Atchley v. AstraZeneca UK Limited

• Decision Date: 04 January 2022
• Docket Number: No. 20-7077,20-7077
• Citation: 22 F.4th 204
• Parties: Joshua ATCHLEY, et al., Appellants v. ASTRAZENECA UK LIMITED, et al., Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

22 F.4th 204

Joshua ATCHLEY, et al., Appellants

v.ASTRAZENECA UK LIMITED, et al., Appellees

No. 20-7077

United States Court of Appeals, District of Columbia Circuit.

Argued September 21, 2021

Decided January 4, 2022

Joshua D. Branson argued the cause for appellants. With him on the briefs were David C. Frederick and Andrew E. Goldsmith.

Michael J. Miller and Stephen I. Vladeck were on the brief for amici curiae Law Professors in support of appellants.

Jeffrey R. White was on the brief for amicus curiae The American Association for Justice in support of appellants.

Tejinder Singh was on the brief for amici curiae 44 Former Military Officers, Intelligence Officials, and Analysts in support of appellants.

Michael A. Petrino and Jonathan E. Missner were on the brief for amici curiae Eight United States Senators in support of appellants.

Mazin A. Sbaiti was on the brief for amicus curiae Iraq Anti-Corruption Experts in support of appellants.

Kannon K. Shanmugam argued the cause for appellees. With him on the brief were Neil H. MacBride, Paul S. Mishkin, Beth S. Brinkmann, John E. Hall, David M. Zionts, Patrick J. Carome, David W. Bowker, Leon T. Kenworthy, John B. Bellinger, III, John David Cella, Robert Reeves Anderson, Lisa S. Blatt, Christopher N. Manning, Melissa B. Collins, Brian T. Gilmore, Jeh C. Johnson, Stacie M. Fahsel, and Jessica S. Carey. Alex Young K. Oh entered an appearance.

Tara S. Morrissey, Paul Lettow, Andrew J. Pincus, Robert W. Hamburg, and James C. Stansel were on the brief for amici curiae The Chamber of Commerce of the United States of America and the Pharmaceutical Research and Manufacturers of America in support of appellees.

Michael J. Edney and Mark C. Savignac were on the brief for amici curiae Iraq Reconstruction Experts, et al. in support of appellees.

Timothy P. Harkness, Linda H. Martin, Kimberly H. Zelnick, David Y. Livshiz, Scott A. Eisman, Altin H. Sila, Nathan A. Hembree, and Noelle L. Williams were on the brief for amici curiae Charity & Security Network and InterAction: The American Council for Voluntary International Action, Inc. in support of appellees.

Before: Pillard and Wilkins, Circuit Judges, and Edwards, Senior Circuit Judge.

Pillard, Circuit Judge:

The known terrorist group Jaysh al-Mahdi injured or killed hundreds of United States service members and civilians as part of its years-long campaign to harm Americans and drive the United States' military presence out of Iraq. Plaintiffs are victims of those attacks and the victims' family members. In the period leading up to and during the attacks on plaintiffs, Jaysh al-Mahdi openly controlled Iraq's Ministry of Health (Ministry) and used it as a vehicle for terrorist activity. "Due largely to its 2005-era control of the Ministry," plaintiffs contend, "Jaysh al-Mahdi became the deadliest terrorist group in the country. It massacred thousands of people, including Plaintiffs and their family members." Appellants Br. 2. Plaintiffs claim defendants, large medical supply and manufacturing companies, knowingly gave substantial support to the attacks against them in violation of the Anti-Terrorism Act (ATA or Act), as amended by the Justice Against Sponsors of Terrorism Act (JASTA), and state law. They allege that defendants, aware of Jaysh al-Mahdi's command of the Ministry, secured lucrative medical-supply contracts with the Ministry by giving corrupt payments and valuable gifts to Jaysh al-Mahdi.

Plaintiffs identify two ways in which they say defendants' dealings most vividly provided illegal support to the terrorist acts that harmed them. First, defendants used local agents to deliver cash kickbacks to the terrorists who gave them business. Second, defendants delivered extra, off-the-books batches of valuable medical goods that Jaysh al-Mahdi monetized on the black market to fund its operations, and also used as cash equivalents to pay terrorist fighters. Critically, on the facts plaintiffs allege, defendants undoubtedly had the degree of awareness that our precedent requires regarding the connection between their payments and gifts and the terrorist violence. Defendants' agents finalized contracts at in-person meetings at the Ministry, where Jaysh al-Mahdi weaponry, fighters, propaganda, and other indicia made clear who was in charge. And contemporaneous reports in mainstream media of the terrorists' control of the Ministry provided notice of the stakes of doing business with that entity. "Yet Defendants wanted to profit off the Ministry," plaintiffs assert, "and they were willing to pay terrorists for the opportunity." Appellants Br. 3.

