30 octobre, 2006 22:01

11th Circuit Asked to Clarify Corporate Liability

Julie Kay

Daily Business Review

October 30, 2006

A federal judge in Miami has urged an appellate court to clarify key issues of corporate liability under a federal law that's been used against companies and foreign leaders for alleged human rights violations in other countries.

Late last month, U.S. District Judge Jose E. Martinez dismissed a human rights case against two Coca-Cola bottling companies that was brought by a Colombian labor union under the Alien Tort Claims Act.

The 2001 lawsuit alleged that Panamco and Bebidas, two independent Colombian companies that worked for Coke, assisted Colombian right-wing paramilitaries in killing several union members at the bottling plant in Colombia. The plaintiff, a Colombian labor union called Sinaltrainal, sought $500 million in punitive damages.

Martinez ruled that even though the complaint described how Panamco plant managers allowed paramilitary groups into the plant and did not stop them from leaving threatening pamphlets, there was no evidence of a direct conspiracy between the paramilitary groups and plant managers.

Robert Brochin, a partner at Morgan Lewis & Bockius in Miami who represents Panamco, said the ruling was an affirmation that "so many groups have been using the statute for reasons it is not intended for. They are using this law to resolve international labor disputes. These are large matters and create large exposure for American companies."

But Judge Martinez also asked the 11th U.S. Circuit Court of Appeals to provide guidance to trial courts in handling cases brought under the Alien Tort Claims Act, which originally was passed in 1789 to deal with piracy on the high seas. In his Sept. 29 decision, Martinez wrote, "There is a pressing need for clarification of these issues."

The act has been increasingly used in recent years to bring human rights actions against corporations and foreign officials on behalf of alleged victims of rights violations. Defendants have included Unocal, Nestle and Wal-Mart, as well as the governments of Cuba, Venezuela and Libya and former military leaders of El Salvador and Haiti.

The law allows foreign claimants to bring suit in a U.S. court for any violation of "the law of nations or a treaty of the United States."

Judge Martinez's concluding comments reflected the controversy over the law -- and reluctance of lower courts to directly address the large issues.

"These cases present difficult issues of law regarding the vicarious liability of corporate entities in the context of the ATCA," he wrote. "In light of the growing number of ATCA lawsuits involving corporate defendants, issues of what level of pleading is necessary in the ATCA context, of how to determine vicarious liability, of the extent to which state action may be imputed to private actors and of the extent to which 1983 jurisprudence constitutes an established norm of international law are becoming increasingly urgent."

LIMITED SUCCESS

The 1789 Alien Tort Claims Act laid dormant until 1980, when the 2nd Circuit ruled the law could be used by a foreign national in U.S. courts against another foreign national or foreign company even if the event occurred outside U.S. borders. The ruling has been upheld by courts across the country.

In the 1990s, Congress passed a related law, called the Torture Victim Protection Act, which further boosted plaintiffs in such cases.

But some legal experts, both conservative and liberal, question this use of American courts in such cases. They argue that there's no legitimate legal basis for people who are not U.S. citizens or U.S. residents to sue foreign companies or governments on human rights grounds in courts here.

"The courts that countenance such lawsuits are making up the law of nations out of their own notions of appropriate human rights," former U.S. Solicitor General Robert H. Bork wrote in 2003.

Nevertheless, in the 1990s, U.S. human rights attorneys and labor groups began using the Alien Tort Claims Act to sue American corporations for human rights violations and labor violations around the world.

The act has been utilized successfully in a number of cases against foreign dictators and military leaders who have sought asylum in the United States. Just last week, a federal judge in New York ordered a notorious former Haitian paramilitary leader, Emmanuel "Toto" Constant, to pay $19.5 million in damages to three women who claimed they were systematically gang-raped by soldiers under his command.

But lawyers have had limited success in using the Alien Tort Claims Act to bring charges against U.S. companies operating in foreign countries on behalf of employees alleging human rights abuses.

Of the handful of cases brought against U.S. companies under the act, only one is known to have resulted in victory for the plaintiffs.

In 2004, Burmese workers won a $500 million settlement with California oil giant Unocal. The company allegedly used forced labor in the construction of an energy pipeline in Burma. Government troops in that country, now called Myanmar, which is controlled by a military dictatorship, allegedly used rape and murder to force local residents to work on the Unocal pipeline.

