A brief overview of recent Supreme Court precedent - keeping foreign litigation at bay.

AuthorLuck, David L.

GLOBALIZATION marches on. Consistent with this, connections between the United States and the outside world (both perceived and actual) have become commonplace. (1) Of particular relevance to products liability practitioners, from the 1990s through present day, exports of goods and services as a percentage of United States gross domestic product have continued to increase, as has international trade in general. (2)

For the United States judiciary, this likely means more litigation that is international in nature. Along with that international flavor comes more claims between persons and entities of different national origins, as well as more choice-of-law, venue, and jurisdictional issues. Due to the civil jury system that it provides, its more generous damages laws, and the different compensation structures available to its legal counsel, the United States (and its constituent states and territories) will likely continue to be an attractive litigation situs for claims with greater connections to foreign countries. (3)

In light of this, for products practitioners, as well as defense counsel in other contexts, it is important to understand some of the more recent United States Supreme Court precedent addressing tools to keep foreign litigation at bay. Considered together, these decisions demonstrate the High Court's tendency to err on the side of keeping foreign-centered litigation outside of the United States court system.

Examples of such decisions include those addressing where the principal conduct at issue is centered for purposes of the Foreign Sovereign Immunities Act ("FSLA"); the presumption against extraterritorial application of United States statutory law; personal jurisdiction over foreign defendants; and the doctrine of forum non conveniens.

  1. Recent Precedent Demonstrating The High Court's Tendency To Keep Foreign Litigation At Bay

    1. OBB Personenverkehr AG v. Sachs and FSIA's Commercial-Activity Exception

      In OBB Personenverkehr AG v. Sachs, a California resident sued the Austrian state-owned railway for injuries that she sustained while attempting to board a train in Innsbruck, Austria. (4) She predicated her suit on a United States-based travel agent's Internet sale of a Eurail pass to her before she left for her trip to Europe. (5) Such passes "are available only to non-Europeans, who may purchase them both directly from the Eurail Group and indirectly through a worldwide network of travel agents." (6)

      The Austrian governmental defendant raised FSIA, 28 U.S.C. [section][section] 1330, 1332, 1391(0- 1441(d), and 1602-11, as a defensive bar. (7) In response, the plaintiff argued (successfully in Ninth Circuit Court of Appeals) that her case satisfied FSIA's commercial-activity exception. (8) The commercial-activity exception abrogates sovereign immunity for suits "based upon a commercial activity carried on in the United States by [a] foreign state." (9) The Sachs plaintiff contended that this exception allowed her suit to proceed in United States federal district court because her suit was "based upon" her Massachusetts travel agent's Internet-based sale of a Eurail pass in the United States, and the travel agent's sale was attributable to the Austrian state-owned railway through common-law principles of agency. (10) Under the plaintiffs and the Ninth Circuit's analysis, so long as at least one element of her claim was tied to the United States-based ticket sale, the commercial-activity exception applied and allowed her action to proceed here.

      Without reaching the agency question, the United States Supreme Court unanimously rejected the plaintiff's position and reversed the Ninth Circuit. (12) Chief Justice Roberts' opinion for the Court reasoned that conduct comprising only "one element" of a plaintiffs cause of action is insufficient to satisfy the "based upon" requirement of the first clause of FSIA's commercial-activity exception. (13) Instead, the Court--echoing the views of the Solicitor General's amicus brief--held that an action is based on the conduct constituting the civil action's "gravamen." (14) In this case, the action's "gravamen" or "core" was tied predominately to Innsbruck, Austria, where the allegedly dangerous platform conditions and allegedly faulty boarding process caused the accident. (15) In other words, the United States-based ticket sale was not the gravamen of the plaintiffs action when conditions on the ground in Austria allegedly caused the plaintiffs injuries. (16)

      While the Court did not reach related questions of due process and personal jurisdiction, its FSLA commercial-activity analysis nevertheless appears significant for United States defense counsel because it requires our courts to determine the "particular conduct on which the action is 'based,'" and to identify that conduct by looking to "the gravamen of the complaint." (17) That analysis has a familiar feel when compared to other tools available to defense counsel to keep foreign litigation at bay, such as motions to dismiss addressing forum non conveniens and/or an asserted lack of personal jurisdiction over a foreign defendant, which are discussed infra. Analogies are bound to be drawn between these contexts based on the commonsense question of where the incident at issue truly arose. In Sachs, the correct conclusion was Austria: "However [the plaintiff] frames her suit, the incident in Innsbruck, Austria, remains at its foundation." (18)

      The Court also relied on its prior decision in Saudi Arabia v. Nelson. (19) There, a married couple sued Saudi Arabia and its state-owned hospital for the husband's alleged wrongful arrest, imprisonment, and torture by Saudi police while he was employed there." The plaintiffs argued that the suit was "based upon" the defendants' commercial activities in recruiting, signing an employment contract, and employing the husband. (21) However, the Court held that the "'based upon' inquiry ... requires a court to 'identify [] the particular conduct on which the [plaintiff s] action is 'based' ... [that is] 'those elements ... that, if proven would entitle a plaintiff to relief ... the gravamen of the complaint.'" (22) Because the particular conduct that injured the husband was the behavior of Saudi police, and not the commercial activity, the Court ruled that the plaintiffs' suit fell outside FSIA's commercial-activity exception. (23) Under this line of precedent, the issue remains the primary situs of the incident and conduct at issue. (24)

    2. Kiobel v. Royal Dutch Petroleum Co. and the Presumption Against Extraterritorial Application of United States Law

      In Kiobel v. Royal Dutch Petroleum Co., Nigerian nationals residing in the United States sued Dutch, British, and Nigerian oil corporations under the Alien Tort Statute, 28 U.S.C. [section] 1350, ("ATS"), for allegedly abetting the Nigerian government's violations of the Law of Nations. (25) Specifically, the complaint alleged that, in response to environmental protests, government forces beat, raped, killed, and arrested residents, while destroying or looting property--all in Nigeria. (26) Following the alleged atrocities, the plaintiffs moved to the United States where they were granted asylum and became legal residents. (27) The plaintiffs claimed that the oil companies provided Nigerian forces with food, transportation, and compensation, and allowed the military to use their property to stage attacks. The ATS grants federal district courts "original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United Sates."

      The Court, however, held that the presumption against extraterritorial application of a statute applies even to the ATS. (29) That presumption or canon of construction provides that "[w]hen a statute gives no clear indication of an extraterritorial application, it has none ... [and] reflects the [proposition] that United States law governs domestically but does not rule the world." (30) To rebut the presumption, the United States legislation at issue must "evince a clear indication of extraterritoriality." (31)

      There was nothing in the ATS's text, history, or purposes that provided a clear indication that Congress meant for it to apply to offenses committed abroad. (32) The inclusion of generic terms such as "any" in the phrase "any civil action" did not evidence an intent for extraterritorial reach. (33) In terms of history, the Court explained that at the time Congress passed the ATS, there existed three principal offenses against the...

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