The World in US Courts: Spring 2014: Orrick's Quarterly Review of Decisions Applying US Law to Global Business and Cross-Border Activities

by Orrick, Herrington & Sutcliffe LLP

Spring 2014

The Global law firm Orrick, Herrington & Sutcliffe LLP takes great pride in announcing the Spring 2014 edition of The World in US Courts:  Orrick’s Quarterly Review of Decisions Applying US Law To Global Business and Cross-Border Activities. This issue contains our summaries of 25 new US federal court decisions, in areas of the law including Intellectual Property, Antitrust, Securities, and RICO.

Orrick is planning to offer a no-cost webinar, discussing the key points of law in each of the major areas we cover. The webinar will be designed to provide practical guidance to companies seeking to structure their affairs to avoid litigation in the US, or finding themselves in litigation that they do not believe should involve them. 

If you think you may want to participate, please take a moment to click here and let us know the areas that are of most interest, so we can try to ensure they are covered. You will be under no obligation to participate.

Please take a moment to review the members of our Editorial Board, who are drawn from Orrick’s 25 offices in North America, Europe, and Asia. From this page, you may also go directly to the list of decisions discussed in this issue and the summaries of the cases and authorities. We have also provided a very brief summary description of the statutes that plaintiffs have sought to apply to conduct outside the US.

Editorial Board

Decisions Discussed in This Issue: Spring 2014

Copies of any case discussed in this issue are available upon request.

Alien Tort Statute (ATS)/Torture Victims Protection Act (TVPA)/Victims of Trafficking and Violence Protection Act (VTVPA):

District Court Refuses To Apply 2008 Amendment to VTVPA That Gave Statute Extraterritorial Effect to Conduct Occurring in 2004

Adhikari v. Daoud & Partners, US District Court for the Southern District of Texas, January 15, 2014

Nepali plaintiffs residing in Nepal sued various companies, including the US company KBR, Inc., in US District Court in Texas alleging that they had been illegally transported from their homes to jobs in Iraq. Claims brought under RICO and the Alien Tort Statute had previously been dismissed, with the court finding that claims under the VTVPA applied to the extraterritorial conduct alleged. In this opinion, the court changes its mind as to the VTVPA claims, concluding that, prior to amendments passed in 2008, there were inadequate references in the text of the VTVPA to override the presumption against the extraterritorial application of a US law. The court also rejected a claim that the 2008 amendment should be applied retroactively to the alleged conduct occurring in 2004. In an issue rarely addressed in US caselaw, the court found that amendments extending US laws to acts occurring in other countries were "substantive" changes, rather than "procedural" ones, and therefore that it was required to apply a separate presumption that the change in law was not intended to be given retroactive application. Finding no basis on which to upset that presumption, the court ruled that the 2008 amendment would not act to allow the 2004 claims to be heard.

Court of Appeals Finds TVPA, but not ATS, Applicable to Claims of Torture in Bangladesh

Chowdhury v. Worldtel Bangladesh Holding, Ltd., US Court of Appeals for the Second Circuit, February 10, 2014

Plaintiffs and defendants are Bangladeshi citizens and companies, with the individual defendants having permanent residence status in the US. Following a commercial dispute, plaintiff Chowdhury alleged that, at the defendant’s instigation, he was detained and tortured by governmental units of Bangladesh. He sued the defendants in the US, alleging violations of the ATS and the TVPA. Following a trial, a jury found for Chowdhury. Among other issues on appeal was whether the jury’s verdict impermissibly applied the ATS and TVPA based on conduct occurring outside the US.

As to the ATS, the court, following the Supreme Court’s decision in Kiobel, found the ATS inapplicable to conduct outside the US, which included all of the conduct alleged in the case. As an alternative ground for dismissal, the court held that the ATS could not be applied to the corporate defendant, an issue that has divided courts in the US.

By contrast, the court found evidence that the US Congress intended the TVPA to apply to conduct in other countries, and on that basis affirmed the jury’s verdict. The court also endorsed the principle that TVPA cases need not be brought by US citizens.

US District Court Holds That Development of Software in US That Was Alleged to Have Facilitated Political Persecution and Torture in China Is "Arguably" a Sufficient Basis for an ATS Claim

Du Daobin v. Cisco Systems, Inc., US District Court for the District of Maryland, February 24, 2014

Plaintiffs, Chinese citizens, claim to have been persecuted by the Chinese government as a result of information obtained by the government via an Internet monitoring program, called Golden Shield, created for the government by defendant Cisco. Cisco and its chairman were alleged to have known that the system would be used in the pursuit of political persecution and torture, and therefore had violated the ATS.

Citing the Supreme Court’s Kiobel decision, the US District Court in Maryland dismissed the complaint on alternative grounds, including the Political Question Doctrine (because a decision would necessarily second-guess complex rules developed by the US Government for the export of technology to China) and the Act of State Doctrine (because the plaintiffs are essentially asking the court to declare that China has violated international law and to interfere with US foreign policy). However, the court did intimate that corporations could be sued under the ATS, a question not resolved in Kiobel and which has divided the circuits, but did not make a ruling on the point.

On the question whether the case represented an impermissible extraterritorial application of the ATS, the court noted that Cisco was a US corporation and that development of the Golden Shield program occurred predominantly, if not exclusively, in the US. The court stated that these facts "may well be distinguishable" from those in Kiobel, and that "arguably ATS claims could be brought against a defendant which has taken certain actions within the United States with respect to products that might be primarily used [outside the US] for violations of the laws of nations." Nevertheless, it declined to decide this issue, citing the dispositive alternative grounds for dismissal described above.


Price-fixing Claims Could Be Brought in US Where Meetings Outside the US Related to Price-fixing in US Market

In Re: Cathode Ray Tube Antitrust Litigation, US District Court for the Northern District of California, March 13, 2014

Plaintiffs, affiliated companies of Sharp Electronics Corp., and different plaintiffs in related cases, opted out of a class action in US District Court in California accusing multiple defendants of price-fixing in connection with the sale of cathode ray tube (CRT) products, and brought their own suits. One set of defendants affiliated with the French holding company Thomson SA moved to dismiss on multiple grounds, including, as relevant here, that the alleged conduct did not satisfy the requirements of the Foreign Trade Antitrust Improvements Act (FTAIA), which generally limits cases brought in US courts to those having "a direct, substantial, and reasonably foreseeable effect" on import or export commerce or commerce within the US.

