2nd Circuit dismisses $655M award against PLO

The 2nd U.S. Circuit Court of Appeals, on Aug. 31, ordered dismissal of a $655 million award against the Palestinian Liberation Organization. That judgment, in Sokolow v. Palestine Liberation Organization, is exemplary of recent retrenchment by United States federal courts on jurisdictional grounds in high profile international human rights litigation.

The extraterritorial reach of United States courts in such cases, at least since the holding of the 2nd Circuit in the Filártiga v. Peña-Irala case authored by same circuit in 1980, has often been considerably more aggressive. In Filártiga the court found jurisdiction for compensation for torture in Paraguay. It did so by resurrecting the Alien Tort Claims Act, a previously moribund statute dating from the Judiciary Act of 1789, granting jurisdiction “where an alien sues for a tort only, [committed] in violation of the law of nations.” Despite that historically mysterious phraseology, Filártiga appeared to swing wide the doors for jurisdiction providing for compensatory recourse for activities of entities and individuals responsible for human rights abuses outside the United States. With the advent of terrorist activity as a global phenomenon, the U.S. Congress demonstrated a similarly aggressive extension of the extraterritorial reach of U.S. courts, passing anti-terrorism legislation that included explicit recourse for U.S. victims of terrorist violence abroad, the basis for the claims in Sokolow.

The trend has now turned, and it has turned dramatically. Sokolow bespeaks a broad-based retrenchment on jurisdiction. In Sokolow, the 2nd Circuit dismissed the $655 million verdict obtained under anti-terrorism legislation as beyond the due process limits of jurisdiction. The court supported this reversal with analysis under both the standards of general and specific jurisdiction, though the lower court result was founded exclusively on general jurisdiction.

General jurisdiction requires that the cumulative contacts in the United States be so substantial as to support any claim against the defendant. The lower court’s result had been at least arguably correct under the commonly applied standard of “continuous and systematic contacts” for entertaining any claim against a foreign defendant. However, on Jan. 14, 2014, in the midst of the Sokolow litigation, after the district court found general jurisdiction, the U.S. Supreme Court, in Daimler AG v. Bauman, established a much more severe due process threshold for general jurisdiction to be maintained.

In Daimler, the plaintiffs had claimed general jurisdiction for alleged complicity in human rights abuses by a Mercedes subsidiary in Argentina. The Supreme Court held in Daimler that for general jurisdiction to be asserted in a U.S. court for activity of the defendant abroad, it is required that the defendant’s affiliations with the forum “are so constant and pervasive as to render [it] essentially at home in the forum State.” This newly confining baseline for an assertion of general jurisdiction was clearly unsatisfied for a claim against Mercedes, a German company, for a subsidiary operating in Argentina. It was similarly preclusive for Sokolow of any claim against the PLO or the Palestinian Authority, given their principal locus of activity and organization the Middle East. This was true, the Sokolow court observed, whatever the defendant’s public relations activities in Washington D.C., or their activities elsewhere, designed to influence U.S. foreign policy.

The 2nd Circuit in Sokolow also rejected, in an extensive analysis of recent case law, any grounds for specific jurisdiction. Specific jurisdiction depends more narrowly on establishing a direct nexus between the contacts the defendant creates with the forum and the claims being presented in the forum. The court found no such suit-related conduct in the record, the terrorist attacks having occurred in and around Jerusalem. Despite any finding of support and harboring the terrorists, the court concluded that the plaintiffs were victims of indiscriminate violence that occurred abroad, and not conduct by the defendants specifically targeting American citizens or the United States. It further noted it is insufficient, that a political organization may have sought to influence U.S. policy, for that activity to constitute “purposeful availment” of the forum, nor to constitute sufficient “effects” in the forum.

The result in Sokolow, dashing dreams of “international justice” administered by U.S. courts, was predictable, not just because the standard for general jurisdiction under which it was decided was decidedly narrowed by the U.S. Supreme Court in Daimler. The Court of Appeals’ determination is best understood as a judicial reflection of contextual political reality. Notwithstanding separation of powers concerns, the court no doubt was motivated by the perception that the lower court judgment, if upheld, would severely affect U.S. foreign policy in its current dependency on the defendants, the PLO and Palestinian Authority, for moderation in the Israel-Palestinian conflict.

United States foreign policy walked a fine line in Sokolow. On the one side was the concern to demonstrate public support for the plaintiff’s families in their pursuit of redress for the heinous nature of their loss. On the other was the concern not to further undermine the unhappy and fragile partnership we still call “The Middle East Peace Process.”

This was evident in the U.S. government’s position asserted in the lower court on the question of the posting of bond on appeal. While voicing its support of the plaintiffs, the government interjected its concern that a large bond could threaten the economic viability of the Palestinian Authority and undermine “several decades of U.S. foreign policy.” So much more so, of course, for a verdict of $655 million. And after Sokolow was decided, the plaintiff’s attorneys evidently recognized this same political reality, calling for Congress and the State Department to intervene to ensure that the families are compensated. Thus, probably the principal instruction of Sokolow is that when international justice and international politics intersect, such virtual justice is often the best that can be obtained.

This op-ed was first published on Sept. 8, 2016, in the Daily Journal.

tgsanders