AstraZeneca, Pfizer and Johnson & Johnson may be used to good press after developing and distributing millions of life-saving coronavirus vaccine doses. But 2022 is off to a less-auspicious start for these pharma giants. Back in 2017, a group of Americans who had been wounded by terrorist attacks carried out in Iraq by the militant group Jaysh al-Mahdi sued these companies and others for allegedly helping to finance the attacks by making corrupt payments to the Jaysh al-Mahdi-controlled Iraqi Ministry of Health. The U.S. District Court for the District of Columbia dismissed the case, Atchley v. AstraZeneca, in 2020, finding that the plaintiffs failed to adequately allege primary or secondary liability under the Anti-Terrorism Act (ATA) and failed to establish the court’s ability to exercise personal jurisdiction over some of the defendants. But on Jan. 4, the U.S. Court of Appeals for the District of Columbia Circuit unanimously reversed the dismissal, potentially paving the way for the case to proceed to trial.
Between 2005 and 2011, American service members and civilians were injured and killed by terrorist attacks carried out by the insurgent group Jaysh al-Mahdi in Iraq. The plaintiffs in the case are victims of those attacks and victims’ family members. During that period, Jaysh al-Mahdi, also known as the Mahdi Army, operated as the armed wing of Iraq’s nationalist Shiite Sadrist movement led by Muqtada al-Sadr and received support from the Lebanese political party-cum-militia Hezbollah.
The defendants include two types of pharmaceutical and medical equipment corporations: manufacturers and their affiliated distributors. All 21 of the defendants belong to the corporate families AstraZeneca, GE Healthcare, Johnson & Johnson, Pfizer or Roche. While some of the defendants are U.S. corporations, others are foreign.
According to the plaintiffs, by 2004 Jaysh al-Mahdi-linked Sadrists controlled the Iraqi Ministry of Health and its state-owned import subsidiary, Kimadia. The ministry contracted with the defendants for the supply of medical goods and devices. As part of these agreements, the defendants allegedly furnished the ministry with cash bribes and free, off-the-books items. These corrupt transactions, the plaintiffs allege, funded Jaysh al-Mahdi’s terrorist attacks against Americans involving kidnapping, torture and murder.
In October 2017, the plaintiffs filed a complaint in the U.S. District Court for the District of Columbia, claiming the defendants were both primarily and secondarily liable under the ATA’s civil liability provision, which allows recovery of treble damages, as well as state laws relating to the intentional infliction of emotional distress.
Relevant Statutory Provisions
The main cause of action at issue in Atchley is the ATA’s civil liability provision, 18 U.S.C. § 2333, which enables plaintiffs to recover civil damages for acts of international terrorism. Section 2333(a) provides that:
Any 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 cost of the suit, including attorney's fees.
The ATA defines “international terrorism” at 18 U.S.C. § 2331(1) as violent or dangerous activities that violate U.S. federal or state criminal law, or that would if committed in the United States or one of its states. The definition also has requirements for the activity’s intent and for it to occur primarily outside the United States or else transcend national boundaries. The ATA thus hinges on underlying criminal violations. In their complaint, the plaintiffs identified four alleged “predicate” crimes, two for aiding-and-abetting liability and two for primary liability.
In 2016, Congress passed the Justice Against Sponsors of Terrorism Act (JASTA), which amended the ATA to expressly include civil liability for aiding and abetting. Under JASTA, there are three elements to aiding-and-abetting liability: (1) the injury must arise from an act of international terrorism; (2) the act must have been committed, planned or authorized by an entity designated as a foreign terrorist organization (FTO) under 8 U.S.C. § 1189; and (3) the defendants must have aided and abetted the act of terrorism by knowingly providing substantial assistance. JASTA cited Halberstam v. Welch, a widely cited 1983 D.C. Circuit case on federal civil aiding-and-abetting liability, as providing “the proper legal framework for how such liability should function in the context of” the chapter of the U.S. Code that deals with terrorism, Chapter 113B of Title 18.
Accordingly, the third element to ATA aiding-and-abetting liability is established by reference to three elements drawn from Halberstam: “(1) the party whom the defendant aids must perform a wrongful act that causes an injury; (2) the defendant must be generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance; (3) the defendant must knowingly and substantially assist the principal violation.” Halberstam also identifies six factors that bear on the element of knowing and substantial assistance: (i) the nature of the act assisted, (ii) the amount and kind of assistance, (iii) the defendants’ absence or presence at the time of the tort, (iv) the defendants’ relationship to the tortious actor, (v) the defendants’ state of mind, and (vi) the duration of assistance.
