Sokolow v. PLO : Another Blow Against Recovery for Foreign Wrongs

Last week, the courts once again restricted the ability of terrorism victims to collect compensation, this time on grounds of personal jurisdiction.

Recap

Last Wednesday, the Second Circuit released its decision in Sokolow v Palestine Liberation Organization, a case that has its origins in the bloody years of the Palestinian “intifada.” The case centers on seven terror attacks perpetrated between 2001 and 2004. In one attack, a seventeen-year-old blew himself up at a crowded bus stop in the French Hill neighborhood of Jerusalem; in another, Hamas operatives detonated a bomb in a Hebrew University cafe; and in a third, a Palestinian security officer opened fire in a crowded Jaffa mall. Together, these and the other attacks killed dozens of civilians and wounded scores more, including a number of American citizens.

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In 2004, the families of eleven American victims sued the Palestinian Authority in the Southern District of New York under the civil remedies provision of the Antiterrorism Act. The provision, passed in 1992, allows “[a]ny national of the United States injured in his or her person, property, or business by reason of an act of international terrorism, or his or her estate, survivors, or heirs” to sue and recover threefold damages in “any appropriate district court of the United States.” The plaintiffs insisted that the Palestinian Liberation Organization and the (largely coextensive) Palestinian Authority bore responsibility. In 2015, after a seven-week trial, a jury found the PA liable for six of the attacks and awarded plaintiffs a $218.5 million judgment that, when trebled, became $655.5 million.

But in an opinion by Judge John Koetl (sitting by designation from the Southern District of New York and joined by Circuit judges Pierre Leval and Christopher Droney), the Second Circuit has now vacated the judgment, holding that the litigation failed the Supreme Court’s test for personal jurisdiction developed in Daimler AG v. Bauman.

In Daimler, a group of Argentinian laborers alleged that Daimler’s Argentinian subsidiary, Mercedes-Benz Argentina, collaborated with the country’s military junta to kidnap, detain, torture, and kill workers during a labor dispute. The victims filed suit in a California federal court under the Alien Tort Statute. The Supreme Court ultimately ruled that the Fourteenth Amendment’s guarantee of due process barred courts from exerting general personal jurisdiction over the defendant. As the Supreme Court explained, California was neither Daimler’s (nor Mercedes Benz USA’s) place of incorporation nor its principal place of business. Daimler was not, therefore, sufficiently “at home” in California. As such, due process forbade lawsuits against Daimler in California—unless, of course, the particular conduct for which Daimler would be sued had actually taken place in California, in which case specific personal jurisdiction would be established.

The District Court in this case, however, held that the logic of Daimler did not apply to Sokolow. The situation of the PLO and PA was, according to Judge George Daniels, “exceptional.” Unlike Daimler, the PLO/PA is not a corporation, but an “unincorporated… foreign governmental organization,” whose activities in the District of Columbia make it “continuously and systematically present in the United States.”

The Second Circuit rejected this logic, holding that Daimler—and its own related circuit precedent, Gucci America, Inc. v. Weixing Li—governed here. In the ruling, the panel noted that the vast majority of PA/PLO’s activities take place in the West Bank, where the PA governs. As the court explained:

The overwhelming evidence shows that the defendants are “at home” in Palestine, where they govern. Palestine is the central seat of government for the PA and PLO…. All PA governmental ministries, the Palestinian president, the Parliament, and the Palestinian security services reside in Palestine.

By contrast, these organizations’ lobbying and diplomacy activities in the United States appear relatively insignificant. And the simple fact the territories on which defendants conduct the bulk of their activities “are not within a sovereign nation” does not affect the determination of where it properly understood as “at home.” The West Bank, not the United States, is the place in which the Palestinian Authority and PLO are “amenable to suit.”

The panel then went on to consider—and swiftly dispense with—an alternative basis for personal jurisdiction—one on which the District Court had not ruled. The court explained that defendants’ suit-related conduct also did not give rise to “specific personal jurisdiction” because the record gave “no basis to conclude that the defendants participated in these acts in the United States or that their liability for these acts resulted from their actions that did occur in the United States.” Simply put, there was no evidence that any US-related conduct by the PA and PLO had any causal relationship to the terror acts at issue.

Lacking a basis for personal jurisdiction, the Second Circuit vacated judgment and remanded to the District Court with instructions to dismiss the case.

Analysis

First, we should keep our eye on a larger trend toward limiting liability in U.S. courts for foreign wrongs. Neither this decision, nor the Supreme Court’s Daimler ruling comes in a vacuum; they follow on the heels of another famously consequential ATS case, Kiobel v. Royal Dutch Petroleum. In Kiobel, a group of Nigerian plaintiffs sought damages for brutalities committed against them in Nigeria in violation of the laws of nations. Unlike Daimler, the Kiobel case involved no constitutional analysis, but simply asked whether the ATS could be applied to conduct abroad. Citing a standard presumption against extraterritorial application of laws, the Supreme Court rejected the suit.

