We’ve been following with great interest developing case law concerning the Alien Tort Statute (ATS) (see here), including Cardona, et al. v. Chiquita Brands Int’l, Inc., et al.  The Chiquita case represents a victory for corporate defendants, and reinforces the Supreme Court’s narrowing of the ATS.

By way of background, the ATS allows foreigners to bring civil suits in U.S. courts for torts that are “committed in violation of the law of nations or a treaty of the United States.” In recent years, the ATS has been used primarily as a mechanism for plaintiffs to sue large multinational corporations for alleged human rights abuses that they claim are committed abroad by foreign individuals living in the U.S. at the time of suit. Such corporate ATS cases target companies with significant ties to the U.S. and generally allege that the defendant corporations were involved in either facilitating or implicitly condoning human rights abuses in connection with their business operations abroad.

Last year, the Supreme Court decided Kiobel v. Royal Dutch Petroleum, a case involving the application of the ATS to a suit brought by Nigerian nationals residing in the U.S. who claimed that Dutch, British, and Nigerian oil companies aided the Nigerian government in committing human rights abuses against Nigerian activists. The Court’s decision focused on the presumption against extraterritorial application, finding that the ATS does not apply to actions that occurred outside the U.S

Just this week, the Eleventh Circuit relied on Kiobel in dismissing a case brought against Chiquita Brands International, Inc. under the ATS and the Torture Victims Protection Act. Plaintiffs brought suit against Chiquita alleging that the company engaged in “concert of action with paramilitary forces in Colombia”, and that such action resulted in torture, personal injury, and death. The Eleventh Circuit noted that none of the relevant conduct took place within the U.S. The court referenced the Kiobel decision’s admonishment that “even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.”

The Eleventh Circuit went on to address the plaintiffs’ attempt to distinguish Chiquita from Kiobel on the basis of corporate citizenship in each case.  Plaintiffs argued that while the corporate defendants in Kiobel were not U.S. corporations, but were merely present in the U.S., the Chiquita entities are U.S. corporations.  The circuit court acknowledged this argument but held that the “distinction between the corporations does not lead us to any indication of a congressional intent to make the statute apply to extraterritorial torts.  As the Supreme Court said in Kiobel, ‘[i]f Congress were to determine otherwise, a statute more specific than the ATS would be required.’”  Finding no other applicable statute, the panel found no jurisdiction.

The dissent interpreted Kiobel‘s mandates differently, finding that the Kiobel decision “offers little assistance about what kinds of domestic connections would be necessary to overcome the presumption against territoriality.” The dissent would have held that the U.S. connections present in the Chiquita case would actually overcome the presumption for two reasons. First, because the primary defendant is a corporation incorporated and headquartered in the U.S. Second, because the plaintiffs allege that Chiquita’s participation in reviewing, approving, and concealing a scheme of payments and weapons shipments to a Colombian terrorist organization all took place from its U.S. corporate offices.

Ultimately, Chiquita highlights the disagreement about what conduct would sufficiently “touch and concern” the territory of the U.S., and what level of conduct would be sufficient to subject a corporate defendant to a U.S. court’s jurisdiction for harms committed abroad. We will keep you updated as other courts continue to grapple with the application of the ATS post-Kiobel.

There are many avenues defendants may pursue in their attempts to prevent class certification in federal courts, particularly post-Dukes.  One of those avenues is challenging “ascertainability,” the certification factor that has proven to be the Achilles’ heel of some consumer class actions.

Ascertainability refers to the ability, through use of objective criteria, to identify the members of a precisely defined class.  The concept of a clearly ascertainable class seems simple enough, but, as with other class certification factors, it is not so straightforward in practice.  As an initial matter, ascertainability is not mentioned in FRCP 23 as a class certification factor.  It is, instead, an implicit prerequisite recognized by the courts.  And, it is a concept that is closely related to the explicit certification factors because, without ascertainability, a class action would not be “superior to other available methods for fairly and efficiently adjudicating the controversy,” as required by FRCP 23(b)(3).

The onus is on plaintiffs, at the class certification stage, to demonstrate ascertainability.  But, as a federal district court recently observed: “federal courts throughout the United States have taken differing approaches to the substance of the ascertainability requirement for class certification.”  Karhu v. Vital Pharm., Inc., No. 13-60768, 2014 BL 198455, at *3 (S.D. Fla. July 17, 2014).  The likelihood of successfully attacking ascertainability and defeating class certification on that basis, therefore, not only depends on the facts and circumstances surrounding the putative class and its claims, but also depends on the jurisdiction.

To complicate matters further, there have been seemingly inconsistent applications of the ascertainability requirement even within the same jurisdiction.  As I reported last month, in the context of two cases in the Northern District of California alleging that food products were mislabeled as “all natural” because they contained synthetic ingredients, one judge, in January, denied class certification because the proposed class was not clearly ascertainable, but another judge, in May, granted class certification.  While the decision granting class certification attempted to draw factual distinctions between the two cases, the court indicated that the opposite outcomes may really stem from differing views as to what ascertainability means in the Ninth Circuit.  See Brazil v. Dole Packaged Foods, LLC, No. 12-CV-01831, slip op. at 10 (N.D. Cal. May 30, 2014) (“Put simply, in the Ninth Circuit there is no requirement that the identity of the class members be known at the time of certification.”).

