District Court Concludes That Failure to Provide Adequate Electrical Service Cannot Support an ATS Claim, and States That a U.S. Corporation is not Liable Under the ATS For Activities of a Subsidiary in Cameroun, Even Though Parent Profited From Alleged Conduct

The World in U.S. Courts: Summer 2014 - Alien Tort Statute (ATS)/Torture Victims Protection Act (TVPA)/Victims of Trafficking and Violence Protection Act (VTVPA)/Foreign Sovereign Immunity Act (FSIA)

William v. AES Corp., U.S. District Court for the Eastern District of Virginia, June 26, 2014

A class comprised of all citizens and residents of Cameroun sued AES, a U.S. power generation holding company, and its Cameroun subsidiary under the ATS for injuries allegedly suffered as a result of the provision of poor electrical service in Cameroun.

AES was dismissed because the plaintiffs had alleged no facts that allowed conduct of the Cameroun subsidiary to be imputed to its parent on a theory that the two companies were “alter egos” of one another.

As to the subsidiary, the District Court in Virginia concluded that the claims alleged did not rise to the level of violations of international law so as to generate a right of recovery. The plaintiffs alleged that the deprivation of reliable electrical service constituted the requisite “cruel, inhuman, and degrading treatment,” but the Court found that this standard required that a defendant be alleged to have engaged in “intentional, targeted persecution” of the defendant, which conduct was not alleged. In so ruling, the Court recognized that policy considerations militated against recognizing a new and actionable violation of international law based on a presumed right to regular electrical service.

In dictum, the Court also concluded that the complaint alleged “purely extraterritorial conduct,” and that the mere presence of AES as a U.S. corporation was insufficient to establish the requisite domestic U.S. action, even where it may have received profit from its subsidiary’s activities. The Court also indicated, in dictum, that it believed that liability under the ATS could apply to corporations.

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