Under what circumstances can a foreign plaintiff bring suit against U.S. companies for allegedly tortious actions that occurred abroad? For pharmaceutical companies that conduct clinical trials all over the world, this is anything but a theoretical matter. The Supreme Court may soon answer these questions, raised by a case arising under the Alien Tort Statute, should it decide to grant Pfizer’s petition for certiorari in Abdullahi v. Pfizer.1
The Abdullahi case arises out of a highly pubicized clinical trial of the antibiotic Trovan (trovafloxacin mesylate), conducted by Pfizer, Inc. in 1996 in Nigeria. The Second Circuit held that conducting an investigational drug clinical trial without informed consent—as the Abdullahi plaintiffs allege—falls within a select category of international norms that do not require state action to satisfy jurisdictional requirements under the Alien Tort Statute. The Second Circuit also held that the plaintiffs’ allegation of the state action element was adequate for jurisdiction under this statute.2 Pfizer has sought certiorari.
The Alien Tort Statute
Enacted in 1789, the Alien Tort Statute confers jurisdiction in federal district courts over “any civil action by an alien for tort only, committed in violation of the laws of nations or a treaty of the United States . . .”3 The Alien Tort Statute ensures that American citizens living abroad enjoy the protection of United States laws and provides remedies in the United States legal system for breaches of customary law abroad by United States nationals. More recently, foreign nationals in developing countries also have sought to use the Alien Tort Statute to seek recovery in the United States against domestic multinational corporations.
In 1996, northern Nigeria was beset by an epidemic of bacterial meningitis. In April of that year, Pfizer began a clinical study of its investigational antibiotic, Trovan (trovafloxacin mesylate) in Kano, Nigeria.4 With permission from the Nigerian government, Pfizer established a treatment center in Kano. In its clinical trial, Pfizer recruited 200 sick children, providing half with Trovan and half with ceftriaxone, a Food and Drug Administration (FDA)-approved antibiotic. The Abdullahi plaintiffs alleged that Pfizer gave those children in the ceftriaxone control group a lower dose, in order to misrepresent the effectiveness of Trovan, and that Pfizer ended the experiment without administering any follow-up care to any of the patients. The plaintiffs also alleged that the trial caused the deaths of 11 children (five in the Trovan arm, and six in the ceftriaxone arm), and caused serious injuries to others. They further claimed that Pfizer failed to secure informed consent by not providing, in a language that the subjects and guardians could understand, documents that explained the experimental nature and that disclosed the serious risks of the study. Finally, the plaintiffs alleged that Pfizer informed neither the children nor their guardians of the availability from another source, without charge, of an alternative meningitis treatment. The claims in the Abdullahi complaint included claims brought under the Alien Tort Statute.
Pfizer contended that had conducted its trial ethically and that the deaths and injuries of the children were a result of the underlying meningitis, not the study drug or the control. Pfizer also contested the District Court’s subject-matter jurisdiction over the complaint in the first place, in light of Supreme Court and Second Circuit decisions that sharply curtail claims under the Alien Tort Statute. The District Court agreed with Pfizer’s jurisdictional argument and dismissed plaintiffs’ complaint. Plaintiffs appealed to the Second Circuit Court of Appeals.
The Second Circuit’s Decision
The Second Circuit held that plaintiffs had established jurisdiction under the Alien Tort Statute, reversing the District Court’s dismissal. Writing for a divided three-judge panel, Judge Parker held that allegedly nonconsensual drug trials violate customary international law, and that the plaintiffs’ allegations of Nigerian government involvement were sufficient to satisfy the Alien Tort Statute state action requirement. Judge Parker cited several sources of international law in finding that nonconsensual drug trials violate customary international law, holding that the international norms were “sufficiently specific, universally accepted, and obligatory for courts to recognize a cause of action to enforce the norm.” In finding the state action requirement was met, the majority relied heavily on new allegations in the plaintiffs’ appellate brief and determined that the plaintiffs had sufficiently alleged that “the Nigerian government was involved in all stages of the Kano test and participated in the conduct that violated international law.” Because the Nigerian government allegedly “facilitated the nonconsensual testing” and “conspired to cover up the violations,” the majority concluded that there was a sufficient nexus between the State and the action, such that the otherwise private behavior was, in substance, an act of the state itself.
Judge Wesley dissented, voicing concern that the majority had “create[d] a new norm out of whole cloth.” He observed that none of the sources invoked by the majority established a “universal and obligatory” norm requiring drug trials to have adequate consent. He further observed that, even if an international norm had been violated, the plaintiffs had failed to allege Nigerian involvement sufficient to satisfy the state action requirement: “the plaintiff must allege that the state was involved with the activity that caused the injury giving rise to the action,” not merely that there was some state activity. The dissenting judge also noted that the complaints “did not allege that any Nigerian government officials even knew about the non-consensual tests,” much less that the studies were compelled by state plan or policy. Pfizer filed for a petition for panel rehearing and rehearing en banc, which was denied.