Thomson argued that the complaint alleged only meetings outside the US to fix worldwide prices, not US prices specifically, and that any effect in the US was "indirect and attenuated." The court disagreed with Thomson’s characterization of the complaint, concluding that Sharp had alleged that the French Thomson parent had engaged in meetings outside the US specially relating to price-fixing within the US market. Thus, the court found, the FTAIA was not a bar to the present action. The court noted, but did not address, that the law was unsettled whether the FTIA was jurisdictional or whether it was merely a required element of a claim, the answer to which could have implications with regard to pleading and burden of proof, among other things.

[Editor’s note: This case is also addressed under the Personal Jurisdiction section of this report.]

Court of Appeals Sharply Limits Price-Fixing Claims Against Non-US Defendants That Sold Products to Non-US Companies for Resale in the US

Motorola Mobility, LLC v. AU Optronics Corp., US Court of Appeals for the Seventh Circuit, March 27, 2014

This procedurally complicated case involves price-fixing claims brought under Section 1 of the Sherman Act, 15 U.S.C. § 1, against manufacturers of liquid-crystal display (LCD) panels used in mobile phones. The plaintiff Motorola brought claims arising from three categories of purchases: purchases of LCD panels by Motorola that were delivered directly to Motorola facilities in the US (Category I), and purchases of LCD panels by Motorola’s non-US affiliates that were delivered to the affiliates’ manufacturing facilities outside the US, where they were incorporated into mobile phones that later were either sold in the US (Category II) or sold outside the US (Category III).

Category I claims (LCD panels bought in the US and incorporated into phones sold in the US) were assumed to be within the federal courts’ antitrust jurisdiction. The case addressed by the US Court of Appeals in Chicago considered whether Category II and Category III claims were barred by the Foreign Trade Antitrust Improvements Act (FTAIA), whose complicated provisions are intended to limit the antitrust jurisdiction of US courts. For a US claim to exist, the FTAIA requires, as relevant here, that the price-fixed panels had "a direct, substantial, and reasonably foreseeable effect" on commerce within the US.

The court first described as "frivolous" Motorola’s argument that Category III claims (LCD panels bought by and sold to non-US entities) could satisfy the test, and thus dismissed the claims.

For the Category II claims (LCD panels bought outside the US but incorporated into phones sold in the US), the court concluded that the statutory requirement that an effect on US commerce be "direct" could not be satisfied, as the only effect on US commerce would be as a result of alleged price-fixing affecting a component of the product sold in the US and potentially raising the product’s price. The court also found that the independent statutory requirement that the effect on US commerce "give rise to" an antitrust claim could likewise not be satisfied. Under the federal antitrust laws, price-fixing claims can only be brought by direct purchasers of the products in question, which in this case would be the non-US affiliates of Motorola, which were not plaintiffs and whose claim against the non-US defendants could not be heard in US courts. Finally, the court also based its decision on policy, observing that a rule permitting price-fixing claims to be brought based on products sold elsewhere and merely incorporated into products sold in the US would "enormously increase the global reach of the Sherman Act, creating friction with many foreign countries . . . ."

[Editor’s note: If the decision stands, it would effectively eliminate Sherman Act liability for a non-U.S. company that engages in price-fixing but sells the price-fixed good to an unrelated non-U.S. company before the good enters the US. Such a rule would provide defendants with a powerful defense against many antitrust claims alleging worldwide conspiracies.]

Employment Discrimination—Section 1981 Claims

District Court Refuses to Apply Employment Discrimination Remedy of 42 USC § 1981 to Conduct at US Bagram Airfield in Iraq

Marshall v. Exelis Systems Corp., US District Court for the District of Colorado, March 24, 2014

Plaintiff Marshall was employed by a private contractor at Bagram Airfield in Iraq. She alleged that her employment had been terminated unlawfully because of her race, and sued her employer and supervisor under the general federal civil rights statute, 42 USC § 1981, and the employment discrimination provisions of Title VII of 42 USC. The defendants moved to dismiss Marshall’s § 1981 claim (Title VII expressly applies outside the US and was not the subject of a motion to dismiss).

The court first rejected an argument by Marshall that the Bagram base should be deemed to be a "territory" of the US, in which case the question whether § 1981 applies extraterritorially would not be presented. Marshall argued that her situation was analogous to that presented in cases in which US "territory" is deemed to include a specific place outside the US (such as the US Guantanamo naval base in Cuba) where the US exerts "complete control and jurisdiction." The court rejected the argument, following a line of cases that declined to extend § 1981 claims to US military bases in other countries where the US has not exhibited an intent to exercise "sovereignty," "with permanence."

The court also rejected a number of proposals by Marshall that the statutory language of § 1981 should be read to apply to "all persons within the jurisdiction of the United States"—including her—regardless of where the operative events occur.

The court finally turned to the question whether § 1981 should be applied extraterritorially. Finding no basis on which to rebut the presumption against extraterritoriality established in the US Supreme Court’s Kiobel decision, the court concluded that conduct at Bagram Airfield Base cannot give rise to a claim in US courts that § 1981 was violated.

Intellectual Property (Copyright)

In Copyright Dispute, Federal Magistrate Judge Permits Discovery in France and the UK of Non-US Uploading of Allegedly Unlicensed Recordings to US Online Music Libraries and of Importation into the US of Allegedly Infringing Recordings

Blagman v. Apple, Inc., US District Court for the Southern District of New York, March 31, 2014

A composer and performer brought a class action lawsuit in US District Court in New York against Apple, Google, and other "Retailer Defendants" representing 80% of the US digital music market, and "Aggregator Defendants" that made digital music files available to the Retailer Defendants, for copyright infringement. The claims were based upon the alleged copying of Blagman’s material by foreign record labels and aggregators, outside of the US, which then supplied the digital files to the Retailer Defendants in the US for purchase by consumers worldwide. The opinion by a US magistrate judge ruled on Blagman’s request that the court issue letters rogatory to allow the taking of depositions in France and the United Kingdom. At issue was the relevance of the requests to the Blagman’s claims.

As pertinent here, the court first considered whether discovery concerning the uploading of songs by the Aggregator Defendants outside of the US to the Retailer Defendants’ US websites should not proceed because it would only address an impermissible extraterritorial application of the copyright laws, and therefore be irrelevant. Finding that the "locus of the allegedly infringing action" –including the copying that was done by the retailer defendants in order to make the music available and the distribution of that material worldwide—to be in the US, the court concluded that the claim was not extraterritorial in nature. Next, the court considered the relevance of discovery relating to the importation of allegedly infringing works into the US. Although such importation can violate the Copyright Act, the court noted that Blagman had not pleaded that conduct as a basis for his claims. Nevertheless, the court considered the issue potentially relevant to the Retailer Defendants’ affirmative defense that they were licensed to distribute the works in question, and so permitted the discovery to proceed.

