Balintulo Ex Rel. Balintulo v. Ford Motor Co.
2015 U.S. App. LEXIS 12936
| 2d Cir. | 2015Background
- Plaintiffs (victims of South African apartheid) sued multinational corporations, ultimately leaving Ford and IBM, under the Alien Tort Statute (ATS) alleging aiding and abetting apartheid-era human-rights abuses committed in South Africa.
- District Court initially allowed ATS claims to proceed against Ford and IBM on an agency theory based on subsidiary conduct; companies sought mandamus and further review followed.
- After the Supreme Court’s Kiobel decision (Kiobel II), the Second Circuit in Balintulo I held plaintiffs had not alleged any "relevant conduct" within the United States sufficient to overcome the ATS’s presumption against extraterritoriality and remanded.
- On remand, plaintiffs sought leave to amend complaints to allege U.S.-based conduct: Ford allegedly controlled its South African subsidiary, provided vehicles, and shared intelligence; IBM allegedly designed technologies and trained personnel, bid on contracts, and developed systems in the U.S. for identity documents.
- The District Court denied leave as futile; the Second Circuit affirmed, holding plaintiffs failed to plausibly plead U.S. conduct that purposefully aided and abetted violations of the law of nations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether amended complaints allege sufficient U.S. "relevant conduct" to overcome ATS presumption against extraterritoriality | Plaintiffs allege specific U.S.-based design, development, management, and control (esp. IBM’s tech developed in U.S.; Ford’s headquarters control) that tied defendants to apartheid abuses | Companies argue alleged relevant conduct occurred in South Africa (via subsidiaries); U.S. acts are general corporate oversight or non-actionable (bids, development without purposeful facilitation) | Held: Plaintiffs did not plausibly allege U.S. conduct that displaces the presumption (only IBM’s tech design arguably domestic but fails mens rea) |
| Whether plaintiffs plausibly allege aiding-and-abetting mens rea under ATS (purpose vs. knowledge) | Plaintiffs contend defendants knew their products/systems would facilitate apartheid and thus aided and abetted | Defendants argue knowledge is insufficient; ATS requires purpose to facilitate the crime | Held: Knowledge/complicity is insufficient; plaintiffs fail to plausibly allege purpose required for aiding-and-abetting liability |
| Whether parent corporations can be held directly liable for subsidiary actions (piercing corporate veil / direct liability) | Plaintiffs claim Ford (and IBM) exercised control making them directly liable, not merely vicariously liable for subsidiary acts | Defendants assert parent/subsidiary distinction and lack of extraordinary circumstances to pierce veil | Held: General allegations of control are insufficient; no basis to pierce corporate veil or treat subsidiaries’ foreign conduct as defendants’ own conduct |
| Whether bidding on or losing a contract that could facilitate a violation of law of nations is actionable under ATS | Plaintiffs allege IBM bid on denationalization-related contracts in furtherance of apartheid | IBM notes it did not win the bid and bidding/loss is not a violation | Held: Bidding on and losing a contract is not a violation of the law of nations and cannot sustain ATS liability |
Key Cases Cited
- Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013) (ATS claims subject to presumption against extraterritoriality; claims must "touch and concern" U.S.)
- Mastafa v. Chevron Corp., 770 F.3d 170 (2d Cir. 2014) (two-step test: isolate defendant's "relevant conduct" and determine whether it "touches and concerns" U.S.; aiding-and-abetting requires purpose)
- Balintulo v. Daimler AG, 727 F.3d 174 (2d Cir. 2013) (similar failure to allege U.S. "relevant conduct" by parent for subsidiary's foreign acts)
- Presbyterian Church of Sudan v. Talisman Energy, Inc., 582 F.3d 244 (2d Cir. 2009) (adopting aiding-and-abetting standard requiring purpose to facilitate violations)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must plead factual content rendering claim plausible; legal conclusions insufficient)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard governs dismissal)
- Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010) (presumption against extraterritoriality focuses on conduct and relationships comprising the statute's "focus")