2013 International Law Update, Volume 19, Number 3 (July – August - September)

2013 International Law Update, Volume 19, Number 3 (July – August - September)

Legal Analyses published by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com. 

ANTITRUST

European Court of Justice holds that a Parent Company can be liable for antitrust violations of a joint venture company

With the following case, the European Court of Justice (ECJ) upholds parent company liability for Dow and DuPont in matters of the Chloroprene Rubber Cartel (Case No. 38629). On September 26, 2013, the ECJ dismissed appeals by The Dow Chemical Company and E.I. du Pont de Nemours and Company of the European Commission decision in the Chloroprene Rubber Cartel case.

A summary of the Judgment follows.

By its appeal, EI du Pont de Nemours and Company (‘EI DuPont’) asks the Court, [1] to set aside the judgment of the General Court of the European Union of 2 February 2012 in Case T-76/08 … and, secondly, [2] to annul the fine imposed on it by that decision.

[…] 3. “EI DuPont is the ultimate parent company of the DuPont group and has its headquarters in the United States. DuPont Performance Elastomers LLC (‘DPE LLC’) is a wholly-owned subsidiary of EI DuPont, and DuPont Performance Elastomers SA (‘DPE SA’’) is a wholly-owned subsidiary of DPE LLC. EI DuPont was the first undertaking to develop chloroprene rubber (‘CR’).”

“It remained active on the CR market until 1 April 1996, when it transferred all its activities in the elastomers sector to DuPont Dow Elastomers LLC (‘DDE’), a joint venture held in equal shares by EI DuPont and The Dow Chemical Company (‘Dow’). On 1 July 2005 EI DuPont acquired the 50% share held by Dow in DDE. DDE then became a wholly-owned subsidiary of EI DuPont and was renamed DPE LLC. DPE LLC’s regional office for Europe is DPE SA, a wholly-owned subsidiary of DPE LLC.”

4. “On 27 March 2003 the Commission of the European Communities carried out inspections at the premises of, inter alia, Dow Deutschland Inc. On 21 November 2003, DDE applied for leniency in accordance with the Commission notice on immunity from fines and reduction of fines in cartel cases (OJ 2002 C 45, p. 3).”

5. “On 13 March 2007, the European Commission sent a statement of objections to 12 undertakings, including EI DuPont. On 5 December 2007, the Commission adopted an initial decision in which it took the view that, between 1993 and 2002 several producers of CR had participated in a single and continuous infringement of Article 81 EC and Article 53 of the European Economic Area Agreement of 2 May 1992 (OJ 1994, L 1, p. 3), covering the entire territory of the European Economic Area (EEA), consisting of agreements and concerted practices aimed at agreeing upon the allocation and the stabilisation of markets, market shares and sales quotas for CR, coordinating and implementing several price increases, agreeing upon minimum prices, allocating customers and exchanging competitively sensitive information. Those producers met on a regular basis several times a year in bilateral, trilateral and multilateral meetings.”

6. “In that decision, the Commission imputed liability for the cartel, in particular, to EI DuPont, DPE LLC, DPE SA and Dow, and ordered those undertakings to bring that infringement immediately to an end in so far as they had not already done so, and to refrain immediately from any restrictive practice having the same or similar object or effect.” […]

9. “As the participation in the infringement had lasted for nine years for EI DuPont, and six years and one month for DPE LLC, DPE SA and Dow, the Commission, in application of point 24 of the Guidelines on the method of setting fines, multiplied the starting amounts of the fines determined by reference to the value of sales by nine for EI DuPont, and by six and a half for DPE LLC, DPE SA and Dow.” […]

11. “Furthermore, the Commission considered that EI DuPont and Dow, as the parent companies of the joint venture DDE, should be held jointly and severally liable for the behaviour of that joint venture during the period from 1 April 1996 to 13 May 2002. In addition, it found that, as the successors to DDE, the entities DPE LLC and DPE SA should also be held jointly and severally liable for DDE’s conduct during that period, because, after the infringement was ended, they took over its activities on the CR market.”

12. “In the light of those factors, the basic amount of the fine to be imposed on EI DuPont was fixed at EUR 79 million, of which EUR 59 million was to be paid jointly and severally with DPE LLC, DPE SA and Dow.” […]

The procedure before the General Court and the judgment under appeal

18. “By application lodged at the Registry of the General Court on 15 February 2008, EI DuPont brought an action for annulment of Article 1(b) of the decision of 5 December 2007, in so far as it concluded that EI DuPont participated in the infringement, and of Article 2(b) of that decision requiring it to pay a fine, and, in the alternative, a reduction of the amount of the fine imposed on it by that decision. In that regard, it must be noted that in its reply EI DuPont reformulated its claims, pleas in law and arguments in the light of the amendments made by the Commission to the decision of 5 December 2007 by its amending decision of 23 June 2008. Therefore, that application was regarded as being directed against the decision of 5 December 2007, as amended; that is to say, the decision at issue.”

19. “In support of its action, EI DuPont raised six pleas in law. The first three, the only grounds which are relevant for the purposes of this appeal, alleged: (1) incorrect imputation of the infringement to EI DuPont during the period from 1 April 1996 to 13 May 2002 (‘the DDE period’); (2) breach of the rules on limitation; and (3) lack of a legitimate interest on the Commission’s part in addressing a decision to EI DuPont.”

20. “By its first plea, EI DuPont criticised in particular the Commission for finding that it had participated in the cartel during the DDE period and for wrongly holding it jointly and severally liable for DDE’s participation in that cartel during that period. Specifically, the Commission did not prove that EI DuPont had exercised decisive influence over DDE.”

21. “In that regard, the General Court pointed out, in paragraph 64 of the judgment under appeal, that EI DuPont did not contest its participation in a cartel in breach of Article 81 EC between 13 May 1993 and 31 March 1996. Similarly, it is clear from paragraph 64 that EI DuPont also did not contest DDE’s involvement in a cartel in breach of Article 81 EC during the DDE period, or the fact that that infringement was imputed to DPE LLC and DPE SA as the successors in title to DDE.”

22. “In paragraphs 70 to 73 of the judgment under appeal, the General Court reviewed the tests used by the Commission in the decision at issue to demonstrate that DDE’s parent companies did in fact exercise decisive influence over its conduct on the CR market.”

23. “The General Court stated in paragraph 74 of the judgment under appeal that, in the light of all the economic, legal and organisational links between EI DuPont and DDE, the Commission did not err in finding that EI DuPont, as one of DDE’s two parent companies, had exercised decisive influence over its conduct on the CR market.”

“The Commission did not therefore err in finding that EI DuPont and DDE formed a single undertaking for the purposes of Article 81 EC and in holding EI DuPont jointly and severally liable for DDE’s conduct during the DDE period.”

24. “In paragraphs 76 to 82 of the judgment under appeal, the General Court dismissed EI DuPont’s arguments which could have called into question its finding concerning EI DuPont’s exercise of decisive influence over DDE. Consequently, in paragraph 83 of the judgment under appeal, the General Court dismissed the first plea in law.”

25. “By its second plea in law, EI DuPont alleged that the Commission infringed the rules on limitation periods by imposing on it a fine for the period from 13 May 1993 to 31 March 1996 (the period before the DDE period). It argued that imposing such a fine, in the circumstances of this case, contravened the principles of legal certainty and legitimate expectations as the limitation period of five years expired on 31 March 2001.”

26. “In dismissing that plea as unfounded, the General Court stated in paragraphs 87 and 88 of the judgment under appeal that it was clear from the analysis of the first plea that the Commission had rightly taken the view that EI DuPont should be held jointly and severally liable for DDE’s conduct during the DDE period. In addition it stated that the applicants, including EI DuPont, had not contested the characterisation of the infringement committed between 13 May 1993 and 13 May 2002 as single and continuous.”

“The General Court therefore concluded that, contrary to what the applicants argued, the infringement committed by DDE did not end on 31 March (or 1 April) 1996 and that the Commission could therefore impose a fine on EI DuPont for the entire period during which that infringement was committed, including the period before the DDE period.”

27. “By its third plea, EI DuPont claimed that, since the right of the Commission to impose a fine was time-barred, the Commission had to demonstrate that it had a legitimate interest in adopting a decision against EI DuPont.”

28. “The third plea was dismissed as unfounded in paragraphs 91 to 93 of the judgment under appeal. The General Court held in particular in paragraph 92 of that judgment that the Commission could impose a fine on EI DuPont for the entire period in which the infringement was committed, including the period before the DDE period. Therefore, in the opinion of the General Court, the Commission did not have to demonstrate that it had a legitimate interest in adopting a decision against EI DuPont.”

29. “Having rejected the fourth to sixth pleas in law as being similarly unfounded, the General Court dismissed the action in its entirety.”

30. “EI DuPont claims that the Court of Justice should: - set aside the judgment under appeal; and - order the Commission to pay the costs.” […]

32. “EI DuPont puts forward three grounds in support of its appeal. By the first ground of appeal, it claims: [1] that the General Court erred in law in imputing to it the infringement committed by DDE for the DDE period and in relation to its joint and several liability with Dow. By the second ground of appeal, [2] it contests the finding in the judgment under appeal that the Commission was not prevented, on account of the limitation period, from imposing fines on EI DuPont for the period before the DDE period; that is to say, from 13 May 1993 to 31 March 1996. The third ground of appeal [3] alleges an error of law committed by the General Court in that it did not find that the Commission had failed to demonstrate that it had a legitimate interest in taking a decision against EI DuPont.”

The first ground of appeal: error of law committed by the General Court in that it imputed the infringement to EI DuPont and held it jointly and severally liable with Dow

[…] 38. “As regards the admissibility of the first ground of appeal, it must be stated that, contrary to what the Commission contends, EI DuPont does not dispute the General Court’s findings of fact, but the inferences in law drawn by the General Court from those findings in relation to DDE’s lack of autonomy in order to determine the actual exercise of decisive influence. It follows that this ground of appeal is admissible.”