Differences in how to apply the FTO and knowing-and-substantial assistance prongs of secondary liability under the ATA contributed to the different outcomes in the district and appellate courts.
On July 17, 2020, Judge Richard J. Leon of the U.S. District Court for the District of Columbia issued an opinion granting the defendants’ motion to dismiss for failing to state a claim under the ATA as well as the foreign defendants’ motion to dismiss for lack of personal jurisdiction.
Judge Leon ruled that the court lacked personal jurisdiction over the foreign defendants. The court held that the plaintiffs failed to establish that the foreign defendant’s transactions with the Iraqi Ministry of Health were “substantially connected” to or “purposefully directed” at the United States as the defendants’ relevant conduct occurred entirely overseas and was not “expressly aimed” at the United States so as to establish personal jurisdiction there. The court also ruled that the plaintiffs failed to show that the defendants purposefully availed themselves of the benefits and protections of the United States through their relevant conduct because the sourcing of items from and other business activities tied to the United States were not directly related to the defendants’ purportedly tortious conduct in Iraq.
As for the substantive issues, Leon found that the plaintiffs failed to adequately allege direct or secondary liability under the ATA as amended by JASTA.
The plaintiffs claimed that the defendants were directly liable because their alleged financing and material support of Jaysh al-Mahdi was itself “act[s] of international terrorism” within the meaning of § 2331(1). However, the court did not address the scope of that term because it dismissed the claim for failure to adequately plead the proximate causation requirement implied in the “by reason of” language of § 2333(a). This requirement means the defendant’s alleged wrongful conduct must have “led directly” to the plaintiffs’ injuries, yet the court viewed the ministry as an independent, sovereign intermediary between the defendants and Jaysh al-Mahdi that therefore broke the chain of causation.
The court also rejected the plaintiffs’ secondary liability claims for two reasons. First, § 2333(d)(2) requires the relevant attacks to have been “committed, planned, or authorized” by a designated FTO. Yet Jaysh al-Mahdi has never been so designated. While Jaysh al-Mahdi’s ally Hezbollah was a designated FTO, Judge Leon found that on the plaintiffs’ facts, Hezbollah had not “planned” or “authorized” all of Jaysh al-Mahdi’s attacks, but rather for most of them only offered “[g]eneral support or encouragement.”
Second, the court held that the plaintiffs failed to show the defendants “knowingly provid[ed] substantial assistance” to Jaysh al-Mahdi, as required by § 2333(d)(2). In the court’s view, this showing was lacking because the defendants allegedly provided goods to the ministry, not directly to Jaysh al-Mahdi itself. Moreover, the plaintiffs failed to allege that any assistance was “substantial” under the Halberstam factors, including because the fifth factor—state of mind—was lacking given that the defendants were not alleged to be “one in spirit” with Jaysh al-Mahdi’s anti-American aims.
Finally, because the court decided it lacked subject matter jurisdiction over the federal ATA claims, it declined to exercise supplemental jurisdiction over the state-law claims and did not address them.
Following the ruling, the plaintiffs appealed, arguing both that they had sufficiently alleged that the defendants proximately caused their injuries under the ATA and that the defendants were secondarily liable under the ATA. The plaintiffs also argued that they had alleged personal jurisdiction over the foreign defendants and that the court had abused its discretion by denying their request for jurisdictional discovery.
On Jan. 4, a unanimous panel of the U.S. Court of Appeals for the District of Columbia Circuit handed down a ruling reversing and remanding the case. The panel consisted of Judges Robert L. Wilkins, Harry T. Edwards and Cornelia T.L. Pillard, who wrote the opinion. Because the court was reviewing a motion to dismiss for failure to state a claim, it assumed the truth of facts plausibly alleged in the plaintiffs’ complaint and drew all reasonable inferences in the plaintiffs’ favor.
Contrary to the district court, the panel found that the plaintiffs adequately alleged proximate causation. Judge Pillard wrote that the lower court relied on an “erroneous theory of proximate causation” because the ministry was alleged to be a mere front for Jaysh al-Mahdi and thus not an independent intermediary. The panel found proximate causation to have been adequately pleaded because the defendants’ alleged cash and cash-equivalent support to Jaysh al-Mahdi would have been a substantial factor in the events leading to the plaintiffs’ injuries, which would have been reasonably foreseeable as a natural consequence of the defendants’ conduct.
The D.C. Circuit also diverged from the trial court in finding the plaintiffs to have sufficiently pleaded their aiding-and-abetting claim.
