Transnational Litigation at the Supreme Court, October Term 2024
October 7, 2024
Today is the first day of the Supreme Court’s October Term. This post briefly discusses four transnational litigation cases in which the Court has already granted cert, as well as several others that are in the pipeline and could be decided this Term. Readers can also consult our Supreme Court page.
Cases in which the Court Has Granted Cert
Republic of Hungary v. Simon
In Republic of Hungary v. Simon, the Supreme Court will consider three questions under the Foreign Sovereign Immunities Act’s (FSIA) expropriation exception: (1) whether historical commingling of assets suffices to establish that proceeds of seized property have the required commercial nexus with the United States; (2) whether a plaintiff must make out a valid claim that an exception to the FSIA applies at the pleading stage, rather than merely raising a plausible inference that an exception applies; and (3) whether a sovereign defendant bears the burden of producing evidence to disprove that the proceeds of expropriated property have a commercial nexus with the United States.
The plaintiffs in Simon are Holocaust survivors who allege that Hungary expropriated their property, commingled the proceeds with other government funds, and ultimately used those funds to pay holders of government bonds in the United States. The D.C. Circuit held that commingling was sufficient to establish the requisite nexus with the United States, that the plaintiffs needed only to raise a plausible inference that the exception applies, and that it was Hungary’s burden to prove that the funds it used to pay bondholders in the United States could not be traced to the proceeds of expropriated property.
The Solicitor General filed an amicus brief supporting Hungary and arguing that the D.C. Circuit’s decision should be reversed. I have expressed doubts about one aspect of the SG’s position.
CC/Devas (Mauritius) Limited v. Antrix Corp.
The question in CC/Devas (Mauritius) Limited v. Antrix Corp. and Devas Multimedia Private Ltd. v. Antrix Corp. (consolidated for oral argument) is whether the exercise of personal jurisdiction over a foreign state under the FSIA requires satisfaction of the minimum-contacts test.
The FSIA provides in 28 U.S.C. § 1330(b) that personal jurisdiction “shall exist” for every claim over which a district court has subject matter jurisdiction, which is to say claims from which a foreign state is not entitled to immunity. The FSIA defines a foreign state to include many state-owned corporations. Lower courts have generally held that foreign states are not “persons” under the Fifth Amendment Due Process Clause and accordingly are not protected by constitutional limits on personal jurisdiction, including the minimum-contacts requirement. Private corporations, however, are entitled to due process protections, and lower courts have struggled to determine whether foreign state-owned corporations should be characterized as foreign states (with no due process protections) or as private corporations (with such protections). In this case, the Ninth Circuit interpreted the FSIA itself to require a showing of minimum contacts. Petitioners argue that neither the statute nor the Constitution imposes such a requirement.
Ingrid (Wuerth) Brunk has argued that foreign states are “persons” for due process purposes and that Article III also requires that federal courts have personal jurisdiction over them. If the Supreme Court agrees, it may also have to address whether the limits on personal jurisdiction applicable to federal courts under the Fifth Amendment are the same as those applicable to state courts under the Fourteenth, a question that has recently attracted attention in the lower courts.
Smith & Wesson Brands v. Estados Unidos Mexicanos
Smith & Wesson Brands v. Estados Unidos Mexicanos is not a case brought against a foreign state but rather a case brought by a foreign state. As regular readers will recall, Mexico sued Smith & Wesson and other gun manufacturers in federal district court of the District of Massachusetts, alleging that defendants design, market, and sell guns in ways they know will arm Mexican drug cartels. The district court held that Mexico’s claims were barred by the Protection of Lawful Commerce in Arms Act (PLCAA). But the First Circuit reversed, holding that some of Mexico’s claims fit within PLCAA’s “predicate” exception. On remand, the district court dismissed the claims against all the gun makers other than Smith & Wesson for lack of personal jurisdiction.
The questions presented have to do with the predicate exception, specifically whether Mexico has sufficiently alleged that the manufacture and sale of guns in the United States proximately caused Mexico’s injuries and constituted aiding and abetting firearms trafficking in violation of federal law.
BLOM Bank SAL v. Honickman
The plaintiffs in BLOM Bank SAL v. Honickman are U.S. nationals who were victims (or the family members of victims), of terrorist attacks by Hamas. They sued BLOM Bank, alleging that it aided and abetted the terrorist attacks by providing banking services to three customers alleged to be affiliates of Hamas. Under the Anti-Terrorism Act (ATA), as amended by the Justice Against Sponsors of Terrorism Act (JASTA), liability extends to “any person who aids and abets, by knowingly providing substantial assistance, or who conspires with the person who committed such an act of international terrorism.”