39. “With regard to the substance, EI DuPont claims, in essence, that by confirming in paragraph 74 of the judgment under appeal that EI DuPont had exercised decisive influence over DDE’s conduct on the CR market, the General Court erred in law with regard to the imputation of the infringement jointly and severally with Dow during the DDE period.”

40. “In that regard, it is clear from paragraphs 74 and 79 of the judgment under appeal that the General Court held that EI DuPont formed a single undertaking with DDE by reason of the decisive influence which it exercised over DDE’s conduct on that market.”

41. “It should be pointed out first of all that, in accordance with the settled case-law of the Court of Justice, the conduct of a subsidiary can be imputed to its parent company, in particular where, although it has separate legal personality, that subsidiary does not decide independently on its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company, regard being had in particular to the economic, organisational and legal links between those two legal entities (See Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, paragraphs 58 and 72, and Joined Cases C-628/10 P and C- 14/11 P Alliance One International and Standard Commercial Tobacco v. Commission and Commission v Alliance One International and Others [2012] ECR I-0000, paragraph 43).”

42. “In such a situation, because the parent company and its subsidiary form a single economic unit and therefore form a single undertaking for the purposes of Article 81 EC, the Commission may address a decision imposing fines to the parent company, without having to establish the personal involvement of the latter in the infringement …”

43. “The Court of Justice has also stipulated that account must be taken of all the relevant factors relating to the economic, organisational and legal links which tie the subsidiary to the parent company, which may vary from case to case and cannot, therefore, be set out in an exhaustive list (see, to that effect, Akzo Nobel and Others v Commission, paragraph 74, and Case C-521/09 P and Elf Aquitaine v Commission [2011] ECR I- 8947, paragraph 58).”

44. “In paragraphs 58 to 60 of the judgment under appeal, the General Court therefore cited the case-law setting out the test for imputing to a parent company the competition infringement committed by its subsidiary. It rightly found that, in order to be able to impute the conduct of a subsidiary to the parent company, the Commission cannot merely find that the parent company is in a position to exercise decisive influence over the conduct of its subsidiary, but must also check whether that influence was actually exercised (see, to that effect, Case 107/82AEG-Telefunken v Commission [1983] ECR 3151, paragraph 50).”

45. “It should be noted in that regard that the rule that it is necessary to check whether the parent company actually exercised decisive influence over its subsidiary applies only where the subsidiary is not wholly owned by its parent company. According to the settled case-law of the Court of Justice, where the entire capital of the subsidiary is owned, there is no longer any requirement to carry out such a check since, in those circumstances, there is a presumption of decisive influence on the part of the parent company, which has the burden of rebutting that presumption (see Alliance One International and Standard Commercial Tobacco v. Commission [passim] and Commission v. Alliance One International and Others, paragraphs 46 and 47 and the case-law cited).”

46. “More specifically, with regard to the claim that the General Court misconstrued the term ‘a single undertaking’, it must be stated that, in paragraph 58 of the judgment under appeal, the General Court pointed out that, according to the settled case-law of the Court of Justice, in competition law the term ‘undertaking’ must be understood as designating an economic unit for the purposes of the subject-matter of the agreement in question, even if in law that economic unit consists of several persons, natural or legal (Case-170/83 Hydrotherm Gerätebau [1984] ECR 2999, paragraph 11; Case C-217/05 Confederación Española de Empresarios de Estaciones de Servicio [2006] ECR I-11987, paragraph 40; and Akzo Nobel and Others v. Commission, paragraph 55).”

47. “Where two parent companies each have a 50% shareholding in the joint venture which committed an infringement of the rules of competition law, it is only for the purposes of establishing liability for participation in the infringement of that law and only in so far as the Commission has demonstrated, on the basis of factual evidence, that both parent companies did in fact exercise decisive influence over the joint venture, that those three entities can be considered to form a single economic unit and therefore form a single undertaking for the purposes of Article 81 EC.”

48. “It must therefore be held that, as regards the verification process of the assessment carried out by the Commission, the General Court did not misconstrue the term ‘a single undertaking’.”

49. “EI DuPont, in support of its first ground of appeal, also relies on other arguments, …first, that it cannot exercise decisive influence over DDE bearing in mind that DDE has separate legal personality from that of the parent companies; and secondly, that, since the joint control exercised by parent companies over their full-function joint venture gives them only a negative power to block the latter’s strategic decisions, that control cannot imply the existence of the parent company’s decisive influence over the subsidiary.”

“In that regard, it must be noted that the General Court did not find the existence of EI DuPont’s decisive influence over the subsidiary solely on the basis of the possibility that the parent companies could exercise joint control over that subsidiary, but that it relied on its own assessment of the economic, organisational and legal factors which tied DDE to its two parent companies, as determined by the Commission in its decision of 5 December 2007.”

50. “In that regard, suffice it to state that, since the Commission found that Dow exercised a decisive influence over DDE’s conduct on the basis of factors which, unless they have been distorted, cannot be called into question on appeal, those claims must be held to be unfounded.”

51. “As regards EI DuPont’s argument, … that the fact that parent companies are deemed to exercise joint control in accordance with the EC Merger Regulation does not mean that they incur liability under Article 81 EC by reason of the conduct of the joint venture, it must be pointed out that, as is clear from the case-law cited …above, the evidence of such influence must be assessed having regard to all the economic, organisational and legal links between the subsidiary and the parent company.”

52. “In this case, the General Court concluded from all the evidence, in particular the control exercised by DDE’s two parent companies over its strategic business decisions, that those companies did in fact exercise decisive influence. Accordingly, it rightly pointed out in paragraph 78 of the judgment under appeal that the autonomy which a joint venture enjoys within the meaning of Article 3(4) of the EC Merger Regulation does not mean that that joint venture also enjoys autonomy in relation to adopting strategic decisions, and that it is therefore not under the decisive influence of its parent companies for the purposes of Article 81 EC.”

53. “Consequently, it must be stated that, contrary to what EI DuPont claims, the General Court’s finding in … the judgment under appeal relating to the single nature of the undertaking in the light of competition law, is not incompatible with the EC Merger Regulation, and therefore does not lead to a misleading and inconsistent application of competition law.”

54. “It follows that the first ground relied on by EI DuPont in support of its appeal must be rejected as unfounded.”

The second ground of appeal: error of law committed by the General Court in that it held that the Commission was not prevented, on account of the limitation period, from imposing fines on EI DuPont for the period from 13 May 1993 to 1 April 1996

57. “It must be stated at the outset that the plea of inadmissibility raised by the Commission in relation to the second ground relied on by EI DuPont in support of its appeal, alleging that EI DuPont merely reproduced the arguments put before the General Court, cannot be upheld.”

58. “In that regard, it must be noted that, where a party challenges the interpretation or application of European Union law by the General Court, the points of law examined at first instance may be discussed again in the course of an appeal. Indeed, if a party could not base its appeal on pleas in law and arguments already relied on before the General Court, an appeal would be deprived of part of its purpose (Case C-234/02 P European Ombudsman v. Lamberts [2004] ECR I-2803, paragraph 75, and Joined Cases C-514/07 P, C-528/07 P and C-532/07 P Sweden and Others v API and Commission [2010] ECR I-8533, paragraph 116).”

59. “With regard to the substance, it must be pointed out that that ground of appeal is based on the assumption that the first ground of appeal would be upheld in the absence of any proof that the DuPont group was involved in the cartel during the DDE period. [I]t is clear from the analysis of the first ground of appeal, however, that the reasoning followed by the General Court in paragraphs 64 to 83 of the judgment under appeal is not vitiated by any error of law.”

60. “Consequently, the General Court did not err in law by holding in paragraph 87 of the judgment under appeal that the limitation period had not expired when the Commission imposed the fine on EI DuPont.”

61. “The second ground relied on by EI DuPont in support of its appeal must therefore be rejected as unfounded.”

The third ground of appeal: error of law committed by the General Court in that it did not find that the Commission had failed to demonstrate that it had a legitimate interest in taking a decision against EI DuPont

64. “As regards the admissibility of the third ground of appeal, it must be pointed out that, as is clear from the settled case-law of the Court of Justice cited in paragraph 58 above, this ground must be declared admissible because, through it, EI DuPont alleges that the General Court incorrectly interpreted European Union law.”

65. “With regard to the substance, the third ground is also based on the assumption that the first and second grounds relied on in support of this appeal would be upheld. It amounts to a claim that, since the Commission could not impose a fine on EI DuPont on account of the limitation period, it had to demonstrate a legitimate interest in adopting a decision against EI DuPont.”

66. “Since the first and second grounds of appeal have been rejected, it necessarily follows that the third ground of appeal must be rejected as unfounded.”

67. “As none of the grounds relied on by EI DuPont in support of its appeal can be upheld, the appeal must be dismissed in its entirety.”

“On those grounds, the Court (Ninth Chamber) hereby: 1. Dismisses the appeal; 2. Orders EI du Pont de Nemours and Company to pay the costs. [Signatures].”

Citation: E.I. du Pont de Nemours v Commission, JUDGMENT OF THE EUROPEAN UNION COURT OF JUSTICE (Ninth Chamber) of 26 September 2013 in Case C-172/12; Celex No. 612CJ0172, European Court Reports 2013 page _____ (regarding Infringement of Article 81 EC).

GOVERNMENT DOCUMENTS, CONFIDENTIALITY OF

District of Columbia Circuit rules that confidential U.S. Trade Representative White Paper related to the Free Trade Agreement of the Americas was properly classified as confidential and need not be disclosed pursuant to FOIA request

The Free Trade Area of the Americas (FTAA) was a proposal to eliminate or reduce the trade barriers among all countries in the Americas with the exception of Cuba. It was being negotiated until the early 2000s. If it had been approved, would have governed international trade and investment in the Western Hemisphere.

