In re South African Apartheid Litigation, No. 02 MDL 1499, (S.D.N.Y. Apr. 17, 2014) [click for opinion]
In an opinion contradicting a prior Second Circuit opinion, Judge Scheindlin of the Southern District of New York ruled that corporations may be liable under the Alien Tort Statute ("ATS"), 28 U.S.C. § 1350. Judge Scheindlin justified the result on the basis of two intervening Supreme Court opinions. While those opinions did not directly address the question whether corporations may be liable under the ATS, Judge Scheindlin read them as irreconcilable with—and hence implicitly overruling—the Second Circuit opinion.
Judge Scheindlin's opinion was issued in the context of a multi-district litigation, which was based on allegations that corporations aided and abetted the South African apartheid regime. Plaintiffs, black South Africans who were victims of apartheid-era violence, sued Ford and IBM under the ATS, which gives federal courts 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." Plaintiffs alleged that Ford and IBM manufactured military vehicles and computers for South African security forces.
In 2010, the Second Circuit ruled that the ATS does not confer jurisdiction over claims against corporations. Judge Scheindlin found this ruling to be at odds with two subsequent Supreme Court opinions. First, in 2012, the Supreme Court ruled in Kiobel v. Royal Dutch Petroleum Co. that the presumption against the extraterritorial application of American laws applies to claims under the ATS. As a result, ATS claims that "touch and concern the territory of the United States…must do so with sufficient force to displace" the presumption. The Court clarified that because "[c]orporations are often present in many countries, . . . it would reach too far to say that mere corporate presence suffices" to overcome that presumption. Similarly, in 2014, the Supreme Court held in Daimler AG v. Bauman that corporate presence alone is insufficient to overcome the presumption against extraterritoriality.
Judge Scheindlin concluded that the Supreme Court's recognition that mere presence of a corporation in the United States is insufficient to overcome the presumption against extraterritoriality necessarily implies that "corporate presence plus additional factors" may be sufficient to overcome the presumption. "This language makes no sense," Judge Scheindlin wrote, "if a corporation is immune from ATS suits as a matter of law."
In further support of her reading were the opinions of four federal courts of appeal—the Seventh, Ninth, Eleventh, and D.C. Circuits—all of which have held that corporations may be liable under the ATS. Three of those courts reached this conclusion after the Supreme Court's opinion in Kiobel, and each vigorously disagreed with the Second Circuit's reasoning. In fact, the Second Circuit is the only federal court of appeals to hold that there is no corporate liability under the ATS.
Finally, Judge Scheindlin noted that nothing in the text, history, or purposes of the ATS suggests that corporations should be treated any differently than natural persons. She thus held that corporations are liable under the ATS in the same manner as natural persons for torts in violation of the law of nations.