District Court Applies Copyright Act to United Kingdom Uploading of Pirated Japanese Anime Videos to US YouTube Severs

Crunchyroll, Inc. v. Aria Adm, US District Court for the Northern District of California, February 10, 2014

A creator and distributor of anime programs worldwide sued parties alleged to have uploaded copies of the programs to YouTube in violation of the US Copyright Act. The defendants did not appear or respond, and in ruling on a motion to enter a default judgment the court independently discussed its jurisdiction over the claims and the parties.

As part of its analysis, the court considered the claims against one defendant who lived in the United Kingdom and who copied and uploaded more than 3,000 programs in the UK to YouTube servers in California, from which they were available for viewing worldwide. The court sought to determine whether those acts should be considered "extraterritorial," and therefore outside of the reach of the Copyright Act.

The court observed that the law was unsettled as to whether the Copyright Act only applied to conduct where at least one act of infringement occurred entirely within the US. It concluded that there was no such requirement, and that the UK defendant’s conduct therefore would be deemed to violate US law. In so holding, the court appeared to consider the nature of the relationship between the defendant’s conduct and the US, noting that his actions resulted in the creation of a duplicate infringing copy of the 3,000 programs on the YouTube servers in California, and that the videos could be viewed by "potentially thousands" of Americans.

Intellectual Property (Patent)

District Court Finds Non-US Manufacture and Sale of Chips Capable of Supporting Infringement Claim Where Sales Made Pursuant to Contract Between Two US Parties

MediaTek Inc. v. Freescale Semiconductor, Inc., US District Court for the Northern District of California, February 13, 2014

A chip manufacturer sued a competitor (Freescale) in US District Court in California, alleging patent infringement in the supply of chips used in the Amazon Kindle device. The chips were made and sold to entities outside the US, but were incorporated into devices then resold in US. Material elements of the non-US transaction were governed by a contract entered into between defendant Freescale, a US company, and an Amazon affiliate in the US. Freescale argued that it made no "sale" or "offer of sale" in the US, and therefore could not be liable.

The court agreed that the mere understanding by parties to a transaction that a product containing an allegedly infringing component would be sold to a US customer does not establish the required "sale or offer for sale" in the US. The court similarly stated that "pricing discussions" in the US supporting non-US sales would not establish US jurisdiction. Here, however, the court observed that the entire transaction was governed by a contract between two US entities (Freescale and the Amazon affiliate), and that was sufficient to establish a US "sales relationship" and therefore a basis for a US patent infringement claim.

Intellectual Property (Trademark)

US District Court Enters Order Prohibiting Use of Confusing Mark in Canada, Even Though No US Consumers Confused and Plaintiff Held No Registered Canadian Mark

Global Healing Center LP v. National Brands Inc., US District Court for the Southern District of Texas, March 6, 2014

Plaintiff Global Healing Center (GHC) is a leading international manufacturer and distributor of nutritional supplements and "natural health care products." Among its leading brands is Oxy-Powder, which purports to be an "oxygen based colon cleaner." Following GHC’s termination of a manufacture and supply agreement with a defendant, related entities of the defendant (all US companies) began promoting and selling in Canada a competing product called "OxyHealth Powder," which bore a label the court ultimately found confusingly similar to GHC’s label for Oxy-Powder. GHC holds trademark rights for Oxy-Powder in the US but not in Canada.

GHC sued the defendants in US District Court in Houston alleging a variety of claims principally centered on the Lanham Act and trademark infringement. Among other things, it sought an injunction against the defendants’ sale and promotion of OxyHealth Powder in Canada.

The court first established that the substantive requirements of a Lanham Act violation had been satisfied: That GHC owned a valid mark and that the defendants’ actions had created a likelihood of confusion among consumers. Second, the court considered whether the fact that any consumer confusion would exist in Canada, where GHC did not own trademark for its product, was fatal to GHC’s claims. As to this question, the court applied the "Bulova factors" enunciated in a leading New York decision and found that they were satisfied and so jurisdiction would exist: (1) The defendants were US entities; (2) the activities "affected US commerce" (with the court stating that "most of Defendants' infringing activities occurred in the United States including designing the infringing label, printing the labels, affixing the labels, advertising the infringing product, offering to sell the product, selling the product, manufacturing the product, entering into a distribution agreement to sell the product, shipping the product, and receiving payment for the product"); and (3) the defendants did not have superior rights to use the mark in Canada. Of particular note with respect to the second factor, the court concluded that it was irrelevant that US consumers had not been deceived, since US commerce was otherwise implicated.

Racketeer Influenced and Corrupt Organizations Act (RICO)/Hobbs Act

District Court Finds "Pattern of Racketeering Activity" "Conceived and Orchestrated" From US but Substantially Implemented Elsewhere Supports RICO Claim

Chevron Corp. v. Donziger, US District Court for the Southern District of New York, March 4, 2014

In an opinion running more than 750 pages, the US District Court in New York resolves claims by Chevron, the multi-national oil company, that lawyers for a plaintiff class in Ecuador had procured a multi-billion dollar environmental judgment against Chevron by fraud, and in the process violated the US RICO statute. The US suit sought, among other things, equitable relief against the defendants precluding enforcement of the Ecuadorean judgment against Chevron in the US, and precluding the lawyer from receiving any financial benefit from the judgment.

As relevant here, the court considered the applicability of RICO to fraudulent conduct that occurred largely in Ecuador. The court first concluded that it was bound by Circuit precedent to the ruling that RICO does not apply extraterritorially, even as the court questions whether the precedent was decided correctly. Second, the court considered whether the RICO claim would, in fact, involve an extraterritorial application of the law. The court observed that the case law is split as to whether this second inquiry should focus on the geographic nexus of (i) the alleged "pattern of racketeering" giving rise to the claim or (ii) the alleged "enterprise" that must exist independent of the conduct alleged in order for there to be a RICO violation. Following a prior ruling, the court adheres to the view that it must analyze the geographic scope of the alleged "pattern of racketeering activity" to determine whether the conduct is within the scope of the statute.

