Eighth Circuit Weighing Adoption of Foreign Relations Abstention
November 14, 2023
The Eighth Circuit will soon hear an interlocutory appeal to consider permitting abstention based on foreign relations concerns. In Reid v. Doe Run Resources Corp. (as the case is captioned on appeal), Peruvian citizens allege they were seriously harmed as children by toxic substances emitted by a metallurgical refining complex in Peru and that this exposure was the fault of the defendants, who are interrelated U.S. companies and their officers and directors. The Eastern District of Missouri (Judge Catherine Perry) twice rejected the defendants’ argument that the plaintiffs’ claims should be dismissed on the basis of “international comity abstention.” The second time, however, she certified the question for immediate interlocutory appeal, and the Eighth Circuit agreed to decide it. This post describes the dispute and the briefing before the Eighth Circuit, including an amicus brief that Bill Dodge and I submitted in support of the plaintiffs.
The La Oroya Complex
The complex at La Oroya has been in operation since 1922, smelting and refining locally mined minerals into copper, zinc, lead, and other metals. Peru nationalized the complex in 1974 but then privatized it in 1997 and sold it to The Renco Group (“Renco”) and Doe Run Resources Corporation (which is owned by a holding company that is in turn owned by Renco). To maintain Peruvian ownership of the complex as required by Peruvian law, Renco and Doe Run Resources formed a Peruvian company to hold the La Oroya complex (“Doe Run Peru”), as well as another Peruvian company to be its direct parent (“Doe Run Mining”). All these companies trace back, through holding companies, to The Renco Group. Billionaire Ira L. Rennert, who is the chairman and CEO of Renco (and whose family owns nearly 100% of it), is also the Chairman and often the Sole Director of all the various holding companies.
At the time of the 1997 sale, the La Oroya complex was under a new environmental remediation plan with a ten-year timeline, and Doe Run Peru agreed to fulfill certain obligations under the plan. After operating the complex at maximum capacity for a decade without completing the required remediation, however, Doe Run Peru shuttered the complex and went bankrupt in 2009.
The U.S. Lawsuits
Starting in 2007, representatives of Peruvian children living near the La Oroya complex, who were permanently harmed by exposure to lead and other contaminants after 1997, began filing state tort claims in Missouri state court against Renco, various holding companies, Rennert, and three other corporate officers. All the defendants are based or reside in Missouri or New York. The plaintiffs allege that the defendants closely managed Doe Run Peru from Missouri and that defendants’ demands that Doe Run Peru send millions in debt repayments back to Missouri prevented it from funding much-needed pollution mitigation measures at La Oroya.
The Eastern District of Missouri initially rebuffed the defendants’ efforts to remove the case to federal court as the plaintiffs had sued Missouri defendants in Missouri state court on state-law causes of action. After the defendants initiated a related arbitration against Peru in 2010, however, they convinced the district court and the Eighth Circuit that removal was proper based on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the New York Convention). The district court ultimately consolidated 40 removed cases involving 1420 individuals, as well as a different set of cases involving more than 1000 additional plaintiffs, which is pending before another judge in the same district.
In an earlier decision, Judge Perry applied Missouri’s choice-of-law rules and concluded that Missouri law applied to the plaintiffs’ claims. She dismissed some of their claims on summary judgment but allowed others to go forward. Of relevance for the interlocutory appeal, she refused to dismiss the remaining claims based on “international comity.”
After significant discovery, the defendants asked the district court to reconsider its choice-of-law determination and to dismiss the lawsuits based on a litany of “transnational law doctrines.” In a decision issued last January, Judge Perry agreed that one defense should be governed by Peruvian law but again refused to dismiss the case on the basis of international comity abstention. Even accepting that federal courts have the authority to dismiss cases because of foreign relations concerns, she reasoned that the facts of this case did not satisfy any of the proposed tests for such abstention. Judge Perry also rejected arguments for dismissal based on the presumption against extraterritoriality, the act of state doctrine, and foreign affairs preemption. Recognizing that the Eighth Circuit has not yet spoken on the question of international comity abstention, however, she certified that question for immediate interlocutory appeal. In April 2023, the Eighth Circuit agreed to hear the appeal.
