What Statutory Construction Will The Supreme Court Give To The Alien Tort Statute?

Tuesday, April 24, 2012 - 14:00
What Are The Critical Issues At Stake In Kiobel v. Royal Dutch Petroleum Co.,
Currently Before The U.S. Supreme Court?

The case of Kiobel v. Royal Dutch Petroleum was brought by Nigerian residents of the Ogoni region of Nigeria against Dutch, British, and Nigerian corporations engaged in oil exploration and production. The lawsuit claimed that those corporations aided and abetted the Nigerian government and military during the 1990s in attacking residents who were protesting the environmental effects of oil exploration. Plaintiffs alleged that Nigerian military forces destroyed and looted property, forced residents into exile, subjected them to torture and detention, and performed extrajudicial killings. They also accused the corporations of having assisted the Nigerian forces by providing transportation, food and compensation to the soldiers.

There are two main questions the petitioners have raised on appeal. First, the Supreme Court must decide whether corporate tort liability under the Alien Tort Statute (“ATS”) is a question of subject matter jurisdiction or a substantive merits-based question. The answer to this is important for two reasons: for one, this question implicates recent Supreme Court cases evaluating when a statute should be considered jurisdictional, including Morrison v. National Australia Bank Ltd, 130 S. Ct. 2869 (2010), where the Court distinguished between whether a statute reaches particular conduct and whether a court has the power to hear the case. The other reason is that all the parties in Kiobel, including the corporations, are aliens. There is no question that the statute is applicable to suits by an alien against a U.S. citizen. The text of the statute says “district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” But here we have a suit by an alien against another alien. The Court could easily find that the ATS was not intended to confer jurisdiction over this type of suit. In that case, the Court would avoid dealing with the thornier issues below.

The second question that petitioners have raised is the one that most legal observers and corporate executives are watching closely. It is the issue of whether a corporation can be held liable in U.S. courts for violations of the law of nations. The text of the ATS itself is silent on this point. It does not include or exclude any specific category of defendant. The Second Circuit decision in Kiobel, which is the subject of petitioners’ appeal, concluded that the scope of liability is determined by customary international law. By exhaustively examining international tribunals, including the International Military Tribunal at Nuremberg, and treatises and academic texts, the Second Circuit concluded that because no corporation has ever been subject to liability under customary international law of human rights, corporate liability does not apply under the ATS. That reasoning effectively wiped out corporate liability under the ATS. But nearly every other court that has considered the issue has found that corporate liability exists under the ATS.

Can Corporations Be Held Liable Under The ATS?

If the Supreme Court reaches this question, it will be a watershed moment. The Supreme Court previously weighed in on the ATS in 2004 in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004). That case was brought by a Mexican national against the U.S. Drug Enforcement Agency (“DEA”). The DEA had approved a plan to hire Mexican nationals to seize Alvarez – who had been indicted for murder in a U.S. court – and bring him to the United States for trial. To carry out that plan, a group of Mexicans, including Sosa, abducted Alvarez from his house, held him overnight in a motel, and brought him by private plane to El Paso, Texas, where he was arrested by federal officers. In Sosa, the Supreme Court limited the availability of private causes of action under the ATS to a narrow range of international law violations. Although many practitioners had hoped the Court would weigh in definitively on the issue of corporate liability, Sosa dealt with claims against an individual rather than against corporations. The Sosa Court did not decide then – and the Supreme Court has not subsequently decided – whether corporations could be held liable under the ATS.

Finding that the ATS does not allow for corporate liability will depend primarily on how the justices view international law and, specifically, whether international law recognizes that corporations can be liable for international law violations. But there is another potential twist on the Court’s approach that might avoid this issue altogether. Shortly after oral argument, the Court issued an order requesting additional briefing on the question of whether and under what circumstances the ATS recognizes a cause of action for conduct occurring outside the United States. This question is focused on whether U.S. courts should police violations of international law that occur solely outside its borders.