Although the doctrinal keys Daimler and Kiobel differed widely, both decisions (decided 9-0) reflect, perhaps, a judicial impulse: a deep discomfort with transforming the United States (and particularly its courts) into a “uniquely hospitable” place for the resolution of foreign claims.

This impulse is particularly clear in these two cases’ concurrences: In Kiobel, Justice Breyer wrote: “In this case, however, the parties and relevant conduct lack sufficient ties to the United States for the ATS to provide jurisdiction.” And in Daimler, Justice Sotomayor explained that the exercise of jurisdiction was “unreasonable given that the case involves foreign plaintiffs suing a foreign defendant based on foreign conduct, and given that a more appropriate forum is available.” The message here is stark: American courts must not become the destination for foreigners seeking justice for foreign wrongs, and the justices will invoke a variety of tools (due process, statutory presumptions, international law) to protect them.

The Second Circuit’s decision in Sokolow seems to lie squarely within this tradition. But perhaps there is a wrinkle. In both Daimler and Kiobel (as in all ATS cases), the plaintiffs were foreigners. This fact alone does not appear to do much formal legal work, at least in the majority opinions (both center on the location of the acts.) But as is clear from the concurrences, this fact was hovering in the background--deepening the Court’s wariness of adjudicating foreign claims.

But in Sokolow, this fact does not apply: the plaintiffs are all American. How then would the Supreme Court rule? When dealing with American victims, will the justices be as quick to erect procedural barriers to recovery? We do not yet know, but at the very least we can say that the Second Circuit has stepped out ahead of the curve.

Relatedly, it is also worth noting the Second Circuit’s brief discussion of the relative due process protections of the Fifth and Fourteenth Amendments. The court notes that Daimler was explicitly decided on the basis of the Fourteenth Amendment. (Under Rule Civ. Proc. 4(k)(1)(A), the federal court was required to interpret California’s long-arm statute in order to determine its own jurisdiction.) By contrast, in Sokolow, the court was deciding the constitutional limits of federal power and so was called on to to determine how the Fifth Amendment’s due process limits the exercise of personal jurisdiction.

Ultimately, the Second Circuit concluded that the due process protections of the two amendments are coextensive. In doing so, the court rejected the suggestion that Federal government might have heightened power (beyond that of the states) to confer personal jurisdiction for extraterritorial conduct because of its role in pursuing “the national interest." The decision thus reinforces the structural dimension of due process. Congress and the president retain all sorts of tools with which they can wreak havoc on foreign organizations if they so choose. But if Congress intends to commandeer the courts and the procedures of civil liability to do this work, it will hit a sudden wall. Due process, as it manifests here, thus operates as a kind of guarantor of judicial independence.

And this realization brings me to my final point: In this case, the United States and Israel have dodged a bullet. From the beginning, the Sokolow litigation demonstrated the dangers of bringing the judicial system into the complex world of foreign affairs. As I wrote here when the Sokolow jury judgment was first announced:

[T]he PA’s role in the Israeli-Palestinian conflict has shifted dramatically in the decade and half since Arafat unleashed the second intifada…. Punishing an organization for terrorism just as it has turned decisively away from this tactic---no matter its other sins---is a very complicated business… [A]s Hamas constantly maneuvers for greater power and struggles to inflict damage on Israel, and as Israel seeks to disentangle itself from the Palestinian population that it has no interest in governing, the PA has rarely been as essential. Already teetering on insolvency, half a billion in damages is a cost the Palestinian Authority---and perhaps by extension, Israel---can ill-afford.... Maneuvering with such an entity---pushing the proper pressure points, offering the right carrots and sticks in order to facilitate best outcomes---requires a high-wire act of artful diplomacy.

Private lawsuits, however, are the polar opposite of this kind of diplomacy. They are initiated in the service of private interests and are adjudicated according to abstract legal principles. Political exigencies and budgetary realities---for instance, whether the PA is critical for regional stability or whether it is close to broke---are simply irrelevant to the law. That is why torts are such a dangerous tool of politics... Diplomacy considers fast-changing context and requires constant calibration; law is a blunt instrument.

The Sokolow judgment thus exemplifies the dangers of lawfare, of inserting the courts and the demands of “justice” into the messy business of international diplomacy. Courts are ill-equipped to handle the competing demands of justice and strategy. This is a danger the courts seem to intuit. And last week’s Second Circuit’s decision represents the institutional pushback.

There is irony here. Usually, foreign policy is an area where we expect courts to exhibit maximal deference to the political branches. In enacting the Anti-Terrorism Act, the political branches made clear they believed the interests of the United States were best served by involving U.S. courts in American foreign policy. And yet, in Sokolow as in the ATS cases, judges resist involvement. The judiciary’s very desire to remain outside of international politics leads them to reject the foreign policy judgment of the political branches.

The Second Circuit has spoken in the technical language of personal jurisdiction and due process. But it is also saying something deeper: this is not our place.