Friday, February 22, 2008

Are US Companies Responsible for South Africa's Apartheid?

This is somewhat relevant for business leaders and lawyers, but it's also just really interesting...

There is a case called American Isuzu Motors Inc. et al. v. Lungisile Ntsebeza which may make its way to the Supreme Court (i.e., the DoJ has asked the Court to hear the case, and a decision whether to review the case should be made in April).

The case is actually a collection of three cases in which US companies have been sued for up to $400 billion for their role in allegedly promoting South Africa's Apartheid. The defendant companies include Ford Motor Co., General Motors, IBM, Hewlett-Packard, Citigroup, Bank of America, Exxon Mobil, and General Electric.

If your reaction is anything like mine, you may be wondering what these companies did to cause human rights abuses in Africa, and why on earth we haven't heard about their roles until now. (Hello, reporters?) The pictures in my head included bribes to corrupt officials, discrimination in their operations in South Africa, and other unseemly acts that I wouldn't even want to speculate about. Ah, but it's not that simple...

IBM, in its role to perpetrating the horrors of Apartheid, is alleged to have sold computers to South Africa that the government used to categorize its citizens by race. Ford and General Motors made armored vehicles which were purchased by the South African government. Banks provided funding to the government that allowed it to expand its police state.


Yes, the plaintiffs' argument is akin to suing Apple for child pornography, because someone used a Mac to upload such offensive material to the internet. The plaintiffs believe that these companies knew their products were being used in the commission of a crime. But extending my Apple analogy, that could be said of almost any object that has been used in the commission of a crime. Auto manufacturers would be the most obvious target, because many crimes wouldn't happen if there wasn't a getaway car available. How about Cuisinart? They make knife sets, and I watch enough CourtTV to know that that's a pretty common weapon. I don't think I have to tell you that the gun manufacturers would be put out of business. We all know the roles that these objects have had in crimes in the past, so surely the companies who make them were put on notice that their products could be used again to perpetrate crime.

Aside from offending the sensibilities of anyone who supports capitalism or a free market, this case will set a very oppressive precedent. We know that China is one of the most expansive new markets for US companies. And we know China's human rights record.

At issue is whether the case should be heard at all. The court of appeals has already decided that the suit can continue, and now the government is trying to nip it in the bud at the highest court. This is the link to the District Court decision dismissing the case (which is a good place to start to see the background and law involved), and this is the link to the Second Circuit Court of Appeals decision overturning the lower court.

The law involved is the Alien Tort Claims Act, which is an 18th century statute designed to give access to US courts to victims of piracy and other illegal acts that actually occur outside the US. (You can read more about the ATCA here in an article that also offers suggestions about how companies with overseas operations can avoid ATCA lawsuits.) Here are some other places to find out more about the ATCA:

The Alien Tort Claims Act begins in 28 USC § 1350, which grants jurisdiction to federal courts over tort claims brought by a plaintiff outside the US based on a violation of a treaty or the "law of nations." The problem is that the plaintiffs do not allege that the defendants actually violated a treaty or international law. Their argument is essentially that the defendants should be held liable for all of the human rights abuses in South Africa because they aided and abetted in the government's activities.

Thus, this case has similarities to the scheme liability of the Stoneridge case that I have written about in this blog. This case will also prompt discussion of how the US manages its relations to countries who engage in human rights abuses. It would be unwise to continue to allow trade if it opens US companies to substantial litigation by the citizens of those countries.

To be clear, I do no advocate human rights abuses in any way. I was the president of Amnesty International in high school, I'm thrilled that Steven Spielberg quit his role in the Beijing Olympics, and I got giddy when I heard about Fidel Castro stepping down because I think human beings yearn to be free and I'm excited for all the freedoms that the Cuban people will (hopefully) soon experience. However, I do advocate common sense.

Common sense tells me that the people who are responsible for Apartheid in South Africa can mostly be found in South Africa, and that a multi-national corporation who sells a product probably does not intend for that product to be used in torture, murder, and the suppression of human rights. I believe that the people responsible should be brought to justice, but that justice does not include a $400 billion lawsuit against companies whose only "illegal" actions consisted of free trade.

Sorry, I'll get off my soapbox. Stay tuned, this should be interesting.