Transnational Litigation Anticipation: Previewing the Court’s Next Term

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TLB recently recapped the Supreme Court’s transnational litigation cases from last Term. This post looks ahead to the upcoming Term, for which the Court has already granted certiorari in a personal jurisdiction case that may have implications for transnational litigation. TLB is also tracking several interesting petitions for certiorari in disputes involving the Foreign Sovereign Immunities Act (FSIA), Rule 44.1, the extraterritorial application of the Lanham Act, counterterrorism, forum non conveniens in the enforcement of foreign arbitral awards, and sanctions. In three of these, the Court has already called for the views of the Solicitor General (“CVSGs”).

Cert Grants

Mallory v. Norfolk Southern Railway Co.

Though Mallory does not have transnational facts, the Court’s decision will likely have major implications for personal jurisdiction in transnational litigation, as Maggie Gardner has noted. The Court will have to decide whether the Due Process Clause of the Fourteenth Amendment precludes states from requiring corporations to consent to jurisdiction via corporate registration statutes in order to do business within the state.

The Court’s 2014 decision in Daimler v. Bauman largely eliminated general personal jurisdiction over foreign corporations in U.S. courts. Corporate registration statutes, however, may provide plaintiffs with an alternative basis for jurisdiction. Charles W. (Rocky) Rhodes and Cassandra Burke Robertson have previously described for TLB the history of and debate over corporate registration statutes. With its grant in Mallory, the Supreme Court seems poised to narrow the degree to which states can require corporations—including foreign corporations—to consent to suit within their courts.

For more on Mallory, including filings before the Court, see SCOTUSblog.


NSO Group Technologies Limited v. WhatsApp Inc.

The Supreme Court has called for the views of the Solicitor General in three transnational litigation cases. In the first, NSO Group, an Israeli company, petitioned the Court to resolve a purported circuit split about whether corporate agents of foreign governments may seek conduct-based immunity under federal common law.

NSO provides intelligence-gathering technology to governments for use in the investigation of serious crimes like terrorism and child exploitation. WhatsApp sued NSO, claiming that the company violated state and federal law and facilitated human rights violations by sending malicious code to WhatsApp users. NSO moved to dismiss for lack of subject matter jurisdiction, asserting it was immune from suit as an agent of foreign governments. The district courtrejected the company’s immunity argument, despite finding it to be an agent of foreign governments, because a judgment against NSO would not bind foreign governments. The Ninth Circuit then affirmed on the ground that the FSIA displaced common-law sovereign immunity for entities; thus the company could only obtain immunity if it qualified as a foreign state under the FSIA.

Before the Supreme Court, NSO cites the “significant implications” for foreign relations and government contracts, decisions by the Fourth and D.C. Circuits granting conduct-based immunity to private entities, and Samantar v. Yousuf’s holding that common law applies to foreign government officials to argue that the common law should also govern claims to immunity by private entities like itself. WhatsApp asserts that there is no real circuit split regarding the issue and that the Ninth Circuit’s ruling is consistent with Samantar.

In his posts on TLB and Just Security, William Dodge has argued that NSO’s cert petition should be denied and that the Solicitor General should not recommend immunity: Congress has already fully addressed corporate immunity in the FSIA; corporations like NSO are not entitled to conduct-based immunity, which is reserved for foreign officials; and NSO’s case is not a good vehicle for resolving these questions because no foreign government has acknowledged that NSO is its agent.

For more on NSO Group, including filings before the Court, see SCOTUSblog.

Turkey v. Usoyan

A clash at the Turkish Ambassador’s residence in Washington, D.C. between protestors and the Turkish President’s security detail resulted in injuries to several protestors, who sued Turkey. Turkey asserted sovereign immunity, but both the district court and D.C. Circuit held that the suit came within the forum tort exception and that Turkey was not immune under the discretionary function rule. The lower courts applied the two-part Berkovitz v. United States test: whether Turkey had the discretion to act in the first place (yes) and whether the security detail’s actions were plausibly related to security policy or reasonably necessary (no).

In its petition, Turkey challenges the D.C. Circuit’s application of the second part of the Berkovitz test. It asserts that the decision conflicts with the language of the FSIA and the consensus of other circuits, which prohibit trial courts from “second guessing” discretionary governmental acts. It also argues that the decision poses a major threat to U.S. foreign policy by expanding civil liability, discouraging heads of state from traveling to the United States, and inviting reciprocal treatment of U.S. security details.

In an earlier post, Ingrid Wuerth anticipates the Solicitor General’s recommendation in Usoyan and asserts that Turkey’s acts were not discretionary. She cites the line of cases indicating that criminal conduct cannot count as a discretionary function, as well as the video footage revealing the Turkish security detail attacking peaceful protestors without provocation. Wuerth also discusses the origins of Turkey’s authority to protect its officials in greater detail, asserting that the strongest legal basis for such authority is the consent of the United States.

For more on Turkey v. Usoyan, including filings before the Court, see SCOTUSblog.

Abitron Austria GmbH v. Hetronic International, Inc.

