When Congress passed the Justice Against Sponsors of Terrorism Act (“JASTA”), 18 U.S.C. §2333, back in 1992, it no doubt thought it was enlisting the plaintiffs’ bar to go after Hezbollah, al-Qaeda, Daesh, and others of that ilk. But good intentions do not a successful statute make. The other side of the “v.” is is in business to make money (as are we), and there’s no money in suing actual international terrorists and their equally international sponsors. With 9/11 as the horrific exception, most international terrorist actions happen overseas and are the work of foreign entities.
Thus JASTA never operated as intended – for one thing, there’s no personal jurisdiction in the United States over foreigners who commit terrorist acts overseas. Indeed, the very first case to cite our Mallory personal jurisdiction win did so in the course of holding just that. See Fuld v. Palestine Liberation Organization, 2022 WL 62088, at *8 & n.6 (S.D.N.Y. Jan. 6, 2022) (legislative power to “deem” something as “consent” to personal jurisdiction in JASTA cannot so deem actions that could not otherwise support jurisdiction consistently with Due Process).
So instead of suing anyone that is deliberately acting in cahoots with international terrorists, the other side has hijacked JASTA and used it to sue – the pharmaceutical industry. And in a positively putrid opinion, an appellate court has just let them do it. See Atchley v. AstraZeneca UK Ltd., 22 F.4th 204 (D.C. Cir. Jan. 4, 2022).
Happy New Year’s.
We mentioned Atchley as a case to watch in 2022 in our annual “Best of” post for 2021. At the time, we thought it likely that the DC Circuit would affiget rm the district court, which in Atchley v. AstraZeneca UK Ltd., 474 F. Supp.3d 194 (D.D.C. 2020), held that the plaintiff’s claims of both “direct” and “aiding and abetting” JASTA liability were simply implausible.
Boy did we get the DC Circuit wrong.
In a nutshell, here’s what the plaintiffs in Atchley claimed happened. In the aftermath of the 2003 Iraq War, the government of Iraq – the government that the United States installed – allegedly allowed the Ministry of Health to be run by terrorists (the “Jaysh al-Mahdi”). 22 F.4th at 210-11. Any pharmaceutical company (there were 21 defendants) seeking to do business with the Ministry purportedly had to pay bribes, either “cash kickbacks” or “extra, off-the-books batches of valuable medical goods.” Id. at 209. The Ministry terrorists then allegedly used the proceeds of the supposed bribes (on a Rule 12 motion to dismiss, this allegation was not at issue in Atchley) to finance other terrorists’ attacks, including those that injured the plaintiffs or their loved ones. Id. at 212-13 (“The stream of bribes and free goods helped finance Jaysh al-Mahdi’s terrorist attacks on Americans, including plaintiffs.”). The terrorists themselves, and their middlemen who allegedly converted goods to cash on the black market, were of course never sued.
Instead of going after actual terrorists and their sponsors, as Congress intended, plaintiffs sued drug companies that, on plaintiffs’ own allegations, had themselves been the victims of terrorist extortion.
Our overall reaction to the decision is that, assuming everything Atchley decision held was the law, then the law is an ass. We base that on two fundamental problems with that litigation. First, the allegedly terrorist-controlled Ministry was a branch of the post-Saddam Hussein Iraqi government that the United States created, and which American troops were then occupying Iraq to support. Second, what alternative did these defendants have to being extorted by the alleged terrorist in the Ministry? Were they supposed to cease selling drugs to Iraq altogether? What then? Without prescription drugs, the Iraqi health system – already damaged by the war – would have ceased to practice modern medicine and the condition of the Iraqi population, including American-backed police and security forces, would have descended to medieval levels. Even if that’s what these plaintiffs wanted, it would not have been permitted by the United States government, which could not allow its invasion to produce that sort of abject misery throughout then-occupied Iraq.
So the plaintiffs diverted JASTA to target American and other western pharmaceutical companies, rather than terrorists and their shadowy sponsors. Further, the foundations of the litigation were directly contrary to American foreign policy interests at the time of the alleged activity and would have resulted in a humanitarian disaster.
The legal reasoning that allowed this perverse litigation to continue wasn’t much better. Atchley held that the complaint stated claims for both “direct” and “aiding and abetting” liability under JASTA, despite there being no precedent for legitimate businesses being liable under the statute. Indeed, literally every case that Atchley cited that involved a JASTA suit against a large American or European company (mostly international banks) dismissed the action. See Colon v. Twitter, Inc., 14 F.4th 1213 (11th Cir. 2021) (dismissal for failure to plead proximate cause or an action by a designated terrorist actor); Gonzalez v. Google LLC, 2 F.4th 871 (9th Cir. 2021) (dismissal on preemption grounds and for failure to plead aiding and abetting affirmed); Siegel v. HSBC North America Holdings, Inc., 933 F.3d 217, 224 (2d Cir. 2019) (dismissal for failure to plead aiding and abetting affirmed); Crosby v. Twitter, Inc., 921 F.3d 617 (6th Cir. 2019) (dismissal for failure to plead direct connection or material support affirmed); Kemper v. Deutsche Bank AG, 911 F.3d 383 (7th Cir. 2018) (dismissal for failure to plead intent affirmed); Owens v. BNP Paribas, S.A., 897 F.3d 266 (D.C. Cir. 2018) (dismissal for failure to plead causation or aiding and abetting affirmed); Rothstein v. UBS AG, 708 F.3d 82 (2d Cir. 2013) (dismissal for lack of standing and failure to plead causation affirmed); Freeman v. HSBC Holdings PLC, 413 F. Supp.3d 67 (E.D.N.Y. 2019) (action dismissed for failure to plead that the defendants dealt directly with terrorist organizations or their fundraising affiliates).
