Apartheid Lawsuit Puts Corporations on Notice
/By JOSEPH GOLDSTEIN -, Staff Reporter of the Sun
In giving the go-ahead to a historic class-action suit against businesses that sold to South Africa's apartheid regime, a federal appellate court here has put the world's largest companies on notice that they can be held liable for doing business with foreign regimes that commit human-rights abuses.
The decision last month by the 2nd U.S. Circuit Court of Appeals in Manhattan revives several class-action suits brought by South Africans against the arms suppliers, oil producers, and computer manufacturers that sold goods to the apartheid government during the second half of the 20th century.
The claims earlier had been dismissed by a lower court as being beyond the jurisdiction of American courts.
The 2-1 ruling, with Judges Peter Hall and Robert Katzmann in the majority, means that a Manhattan judge yet may oversee compensation of billions of dollars to South African blacks who lived under apartheid rule. That prospect raises profound questions about the role of American courts in providing a place of reckoning for the wrongs of foreign governments.
Previous court rulings by federal judges here had left it uncertain whether corporations can be sued in American courts for acting as accomplices to foreign governments committing atrocities. The effect of the decision is to "give courts the green light to hear suits against corporations for their connections to abusive regimes," a law professor at Duke University, Curtis Bradley, who served as counselor on international law at the State Department in 2004, said.
The 2nd Circuit now joins two other appellate courts in the West and Southeast in allowing American courts to impose accomplice liability on corporations for human-rights violations against international law. This emerging consensus has arisen without any nod of congressional approval since the First Congress adopted the Alien Torts Statute in 1789, which courts now use to assert jurisdiction in these cases. Still, the 2nd Circuit sets a relatively high bar for finding that a company is liable as an accomplice in apartheid, torture, or assassination.
Two of the three 2nd Circuit judges would require more proof than that the company simply knew it was assisting a foreign government to commit human-rights violations. Liability would require companies to share "a common purpose" with a foreign government or a subjective intent that a human-rights abuse occur, according to the 2nd Circuit's decision.
Even with this court victory, the plaintiffs still face several hurdles, the most significant of which is to show that the conduct of defendants such as Ford and amounted to "aiding and abetting" apartheid.
Another hurdle is the opposition voiced by the post-apartheid South African government, which argues that it - not America - should be dealing with apartheid's legacy. The South African government has asked that the suits be dismissed. Officials there have said apartheid-related claims belonged before that country's Truth and Reconciliation Commission for apartheid-era crimes.
The dissenting member of the 2nd Circuit's panel, Edward Korman, said the suits should have been dismissed.
South Africa, Judge Korman wrote, "has asserted the right to define and finalize issues related to reparations for apartheid-era offenses within its own legal framework - thus making this lawsuit an insult to the post-apartheid, black-majority government of a free people."
The State Department has joined South Africa, citing the foreign policy tensions these suits pose to American-South African relations.
The Alien Torts Statute, under which the apartheid suits are being brought, was passed 218 years ago because of anti-piracy concerns. It allows American courts to hear foreigners' suits involving egregious violations of international law and that occurred beyond America's borders. The law was largely ignored until about 30 years ago when it was used to sue a Paraguayan police official accused of torturing a man to death. While the Supreme Court in 2004 allowed foreigners to use the law to sue foreign officials, the court left open the question of whether the Alien Torts Statute gave courts jurisdiction over deep-pocketed corporate defendants for "aiding and abetting" violations.
In one landmark decision endorsing just such liability against Unocal, California's 9th Circuit allowed a suit by Burmese villagers who said the Burmese military used them for slave labor on a pipeline.
Only one Alien Torts Statute case with a corporate defendant has gone to trial: It resulted in a win for Alabama's Drummond Ltd., which had been accused of a role in the slaying by paramilitary forces of three labor union activists near a company mine in Colombia.
But never before had anybody brought a claim under the Alien Torts Statute for violations even approaching the scale of those committed by the apartheid regime.
"It's a matter of the scale and the tenuousness of the allegations and the diffuseness of the conduct here that will embolden other lawyers," a professor at the Benjamin N. Cardozo School of Law, Anthony Sebok, said, of the apartheid suits. "Like the Holocaust litigation of the 1990s, this is going to be a signal event, and it's going to be shorthand to people about how you can push the envelope."
The plaintiffs, who include victims of apartheid violence, accuse corporations, ranging from New York banks to a Swiss artillery manufacturer, of propping up the apartheid regime for decades through providing military goods to the South African security forces, and computing equipment to bureaucrats, which were used to track apartheid's racial categories of whites, coloreds, and Asians.
The plaintiffs allege that the companies also played a direct role in apartheid violence. General Motors "recruited white employees to join a citizen commando force" involved in vigilante killings, plaintiffs claim in one court brief. And one South African mining concern, Implats, allegedly requested police to put down a 1986 mine strike.
Banks, the plaintiffs say, played a significant role in propping up an increasingly isolated South Africa. Following the Sharpeville Massacre in 1960, when police opened fire on a crowd of black protesters, Chase Manhattan "devised a package of loans" to South Africa, one group of plaintiffs claim, that was meant "to replace capital leaving the country because of police brutality." Another group of plaintiffs claim that bank loans by Credit Suisse and UBS "supported the government during the bloodiest period of apartheid in the late 1980s" before its collapse in the early 1990s.
Since last month's ruling, a lawyer for the defendants, Francis Barron of Cravath, Swaine & Moore LLP, has said his clients will ask the Supreme Court this year to dismiss the suits on foreign policy considerations. The Supreme Court is no stranger to the case.
In a footnote to one decision on the Alien Torts Statute, the federal high court took the unusual step of singling out these lawsuits for mention.
Citing the potential impact of the apartheid litigation on American relations with South Africa, the court said: "There is a strong argument that federal courts should give serious weight to the Executive Branch's view of the case's impact on foreign policy."
