Basic Principle of Parent/Subsidiary Separation Applied to Strike Claims Under Alien Tort Claims Act

Basic Principle of Parent/Subsidiary
Separation Applied to Strike Claims Under Alien Tort
Claims Act

       Earlier this week the Second Circuit Court of Appeals handed down a decision to the effect that the U.S. parent corporations of foreign subsidiaries who were alleged to have facilitated apartheid in South Africa could not be sued under the Alien Tort Claims Act.  Balintulo v. Ford Motor Co., 2015 BL 238790 (2^nd Cir. July 27, 2015).

        The plaintiffs sought to hold Ford and IBM responsible for having, through their foreign subsidiaries, facilitated apartheid.  Pursuing the claims and the jurisdictional requirements of the ATCA, it was found that they were deficient.  While, in the case of Ford, a South African subsidiary may have done so via the assembly of vehicles and by the S.A. Defense Forces, it was not Ford which did so.

[H]olding Ford to be directly responsible for the actions of its South African subsidiary, as plaintiffs would have us do, would ignore well-settled principles of corporate law, which treats parent corporations and their subsidiaries as legally distinct entities. (citation omitted).

       The Court of Appeals continued with a discussion of piercing the veil, noting it is done only in “extraordinary circumstances” and that the plaintiff had not plead any basis for doing so.