Another aspect of JASTA is that “aiding and abetting” is limited to terrorist acts committed by “an organization that had been designated as a foreign terrorist organization.” 18 U.S.C. §2333(d)(2). However, neither the Iraqi Ministry of Health, nor even Jaysh al-Mahdi, ever received such a designation. 22 F.4th at 214. So Atchley strove to pin these attacks on an actual designated terrorist group (Hezbollah) through its “involvement in attacks it did not also commit.” Id. at 217. First, Hezbollah allegedly “provi[ded] weaponry, training, and knowledge to Jaysh al-Mahdi with the intent of harming Americans in Iraq,” which “constituted a ‘plan.’” Id. at 218. Second, “Hezbollah exerted religious, personal, and operational authority over Jaysh al-Mahdi show that it “authorized” the attacks as well. Id. at 219.
We accept all of that at face value. Both Hezbollah and Jaysh al-Mahdi can burn in Jahannam (hell) for all we care. From our perspective, the fundamental flaw in Atchley’s analysis is that it ignores the obvious – none of the 21 drug manufacturer defendants is alleged to be involved in these activities, nor are they alleged to have prior knowledge of them or to have intended to assist either of those groups in carrying them out. We searched Atchley for every reference to “Hezbollah.” There are numerous allegations that Hezbollah was involved with Jaysh al-Mahdi, 22 F.4th at 211, and with the terrorist acts at issue. Id. at 216-19. But nowhere are there any allegations that any of the defendants in fact knew that they were actually dealing with a Hezbollah front rather than with the Iraqi Ministry of Health. Here’s the sum total of what Atchley discussed on the issue of actual knowledge:
The complaint plausibly alleges that defendants were aware of reports extensively documenting both Jaysh al-Mahdi’s domination of the Ministry and its mission to engage in terrorist acts. For example, the media reported . . . that the health minister was a devotee of Sadr’s movement even as Sadr led armed rebellions against American troops. Other reports highlighted Jaysh al-Mahdi’s abuse of the Ministry’s resources. Defendants would have been aware of such reports because each defendant had a corporate security group that would have tracked them as part of its due diligence. Defendants also sent their agents into the Ministry to finalize deals on their behalf. Inside the Ministry, armed terrorist fighters circulated openly and anyone who entered could see Jaysh al-Mahdi’s distinctive flag, weapons, Sadr posters, and “Death to America” slogans on display. Yet, in dealing with the notoriously corrupt Ministry under the control of a terrorist group, defendants facilitated their transactions with bribes and structured them to include free goods of great value in funding terrorist acts.
Id. at 221 (emphasis added).
Again, we take everything at face value as we must under Rule 12. Jaysh al-Mahdi was a bad actor. They demanded bribes and were anti-American terrorists. But there is: (1) zero reference to anything connected to the statutorily required “foreign terrorist organization” – Hezbollah. Nor do these allegations support any actual intent on the part of these defendants. (2) Actual knowledge is limited to what certain “agents” presumably, not actually, saw (“anyone who entered could see”). The defendant’s own knowledge is, once again, presumed on a negligence (should have known) standard. (3) “Defendants would have been aware of such reports because each defendant had a corporate security group that would have tracked them.” Neither proposition is supported by a record citation.
JASTA requires that a defendant either “knowingly provid[e]” assistance to the designated terrorist group or that they “conspire with the person who committed” some terrorist act. 18 U.S.C. §2333(d)(2). The requisite intent does not exist – only that defendants “would have been aware” of certain reports or that “anyone could see” certain things. That’s not intent; at most it’s negligence. And the reason not even Atchley could find actual intent is simple. As numerous courts have held, “What we know as men and women we must not forget as judges.” E.g., United States v. Blackburn, 461 F.3d 259, 264 (2d Cir. 2006). Drug companies are simply not terrorists.
