New York Federal Court Dismisses Case Against U.S.-Based Corporation Alleging Human Rights Abuses in Guatemala

In what continues to be a flurry of activity in U.S. federal courts involving allegations of human rights abuses abroad, the Southern District of New York, in Palacios v. Coca-Cola Co., Inc., No. 10-03120(RJS) (Nov. 19, 2010), recently dismissed a federal lawsuit brought by a group of Guatemalan nationals in connection with their union activities in Guatemala.

In Palacios, Guatemalan nationals alleged that Coca-Cola Company, Inc. was complicit in death threats, murder and rape resulting from plaintiffs' union involvement at a Coca-Cola-affiliated processing plant in Guatemala. Significantly, the complaint included a consumer fraud claim under New York's General Business Law section 349, alleging that Coca-Cola fraudulently misrepresented to New York consumers - through its published "Workplace Rights" standards - that its affiliated bottlers "comply with internationally-recognized human rights standards, the laws of the countries where [Coca-Cola] operates, and the policies and directives of [Coca-Cola]." Surprisingly absent from the complaint was any claim under the Alien Tort Claims Act, a federal statute commonly used by non-U.S. plaintiffs seeking damages in U.S. courts for alleged violations of international law.

After carefully considering the facts and circumstances at issue, the court dismissed the complaint under the doctrine of forum non coveniens. However, the court reserved the right to "reconsider [its] holding" in the event that the plaintiffs residing in New York were required to return to Guatemala to prosecute their claims, or if the case was dismissed by Guatemala's highest court under a Guatemalan law which arguably divested Guatemalan courts of jurisdiction based on the plaintiffs having filed suit in the United States.

For a detailed discussion of the Palacios decision and its implications for multinational companies with operations in the developing world, please continue reading Littler's ASAP New York Federal Court Rejects Attempt to Litigate Alleged Human Rights Abuses in the U.S., by Eric A. Savage and Michael Congiu.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.