The issue of extraterritorial application of the ATS was foreshadowed during oral argument. Within a few minutes of the plaintiffs’ opening argument, Justice Kennedy chimed in that the United States appears to be the only country in the world that entertains cases involving extraterritorial violations to which the United States has absolutely no connection. Justice Alito pressed the point further by squarely asking, “What business does a case like that have in the courts of the United States?” The answer to this question now appears to be the defining issue in Kiobel, a departure from the more narrow question of corporate liability that first brought the case to the Supreme Court. The statute itself offers nothing on this point, so the justices will have to find that the statute was intended to apply only to conduct in the United States or some other creative rationale. The Court can certainly find guidance in some of its recent opinions, including Morrison, regarding extraterritorial application of a statute. If the Court rules against the extraterritorial application of the ATS, it may again avoid deciding once and for all whether corporations can be sued under the statute. The parties will submit briefs in the coming months, and the Court will issue a decision during its next term.

Implications Of Citizens United

In its deliberations about whether a corporation can be held directly liable under the Alien Tort Claims Act (ATCA), will the Court include its own decision in Citizens United? Might such consideration be viewed by corporations as an unwelcome consequence of this landmark decision?

Wrapped up in some of the issues facing the Kiobel Court is the fundamental question of how corporations should be treated under the law. In Citizens United v. Federal Election Commission, the Supreme Court recognized that corporations have certain free speech rights that must be protected. It is unlikely that the Supreme Court will rely on its decision in Citizens United for guidance here. The two cases are not related: neither side mentioned Citizens United in any briefs, and the Court did not invoke that decision during oral argument.

However, Citizens United looms in the background. It might be difficult – if not inconsistent – for the Supreme Court to say that, on the one hand, corporations enjoy some of the same rights that individuals do but, on the other hand, cannot be sued for tortious conduct. Citizens United upheld the right of a corporation to engage in protected activity. Kiobel is, it could be argued, the flip side of that same coin, and that the Court must consider not only the rights, but also the obligations, if any, corporations should have. If the Court reads Kiobel as relating to the nature of corporate personhood, its rationale behind Citizens United could create a tension in the law. But there are no indications so far that the Supreme Court is interested in linking these two cases.

Significance Of The Decision

What are the potential effects and the significance of the decision? What is the response from the international community? Some in the media have postured that modern judicial treatment of the ATCA has created the same diplomatic tensions it was enacted to prevent.

Whatever the basis or rationale for the Court’s decision, there will be significant reverberations from Kiobel. If the Second Circuit’s decision stands up to appeal and is adopted as the law of the land on corporate liability under the ATS, then corporations are spared under that statute. The problem, however, is that it could lead to new and creative ways for plaintiffs to seek relief, such as placing greater focus on individual liability (i.e., suing corporate executives and agents), or suing corporations under other federal laws. If, however, the Court disagrees with the Second Circuit and instead decides that there is a basis for corporate liability, one potential consequence is that corporations may decrease or substantially change their operations and activities in volatile areas of the world.

If the Court avoids the corporate liability issue and instead solely decides that the ATS does not apply extraterritorially, the number and nature of ATS suits will be significantly affected. It will also be a decision welcomed by other nations. In other ATS cases, U.S. courts have assumed jurisdiction involving conduct occurring in foreign sovereign territories. In fact, the extraterritorial application of the ATS has rarely been questioned. But some foreign nations, including the British, Dutch and German governments, which all filed amicus briefs in Kiobel, have weighed in and stated that it is inappropriate for a U.S. court to adjudicate actions with no connection to the United States. With the Court’s new focus on whether the ATS applies to acts occurring outside U.S. borders, it appears that those foreign nations may get the answer they desire.

Lystra Batchoo is an Associate in the New York City office of Kelley Drye & Warren LLP. She focuses her practice on several aspects of civil litigation, including complex and commercial litigation, contract disputes, fraud and securities litigation.

Please email the author at lbatchoo@kelleydrye.com with questions about this article.