IBM to face renewed lawsuit over apartheid-era abuses

Ford Motor Co and IBM Corp will again have to face a U.S. lawsuit claiming they encouraged race-based human rights abuses in apartheid-era South Africa, despite a series of recent court decisions limiting the right to pursue such cases.

Reviving a 12-year-old lawsuit, U.S. District Judge Shira Scheindlin in Manhattan accepted an argument from a group of plaintiffs that corporations may be held liable under a 1789 law, the Alien Tort Statute (ATS), that lets non-U.S. citizens pursue some cases in U.S. courts over alleged violations of international law.

"No principle of domestic or international law supports the conclusion that the norms enforceable through the ATS apply only to natural persons and not to corporations," Scheindlin wrote.

Her decision came in a case that the 2nd U.S. Circuit Court of Appeals, also in Manhattan, in August had said should be dismissed.

"Obviously we're thrilled," said Diane Sammons, a partner at Nagel Rice law firm in Roseland, New Jersey, representing some plaintiffs. "Judge Scheindlin is not taking the word of the defendants that corporations are not liable for human rights abuses under the ATS."

Sammons said she plans to file an amended complaint.

Jonathan Hacker, an O'Melveny & Myers partner who represents Ford, did not respond immediately to requests for comment. Keith Hummel, a partner at Cravath, Swaine & Moore who represents IBM, did not respond immediately to similar requests.

The plaintiffs contended that by having made military vehicles and computers for South African security forces, several companies during the 1970s, 1980s and early 1990s had aided and abetted South Africa's former apartheid government in perpetrating abuses, such as killings and torture.

The litigation seeks class action status, with potential damages in the billions of dollars.

Touching and concerning US territory
Last April, the U.S. Supreme Court limited the sweep of the Alien Tort Statute, in the case Kiobel et al v. Royal Dutch Petroleum Co et al.

In a decision by Chief Justice John Roberts, the court held that the 1789 law was presumed to cover only violations of international law occurring in the United States, and that violations elsewhere must "touch and concern" U.S. territory "with sufficient force to displace the presumption."

Four months later, Circuit Judge Jose Cabranes wrote for the 2nd Circuit that these findings meant the case against Ford and IBM should be dismissed, having "plainly bar[red] common-law suits, like this one, alleging violations of customary international law based solely on conduct occurring abroad."

The plaintiffs, however, said Cabranes' ruling was based on arguments made before the Supreme Court's decision in the Kiobel case, and sought a chance to meet the new, tighter standard set by that court.

Thursday's decision provides that chance, and Scheindlin set a May 15 deadline to file a new complaint against Ford and IBM, whose full name is International Business Machines Corp.

Germany's Daimler AG and Rheinmetall AG had also been defendants, but Scheindlin agreed in December that the Kiobel decision barred claims against them.

General Motors Corp had also been among the defendants, but Sammons said claims against it were discharged during that automaker's 2009 bankruptcy.

Apartheid ended in 1994 when South Africa held its first all-race elections, bringing Nelson Mandela and the African National Congress to power.

The case is In re: South African Apartheid Litigation, U.S. District Court, Southern District of New York, No. 02-md-01499.

© Thomson Reuters 2014