Earlier this week, the Second Circuit Court of Appeals affirmed a decision in In re: South African Apartheid Litigation dismissing claims brought pursuant to the Alien Tort Statute (“ATS”) against Ford and IBM. Plaintiffs had alleged that the companies aided and abetted tortious conduct by South Africa’s apartheid regime.
The Court observed that the “focus” of the necessary inquiry as to whether plaintiffs’ claims properly “touch and concern” the United States is “the nature and location of the conduct constituting the alleged offenses under the law of nations.” A court must therefore “isolate the ‘relevant conduct'” and then perform a two-prong inquiry:
- Step 1: Determine whether the relevant conduct sufficient touches and concerns the United States so as to displace the presumption against extraterritoriality.
- Step 2: Determine whether that same conduct states a claim for a violation of the law of nations or aiding and abetting another’s violation of the law of nations.
Citing Presbyterian Church of Sudan v. Talisman Energy (2d Cir. 2009), the Court stated that a claim may only be brought pursuant to a theory of aiding and abetting if plaintiffs can show that a defendant (1) provided practical assistance to the principal which has a substantial effect on the perpetration of the crime; and (2) did so with the purpose of facilitating the commission of that crime.
In its decision, the Court found that, with regard to Ford, plaintiffs had only alleged relevant conduct in South Africa. The Court noted that “[i]t was Ford’s subsidiary in South Africa, not Ford, that is alleged to have assembled and sold the specialized vehicles [to South African police and security forces] with parts shipped principally from Canada and the United Kingdom[.]” The Court also observed that “it was Ford’s South African subsidiary, not Ford, that allegedly provided information to the apartheid government about anti-apartheid activists in South Africa.” The Court noted that it has previously rejected a claim that the U.S.-based apartheid defendants could be held vicariously liable for the acts of their South African subsidiaries.
With regard to IBM, the Court found that plaintiffs had shown that certain conduct on the part of the company may have “touched and concerned” the United States with sufficient force so as to displace the presumption against extraterritoriality. Specifically, plaintiffs alleged that IBM developed hardware and software in the United States that was used in South Africa to implement an ID system that supported racial separation. The Court therefore found that plaintiffs had satisfied the first prong of the jurisdictional analysis. The Court, however, found that plaintiffs had not shown that IBM acted with the purpose of supporting human rights abuses in South Africa. Plaintiffs therefore failed on the second prong and the lower court’s dismissal was affirmed.