Fifth Circuit upheld judgment of united states district court for the southern district of Texas. Fifth circuit held that the district court’s grant of summary judgment on the ATS and TVPRA claims in favor of defendant was proper and that the district court did not abuse its discretion in dismissing the common law claims by refusing to equitably toll plaintiffs’ state law tort claims

In 2004, an Iraqi insurgent group kidnapped and murdered twelve Nepali men as they traveled through Iraq to a United States military base to work for Daoud & Partners (“Daoud”), a Jordanian corporation that had a subcontract with Defendant-Appellee Kellogg Brown Root (“KBR”). In 2008, Plaintiffs filed suit against KBR and Daoud. They asserted claims under the TVPRA and the ATS, and also brought common law negligence claims. In November 2009, the district court granted KBR’s motion to dismiss Plaintiffs’ common law negligence claims. KBR moved for interlocutory review of the district court’s TVPRA ruling under 28 U.S.C. § 1292(b). In response, the district court reconsidered its denial of summary judgment sua sponte on the TVPRA claim. The court reversed its previous decisions and held that the TVPRA like the ATS did not apply extraterritorially at the time of the alleged conduct in 2004.

Plaintiffs responded by filing motions for rehearing on the district court’s TVPRA and ATS rulings and for leave to amend their ATS claims. In March 2015, the district court denied these motions. The appeal followed. *191

Plaintiffs contended that KBR’s alleged involvement in the trafficking of the Deceased and Plaintiff Gurung and in the forced labor of Plaintiff Gurung at Al Asad constitute actionable torts under the ATS. KBR countered that Plaintiffs’ allegations of misconduct in foreign countries are barred by the presumption against extraterritoriality. *192

The presumption against extraterritoriality is a canon of statutory interpretation rooted in the “longstanding principle” that a federal statute “is meant to apply only within the territorial jurisdiction of the United States” absent congressional intent to the contrary. Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 255, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010) (quoting EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991)). *193

A two-step inquiry governs the presumption’s application to a statute. RJR Nabisco, Inc. v. European Cmty., ___ U.S. ___, 136 S.Ct. 2090, 2101, 195 L.Ed.2d 476 (2016). First, “we ask whether the presumption against extraterritoriality has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially.” Id. Second, “[i]f the statute is not extraterritorial, then ... we determine whether the case involves a domestic application of the statute, and we do this by looking to the statute’s ‘focus.’” Id. *193

As for the ATS, the Supreme Court in Kiobel addressed step one of the extraterritoriality inquiry: The Court held that the “presumption against extraterritoriality applies to claims under the ATS, and that nothing in the statute rebuts that presumption.” 133 S.Ct. at 1669. The Court did not foreclose the possibility that there may be circumstances in which the bar would not apply. Id. The Court stated that the ATS could create jurisdiction for “claims [that] touch and concern the territory of the United States ... with sufficient force to displace the presumption against extraterritorial application.” Id. (citing Morrison, 561 U.S. at 265-73, 130 S.Ct. 2869). Notably, in discussing claims that “touch and concern” the United States, the Court cited to Morrison and its “focus” inquiry. See Kiobel, 133 S.Ct. at 1669 (citing Morrison, 561 U.S. at 265-73, 130 S.Ct. 2869). *193

In deciding whether KBR’s conduct on Al Asad constitutes domestic conduct, the Court first addresses how to distinguish between domestic and foreign conduct for purposes of the presumption against extraterritoriality. *196 KBR contends that the question is a matter of de jure sovereignty, arguing that “Iraq’s retention of de jure sovereignty over Al Asad defeats characterizing it as U.S. territory.” See Coalition Provisional Authority Order No. 17 (Revised) § 9 (noting that any premises operated by the Multinational Forces in Iraq “remain Iraqi territory”). On this record, we are unconvinced that Al Asad constituted de facto territory of the United States in 2004. Consequently, because KBR’s actions at Al Asad occurred in Iraq and not the United States, those actions cannot constitute domestic conduct relevant to their ATS claims. *197

Plaintiffs also argue that U.S.-based conduct rebuts the presumption against extraterritoriality. First, they cite KBR’s domestic payments to Daoud, the subcontractor that hired the Deceased and Plaintiff Gurung. Second, they claim that employees based in Houston, Texas, were “aware of allegations of human trafficking at [KBR’s] worksites.” *197

Plaintiffs have failed to show how KBR’s alleged financial transactions permit a domestic application of the ATS. They contend that KBR “transferred payments to [Daoud] from the United States, using New York Banks.” However, they failed to connect the alleged international law violations to these payments or demonstrate how such payments—by themselves—demonstrate that KBR’s U.S.-based employees actually engaged in trafficking the Deceased or forcing Plaintiff Gurung to work on its base. *198

Further, Plaintiffs’ contention that KBR’s U.S.-based employees may have known about “allegations” of human rights abuse by Daoud or KBR overseas is not enough to raise a genuine fact dispute that those employees were directly liable for violating international law. In response to Plaintiffs’ motion for reconsideration of its ruling, the district court acknowledged that Plaintiffs had introduced some evidence suggesting KBR knew it obtained trafficked labor. However, it noted that such evidence only implicated KBR’s operations overseas.