Pfizer has now sought a writ of certiorari from the Supreme Court, arguing in its petition that the Second Circuit’s ruling has deepened a circuit split and requires the Supreme Court’s attention. Specifically, Pfizer has sought certiorari on two issues:
- whether jurisdiction under the Alien Tort Statute can extend to a private actor based on alleged state action by a foreign government where there is no allegation that the foreign government knew of, or participated in, specific acts by the private actor claimed to have violated international law, and
- whether, absent state action, a complaint that a private actor has conducted a clinical trial of a medication without adequate informed consent can surmount the “high bar to new private causes of action” under the Alien Tort Statute.
In an indication of the Court’s recognition that the issue is one that may be of interest to the U.S. government , the Supreme Court recently invited the Solicitor General to file a brief expressing the views of the United States Government on Pfizer’s petition.5 The case is one of several in which foreign nationals in other countries have recently sought to use the Alien Tort Statute to seek recovery in the United States against domestic multinational corporations. 6
How must plaintiffs allege and prove state action required for most ATS claims? Typically, private actors cannot be held liable under the Alien Tort Statute unless they have acted in concert with a state, thereby creating “state action.” But there is no clear standard as to what constitutes “state action.” Courts rendering decisions under this statute have required different levels of state involvement, ranging from general knowledge to specific participation.
One key reason for the currently inconsistent standards is that circuits are split as to whether domestic or international law applies to define the interaction between a private actor and a state actor. Because the state-action nexus is so critical for purposes of Alien Tort Statute jurisdiction, the application of differing standards has led to drastically different results – a classic predicate for certiorari jurisdiction.
Some circuits have looked primarily to international law, in particular the Rome Statute, which provides that “a defendant may be held liable under international law for aiding and abetting the violation of that law by another when the defendant (1) provides practical assistance to the principal which has a substantial effect on the perpetration of the crime, and (2) does so with the purpose of facilitating the commission of that crime.”7 Thus, under international law, mere knowledge on the part of the secondary state actor does not suffice to create state action. Rather, the state must have had a “plan or policy” to commit the international law violation.8 Under international law, therefore, purposefulness is a required component of the standard for state action.
Other circuits have looked to domestic law to analyze the nexus between the private actor and state actor.9 As a result, these circuits have found necessary only that the secondary actor ”knew of the events in question”—it is not required that the act be done purposefully.10 Adding to the confusion, the circuit courts that apply domestic law are themselves split on the required level of knowledge. Thus, some courts applying domestic law have concluded that knowledge of the specific alleged events is necessary to warrant Alien Tort Statute jurisdiction;11 other courts have found that even a general knowledge of events will suffice to establish state action.
What is the scope of international law norms that might be enforceable under the Alien Tort Stature against purely private actors? Even where a plaintiff cannot show state action, a claim under the Alien Tort Statute may be brought against solely private actors if the tortious activities violate norms of “universal concern” that are recognized to extend to the conduct of private parties. In its only prior ruling on the statute, the Supreme Court confirmed that the Statute recognizes “a narrow class of international norms” to be judicially enforceable, and that courts have a limited power to “adapt the law of nations to private rights.” 12 This narrow class has included piracy; slave trade; attacks on or hijacking of aircraft; genocide; war crimes; and perhaps certain acts of terrorism. However, the Supreme Court has urged that lower courts must serve as “vigilant doorkeep[ers],” suggesting that the boundaries of this class should remain tightly drawn.13
In Abdullahi, the Second Circuit held that Alien Tort Statute jurisdiction extends “to alleged violations of those clear and unambiguous rules by which States universally abide, or to which they accede, out of a sense of legal obligation and mutual concern.” 14 The Circuit Court found that “nonconsensual” drug trials violate customary international law. The court stated that “since [the Nuremberg trials of Nazi war criminals], states throughout the world have shown through international accords and domestic law-making that they consider the prohibition on nonconsensual medical experimentation identified at Nuremberg as a norm of customary international law,” and therefore, the Second Circuit treated the cause of action under this umbrella of international norms that create Alien Tort Statute jurisdiction over the conduct of private parties. At issue now is whether the Second Circuit overstepped the restraints of previous case law to encompass investigational drug trials conducted without informed consent. Particularly, how specifically defined must the norm be under international law? What standards must be met before a violation qualifies?
The Supreme Court has decided only one other case directly concerning the Alien Tort Statute. See Sosa v. Alvarez-Machain, 542 U.S. 692 (2004). If it grants Pfizer’s certiorari petition, the implications of its decision could be broad and deep – particularly if the Court affirms the Second Circuit, and thus confirms the broad jurisdiction found by the Second Circuit panel majority. An affirmance on these grounds may affect the litigation exposure calculation of U.S.-based sponsors of foreign clinical trials. The upshot for present purposes is that pharmaceutical and medical device companies and research institutions with overseas clinical activities should be aware of the changing landscape in order to understand and reduce their liability when conducting clinical trials abroad, especially in resource-poor countries.
Also worthy of close attention from global companies is Morrison v. National Australia Bank, a securities law case that was the subject of oral arguments in the Supreme Court on March 29, 2010. In Morrison, the Court must consider whether U.S. federal courts have subject- matter jurisdiction over a securities suit brought by a class of foreign investors who purchased stock issued by a foreign company on a foreign securities exchange, a so-called “foreign-cubed” case. In particular, the Court has been asked to review whether SEC Rule 10(b)(5) provides these foreign investors a private cause of action, when the allegedly fraudulent activity took place primarily overseas.