Case Information
*1 14 ‐ 4104 (L) Motor Co.
In the
United States Court of Appeals
for the Second Circuit A UGUST T ERM 2014 Nos. ‐ 4104(L), ‐ 3589, ‐ 3607, ‐ 4129, 14 ‐ 4130, ‐ 4131, ‐ 4132, ‐ 4135, ‐ 4136, ‐ 4137, ‐ 4138, ‐ S AKWE B ALINTULO , personal representative S ABA B ALINTULO , et al.,
Plaintiffs ‐ Appellants ,
F ORD M OTOR C O NTERNATIONAL B USINESS M ACHINES C ORP ., Defendants Movants .
On Appeal from District Southern New York
A RGUED : J UNE D ECIDED : J ULY
Before: C ABRANES H ALL L IVINGSTON , Circuit Judges
This appeal presents question whether plaintiffs, victims apartheid, have plausibly relevant committed United States sufficient rebut Alien Tort Statute’s extraterritoriality.
We hold they not.
Accordingly, AFFIRM August order for Southern District New York (Shira A. Sheindlin, Judge ).
P AUL L. H OFFMAN (Diane E. Sammons, Nagel Rice, LLP, Roseland, NJ; Michael D. Hausfeld, Kristen M. Ward, Hausfeld, Washington, DC, on brief ), Schonbrun, Desimone, Seplow, Harris & Hoffman LLP, Venice, CA, for Plaintiffs ‐ Appellants. J ONATHAN H ACKER (Anton Melitsky, on brief ), O’Melveny & Myers LLP, New York, NY, Defendant ‐ Movant Motor Company.
K EITH R. H UMMEL (Teena ‐ Ann V. Sankoorikal, James E. Canning, brief ), Cravath, Swaine & Moore LLP, New York, NY, Defendant Movant International Business Machines Corporation.
J OSÉ A. C ABRANES Circuit Judge :
This appeal presents question of whether plaintiffs, victims of apartheid, have plausibly relevant committed United States sufficient rebut Alien Tort Statute’s against extraterritoriality.
We hold they have not.
Accordingly, AFFIRM August 28, 2014 order of United District Court for Southern District of New York (Shira A. Sheindlin, Judge ).
BACKGROUND
Nearly decade half ago, plaintiffs filed suit Alien Tort Statute (“ATS”) various corporations allegedly crimes proscribed by “the law of nations” (also called “customary law”) committed *4 during apartheid by South African government against South Africans South Africa’s sovereign territory.
The long complicated procedural history this consolidated case involves rulings from all three levels federal judiciary. [4] As relevant here, Court, on April 8, 2009, held may proceed defendants (the “Companies”) on an agency theory apartheid era crimes allegedly committed subsidiaries. Thereafter, Companies sought writ mandamus this Court. On September 17, 2010, while this case remained pending, we held, Kiobel v. Royal Dutch Petroleum Co (“ Kiobel ”), does confer jurisdiction over claims pursuant customary international law corporations. The Supreme granted certiorari and, on April 17, 2013, affirmed our judgment, while explicitly declining international law); Flores S. Peru Copper Corp ., F.3d 233, n.2 (2d Cir. 2003) (“In context [ATS], consistently used term ‘customary international law’ synonym term ‘law nations.’”); see also Hartford Fire Ins. Co. California U.S. 764, (Scalia, J. dissenting part) (using two terms interchangeably when noting “‘the nations,’ or law, includes limitations nation’s exercise its jurisdiction prescribe”). factual procedural history case—and various separate
cases were consolidated form current action—is summarized In re South African Apartheid Litig., F. Supp. 2d 241–45 (S.D.N.Y. 2009), I, 182–85, In re Apartheid Litig., F. Supp. 3d 455–57, re Apartheid Litig F. Supp. 3d 332–36 (S.D.N.Y. 2014). (2d Cir. 2010).
reach the corporate liability question (“ Kiobel II ”). Instead, the Court held “the extraterritoriality applies claims under the ATS” thus the statute cannot be applied “to conduct in the territory another sovereign.”
Two days after the Supreme Court released its ruling Kiobel II , we requested supplemental briefing from the parties on the impact decision on the present case. Thereafter, on August 2013, Balintulo Daimler AG 174, (2d Cir. 2013) (“ Balintulo I ”), we denied Companies’ request for writ mandamus remanded District Court where Companies would be able “seek dismissal all plaintiffs’ claims, prevail, prior discovery, through motion for judgment on pleadings.” so doing, rejected plaintiffs’ theory vicarious Companies based actions taken Africa their subsidiaries concluded Kiobel II “forecloses claims failed allege relevant occurred States.”
