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Late last year, two closely watched cases brought under the Alien Tort Claims Act ended with a whimper. On the day they were set to be heard by an en banc panel of the Ninth Circuit U.S. Court of Appeals, Roe v. Unocal and Doe v. Unocal settled on confidential terms. The appeals court had scheduled the hearing after a panel held in 2002 that the company could be held liable for atrocities committed by the local military in connection with pipeline construction in Myanmar. A related case against Unocal in Los Angeles County Superior Court also settled. Before this resolution, the Unocal federal case was a good bet to end up at the U.S. Supreme Court and clarify the reach of the alien claims act. In recent years, human rights groups have used the once-obscure 1789 law to seek corporate accountability for certain controversies abroad. Success has been mixed. Last year the Supreme Court could have defined the reach of the law in Sosa v. Alverez-Machain. The high court held that the act gave federal courts jurisdiction over only those offenses widely deemed violations of international law. But the court did not clearly define those cases. With Unocal off the docket, the case that might set precedent is now before the Second Circuit. The defendants are 30 companies that did business in South Africa during apartheid. Yet human rights lawyers worry this might not be a good test case. “I’ve been concerned about that case since the day it was filed,” says Terry Collingsworth, executive director of the International Labor Rights Fund, one of the plaintiffs lawyers in Unocal. With good reason. Last November, Manhattan U.S. District Judge John Sprizzo granted the defendants’ motion to dismiss. The plaintiffs have filed a notice of appeal. Unlike the Unocal case and other alien tort claims, the South Africa case was not filed by human rights groups. Instead it was brought by the unhappy alliance of plaintiff lawyers Michael Hausfeld and Edward Fagan, who have openly battled each other over control of the case. Several years ago the two were part of a group that used this law to recover $6.25 billion for Holocaust victims. In June 2002 Fagan filed the first of seven suits against companies that did business in South Africa, seeking $400 billion for everyone who had lived in that country since 1948 and suffered under apartheid. Hausfeld later filed a narrower suit, targeting 22 companies that allegedly aided and abetted the government. He sued IBM Corp., for example, for providing computers used by South Africa to produce “pass books” that controlled residents’ movements. The cases were consolidated before Judge Sprizzo. While condemning apartheid, Sprizzo concluded the plaintiffs had not shown that the defendants had violated international law, as required by Sosa. Most significantly, Sprizzo found no liability for aiding and abetting under the alien claims act, a conclusion that, if upheld, would be a major setback for the cases. Hausfeld, however, says he’s optimistic about getting a reversal. Sprizzo erred by adopting the reasoning of Justice Antonin Scalia’s dissent in Sosa, he says, rather than the majority opinion. The judge also ignored customary international law, he claims. Collingsworth, it turns out, was “delighted” the apartheid case was tossed: “The courts are pretty good at sorting out the wheat from the chaff.” Collingsworth says Hausfeld’s case is stronger than Fagan’s, but he says it still suffers from being lumped with Fagan’s. “Mike Hausfeld’s case is a good case,” he says. “[It] tries to identify specific companies that tried to willingly and knowingly assist apartheid.” Fagan could not be reached for comment. Collingsworth still sees a promising future for alien claims cases post- Sosa, especially those that allege corporate complicity in crimes such as murder and torture. “If you’re working within those traditional boundaries, then the Supreme Court gave you a big green light,” he says. “But if you’re relying on environmental claims or claims like the South Africa case, you’re out of luck.” But Cravath, Swaine & Moore partner Frank Barron, who represents financial institution UBS AG and made the oral argument before Sprizzo on behalf of all the defendants, says plaintiffs may have a hard time clearing Sosa’s hurdles. “The Supreme Court was very cautious about what it would allow [lower courts] to do in finding new violations of international law,” he says. At the same time, he notes that Judge Sprizzo’s dismissal isn’t grounds for jubilation, given that the plaintiffs were “very sympathetic and obviously suffered a great deal of harm.” He notes, “You can’t go out dancing in the streets saying what a great victory this is. . . . You can be quietly satisfied that the legal process worked.” Susan Beck is a San Francisco-based senior writer for The American Lawyer. Her e-mail address is [email protected].

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