Before the Eighth Circuit
A preliminary point of clarification is what exactly the Eighth Circuit agreed to decide. As Judge Perry correctly noted, “international comity abstention” typically refers to deference to foreign parallel proceedings—which do not exist in this case. The defendants are instead invoking a variation of international comity abstention recognized by the Eleventh and Ninth Circuits, which involves weighing the sovereign interests of the United States against those of another country (here, Peru). Under this doctrine—which I’ll call “foreign relations abstention” to distinguish it more clearly from the context of parallel proceedings—a federal judge can dismiss a case if they worry it will cause foreign relations problems.
Judge Perry avoided deciding whether foreign relations abstention is a recognized doctrine in the Eighth Circuit by reasoning that, even if it were such a doctrine, it wouldn’t apply on its own terms to these lawsuits. Given that framing, both sides primarily dispute on appeal whether Judge Perry abused her discretion in how she applied foreign relations abstention.
First, the defendants argue that the U.S.-Peru Trade Promotion Agreement (“TPA”) precludes a U.S. court from deciding this case, as it involves investment in Peru and Peru’s regulatory interests. The plaintiffs counter that no language in the TPA preempts litigation in U.S. courts, that the implementing statute makes clear that it does not preempt state law, and that the same statute prohibits private litigants from invoking the TPA as a defense.
Second, regarding Peru’s interests in the litigation, the defendants point to two letters from the Peruvian Minister of Economy of Finance to the U.S. State Department expressing concern about the Missouri lawsuits. They argue that Judge Perry erred in discounting these letters as expressions of Peru’s sovereign interests. The plaintiffs counter that Judge Perry did not abuse her discretion in light of two competing letters submitted by members of Peru’s Congress, as well as Peru’s decision not to submit a statement or amicus brief to the Eighth Circuit.
Third, regarding U.S. foreign policy interests, the plaintiffs emphasize that the U.S. government has for fifteen years declined to object to this litigation. The defendants counter that the TPA itself shows the United States has an interest in such litigation being pursued in Peru. They also argue that the only real U.S. interest at stake is Missouri’s interest in policing the conduct of its corporate citizens, which they characterize as insignificant.
On this last point, Missouri Attorney General Andrew Bailey filed an amicus brief on behalf of the state, affirmatively stating that Missouri “lacks any substantial interest in this case proceeding in Missouri rather than in some other venue.” This assertion is interesting on a broader level because it runs counter to the U.S. Supreme Court’s assumption that states have a strong interest in regulating the conduct of their own citizens. In the personal jurisdiction context, for example, the Court has told plaintiffs to sue corporations in the corporations’ home states. Missouri’s intervention in Reid is further indication that the Supreme Court’s assumptions about state interests may be too simplistic.
General Bailey’s brief also raises the question of who speaks for a sovereign—a key question in a doctrine that asks judges to identify and weigh competing sovereign interests. In cases like this one, the defendant is incentivized to push both the foreign government and the U.S. government to intervene in private litigation, which in turn saddles judges with having to decide which interventions to credit. In Reid, for example, not only do the parties dispute who speaks credibly for Peru, but the plaintiffs have also moved to strike the Missouri amicus brief in light of Renco’s subsequent $50,000 donation to a PAC that plaintiffs allege is assisting General Bailey’s re-election campaign. Missouri and the defendants have challenged that link, as well as any relevance it might have to the propriety of the amicus brief. The result is another side issue that the Eighth Circuit will have to resolve.
Is Foreign Relations Abstention a Thing?
As plaintiffs argue at the end of their response brief, all this trouble could be avoided if the Eighth Circuit simply declines to recognize foreign relations abstention. Bill and I filed an amicus brief to lay out just how novel and unnecessary foreign relations abstention is. The Eleventh Circuit first invoked abstention based on foreign relations concerns in Ungaro-Benages v. Dresdner Bank AG (2004). It has never again applied it, however, and has said in a subsequent decision that such abstention should be limited to “rare” cases. The Ninth Circuit adopted the idea in Mujica v. AirScan Inc. (2014) and subsequently affirmed a lower court’s use of foreign relations abstention in a different case. But that’s it. No other circuit has affirmatively adopted this idea, and the Third Circuit has rejected it.