On remand, Companies moved judgment favor. ordered Companies brief question whether corporations can held liable *6 following Kiobel II . On April 17, 2014, District Court held Supreme Court in Kiobel II , which, as noted earlier, expressly declined to address question corporate liability law, had nonetheless overruled holding Kiobel I thus altered Circuit respect. [10] District Court also permitted plaintiffs to move to amend their complaints order allege facts sufficient to overcome ATS’s extraterritoriality. [11] After submitted proposed complaints, held proposed amendments were futile because “all occurred abroad” theory was foreclosed this Court’s decision [12]
DISCUSSION
We generally review a district court’s decision permit or deny leave amend a complaint abuse discretion, “keeping mind leave amend should freely granted when justice so requires.” However, when denial leave file revised pleading based legal interpretation, such futility, reviewing court conducts de novo review. A proposed amendment *7 is futile when “could withstand a motion to dismiss.” [15] order to survive motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, ‘state claim relief that is plausible its face.’” [16] And while court must accept all allegations contained true, “that tenet inapplicable legal conclusions, and threadbare recitals elements cause action, supported mere conclusory statements, do suffice.” [17]
I. Claims On appeal, plaintiffs claim they extensive new facts demonstrating Companies’ U.S. based actions constituted unlawful crimes nations. They allege Companies’ “specialized product development, sales such tailored products, provision expertise training” were aimed facilitating abuses committed South Africa. [18] Specifically, allege defendant (1) provided specialized vehicles police security forces enable these forces enforce apartheid, (2) shared information *8 regime about anti ‐ apartheid and union activists, thereby facilitating suppression anti apartheid activity. As for IBM, plaintiffs claim company (1) designed specific technologies were essential racial separation under apartheid and denationalization black South Africans; (2) bid on, and executed, contracts South Africa unlawful purposes such “denationalization” black South Africans; (3) provided training, support, expertise South African government using IBM’s specialized technologies. turn, Companies assert properly
denied plaintiffs’ motion leave amend complaints (1) plaintiffs cannot satisfy ATS’s territoriality mens rea requirements; (2) corporations cannot be sued under ATS; there no ATS.
II. Jurisdiction Under ATS Our inquiry begins by assessing whether grants us jurisdiction over action. Alien Tort Statute contains numerous predicates, each which must satisfied *9 before court may properly assume jurisdiction over an ATS claim. Thus, the outset, court must assure itself that: “(1) the pleads the law nations; (2) the presumption against extraterritorial application ATS, announced by Supreme in Kiobel [ II ], does not bar claim; (3) customary international law recognizes [the asserted] liability [of a] defendant; theory liability by plaintiffs ( i.e abetting, conspiracy) recognized by [or ‘the law nations’].” And while defect these jurisdictional predicates would fatal plaintiff’s claims, courts retain discretion regarding order manner which they undertake these inquiries.
Here, we begin addressing question whether plaintiffs, proposed complaints, allege sufficient displace ATS’s extraterritoriality. Because we agree Court’s conclusion they do not, we need not address other jurisdictional predicates.
*10 A. ATS the Presumption Against Extraterritoriality
As noted above, the Supreme Court in Kiobel II made clear that claims under the cannot brought for violations the law nations occurring the territory sovereign nation other than the United States. The Court explained that it was dismissing the ʹ claims “all the relevant took place outside United States.” wholly extraterritorial nature Kiobel claims was “a dispositive fact” Kiobel II Court so it had no reason explore how courts should proceed where, as here, some occurred States. Circuit that “corporate liability is not recognized ‘specific, universal, obligatory norm’ . . . [and] is not rule may apply ATS.” Kiobel I at (internal citation omitted).
We need delve deeply into corporate question here note obvious error Court its holding Supreme Court Kiobel II overturned our Court’s holding Kiobel I See re Apartheid Litig., F. Supp. 3d 460–61 (S.D.N.Y. 2014). There no authority proposition when Supreme Court affirms judgment different ground than an appellate court thereby overturns holding Supreme has chosen address. To hold otherwise would undermine basic principles stare decisis institutional regularity. S. Ct. 1669. Id.
