Ford Motors HQ
Ford Motors HQ ()

It’s the end of the line for plaintiffs who tried to hold IBM and Ford liable for allegedly assisting in the atrocities of the apartheid regime in South Africa.

Southern District Judge Shira Scheindlin (See Profile) held Thursday that the plaintiffs can no longer pursue redress in U.S. courts from the companies accused of helping the repressive regime because of recent interpretations of the Alien Tort Statute by the U.S. Supreme Court and the U.S. Court of Appeals for the Second Circuit.

The Alien Tort Statute allows U.S. courts to entertain “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.” Ford and IBM were accused of aiding and abetting apartheid policies of discrimination and violence through the provision of military vehicles and computers, respectively.

“That these plaintiffs are left without relief in an American court is regrettable,” Scheindlin said in In Re South African Apartheid Litigation, 02 MDL 1499, litigation that included the cases Balintulo v. Ford Motor Co., 03 Civ. 4524 and Ntsebeza v. Ford Motor Co., 02 Civ. 4712. But the judge said she was “bound to follow” recent case law “no matter what my personal view of the law may be.”

Five years ago, Scheindlin had ruled that Alien Tort Statute actions against Ford, IBM and other companies could proceed (NYLJ, April 9, 2009). The defendant companies went to the Second Circuit seeking a writ of mandamus and the dismissal of the cases.

While that appeal was pending, a divided Second Circuit in 2010 issued a decision in another Alien Tort Statute case, Kiobel v. Dutch Petroleum Co., finding the statute did not give U.S. courts jurisdiction over claims against corporations for violating international law (NYLJ, Sept. 20, 2010).

The circuit’s decision in the Ford and IBM cases before Scheindlin was stayed while the case headed to the Supreme Court.

In April 2013, the U.S. Supreme Court issued Kiobel II. While it affirmed the circuit’s dismissal in Kiobel I, the Supreme Court did not address the issue of corporate liability under the Alien Tort Statute.

Instead, it applied the presumption against the extraterritorial application of U.S. laws in the Alien Tort Statute context, saying it barred actions “for violations of the law of nations occurring outside of the United States.”

On remand, the Second Circuit directed a supplemental briefing on Kiobel’s impact, and then, in August 2013, remanded to Scheindlin. It went on to deny rehearing and rehearing en banc in November 2013.

In December 2013, Scheindlin dismissed the claims against all but the IBM and Ford defendants. She quoted the Supreme Court in Kiobel II, saying “plaintiffs have failed to show that they could plausibly plead the[ir] actions … touch and concern the United States with sufficient force to displace the presumption against the extraterritorial application” of the Alien Tort Statute.

But she also ordered the Ford and IBM parties to fully brief the question of whether the Supreme Court left the door ajar on whether corporations could be held liable for Alien Tort Statute violations post-Kiobel II.

Then, in April, Scheindlin ruled that the Supreme Court had implicitly overruled the Second Circuit’s rejection of corporate liability when it premised Kiobel on extraterritoriality, and she concluded that actions under the Alien Tort Statute could be brought against corporations. The judge let the plaintiffs in Balintulo and Ntsebeza replead with additional allegations (NYLJ, April 21, 2014).

But with those new allegations before her, Scheindlin on Thursday said the pleadings did not measure up to Kiobel II, which she said “drastically limits the viability of Alien Tort Statute cases based on conduct occurring abroad.”

The Second Circuit interpretation of the Supreme Court’s Kiobel decision, she said, led the circuit to find in Balintulo that corporate citizenship was irrelevant where “all the relevant conduct occurred abroad,” and that defendants cannot be held vicariously liable for conduct that occurred within South Africa by their South African subsidiaries.

This, Scheindlin said Thursday, left the plaintiffs without recourse.

“Despite plaintiffs’ tenacious efforts to revive this litigation, the bar set by the Supreme Court in Kiobel II, and raised by the Second Circuit in Balintulo, is too high to overcome,” she said. “Defendants argue, and plaintiffs cannot plausibly deny, that while the newly proposed allegations are substantially more detailed and specific, the theories of the American corporations’ liability are ‘essentially the same as those in plaintiffs’ existing complaints.’”

“Even if accepted as true, the ‘relevant conduct’ alleged in the plaintiffs’ proposed amended complaints all occurred abroad,” she said. “Thus, under the law of the Supreme Court and the Second Circuit, the claims do not touch and concern the territory of the United States ‘with sufficient force to displace the presumption against extraterritorial application’ and would not survive a motion to dismiss.”

Bruce Nagel of Nagel Rice in Roseland New Jersey, one of the lead attorneys representing plaintiffs in Ntsebeza, could not be reached for comment, nor could Michael Housfeld of Housfeld LLP in Washington, D.C, one of the lead attorneys in Baluntulo.

Jonathan Hacker of O’Melveny & Myers represented Ford. Keith Hummel of Cravath, Swaine & Moore represented IBM.