One reason for the lack of uptake is that foreign relations abstention is largely redundant of existing doctrines. Foreign sovereign immunity, the act of state doctrine, and the political question doctrine already address foreign relations concerns regarding litigation in U.S. courts. Significantly, Congress and the Supreme Court have carefully cabined these doctrines to avoid giving federal judges too much discretion to dismiss cases based on loose invocations of foreign policy.
Meanwhile, other doctrines address the practical difficulties of handling complex cross-border cases. In particular, forum non conveniens already gives district court judges discretion to dismiss cases that they think would be better addressed by a foreign court. Notably, the defendants in Reid raised forum non conveniens early on but then abandoned that argument. One reason why might be because the Eighth Circuit has strong precedent disfavoring forum non conveniens dismissals in cases brought against in-state residents—like many of the defendants in Reid.
Adopting foreign relations abstention, as urged by the Reid defendants, would blow up all of these limitations. Why would a defendant worry about the limits of the act of state doctrine or forum non conveniens if they can instead simply argue that sovereign interests (broadly construed) favor dismissal?
Whatever one thinks about the propriety of foreign plaintiffs suing U.S. defendants in their home forums, decisions about court access should be left primarily to the political branches. The judicial discretion urged by the Reid defendants runs counter to the Supreme Court’s repeated insistence that federal courts have a “virtually unflagging obligation” to hear the cases over which Congress has granted them subject-matter jurisdiction. In particular, it runs counter to the Supreme Court’s recent efforts to limit already-existing bases of abstention. And it runs counter to the Supreme Court’s holding in Quackenbush v. Allstate Insurance Co. (1996) that abstention does not permit federal courts to dismiss cases, like this one, that seek damages.
The Red Herring of The Belgenland
I have just posted a new article debunking this supposed link between foreign relations abstention and old admiralty cases like The Belgenland. The Belgenland invoked a discretion to decline jurisdiction that was limited to admiralty disputes involving no U.S. parties. That discretionary doctrine evolved through an unbroken series of opinions into today’s doctrine of forum non conveniens. If applied as precedent that has continued to develop over time, then, The Belganland leads to forum non conveniens; if applied instead as it was understood in the 1800s, The Belgenland’s discretion would be of no use to U.S. defendants like Renco being sued outside of admiralty.
The defendants assert half-heartedly in a footnote that, “[w]hile The Belgenland is also credited with recognizing the doctrine of forum non conveniens, it separately recognized international comity abstention.” They cite no support for this position, nor could they. The Belgenland discussed one basis for declining jurisdiction, not two. The Court referred to comity and convenience within that single framework. At most, then, one might argue that The Belgenland supports adding comity back into the forum non conveniens analysis. But there is no basis for arguing that The Belgenland established discretion to dismiss cases based on two distinct doctrines, one of which became forum non conveniens and the other of which lay forgotten for 140 years.
No prior case has linked The Belgenland to the doctrine of foreign relations abstention that the defendants have invoked in this case. Neither the Eleventh Circuit in Ungaro-Benages nor the Ninth Circuit in Mujica even mentioned the decision. There are many doctrines of international comity in American law. They have separate histories, requirements, and fields of application. The defendants’ citation of The Belgenland is a transparent attempt to manufacture a pedigree for a new doctrine of abstention when no such pedigree exists.
For reasons of practical litigation strategy, the briefing before the Eighth Circuit has buried the lede. There is no need to consider whether the district court abused its discretion in identifying and weighing sovereign interests in this case. The appellate court should instead refuse to follow the Ninth Circuit in embracing a new basis for abstention. Foreign relations abstention is a novel and unnecessary doctrine, and the defendants’ self-serving efforts to expand judicial power should be rejected.