Jose Linares (Carmen Natale)
A federal judge on Monday refused to throw out a lawsuit that accuses Rajakumara Rajaratnam, a former hedge fund manager convicted of insider trading, of aiding and abetting human rights violations by allegedly funneling millions of dollars to the Tamil Tigers, a Sri Lankan terrorist group.
Rajaratnam, his father Jesuthasan and the Tamil Rehabilitation Organization (TRO), a Sri Lankan NGO that raises money for the Tamil Tigers—whose full name is the Liberation Tigers of Tamil Elam—were sued under the Alien Tort Statute by more than two dozen Sri Lankan plaintiffs who claim they lost family members or were themselves injured in five bombings carried out by the Tigers in 2007 and 2008.
U.S. District Judge Jose Linares in Newark ruled that he had subject matter jurisdiction over the claims against the Rajaratnams despite a 2013 U.S. Supreme Court decision that made it much more difficult for non-U.S. citizens to sue under the Alien Tort law for human rights violations committed in other countries.
Linares also held in Krishanti v. Rajaratnam, that the court lacked personal jurisdiction over TRO. He dismissed the claims against it without prejudice, however, and gave the plaintiffs leave to file an amended complaint with stronger jurisdictional allegations by June 13.
Rajaratnam, the founder of New York’s Galleon Group, a hedge fund management firm, was born in Sri Lanka when it was still known as Ceylon and has dual citizenship there and in the U.S.
The Tamil Tigers waged a campaign of bombings and assassinations in an attempt to establish an independent Tamil state in northern Sri Lanka. The resulting civil war ended in 2009, when it was defeated by government forces.
The U.S. government has designated the Tigers as a “foreign terrorist organization” and a “specially designated global terrorist,” designations that prohibit individuals from providing the group with financial and other material support.
TRO, a charity with a U.S. branch based in Cumberland, Md. and a New Jersey office in Princeton Junction, is a major source of funds for the Tigers.
The Treasury Department has called TRO a “front to facilitate fundraising and procurement” for the Tigers and barred U.S. individuals from engaging in activities with it.
The plaintiffs claim TRO knowingly gave the Tigers money for the purpose of carrying out the attacks that injured them and killed their families.
For example, three of the plaintiffs sued over an April 6, 2008, suicide bombing at the start of a marathon in the city of Weliweriya that killed 15 people and injured more than 90 others. Two of them lost their spouses and the third suffered a head injury and extensive wounds from shrapnel, says the complaint.
The Rajaratnams allegedly gave money meant for the Tigers to TRO directly as well as through two charitable organizations they founded that donated to other Tamil charities too: the Rajaratnam Family Foundation, launched in 2000, and the Tsunami Relief fund, launched after the December 2004 tsunami that struck the Sri Lanka coast.
In 2005, Tsunami Relief allegedly took in more than $7 million, of which $2 million went to TRO, with another $500,000 donated in 2006.
The plaintiffs alleged Rajaratnam had Tsunami Relief donate the money to TRO knowing it would go to the Tigers to be used to carry out bombings.
He was a guest speaker in 2002 at a TRO fundraising event in North Brunswick where the Tigers’ flag and brochures were on display and he urged attendees to support the struggle in Sri Lanka, plaintiffs said.
In addition, captured Tamil Tiger operatives have spoken of Rajaratnam’s financial support for the group, his attempt to meet with its leader and a personal $1 million donation he made after a successful terrorist attack in 2000, plaintiffs said.
They also claim that Rajaratnam’s father tried to bribe U.S. officials to get the Tigers removed from the terrorist list and attended events seeking to raise money for the Tigers and hosted one at his home in Old Tappan, N.J.
The Alien Tort Statute, enacted in 1789, gives federal courts subject matter jurisdiction over claims by non-U.S. citizens for human rights violations committed in other countries.
The plaintiffs sued in 2009 and in 2010, U.S. District Judge Dennis Cavanaugh dismissed a large part of the case but left the claims for aiding and abetting crimes against humanity and reserved decision on whether there was personal jurisdiction over TRO.
He asked for supplemental briefing after the U.S. Supreme Court’s April 2013 decision in Kiobel v. Royal Dutch Petroleum, a suit by Nigerian nationals living in the U.S. who claimed that Dutch, British and Nigerian oil companies operating in Nigeria had aided and abetted the Nigerian government during the 1990s in crushing peaceful protests against oil development.
The court held that the presumption against extraterritorial application of U.S. law applies to claims under the Alien Tort Statute but that the presumption can be overcome where the claims “touch and concern the territory of the United States” to a sufficient extent.
Linares disagreed with the Rajaratnams that Kiobel meant there was no subject matter jurisdiction over the claims against them because all the harm occurred in Sri Lanka. He stated that argument would have weight if they were sued over actions they took in Sri Lanka but the case was about meetings, donations, creation of charities and bribery attempts that all happened here. And the Rajnaratams were both U.S. citizens, not foreign nationals being haled into a strange court to defend themselves, he said.
On the other hand, TRO’s contacts with New Jersey were not continuous and systematic enough to provide a basis for general personal jurisdiction.
And although TRO had directed activities toward New Jersey by fundraising here, they were not a sufficient basis for specific personal jurisdiction without a showing that without those actions, the bombings would not have taken place, said Linares.
He gave the plaintiffs a chance to allege facts showing that at least some of the money raised in New Jersey was “used to facilitate the relevant bombings.”
Michael Elsner of Motley Rice in Mount Pleasant, S.C., who represents the plaintiffs, said Linares correctly applied Kiobel’s “touch and concern” standard.
Not only did New Jersey have the best connection to all three defendants but there was nowhere else to bring the action, he notes. Sri Lankan experts advised him there would not be jurisdiction there and even if there were, it would not have been possible to depose the Rajaratnams.
He is “looking at” whether to amend the complaint to try to bring TRO back in.
TRO lawyer Joshua Dratel, of Dratel & Mysliwiec in New York, called the ruling regarding his client “in line with Supreme Court precedent.”
The Rajaratnams’ attonrey, Thomas Valen of Gibbons in Newark, declined to comment.
Penny Venetis, who won a landmark 2004 ruling in Jama v. Esmor, that allowed an Alien Tort suit by detainees at a privatized immigration center in New Jersey to sue the company that operated it over alleged abuses by guards, says most post-Kiobel opinions have allowed actions against corporations to go forward. Venetis is Director of the International Human Rights Clinic at Rutgers-Newark Law School.
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