Since the U.S. Court of Appeals for the Second Circuit opened the federal courthouse door to the aggressive use of the Alien Tort Statute in Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980), some of the most explosive litigation battles have involved foreign plaintiffs suing multinational companies for human rights violations suffered in their home countries.
Although the U.S. Supreme Court successfully cut back the reach of the ATS in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), by paring down the types of claims that could be brought, human rights cases continued to occupy a major place on the federal docket. The latest Supreme Court ATS ruling, Kiobel v. Royal Dutch Petroleum Co., 2013 U.S. Lexis 3159 (April 17), however, is likely to make it difficult for foreign plaintiffs to stay in federal court on a claim based on conduct that takes place in foreign countries.
The facts in Kiobel are typical of those seen in ATS cases: Plaintiffs were residents of Ogoniland, in Nigeria. Defend­ants Royal Dutch Petroleum Co. and Shell Transport and Trading Co. were holding companies incorporated in the Netherlands and England. Their joint subsidiary, defendant Shell Petroleum Development Co. of Nigeria Ltd., was incorporated in Nigeria, and engaged in oil exploration and production in Ogoniland.
After residents of Ogoniland began protesting the environmental effects of Shell Petroleum’s practices, the defendants allegedly enlisted the Nigerian government to violently suppress the residents’ protests. The plaintiffs further alleged that Nigerian military and police forces attacked Ogoni villages, beating, raping, killing and arresting residents and destroying or looting property. The plaintiffs alleged that the corporate defendants aided and abetted the violence by, among other things, providing the Nigerian forces with food, transportation and compensation, as well as by allowing the Nigerian military to use the respondents’ property as a staging ground for attacks.
In a twist not usually seen in ATS cases, some of the villagers then moved to the United States, where they were granted political asylum. They then filed suit in the Southern District of New York, alleging jurisdiction under the ATS and requesting relief under customary international law. The district court dismissed many of the claims essentially because they did not give rise to a type of violation of the law of nations for ATS purposes. However, the court recognized the increasingly controversial doctrine of aiding and abetting liability for corporate liability for ATS purposes. See Georgene Vairo, "ATS Update," NLJ, April 20, 2009.
The Second Circuit addressed the issue of aiding and abetting in Kiobel. It dismissed the remainder of the complaint, in a 2-1 opinion, finding that the law of nations does not recognize corporate liability. The Supreme Court granted certiorari to consider that question. Curiously though, after oral argument, the court directed the parties to file supplemental briefs addressing an additional question that had been the subject of a footnote in the Second Circuit’s opinion: "Whether and under what circumstances the [ATS] allows courts to recognize a cause of action for violations of the law of nations occurring within the territory of a sovereign other than the United States." After hearing argument on that question, it affirmed the Second Circuit based on its answer to that second question.
There are several surprising aspects to the decision. First, it was a surprise to many observers when the high court first halted consideration of the aiding-and-abetting issue to ask for briefing on the extraterritoriality question. I suspect the court was on the same page as many who had been thinking that the use of the ATS to make the U.S. federal courts an all-purpose human rights police force had gone too far or at least far enough. In fact, Judge José Cabranes, the author of the Second Circuit decision in Kiobel , seemed to be heading in that direction. He noted that in the first 15 or so years of ATS litigation, cases were brought only against foreign individuals. It was not until 1997 that a case appeared to be brought against a corporate defendant. See Doe v. Unocal Corp., 963 F. Supp. 880 (C.D. Calif. 1997), aff’d in part and rev’d in part, 395 F.3d 932 (9th Cir. 2002).
In many of the corporate cases, various issues about the applicability of the ATS went unresolved as defendants moved to dismiss, generally successfully, on forum non conveniens grounds, or settled because of fears of draconian jury verdicts because of the heinous allegations made. But some ATS cases moved forward, and the time apparently was ripe for the Second Circuit and the Supreme Court to grapple with two important issues: aiding and abetting/corporate liability and extraterritoriality. The second surprising aspect to the decision is that the Supreme Court ended up jumping over the aiding-and-abetting issue, addressing only the ATS extraterritoriality issue instead, and more curiously, that it was able to reach a unanimous result on the judgment.
So, how did the Supreme Court, so well known for its 5-4 opinions, manage to achieve unanimity in terms of affirming the Second Circuit decision dismissing the entire Kiobel complaint? In an opinion by Chief Justice John Roberts Jr., the five-judge majority rested its judgment almost entirely on a single canon of statutory interpretation, under which courts presume that a statute does not apply extraterritorially unless Congress has clearly indicated otherwise. Hmmm — that may well seem reasonable, but in light of the fact that the key purpose of the ATS, which was adopted in the late 18th century, was to deal with things like piracy on the high seas, that explanation seems a bit strange, whether one agrees that the ATS should be used to make federal courts human rights courts or not.
And the majority itself left open the question of when this presumption can be rebutted, stating that the ATS will provide federal jurisdiction if the claims "touch and concern the territory of the United States…with sufficient force." In this ever shrinking world of ours, this might seem to be all the time. The surviving Boston Marathon bombing suspect pointed to what is going on in other parts of the world as justification for his acts.
MORE UNANSWERED QUESTIONS
The concurring opinions leave the door somewhat open as well. As Justice Anthony Kennedy said, the extraterritorial reach of the ATS will still require "further elaboration and explanation." Justices Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan concurred with the majority’s holding but would grant jurisdiction "where distinct American interests are at issue." This would seem to be a relatively easy standard to meet, and as a matter of fact, Shell Oil does extensive business in the United States, but that apparently was not sufficient to trigger such interests for the liberal justices on the court. Given the complicated ownership structure of today’s multinational holding companies, when would a company be "American" enough to come under the reach of the ATS? Will we only police corporations incorporated in the United States? Or will Kiobel only further encourage corporations to arrange their business structures in ways to ensure that their subsidiaries have so little "American-ness" to ensure that ATS jurisdiction will not attach? And, even if there is enough of a U.S. hook, what about aiding-and-abetting liability? The circuit split on that issue remains.
At the end of his opinion, Roberts lobbed the ball into Congress’ court: "Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices. If Congress were to determine otherwise, a statute more specific than the ATS would be required." Since Filartiga, the evolution of ATS litigation has become more and more controversial. Arguably, it is up to Congress to decide the extent to which federal courts ought to be home to human rights litigation via the ATS. Given the controversial nature of ATS and human rights litigation, and Con­gress’ inability to get legislation passed even when the public appears to be on board (see gun control/background-check legislation), it is hard to believe we will see expanded ATS legislation.
In the alternative, practitioners should keep in mind that state courts and federal courts through alienage jurisdiction are open to state tort claims. At least for now. The target for human rights plaintiffs keeps moving: Keep an eye out for the next case, DaimlerChrysler A.G. v. Bauman, 2013 U.S. Lexis 3163 (cert. granted April 22). This case involves the Argentine "Dirty War" of the 1970s and ’80s. It does not involve an ATS issue, but another issue that may arise if plaintiffs seek to sue in state or federal court on non-ATS claims. The question is whether there is general personal jurisdiction in a suit brought by Argentine nationals against a German corporation whose Argentine subsidiary allegedly violated their human rights where the only contact with the forum state, California, is the German corporation’s U.S. subsidiary. So stay tuned.
Georgene M. Vairo is the David P. Leonard Professor of Law at Loyola Law School, Los Angeles. She serves as a member of the board of editors of Moore’s Federal Practice, for which she writes chapters on removal, venue and multidistrict litigation. She also serves on the Rand Institute for Civil Justice Board of Overseers.