The Alien Tort Statute – when will a claim "touch and concern" the territory of the United States?

In Kiobel v Royal Dutch Petroleum Co, the US Supreme Court held that the presumption against extraterritorial application of US laws applies to claims under the Alien Tort Statute (ATS). The Supreme Court left open the possibility of ATS claims which "touch upon and concern" US territory, provided that they “do so with sufficient force to displace the presumption against extraterritorial application". However, they provided limited guidance as to how that standard should be interpreted.

The circumstances in which the presumption against extraterritorial application will be displaced have recently been considered by courts in the Second, Fourth, Ninth and Eleventh Circuits in the cases of In re: South African Apartheid Litigation, Al Shimari v CACI Premier Technology Inc., Doe v Cisco Systems Inc., and Cardona v Chiquita Brands International Inc. Following these decisions, it appears that in order to establish jurisdiction under the ATS it will be necessary to show that some conduct which contributed to the alleged harm has taken place on US soil.

Background

Under the ATS, federal district courts have jurisdiction over “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” 28 U.S.C. §1350. The ATS permits US federal courts to hear claims by foreign plaintiffs involving violations of well-defined and universally-accepted norms of international law.

The statute has been used to sue foreign government officials for acts of torture and human rights abuses and has also been relied upon by plaintiffs alleging that corporations have violated international law, or have aided and abetted violations committed by others. The ATS claims which have been brought against corporations to date have focused on allegations of harm occurring outside the US.

In Kiobel, Nigerian nationals brought ATS claims against British, Dutch and Nigerian corporations contending that they had aided and abetted atrocities committed in Nigeria by local military and police. The Supreme Court held that claims could not be pursued under the ATS where the plaintiff, the defendant and the allegedly tortious conduct lack any connection to the US (we discussed the Supreme Court judgment in a previous blog).

The majority decision left open the possibility of ATS claims which “touch upon and concern” the territory of the US, provided that they “do so with sufficient force to displace the presumption against extraterritorial application". However, the majority gave only limited guidance on the circumstances in which the presumption might be displaced.

In a concurring opinion which was joined by three other justices, Justice Breyer found that US courts should exercise jurisdiction under the ATS “where (1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant’s conduct substantially and adversely affects an important American national interest...”

Conversely, in a separate concurring opinion, joined by one other justice, Justice Alito concluded that the presumption against extraterritorial application will only be rebutted if "domestic conduct is sufficient to violate an international law norm".

Al Shimari v CACI Premier Technology Inc.

In a unanimous judgment on 30 June 2014, the Fourth Circuit Court of Appeals held that claims against CACI Premier Technology Inc. (CACI) involving alleged torture and mistreatment of foreign nationals detained at the Abu Ghraib prison in Iraq could proceed. See Al Shimari v CACI Premier Technology Inc., 4^th US Circuit Court of Appeals, No. 13-1937.

The Fourth Circuit Court of Appeals adopted a fact-based approach, finding that the claims did "touch and concern" the territory of the US with sufficient force to displace the presumption against extraterritorial application of the ATS. The Court noted the following facts:

• CACI was a US corporation;
• the CACI employees who allegedly committed the acts of torture were US citizens;
• the employees were hired by CACI in the US to fulfil the terms of a contract that CACI executed with the US Government;
• it was alleged that CACI managers located in the US were aware of reports of misconduct and "implicitly, if not expressly, encouraged it"; and
• it was the express intent of Congress in enacting the ATS that foreign aliens should be given access to US courts to hold US citizens accountable for acts of torture committed abroad.

In reaching its conclusion, the Fourth Circuit Court of Appeals emphasised that the case involved allegations that CACI had aided and abetted acts of torture through conduct which took place on US soil.

Cardona v Chiquita Brands International Inc.

On 24 July 2014, by 2-1 majority, the Eleventh Circuit Court of Appeals held that it did not have jurisdiction in respect of claims that Chiquita Brand International Inc. (Chiquita) had been complicit in the torture and death of thousands of Colombian citizens, by making payments to paramilitary groups during the civil war in Colombia. See Cardona et al v Chiquita Brands International Inc. et al, 11^th US Circuit Court of Appeals, No. 12-14898.

The majority decision applied the presumption against extraterritorial application and found that the alleged violations of international law had taken place outside the territorial jurisdiction of the US. The majority did not comment in detail on the factors which would support a conclusion that the claims in question sufficiently "touch and concern" US territory but stated that "there is no allegation that any torture occurred on US territory, or that any other act constituting a tort in terms of the ATS touched or concerned the territory of the United States with any force".

In a dissenting opinion, which refers to the decision in CACI, Circuit Judge Martin observed that:

• unlike in Kiobel where the plaintiffs relied on the corporations' "mere corporate presence in the US", Chiquita was headquartered and incorporated within the US; and
• the plaintiffs were not seeking to hold Chiquita liable for conduct that took place on foreign soil; instead they alleged that Chiquita, from its corporate offices in the US, aided and abetted torture and murder in Colombia by reviewing, approving and concealing a scheme of payments and weapons shipments to Colombian paramilitaries.

