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“If you’re a business and you haven’t yet been sued under this law, don’t worry, you will be.” That’s the dire prediction from Competitive Enterprise Institute President Fred Smith about the increase in litigation under the Alien Tort Claims Act. Nor is Smith alone in his fears. Business advocates nationwide are sounding the alarm about the once-obscure 1789 statute now being invoked to hold multinational corporations liable for human rights abuses committed by government officials around the world. The U.S. Chamber of Commerce, the National Association of Manufacturers, and the National Foreign Trade Council are among the groups gearing up for a legal and lobbying battle to rein in the law, retaining a team of lawyers led by Carter Phillips and Daniel Price of Sidley Austin Brown & Wood in the District. It will require a deft touch. Labor and human rights activists, religious groups, environmental organizations, and plaintiffs lawyers are mobilized to defend the statute, which they say often provides the only means of redress for victims of atrocities overseas. Ground zero in the fight is Doe v. Unocal, the first ATCA case brought against a corporate defendant. Last month, an en banc panel of the U.S. Court of Appeals for the 9th Circuit heard arguments on whether to allow the case to go forward, with a decision expected this fall. Parallel litigation brought in California state court is scheduled for trial Sept. 22. The plaintiffs, Burmese citizens, are attempting to hold the Unocal Corp. liable for abuses committed by the Burmese military during the construction of the Yadana Gas Pipeline Project, in which Unocal holds a minority interest. Represented by six plaintiffs firms as well as the International Labor Rights Fund (ILRF), the Center for Constitutional Rights, and Earthrights International, the plaintiffs allege Unocal used forced labor to build the pipeline, and that soldiers hired by the corporation to provide security murdered, imprisoned, and tortured the local villagers. “Unocal was more than a passive beneficiary of forced labor. It was knowingly in business with a brutal military regime and is liable for the ensuing human rights violations,” wrote Terrence Collingsworth of the D.C.-based ILRF in his opening brief to the 9th Circuit. The case was filed in 1996, 16 years after a landmark decision from the 2nd Circuit resurrected the Alien Tort Claims Act, which had lain dormant for nearly 200 years. The law, originally used to combat piracy, gives U.S. courts jurisdiction to hear cases brought by non-U.S. citizens for events that occurred outside the United States. After the 1980 decision, the first spate of ATCA suits was directed at foreign officials, including the Philippines’ Ferdinand Marcos and Radovan Karadzic of the former Bosnian Serb Republic. The first lawyer to apply the law to corporate defendants was Collingsworth, who came up with the idea after meeting with Burmese refugees in Thailand who asked for his help. While the logistics of gathering evidence and keeping witnesses safe for the duration of the litigation seemed daunting, he says, “We decided that even if it was almost impossible to do, we’ve got to try.” So far, his plan has worked. “We like where we’re sitting,” Collingsworth says, and indeed, both plaintiffs and defense lawyers following the case tend to predict the 9th Circuit will allow it to go to trial. But Unocal’s lawyers — Daniel Petrocelli and M. Randall Oppenheimer of O’Melveny & Myers in Los Angeles, and L.A.-based Howrey Simon Arnold & White partner Edwin Woodsome Jr. — argue that private corporations such as Unocal can’t be held responsible for the conduct of the foreign governments where they have operations. “Just as a company investing in a high-crime area in the U.S. has no choice but to rely upon the local police force, a company investing in a foreign country typically has no choice but to rely upon the local military or police,” said Woodsome in a speech earlier this year at the Loyola Law School International Law Symposium. The case has drawn an amicus brief from the U.S. Department of Justice, which argues that allowing ATCA claims to proceed would have “significant potential for interference with the important foreign policy interests with the United States, and is contrary to our constitutional framework and democratic principles. . . . Although it may be tempting to open our courts to right every wrong all over the world, that function has not been assigned to the federal courts.” The State Department has had similar reservations. “The courts are probing the outer limits of the law of nations,” said David Stewart, head of the State Department’s Office of Diplomatic Law and Litigation, at a legal advisory committee meeting last fall. “Some question the wisdom, the propriety, even the constitutionality of unilateral assertion of jurisdiction [in cases with] no nexus or relation to the United States.” Still, at the same meeting, State Department Legal Adviser William Taft IV seemed less hostile to the law, and more concerned that it wasn’t the right tool to help victims of human rights abuse. “I have doubts about how effective this remedy is, whether in fact the plaintiffs ever do get something out of it. Is there a better way of getting something for them than through litigation in U.S. courtrooms?” he mused. CORPORATE TAINT A coalition of trade groups — the National Foreign Trade Council, the National Association of Manufacturers, the Chamber of Commerce, the U.S. Council for International Business, and the Organization for International Investment — known collectively as USA Engage hired Sidley Austin six months ago to pen an amicus brief in the Unocal case and others in the future. In the brief, Sidley lawyers stress that the law is jurisdictional only, and does not provide a cause of action — an interpretation that, if adopted, would prove fatal to virtually all pending ATCA cases. “The real problem is the construction of the statute,” says Sidley’s Daniel Price. In its entirety, the law reads, “The district courts shall have original jurisdiction of 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.” Nowhere, however, argues Price in the amicus