MANHATTAN (CN) - Ford Motor Co. and IBM must face a class action from black South Africans accusing them of supplying the apartheid regime with military cars and computers, a federal judge ruled.
In a nod to an ongoing legal controversy, U.S. District Judge Shira Scheindlin's 30-page decision opens with quotations from two federal appellate court opinions supporting her conclusion that U.S. corporations can be held liable for alleged atrocities that they perpetrate or aid abroad under the Alien Tort Statute.
"Given that the law of every jurisdiction in the United States and of every civilized nation, and the law of numerous international treaties, provide that corporations are responsible for their torts, it would create a bizarre anomaly to immunize corporations from liability for the conduct of their agents in lawsuits brought for shockingly egregious violations of universally recognized principles of international law," D.C. Circuit Judge Judith Rogers wrote, in the first of these quotations.
South Africans who say they were imprisoned and tortured under apartheid first brought the case in 2002, shortly after the centuries-old Alien Tort Statute began to be used against corporate defendants to redress overseas wrongs.
The viability of their case became uncertain as similar cases wound their way through U.S. appellate courts and the Supreme Court.
One of the most fateful, Kiobel v. Royal Dutch Petroleum, involved allegations that the oil giant conspired with the Nigerian government to brutally suppress dissent against oil exploration in the country's Ogoni region. The 2nd Circuit ruled in that case that corporations could not be sued under the Alien Tort Statute (ATS), in a decision that came to be known as Kiobel I.
Calling the decision a "stark outlier," Scheindlin wrote Thursday that the appellate majority here broke an "unbroken line of controlling precedent."
"It is the only opinion by a federal court of appeals ... to determine that there is no corporate liability under the ATS," the opinion states, citing conflicting findings by the 7th, 9th, 11th and D.C. Circuits.
The Supreme Courtdid not address this controversy, however, when it dismissed claims against Royal Dutch on the grounds that U.S. courts lacked jurisdiction to try foreign corporations for conduct outside its borders. That decision came to be known as Kiobel II.
The Supreme Court likewise did not touch the issue in booting a lawsuit against Daimler for alleged complicity in Argentina's Dirty War, on the basis of the auto company's insufficient ties to California to reach the state's "long-arm" statute.
But Scheindlin said "this language makes no sense if a corporation is immune from ATS suits as a matter of law."
"The Supreme Court's opinions in Kiobel II and Daimler cannot be squared with Kiobel I's rationale," she added.
The Kiobel I opinion relies on the faulty premise that "no corporation has ever been held liable in a civil or criminal case for violations of customary international law or norms," Scheindlin wrote.
Such an assertion ignores the Allied prosecution of Nazi companies like I.G. Farben after World War II, the opinion states.
Bruce Nagel, a partner at Nagel Rice representing the South Africans, said he was "extremely pleased with the decision."
"Ford and IBM enabled the apartheid regime to function, and justice requires that they answer for their wrongdoing," Nagel said.
Other attorneys in the case have not yet returned requests for comment.
Thursday's decision marks the third time Scheindlin has advanced the case.