Source: https://caselaw.findlaw.com/us-2nd-circuit/1709514.html
Timestamp: 2019-04-21 07:17:14+00:00

Document:
Sakwe BALINTULO, as personal representative of Saba Balintulo, et al., Plaintiffs–Appellants, v. FORD MOTOR CO., International Business Machines Corp., Defendants–Movants.
Nos. 14–4104, 14–4129, 14–4132, 14–3589, 14–4130, 14–4135, 14–3607, 14–4131, 14–4136.
Before CABRANES, HALL, and LIVINGSTON, Circuit Judges. Paul L. Hoffman (Diane E. Sammons, Nagel Rice, LLP, Roseland, NJ; Michael D. Hausfeld, Kristen M. Ward, Hausfeld, Washington, DC, on the brief), Schonbrun, Desimone, Seplow, Harris & Hoffman LLP, Venice, CA, for Plaintiffs–Appellants. Jonathan Hacker (Anton Melitsky, on the brief), O'Melveny & Myers LLP, New York, NY, for Defendant–Movant Ford Motor Company. Keith R. Hummel (Teena–Ann V. Sankoorikal, James E. Canning, on the brief), Cravath, Swaine & Moore LLP, New York, NY, for Defendant–Movant International Business Machines Corporation.
This appeal presents the question of whether plaintiffs, victims of South African apartheid, have plausibly alleged relevant conduct committed within the United States that is sufficient to rebut the Alien Tort Statute's presumption against extraterritoriality.
We hold that they have not.
Accordingly, we AFFIRM the August 28, 2014 order of the United States District Court for the Southern District of New York (Shira A. Scheindlin, Judge ).
Nearly a decade and a half ago, plaintiffs filed suit under the Alien Tort Statute (“ATS”)1 against various corporations2 for allegedly aiding and abetting crimes proscribed by “the law of nations” (also called “customary international law”)3 committed during apartheid by the South African government against South Africans within South Africa's sovereign territory.
In turn, the Companies assert that the District Court properly denied plaintiffs' motion for leave to amend their complaints because (1) plaintiffs cannot satisfy the ATS's territoriality and mens rea requirements; (2) corporations cannot be sued under the ATS; and (3) there is no aiding and abetting liability under the ATS.
In Mastafa v. Chevron Corporation, we applied the Supreme Court's rulings in Morrison v. National Australia Bank Limited32 and Kiobel II to clarify that the “focus” of the ATS inquiry is on the nature and location of the conduct constituting the alleged offenses under the law of nations.33 Accordingly, to determine whether specific claims can be brought under the ATS, a court must isolate the “relevant conduct” of a defendant—conduct that is alleged to be either a direct violation of the law of nations or the aiding and abetting of another's violation of the law of nations—in a complaint and then conduct a two-step jurisdictional analysis.
In Balintulo I, we reasoned that the Companies' alleged domestic conduct lacked a clear nexus to the human rights abuses occurring in South Africa.43 Here too, plaintiffs' amended pleadings do not establish federal jurisdiction under the ATS because they do not plausibly allege that the Companies themselves engaged in any “relevant conduct” within the United States to overcome the presumption against extraterritorial application of the ATS.
Here, plaintiffs present no plausible allegations—indeed, they present no allegations—that would form any basis for us to “pierce [Ford's] corporate veil.”51 The complaints do not suggest that Ford's control over its subsidiaries differed from that of most companies headquartered in the United States with subsidiaries abroad. Allegations of general corporate supervision are insufficient to rebut the presumption against territoriality and establish aiding and abetting liability under the ATS.
Plaintiffs' second allegation against IBM—that the company bid on contracts meant to further the denationalization of South African blacks—falls short of alleging a violation of the law of nations for a simple reason: IBM did not win the contract for the only bid specifically alleged to have been made by IBM, rather than IBM's South African subsidiary.55 Indeed, even according to plaintiffs, another company, ICL, won the passbooks contract over IBM.56 It is simply not a violation of the law of nations to bid on, and lose, a contract that arguably would help a sovereign government perpetrate an asserted violation of the law of nations.