brief, does the law “expressly create a cause of action nor does it contain language conferring substantive rights and remedial provisions from which a court could imply a private right of action . . . . Congress was allocating the power (that is, the jurisdiction) of [the federal courts]. It was not creating causes of action for those new courts to adjudicate.” To read it otherwise, he continues in an interview, creates “an easily satisfied threshold for filing cases, which immediately taint a corporate defendant with the bad acts of the government where it does business. By the time the case is dismissed, reputational and other injuries have been inflicted.” Many more suits have followed in Unocal‘s wake. Among them: another action by the ILRF, with the Exxon Mobil Corp. as the target. Filed in the U.S. District Court for the District of Columbia last year on behalf of 11 villagers in the Indonesian province of Aceh, the suit alleges that Indonesian soldiers paid by Exxon to protect gas production facilities terrorized the local citizens, committing murder, torture, kidnapping, and rape. Exxon is being represented by D.C.-based Foley & Lardner partners Robert Meyer and Martin Weinstein. In another closely watched case filed in the U.S. District Court for the Northern District of California, the Chevron Corp. is charged with helping the Nigerian military shoot protesters at a company offshore platform in the Niger Delta, and with the destruction of two villages that supported the demonstrators. The company has retained Robert Mittelstaedt of Jones Day in San Francisco. Plaintiffs counsel include Richard Herz of D.C.’s Earthrights International. But the case that has the corporate world most up in arms is In Re South African Apartheid Litigation, now pending in the Southern District of New York. In one complaint, filed last November by D.C.-based partner Michael Hausfeld of Cohen, Milstein, Hausfeld & Toll, 23 major corporations are named for aiding and abetting the apartheid regime in crimes including forced labor, genocide, murder, torture, sexual assault, and unlawful detention. For example, the IBM Corp. is charged with supplying computers that enabled the South African government to create the “pass book system” used to control the black population. The Ford Motor Co., the General Motors Corp., and DaimlerChrysler are named for providing the armored vehicles used to patrol the townships. Banks including Citigroup, J.P. Morgan Chase & Co., and Credit Suisse Group are being sued for providing the funding that enabled South Africa to expand its police and security apparatus. “We didn’t pick any companies willy-nilly,” says Hausfeld. “We did a year of research on which companies materially provided aid” to the regime, a standard that he says is based on precedent set by the Nuremberg trials after World War II. A series of class action complaints against 40 companies has also been filed by Edward Fagan, who is best known for bringing Holocaust lawsuits against Swiss banks and German companies. In addition, a suit by Connecticut lawyers Paul Ngobeni, Kweku Hanson, and Medi Mokuena initially named 84 companies, including some, such as the Sara Lee Corp., without any obvious link to the crimes of the regime. Since then, says Hanson, they’ve winnowed the list to 34. The suit, a class action, includes claims of wage discimination, targeting companies that “reaped profits illegally, paying subhuman wages” to black South Africans, he says. One consequence of the apartheid litigation has been to “energize” the corporate world to fight back, says William Reinsch, president of the National Foreign Trade Council. “The fact that so many defendants and corporate John Does are named puts us in the position of telling people truthfully when they ask, ‘Why should we care?’ ” that they stand a good chance of being sued under the law. Agrees Meyer of Foley & Lardner: “The breadth of the lawsuits and the number of companies sued have made a lot more people pay attention.” But, he adds, “The plaintiffs lawyers have tried to push too far. It could be counterproductive for them.” Now, the business community is trying to figure out the best strategy to counter the snowballing litigation. The immediate challenge is changing the terms of the debate. “The moral framing of this issue has been disastrous for us,” said Smith of the Competitive Enterprise Institute at a recent Chamber of Commerce-sponsored forum on the law. The perception, he continued, is “we want to make money, and they want human rights. We have yet to find an effective argument to counter [this].” Nor does it help, notes Reinsch, that “these are enormously sympathetic plaintiffs, people who have had terrible things happen to them. It’s difficult for judges to dismiss the cases, even though the legal nexus between the crimes and the U.S. companies as perpetrators is usually zero, and at best tenuous. “We’re wrestling with the best course of action,” he continues. “We’ve got some people who think the only way to deal with it is to get a case in the Supreme Court, and do what we can to make sure they make the right decision. But, at best, that will take awhile.” Right now, business advocates are focusing on educating members of Congress on the issue. But some are pushing for a legislative fix, perhaps a clarification that ATCA provides jurisdiction only. It could be a risky tactic. Covington & Burling partner Stuart Eizenstat, who as the special representative of President Bill Clinton brokered the Holocaust-related settlements, has warned USA Engage members that “once you open up the statute, you never know how it’s going to come out,” he says. And the attendant fight “will be a donnybrook. The statute could even get tighter.” Collingsworth of the ILRF says his organization and colleagues from groups such as Amnesty International and the Lawyers’ Committee for Civil Rights Under Law are well aware of the maneuvering. “They don’t have any legs at all to get [the law] repealed,” he says. “We’re more concerned about the classic ‘page 3,004 of the Omnibus Funding Act’ move — that they’ll do something sneaky in the fine print. We’ve got a lot of people watching in Congress.”

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