The district court held that the complaint failed to state claims for either direct or secondary (aiding-and-abetting) liability under the ATA, and that it lacked personal jurisdiction over six foreign defendants.

We reverse on three points of law and remand the balance of the issues to be addressed by the district court consistent with our opinion. First, plaintiffs plead facts that suffice to support their aiding-and-abetting claim at the motion-to-dismiss stage. The complaint plausibly alleges that Hezbollah, a designated Foreign Terrorist Organization, planned or authorized the relevant attacks as required under the JASTA. It describes how Hezbollah helped establish Jaysh al-Mahdi in Iraq, then recruited, trained, and equipped Jaysh al-Mahdi's fighters with the intent that it carry out attacks to extirpate the American presence. And plaintiffs allege that defendants knowingly provided substantial assistance to Jaysh al-Mahdi—most clearly through their corrupt provision of free goods and cash bribes to do business with a Ministry completely overrun by Jaysh al-Mahdi. Aware of Jaysh al-Mahdi's ongoing terrorist operations, defendants allegedly secured lucrative medical-supply contracts by giving the organization millions of dollars of cash and cash-equivalents over a period of many years. Those allegations, which must be accepted as true at this motion-to-dismiss stage, support an inference that defendants aided and abetted acts of international terrorism.

Second, with respect to the direct liability claim, plaintiffs have adequately pleaded that defendants' payments to Jaysh al-Mahdi proximately caused plaintiffs' injuries. The complaint describes how Jaysh al-Mahdi controlled the Ministry and used it as a terrorist headquarters. Accepting those allegations, defendants' dealings with the Ministry were equivalent to dealing with the terrorist organization directly. The Ministry was therefore not an independent intermediary that broke the chain of causation, but a front for Jaysh al-Mahdi. With causation adequately alleged, the adequacy of the allegations of other direct-liability requisites remains open on remand.

Finally, the district court's personal jurisdiction analysis was unduly restrictive. The foreign supplier defendants' direct, valuable, and ongoing sourcing of medical supplies and drugs for the Iraqi Ministry from their affiliated manufacturers in the United States amounts to robust contact with the U.S. forum through which the foreign defendants purposefully availed themselves of the benefits of doing business here. The question is whether plaintiffs' claims arose out of or related to those contacts. We hold that they did. The foreign supplier defendants worked closely with their manufacturer affiliates in the United States to bring to market in Iraq U.S. drugs and medical supplies. They did so through the very bribes and gifts that plaintiffs allege materially supported terrorist acts against them, including through defendants' provision of extra, U.S.-manufactured goods on top of contract quantities. The resultant medical supply contracts with the Ministry were both the outlet for the U.S.-origin goods and the vehicle for Jaysh al-Mahdi's terrorist fundraising. The relationship between plaintiffs' claims and the foreign defendants' forum contacts supports the court's exercise of personal jurisdiction.

BACKGROUND

On review of an order granting a motion to dismiss for failure to state a claim, we must assume the truth of facts plausibly alleged in plaintiffs' Third Amended Complaint and draw all reasonable inferences in plaintiffs' favor. See Owens v. BNP Paribas, S.A. (Owens IV ), 897 F.3d 266, 272 (D.C. Cir. 2018). Doing so permits us to establish governing propositions of law—a step that precedes either party's opportunity to obtain discovery and test the evidence in the adversarial process. Even when we do not individually describe them as allegations, all of the facts on which we rely are from the complaint, and are therefore assumed true at this stage of the litigation. As is always the case in this procedural posture, we recognize that defendants plan to dispute many of the facts alleged, and plaintiffs cannot ultimately prevail unless they can support their allegations with evidence.

Plaintiffs allege that Iraq's Ministry of Health and Kimadia, the Ministry's state-owned import company, have a long history dating back to the Saddam Hussein era of corrupting Iraq's medical-goods procurement process. Plaintiffs cast the involvement of defendants in that past corruption as an instructive precursor to defendants' involvement in events giving rise to this case. From 2000-2003, Kimadia obtained kickbacks on medical-goods contracts it awarded to international medical goods purveyors under the United Nations "Oil-for-Food" program. That program was a humanitarian exception to sanctions on Iraq that allowed the country to sell some of its oil for the limited purpose of purchasing essential food and medical supplies for its people. Kimadia exploited the exception, circumventing the program's limits by extracting a 10% cash kickback from humanitarian-goods suppliers. And Kimadia required suppliers to provide free medical goods—typically 10% in excess of the underlying contract quantities. Most of the defendants here (or their predecessors or affiliates) participated in that scheme. An...