Identity documents, like those allegedly created by IBM and transferred to the Bophuthatswana government, were an essential component of the system of racial separation in South Africa.58 And so, designing particular technologies in the United States that would facilitate South African racial separation would appear to be both “specific and domestic”59 conduct that would satisfy the first of the two steps of our jurisdictional analysis.60 Accordingly, if this allegation is able to also satisfy the second prong of our extraterritoriality inquiry—that is, if such conduct aided and abetted a violation of the law of nations—the presumption against extraterritoriality would be displaced and we would be able to establish jurisdiction for this particular claim under the ATS.
Moreover, where the language in the complaint seems to suggest that IBM acted purposefully,63 “it does so in conclusory terms and fails to establish even a baseline degree of plausibility of plaintiffs' claims.”64 A complaint will not “suffice if it tenders naked assertions devoid of further factual enhancement.”65 Indeed, plaintiffs do not—and cannot—plausibly allege that by developing hardware and software to collect innocuous population data, IBM's purpose was to denationalize black South Africans and further the aims of a brutal regime.66 This absence of a connection between IBM's “relevant conduct” and the alleged human rights abuses of the South African government means that plaintiffs, even if allowed to amend their complaint, will be unable to state a valid ATS claim against IBM.
Accordingly, because plaintiffs fail plausibly to plead that any U.S.-based conduct on the part of either Ford or IBM aided and abetted South Africa's asserted violations of the law of nations, their claims cannot form the basis of our jurisdiction under the ATS. We therefore affirm the District Court's denial of plaintiffs' motion for leave to file an amended complaint because the proposed amendments are futile as a matter of law.
(1) Knowledge of or complicity in the perpetration of a crime under the law of nations (customary international law)—absent evidence that a defendant purposefully facilitated the commission of that crime—is insufficient to establish a claim of aiding and abetting liability under the ATS.
(2) It is not a violation of the law of nations to bid on, and lose, a contract that arguably would help a sovereign government perpetrate an asserted violation of the law of nations.
(3) Allegations of general corporate supervision are insufficient to rebut the presumption against extraterritoriality and establish aiding and abetting liability under the ATS.
(4) Here, plaintiffs' amended pleadings do not establish federal jurisdiction under the ATS because they do not plausibly allege that the Companies themselves engaged in any “relevant conduct” within the United States to overcome the presumption against extraterritorial application of the ATS.
a. Holding Ford to be directly responsible for the actions of its South African subsidiary, as plaintiffs would have us do, ignores well-settled principles of corporate law, which treat parent corporations and their subsidiaries as legally distinct entities.
b. Plaintiffs have plausibly alleged some specific, domestic conduct in the complaint—namely, that IBM in the United States designed particular technologies in the United States that facilitated South African apartheid. This conduct satisfies the first prong of our extraterritoriality analysis as it “touches and concerns” the United States.
c. Plaintiffs' complaint against IBM fails on the second prong of the required jurisdictional analysis: it does not plausibly allege that IBM's conduct purposefully aided and abetted South Africa's alleged violations of customary international law.
d. Accordingly, the alleged conduct cannot state a claim for aiding and abetting liability under the ATS and cannot form the basis for our jurisdiction.
(5) Because we decide the case on the basis of the presumption against extraterritoriality, we need not address whether plaintiffs' complaint satisfies the ATS's other jurisdictional predicates, including whether the complaint pleads a violation of the law of nations; whether customary international law recognizes the asserted liability of the Companies; and whether the theory of liability alleged by plaintiffs is recognized by customary international law.
For the reasons set forth above, we AFFIRM the August 28, 2014 order of the District Court.
1. The ATS states in full: “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.” 28 U.S.C. § 1350.
2. Among the original defendants in this case were dozens of corporations, including many prominent multinational companies. Over time, however, the District Court granted many of these defendants' motions to dismiss, see, e.g., In re S. African Apartheid Litig., 15 F.Supp.3d 454, 455 (S.D.N.Y.2014), and plaintiffs dropped their claims against many others in their subsequent amended complaints, see, e.g., Balintulo v. Daimler AG, 727 F.3d 174, 183 (2d Cir.2013) (“Balintulo I ”). Accordingly, the number of defendants has been whittled down to two: Ford Motor Co. (“Ford”) and International Business Machines Corp. (“IBM”).
