10/20/2009 04:26:36 PM EST
Chowdhury v. Worldtel and Sinaltrainal v. Coca Cola
Two similar recent cases by courts construing and applying the Alien Tort Statute demonstrate that courts will strictly apply the recent pleading standards set forth by the Supreme Court in Ashcroft v. Iqbal, but that if those standards can be met, the case can result in a plaintiffs verdict. This Emerging Issues Analysis, by Jonathan Drimmer and Laura Ardito of the law firm Steptoe & Johnson, discusses these decisions and their implications.
The authors write: Two similar recent cases by courts construing and applying the Alien Tort Statute (28 U.S.C. § 1350) (ATS) -- one resulting in dismissal, the other the first plaintiff's victory against a corporation in an ATS case -- demonstrate that courts will strictly apply the recent pleading standards set forth by the Supreme Court in Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009), but that if those standards can be met, the case can result in a plaintiff's verdict. In Chowdhury v. Worldtel Bangladesh Holding, Ltd., 588 F. Supp.2d 375 (E.D.N.Y. 2008), the plaintiff, after his ATS case was dismissed without prejudice, was able to successfully reformulate his complaint to present to a jury his claim that the defendant was liable for his torture at the hands of a Bangladeshi paramilitary unit; the result was a verdict in his favor. In Sinaltrainal v. Coca Cola Company, 2009 U.S. App. LEXIS 17764 (11th Cir. 2009), the plaintiffs could make no such showing, and their complaint that Coca Cola was complicit in abuses by a paramilitary group and the police against union officials was dismissed. For multi-national companies, the cases underscore both the hurdles that plaintiffs face in ATS and human rights cases, and the stark risks of being caught in the trend of human rights lawsuits in U.S. courts.
The ATS and Corporations. Part of U.S. law since the nation's first Judiciary Act in 1789, the ATS allows foreign claimants to file tort actions in U.S. federal courts based on a narrow group of serious international crimes "violations of the law of nations" committed domestically or abroad. 28 U.S.C. § 1350. The Act remained largely unused until the late 1970s; it was rediscovered and used repeatedly against individuals and government officials by plaintiffs seeking vindication for a variety of alleged human rights violations. See Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980). The result has been damage awards that have regularly exceeded $10 million and sometimes $100 million, along with substantial litigation costs and harsh negative publicity for defendants who win or lose. See, e.g., Arce v. Garcia, 434 F.3d 1254, 1256 (11th Cir. 2006) ($54 million in damages after contested trial in case involving individual plaintiffs); Mehinovic v. Vuckovic, 198 F.Supp.2d 1322 (N.D. Ga. 2002) ($140 million in case involving individual plaintiffs); Mushikiwabo v. Barayagwiza, 1996 U.S. Dist. LEXIS 4409 (S.D.N.Y. 1996) ($103 million in case involving individual plaintiffs).
The litigation trend began extending to multi-national corporations in the mid-1990s, with claims against Texaco for alleged environmental destruction in Ecuador and Peru, see Aguinda v. Texaco, Inc., 850 F. Supp. 282 (S.D.N.Y. 1994) and Jota v. Texaco, Inc., 157 F.3d 153 (2d Cir. 1998), and against Unocal Corp. for alleged complicity in murder, torture, and forced displacement by the Burmese military in connection with the construction of a pipeline. See Doe v. Unocal Corp., 963 F. Supp. 880, 883-84 (C.D. Cal. 1997), aff'd, 395 F.3d 932 (9th Cir. 2002), vacated 403 F.3d 708 (9th Cir. 2005). Since then, in the past 15 years, the Act has been invoked more than 100 times as a basis of jurisdiction against corporate defendants. That trend also has spawned several derivative or "second generation" human rights cases against corporations, which have not relied on the ATS but on securities laws, traditional common law torts, unfair competition and advertising laws, and other theories. See, e.g., Kasky v. Nike, 45 P.3d 243 (Cal. 2002); Sheet Metal Workers #218 Pension Fund v. Hills, 1:07-CV-01957-PLF, Complaint, Oct. 31, 2007 (D.D.C.); Native Federation of the Madre de Dios River and Tributaries v. Bozovich Timber Products, 491 F. Supp.2d 1174 (U.S. CIT 2007); and Faat v. Honeywell Int'l, No. 04-4333, 2005 U.S. Dist. LEXIS 23414 (D.N.J. 2005).