Abitron asks whether the Lanham Act can be applied extraterritorially to foreign sales of products infringing on U.S. trademarks that have never reached the United States. The Court addressed this issue once before in Steele v. Bulova Watch Co. (1952), holding that the Act could apply to a U.S. citizen engaging in trademark infringement and unfair competition entirely in a foreign country. This case, however, is distinguishable because it involves a U.S. company (respondent) suing a group of German and Austrian nationals (petitioners) for infringement in the foreign sale of radio remote controls.

In affirming the district court’s decision in relevant part, the Tenth Circuit held that the Lanham Act applied extraterritorially to all foreign sales. It surveyed the tests of five other circuits and then created its own.

In seeking cert, the petitioners emphasize the “splintering” of the circuit approaches into six different tests—most notably the contrast between the Fourth and Tenth Circuits’ approaches. They also discuss the potential for international controversy and threats to American interests abroad if the Lanham Act is applied broadly to reach foreign conduct by foreign defendants.

For more on Abitron, including filings before the Court, see SCOTUSblog.


Turkiye Halk Bankasi A.S. v. United States (Halkbank)

Halkbank asks whether the FSIA applies in criminal cases. The petitioner, Halkbank, is a bank owned by Turkey that was indicted for violations of U.S. sanctions against Iran. The district court denied immunity to Halkbank, reasoning that the FSIA confers immunity only in civil cases, and alternatively, that even if the FSIA does apply, Halkbank is not immune due to the FSIA’s commercial activities exception. The Second Circuit affirmed and denied rehearing en banc.

The case involves a circuit split as to whether federal district courts have criminal jurisdiction over foreign sovereigns. Halkbank emphasizes that this case would be the first criminal trial of a foreign sovereign in U.S. courts. The Sixth Circuit, by contrast, recognizes complete immunity from criminal jurisdiction for foreign sovereigns. But the Second, Tenth, and D.C. Circuits have allowed federal prosecutors to indict foreign states and their instrumentalities—although the Second and D.C. Circuits do so only if an exception to the FSIA applies.

Halbank emphasizes that criminal trials of foreign governments and state owned entities have serious implications for international comity and for foreign relations. Azerbaijan and Pakistan submitted an amicus brief in support of Halkbank. The United States argues that whether or not the FSIA applies, Halkbank is not entitled to immunity. The government also highlights that the United States has for decades prosecuted and served criminal process on businesses that are majority-owned by foreign governments.

In her post for TLB and an article for the Virginia Journal of International Law, Chimène Keitner argues that the FSIA applies only to civil proceedings and that it neither authorizes nor prohibits criminal proceedings. She also proposes a common law approach to foreign sovereign immunity in criminal prosecutions until Congress enacts further legislation.

For more on Halkbank, including filings before the Court, see SCOTUSblog.

Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd. (Vitamin C Case)

The Vitamin C Case is the newest chapter of a dispute that began in 2005. The issue raised in the pending cert petition is whether U.S. courts may apply the Sherman Act on a case-by-case basis using a ten-factor balancing test for prescriptive comity, and whether a court interpreting foreign law is limited to the face value of written legal materials or if additional evidence may be considered.

The dispute arose between Chinese manufacturers (respondents) and U.S. vitamin C importers (petitioners). The importers alleged that the manufacturers conspired to fix Vitamin C prices and output. The manufacturers asserted that Chinese law mandated the price-fixing. The Supreme Court has already ruled in this case that federal courts should not give a foreign government’s views of foreign law “conclusive effect,” but rather only “respectful consideration” in resolving the dispute. On remand, the Second Circuit, according to the petitioners, considered only the “face value” of Chinese law in determining that there was a “true conflict” between U.S. and Chinese law. The court then applied a multifactor, prescriptive comity balancing test to determine that the Sherman Act did not reach the respondents’ conduct, thus reversing (again) an almost $150 million antitrust judgment against the Chinese manufacturers.

The petitioners assert that the Second Circuit’s decision conflicts with decisions of the Supreme Court and five other circuits, all of which have rejected the case-by-case analysis applied by the Second Circuit. They also argue that the Second Circuit improperly limited its inquiry into Chinese Law under Rule 44.1 to its “facial” requirements. The respondents, on the other hand, deny that there is a circuit split at all and argue that the Second Circuit’s case-by-case comity analysis does not improperly “reinterpret” the meaning of the Sherman Act but merely applies the accepted meaning to the conflict at hand. They also argue that the Second Circuit did not limit its Rule 44.1 analysis to the “face value” of the foreign law but rather considered all relevant evidence.

In addition to his recent TLB post, William Dodge submitted an amicus brief with Paul Stephan in support of petitioners. Dodge argues that the Second Circuit’s case-by-case approach and use of prescriptive comity to justify abstaining from the application of federal law is contrary to the Supreme Court’s decisions, threatens to replace narrower comity doctrines, and asks the courts to perform tasks relevant to foreign relations and outside of their institutional capabilities.

For more on the Vitamin C Case, including filings before the Court, see SCOTUSblog.