In July 2000, the Center for International Environmental Law, a non-profit organization, submitted a Freedom of Information Act (FOIA) request to the Office of the U.S. Trade Representative (USTR). See 5 U.S.C. Section 552. The FOIA request sought documents that the U.S. had used during sessions of the FTAA Negotiating Group on Investment held in February and March of 2000. The USTR identified 46 responsive documents, but withheld them as exempt from disclosure. The present litigation ensued.

At this point, only one document remains in dispute: a white paper (document 1). It contains the USTR’s commentary on the interpretation of the phrase “in like circumstances.” The participating countries had agreed that all negotiating documents would not be released to the public if any participating Government objected to their disclosure.

The USTR objected to the revelation of document 1. It cited the potential harm to “relations with foreign governments and foreign activities” that might result from disclosure and relied upon the FOIA exemption for classified materials. The USTR argued that international arbitrators might use document 1 in interpreting the broad phrase “in like circumstances” and this could complicate U.S. attempts to defend its interests.

The U.S. District Court for the District of Columbia found the risk of adverse arbitration decisions “insufficiently substantiated” and quite speculative. It ordered the USTR to disclose the document, and the USTR appealed the order. The U.S. Court of Appeals for the District of Columbia Circuit, however, reverses the District Court and concludes that that the document was properly classified as confidential. The Court then explains its thinking.

“Exemption 1 protects from disclosure information that has been ‘properly classified’ in the interest of ‘national defense or foreign policy.’ 5 U.S.C. § 552(b)(1). The governing Executive Order provides that information is properly classified as ‘confidential’ if its disclosure ‘reasonably could be expected to cause damage to the national security,’ Exec. Order No. 12,958, as amended by Exec. Order 13,292, § 1.2(a)(3), 68 Fed. Reg. 15,315, 15,316 (Mar. 28, 2003), which includes ‘harm to the . . . foreign relations of the United States,’ id. § 6.1(j), 68 Fed. Reg. at 15,331.”

“The Trade Representative tells us that the phrase ‘in like circumstances,’ the meaning of which the white paper discusses, is a key element of two nondiscrimination provisions integral to trade and investment agreements entered into by the United States -- the ‘most-favored-nation treatment’ and the ‘national treatment’ provisions. The phrase defines the conditions under which those provisions apply but is not itself defined in such agreements. The Trade Representative submitted declarations in the district court asserting that the ‘United States has routinely avoided making public U.S. interpretations of this type concerning ‘in like circumstances’ because of the ‘wide variety of factual circumstances that could characterize investment relationships.’”

“The white paper, the Trade Representative declared, was not offered as a ‘definitive or exhaustive statement of U.S. views on how the concept [of ‘in like circumstances’] should be applied outside of the [Free Trade Agreement of the Americas] or to every situation,’ and its disclosure would limit the United States’ flexibility to ‘assert a broader or narrower view of the meaning and applicability’ of the phrase in interpreting existing agreements and in negotiating future agreements.” [Page 4-6 of 11, Document #1440074 on federal court docket]

The Court supports the position of the USTR and explains its reasoning. “Whether—or to what extent—this reduced flexibility might affect the ability of the United States to negotiate future trade agreements is not for us to speculate. The government has determined that it would ‘damage [the] ability of the United States to conclude future trade agreements on favorable terms.’ That determination has the force of history behind it. It echoes what George Washington wrote more than two centuries ago.”

“Courts are ‘in an extremely poor position to second-guess’ the Trade Representative’s predictive judgment in these matters, Larson v. Dep’t of State, 565 F.3d 857, 865 (D.C. Cir. 2009), but that is just what the district court did in rejecting the agency’s justification for withholding the white paper.”

“The question is not whether the court agrees in full with the Trade Representative’s evaluation of the expected harm to foreign relations. … [T]he question is ‘whether on the whole record the [a]gency’s judgment objectively survives the test of reasonableness, good faith, specificity, and plausibility.’ Id. We conclude that it does.”

“The Center suggests that the Trade Representative has not shown the ‘requisite degree of harm,’ Appellee’s Br. 40 (quoting King v. U.S. Dep’t of Justice, 830 F.2d 210, 224 (D.C. Cir. 1987)), asserting that the agency ‘has presented no evidence that the harm from the disclosure of the content of [the white paper] would interfere with [the Trade Representative’s] responsibilities enough to outweigh FOIA’s policy of ‘full agency disclosure,” id. at 48 …. But there is no such balancing test under exemption 1.”

“The only question is whether the disputed document is properly classified under the applicable Executive Order. See 5 U.S.C. § 552(b)(1). Here, the question is whether the white paper is properly classified as ‘confidential.’ The governing Executive Order does not require the identification of any specific degree of harm to support classification at the ‘confidential’ level. See Exec. Order No. 12,958, as amended by Exec. Order 13,292, § 1.2(a)(3), 68 Fed. Reg. at 15,316.” “While classification at the ‘top secret’ or ‘secret’ levels requires that disclosure ‘reasonably could be expected to cause exceptionally grave damage’ or ‘serious damage,’ as the case may be, to the national security, classification at the ‘confidential’ level requires only that disclosure ‘reasonably could be expected to cause damage to the national security.’ Id. at § 1.2(a), 68 Fed. Reg. at 15,315-16. As discussed above, the Trade Representative has satisfied its burden to explain the damage that reasonably could be expected to result from disclosure of the white paper.”

“Because the white paper was properly classified as confidential, the Trade Representative properly withheld the document as exempt from disclosure under FOIA exemption 1. Accordingly, the judgment of the district court is reversed.” [Slip op 9-11]

Citation: Center for International Environmental Law v. Office of the United States Trade Representative, 718 F.3d 899, 405 U.S.App. D.C. 249 (CADC 2013).

JURISDICTION, INTERNATIONAL

German High Court rules on the effect of Internet postings on international jurisdiction over privacy infringements outside Germany under European Union Law

In the following case, the German High Court (Federal Court of Justice) (in German: Bundesgerichtshof, BGH) sought and applied an opinion from the European Court of Justice (ECJ) regarding the interpretation of Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1 (“Regulation”)) and Article 3(1) and (2) of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (“Directive on electronic commerce”) (OJ 2000 L 178, p. 1 (“Directive”).

A German court of first instance convicted the Plaintiff and his brother in 1993 of murdering the popular German actor, Walter Sedlmayr. The tribunal sentenced Plaintiff to life in prison. He got out on parole in January 2008, however, and has been living in Germany.

In 1999, the Austrian media company “eDate Advertising” (EDA) posted a news report on its internet portal www.rainbow.at about the murder in which Plaintiff’s full name appears. The article appeared in the portal’s section of old news reports and describes the brothers’ attempts to prove their innocence through appeals and allegations that several of the principal witnesses had lied at trial. While the statements in the news report were truthful, Plaintiff objected to the disclosure of his name. EDA later voluntarily removed the report.

Plaintiff sued in the Hamburg District Court (Landgericht Hamburg) to enjoin EDA from using his name in reports about the murder. EDA responded that German courts have no international jurisdiction in these matters. Plaintiff prevailed in the Hamburg District Court and in the subsequent appeal before the Hamburg Court of Appeals (Hanseatisches Oberlandesgericht). EDA then brought the dispute before the German High Court (BGH).

The BGH, in turn, referred the matter to the European Court of Justice (ECJ). It asked: [1] for clarification of the issue of jurisdiction over privacy infringements; and [2] whether German or Austrian law should apply in this case.

The BGH noted that the outcome of the action turns on whether the lower courts correctly held that they have international jurisdiction to rule on the dispute pursuant to Article 5(3) of the Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

The BGH explained that if the country-of-origin principle were to be considered to be an obstacle to the application of law on a substantive level, German private international law would apply. The decision under challenge would have to be set aside and the action ultimately dismissed, since the applicant’s claim seeking an injunction under German law would have to be refused. By contrast, if the country-of-origin principle were to be treated as a conflict-of-laws rule, Plaintiff’s claim for an injunction would have to be assessed according to Austrian law.

The German High Court therefore stayed the proceedings and requested an opinion from the ECJ. The ECJ issued its opinion on October 25, 2011 (Joined Cases C509/09 and C161/10, AfP 2011, 565 – eDate Advertising).

The ECJ (Grand Chamber) ruled as follows “1. Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that, in the event of an alleged infringement of personality rights by means of content placed online on an internet website, the person who considers that his rights have been infringed has the option of bringing an action for liability, in respect of all the damage caused, either before the courts of the Member State in which the publisher of that content is established or before the courts of the Member State in which the center of his interests is based. Instead of an action for liability in respect of all the damage caused, that person may also bring his action before the courts of each Member State in the territory of which content placed online is or has been accessible. Those courts have jurisdiction only in respect of the damage caused in the territory of the Member State of the court seized.”

“2. Article 3 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services (in particular electronic commerce) in the Internal Market (‘Directive on electronic commerce’), must be interpreted as not requiring transposition in the form of a specific conflict-of-laws rule. Nevertheless, in relation to the coordinated field, Member States must ensure that, subject to the derogations authorised in accordance with the conditions set out in Article 3(4) of Directive 2000/31, the provider of an electronic commerce service is not made subject to stricter requirements than those provided for by the substantive law applicable in the Member State in which that service provider is established.”

Based on the ECJ’s opinion, the German High Court finds that German courts have international jurisdiction over such privacy infringements in cases where the plaintiff’s “center of interests” is in Germany. Such alleged privacy infringement must be reviewed under German law because the effect of the alleged privacy infringement is felt in Germany. The balancing of the relevant factors “individual privacy right” versus “defendant’s right to free speech” generally lets free speech prevail.

