enunciated in Kiobel. She specifically distinguished the plaintiffs’ claims from those in the Al-Shimari case, where the Fourth Circuit recently concluded that claims against the U.S. defense contractor CACI for abuse and detention at Abu Ghraib could proceed. The Apartheid litigation involved several ATS suits, the first of which was filed in 2002, against more than fifty U.S. and non-U.S. manufacturing companies and financial institutions. Plaintiffs alleged that the defendant companies had aided and abetted the Apartheid government by doing business in South Africa. The litigation outlasted several SDNY judges and reached the Second Circuit several times. As a historical footnote, when I was Legal Adviser, the U.S. Government submitted two Statements of Interest in the Apartheid litigation to both the Second Circuit and the Supreme Court urging that the cases be dismissed because they interfered with the foreign relations of the United States (the government of South Africa had complained that they infringed South African sovereignty) and because the ATS should be presumed not to apply to conduct in the territory of another country. The Supreme Court was unable to consider the Apartheid case because four of the justices apparently had financial or personal conflicts. However, Paul Clement and I subsequently submitted two amicus briefs in the Kiobel case on behalf of seven U.S. companies in which we again argued that ATS lawsuits caused diplomatic friction and that the presumption against extraterritoriality should apply to the ATS.  A majority of the Supreme Court in Kiobel adopted the latter argument. After the Kiobel decision, the Second Circuit held that the claims in the Apartheid case against Ford, IBM, and other defendants were barred because all of the relevant conduct that arguably violated international law occurred in South Africa, concluding “[I]f all the relevant conduct occurred abroad, that is simply the end of the matter under Kiobel.” Earlier this year, however, Judge Scheindlin (having previously dismissed the claims against the two remaining foreign defendants, Daimler and Rheinmetal) authorized the plaintiffs to move to amend their complaints against Ford and IBM to provide evidence that the companies’ activities “touch and concern” the territory of the United States.   On Thursday, having considered plaintiffs’ motions, Judge Scheindlin refused to allow them to file amended complaints because any tortious action, if it occurred, took place in South Africa, not in the United States. Judge Scheindlin distinguished the Fourth Circuit’s recent decision in Al-Shimari v. CACI: “Even apart from my obligation to follow Balintulo as controlling law in the Circuit and as the law of the case, the facts in Al-Shimari are clearly different than the facts in this case and involve much greater contact with the United States government, military, citizens, and territory.” Judge Scheindlin concluded:

That these plaintiffs are left without relief in an American court is regrettable.   But I am bound to follow Kiobel II and Balintulo, no matter what my personal view of the law may be.   Even if accepted as true, the “relevant conduct” alleged in plaintiffs” proposed amended complaints all occurred abroad.   Thus, under the law of the Supreme Court and of the Second Circuit, the claims do not touch and concern the territory of the United States ‘with sufficient force to displace the presumption against extraterritorial application [of the Alien Tort Statute],’ and would not survive a motion to dismiss.

One final note on corporate liability: The Second Circuit’s original decision in Kiobel that corporations may not be sued under the Alien Tort Statute remains the law of the Circuit. As I have noted previously, however, Judge Scheindlin has concluded that this decision was implicitly overruled by the Supreme Court’s decision in Kiobel.   (The Ninth Circuit reached a similar conclusion in the Doe v. Nestle case).   Thus, if a new ATS suit were filed against a corporation in the Second Circuit, it is not clear whether another judge would follow the law of the Circuit, or be inclined to follow Judge Scheindlin. In 2009, I commented in the Wall Street Journal ("The U.S. Can't Be the World's Court") about the diplomatic friction caused by ATS litigation in general and by the Apartheid case in particular, noting that many foreign governments, despite their own commitment to accountability for human rights violations, had complained to the State Department that allowing US courts to exercise jurisdiction over their companies or for actions in their territory violated international law.  I concluded:  "Human rights should be promoted in most cases through direct diplomatic engagement and corporate responsibility, not through litigation that causes diplomatic friction and that may be inconsistent with international law."