American Trial Lawyers Take Aim at Beleaguered South African Economy, by John Meredith


A New Visions Commentary paper published October 2003 by The National Center for Public Policy Research, 501 Capitol Ct., N.E., Washington, DC 20002, 202/543-4110, Fax 202-543-5975, E-Mail [email protected], Web Reprints permitted provided source is credited.

America’s 34-million African-Americans should be outraged by the campaign of economic blackmail that a handful of profit-driven personal injury lawyers are waging against the financially beleaguered Republic of South Africa.

Against the expressed wishes of the revered Nelson Mandela and President Thabo Mbeki, the lawyers are filing class-action lawsuits in courts against U.S. corporations who did business in South Africa during apartheid – unjustly claiming that their mere presence in the country aided and abetted that nation’s racist government.

In fact, the companies being sued were signers of the Sullivan Principles on fair labor principles, which Mandela and Mbeki credit with embarrassing laggard European and Asian firms to improve their human rights practices.

The fact that the litigation jeopardizes badly needed foreign investment in South Africa hasn’t deterred the already wealthy American lawyers who stand to walk away with millions of dollars if they are successful.

That would be a disaster for South Africa, a nation of 43 million with a 37 percent unemployment rate and 50 percent of the population living under the poverty line. The situation is made much worse by the country’s incredible AIDS pandemic: 20.1 percent of the adult population have the debilitating disease and 360,000 men, women and children die from it annually

The American personal injury lawyers – virtually all of them multi-millionaires – have a strategy that is downright self-serving, to say the least.

Their first tactic is to make outrageous charges against the corporations, using the resulting media frenzy of negative publicity to bully them into signing a lucrative one-sided settlements.

Those businesses with backbone enough to seek “justice” encounter the lawyers’ fallback strategy which is to proceed with trials before friendly, hand-picked judges who foster multi-million dollar jury verdicts.

In either case, poor black South Africans will get what amounts to peanuts – very small compensation for participating in a lawsuit that leaves their stagnant economy with even fewer jobs as foreign companies delay new investment and expansion plans, and, in some cases, shutter their factory doors and leave.

Ironically, the lawsuits against more than 30 U.S. corporations do not contain any specific allegations that the companies committed human rights violations in South Africa.

Far from it. All of the firms instituted non-discriminatory fair employment policies that provided black workers with good salaries and fringe benefits, safe working conditions and the right to join labor unions. And all of the companies, it should be noted, have better than average minority-hiring records at their facilities in the United States.

The personal injury lawyers are suing the American companies under the Alien Tort Claims Act, a law enacted in 1789 to prevent pirates from disposing of booty in U.S. seaports.

The law, which allows foreign plaintiffs to litigate in U.S. courts, lay dormant for some 200 years, before the lawyers managed to convince a judge that it might be used to sue American companies with investments in South Africa

The South African government vigorously opposes that twisted interpretation. In effect, asking the lawyers to cease and desist.

Mandela is particularly upset by the lawyers’ suggestion that outsiders – U.S. courts thousands of miles away – can do a better job at remedying the wrongs of apartheid than South Africa’s own Truth and Reconciliation Commission, which considers claims and grants reparations to apartheid victims.

“South Africans are competent to deal with issues of reconciliation, reparation and transformation amongst themselves without outside interference, instigation or instruction,” Mandela said recently. “We have dealt with our political transition in that manner and we are capable of dealing with other aspects of our transformation in similar ways.”

Penuell Maduna, South Africa’s Minister of Justice, warns that the U.S. lawsuits threaten foreign investment in his country, and notes that “we talking to the very same companies named in the lawsuits about investing in post-apartheid South Africa.”

The Bush Administration agrees and has filed a brief seeking to limit ATCA lawsuits in U.S. courts on the grounds they pose a direct threat to national security and foreign policy interests and could hinder America’s war against terrorism.

Federal judges should respect the wishes of Presidents Mbeki and Bush in this matter and rule such lawsuits have no standing in U.S. courtrooms.

To do less is to embrace a paternalistic theory that smacks more than faintly of colonialism and racism.

It’s time to end the lawyers’ quest for jackpot justice at the expense of U.S. foreign policy interests and South Africa’s desperate need to revive a habitually decaying economy.

(John Meredith is a member of the African-American leadership network Project 21 and many community-based non-profit groups. Comments may be sent to [email protected].)

Note: New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.