By Jonathan Stempel
(Reuters) - A U.S. appeals court on Tuesday refused to hold KBR Inc <KBR.N> liable for alleged human trafficking, in connection with the 2004 kidnapping and murder by insurgents of 12 Nepali men being transported in Iraq to work for a subcontractor at a U.S. military base.
By a 2-1 vote, the 5th U.S. Circuit Court of Appeals in New Orleans upheld a lower court judge's 2014 dismissal of civil claims against KBR, an engineering firm and military contractor sometimes known as Kellogg Brown & Root, by surviving family members and a Nepali worker who was not captured.
Circuit Judge Edward Prado said dismissal was proper because KBR's alleged misconduct lacked a sufficient connection with the United States to justify letting the lawsuit proceed there.
Lawyers for the plaintiffs did not immediately respond to requests for comment.
In their 2008 lawsuit, the plaintiffs accused Houston-based KBR and its Jordanian subcontractor Daoud & Partners of recruiting victims in Nepal by promising them jobs at a luxury hotel in Amman, only to send them to Iraq instead.
The surviving worker said he was forced to work at the Al Asad base north of Ramadi, Iraq for 15 months before getting his passport back.
Daoud eventually settled.
Prado rejected claims that KBR's alleged misconduct could be deemed "domestic" under the federal Alien Tort Statute, which is often invoked in human rights cases, because Al Asad fell under U.S. control, KBR conducted financial transactions through U.S. banks, and U.S.-based workers may have known of alleged abuses.
"All the conduct comprising the alleged international law violations occurred in a foreign country," wrote Prado, who also rejected claims under a federal anti-trafficking law.
Circuit Judge James Graves dissented. He found "much to support" the conclusion that claims over whether KBR engaged in human trafficking to fulfill its U.S. government contract to provide labor at Al Asad "touch and concern" the United States.
The U.S. Supreme Court narrowed the reach of the Alien Tort Statute in 2013.
Geoffrey Harrison, a partner at Susman Godfrey representing KBR, said he was pleased with Tuesday's decision, and that "the court of appeals got it right."
The case is Adhikari et al v. Kellogg Brown & Root Inc et al, 5th U.S. Circuit Court of Appeals, No. 15-20225.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)