Accordingly, Circuit Judge Martin was of the view that the case did "touch and concern" the US with sufficient force to rebut the presumption against extraterritorial jurisdiction.

In re: South African Apartheid Litigation

On 28 August 2014, a district court in the Second Circuit dismissed claims against Ford and IBM of aiding and abetting human rights abuses in apartheid-era South Africa, by manufacturing and supplying military vehicles and computers used by the South African security forces. See In re: South African Apartheid Litigation, 02-md-1499.

The In re: South African Apartheid Litigation originally involved more than a dozen distinct cases against corporations. All the claims against foreign defendants were dismissed, most recently those against Germany's Daimler AG and Rheinmetall AG in December 2013.

In April 2014, the US District Court for the Southern District of New York held that actions under the ATS could be brought against corporations, concluding that the Supreme Court's decisions in Kiobel and Daimler AG v Bauman implied that certain factors in combination with corporate presence could overcome the presumption against extraterritoriality. The plaintiffs in the Ford and IBM case were therefore permitted to move to amend their complaints in order to show that Ford and IBM had engaged in actions which "touch and concern" the US.

In denying the plaintiffs' motion to amend, the district court held that it was bound to follow the earlier Second Circuit decision in Balintulo v Daimler. The Second Circuit Court of Appeals had expressly rejected Justice Breyer's concurring opinion in Kiobel that US courts should have jurisdiction under the ATS where the defendant is an American national, finding that corporate citizenship in the US was an "irrelevant factual distinction" when "all the relevant conduct occurred abroad".

The district court also considered the case of CACI but distinguished it on the basis that the facts in CACI involved "much greater contact with the United States government, military, citizens and territory".

In finding that all the relevant conduct occurred abroad and that "the bar set by the Supreme Court in Kiobel II, and raised by the Second Circuit in Balintulo" was too high to overcome, the district court therefore held that the plaintiffs' conduct did not "touch and concern" the US with sufficient force to displace the presumption against extraterritorial application.

Doe v Cisco Systems Inc.

On 5 September 2014, a district court in the Ninth Circuit dismissed claims that Cisco Systems Inc (Cisco) had aided, abetted and conspired with the Chinese Communist Party and public security officers in China through the creation of a customised security system, “the Golden Shield”, knowing and intending that it would be used to commit human rights abuses against practitioners of the Falun Gong religion. See Doe v Cisco Systems Inc., 5:2011-cv-02449.

In dismissing the claims, the US District Court for the Northern District of California found that Cisco's creation of the Golden Shield system, even if directed and planned from the US, did not touch and concern the US with sufficient force to overcome the presumption against extraterritorial application.

The district court held that the domestic conduct of Cisco was not, as set forth by Justice Alito in Kiobel, "sufficient to violate an international law norm" and that "to overcome the presumption against extraterritoriality, a stronger showing is needed that tortious acts were planned, directed, or executed in the United States".

Comment

In contrast to the opinion of Justice Breyer in Kiobel, CACI, Chiquita, In re: South African Apartheid Litigation and Cisco can be seen as authority for the proposition that the incorporation of a defendant company in the US will be insufficient, in and of itself, to establish jurisdiction under the ATS. Unlike Kiobel, these cases all involved US corporations. The approach taken by the courts suggests that in such cases it will be necessary to also show that some conduct which contributed to the alleged harm has taken place on US soil.

However, the decisions discussed here are unlikely to be the end of the story when it comes to deciding whether claims "touch and concern" US territory. The plaintiffs in Chiquita have petitioned for rehearing before the full Eleventh Circuit Court of Appeals, and if unsuccessful, could seek leave to appeal to the Supreme Court. The plaintiffs in In re: South African Apartheid Litigation and Cisco may also appeal to the Second and Ninth Circuit Court of Appeals.

In another recent decision, on 4 September 2014, the Ninth Circuit Court of Appeals issued a revised order in the case of Doe v Nestlé in which three victims of child slavery in the Ivory Coast allege that Nestlé, Archer Daniels Midland and Cargill aided and abetted child slavery by providing assistance to Ivorian farmers. The Court found that the prohibition against slavery was a universally recognised international norm which could be asserted against the corporate defendants. The court granted the plaintiffs permission to amend their complaint to allege that some of the conduct underlying their ATS claim took place in the US.

It is expected that this issue will continue to be litigated unless and until the Supreme Court provides further guidance on how the "touch and concern" test is to be applied in practice.

For further information, please contact Laurence Shore, Partner, Antony Crockett, Senior Associate, Michael Kelly, Senior Associate, Emily Soothill, Associate, or your usual Herbert Smith Freehills contact.