In performing that analysis, the court concluded that it may look only at the relative significance of alleged acts that are illegal under US law—which are the only acts that the RICO statute permits to be part of the requisite "pattern of racketeering activity"—and not the many acts alleged to have violated Ecuadorean law. In its discussion, the court criticized the recent decision of the Ninth Circuit Court of Appeals in United States v. Chao Fan Xu, which the court believed had improperly appeared to have considered the relative importance of all of the alleged misconduct by the defendant, whether US or non-US. [Editor’s note: The Chao Fan Xu case is discussed in the Spring 2013 edition of The World in US Courts.] Ultimately the court concluded that the RICO statute applied because defendants "conceived and orchestrated" an illegal scheme to injure the US plaintiff. The observation that "absent the U.S. activity, there would have been no scheme" may be the closest to a specific test that appears in the opinion.

The court also concluded that Chevron’s claim under the Hobbs Act—which generally precludes bribery and extortion that injures commerce within the US or between the US and another country—was not impermissibly extraterritorial in nature. The court acknowledged that the statute would not apply to conduct outside the US, but concluded that the Hobbs Act standard required that the focus be on the defendants’ desire to enrich themselves, and this pointed to conduct in the US, where "the plan was hatched and run." It was not relevant to the court that the means of carrying the plan out occurred outside the US.

District Court Rejects RICO Claim Based on Alleged Extraterritorial Securities Fraud

Perkumpulan Investor Crisis Center Dressel--WBG v. Wong, US District Court for the Western District of Washington, March 14, 2014

Plaintiff Perkumpulan represents Indonesian investors who claimed they were defrauded out of hundreds of millions of dollars through a Ponzi scheme operated by the defendants. It sued the defendants in US District Court in Washington alleging RICO violations.

The RICO statute was amended in 1995 to remove from the list of acts that can give rise to a RICO claim ones that were actionable as "fraud in connection with the purchase and sale of securities." The US District Court in Washington State found that the defendants’ claims did, on their face, allege fraud in connection with the purchase or sale of securities. Perkumpulan argued, however, that the acts were not actionable because they were extraterritorial and therefore outside the reach of the US securities laws. Thus, Perkumpulan maintained that the defendants’ actions were not exempted from the RICO statute. The court rejected this argument, concluding that the 1995 RICO amendment precluded claims based on types of "conduct" in the nature of securities fraud, whether or not the plaintiff could successfully pursue a securities claim.

White Collar Criminal

Wire Fraud Statute Reaches Communications Between US and Non-US Actors

United States v. Lyons, US Court of Appeals for the First Circuit, January 17, 2014

Defendants operated a gambling business in Antigua and were convicted of wire fraud and related violations. Among other arguments, they sought reversal of their convictions in the US Court of Appeals in Boston on grounds that the Wire Act under which they were convicted had been improperly applied to conduct occurring outside the US. The Court of Appeals disagreed, noting that the presumption that US laws were to apply only to conduct in the US was not applicable to the Wire Act, which specifically covered frauds executed in US or foreign commerce.

Securities Law

District Court Applies Section 10(b) to Transactions Made by US Trader Instructed by Non-US Clients

Butler v. United States, US District Court for the Southern District of New York, January 16, 2014

Butler was convicted of criminal violations of Section 10(b) of the Securities Exchange Act of 1934 and other statutes in connection with the private purchase and sale of auction rate securities (ARSs) by sophisticated investors, including many multi-national corporations. After sentencing and appeal, he filed motions to vacate his conviction and sentence, based in part on the assertion that Section 10(b) had impermissibly been applied extraterritorially to conduct occurring outside the US.

Observing that courts have "struggled" to define the extraterritorial scope of the US securities laws even after the 2010 US Supreme Court decision addressing the question, the court summarized the current rule: Section 10(b) can apply, in a civil or criminal case, only in connection with the purchase or sale of a security (i) traded on a US national exchange or (ii) if not so traded, where the purchase or sale was in the US. Because ARSs are not exchange-traded, the subsection (ii) test would have to be satisfied for jurisdiction to exist. Applying binding precedent from the Second Circuit Court of Appeals, the court stated that Section 10(b) could be applied to a transaction where "irrevocable liability" for it was established, or title to the security passed, in the US.

Butler argued that the transactions for which he was convicted were not US transactions because the office addresses of the six clients whose employees testified at trial were outside the US. The court disagreed, however, that the office locations of the purchasers conclusively established where transactions actually occurred for purposes of determining whether the statute applied. It noted that Butler had traveled out of the country to meet with clients, and may have made misstatements to them at locations outside the US, but the transactions were not consummated in connection with any of these trips. Rather, Butler transacted business from his office in New York, with clients executing documents at their headquarters and exchanging these documents with Butler electronically. Among those documents were ones that made Butler the client’s agent for purposes of placing orders or executing instructions, and those actions by Butler, occurring in the US, consummated the transactions and thus were sufficient to support the suit.

Personal Jurisdiction

Southern District of Texas Finds No Personal Jurisdiction Over West Indies Insurance Company That Maintained Administrative Office in Texas

Air Tropiques, SPRL v. Northern & Western Ins. Co., U.S. District Court, Southern District of Texas, March 31, 2014

Plaintiff Air Tropiques, an air carrier incorporated in the Democratic Republic of Congo, filed suit against Defendant Northern & Western Insurance (NWI), an insurance company based in St. Kitts, relating to NWI’s denial of Air Tropiques’ insurance claim for a plane crash in Africa. NWI moved to dismiss for lack of personal jurisdiction, arguing that it is a St. Kitts company providing policies in St. Kitts, while Plaintiff is an African corporation and the plane crash occurred in Africa. NWI did, however, operate an "administrative office" in Texas, where Air Tropiques claims decisions regarding the underwriting and claims adjustment occurred.

The court held that, because Air Tropiques failed to alleged that the "administrative office" was Defendant’s principal place of business, "at best" it was unclear whether NWI is "at home" in Texas, which under the Supreme Court’s recent Daimler AG v. Bauman decision would be required for general personal jurisdiction to attach. The court also rejected specific personal jurisdiction over NWI because Air Tropiques had failed to make a prima facie showing that NWI had purposefully availed itself of the jurisdiction of US courts in Texas by entering into the insurance contract.