Concluding that Plaintiff does not have a right to enjoin the media company, the German High Court dismisses the case. The ECJ explained in its advisory opinion that the criteria for privacy infringements by print publications also apply to internet publication (see ECJ decision of 7 March 1995, C-68/93 – Shevill). The effects of content published through the internet on a person’s privacy can be evaluated in the place where the alleged target has its center of interests. It is the place of usual abode. It is possible, however, that a person has his or her center of interests in another Member State of the European Union where he or she has ties through employment or otherwise. Such considerations also apply to injunctions.

Based on the ECJ opinion, German courts have international jurisdiction. Here, the Plaintiff had his center of interests in Germany. He lives here and is socially integrated. The effect of the alleged privacy infringement is felt here. Thus, the Complaint is generally permissible.

Plaintiff’s Complaint is not seeking to prohibit all reports about the murder at issue. Instead, Plaintiff is seeking the removal of outdated reports that mention his full name, as well as future reports that mention his full name. The Complaint fails to state a claim upon which relief can be granted.

Here, German law applies. Section 3, paragraph 1 of the German Electronic Media Law (TMG) provides that a media company based in Germany is subject to German law even if their services or offerings are available in other Member States of the European Union. See Section 3 of the TMG [‘Country of Origin Principle,’ media companies are subject to German law even if their media are being offered in another Member State of the European Union]. This Section 3 does not restrict the offerings in Germany by information providers based elsewhere in the European Union.

Section 3 must be interpreted in light of Article 3 of Directive 2000/31/EC on electronic commerce. Both Sections of the TMG and Article 3 of the EU Directive do not contain a conflict-of-laws rule.

The privacy right is fundamental and peculiar, and its reach must be determined through balancing the competing protected rights and interests. The jurisprudence of the BGH has developed guidelines for such balancing, including: (a) If reports are truthful but disadvantageous, they must generally be accepted by the target. Even truthful reports, however, may violate a person’s privacy if the potential effect is disproportional; (b) crime reporting is part of current events, and the public has a strong interest in receiving details about crimes to: (a) prevent future crimes and (b) maintain the legal system.

This applies particularly to violent crimes. In such cases, the public interest in receiving information generally prevails over the perpetrator’s right to privacy; (c) as time goes by after the crime, the perpetrator has an expanding right to not re-live his crime. If the crime is solved, the public informed, and the perpetrator punished, the perpetrator’s right may prevail over the public’s right to information.

On the other hand, the Plaintiff’s Complaint may have a chilling effect on the freedom of speech and the press. The media company in this case may not be able to fully inform the public if it had to block interested users from using older data. It would be an undue burden for such parties to regularly review and purge such data from their records.

The BGH concludes as follows:

(a) International Jurisdiction: German Courts have jurisdiction over alleged privacy infringements caused by internet articles published in another Member State of the European Union, as long as the plaintiff has his/her “Center of Interests” in Germany.”

(b) Section 3 of the TMG [Country of Origin Principle, media companies are subject to German law even if their media are being offered in another Member State of the European Union] does not contain a conflict-of-laws rule.

(c) Old news data may be maintained by a media company in an online archive even if it mentions by name a convicted criminal who may since have re-integrated into society.

The BGH, therefore, dismisses Plaintiff’s case and orders him to pay the costs of the dispute.

Citation: German High Court [Bundesgerichtshof], VI ZR 217/08 (8 May 2012).

ACTS OF PIRACY, GEOGRAPHICAL SCOPE

In case of alleged conspiracy of pirates, D.C. Circuit reviews whether piracy charges include criminal acts committed on land and not on the open seas

Ali Mohamed Ali (“Ali”) appeared to do a good deed by helping negotiate the release of a merchant vessel and its crew from the hands of pirates. Ali, a Somali citizen, may have been in cahoots with the Somali pirates who had captured the vessel.

In November 2008, Ali’s fellow citizens captured the “CEC Future,” a Danish-owned merchant vessel carrying goods for a U.S. company, on the high seas in the Gulf of Aden. The pirates forced the vessel to make a stop in Point Ras Binna, off the coast of Somalia. There, Ali boarded the vessel as the interpreter for the pirates. The vessel proceeded to the Somali port of Eyl and remained there until a $1.7 million ransom was paid the following January. Ali received a one percent share of the ransom, as well as a $75,000 fee from the vessel owners for his “assistance.”

Ali later became the Director General of the Ministry of Education for Somaliland, a self-proclaimed sovereign state within Somalia. United States prosecutors had been building a case against Ali. They arranged for Ali to receive an invitation to an education conference in North Carolina. Ali accepted the invitation and was arrested upon his arrival in the U.S. in 2011. The U.S. charged Ali with piracy on the high seas and hostage taking.

Before putting Ali on trial for the alleged offenses, the U.S. District Court for the District of Columbia had to resolve fundamental questions about the legal sufficiency of the charges: Ali’s alleged offenses were committed either on land or in territorial waters, not on the open seas. The District Court thus restricted the charge of aiding and abetting piracy to his conduct on the high seas, and dismissed the charge of conspiracy to commit piracy. The District Court later dismissed the hostage-taking charges because they would violate Ali’s right to due process.

On appeal, the U.S. Court of Appeals for the District of Columbia Circuit: [1] affirms the dismissal of the charge of conspiracy to commit piracy; [2] reverses (a) the District Court’s dismissal of the hostage taking charges; and (b) the District Court’s limiting the charges of aiding and abetting piracy. The Court first explains the basis of the piracy charges:

“In most cases, the criminal law of the United States does not reach crimes committed by foreign nationals in foreign locations against foreign interests. Two judicial presumptions promote this outcome. The first is the presumption against the extraterritorial effect of statutes: ‘When a statute gives no clear indication of an extraterritorial application, it has none.’ Morrison v. Nat’l Austl. Bank Ltd., ___ U.S. ___, 130 S.Ct. 2869, 2878, 177 L.Ed.2d 535 (2010).”

“The second is the judicial presumption that ‘an act of Congress ought never to be construed to violate the law of nations if any other possible construction remains,’ Murray v. Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118, 2 L.Ed. 208 (1804) — the so-called Charming Betsy canon. Because international law itself limits a state’s authority to apply its laws beyond its borders, see RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES §§ 402-03, Charming Betsy operates alongside the presumption against extraterritorial effect to check the exercise of U.S. criminal jurisdiction. Neither presumption imposes a substantive limit on Congress’s legislative authority, but they do constrain judicial inquiry into a statute’s scope.”

“Piracy, however, is no ordinary offense. The federal piracy statute clearly applies extraterritorially to ‘[w]hoever, on the high seas, commits the crime of piracy as defined by the law of nations,’ even though that person is only ‘afterwards brought into, or found in, the United States.’ 18 U.S.C. § 1651. Likewise, through the principle of universal jurisdiction, international law permits states to ‘define and prescribe punishment for certain offenses recognized by the community of nations as of universal concern.’ RESTATEMENT (THIRD) supra § 404; see United States v. Yunis, 924 F.2d 1086, 1091 (D.C.Cir.1991).” “And of all such universal crimes, piracy is the oldest and most widely acknowledged. See, e.g., Kenneth C. Randall, Universal Jurisdiction Under International Law, 66 TEX. L.REV. 785, 791 (1988). ‘Because he commits hostilities upon the subjects and property of any or all nations, without any regard to right or duty, or any pretence of public authority,’ the pirate is ‘hostis humani generis,’ United States v. Brig Malek Adhel, 43 U.S. (2 How.) 210, 232, 11 L.Ed. 239 (1844) — in other words, ‘an enemy of the human race,’ United States v. Smith, 18 (5 Wheat.) U.S. 153, 161, 5 L.Ed. 57 (1820). Thus, ‘all nations [may punish] all persons, whether natives or foreigners, who have committed this offence against any persons whatsoever, with whom they are in amity.’ Id. at 162.” [935]

As for the charge of “aiding and abetting piracy,” the Court ponders whether (1) the Charming Betsy canon prevents the prosecution of Ali for aiding and abetting piracy, and (2) the presumption against extraterritoriality applies to acts of aiding and abetting piracy not committed on the high seas.

“Section 1651 criminalizes ‘the crime of piracy as defined by the law of nations.’ Correspondence between the domestic and international definitions is essential to exercising universal jurisdiction. Otherwise, invocation of the magic word ‘piracy’ would confer universal jurisdiction on a nation and vest its actions with the authority of international law. See Randall, supra, at 795. As a domestic matter, doing so may be perfectly legal. But because Charming Betsy counsels against interpreting federal statutes to contravene international law, we must satisfy ourselves that prosecuting Ali for aiding and abetting piracy would be consistent with the law of nations.”

“Though § 165’s invocation of universal jurisdiction may comport with international law, that does not tell us whether § 2’s broad aider and abettor liability covers conduct neither within U.S. territory nor on the high seas. Resolving that difficult question requires examining precisely what conduct constitutes piracy under the law of nations. Luckily, defining piracy is a fairly straightforward exercise. Despite not being a signatory, the United States has recognized, via United Nations Security Council resolution, that the U.N. Convention on the Law of the Sea (‘UNCLOS’) ‘sets out the legal framework applicable to combating piracy and armed robbery at sea.’ S.C. Res.2020, U.N. Doc.S/Res/2020, at 2 (Nov. 22, 937*937 2011); see United States v. Dire, 680 F.3d 446, 469 (4th Cir.2012).” […]

“By including ‘intentionally facilitating’ a piratical act within its definition of piracy, article 101(c) puts to rest any worry that American notions of aider and abettor liability might fail to respect the international understanding of piracy. One question remains: does international law require facilitative acts take place on the high seas?”

