Southern District of New York Judge Shira Scheindlin Wednesday narrowed the claims that will survive in lawsuits charging that multinational corporations aided and abetted the brutal apartheid regime in South Africa.
In two cases that test the reach of the Alien Tort Claims Act,? 28 U.S.C. §1350, Scheindlin refused to dismiss claims that Ford, General Motors, IBM and other companies aided and abetted torture and other atrocities committed by the regime.
But the judge also said the aiding and abetting of specific acts by the corporations does not give the plaintiffs the right to sue for "breadth of harms" committed under apartheid, and she dismissed claims against the multinationals seeking direct liability for the tort of apartheid.
"Although the establishment of state-sponsored Apartheid and the commission of inhumane acts needed to sustain such a system is indisputably a tort under customary international law," Scheindlin said, "the international legal system has not thus far definitively established liability for non-state actors who follow or even further state-sponsored racial oppression."
The judge nonetheless allowed several claims to go forward on aiding and abetting liability in her 135-page opinion in the multi-district litigation "In re South African Apartheid Litigation,? 02 MDL 1499."
The plaintiffs are tens of thousands of South Africans seeking damages for victimization by the white majority. They claim they were driven from their homes and resettled, arrested and imprisoned without cause and beaten, tortured and killed by the authorities.
The cases had been dismissed by Southern District Judge John E. Sprizzo and then reinstated in part by the 2nd U.S. Circuit Court of Appeals in 2007.
Over the objection of the U.S. State Department, the 2nd Circuit said that banks and companies that included the auto, computer and energy industries could be sued under the act for aiding and abetting torts in violation of customary international law.
The Circuit remanded the two cases:? Khulumani v. Barclay National Bank Ltd., 05-2141-cv and? Ntsebeza v. Daimler Chrysler Corp.,? 05-2326-cv (.pdf), for a determination on whether there were any good reasons why they should not proceed, including whether the suits would raise a political question best left to the executive branch.
When Sprizzo died in 2008, the cases were reassigned to Scheindlin, who was asked to consider the defendants' motions to dismiss. A hearing in the case was held last month.
Scheindlin said Wednesday the authors of the 2nd Circuit's per curiam opinion, Judges Robert Katzmann and Peter Hall, while recognizing aiding and abetting liability, "left this court without a standard to apply or even a decision concerning the source of law from which this court should derive a standard." District Judge Edward Korman, sitting by designation, dissented.
Scheindlin also said the Circuit did not address the existence of conspiratorial liability.
The judge began by noting that a court's jurisdiction under the act "allows only for the regulation of conduct that is universally forbidden."
Scheindlin said international law clearly recognizes the arbitrary termination of the nationality of a citizen, known as denationalization, by a state actor as a tort in violation of customary international law. She also said there could be aiding and abetting liability for cruel, inhuman and degrading treatment.
Merely doing business with a state that violates international norms is not enough, the judge said, and she drew a distinction between the provision of goods specifically designed to kill, such as the poison gas used in the Nazi concentration camps, and the more general sale of raw materials or the provisions of loans.
The mens rea standard was a restrictive one, she said, requiring proof that all major sources of customary international law would, in the words of Katzmann "authorize the imposition of such liability."
Scheindlin concluded that international law "requires that an aider and abettor know that its actions will substantially assist the perpetrator in the commission of a crime or tort in violation of the law of nations."
But on conspiratorial liability, Scheindlin could find no such consensus among nations and she refused to recognize conspiracy as a tort.
Scheinlin dismissed a number of claims against several of the companies and made the following rulings on the? Ntsebeza? andKhulumani? cases. The judge:
? • found the plaintiffs in? Ntsebeza? adequately pleaded that Daimler, Ford and General Motors aided and abetted apartheid, torture, extrajudicial killing and cruel, inhuman and degrading treatment -- in part because their security personnel were "intimately involved" with the torture and inhuman treatment of several plaintiffs and also because the companies provided the military equipment and trucks used by the South African Defense Forces and the special branch for attacks on protesting citizens and activists;?The judge went on to reject the defendants' motion to dismiss under the prudential doctrines of comity and political question, despite the fact that the governments of several nations involved expressed support for dismissal.
• dismissed, but with leave to replead, the? Khulumani? plaintiffs claim that Daimler, Ford and GM aided and abetted extrajudicial killing and apartheid;
• ruled that IBM remain in the? Ntsebeza? suit for aiding and abetting arbitrary denationalization, and apartheid, because it provided the computers and software used by the government "to register individuals, strip them of their citizenship, and segregate them in particular areas of South Africa";
• dismissed, but with leave to replead, allegations in? Khulumani? against IBM and Fujitsu for aiding and abetting apartheid. She dismissed outright claims that IBM and Fujitsu aided and abetted extrajudicial killing, torture and the other allegations;
• dismissed claims against Barclays Bank PLC for its denial of job opportunities based on race and claims against both Barclays and UBS for loaning money and backing the purchase of South African defense forces bonds;
• refused to dismiss claims that the Rheinmetall Group aided and abetted extrajudicial killing and apartheid through the sale of armaments.
The judge also denied motions to dismiss based on statute of limitations grounds.
Plaintiffs' lawyer Michael Hausfeld of? Hausfeld LLP? in Washington, D.C., called the decision "a major advancement in international human rights law."?
He credited the judge with addressing the standards for intent in aiding and abetting, giving guidelines on pleading requirements, and setting standards on both the political question doctrine and on the deference to be accorded the opinions of foreign governments.
Hausfeld also said Scheindlin "set the standard as to when the statute of limitations begins to run and when they are equitably tolled in countries where abusive practices may effectively block access to justice."
Francis P. Barron of? Cravath Swain & Moore, who represents UBS, argued for the defendants at a March hearing on the motions to dismiss.