First, citing Congress’s stated intent to “provide civil litigants with the broadest possible basis” for relief, the court concluded that the plaintiffs adequately alleged that the attacks against them were “committed, planned, or authorized” by an FTO, Hezbollah. The court acknowledged that most attacks at issue were carried out by Jaysh al-Mahdi “with Hezbollah more in the background.” Yet, the court concluded that Hezbollah’s alleged involvement in the attacks at issue was “deep and far reaching.” According to the plaintiffs, the Lebanese group acted through the Iraqi one in order to target Americans in Iraq, as evidenced by Hezbollah operatives’ roles in training, arming and supervising Jaysh al-Mahdi militants and by Jaysh al-Mahdi openly identifying with Hezbollah, for instance by marching under Hezbollah flags.
Second, the panel held that the plaintiffs adequately alleged the defendants’ “knowingly providing substantial assistance to” Jaysh al-Mahdi’s attacks. Here the court drew on the three Halberstam elements, the first of which—that the party the defendant allegedly aided performed a wrongful act that causes injury—was not disputed.
The D.C. Circuit found the second Halberstam element—that the defendants were generally aware of their role in an overall illegal activity for which a foreseeable risk was an act of international terrorism—to have been met. When the distributor defendants’ local agents finalized the contracts at the ministry’s headquarters, they did so in a building replete with Jaysh al-Madhi fighters and other obvious indications of who was in charge. And contemporary media reports documented the Sadrists’ capture of the ministry and co-opting of it to finance attacks. Accordingly, the panel found that on the facts alleged by the plaintiff, the defendants were generally aware that their corrupt provision of cash and goods would foreseeably finance terrorist attacks.
As for the third Halberstam element—knowing and substantial assistance—the panel weighed the six relevant factors laid out in that case, as discussed above. It found that the first, second, fifth and sixth factors all supported finding the plaintiffs to have plausibly pleaded knowing and substantial assistance. On the fifth factor, the panel corrected the lower court. What is required is knowledge of one’s actions and general awareness of their foreseeable results—not specific intent. So the panel concluded that the district court erred in discerning in Halberstam, and thus JASTA, a requirement that the defendants be “one in spirit” with the terrorists.
Pillard also faulted the lower court for reading the complaint to allege that cash and gifts reached Jaysh al-Mahdi only indirectly and for holding that indirect aid cannot support aiding-and-abetting liability. Gifts to a ministry in thrall to Jaysh al-Mahdi were gifts to Jaysh al-Mahdi itself, the court held, and, at any rate, the statute imposes no directness requirement.
On personal jurisdiction, the panel found the lower court’s analysis “unduly restrictive.” The disputed issue on appeal was whether the claims, which center on the foreign supplier defendants’ alleged bribes, “arise out of or relate to” the foreign defendants’ U.S. contacts. The panel found that they did, “in at least four overlapping ways.” First, the cooperation between the foreign defendants and their affiliated U.S. manufacturers to market products in Iraq is the ultimate reason for the corrupt transactions at the heart of the case, and this cooperation benefited from the protections of U.S. law. Second, the products the foreign defendants sold to the ministry included items manufactured in the United States. Third, the corrupt provision of U.S.-made free goods was one of the ways the foreign defendants allegedly violated the ATA. Fourth, the U.S. origin of certain goods was specifically prioritized by Jaysh al-Mahdi because of their higher street value and thus greater utility for terrorist financing.
The panel also rejected the argument of the manufacturer defendants that, even if the suppliers are liable, the manufacturers are not because they were too uninvolved in direct engagements in Iraq to be aware of Jaysh al-Mahdi’s involvement. This argument failed because the plaintiffs allege that all the defendants were aware of Jaysh al-Mahdi’s activity through media reports and because the supplier defendants were acting as the manufacturers’ agents. Therefore, the panel determined that the plaintiffs made sufficient allegations of ATA liability against both the manufacturers and the suppliers.
The D.C. Circuit reversed the district court’s order dismissing the plaintiffs’ claims in full and dismissing the foreign defendants over a lack of personal jurisdiction and reversed the attendant dismissal of the state-law claims. The panel remanded the case back to the district court for further proceedings, including to determine in the first instance whether the defendants’ alleged financing and material support were themselves acts of “international terrorism” within the meaning of § 2331(a).
As of now, the docket does not reflect an attempt by any parties to appeal the case further. However, the parties have 30 days to seek a rehearing en banc (dated from entry of the order on Jan. 4) and 90 days to seek direct review by the Supreme Court.
Meanwhile in Iraq, the Sadrists are perhaps more powerful than ever, with the party of Muqtada al-Sadr winning a plurality of seats in the October 2020 parliamentary elections. Yet in a role reversal, the Sadrists’ staunch opposition to Iranian meddling in Iraq has unexpectedly made them potential allies of the United States, despite the bloody history of the Iraq War.