Category Archives: Commercial Civil Litigation

Risks of Cross Border Operations: Chiquita Brands International Found Liable for Financing Terrorism

by Timothy Harkness, Peter Linken, Scott Eisman, and Maylin Meisenheimer

photos of the authors

From left to right: Timothy Harkness, Peter Linken, Scott Eisman and Maylin Meisenheimer (Photos courtesy of Freshfields Bruckhaus Deringer LLP)

Doing business in conflict zones has always been complicated. Increased litigation has compounded those risks in recent years. A June 2024 federal jury verdict against Chiquita Brands International illustrates the changing legal landscape. The jury in Florida found Chiquita liable for financing Autodefensas Unidas de Colombia (“AUC”), a Colombian paramilitary group, and awarded a bellwether group of plaintiffs $38.3 million in damages. A second bellwether trial against Chiquita is scheduled for later this year, and thousands of related claims against Chiquita remain pending. Although the Chiquita litigation has spanned almost two decades, this jury verdict represents the first liability determination and paves the way for the second bellwether trial and eventual resolution of all pending claims. As each plaintiff was awarded around $2 million, Chiquita could be facing hundreds of millions of dollars in damages as the broader litigation includes vastly more victims.

The Chiquita verdict is a signal to corporations that U.S. courts may be more willing to find them liable for actions that occurred abroad and that plaintiffs may increasingly choose to file these claims in U.S. courts. In Chiquita, the alleged actions took place in Colombia and the claims at issue were brought under Colombian law, but this is just one example among many. In Kaplan v. Lebanese Canadian Bank, for example, the Second Circuit held that the plaintiffs plausibly pleaded that Lebanese Canadian Bank had aided and abetted acts of international terrorism under the Antiterrorism Act (“ATA”) by alleging that the bank had processed transactions in Lebanon for individuals closely affiliated with Hezbollah. As companies weigh the risks of doing business abroad and how best to structure their operations, this verdict should be at the forefront of their minds.

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Second Circuit: Crypto Exchange Binance Subject to U.S. Securities Laws to Avoid a Regulatory Vacuum

by David Livshiz, Timothy Howard, Andrew Gladstein, Peter Linken, Jacob Johnston, and Seve Kale

Photos of the authors

Left to right: David Livshiz, Timothy Howard, Andrew Gladstein, Peter Linken, and Seve Kale (photos courtesy of authors)

A recent Second Circuit decision underscores that decentralized crypto exchanges with no claimed “home” jurisdiction face a substantial likelihood of exposure to U.S. securities laws.  In Williams v. Binance, 96 F.4th 129 (2d Cir. 2024), the Second Circuit held plaintiffs adequately alleged crypto token purchases made on Binance’s trading platform by U.S. persons were domestic transactions and subject to U.S. securities laws on two independent grounds.  First, it was plausible that plaintiffs’ purchase orders were matched with sellers on servers located in the U.S.  Second, Binance’s Terms of Use stated orders became irrevocable once they were sent to Binance, which the plaintiffs alleged occurred from their homes in the United States.  The Court’s extraterritoriality analysis focused on Binance’s express disclaimer of a physical presence or geographical headquarters and the inapplicability of any other country’s securities regime.  These factors created the possibility of a regulatory vacuum absent imposition of U.S. securities laws.  Underscoring this point, the Court reasoned that “[e]ven if the Binance exchange lacks a physical location, the answer to where [it matches transactions] cannot be ‘nowhere.’”  Williams, 96 F.4th at 138. 

It will take years before the full implications of Williams become clear; but what is already clear is that U.S. courts are likely to be skeptical of corporate structures that appear to leave a company immune from litigation anywhere.  This skepticism is particularly relevant to crypto exchanges and other decentralized actors, which may not have or maintain a traditional “home” jurisdiction or base. Such decentralized actors may wish to consider taking steps to reduce the risk of exposure to U.S. securities laws, including affirmatively establishing a domicile outside the U.S. by opening a non-U.S. office or otherwise formally submitting to regulation by another nation, using servers data centers, and other computer network infrastructure outside of the United States, and drafting terms of service or other contractual agreements to provide that transactions become irrevocable in a location outside the U.S.

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Court Dismisses Most Claims in Authors’ Lawsuit Against OpenAI

by Angela Dunning, Arminda Bepko, and Jessica Graham

Photos of authors

From left to right: Angela Dunning, Arminda Bepko & Jessica Graham (photos courtesy of Cleary Gottlieb Steen & Hamilton LLP)

This week saw yet another California federal court dismiss copyright and related claims arising out of the training and output of a generative AI model in Tremblay v. OpenAI, Inc.,[1] a putative class action filed on behalf of a group of authors alleging that OpenAI infringed their copyrighted literary works by using them to train ChatGPT.[2] OpenAI moved to dismiss all claims against it, save the claim for direct copyright infringement, and the court largely sided with OpenAI.

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