Anguillan Resort Subject to Personal Jurisdiction Due to Failure to File Affidavits in Support of its Motion to Dismiss

Barriere v. Cap Juluca, US District Court, Southern District of Florida, February 19, 2014

Defendant, Cap Juluca, an Anguillan corporation that manages a hotel resort in Anguilla, moved to quash service of the complaint on it for personal injury claims on grounds of a lack of personal jurisdiction. Plaintiffs Aimee Barriere and her husband were guests of a Cap Juluca resort when Mrs. Barriere allegedly slipped and fell on wet tiles on a staircase. Neither the Barrieres nor Cap Juluca filed additional affidavits, testimony, or documents, and the US District Court in Florida was forced to rely solely on the allegations in the complaint to determine whether the court had jurisdiction over the resort. Because Cap Juluca failed to raise with such materials a "meritorious" personal jurisdiction defense required under Eleventh Circuit precedent, the court accepted as true Barrieres’ allegation that Cap Juluca maintains a sales office in Florida and has a Florida-based agent. Furthermore, the Barrieres alleged that Cap Juluca contracts with a US company to promote and manage US reservation services for the resort. The court held these contacts were sufficient to find that Cap Juluca was "at home" in Florida and therefore establish general personal jurisdiction, because a "contrary result would effectively permit foreign corporations to freely solicit and accept business from Americans in the United States and at the same time be completely shielded from any liability in U.S. courts." [Editor’s note: The Barrierre case takes a very expansive view of the general personal jurisdiction rule established by the US Supreme Court’s recent decision in Daimler AG v. Bauman. It is clear that the appropriate standard to be applied remains unsettled.]

Southern District of New York Rejects Personal Jurisdiction Over Citigroup Subsidiary and Subsidiary CEO Based on Links With New York Parent

Beach v. Citigroup Alternative Investments LLC, US District Court, Southern District of New York, March 7, 2014

In this action for fraud and negligent misrepresentation, the US District Court in New York concluded it lacked personal jurisdiction over the UK-based Defendants, CSO Partners Limited, a subsidiary of defendant Citigroup, and John Pickett, CSO Partners’ CEO. First, the court rejected general personal jurisdiction because it could not be said that the corporation or Pickett were "at home" in New York. Instead, neither had done business in New York or had any physical presence in the state. All alleged actions occurring in New York were committed by Citigroup, the parent corporation, or another subsidiary, and the "alter-ego" test which would have attributed the parent’s actions to CSO Partners and Pickett was not satisfied. The court also rejected specific personal jurisdiction because the allegedly fraudulent investor letters were not sent or received in New York and Plaintiffs had not made a prima facie showing that the harm alleged in the complaint resulted from the actions that took place in New York. The court denied Plaintiffs’ request for jurisdictional discovery to establish these points, noting that Plaintiffs had failed to allege facts giving rise to an inference that any sufficient conduct occurred in New York.

Delaware District Court Holds Allegedly Forged Delaware Notarization Seal Does Not Confer Personal Jurisdiction Under Delaware Personal Jurisdiction Statute

Capital Investments Group, Inc. v. Korban, US District Court, District of Delaware, February 14, 2014

Plaintiff Capital Investments Group filed suit in Delaware against nineteen foreign defendants, alleging theft and conversion of property of Capital Investments’ real property in Ukraine. Specifically, Capital Investments claimed that Defendant Korban and eighteen others used a forged power of attorney and sham Ukrainian legal proceedings to take control of its real property. Korban, an Israeli citizen, moved to dismiss the claims for lack of personal jurisdiction and improper service of process.

The US District Court in Delaware found that it did not have personal jurisdiction over Korban. Although one of the co-conspirators allegedly used a forged Delaware notarization and apostille seal in the forged power of attorney document, that allegation did not relate to Korban, who was not otherwise alleged to have any connection to Delaware. Separately, The court held the allegation regarding the forged seal did not confer personal jurisdiction because it did not involve a transaction that occurred in Delaware, as required by the Delaware personal jurisdiction statute. The court also noted that Capital Investments Group was a Wyoming corporation and did not suffer the injury in Delaware, further supporting the dismissal for lack of personal jurisdiction.

California District Court Finds Personal Jurisdiction Over Parties Alleged to Have Conspired to Fix Prices in the US

In re Cathode Ray Tube (CRT) Antitrust Lit., US District Court, Northern District of California, March 13, 2014

Plaintiffs, numerous US retail corporations, alleged a widespread price fixing conspiracy among Chinese and Japanese corporations regarding cathode ray tubes (CRTs) in televisions and computer monitors. Defendants Beijing-Matsushita Color CRT Company and Thomson SA moved to dismiss for lack of personal jurisdiction. Beijing-Matsushita argued that it never sold CRTs or associated products in the US or to US customers. Instead, it sold some of its products in China to Defendant Panasonic, which ultimately sold them in the United States. Thomson SA similarly argued that it did not make or sell CRTs in the US and that many of the allegations related to a corporate sibling, Thomson Consumer, rather than Thomson SA. The court addressed Beijing-Matsushita’s and Thomson SA’s motions in separate opinions.

As to Beijing-Matsushita, the retailer plaintiffs conceded a lack of general personal jurisdiction, but argued the court could assert specific personal jurisdiction because Beijing-Matsushita directed its price fixing activities at the United States, with knowledge the products would end up in the US, and that their claims arise out of those activities. Applying the Ninth Circuit’s test for specific personal jurisdiction, the court agreed, holding that Defendant purposefully directed its conspiracy at the forum by "fix[ing] CRT prices abroad and ensur[ing] that United States customers paid supracompetitive prices." The court found that the activities were sufficiently directed at the US because Defendant shared US pricing data with other defendants, coordinated pricing in relation to US market conditions, attended meetings with co-defendants regarding US pricing, and knew its products were destined for the US. In addition, the court held that exercising jurisdiction would be reasonable because, despite the risks of international comity and significant burdens of litigation, Beijing-Matsushita’s activities were specifically directed against the US market and thus weighed heavily in favor of jurisdiction and outweighed other factors.

As to Thomson SA, the retailer Plaintiffs submitted affidavits with additional allegations of specific US conduct. While the plaintiffs conceded the lack of general personal jurisdiction, they argued that Thomson SA took part in a list of meetings regarding price-fixing in the US and participated in price negotiations for CRTs sold in North America. The court sided with retailer plaintiffs, finding Thomson SA had failed to rebut allegations of intentional acts directed at the US while knowing "the effects of the activity will be felt there." Moreover, Thomson SA allegedly negotiated with Plaintiffs regarding US CRT sales, which the court held would alone be sufficient to establish specific personal jurisdiction. The court also rejected Thomson SA’s arguments that jurisdiction would be overly burdensome, holding that although the company’s burden of litigation would be substantial due to the presence of documents in France and that it no longer owned the CRT business, such costs are "simply parts of modern, multinational litigation" and "foreign litigants must always deal with their home states’ laws." As such, the court held that Thomson SA’s "purposefully interjected" activities rendered exercising jurisdiction reasonable, considering "it is not plausible that a wealthy, multinational corporation like Thomson SA would be somehow overstressed at litigating one case, based on specific jurisdiction, in the United States."