In Mastafa Chevron Corporation applied the Supreme Court’s rulings Morrison National Australia Bank Limited and Kiobel II to clarify that the “focus” of the inquiry is on the nature and location of the conduct constituting the alleged offenses under the law of nations. Accordingly, determine whether specific claims can be brought under the ATS, a court must isolate the “relevant conduct” of a defendant—conduct that is either a direct violation of the law of nations or the aiding abetting of another’s violation of the law of nations—in a then conduct a two ‐ step analysis.
Step one is a determination of whether sufficiently “touches concerns” so displace presumption extraterritoriality. Step two a determination whether same states claim violation law nations or aiding abetting another’s nations. order satisfy second step this analysis, plaintiff stating claim an theory must demonstrate defendant “’(1) provides practical assistance principal which has substantial effect perpetration *12 crime, and (2) does so with the purpose of facilitating the commission of that crime.’” [35] mens rea standard for accessorial liability in actions is “purpose rather than knowledge alone.” Knowledge or complicity in the perpetration of a crime—without evidence that defendant purposefully facilitated the commission crime—is thus insufficient to establish claim aiding abetting liability under the ATS.
B. Analysis Plaintiffs’ Complaints Turning to complaints in instant case, plaintiffs assert following defendant Ford is sufficient to displace ATS’s extraterritoriality: provided specialized vehicles to security forces enabled these forces violently suppress opposition *13 apartheid; [38] (2) was responsible for suppression its own workforce South Africa.
As IBM, allege (1) IBM employees trained employees South government on how use their hardware software create identity documents—“the very means which black South Africans were deprived South nationality”; (2) IBM bid contracts South Africa unlawful purposes such denationalizing black South Africans; designed specific technologies were essential racial separation under apartheid denationalization black Africans. reasoned Companies’ domestic lacked clear nexus human rights abuses occurring Africa. Here too, pleadings do establish federal jurisdiction they do plausibly allege Companies themselves engaged overcome extraterritorial application ATS. *14 1. Allegations Against Ford
Beginning with allegations Ford, plaintiffs only allege that occurred South Africa, thus failing satisfy step one Mastafa ’s two ‐ step analysis. It was Ford’s subsidiary South Africa, not Ford, alleged have assembled sold specialized vehicles South Africa’s government, parts shipped principally from Canada United Kingdom—not from United States. Similarly, was Ford’s South African subsidiary, Ford, allegedly provided information apartheid government about anti apartheid activists South Africa. Although repeatedly allege—no less than six times their proposed complaint —that controlled South subsidiary, previously rejected vicarious theory based allegations materially identical those asserted here.
*15 Plaintiffs contend that their pleadings demonstrate Companies controlled their subsidiaries from United States such they could be found directly—and just vicariously—liable for their subsidiaries’ ATS. But holding directly responsible actions its subsidiary, as plaintiffs would us do, would ignore well settled principles corporate law, which treat parent corporations subsidiaries as legally distinct entities. While courts occasionally “pierce corporate veil” ignore subsidiary’s separate legal status, they will do so only extraordinary circumstances, such as where corporate parent excessively dominates its “subsidiary such way as make ‘mere instrumentality’ parent.”
Here, present no plausible allegations—indeed, they present no allegations—that would form basis us “pierce [Ford’s] corporate veil.” complaints do suggest Ford’s control over its subsidiaries differed from most companies headquartered subsidiaries abroad. Allegations general corporate supervision are insufficient rebut presumption against territoriality establish ATS. 2. Allegations Against IBM
Plaintiffs’ first allegation against IBM also fails all occurred within South Africa so they cannot satisfy step one Mastafa ’s two step analysis. Just as case Ford, is IBM’s South African subsidiary—not IBM—that alleged to have trained South African government employees use IBM hardware software create identity materials. These allegations cannot rebut extraterritoriality they do sufficiently “tie[ ] relevant human rights violations actions taken States.”
Plaintiffs’ second allegation IBM—that company bid contracts meant further denationalization blacks—falls short alleging nations simple reason: did win contract only bid specifically been made IBM, rather than IBM’s subsidiary. Indeed, even according plaintiffs, another company, ICL, won passbooks contract over *17 IBM. It is simply a violation of the law of nations bid on, and lose, a contract arguably would help a sovereign government perpetrate an asserted violation of the law of nations.
