Column-BNP Paribas genocide verdict sets stage for appeal on multiple grounds

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By Jenna Greene

(Reuters) -When a federal jury in Manhattan on Friday found French bank BNP Paribas liable for aiding Sudan’s genocidal regime by providing banking services that violated American sanctions, the decision set the stage for what’s likely to be a fierce battle on appeal.

The stakes are huge. Victims’ lawyers say the jury’s $20.75 million award clears the way for an estimated class of 23,000 Sudanese refugees in the U.S. to “seek billions more in recovery.”

The three Sudanese plaintiffs alleged they suffered severe human rights abuses under Sudan’s former President Omar al-Bashir. Their cases were selected for a so-called bellwether trial — commonly used in class actions to gauge how juries will respond to a larger set of claims.

BNP Paribas in a statement said it “strongly” believes the verdict should be overturned and “will fight this case and use all recourses available to it.” It also downplayed the significance of the verdict, saying it is specific to these three plaintiffs.

Shares of the bank opened sharply lower Monday morning after the Friday afternoon verdict in the five-week trial and fell again on Tuesday. In a call with analysts, BNP Paribas Chief Financial Officer Lars Machenil said on Tuesday that the bank had not set aside any funds to pay out litigation claims, my Reuters colleagues reported.

Assuming the case doesn’t settle — always a possibility in any high-stakes fight — what might the bank’s appeal look like?  

It’s hard at this point to put a timeline on next steps. In large part, it will depend on whether the 2nd U.S. Circuit Court of Appeals opts to review the three bellwether verdicts now or will wait until a later stage in the case, after other victims’ claims are heard.

Based on court records, three issues stand out as particularly intriguing to me.

First, BNP Paribas may get traction arguing that U.S. District Judge Alvin Hellerstein applied the incorrect legal standard by misapplying Swiss law — more on that later — to hold it liable.

The lawsuit, which was filed in 2016, argued that the bank knew or should have known that by providing financial services, it was contributing to the Sudanese regime’s campaign of murder, rape and torture between 1997 and 2011. The U.S. government recognized the Sudanese conflict as a genocide in 2004, and a decade later, BNP Paribas pleaded guilty to U.S. criminal charges related to facilitating transactions for sanctioned entities in Sudan, Iran and Cuba. It paid an $8.97 billion penalty.

In the past, attempts by plaintiffs’ lawyers to hold companies responsible for their role in enabling overseas human rights abuses have largely failed, plaintiffs’ co-lead counsel Kathryn “Lee” Boyd told me in an interview. Such complaints have been brought under U.S. statutes including the Alien Tort Claims Act or the Antiterrorism Act. Here, Boyd initially asserted tort claims against the bank including negligence and wrongful death.

After a series of procedural twists, however, the case was tried under Swiss law. The judge who initially presided over the case before being elevated to the appeals court in 2022, Alison Nathan, reasoned that the choice of law was appropriate because the bank in dealings with Sudan predominantly operated through its Swiss branch.

The bank has repeatedly argued that Hellerstein didn’t apply Swiss law correctly. The Swiss government itself weighed in last month, arguing in a Sept. 2 letter to the court by ambassador to the U.S. Ralf Heckner that BNP Paribas’ past conduct in Sudan “was permissible under Swiss law” at the time.

Boyd called the letter “a last-gasp effort,” and said BNP Paribas has argued unsuccessfully for years to both Nathan and Hellerstein that Swiss law lets it off the hook.

The trial began on Sept. 11, after Hellerstein denied defense counsel’s request to start on a day without terrorism-related associations. “We will open 9/11. It’s not a holiday,” he said, according to a transcript. However, he granted defense counsel’s motion to exclude references to international terrorism, including Sudan hosting Osama bin Laden from 1991 to 1996.

Despite his own guardrails, the judge kicked off the proceedings by sharing at length with jurors his vivid recollections of 9/11: the smoke, the smell and “the skeletal teetering of the remains of the World Trade Center.” 

Plaintiffs’ lawyer Bobby DiCello picked up the theme in his opening, telling the jury that “you heard his Honor speak of survivors, an auspicious day for me to deliver our opening statement. There are three survivors sitting right here,” he said, referring to the Sudanese plaintiffs.

In what may emerge as a second potential issue to raise on appeal, BNP trial counsel Barry Berke, a partner at Gibson, Dunn & Crutcher, moved for a mistrial. Berke called the judge’s 9/11 remarks improper and prejudicial, according to a transcript of the proceedings.

Hellerstein denied the motion. “I don’t think there’s anything objectionable,” he said.

Defense counsel made another mistrial motion a week later, arguing that testimony from a witness about the relationship between Sudanese officials and BNP Paribas irreparably prejudiced them.

Hellerstein, who struck the testimony as hearsay, denied the motion and said he had no reason to believe jurors would not follow his instructions to disregard the exchange.

Beyond technical legal questions, internal disputes among plaintiffs’ counsel could also prompt a third argument by the bank on appeal that alleged lawyer misconduct undermined the fairness of the proceedings. 

As I previously wrote, a highly unusual public fight broke out this summer among plaintiffs’ lawyers who accused one another of unethical conduct in the case. Co-counsel from Hausfeld and Zuckerman Spaeder in July sought to disqualify Boyd, alleging she tried to “force words into the mouth of an expert witness,” and coached class members on how to fill out a questionnaire being used for settlement purposes. 

Boyd denied wrongdoing, and responded that the Hausfeld/ Zuckerman team was trying to settle the case behind closed doors “without the consent or involvement of the very people they purport to represent.”

At a Sept. 3 hearing, the plaintiffs’ team told the judge they had found a way to work together, but Berke indicated the issue wasn’t going away. 

“We’re very concerned about the significant allegations under oath that the experts and fact witnesses, including potentially the plaintiffs, were prepared to testify falsely in this trial,” Berke said at the Sept. 3 hearing, according to a transcript.

In an interview on Monday, plaintiffs’ counsel Michael Hausfeld said the lawyers recognized it was essential to put aside their personal differences, and that their conflict was “not an appealable issue” for BNP. 

As the case moves into its next phase, whether the verdicts will stand remains a pivotal question for BNP Paribas and the tens of thousands of Sudanese refugees still awaiting their day in court.

(Reporting by Jenna Greene)