[Editor’s Note: This decision also is addressed under the Antitrust Section of this report.]

Court Finds Personal Jurisdiction Over Chinese Drywall Manufacturer Due to Repeated Sales of Made-To-Order Products To US Distributor

In re Chinese-Manufactured Drywall Products Liability Lit., US Court of Appeals, Fifth Circuit, Jan. 28, 2014

In a suit filed by Virginia homeowners, Defendant Taishan Gypsum Co., a Chinese drywall manufacturer, moved to dismiss claims that it manufactured defective drywall causing property damage and health problems on grounds that the court lacked personal jurisdiction over it. Although Taishan did not maintain any operations in the US, it did contract to provide drywall to an American corporation for distribution in the US, including Virginia.

Different courts of appeals apply different standards for assessing personal jurisdiction, and because the case had been transferred from a state in a different judicial circuit, a preliminary issue was which law to apply. The Fourth Circuit, where the case was filed, applies the "stream-of-commerce-plus" test when assessing minimum contacts with a jurisdiction, which requires conduct in addition to merely placing the product into the "stream of commerce" in order to exercise jurisdiction. The Fifth Circuit, to which the case was transferred, finds personal jurisdiction merely upon a party’s placing an article into the stream of commerce. The Court of Appeals for the Fifth Circuit, in deciding the question, found that both tests had been satisfied.

Under the "stream-of-commerce-plus" test, a plaintiff must show (1) "the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State;" (2) "whether the plaintiff[s]’ claims arise out of those activities directed at the State;" and (3) "whether the exercise of personal jurisdiction would be constitutionally reasonable." The court found all three factors satisfied. It held that Taishan’s knowing sale of the products to a Virginia distributor was a significant contact with the forum, satisfying the first and second factors. Moreover, Taishan designed its product for sale in Virginia on a made-to-order basis and made repeated sales, which satisfied the "additional conduct" requirement. Finally, the court held that exercising jurisdiction would be constitutionally reasonable due to the size and magnitude of Taishan’s operations and Virginia’s interest in allowing its citizens to litigate the issue.

Court Rejects Personal Jurisdiction Over Austrian Bank in Suit Over Tax Scheme to Manufacture Deductible Losses Where Contacts Associated With Loan Agreement Were Irrelevant to the Claimed Injury

Mann v. European Am. Investment Bank AG, US District Court, Middle District of North Carolina, February 24, 2014

Plaintiff Richard Mann, a US citizen, engaged in a "creative financial solution" designed and promoted by Defendant Euram Bank, an Austrian company, which was intended to create for Mann a tax deductible trading loss. Instead, the US Internal Revenue Service disallowed the transaction and assessed $911,869 in tax penalties against Mann. Mann filed suit alleging breach of contract and fraud, among other claims, and moved to dismiss the action for lack of personal jurisdiction.

Mann alleged that he was contacted directly by Euram Bank at his home in North Carolina about the tax strategy and that the bank used a US company to assist in its US marketing. Because Mann conceded there was no basis for general jurisdiction, the court analyzed whether the bank was subject to specific personal jurisdiction arising out of its contacts with North Carolina. Although the bank executed a Loan Agreement with Mann, a North Carolina citizen, the court found Mann’s allegations of injury did not arise out of the Loan Agreement but instead from the flawed tax advice he allegedly received. Thus, the bank’s activities in marketing and promoting the Loan Agreement were irrelevant to the question of personal jurisdiction. Moreover, because Mann alleged North Carolina contacts by many other entities, but not Euram Bank, the court held that Mann had failed to allege sufficient facts, outside conclusory allegations, that Euram Bank had purposefully availed itself of the forum.

District Court Finds Personal Jurisdiction Over Quebec Corporation that Negotiated and Executed Contract with US Company and Made Numerous Visits to Iowa Over Two Years

Relco Locomotives, Inc. v. AllRail, Inc., US District Court, Southern District of Iowa March 5, 2014

Defendant AllRail, Inc., a Quebec railroad services company, moved to dismiss breach of contract claims brought by Relco Locomotives, an American company, with which AllRail had contracted to rebuild two locomotives, for lack of personal jurisdiction. Relco alleged that AllRail had failed to pay money due under their contract, while AllRail filed suit separately in Montreal relating to alleged defects in the repair of the locomotives.

The District Court in Iowa found that AllRail had established minimum contacts with Iowa collectively through several contacts, none of which on its own would have been sufficient to confer jurisdiction. Specifically, the court cited AllRail’s contract with the Iowa company and their two year relationship, AllRail’s multiple visits to Iowa during the duration of the contract, and the fact that AllRail also arranged and executed the delivery of the locomotives from Iowa to Quebec. All of these contacts related directly to the cause of action and so specific personal jurisdiction existed.

Personal Jurisdiction Upheld Over English Manufacturer That Was Aware Goods Were Destined for New York

Roberts-Gordon LLC v. Pektron PLC, US District Court, Western District of New York, February 13, 2014

New York’s personal jurisdiction statute confers personal jurisdiction if a defendant "transacts business within the state or contracts anywhere to supply goods or services in the state." Defendant Pektron, an English manufacturer of ignition control units, moved to dismiss claims regarding defective products for lack of personal jurisdiction, arguing that because it did not ship any goods directly to New York it could not be subject to personal jurisdiction under this provision. The US District Court in Buffalo, New York concluded, however, that Pektron was aware the goods were destined for New York, which the court held was the relevant criterion under the statute. The court rejected Pektron’s attempt to argue that its knowledge was irrelevant because it did not personally arrange for shipping the goods to New York, citing the fact that Pektron had manufactured the goods specifically for a New York company and knew at the time of contracting that the goods were destined for New York. Following other decisions within the Second Circuit, the court held knowledge that the goods will be supplied in New York is sufficient to confer jurisdiction under the statute.