“Explicit geographical limits — ‘on the high seas’ and ‘outside the jurisdiction of any state’ — govern piratical acts under article 101(a)(i) and (ii). Such language is absent, however, in Article 101(c), strongly suggesting a facilitative act need not occur on the high seas so long as its predicate offense has. Cf. Dean v. United States, 556 U.S. 568, 573, 129 S.Ct. 1849, 173 L.Ed.2d 785 (2009) (‘[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.’). So far, so good; Charming Betsy poses no problems.” […]

“What does Article 86 mean, then, if it imposes no high seas requirement on the other articles in Part VII of UNCLOS? After all, ‘the canon against surplusage merely favors that interpretation which avoids surplusage,’ not the construction substituting one instance of superfluous language for another. Freeman v. Quicken Loans, Inc., ___ U.S. ___, 132 S.Ct. 2034, 2043, 182 L.Ed.2d 955 (2012). We believe it is best understood as definitional, explicating the term ‘high seas’ for that portion of the treaty most directly discussing such issues.”

“Under this interpretation, Article 86 mirrors other prefatory provisions in UNCLOS. Part II, for example, concerns ‘Territorial Sea and Contiguous Zone’ and so opens with article 2’s explanation of the legal status of a State’s territorial sea. 1833 U.N.T.S. at 400. And Part III, covering ‘Straits Used for International Navigation,’ begins with Article 34’s clarification of the legal status of straits used for international navigation. 1833 U.N.T.S. at 410.”

“Drawing guidance from these provisions, Article 86 makes the most sense as an introduction to Part VII, which is titled ‘High Seas,’ and not as a limit on jurisdictional scope. Cf. FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000) (‘It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.’.” […]

“Legislative history is an imperfect enough guide when dealing with acts of Congress. See Conroy v. Aniskoff, 507 U.S. 511, 519, 113 S.Ct. 1562, 123 L.Ed.2d 229 (1993) (Scalia, J., concurring in the judgment) (‘If one were to search for an interpretive technique that, on the whole, was more likely to confuse than to clarify, one could hardly find a more promising candidate than legislative history.’). Ali’s inferential chain compounds the flaws — and that even assumes a single intent can be divined as easily from the myriad foreign governments that ratified the agreement as from a group of individual legislators.”

“Even were it a more feasible exercise, weighing the relevance of scholarly work that indirectly inspired UNCLOS is not an avenue open to us. Basic principles of treaty interpretation—both domestic and international—direct courts to construe treaties based on their text before resorting to extraneous materials. See United States v. Alvarez-Machain, 504 U.S. 655, 663, 112 S.Ct. 2188, 119 L.Ed.2d 441 (1992) (‘In construing a treaty, as in construing a statute, we first look to its terms to determine its meaning.’); Vienna Convention on the Law of Treaties, art. 32, May 23, 1969, 8 I.L.M. 679, 692, 1155 U.N.T.S. 331, 340. Because international law permits prosecuting acts of aiding and abetting piracy committed while not on the high seas, the Charming Betsy canon is no constraint on the scope of Count Two.” [936-939].

As for piracy and the presumption against extraterritorial effect, the Court notes that Section 1651 refers to the “Law of Nations.”

“ … § 1651’s high seas element is not the only evidence of the statute’s extraterritorial reach, for the statute references not only ‘the high seas’ but also ‘the crime of piracy as defined by the law of nations.’ As explained already, the law of nations specifically contemplates, within its definition of piracy, facilitative acts undertaken from within a nation’s territory. [941] See supra Subsection II.A.1. By defining piracy in terms of the law of nations, § 1651 incorporated this extraterritorial application of the international law of piracy and indicates Congress’s intent to subject extraterritorial acts like Ali’s to prosecution.”

“Why then does § 1651 mention the high seas at all if ‘the law of nations,’ which has its own high seas requirements, is filling in the statute’s content? Simply put, doing so fits the international definition of piracy — a concept that encompasses both crimes on the high seas and the acts that facilitate them — into the structure of U.S. criminal law. To be convicted as a principal under § 1651 alone, one must commit piratical acts on the high seas, just as UNCLOS article 101(a) demands.”

“But applying aider and abettor liability to the sorts of facilitative acts proscribed by UNCLOS article 101(c) requires using § 1651 and § 2 in tandem. That is not to say § 1651’s high seas requirement plays no role in prosecuting Ali for aiding and abetting piracy, for the government must prove someone committed piratical acts while on the high seas. See Raper, supra at 676 F.2d at 849. That is an element the government must prove at trial, but not one it must show Ali perpetrated personally.” […]

“Like the Charming Betsy canon, the presumption against extraterritorial effect does not constrain trying Ali for aiding and abetting piracy. While the offense he aided and abetted must have involved acts of piracy committed on the high seas, his own criminal liability is not contingent on his having facilitated these acts while in international waters himself.” [940-941]

As for the charge of “conspiracy to commit piracy,” the Court finds that “conspiracy” (unlike aiding and abetting) is not part of the UNCLOS definition of piracy. Thus, the Charming Betsy precludes Ail’s prosecution for conspiracy to commit piracy. The District Court properly dismissed that charge.

As for the “hostage taking” charges under 18 U.S.C. Section 1203, it is applied extraterritorially. “The statute’s extraterritorial scope is as clear as can be, prescribing punishments against ‘whoever, whether inside or outside the United States, seizes or detains and threatens to kill, to injure, or to continue to detain another person in order to compel a third person or a governmental organization to do or abstain from doing any act.” 18 U.S.C. § 1203(a).

We also need not worry about Charming Betsy’s implications, as § 1203 unambiguously criminalizes Ali’s conduct. Section 1203 likely reflects international law anyway, as it fulfills U.S. treaty obligations under the widely supported International Convention Against the Taking of Hostages, Dec. 17, 1979, 18 I.L.M. 1456, 1316 U.N.T.S. 205. See United States v. Lin, 101 F.3d 760, 766 (D.C.Cir.1996). Nor, as in the case of the federal piracy statute, is there any uncertainty as to the availability of conspiratorial liability, since the statute applies equally to any person who ‘attempts or conspires to’ commit hostage taking. 18 U.S.C. § 1203(a).” […]

“… Though this Circuit has yet to speak definitively, see United States v. Delgado-Garcia, 374 F.3d 1337, 1341-43 (D.C. Cir. 2004) (explaining that, even if prosecuting the appellants for their extraterritorial conduct would deprive them of due process, the argument had been waived through their unconditional guilty pleas), several other circuits have reasoned that before a federal criminal statute is given extraterritorial effect, due process requires ‘a sufficient nexus between the defendant and the United States, so that such application would not be arbitrary or fundamentally unfair.’ United States v. Davis, 905 F.2d 245, 248-49 (9th Cir.1990); …”

“Others have approached the due process issue in more cautious terms. See United States v. Suerte, 291 F.3d 366, 375 (5th Cir.2002) (assuming, without deciding, the Due Process Clause constrains extraterritorial reach in order to conclude no violation occurred); United States v. Martinez-Hidalgo, 993 F.2d 1052, 1056 (3d Cir. 1993) (accord).”

Likewise, the principle is not without its scholarly critics. See, e.g., Curtis A. Bradley, Universal Jurisdiction and U.S. Law, 2001 U. CHI. LEGAL F. 323, 338 (‘[I]t may be logically awkward for a defendant to rely on what could be characterized as an extraterritorial application of the U.S. Constitution in an effort to block the extraterritorial application of U.S. law.’). We need not decide, however, whether the Constitution limits the extraterritorial exercise of federal criminal jurisdiction. Either way, Ali’s prosecution under § 1203 safely satisfies the requirements erected by the Fifth Amendment.” [943-944]

Finally, the Court addresses Ali’s Due Process arguments related to the “hostage taking” charges. “In support of his due process argument, Ali cites a panoply of cases concerning personal jurisdiction in the context of civil suits. It is true courts have periodically borrowed the language of personal jurisdiction in discussing the due process constraints on extraterritoriality.”

“But Ali’s flawed analogies do not establish actual standards for judicial inquiry; the law of personal jurisdiction is simply inapposite. See United States v. Perez Oviedo, 281 F.3d 400, 403 (3d Cir.2002). To the extent the nexus requirement serves as a proxy for due process, it addresses the broader concern of ensuring that ‘a United States court will assert jurisdiction only over a defendant who should reasonably anticipate being haled into court in this country.’ United States v. Klimavicius-Viloria, 144 F.3d 1249, 1257 (9th Cir.1998).”

“What appears to be the animating principle governing the due process limits of extraterritorial jurisdiction is the idea that ‘no man shall be held criminally responsible for conduct which he could not reasonably understand to be proscribed.’ Bouie v. City of Columbia, 378 U.S. 347, 351, 84 S.Ct. 1697, 12 L.Ed.2d 894 (1964). The ‘ultimate question’ is whether ‘application of the statute to the defendant [would] be arbitrary or fundamentally unfair.’ United States v. Juda, 46 F.3d 961, 967 (9th Cir. 1995).”

“United States v. Shi, 525 F.3d 709 (9th Cir. 2008), is most on point. Shi dealt with a due process challenge to the defendant’s prosecution under 18 U.S.C. § 2280, which implements the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation, Mar. 10, 1988, 27 I.L.M. 672, 1678 U.N.T.S. 222. See 525 F.3d at 717-24. Because ‘the Maritime Safety Convention ... expressly provides foreign offenders with notice that their conduct will be prosecuted by any state signatory,’ due process required no specific nexus between the defendant and the United States. Id. at 723. In other words, the treaty at issue in Shi did what the International Convention Against the Taking of Hostages does here: provide global notice that certain generally condemned acts are subject to prosecution by any party to the treaty. We agree with the Ninth Circuit that the Due Process Clause demands no more.” […]

“… Whatever due process requires here, the Hostage Taking Convention suffices by ‘expressly provid[ing] foreign offenders with notice that their conduct will be prosecuted by any state signatory.’ Shi, 525 F.3d at 723. That is what Shi said. It did not hold that due process depends on the participation of the defendant’s nation in the agreement. ….” [944-945]

The Court therefore affirms the dismissal of charge of “conspiracy to commit piracy.” However, the Court reverses the district court’s narrowing of the scope of the “aiding and abetting piracy” charges to those committed on the High Seas, and also reverses the dismissal of the “hostage taking” charges.

