The International Trial Lawyer - 2013 Year in Review

• Jurisdiction: United States,Federal
• Author: By Mark W. Danis and Jessica A. Roberts*
• Publication year: 2014
• Citation: Vol. 22 No. 1

The International Trial Lawyer - 2013 Year in Review

By Mark W. Danis and Jessica A. Roberts*

Looking back at 2013, a unifying thread in many federal cases involving international civil disputes was "location, location, location." The exact whereabouts of a challenged tort or transaction was under the microscope in determining who won and who lost. In these same cases, courts either embraced, or artfully sidestepped, the presumption against the extraterritorial application of U.S. laws.

This past year also yielded one of the first appellate decisions interpreting the protection of the federal SPEECH ("Securing the Protection of our Enduring and Established Constitutional Heritage") Act¹against "libel tourism"—a situation in which litigants forum shop and obtain defamation judgments in countries with weak free speech protections, and then seek to enforce those judgments in the United States.

Finally, not to be ignored, the Vatican entered a fierce forum selection battle in a dispute that ended favorably for the Holy See.

These and other noteworthy developments in international litigation are surveyed below.

I. KIOBEL BARS MOST ALIEN TORT CLAIMS DIRECTED AT FOREIGN CONDUCT

We begin with the case that magically aligned pirates, ambassadors, and craven watch dogs. In Kiobel v. Royal Dutch Petroleum, the Supreme Court significantly narrowed the application of the Alien Tort Statute ("ATS").² Holding that the presumption against extraterritoriality applies to claims under the ATS, the Court brought an end to a suit challenging the overseas conduct of corporations alleged to have violently suppressed Nigerian environmentalists.³

The Court's decision began with a review of the rarified history of the ATS, noting that after its passage in 1789, it had been "invoked twice in the late 18th century, but then only once more over the next 167 years."⁴ Given the vagaries of the statute, it is not surprising that the law saw little usage. The ATS provides that "[t]he district courts shall have 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 States."⁵

In the single Supreme Court case this century to interpret the ATS—Sosa v. Alvarez-Machain—the Court observed that while "the First Congress did not intend the provision to be 'still-born,'" the ATS nonetheless should be read as providing "a cause of action for a modest number of international law violations."⁶ What modest violations qualified remained unclear beyond the ATS's original targets to secure protection for foreign Ambassadors in the United States and to secure protection against pirates on the high seas. Sosa itself rejected a plaintiff's claim for arbitrary arrest and detention as failing to state a sufficiently clear violation of the law of nations. Sosa further noted that even though the "door is still ajar" to international human rights litigation under the ATS, it was "subject to vigilant doorkeeping."⁷ Just under a decade after Sosa, Kiobel effectively shuts the door to ATS claims directed solely at a party's actions abroad—with the exception of pirates!

In Kiobel, a group of Nigerian nationals residing in the United States brought an ATS claim against several foreign corporations. The petitioners alleged that the companies aided and abetted the Nigerian Government in violating Nigerian laws. Respondents contended that ATS claims did not reach conduct occurring abroad pursuant to the presumption that federal laws, absent a clear indication to the contrary, are presumed not to apply extraterritorially. Thus, as framed by the Court, the question on review was whether an ATS "claim may reach conduct occurring in the territory of a foreign sovereign" when none of the challenged conduct occurred in the United States.⁸

Noting that the presumption against extraterritoriality "serves to protect against unintended clashes between our laws and those of other nations," and finding no "clear indication" in the statute to rebut this presumption, the majority held that the petitioners' claims were barred.⁹ In a concurring opinion, Justice Alito cautioned that even if an ATS suit involved some activity in the United States, the presumption against extraterritoriality, lest it be a craven watchdog retreating to a kennel, might bar the suit.¹⁰

Justice Breyer's concurring opinion challenged the majority's failure to satisfactorily address the fact that the ATS undisputedly applies to claims for piracy on the high seas, and by its references to "alien[s]," "treat[ies]," and the "law of nations," seems to contemplate application to foreign activities. And so if a claim for piracy occurring outside of the U.S. territorial waters can be recognized under the ATS, why should not claims involving actions on foreign soil be actionable as well? Justice Breyer nonetheless deemed the claim at issue as non-actionable because, under his jurisdictional view of the ATS, the suit involved no distinct American interest and the defendants were foreign corporations with only a minimal and indirect U.S. presence.

Following Kiobel, several other ATS suits involving a company's allegedly tortious activities abroad were quickly dispatched. See, e.g., Rio Tinto PLC v. Sarei,¹¹ Sarei v. Rio Tinto,¹²Balintulo v. Daimler AG.¹³

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II. KIRTSAENG DODGES EXTRATERRITORIAL BULLET

The consequence of foreign conduct under federal law also was front and center in the Supreme Court's landmark decision in Kirtsaeng v. John Wiley & Sons, Inc.¹⁴ Kirtsaeng involved the application of the first sale doctrine to a copyrighted work made and sold abroad. Under the first sale doctrine, a lawful owner of a copyrighted work may dispose of that work (for example, by sale or gift) without violating the copyright holder's exclusive right to distribute that work.

The copyrighted works at issue in Kirtsaeng were textbooks of the publisher John Wiley & Sons. The books were made abroad, sold at a book store in Thailand, and then imported into the United States, where the defendant Kirtsaeng resold the books for a profit. Wiley sued Kirtsaeng for copyright infringement, claiming that the importation and resale of the textbooks in the United States constituted copyright infringement.

Kirtsaeng claimed that his activities were protected under the "first sale" doctrine, 17 U.S.C. § 109(a), which provides that "the owner of a particular copy or phonorecord lawfully made under this title... is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."

In a 6-3 decision, the Supreme Court agreed with Kirtsaeng, holding that the "'first sale' doctrine applies to protect a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad if that owner wants to bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner."¹⁵

The Court explained that the "language of § 109(a) read literally" does not support a geographical limitation to the "first sale" doctrine. The phrase "lawfully made under this title," the Court reasoned, does not mean lawfully made in the United States, but rather "in accordance with" or "in compliance with" the Copyright Act, wherever the copy was made.¹⁶

In dissent, Justice Ginsburg remained faithful to the presumption against extraterritoriality and concluded that "Section 109(a), properly read, affords Kirtsaeng no defense against Wiley's claim of...