Plaintiffs final allegation IBM, the other hand, appears “touch concern” the United sufficient force displace the extraterritoriality. Their proposed reads, relevant part, follows: the States, IBM developed both hardware software—both a
machine program—to create
Bophuthatswana ID. Once IBM had
developed system, was transferred Bophuthatswana government implementation.
Identity documents, like those allegedly created by transferred Bophuthatswana government, were an essential component system racial separation South Africa. And *18 so, designing particular technologies the that would facilitate racial separation would appear be both “specific and domestic” conduct that would satisfy first the two steps our jurisdictional analysis. Accordingly, if this allegation is able also satisfy second prong our extraterritoriality inquiry—that is, if such conduct aided and abetted nations—the extraterritoriality would be displaced and we would be able establish jurisdiction this particular claim ATS.
Upon an initial review complaint, however, we conclude that claim does meet mens rea requirement and established by our Court. While must “support [] an inference [IBM] acted with ‘purpose’ advance [South Africa’s] human rights abuses,” plausibly alleges, at most, company acted with knowledge its acts might facilitate government’s apartheid policies. But, we noted earlier, mere knowledge without proof purpose one inextricably intertwined extraterritoriality analysis here. Mastafa , F.3d See supra II.A.; see also (finding multiple domestic purchases financing transactions by one defendant numerous domestic payments “financing arrangements” another defendant sufficiently “specific domestic” satisfy first prong analysis). Presbyterian Church
insufficient make out proper mens rea and liability. [62]
Moreover, where language in complaint seems suggest that acted purposefully, [63] “it does so conclusory terms and fails establish even a baseline degree of plausibility of claims.” [64] A will “suffice if tenders naked assertions devoid of further factual enhancement.” [65] Indeed, do not—and cannot—plausibly allege by developing hardware and software collect innocuous population data, IBM’s purpose was denationalize black Africans and further aims brutal regime. [66] This absence of connection between IBM’s and human rights abuses government means plaintiffs, even if allowed amend their complaint, will unable to state a valid claim IBM. Accordingly, because fail plausibly plead U.S. based part of either or aided abetted Africa’s asserted violations of law of nations, claims cannot form basis of our jurisdiction under ATS. We therefore affirm Court’s denial of motion leave file an proposed amendments are futile a matter of law.
CONCLUSION
To summarize, hold that: (1) Knowledge or complicity perpetration of a crime under law nations (customary law)— absent evidence defendant purposefully facilitated commission crime—is insufficient establish claim aiding abetting liability under ATS. (2) It violation law nations bid on, lose, contract arguably would help sovereign government perpetrate an asserted nations. Allegations general corporate supervision are
insufficient rebut extraterritoriality establish ATS. Here, pleadings do not establish federal jurisdiction they do plausibly allege Companies themselves engaged United States overcome extraterritorial application ATS.
a. Holding directly responsible actions its South subsidiary, as would have us do, ignores well settled principles corporate law, which treat parent corporations subsidiaries as legally distinct entities. b. Plaintiffs plausibly alleged some specific, domestic conduct complaint—namely, IBM United States designed particular technologies United facilitated apartheid. This conduct satisfies first prong our extraterritoriality analysis it “touches concerns” States.
c. Plaintiffs’ fails second prong required analysis: does plausibly allege IBM’s purposefully aided abetted Africa’s violations law. *22 d. Accordingly, the alleged cannot state claim liability cannot form basis our jurisdiction. Because we decide case basis extraterritoriality, we need address whether complaint satisfies ATS’s other predicates, including whether pleads law nations; whether customary international recognizes asserted liability Companies; whether theory by recognized law. For reasons set forth above, AFFIRM August order Court.
[1] states full: “The district courts shall original jurisdiction of civil action an alien tort only, committed law nations or treaty States.” U.S.C. §
[2] Among original defendants this case were dozens corporations, including many prominent multinational companies. Over time, however, granted many these defendants’ motions dismiss, see, e.g , re S. Apartheid Litig ., F. Supp. 3d 454, (S.D.N.Y. 2014), dropped claims many others their subsequent complaints, see e.g ., Balintulo Daimler AG (2d Cir. 2013) (“ ”). Accordingly, number defendants has been whittled down two: Motor Co. (“Ford”) International Business Machines Corp. (“IBM”).
[3] See, e.g Chevron Corp ., (2d Cir. 2014) (equating violations nations violations
[6] Kiobel Royal Dutch Petroleum Co S. Ct (2013).
[7] Id. 1669.
[8]
[9] Id.