After plaintiffs declined several times to amend their complaint, the district court dismissed it with prejudice for failing to state a claim on which relief may be granted. On appeal the Second Circuit clarified the standards for aiding and abetting liability under the ATA but affirmed dismissal of the complaint. Plaintiffs then asked the district court to vacate its judgment under Federal Rule 60(b)(6) and allow them to file an amended complaint under the clarified law. The district court denied the request, and the Second Circuit reversed.
In Twitter, Inc. v. Taamneh (2023), the Supreme Court significantly tightened the rules for aiding and abetting liability under the ATA, but this case is not about those rules. Rather, the question presented is whether Rule 60(b)(6)’s requirement of extraordinary circumstances to justify reopening of final judgment applies to a request to vacate so that an amended complaint can be filed.
Other Cases in the Pipeline
Fuld v. Palestinian Liberation Organization
The plaintiffs in Fuld v. Palestinian Liberation Organization have asked the Supreme Court to review the Second Circuit’s decision holding unconstitutional the Promoting Security and Justice for Victims of Terrorism Act of 2019 (PSJVTA). The Solicitor General has filed its own cert petition defending the constitutionality of the statute.
The PSJVTA purports to establish personal jurisdiction over the Palestine Liberation Organization (PLO) and the Palestinian Authority (PA) for civil actions under the ATA by providing in 18 USC § 2334(e) that the PLO and PA “shall be deemed to have consented to personal jurisdiction” if they either (1) make payments to individuals who committed an act of terrorism that killed or injured U.S. nationals or to their families, or (2) maintain an office or conduct any activity in the United States, other than activity necessary to participate in the United Nations. The Second Circuit held that the PSJVTA violated the PLO’s and PA’s due process rights by converting continuing conduct into implied consent by legislative fiat.
There is a strong likelihood that the Supreme Court will grant cert simply because a lower court has declared an act of Congress unconstitutional. The case also tests the limits of consent jurisdiction under Mallory v. Norfolk Southern Railway Co. (2023) in a context where the dormant Commerce Clause is inapplicable because Congress has acted rather than a state. Finally, the case presents an opportunity for the Court to consider whether due process limits applicable to federal courts under the Fifth Amendment are different from those applicable to state courts under the Fourteenth, a question that (as noted above) may also arise in CC/Devas.
Shell PLC v. Honolulu
In Shell PLC v. Honolulu, Shell seeks review of a Hawaii Supreme Court decision allowing state tort law claims relating to climate change to move forward against Shell and other major oil companies. This is one of many climate change cases brought by state and local governments against oil companies in recent years. Shell argues that Hawaii tort law is preempted by federal law because climate change is a global issue. In June, the Supreme Court called for the views of the Solicitor General.
Binance v. Anderson
In Binance v. Anderson, a crypto-asset exchange asks the Supreme Court to review a Second Circuit decision allowing federal and state securities law claims to proceed against it. I have previously noted some problems with the Second Circuit’s decision, but the cert petition does not raise those issues.
Instead, Binance argues that the Second Circuit misapplied Morrison v. National Australia Bank (2010), which held that § 10(b) applies only to securities transactions in the United States. This looks like an uphill battle. The Second Circuit applied the same test that it has routinely used to determine the location of transactions in unlisted securities, a test that other circuits have also adopted. And although there is a circuit split on whether Morrison’s transactional test is the exclusive limit on the extraterritorial reach of U.S. securities laws, the decision here does not implicate that split.
Doe v. Cisco Systems
We can also expect a cert petition in Doe v. Cisco Systems, Inc. In that case, the Ninth Circuit held that Chinese practitioners of Falun Gong could bring claims under the Alien Tort Statute (ATS) against Cisco for aiding and abetting human rights violations by building a surveillance system for the Chinese government. The complaint clearly fits within the limits the Supreme Court has placed on claims under the ATS because the defendant is a U.S. company that engaged in substantial conduct in the United States.ß
Cisco can be expected to argue, however, that aiding and abetting claims cannot be brought under the ATS. As I noted in a recent post, a decision by the Supreme Court to bar aiding and abetting claims would be a final and fatal blow to corporate liability under the ATS.