Newly Limited General Personal Jurisdiction Standard Leads to Dismissal for Austrian Banks in Land Purchase Dispute

St. Michael Enterprises v. Serbia Ministry of Privatization, US District Court, Eastern District of New York, February 25, 2014

In a dispute over the purchase of Serbian property from the Serbian government, Plaintiff St. Michael Enterprises claimed that the Serbian Ministry of Privatization and several Austrian companies committed fraud and breach of contract by interfering with Plaintiff’s agreement to purchase the property. Defendant Austrian banks moved to dismiss the claims for lack of personal jurisdiction. St. Michael claimed general personal jurisdiction over the banks, stemming from the sustained conduct of their subsidiary and affiliated US banks doing business in New York. Specifically, St. Michael alleged that the subsidiary and affiliated US banks executed transactions totaling billions of dollars and "regularly litigated in the New York courts." However, given the US Supreme Court’s limitation of general personal jurisdiction in Daimler AG v. Bauman, the US District Court in Brooklyn, New York, rejected jurisdiction over the banks because neither their place of incorporation nor principal place of business are located in the US. Even if all conduct of the subsidiary and affiliated banks were attributed to the banks, the court held the banks still could not be considered "at home" in New York. No basis for specific personal jurisdiction was alleged.

District Court Dismisses Slander and Libel Claims Against Spanish Basketball Federation for Lack of Personal Jurisdiction Where No Contacts With Forum Alleged

Sallie v. Spanish Basketball Federation, US District Court, District of Colorado, February 25, 2014

Plaintiff Roburt Sallie, a professional basketball player, alleged Defendants, a Spanish basketball team and league, slandered and libeled him by informing the media that Sallie’s contract was terminated for consuming a nutritional supplement containing a banned substance. The Spanish team and league moved to dismiss the claims for lack of personal jurisdiction. The court granted the motion because Sallie failed to allege that the Spanish entities had any contact with Colorado. Although Sallie claimed both general and specific personal jurisdiction, the complaint did not allege any contacts with Colorado, let alone sufficient minimum contacts.

Southern District of Texas Finds No Personal Jurisdiction Over Former Employee Whose Extensive Contacts With the Forum Ended Prior to His Allegedly Unlawful Activities

Tendeka, Inc. v. Glover, US District Court, Southern District of Texas, March 12, 2014

Defendant Neil Glover, a former employee of Plaintiff Tendeka, Inc., moved to dismiss claims against him in US District Court in Texas based on a lack of personal jurisdiction. Tendeka alleged that Glover breached his employment contract and interfered with another contract by impermissibly downloading and taking proprietary confidential information when he left the company and formed a competing company, Swell X. Tendeka alleged that Glover used the confidential information to develop a competing product using Tendeka’s proprietary formulations and designs. Tendeka further alleged that Swell X secretly worked with Elite Elastomers, Inc., a US corporation, who had contracted with Tendeka, to create the rival product.

Tendeka is a Netherlands corporation and Glover is a citizen of the United Kingdom resident in Scotland. Although Glover’s corporation, Swell X, has a US sales representative in Texas, Glover claimed he visited Texas during his employment with Tendeka only to discuss product development with Elite. Since leaving Tendeka, Glover claimed his contact with Elite had been in Scotland or Mississippi. As such, the court found that Tendeka had failed to demonstrate that Glover had directed any activities in allegedly interfering with contract towards Texas.

Laws Discussed

We provide below alphabetically very brief summaries of key US laws addressed by cases summarized in this edition. Please note that these summaries provide a very simplified overview of the statutes and are not intended to describe fully what they may prohibit and require. They are only provided as a guide for the convenience of the reader.

Alien Tort Statute (“ATS”), 28 U.S.C. § 1350 (also called the Alien Tort Claims Act)

The ATS is a jurisdictional statute that allows US courts to decide cases brought by a foreign citizen for torts committed in violation of international law or a US treaty. Much litigation under the statute involves the nature of the claims that can be brought; although treaties have specified terms, "international law" is a more general term. To support ATS jurisdiction, violations of international law "must be of a norm that is specific, universal, and obligatory."

Commodities Exchange Act (“CEA”) §§ 4o, 9(a), 22(a), 7 U.S.C. §§ 6o, 13(a), 25(a)

The CEA applies to the sale of commodities and imposes restrictions similar to those imposed on stock exchanges. Section 4o of the CEA generally makes unlawful the use of any means of fraud or deceit in connection with the sale of commodities or futures contracts involving commodities. Section 22(a) authorizes private individuals to sue for violations of Section 4o in certain limited circumstances. Finally, Section 9(a) prohibits manipulating the price of commodities or their futures contracts.

Dodd-Frank Wall Street Reform and Consumer Protection Act-Anti-Retaliation Provision, 15 U.S.C. § 78u-6(h)(1)(A)

The 2010 Dodd-Frank Act was reform legislation passed in the wake of the financial crisis. As relevant here, one provision expanded incentives for and protection of “whistleblowers” in specific circumstances. Most notably, the provision protects certain individuals from retaliation for making disclosures that are “required or protected” under previously-enacted securities laws or SEC rules. Other important limitations apply.

Foreign Sovereign Immunities Act of 1976(FSIA), 28 U.S.C. Sec. l330, l332(a), l39l(f) and l60l-l6ll

The FSIA codifies the longstanding US rule that non-US Governments generally are immune from suit in US courts. The statute establishes a presumption against suit, and sets out a number of specific exceptions. These include:

  • Explicit or implicit waiver of immunity by the foreign state;
  • Commercial activity carried on in the United States or an act performed in the United States in connection with a commercial activity elsewhere, or an act in connection with a commercial activity of a foreign state elsewhere that causes a direct effect in the United States;
  • Property taken in violation of international law is at issue;
  • Rights in property in the United States acquired by succession or gift or rights in immovable property situated in the United States are at issue;
  • Money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state;
  • Action brought to enforce an agreement made by the foreign state with or for the benefit of a private party to submit to arbitration;
  • Money damages are sought against a foreign state for personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources for such an act, if the foreign state is designated as a state sponsor of terrorism under section 6(j) of the Export Administration Act of 1979 (50 U.S.C. App 2405(j) or Section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371).
  • A suit in admiralty is brought to enforce a maritime lien against a vessel or cargo of the foreign state which maritime lien is based upon a commercial activity of the foreign state. 

Foreign Trade Antitrust Improvements Act (“FTAIA”), 15 U.S.C. § 6a

The FTAIA is the principal US statute governing the applicability of US antitrust (competition) laws to foreign conduct. The statute is both complicated and unclear, and has been the subject of extensive litigation. Basically, the FTAIA provides that foreign conduct cannot be the basis of a violation of the US antitrust laws unless certain exceptions apply. These exceptions include, most significantly, foreign conduct that has a “direct, substantial, and reasonably foreseeable effect” on competition or prices in a US market, so long as the conduct also independently violates the substance of a US antitrust law. The FTAIA also permits antitrust claims to be brought where US export commerce is affected by anticompetitive acts outside the US. One important qualification is that the FATIA does not apply to claims that there has been an injury to the import trade into the US. Those claims must satisfy a different test under a different statutory regime.