Citation: United States v. Ali, 718 F.3d 929, 405 U.S. App. D.C. 279 (2013).

TERRORISM, NATURE OF

In case involving New York terrorist attacks of September 11, 2001, Second Circuit holds that no universal norm against “terrorism” existed at the time of the attacks, and that the Tort Victim Protection Act (TVPA) only provides liability for natural persons

The families and estates of victims of the terrorist attacks of September 11, 2001 (“Plaintiffs”) in New York City filed many lawsuits against purported charities, financial institutions, and individuals who may have provided support to Osama Bin Laden and al Qaeda. The claims involve, inter alia, the Anti-Terrorism Act (“ATA”), 18 U.S.C. § 2333, the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350, the Torture Victim Protection Act (“TVPA”), 28 U.S.C. § 1350 note, as well as various common law tort claims.

In the following consolidated appeal, the U.S. Court of Appeals for the Second Circuit reviews the grant of summary judgment by the U.S. District Court for the Southern District of New York in favor of 76 defendants on various grounds.

This opinion only addresses the five defendants who were granted summary judgments because the plaintiffs failed to state a claim upon which relief can be granted (“defendants” or “Rule 12(b)(6) defendants”). These defendants include the Al Rajhi Bank, the Saudi American Bank, and an individual by the name Saleh Abdullah Kamel.

The Second Circuit affirms the grant of summary judgment in favor of the defendants (based on Rule 12(b)(6)) based on the following legal propositions. They are that: (1) the plaintiffs cannot allege aiding-and-abetting claims under the ATA and do not make the necessary allegation that the actions of these defendants proximately caused their injuries; (2) no universal international norm against “terrorism” existed under customary international law (the “law of nations”) as of September 11, 2001, as required for a valid claim under the ATS; (3) the TVPA provides liability only for natural persons and plaintiffs do not make the necessary allegation under the TVPA that the sole natural person defendant, Saleh Abdullah Kamel, acted under color of law; and (4) plaintiffs fail to make the necessary allegation for their common law tort claims that these defendants owed them a duty or that the actions of these defendants proximately caused their injuries.

The Court first discusses the ATA issues. The ATA provides that “[a]ny national of the United States injured in his or her person, property, or business by reason of an act of international terrorism, or his or her estate, survivors, or heirs, may sue therefor in any appropriate district court of the United States and shall recover threefold the damages he or she sustains and the litigation costs, including attorney’s fees.” 18 U.S.C. § 2333(a).

Plaintiffs alleged that these defendants are liable pursuant to § 2333(a) for: (1) knowingly providing financial support to purported charities that supported al Qaeda; and (2) knowingly and intentionally provid[ing] financial [and bank] services for certain front charities that benefitted al Qaeda.

In response, these defendants argued that: (1) the ATA does not provide for secondary liability as the statute is silent on that issue (citing Cent. Bank of Denver, N.A v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 182, 184, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994) [“there is no general presumption that [a] plaintiff may ... sue aiders and abettors” and that statutory silence regarding aiding and abetting liability “indicates a deliberate congressional choice with which the courts should not interfere”]); and (2) plaintiffs do not allege the actions of these defendants proximately caused their injuries. Based on Rothstein v. UBS AG, 708 F.3d 82 (2d Cir.2013), the Court sides with the defendants.

“First, Rothstein specifically held that a defendant cannot be liable under the ATA on an aiding-and-abetting theory of liability. Id. at 97 (‘[W]e are not persuaded that the district court erred in concluding that plaintiffs had not stated a claim on which relief could be granted against UBS on an aiding-and-abetting theory, because it does not appear to us that Congress intended § 2333(a) to permit recovery on such a theory.’) ...”

“Second, we held in Rothstein that Congress did not ‘intend[] to permit recovery under § 2333 on a showing of less than proximate cause,’ Rothstein, 708 F.3d at 95, …As Rothstein holds that proximate cause is required to state a claim under § 2333, our next task is to determine whether plaintiffs allege that the actions of the defendants proximately caused their injuries. After reviewing the record, we conclude that they do not.”

“In Rothstein, we determined that plaintiffs’ allegations — which are strikingly similar to those alleged against these defendants — were insufficient for the purposes of establishing proximate causation. In particular, the Rothstein plaintiffs alleged that … UBS … provided funding to a known state sponsor of terrorism that, in turn, provided funding to Hizbollah and Hamas. The complaint in Rothstein also alleged that ‘the bombings and rocket attacks between July 1997 and July 2006, in which plaintiffs and/or their family members were injured, were conducted by Hizbollah or Hamas.’ …”

“Similarly, these defendants are alleged to have provided funding to purported charity organizations known to support terrorism that, in turn, provided funding to al Qaeda and other terrorist organizations. These allegations are insufficient for proximate causation purposes for the same reasons the allegations in Rothstein fell short. See id. at 94-96. Simply put, plaintiffs do not allege that these defendants participated in the September 11, 2001 attacks or that they provided money directly to al Qaeda; nor are there factual allegations that the money allegedly donated by these defendants to the purported charities actually was transferred to al Qaeda and aided in the September 11, 2001 attacks. …”

“We also are not persuaded that providing routine banking services to organizations and individuals said to be affiliated with al Qaeda—as alleged by plaintiffs—proximately caused the September 11, 2001 attacks or plaintiffs’ injuries. … The allegations, moreover, against these defendants on this score are conclusory, … and similar to the allegations rejected in Rothstein, 708 F.3d at 97 (‘And while the Complaint alleges that UBS knew full well that the cash dollars it was providing to a state sponsor of terrorism such as Iran would be used to cause and facilitate terrorist attacks by Iranian-sponsored terrorist organizations such as Hamas, Hizbollah and PIJ, these are conclusory allegations that do not meet Twombly’s plausibility standard with respect to the need for a proximate causal relationship between the cash transferred by UBS to Iran and the terrorist attacks by Hizbollah and Hamas that injured plaintiffs.’).”

“For these reasons, we conclude that plaintiffs have failed to state a claim under the ATA upon which relief can be granted against the Rule 12(b)(6) defendants. Although Congress clearly intended to create impediments to terrorism by ‘the imposition of liability at any point along the causal chain of terrorism,’ S.Rep. No. 102-342, at 22 (1992), … ‘by reason of language of the statute restricts the imposition of such liability to situations where plaintiffs plausibly allege that defendants actions proximately caused their injuries, Rothstein, 708 F.3d at 95 (‘[H]ad [Congress] intended to allow recovery upon a showing lower than proximate cause, we think it either would have so stated expressly or would at least have chosen language that had not commonly been interpreted to require proximate cause for the prior 100 years.’). As plaintiffs do not make such allegations in this case, we affirm the District Court’s dismissal of the ATA claims.” [123-125]

The Court then turns to the ATS and finds that there is no “law of nations” with respect to acts of terrorism. “To assert a private cause of action under the ATS, a plaintiff must plead that: (1) the plaintiff is an alien; (2) the claimed damages stem from a tort only; and (3) a defendant committed the tort in violation of the law of nations or a treaty of the United States. 28 U.S.C. § 1350; … Plaintiffs fail to allege the third element necessary to plead a violation of the ATS because no universal norm against ‘terrorism’ had existed under customary international law (i.e., the ‘law of nations’) as of September 11, 2001.”

“Indeed, in United States v. Yousef, 327 F.3d 56,106-08 (2d Cir. 2003), we noted: ‘We regrettably are no closer now ... to an international consensus on the definition of terrorism or even its proscription; the mere existence of the phrase ‘state-sponsored terrorism’ proves the absence of agreement on basic terms among a large number of States that terrorism violates public international law. Moreover, there continues to be strenuous disagreement among States about what actions do or do not constitute terrorism, nor have we shaken ourselves free of the cliche that ‘one man’s terrorist is another man’s freedom fighter.’ We thus conclude ... that terrorism—unlike piracy, war crimes, and crimes against humanity—does not provide a basis for universal jurisdiction [under customary international law].’”

“Other courts have reached the same conclusion. See Tel-Oren v. Libyan Arab Republic, 726 F.2d 774, 795 (D.C.Cir.1984) (Edwards, J., concurring) (‘Indeed, the nations of the world are so divisively split on the legitimacy of such aggression [terrorism] as to make it impossible to pinpoint an area of harmony or consensus.’) …” [125] The Court therefore affirms the district court’s dismissal of the ATS claims against the Rule 12(b)(6) defendants.

As for the TVPA, it provides a cause of action against an individual who, under actual or apparent authority, or color of law, subjects an individual to torture or extrajudicial killing.