3. See, e.g., Mastafa v. Chevron Corp., 770 F.3d 170, 176 (2d Cir.2014) (equating violations of the law of nations with violations of customary international law); Flores v. S. Peru Copper Corp., 414 F.3d 233, 237 n.2 (2d Cir.2003) (“In the context of the [ATS], we have consistently used the term ‘customary international law’ as a synonym for the term the ‘law of nations.’ ”); see also Hartford Fire Ins. Co. v. California, 509 U.S. 764, 815 (1993) (Scalia, J., dissenting in part) (using the two terms interchangeably when noting that “ ‘the law of nations,’ or customary international law, includes limitations on a nation's exercise of its jurisdiction to prescribe”).
4. The factual and procedural history of the case—and the various separate cases that were consolidated to form the current action—is summarized in In re South African Apartheid Litig., 617 F.Supp.2d 228, 241–45 (S.D.N.Y.2009), Balintulo I, 727 F.3d at 182–85, In re South African Apartheid Litig., 15 F.Supp.3d at 455–57, and In re South African Apartheid Litig., 56 F.Supp.3d 331, 332–36 (S.D.N.Y.2014).
5. 621 F.3d 111 (2d Cir.2010).
6. Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct 1659, 1663 (2013).
8. Balintulo I, 727 F.3d at 188.
10. In re S. African Apartheid Litig., 15 F.Supp.3d at 460.
12. In re South African Apartheid Litig., 56 F.Supp.3d at 338.
13. Pangburn v. Culbertson, 200 F.3d 65, 70 (2d Cir.1999) (internal quotation marks omitted).
14. Hutchison v. Deutsche Bank Sec., Inc., 647 F.3d 479, 490 (2d Cir.2011).
15. Lucente v. IBM Corp., 310 F.3d 243, 258 (2d Cir.2002).
16. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
17. Mastafa, 770 F.3d at 177.
22. By “denationalization,” plaintiffs refer to the “stripp[ing] of ․ South African nationality and/or citizenship by South African security forces during the period from 1960 to 1994.” J.A. 403.
25. Mastafa, 770 F.3d at 179.
26. Id. (internal citations omitted).
28. Though we dispose of plaintiffs' claims on other jurisdictional grounds, we note that plaintiffs fail to surmount another obstacle as well: they cannot establish jurisdiction under the ATS for claims against corporations. As previously discussed, the Supreme Court's decision in Kiobel II explicitly did not reach the corporate liability issue and did not modify the precedent of this Circuit that “corporate liability is not recognized as a ‘specific, universal, and obligatory norm’ ․ [and] is not a rule of customary international law that we may apply under the ATS.” Kiobel I, 621 F.3d at 145 (internal citation omitted).We need not delve deeply into the corporate liability question here to note the obvious error of the District Court in its holding that the Supreme Court in Kiobel II overturned our Court's holding in Kiobel I. See In re South African Apartheid Litig., 15 F.Supp.3d 454, 460–61 (S.D.N.Y.2014). There is no authority for the proposition that when the Supreme Court affirms a judgment on a different ground than an appellate court it thereby overturns the holding that the Supreme Court has chosen not to address. To hold otherwise would undermine basic principles of stare decisis and institutional regularity.
29. 133 S.Ct. at 1669.
31. Balintulo I, 727 F.3d at 191.
32. 561 U.S. 247 (2010) (after determining that the presumption against extraterritoriality applied to the Securities Exchange Act of 1934, the Court then determined which “territorial event[s]” or “relationship[s]” were the “focus” of the Act).
33. Mastafa, 770 F.3d at 185–86.
35. Presbyterian Church of Sudan v. Talisman Energy, Inc., 582 F.3d 244, 259 (2d Cir.2009) (quoting and adopting the reasoning of Judge Katzmann's concurrence in Khulumani v. Barclay Nat'l Bank Ltd., 504 F.3d 254, 277 (2d Cir.2007), which laid out the standard for a plaintiff to plead a theory of aiding and abetting liability under the ATS).
