Balintulo v. Daimler AG, et al., 727 F.3d 174 (2d Cir. 2013) [click for opinion]

Plaintiffs brought a class action lawsuit on behalf of two South African organizations representing apartheid victims.  The suit named several multi-national corporations and their South African subsidiaries and was brought in U.S. federal court under the Alien Tort Statute ("ATS"), which confers federal 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 defendants were alleged to have aided the violation of customary international law during South Africa’s apartheid regime.  Plaintiffs claimed that some of the defendants, including Daimler AG, supplied vehicles, parts, and other equipment to the apartheid security forces, while the other defendants, including IBM, provided the computer systems necessary for the apartheid government to restrict black South Africans’ movements and to track and target dissidents.  Plaintiffs did not claim that any of defendants’ alleged violations occurred in U.S. territory, as no such geographical connection was legally required at the time of filing.

The defendants filed a joint motion to dismiss on various grounds, including doctrines of case-specific deference and international comity, lack of jurisdiction over corporations under the statute, lack of extra-territorial reach for causes of action under the statute, and the absence of accessorial liability under federal common law.  The district court denied the joint motion on the basis that Plaintiffs could proceed on an agency theory, under which Defendants could be held liable for the actions of their South African subsidiaries.  The court ruled, in line with Second Circuit law at the time, that South African subsidiaries could be liable as accessories based on mere knowledge that their actions facilitated violations of international law, rather than any intent that their actions would lead to that end.   Defendants filed a writ of mandamus with the Second Circuit to reverse the district court’s ruling.

After staying the action, the Second Circuit held in a separate case that the ATS does not afford subject matter jurisdiction over claims against corporations based on alleged violations of international law.  See Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 149 (2d Cir. 2010).  The case remained stayed while Kiobel was appealed to the U.S. Supreme Court.  In April 2013, the Supreme Court decided Kiobel and held that there are no federal common law causes of action under the ATS for conduct that occurs outside the U.S.

Upon receiving supplemental briefing, the Second Circuit held that all of Plaintiffs’ ATS claims against Defendants should be dismissed in light of the Supreme Court’s Kiobel decision. The Second Circuit noted the “unambiguous holding” in Kiobel “plainly bars common-law suits, like this one, alleging violations of customary international law based solely on conduct occurring abroad.”  In so ruling, the Second Circuit rejected Plaintiffs’ argument that Kiobel allows for ATS claims based on extra-territorial conduct where the defendants were American nationals.  In the Second Circuit’s view, Kiobel firmly closed the door on that argument and rendered the citizenship of the defendants an “irrelevant factual distinction."  As the Second Circuit noted, “if all the relevant conduct occurred abroad, that is simply the end of the matter under Kiobel.” 

In reaching its decision, the Second Circuit also applied the presumption against extra-territoriality to the ATS.  Rather than “guess anew in each case,” courts should apply that “presumption in all cases, preserving the stable background against which Congress can legislate with predictable effects.”  The Court expounded on this point by stating: “the ATS does not permit claims based on illegal conduct that occurred entirely in the territory of another sovereign. In other words, a common-law cause of action brought under the ATS cannot have extraterritorial reach simply because some judges, in some cases, conclude that it should.” 

The Second Circuit also rejected Plaintiffs’ claim that Defendants are vicariously liable “based on the actions taken within South Africa by their South African subsidiaries.”  Pointing again to Kiobel, the Second Circuit explained that Defendants cannot be vicariously liable under the ATS when their “putative agents did not commit any relevant conduct within the United States giving rise to a violation of customary international law."