So, while defendants cannot rely solely on challenges to ascertainability to prevent certification, recent defense victories at the class certification stage are encouraging.  For example, in the Karhu case cited above, the district court refused to certify a class of diet supplement purchasers claiming false advertising because the plaintiff had failed to establish that the proposed class was clearly ascertainable.  See Karhu v. Vital Pharm., Inc., No. 13-60768-CIV, slip op. (S.D. Fla. March 3, 2014).  The court explained that “[a] class is ascertainable if the Court can determine whether a given person is a class member through administratively feasible methods.”  Slip Op. at 5.  Because class members were unlikely to have kept receipts of their purchases and the defendant manufacturer rarely sold its product directly to consumers, the court found that plaintiff had “not suggested any practical means of verifying class membership through existing evidence.”  Id. at 6.  Moreover, the court refused to permit self-identification of class membership by affidavit.  The court reasoned that accepting affidavits of purchases without verification would deprive the defendant manufacturer of its due process right to challenge putative class members’ claims, and that requiring the defendant manufacturer to dispute each affidavit would defeat the whole purpose of the class action device.  Id.  In addition, the court cited concerns that the use of affidavits would invite fraudulent submissions and potentially dilute the recovery of genuine class members.  Id. 

The Karhu court concluded that the ascertainability requirement was not met and denied the motion for class certification.  The plaintiff filed a motion for reconsideration, arguing, among other things, that the court’s ascertainability analysis presented a clear error of law.  In denying the plaintiff’s motion, the court held that while different courts have adopted different approaches to evaluating ascertainability, “[t]he Eleventh Circuit [ ] has held that one aspect of a clearly ascertainable class is that the identification of class members is administratively feasible.”  Karhu v. Vital Pharm., Inc., No. 13-60768, 2014 BL 198455, at *3 (S.D. Fla. July 17, 2014).

While we wait for the circuit courts to clarify ascertainability, manufacturers facing class action lawsuits should look to cases like Karhu for ideas on how to attack the ascertainability of a putative class.  After all, anything that may help in the fight against class certification is a welcomed addition to any defendant’s arsenal.

Earlier this month, the New York State Court of Appeals – New York State’s highest court – reversed a decision in a product liability action based on a jury instruction that listed an improper standard.  The case – Reis v. Volvo - involved a claim for defective design of an automobile, and much of the evidence presented at trial, including expert evidence, involved the standard practices of automobile manufacturers.  The jury was ultimately instructed that the defendant manufacturer must be found negligent if it did not use the “same degree of skill and care” as its peer manufacturers, an instruction that is generally issued in professional malpractice cases for defendants with special skills – such as doctors and lawyers – who are expected to uphold the level of care used by others of the same profession in their community.  The Court of Appeals held that the standard is different for other types of negligence defendants in actions outside of the malpractice context, who ought to be held only to a reasonable person standard.  At the same time, the Court agreed that the general practices of the industry is relevant and may be taken into account in determining whether the defendant acted with reasonable care, though a defendant manufacturer’s compliance with the industry standard should not be dispositive.

Both the majority and dissenting opinions agreed that the distinction here was subtle, and it’s slight enough that many people – even practicing litigators – might not see the difference.  Indeed, the dissent argued it wasn’t enough of a difference to warrant reversal, particularly in light of the fact that additional jury instructions clarified that the verdict should not be based on industry practices alone.  Nevertheless, the majority found that charging the jury to determine negligence based on whether the defendant used the degree of skill and care typical of its industry was reversible error.  The case was thus remanded, and now the parties must present their evidence for trial all over again.  This outcome is a reminder to litigators that among all the preparation that goes into a trial, it is critical not to overlook the specific details of the legal standards and jury instructions at play, particularly when litigating in state court where there might be nuances in the standards for even typical common law claims like negligence that could ultimately determine whether or not a verdict will stand.

California Court Denies Putative GMO Labeling Class, But Leaves The Door Open

July 16, 2014

Several years ago, most people had never heard of genetically modified organisms — commonly referred to as GMOs.  Chances are, if you were not a farmer or a scientist and did not work for a food manufacturer, you had never heard of GMOs.  Now, however, you can add lawyers and self-proclaimed healthy-eating advocates to the […]

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New York Court of Appeals Issues Fracking Decision on Preemption of Local Bans

July 11, 2014

Last month, I posted on the oral argument that took place at the New York Court of Appeals addressing two local towns’ bans on fracking within its borders.  On June 30, 2014, the Court of Appeals issued its decision, rejecting the companies’ preemption argument and upholding the fracking ordinances. On appeal, the companies argued that […]

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