[10] In re S. Apartheid Litig ., F. Supp. 3d 460.
[11] Id.
[12] re Apartheid Litig F. Supp. 3d
[13] Pangburn Culbertson (2d Cir. 1999) (internal quotation marks omitted).
[14] Hutchison Deutsche Bank Sec. Inc. (2d Cir. 2011).
[15] Lucente v. Corp 243, (2d Cir. 2002).
[16] Ashcroft Iqbal , U.S. (quoting Bell Atl. Corp. Twombly U.S. (2007)).
[17]
[18] Appellants’ Br.
[19] Id 15–21.
[20] Id . 21–23.
[21] Id . 12–13.
[22] By “denationalization,” refer “stripp[ing] . . . nationality and/or citizenship security forces during period from 1994.” J.A.
[23] Appellants’ Br. 11–12.
[24] Id
[25]
[26] Id. (internal citations omitted).
[27] Id
[28] Though we dispose claims other grounds, note fail surmount another obstacle well: they cannot establish jurisdiction claims corporations. As previously discussed, Supreme Court’s decision Kiobel II explicitly did reach corporate issue did modify precedent this
[32] U.S. (after determining extraterritoriality applied Securities Exchange Act then determined which “territorial event[s]” or “relationship[s]” were “focus” Act).
[33]
[34] Id.
[35] Presbyterian Church Sudan Talisman Energy, Inc ., F.3d (2d Cir. 2009) (quoting adopting reasoning Judge Katzmann’s concurrence in Khulumani Barclay Nat’l Bank Ltd F.3d (2d Cir. 2007), which laid out standard plaintiff plead theory aiding abetting under ATS).
[36] Id
[37] , (“Accordingly, defendant’s ‘complicity’ government’s abuses Presbyterian Church without more, was insufficient establish claim or conspiracy ATS.”); Presbyterian Church (“It therefore enough plaintiffs establish Talisman’s complicity depopulating areas or around Heglig Unity camps: must establish Talisman acted purpose assist Government’s violations law.”).
[38] Appellants’ Br. 36; see also J.A. 507, 513–17, 551.
[39] Appellants’ Br. n.16; see also J.A. 521–22.
[40] Appellants’ Br. 35; see also J.A.
[41] Appellants’ Br. 34; see also J.A. 534, 544, 546–48.
[42] Appellants’ Br. 34–35; see also J.A. 546–47.
[43]
[44] See at
[45] J.A. 506–07,
[46] J.A. 519–21.
[47] J.A. 455–68.
[48] (holding because only actions taken within Africa defendants’ subsidiaries because these “putative agents did commit relevant conduct United giving rise law—that is, asserted violation[s] nations occurr[ed] outside States—the defendants cannot vicariously liable ATS” (internal quotation marks citation omitted)).
[49] Carte Blanche (Singapore) Pte., Ltd. Diners Club Int’l, Inc ., (2d Cir. 1993) (“Generally speaking, parent corporation its subsidiary are regarded legally distinct entities.”).
[50] New York State Elec. & Gas Corp. FirstEnergy Corp (2d Cir. 2014).
[51] Id
[52] See 186.
[53] J.A. 547; see also J.A.
[54]
[55] J.A.
[56] J.A. 169–70,
[57] J.A.
[58] Appellant’s Br. 8–9. Bophuthatswana was Bantustan, territory set aside by government particular ethnic groups. Id Given outcome our analysis, need reach question whether allegations regarding racial separation systems Africa constitute violation law nations. Cf. (undertaking analysis context crimes allegedly committed Saddam Hussein regime). Of course, whether nations has indeed occurred an independent predicate, see infra n.27 accompanying text,
[62] See Mastafa , F.3d at 192–94.
[63] See , e.g., J.A.
[64] Mastafa , F.3d at
[65] Iqbal , U.S. (quotation marks, brackets, citation omitted).
[66] See , (“Plaintiffs never elaborate upon [a similarly conclusory] assertion way establishes plausibility large corporation intending—and taking deliberate steps purpose assisting—the Saddam Hussein regime’s torture abuse Iraqi persons.”); see also Kiobel (Leval, J. concurring judgment) (“[The complaint] pleads also conclusory form Nigerian military’s campaign violence [victim plaintiffs] was ‘instigated, planned, facilitated, conspired cooperated in’ [defendant corporation]. Such pleadings are merely conclusory accusation legal standard do withstand test Twombly Iqbal .”).