Twitter, Inc. v. Taamneh

The questions presented in Taamneh are whether a defendant social media site with many users, which “regularly” works to detect and prevent terrorists from using its platform, “knowingly” provided substantial assistance under the Anti-Terrorism Act (ATA) if it could have taken “more ‘meaningful’ or ‘aggressive’ action to prevent such use,” and whether the site can be liable for aiding and abetting even though it was not used in connection with the terrorist act that actually injured the plaintiff.

This suit is one of many seeking to hold social media companies liable for terrorist attacks. All of the other suits were dismissed in cases affirmed by the Second, Fifth, Sixth, and Eleventh Circuits. In Taamneh, however, the Ninth Circuitreversed the district court’s order granting a motion to dismiss and held that social media services that could have taken more aggressive, preventative action could be held liable when ISIS supporters used their platforms—despite the fact that the social media platforms were not connected with the specific terrorist attack at issue. The Ninth Circuit announced both the Taamneh decision and the decision in Gonzales v. Google LLC—another case with a pending cert petition—in a single opinion, but the two cases were decided differently. Unlike Taamneh, the Ninth Circuit affirmed the district court’s dismissal of the claims in Gonzales.

Twitter asserts that the Ninth Circuit critically misconstrued the ATA, which requires that the defendant aid and abet by “knowingly providing substantial assistance” or by conspiring with the person who committed the act of terrorism. Twitter claims that it did not “knowingly” assist ISIS and that its services did not contribute to the specific terrorist act. By holding otherwise, Twitter argues, the Ninth Circuit undermines limitations on ATA liability, thereby threatening businesses, and breaks with other circuits which require at a minimum that the defendant be aware its platform would be used for a “terroristic purpose” or to support attacks. For example, in Weiss v. National Westminster Bank, PLCand Strauss v. Credit Lyonnais, the Second Circuit held that claims against a bank under the ATA were not viable because there was no evidence that the defendant banks knew transfers would be used for terrorist purposes. The Court has since denied cert in both Weiss and Strauss.

For more on Twitter, including filings before the Court, see SCOTUSblog.

Ukraine v. PAO Tatneft

In its petition for certiorari in PAO Tatneft, Ukraine asks the Court to resolve a circuit split as to whether forum non conveniens is available in proceedings to confirm a foreign arbitral award. The Second Circuit has held that under federal common law, forum non conveniens is available and that courts may dismiss proceedings to confirm arbitral awards when defendants can point to a better suited, alternative forum. The D.C. Circuit, on the other hand, ruled that forum non conveniens is categorically unavailable in proceedings to confirm foreign arbitral awards.

The dispute originated in a conflict between a Russian-owned oil company and the Ukrainian government, which attempted to invalidate the oil company’s seizure of the joint venture that ran Ukraine’s largest refinery. The oil company initiated arbitration proceedings against Ukraine and won an award worth over $170 million, which it sought to enforce in the District Court for the District of Columbia. The United States has no connection to the dispute and Tatneft identified no attachable Ukrainian assets, indicating that the oil company seeks to use U.S. discovery laws to its advantage. Ukraine identified itself as an adequate alternative forum, but the district court rejected Ukraine’s forum non conveniens argument and refused to consider the possibility of dismissing the case in favor of a foreign forum because of the D.C. Circuit’s categorical rule. The D.C. Circuit affirmed, and Tatneft began serving discovery requests, but the district court has since issued a temporary moratorium on discovery when Russia invaded Ukraine.

The New York Convention, to which the U.S. is a party and which has been integrated into U.S. law through the Federal Arbitration Act, sets out specific grounds on which contracting states may decline to recognize and enforce an arbitral award, including incapacity, invalid arbitration agreements, awards contrary to public policy, or awards outside the scope of the dispute. Forum non conveniens allows federal courts to dismiss a case when there is an adequate alternative forum and the balance of public and private interests favor dismissal. Ukraine asserts that both of these factors are met. The respondents have not yet submitted a brief in opposition.

Deripaska v. Yellen

The U.S. Treasury’s Office of Foreign Assets Control (OFAC) designated Oleg Deripaska under Executive Orders 13661 and 13662—blocking his assets and prohibiting U.S. persons from dealing with him—stating in a press release that the designation was a response to Russia’s “worldwide malign activity.” Deripaska claimed that the designation violated the limitations imposed on emergency executive powers under the International Emergency Economic Powers Act, which allows the executive branch to impose sanctions on foreign countries and individuals pursuant to the declaration of a national emergency in response to an “unusual and extraordinary threat.” He asserts that Russia’s “worldwide maligned activities” have not been declared a national emergency (only its activities in Ukraine) and that the OFAC action thus violated the Administrative Procedure Act’s arbitrary and capricious standard and its limitation on agency action beyond statutory authority.

The district court and D.C. Circuit left OFAC’s designation in place, and petitioner Deripaska asserts that the designation poses a significant threat to the balance of power between the three branches and essentially grants the executive unlimited power. The Treasury Department has since waived its right to file a response.