“Although plaintiffs asserted … that the District Court erroneously dismissed the TVPA claims against the Rule 12(b)(6) defendants, they have withdrawn those claims against the organizational defendants in light of the Supreme Court’s decision in Mohamad v. Palestinian Authority, ___ U.S. ___, 132 S.Ct. 1702, 1710-11, 182 L.Ed.2d 720 (2012) (‘The text of the TVPA convinces us that Congress did not extend liability to organizations, sovereign or not. There are no doubt valid arguments for such an extension. But Congress has seen fit to proceed in more modest steps in the Act, and it is not the province of this Branch to do otherwise.’). …”

“Moreover, to the extent that plaintiffs continue to press their TVPA claims against Saleh Abdullah Kamel, we agree with the District Court that these claims must be dismissed because plaintiffs do not allege that he acted under color of law. See In re Terrorist Attacks on September 11, 2001, 349 F.Supp.2d 765, 828 (S.D.N.Y. 2005) (‘In re Terrorist Attacks I’).” [126]

Therefore, the Court affirms the District Court’s dismissal of the plaintiffs’ TVPA claims. The Court provides the following summary of its holdings: “(1) In light of our decision in Rothstein v. UBS AG, 708 F.3d 82 (2d Cir. 2013), plaintiffs cannot allege aiding-and-abetting claims under the Anti-Terrorism Act, and moreover, plaintiffs do not make the necessary allegation under the Anti-Terrorism Act that the actions of the Rule 12(b)(6) defendants proximately caused their injuries; (2) Plaintiffs have not pleaded a violation of the Alien Tort Statute because, as we held in United States v. Yousef, 327 F.3d 56, 106-08 (2d Cir. 2003), no universal norm against ‘terrorism’ existed under customary international law (i.e., the ‘law of nations’) as of September 11, 2001; (3) Plaintiffs’ Torture Victim Protection Act claims against Al Rajhi Bank, Saudi American Bank, DMI Trust, and Dallah Al Baraka Group LLC fail in light of the Supreme Court’s decision in Mohamad v. Palestinian Authority, ___ U.S. ___, 132 S.Ct. 1702, 1710-11, 182 L.Ed.2d 720 (2012), which held that the TVPA only imposes liability on natural persons, and plaintiffs’ TVPA claims against Saleh Abdullah Kamel fail because they do not allege that he acted under color of law.”

(4) Plaintiffs’ common law tort claims were properly dismissed because plaintiffs failed to plead that the Rule 12(b)(6) defendants owed them a duty or that the actions of the Rule 12(b)(6) defendants proximately caused their injuries.” [127]

Citation: In re Terrorist Attacks on September 11, 2001 (Al Rajhi Bank, et al.) O’Neill v. Al Rajhi Bank, 714 F.3d 118 (2d Cir. 2013).

FOREIGN WIRETAP EVIDENCE, ADMISSIBILITY IN U.S. COURTS

In criminal case where the prosecutor introduced foreign wiretap evidence, the Second Circuit finds that the Fourth Amendment does not require U.S. law enforcement to review the legality, under foreign law, of surveillance requests submitted to foreign courts

The U.S. District Court for the Eastern District of New York convicted Stephen Lee, a U.S. citizen, for various drug-related offenses. The offenses pertain to Lee’s imports of marijuana from Jamaica to the U.S., which were under investigation in both places.

The U.S. has a Memorandum of Understanding (MOU) in place with Jamaica since 2004. It provides that Jamaican law enforcement officers may monitor phone conversations for joint investigations if authorized by Jamaican courts. In fact, the U.S. has been providing equipment and training to the Jamaica Constabulary Force Narcotics Division Vetted Unit (VU) for such surveillance purposes. The MOU also requires that Jamaican law enforcement provides the wiretap recordings in a format admissible in U.S. courts.

In 2006, the VU began investigating the drug trafficking organization in which Lee took part. The VU notified the U.S. Drug Enforcement Agency (DEA), which began a parallel investigation in the New York area. Lee handled the customs clearance for Jamaican produce in which large amounts of marijuana were hidden. With court authorization, the VU intercepted telephone calls during which Lee discussed drug shipments with individuals located in Jamaica.

At his trial, Lee sought to suppress the intercepted telephone calls, and moved to compel the government to reveal the application submitted by Jamaican law enforcement to the Jamaican court to obtain wiretap permission. The government responded that it did not then possess this application and has been unable to obtain it despite good faith efforts. The District Court denied Lee’s motions. Lee appealed his conviction

The U.S. Court of Appeals for the Second Circuit, however, affirms. It rules that the District Court had correctly denied Lee’s motion to suppress the results of the foreign wiretaps, as well as Lee’s motion to compel discovery of the documents underlying the foreign wiretaps.

The Court then reviews whether the District Court erred in denying Lee’s motions: (1) to suppress evidence obtained based on a Jamaican wiretap order, where the Jamaican agency executing the order was collaborating with U.S. officials; and (2) to compel the government to produce the application materials and other documents allegedly supporting the Jamaican wiretap orders.

The Court first notes that ongoing, formalized cooperation between U.S. law enforcement and foreign counterparts does not, by itself, give rise to an “agency” relationship between the two police entities that would allow a party to apply Fourth Amendment standards outside of U.S. territory.

“While suppression is generally not required when the evidence at issue is obtained by foreign law enforcement officials, we noted in [United States v. Maturo, 982 F.2d 57, 60 (2d Cir. 1992)] that we ‘ha[ve] recognized two circumstances where evidence obtained in a foreign jurisdiction may be excluded. First, where the conduct of foreign officials in acquiring the evidence is so extreme that [it] shock[s] the judicial conscience . . . [and] [s]econd, where cooperation with foreign law enforcement officials may implicate constitutional restrictions . . . .’ Id. at 60-61 …”

“We further explained that ‘[w]ithin the second category for excluding evidence, constitutional requirements may attach in two situations: (1) where the conduct of foreign law enforcement officials rendered them agents, or virtual agents, of United States law enforcement officials; or (2) where the cooperation between the United States and foreign law enforcement agencies is designed to evade constitutional requirements applicable to American officials.’ Maturo, at 61.”

“Lee claims that the close, ongoing, and formalized collaboration between the DEA and VU rendered the latter ‘virtual agents’ of American law enforcement in the context of the parallel investigations. We disagree. A review of the record makes clear that, while the United States and Jamaica agreed on several measures designed to facilitate collaboration and cooperation in transnational drug investigations, the Jamaican investigation of Lee was an independent undertaking by a foreign sovereign.”

“Indeed, Jamaican law enforcement officials: (1) initiated their investigation into the marijuana trafficking organization with which Lee was associated before the DEA commenced its investigation; and (2) [said officials] did not solicit the views, much less approval, of DEA agents prior to conducting surveillance. Moreover, DEA agents were likewise not involved in the actual interception or translation, from Jamaican dialect, of the conversations at issue. Nor did the DEA make a formal request that Jamaican authorities conduct surveillance on Lee or other members of the marijuana trafficking organization.”

“While no one factor—or combination of factors—is dispositive, we conclude that the Jamaican law enforcement officials here did not act as ‘virtual agents’ of the United States. Accordingly, we hold that the District Court did not err in denying Lee’s motion to suppress evidence gathered from the Jamaican wiretaps.” [Slip op. 3]

As for Lee’s motion to compel U.S. government officials to disclose documents underlying the Jamaican wiretap applications, the Court reviews the matter for abuse of discretion. The Fourth Amendment’s exclusionary rule does not require U.S. law enforcement to review the legality, under foreign law, of applications for surveillance considered by foreign courts. Therefore, Lee was not entitled to discovery of the wiretap application materials submitted by Jamaican law enforcement to their national courts.

The Court explains as follows. “As an initial matter, we note that Lee was not entitled to these documents under any arguable rule of discovery because these materials were not even within the ‘[U.S.] government’s possession, custody, or control.’ Fed. R. Crim. P. 16(a)(1)(E); see also id. 26.2(a); … United States v. Yousef, 327 F.3d 56, 129 (2d Cir. 2003) (‘The Government is not under an obligation to produce prior statements of foreign law enforcement officials that it does not possess.’). Indeed, we have made it abundantly clear that, ‘`even in the course of a joint investigation undertaken by United States and foreign law enforcement officials[,] the most the Jencks Act requires of United States officials is a good-faith effort to obtain the statements of prosecution witnesses in the possession of the foreign government.’‘ Id. … The facts of this case do not suggest that there was a ‘joint investigation’ with foreign law enforcement authorities within the meaning of our case law … and, even if there had been such an investigation, the District Court properly found that the government had made good-faith efforts to obtain the documents … ”

“Lee claims, however, that ‘without reviewing th[e] underlying [Jamaican] affidavits and applications, there [is] no way of knowing that [the Jamaican wiretaps] were properly obtained’ and permissible under Maturo. … This claim is without merit. As noted, Maturo instructs that, in certain limited circumstances, the Fourth Amendment’s exclusionary rule can operate to bar the introduction of evidence obtained abroad: (1) where the conduct of foreign officials was so extreme that it would shock the judicial conscience; or (2) where the nature of the cooperation ‘implicate[d] constitutional restrictions.’ Maturo, 982 F.2d at 60-61. …”

“These two narrow exceptions, however, do not suggest, much less require, that the government or the District Court had a duty to review the legality, under Jamaican law, of the applications for surveillance authority considered by Jamaican courts. Indeed, even if Jamaican law enforcement officers somehow operated improperly under Jamaican law in obtaining the electronic surveillance of Lee—and the record belies any such suggestion—nothing in this record shows that they operated in a manner that would implicate either of the limited exceptions set forth in Maturo.”

“In sum, Lee has not demonstrated any basis upon which to suppress evidence derived from foreign electronic surveillance because of an alleged failure by American law enforcement officials to secure the documents from a foreign government. Accordingly, the District Court did not err in denying Lee’s motion to compel the retrieval and submission of documentation submitted to a Jamaican court in support of the wiretap orders executed against him abroad.” [Slip op. 4].

Citation: United States v. Lee, 723 F.3d 134 (2d Cir. 2013), cert. den. 134 Sup. Ct. 976 (2014).

FOREIGN WIRETAP EVIDENCE, ADMISSIBILITY IN U.S. COURTS

Second Circuit finds that ongoing collaboration between U.S. law enforcement and foreign counterpart in parallel investigation, does not invoke exclusionary rule absent evidence of U.S. control, direction or intent to evade the Constitution

A California federal court convicted Matthew Getto, a U.S. citizen, of conspiring to commit mail and wire fraud. The scheme was simple: operating out of Israel, Getto’s group bought the contact information of lottery entrants from lottery operators. The group would then contact the lottery entrants to inform them of the substantial (but non-existent) cash prize they had won. The group falsely claimed that they would have to pay the “taxes and fees” before they can received the prize money.