Gun Control Act, 18 U.S.C. ch. 44

The Gun Control Act of 1968 restricts the sales of firearms the numerous classes of persons, including fugitives from justice, drug addicts, persons unlawfully in the US, certain persons suffering from mental illness, and persons convicted of felony crimes.

Hobbs Act, 18 U.S.C. § 1951

The Hobbs Act is a criminal statute that prohibits actual or attempted robbery or extortion affecting interstate commerce between the US and other countries. It is often used in labor disputes and cases involving commercial disputes and public corruption.

Lanham Act, 15 U.S.C. § 1051, et seq.

The Lanham Act is the principal trademark infringement statute in the US, and also creates additional remedies related to false advertising and “cybersquatting.” The statute makes unlawful the use of both registered and unregistered marks that create a “likelihood of confusion” with a pre-existing trademark. More generally, it also prohibits the use of false or misleading statements made in advertising where the effect may be the likely injury to a business. Amendments to the Lanham Act in 1999 prohibited the use of confusingly similar domain names in internet web sites. Parties that violate the Lanham Act may be subject to damages as well as injunctions.

Maritime Drug Law Enforcement Act (“MDLEA”), 46 U.S.C. § 70501, et seq.

The MDLEA makes unlawful drug trafficking on the high seas. It provides that an individual may not “knowingly or intentionally manufacture or distribute, or possess with intent to manufacture or distribute, a controlled substance on board (1) a vessel of the United States or a vessel subject to the jurisdiction of the United States; or (2) any vessel if the individual is a citizen of the United States or a resident alien of the United States.” The statute expressly provides for application to conduct occurring outside the territorial jurisdiction of the US.

Patent Act, 35 U.S.C. § 271 (Patent Infringement)

Under US law, patent infringement occurs generally where a person, “without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor.” Prior knowledge of the patent is irrelevant for purposes of patent infringement liability. A person who “actively induces” the infringement of a patent is also liable as an infringer. Parties that commit patent infringement face monetary penalties as well as an injunction.

Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961, et seq.

RICO establishes civil and criminal liability for persons employed by or associated with an “enterprise” that has been engaging in a “pattern of racketeering.” The applicability of the statute turns on the meanings of these two terms. The term “enterprise” is broadly defined and can include formal legal entities such as corporations, as well as more informal associations-in-fact, which are “a group of persons associated together for a common purpose of engaging in a course of conduct.” A “pattern of racketeering” is defined in turn to be the commission of at least two “predicate acts” during a ten-year period, where those acts were sufficiently related to one another to be considered part of a “pattern.” The RICO statute lists 35 state and federal crimes that constitute “predicate acts,” including mail and wire fraud, bribery, obstruction of justice, embezzlement, money laundering, immigration fraud, and an assortment of crimes of violence.

Securities Act of 1933, 15 U.S.C. § 77a, et seq.

The Securities Act generally prohibits a security from being offered or sold to the public unless it is either registered with the Securities and Exchange Commission or an exemption from the registration requirement applies.

Securities Exchange Act of 1934 (“1934 Act”) §§ 10(b) & 15(a)(1), 15 U.S.C. §§ 78j(b) & 78o(a)(1) (also referred to as Exchange Act)

Section 10(b) of the 1934 Act is a broad provision prohibiting fraudulent activities with respect to securities listed on US exchanges, including American Depositary Receipts (“ADRs”). In addition, pursuant to Section 10(b), the Securities and Exchange Commission has promulgated Rule 10b-5, which extends Section 10(b)’s prohibition to fraudulent activity in connection with the purchase or sale of any security, registered or unregistered securities, publicly held or closely held companies, and any kind of entity that issues securities, including federal, state, and local government securities.

Section 15(a)(1) of the 1934 Act prohibits any person or company to from acting as a broker or dealer without first registering with the Securities and Exchange Commission.

Sherman Antitrust Act, 15 U.S.C. §§ 1 & 2

The Sherman Antitrust Act is the most generally applicable antitrust statute in US law. Section 1 of the Act makes unlawful any agreement “in restraint of trade.” For most agreements affecting commercial transactions, the statute only makes unlawful agreements that unreasonably restrain trade, meaning that they have an actual anticompetitive effect on a market for goods or services in the US that is not outweighed by precompetitive benefits. Certain narrow classes of agreements, including price-fixing, bid rigging, and agreements among competitors to divide customers or territories, are per se violations of law as to which the facts, if proved, allow for no defenses. Section 2 of the Sherman Act makes unlawful monopolization and attempted monopolization, which may be undertaken by a company acting unilaterally.

Torture Victims Protection Act of 1991 (“TVPA”), Pub. L. No. 102–256, 106 Stat. 73 (1992), codified at 28 U.S.C. § 1350

The TVPA was passed for the purpose of giving a US civil remedy to victims of torture and/or murder. The statute, however, only authorized lawsuits against individuals, not corporations or political groups. When filing suit, the plaintiff must show that he or she pursued all “adequate and available” local remedies. Plaintiffs need not be US citizens to sue.

Victims of Trafficking and Violence Protection Act, 18 U.S.C. § 1581 et seq.

The Victims of Trafficking and Violence Protection Act of 2000, Public Law 106-386, as amended, declares illegal the trafficking in persons, including forced labor, involuntary servitude, slavery and sex trafficking. 18 USC § 1595 creates a private right of action in US federal court for victims of such conduct, allowing them to collect actual damages, punitive damages, and attorneys’ fees. Section 1596 of Title 18 establishes that the remedy applies extraterritorially.

Wire Act, 18 U.S.C. § 1084

The Interstate Wire Act of 1961 prohibiting the operation of certain types of betting businesses in the United States. The statute has been construed to be limited to betting on sporting events, and not to apply to other forms of online gambling.

42 U.S.C. § 1981 

This federal statute provides that “all persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.” The statute is intended to advance the goal that all persons within its scope or equal under the law. Courts have concluded in many cases that it may be enforced by lawsuits in federal court.

Written by:

Orrick, Herrington & Sutcliffe LLP

Orrick, Herrington & Sutcliffe LLP on:

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