We affirm the district court’s decision to deny leave to amend. As an initial matter, an aiding and abetting theory of liability was not presented to the district court. Amendment would bring Plaintiffs no closer to satisfying the test articulated in Morrison and in RJR Nabisco. Accordingly, amendment would be futile. *200

Plaintiffs alleged that KBR’s actions violated the TVPRA, 18 U.S.C. §§ 1589, 1590, which prohibits forced labor and human trafficking, respectively. In their first amended complaint, Plaintiffs cited 18 U.S.C. § 1595, the TVPRA’s civil-remedy provision. Section 1595 permits suits by private parties for violations of, inter alia, § 1589 or § 1590. After Plaintiffs filed their first amended complaint, 18 U.S.C. § 1596 became law. The parties did not dispute that 18 U.S.C. § 1596(a) (the "2008 Amendment”) enables federal courts to entertain a private party’s civil suit that alleges extraterritorial violations of the TVPRA. See Kiobel, 133 S.Ct. at 1665. Plaintiffs argued that § 1596—which explicitly rebuts the presumption against extraterritoriality—applies to their pending lawsuit.

In light of the well-established presumption against extraterritoriality, we conclude that § 1595 unambiguously did not apply extraterritorially until § 1596 was enacted.

However, in seeking to apply § 1596 to pre-enactment conduct, Plaintiffs confronted a different canon of statutory interpretation: the presumption against retroactivity. Nothing in the text of the pre-2008 TVPRA or in the text of § 1596 indicates that a plaintiff was allowed to sue for extraterritorial violations of the TVPRA before 2008. Accordingly, given that nothing in the text of the TVPRA either in 2004 or today indicates that Plaintiffs could assert a civil remedy for extraterritorial violations before § 1596 was enacted, the amendment’s timing fails to persuade us that the law was a clarifying amendment. *202

Plaintiffs alternatively rely on the Military Extraterritorial Jurisdiction Act (“MEJA”) as a basis for jurisdiction for the TVPRA civil claims. It is undisputed that the TVPRA provisions KBR is alleged to have violated—§ 1589 and § 1590—could have been prosecuted under MEJA. However, this Court declines to find that MEJA’s grant of criminal jurisdiction over felony offenses committed abroad gives Plaintiffs an alternative jurisdictional basis for their civil claims. *207

In the alternative, Plaintiffs argue that if California or Texas law applies, the Court should apply equitable tolling. Plaintiffs argue that the civil conflict in Nepal delayed their suit. The district court rejected this argument, finding that “[g]eographic location and personal hardship cannot provide the sole basis for tolling an otherwise applicable statute of limitations.” Moreover, the district court cited Plaintiffs’ other potential avenues for relief. We find the district court did not abuse its discretion in denying tolling.

The Circuit Court affirmed the Judgment of the District Court.

James E. Graves, Jr., Circuit Judge dissenting in part held that the majority adopts an unnecessarily restrictive view as to the meaning of Kiobel’s “touch and concern” language by engaging in a formalistic application of the Morrison “focus” test.

“In deciding whether KBR’s conduct on Al Asad constitutes domestic conduct, we first address how to distinguish between domestic and foreign conduct for purposes of the presumption against extraterritoriality. KBR contends that the question is a matter of de jure sovereignty, arguing that ‘Iraq’s retention of de jure sovereignty over Al Asad defeats characterizing it as U.S. territory.’ See Coalition Provisional Authority Order No. 17 (Revised) § 9 (noting that any premises operated by the Multinational Forces in Iraq ‘remain Iraqi territory’). KBR’s assertion is not without support in recent Supreme Court case law. In Kiobel, the Court held that the issue was whether a claim under the ATS ‘may reach conduct occurring in the territory of a foreign sovereign.’ 133 S.Ct. at 1664 (emphasis added). RJR Nabisco also suggests that domestic conduct is that which ‘occurred in the United States’ rather than ‘in a foreign country.’ 136 S.Ct. at 2101. Nevertheless, the Supreme Court in Kiobel and RJR Nabisco did not squarely address whether what constitutes the United States also encapsulates its de facto territory.” [196]

“Further, nothing in the text of § 1596 expressly indicates that Congress intended to clarify rather than change the TVPRA. See Middleton, 578 F.3d at 664; Belli, 981 F.2d at 841. Rather, as the provision’s title indicates, it provided ‘[a]dditional jurisdiction.’ [7] Indeed, the two courts to address TVPRA’s civil remedy provision before 2008 held that the law did not provide a cause of action for extraterritorial conduct. See Nattah v. Bush, 541 F.Supp.2d 223, 234 (D.D.C. 2008), aff’d in part, rev’d in part on other grounds, 605 F.3d 1052 (D.C. Cir. 2010); John Roe I v. Bridgestone Corp., 492 F.Supp.2d 988, 999-1004 (S.D. Ind. 2007). As such, in contrast to cases where this Court has held an amendment was clarifying, there was no circuit split or conflict that “provoked” Congress to “enact an amendment to clarify rather than change the law.” Cowden, 895 F.2d at 1501.” [202]

“Second, Plaintiffs cite the “transitory tort doctrine,” arguing that KBR would have been liable under state tort law. But Plaintiffs’ state law claims are barred by the statute of limitations. Allowing Plaintiffs to retroactively bring a TVPRA claim would eliminate that defense, thereby imposing new liability to KBR. See Hughes Aircraft, 520 U.S. at 948, 117 S.Ct. 1871.

Additionally, Plaintiffs’ rights or remedies under expired claims cannot be said to parallel the remedies that the TVPRA would make available if applied. Consequently, allowing Plaintiffs to bring a TVPRA claim would have an impermissible retroactive effect.” [206]

CITATION: Adhikari v. Kellogg Brown & Root, Inc., 845 F. 3d 184—Court of Appeals, 5th Circuit 2017.

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