37. Mastafa, 770 F.3d at 192 (“Accordingly, the defendant's ‘complicity’ in the government's abuses in Presbyterian Church, without more, was insufficient to establish a claim of aiding and abetting or conspiracy under the ATS.”); Presbyterian Church, 582 F.3d at 263 (“It is therefore not enough for plaintiffs to establish Talisman's complicity in depopulating areas in or around the Heglig and Unity camps: plaintiffs must establish that Talisman acted with the purpose to assist the Government's violations of customary international law.”).
38. Appellants' Br. 36; see also J.A. 507, 513–17, 551.
39. Appellants' Br. 37 n.16; see also J.A. 521–22.
40. Appellants' Br. 35; see also J.A. 547.
41. Appellants' Br. 34; see also J.A. 528, 534, 544, 546–48.
42. Appellants' Br. 34–35; see also J.A. 535, 546–47.
43. 727 F.3d at 192.
44. See Mastafa, 770 F.3d at 186.
48. Balintulo I, 727 F.3d at 192 (holding that because the complaint alleged only actions taken within South Africa by defendants' South African subsidiaries and because these “putative agents did not commit any relevant conduct within the United States giving rise to a violation of customary international law—that is, because the asserted violation[s] of the law of nations occurr[ed] outside the United States—the defendants cannot be vicariously liable for that conduct under the ATS” (internal quotation marks and citation omitted)).
49. Carte Blanche (Singapore) Pte., Ltd. v. Diners Club Int'l, Inc., 2 F.3d 24, 26 (2d Cir.1993) (“Generally speaking, a parent corporation and its subsidiary are regarded as legally distinct entities.”).
50. New York State Elec. & Gas Corp. v. FirstEnergy Corp., 766 F.3d 212, 224 (2d Cir.2014).
52. See Mastafa, 770 F.3d at 186.
53. J.A. 547; see also J.A. 446.
54. Balintulo I, 727 F.3d at 192.
56. J.A. at 169–70, 258.
58. Appellant's Br. 8–9. Bophuthatswana was a Bantustan, a territory set aside by the South African government for particular ethnic groups. Id. Given the outcome of our analysis, we need not reach the question of whether plaintiffs' allegations regarding racial separation systems in South Africa constitute a violation of the law of nations. Cf. Mastafa, 770 F.3d at 181 (undertaking that analysis in the context of crimes allegedly committed by the Saddam Hussein regime). Of course, whether a violation of the law of nations has indeed occurred is an independent jurisdictional predicate, see infra n.27 and accompanying text, and one inextricably intertwined with the extraterritoriality analysis that we conduct here.
59. Mastafa, 770 F.3d at 191.
60. See supra II.A.; see also Mastafa, 770 F.3d at 191 (finding multiple domestic purchases and financing transactions by one defendant and numerous domestic payments and “financing arrangements” by another defendant to be sufficiently “specific and domestic” to satisfy the first prong of the jurisdictional analysis).
61. Presbyterian Church, 582 F.3d at 260.
62. See Mastafa, 770 F.3d at 192–94.
63. See, e.g., J.A. 534.
64. Mastafa, 770 F.3d at 194.
65. Iqbal, 556 U.S. at 678 (quotation marks, brackets, and citation omitted).
66. See Mastafa, 770 F.3d at 194 (“Plaintiffs never elaborate upon [a similarly conclusory] assertion in any way that establishes the plausibility of a large international corporation intending—and taking deliberate steps with the purpose of assisting—the Saddam Hussein regime's torture and abuse of Iraqi persons.”); see also Kiobel, 621 F.3d at 192 (Leval, J., concurring in the judgment) (“[The complaint] pleads also in conclusory form that the Nigerian military's campaign of violence against the [victim-plaintiffs] was ‘instigated, planned, facilitated, conspired and cooperated in’ by [defendant corporation]. Such pleadings are merely a conclusory accusation of violation of a legal standard and do not withstand the test of Twombly and Iqbal.”).

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