So how did Atchley get from no legitimate western businesses being liable under JASTA to twenty-one in a single case? JASTA indicated that liability should be evaluated by the aiding-and-abetting criteria in Halberstam v. Welch, 705 F.2d 472 (D.C. Cir. 1983). 22 F.4th at 215. Halberstam evaluated a variety of factors, some involving actual intent and others mere foreseeability. Atchley systematically put its thumb on the scale, emphasizing foreseeability factors and discounting those that involved actual intent to further terrorism:
- General awareness – In Atchley “general” prevails over “awareness.” The opinion requires only that a defendant be “generally aware of its role in an overall illegal activity from which an act of international terrorism was a foreseeable risk.” 22 F.4th at 220. An “inference” of the “requisite mental state” suffices. In other words, actual knowledge need not be pleaded, only foreseeability. Id. at 221.
- Knowing and substantial assistance – “[T]he knowledge component requires that the defendant know that it is providing assistance . . . directly to the [foreign terrorist organization] or indirectly through an intermediary.” Id. at 222 (statutory quotations omitted). Atchley again nullifies knowledge: “Defendants do not argue that their provision of cash and free goods was in any way accidental, so the assistance was given knowingly.” Id. But as already discussed, nowhere in Atchley is there any allegation that the defendants actually understood that they were dealing with Hezbollah.
- Nature of the act assisted – “Financial support is ‘indisputably important’ to the operation of a terrorist organization, and any money provided to the organization may aid its unlawful goals.” “In relation to such vicious acts, even ‘relatively trivial’ aid could count as substantial.” Id. (citations and quotation marks omitted). Thus even “trivial” financial support that finds its way to terrorists is enough in Atchley.
- Amount and kind of assistance – “We reject the contention that assistance must be shown to have been indispensable to the injurious acts for this factor to weigh in support of liability.” Id. Bribes paid to one group “were a considerable source of funding,” even if the attacks would have been occurred anyway. Id.
- Presence at the time of the tortious conduct – “[T]hese defendants were not physically present at the attacks on plaintiffs.” Id. at 223. Even Atchley admits that this objective factor “cuts against” liability. Id.
- Relationship – “[T]here is no special relationship here between defendants and the principal tortfeasors,” but Atchley assigned “this factor a low priority in our calculus.” Id. (citation and quotation marks omitted).
- State of mind – Atchley dumbs down this factor, as well. State of mind “more powerfully supports aiding-and-abetting liability of defendants who share the same goals as the principal or specifically intend the principal’s tort, but such intent is not required. Knowledge of one’s own actions and general awareness of their foreseeable results, not specific intent, are all that is required.” Id. The requirement in Halberstam, 705 F.2d at 484, that the defendant be “one in spirit” with the principal actor, gets the heave-ho. 22 F.4th at 223-24. Thus, “state of mind” no longer means what it says, and “on balance” mere “foreseeability” satisfies it. Id. at 224.
- Duration – The defendants were forced to pay bribes to do business with the Iraqi Ministry of Health for “four years,” which “is a significant duration.” Id.
The way we read this, Atchley downplayed every Halberstam factor that necessitated proof that the defendants actually desired, intended, or hoped to facilitate terrorism – to the point of ditching Halberstam’s “one in spirit” formulation altogether. Just as predictably, Atchley inflated all the “foreseeability” factors, so that the overall result was imposition of liability on a negligence standard, despite JASTA’s express intent requirement for intentional conduct.
We could go on, to causation and personal jurisdiction, but we won’t.
If JASTA liability exists solely on the basis of hindsight foreseeability against persons who were themselves subject to terrorist extortion, then JASTA is absurd. We agree with the defendants’ point in this regard – since even the “U.S. government support[ed] the Iraqi Ministry of Health during th[is] period . . . on plaintiffs’ theory, ‘the U.S. Government itself proximately caused Jaysh al-Mahdi’s armed attacks.’” 22 F.4th at 229 (citation to defense brief omitted). As far as we’re concerned, Atchley has twisted JASTA so thoroughly that it is no longer recognizable. Liability is being imposed, not on terrorists nor even on their enablers, but on entities that were themselves victims of terrorist shakedowns. Why? As Willie Sutton said, “that’s where the money is.”
We note that the United States Supreme Court has not looked favorably on similar efforts to punish alleged overseas wrongdoing in American courts. The reasoning in Atchley shows the same hubristic belief, in the context of another misused federal statute, that liability for overseas evils should be adjudicated in American courtrooms. The Supreme Court put a damper on that in Kiobel v. Royal Dutch Petroleum Co., 569 US 108 (2013). We endorsed Kiobel’s exercise of restraint – its presumption against extraterritorial application – here, and we quoted from Steppenwolf’s “Monster”:
We don’t know how to mind our own business.
‘Cause the whole world’s got to be just like us.
Now we are fighting a war over there,
No matter who wins, you know we can’t pay the cost.
Steppenwolf addressed the Vietnam War, but these lines resonate equally with respect to the Iraq War, since “weapons of mass destruction” that weren’t played the same mendacious role as to Iraq as the small boats that weren’t there played in Gulf of Tonkin Resolution. Indeed, the very Sadrists that were the real terrorists in Atchley are, today, recognized as “kingmakers” in Iraq’s post-occupation government.
Hopefully, as with the statute that plaintiffs had hijacked in Kiobel, the Supreme Court will step in and set things right.