But other cases are still slowly working their way through the courts. Most such cases have been filed by the International Labor Rights Fund in Washington, D.C., which advocates for worker rights around the world.

Other Alien Tort Claims Act cases that are cycling through courts around the country include one filed in Los Angeles against Nestle Corp. that accuses the company of using child labor to produce its chocolate in the Ivory Coast in West Africa. Another case was filed against Drummond Coal for allegedly threatening and committing violence against labor union members in Colombia.

Also in Los Angeles, there's a case pending against Wal-Mart for alleged labor rights abuses and for allegedly violating its own code of conduct in China, Bangladesh and Indonesia.

In Miami, a trial is scheduled next year in a case brought against Del Monte on behalf of Guatemalan workers who allege human rights abuses by anti-union managers at the plant. U.S. District Judge Federico A. Moreno dismissed that case, but the International Labor Rights Fund won the appeal. The case was remanded to Moreno.

Federal judges seem unenthusiastic about handling these cases, which often involve witnesses who live in foreign countries and complex questions of international law. "There's a sense that courts may have [that] these events are taking place in another country, so why is the suit being brought here?" said Stephen Schnably, a professor of international law at the University of Miami.

But Terry Collingsworth, executive director of the labor rights fund, argued that such suits often are the only way for the victims of human rights abuses by U.S. companies to win legal redress. Plaintiffs may not be able to get a fair legal hearing in their own countries, and may fear that if they file a suit at home, they will face violent retaliation.

One Alien Tort Claims Act case, Sosa v. Alvarez-Machain, reached the U.S. Supreme Court. That case was brought by a Mexican who was tried and acquitted in the United States of participating in the kidnapping and torture of a Drug Enforcement Administration agent in Mexico in 1985.

The justices were asked to interpret the statute and determine whether it was being used beyond its original purpose. The George W. Bush administration urged the high court to limit the scope of the law, while human rights groups urged the court to interpret it broadly.

But the Supreme Court's 2004 ruling in the case sidestepped the larger issues and essentially maintained the status quo. Collingsworth said the ruling "left a crack in the door open." The court denied Dr. Alvarez-Machain's right to pursue his claims, but rejected the U.S. government's attempt to eliminate the ability of all human rights victims to bring claims in U.S. courts.

In the Sosa case, Schably said, the Supreme Court said the human rights abuses had to be specific and egregious. "That puts district court judges in the position of deciding what is egregious," he said. "That is not something they're good at or used to. They don't get that many cases of international law. So it's not surprising that they are unwilling to wade too deeply in these waters."

NOT ENOUGH EVIDENCE

Plaintiffs in Alien Tort Claims Act cases against deep-pocketed corporate defendants have a long path to victory, as the Sinaltrainal case demonstrates.

In 2003, Judge Martinez dismissed Atlanta-based Coca-Cola as a defendant based on its purported lack of control over the actions of Colombian bottling companies that package and distribute its product in the South American country.

But Martinez allowed the case to go forward against the two bottlers, despite the companies filing objections claiming the plaintiffs lacked jurisdiction because they are not U.S. companies. The plaintiff prevailed on that question by arguing that Panamco's holding company, Pan American Beverages, is based in Miami.

Then last month, Martinez dismissed the case, stating that there wasn't enough evidence linking the murders to an alleged conspiracy between the paramilitaries and bottling plant officials.

"This court concludes that, at best, plaintiff's allegations assert a merely colorable relationship between the defendants and the paramilitaries," Martinez wrote. "Indeed, the complaint fails to provide any critical information about the details of the conspiracy."

Collingsworth, the lead attorney for the plaintiffs, expressed displeasure that it took five years for the district court to hand the case off to the appellate court to decide the law. "We're disappointed but relieved that we can finally get some action," he said. "We asked Judge Martinez if we could appeal the case four years ago. This has been a significant delay."

Even though only one Alien Tort Claims Act case against a corporation has reaped monetary rewards so far, such litigation may have achieved success in other ways.

"It depends how you measure success," Schnably said. "It can result in great publicity and put pressure on the company to correct a situation and make people more aware of what's going on."

That has happened in the Sinaltrainal case, Collingsworth said. "Things have definitely improved at the plant," he said.