July 30, 2015

Second Circuit Decision in Apartheid Appeal Denies Plaintiffs the Opportunity to Proceed with Their Claims

Posted by Susan Farbstein and Tyler Giannini

Earlier this week, the Second Circuit handed down its opinion in In re South African Apartheid Litigation, denying Plaintiffs an opportunity to proceed with their claims against the remaining Defendants Ford and IBM. In doing so, the appellate court affirmed the District Court’s prior decision on the grounds that Plaintiffs’ proposed amended complaints had not alleged sufficient plausible new facts to move forward.

While the outcome was disappointing, so too was the opinion of the Court itself, which failed to fully engage with new, specific, and detailed allegations in the proposed amended complaints — in particular, allegations about how both defendants, in the United States, took purposeful and repeated actions to aid and abet the South African state to commit international law violations. With respect to the allegations against Ford, the Court glanced over important facts about the U.S. parent corporation’s direct involvement in the design and approval of the sale of specialized vehicles to South African security forces, in contravention of international sanctions regimes. Instead, the Court concluded broadly that the allegations were insufficient to link Ford in the United States to the violations in South Africa.

With respect to the allegations against IBM, the Court did find sufficient U.S. domestic conduct by the parent — specifically, that it designed particular technologies that facilitated the denationalization of black South Africans. But while this conduct did “touch and concern” the United States, the standard set by the Supreme Court in Kiobel v. Royal Dutch Petroleum, the Court held that the allegations did not plausibly allege that IBM’s conduct was “purposeful.” Because purpose (rather than knowledge) is the required standard for an aiding and abetting claim in the Second Circuit under Presbyterian Church of Sudan v. Talisman, the Court determined that Plaintiffs’ claims could not proceed.

The Plaintiffs will now seek en banc review of the panel’s decision, requesting that all active judges on the Court rehear the case because it presents questions of exceptional importance and conflicts with prior decisions of the Second Circuit as well as the U.S. Supreme Court.

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