The Federal Bureau of Investigation (FBI) began investigating the fraud in September 2008. It had officers pose as lottery entrants so that Getto’s co-conspirators would contact them. In April 2009, U.S. law enforcement requested Israeli National Police (INP) to assist, based on their Mutual Legal Assistance Treaty (MLAT). INP wiretapped one of the group’s locations, which led to Getto’s later arrest in the U.S.

At their federal trial in the Southern District of New York, Getto moved to suppress evidence obtained by the INP. In particular, Getto argued that: (1) the INP was working jointly with the FBI; and (2) the INP’s actions were so egregious as to trigger the Fourth Amendment. The District Court denied the motion and a jury later convicted Getto. This appeal ensued.

The U.S. Court of Appeals for the Second Circuit concludes that ongoing collaboration between a U.S. law enforcement agency and a foreign counterpart in the course of parallel investigations does not – in the absence of U.S. control, direction, or an intent to evade the Constitution – does not trigger the exclusionary rule as to evidence obtained abroad.

The Court analyzes Getto’s argument in three steps: (1) whether INP’s conduct shocks the judicial conscience; (2) whether INP’s parallel investigation shows sufficient “cooperation” to trigger the Fourth Amendment exclusionary rule; and (3) whether the “joint venture” doctrine applies. The Court notes that the evidence need not be suppressed unless the foreign search was unreasonable.

First, Getto claims that the INP forcibly broke into the office before obtaining a search warrant.

“Even accepting, arguendo, the credibility of Getto’s contested allegations—which the District Court characterized as ‘speculative,’ … —we find them insufficient to meet the high standard necessary to ‘shock the judicial conscience’ recognized by our court and by others in transnational law enforcement cases.”

“In the due process context, we have explained that conduct does not shock the judicial conscience when it is ‘simply illegal’; rather, it must be ‘egregious.’ United States ex rel. Lujan v. Gengler, 510 F.2d 62, 66 (2d Cir. 1975) … We have accordingly held that conduct did not shock the judicial conscience when, for example, there was no act ‘of torture, terror, or custodial interrogation of any kind,’ Gengler, 510 F.2d at 66, or when there was ‘no claim of `rubbing pepper in the eyes,’ or other shocking conduct,’ …”

“The requirement of a showing that conduct ‘shocks the conscience’ stems not from the Fourth Amendment, but instead from a federal court’s authority to exercise its supervisory powers over the administration of federal justice. … Pursuant to this authority, ‘we may employ our supervisory powers when absolutely necessary to preserve the integrity of the criminal justice system.’ …”

“Defendant’s allegations, at most, amount to a claim that Israeli law enforcement officials may not have obtained a warrant under Israeli law prior to conducting some searches or surveillance—a circumstance that would hardly ‘violate[ ] fundamental international norms of decency.’ … As one of our sister circuits has said, ‘the wiretaps at issue cannot be said to shock the conscience’ even when ‘secured in violation of [a] foreign law.’ [United States v. Barona, 56 F.3d 1087, 1091 (9th Cir. 1995)].”

“Defendant’s argument on appeal that ‘[n]o case of this Court establishes that only physical abuse can constitute the kind of shocking conduct that could lead to suppression,’ … misses the basic nature of the standard. In the context of assessing abusive executive action, the concept of ‘shocking the conscience’ derives from the Supreme Court’s decision in Rochin v. California, 342 U.S. 165 (1952). See County of Sacramento v. Lewis, 523 U.S. 833, 846 (1998).”

“In Rochin, the Supreme Court held that: ‘we are compelled to conclude that the proceedings by which this conviction was obtained do more than offend some fastidious squeamishness or private sentimentalism about combatting crime too energetically. This is conduct that shocks the conscience. Illegally breaking into the privacy of the petitioner, the struggle to open his mouth and remove what was there, the forcible extraction of his stomach’s contents—this course of proceeding by agents of government to obtain evidence is bound to offend even hardened sensibilities. They are methods too close to the rack and the screw to permit of constitutional differentiation.’ 342 U.S. at 172.”

“Indeed, the Supreme Court has explained that a ‘court’s inherent power to refuse to receive material evidence is a power that must be sparingly exercised [only in cases of] manifestly improper conduct by federal officials.’ … The alleged searches and surveillance in the instant case are different in kind.”

“Accordingly, we conclude that the District Court did not err in denying defendant’s motion to suppress on the basis that the search did not ‘shock the conscience.’” [Slip op. 13-16, Document 139-1 in the federal docket]

“Defendant also argues that the instant case falls within the second exception to the ‘international silver platter doctrine,’ claiming that this case is one in which ‘cooperation with foreign law enforcement officials may implicate constitutional restrictions.’ … Defendant asserts that a number of factors bring this case within the so-called ‘constitutional restrictions’ exception, including: (1) the INP initiated its investigation based on the MLAT request from American law enforcement officials; (2) Israel never sought to prosecute Getto; (3) many other members of the conspiracy, or related conspiracies, were extradited to the United States; and (4) an article in an Israeli newspaper stated that American law enforcement agents watched live surveillance of the [office].”

“We have explained that, under the ‘constitutional restrictions’ exception, ‘constitutional requirements may attach in two situations: (1) where the conduct of foreign law enforcement officials rendered them agents, or virtual agents, of United States law enforcement officials; or (2) where the cooperation between the United States and foreign law enforcement agencies is designed to evade constitutional requirements applicable to American officials.’ … In examining defendant’s claims that both ‘virtual agency’ and an intentional evasion of constitutional requirements occurred here, the District Court found that ‘[w]hile there was some cooperation in the case,’ it was not enough to fall within the exception. … We agree.”

“Addressing the two situations in turn, Getto first argues that the factors described above rendered the INP ‘virtual agents’ of American law enforcement. In order to render foreign law enforcement officials virtual agents of the United States, American officials must play some role in controlling or directing the conduct of the foreign parallel investigation. …. It is not enough that the foreign government undertook its investigation pursuant to an American MLAT request.”

“Courts have repeatedly observed that the purpose of the exclusionary rule for Fourth Amendment violations is ‘to inculcate a respect for the Constitution in the police of our own nation,’…, and have ‘seldom used [it] to bar [foreign police] work product’ because it ‘has little if any deterrent effect upon foreign police.’ … An inescapable corollary of this principle is that in instances where American law enforcement agents do not have authority to control or direct an investigation abroad, application of the exclusionary rule to the fruits of that investigation would serve no deterrence purpose. …”

“As we explained in United States v. Lira, 515 F.2d 68 (2d Cir. 1975), ‘where the United States Government plays no direct or substantial role in the misconduct and the foreign police have acted not as United States agents but merely on behalf of their own government, the imposition of a penalty would only deter United States representatives from making a lawful request for the defendant and would not deter any illegal conduct.’ …”

“A review of the record here makes clear that U.S. officials neither controlled nor directed the foreign investigation. Although American law enforcement agents requested assistance with investigating Getto and shared the results of their preliminary investigation (e.g., telephone numbers and bank account information) with the INP, the foreign law enforcement agency conducted an independent, parallel investigation. Indeed, the American government has proffered, and Getto has not rebutted, that, although American agents ‘were in contact frequently [with their Israeli counterparts] to share information,’ they did not participate in any law enforcement actions by the INP in Israel. …”

“Defendant’s allegations, even if credited, demonstrate only robust information-sharing and cooperation across parallel investigations and do not contradict the government’s claim that the Israeli investigation was not controlled or directed by American law enforcement. … We do not find persuasive defendant’s argument that a ‘live feed’ allowing American law enforcement agents to view surveillance footage in real time—supposedly referenced in an Israeli newspaper article—demonstrates that the INP acted as virtual agents of the United States. We have long allowed foreign authorities to share the fruits of an investigation with their American counterparts without suggesting or assuming that the latter controlled the investigation. … The ability of modern law enforcement agencies, aided by global telecommunications, to share information across borders without delay is not a significant departure from the traditional method of sharing surveillance after-the-fact and does not, in and of itself, give rise to an inference of agency.” […]

“Second, Getto argues … that ‘the cooperation between the United States and foreign law enforcement agencies [was] designed to evade constitutional requirements applicable to American officials,’ … By its terms, however, this method of fulfilling the ‘constitutional restrictions’ exception requires some intent to evade American constitutional requirements. ...”

“Getto points to nothing in the record suggesting an intent to evade the Fourth Amendment’s requirements. Instead, the record demonstrates that the decision to request INP assistance was motivated by the inability of American law enforcement agents to further investigate criminal activity occurring substantially within the territory of a foreign sovereign. … Accordingly, we hold that the information in the record—the MLAT request, the information-sharing between American law enforcement and the INP, and American receipt of the fruits of the INP’s investigation in Israel—reveals no cooperation ‘designed to evade constitutional requirements,’ … but only successful coordinated law enforcement activity.”

“In analyzing Getto’s claims within the constitutional restrictions exception, the District Court applied the ‘joint venture’ doctrine adopted by some of our sister circuits. … We note that in the context of the Fourth Amendment, the joint venture doctrine has been applied by other courts with inconsistent, even confusing, results. …”

“We have repeatedly declined to adopt the joint venture doctrine in the context of the Fourth Amendment. … As we have explained above, the purpose of the Fourth Amendment’s exclusionary rule is ‘to inculcate a respect for the Constitution in the police of our own nation.’ … This purpose of deterrence is not served in instances where American law enforcement officers, not intentionally seeking to evade our Constitution, participate in a so-called ‘joint venture’ but do not direct or otherwise control the investigation. …”

“We, therefore, decide again not to adopt the joint venture doctrine and, instead, reaffirm the longstanding principles of ‘virtual agency’ and intentional constitutional evasion described in this opinion as the applicable analytic rubric to determine whether ‘cooperation with foreign law enforcement officials may implicate constitutional restrictions.’ …” [Slip op. 16-25].

Citation: United States v. Getto, 729 F.3d 221 (2d Cir. 2013).