Paul Scrom, J.D. Candidate 2012, Hofstra University
In Kiobel v. Royal Dutch Petroleum, decided on September 17, 2010, the U.S. Court of Appeals for the Second Circuit held corporations cannot be subjected to liability for Human Rights violations under the Alien Tort Statute (28 U.S.C. § 1350). The decision was seen as a crippling blow to ATS and Human Rights litigation in the United States, especially since the Second Circuit of New York has had a reputation of being rather favorable towards ATS claims. But, on July 8th, in Doe v. Exxon Mobil, the D.C. Circuit Court of Appeals issued a ruling contradicting the Second Circuit, and recognizing “it would create a bizarre anomaly to immunize corporations from liability for the conduct of their agents in lawsuits brought for shockingly egregious violations of universally recognized principles of international law.” Only three days following the decision, the Seventh Circuit also joined against Kiobel and ruled in favor of corporate liability under the ATS in Flamo v. Firestone Natural Rubber. These inconsistent Circuit decisions beg for the Supreme Court to settle the issue of corporate liability under the ATS. The Supreme Court should find that corporations will be held responsible when its members violate the human rights of others.
Background
The Alien Tort Statute was passed in 1789 as part of the original Judiciary Act. The statute grants 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.” As long as the accused was properly served and processed in the United States, the U.S. courts could hear cases involving torts that occurred in violation of the law of nations. For years this provision laid dormant, being called upon very rarely, until 1980 when Filartiga v. Peña-Irala was decided.
In Filartiga, the Plaintiff brought suit against Pena-Irala for wrongfully causing the death of his seventeen-year old son, which was a result of torture instructed by Paraguayan authorities. The clever attorneys of the Plaintiff evoked the rarely used ATS in order to bring suit. Defendant’s attempt to dismiss the case for lack of jurisdiction failed as the court held “that deliberate torture perpetrated under color of official authority violates universally accepted norms of the international law of human rights, regardless of the nationality of the parties.”
The Filartiga holding lead to a revitalization of the ATS and its new use as an instrument for seeking compensation for violations of law of nations, specifically human rights. The Supreme Court reinforced the legitimacy of ATS litigation in Sosa v. Alverez-Machain, although eventually finding there was no violation of the Plaintiff’s human rights for a “single illegal detention of [the Plaintiff for] less than a day, followed by the transfer of custody to lawful authorities and a prompt arraignment.”
In recent years, corporations have been included as defendants in ATS lawsuits for their aiding and abetting in violations of human rights law. Unocal in Burma, Talisman Energy in Sudan, Rio Tinto in Papua New Guinea, Yahoo!, and others, have all been corporations accused of being involved with human rights violations. Most of these cases settled or the notion of corporate liability went unopposed, and was somewhat accepted. That was until Kiobel.
Kiobel v. Exxon: the Circuit Battle over Corporate Liability Under the ATS:
The main Plaintiff in Kiobel is the wife of one of the “Ogoni Nine” who were executed by Nigerian authorities for their protests against environmental pollution caused by oil companies, among them, Royal Dutch Petroleum. The lawsuit filed against Royal Dutch alleged that the company aided and abetted in the suppression of protests against the company’s questionable oil development activities. The majority ruled against the plaintiffs, rejecting corporate liability under the ATS. They focused on a footnote to the Supreme Court’s decision in Sosa. Footnote 20 of the Opinion reads, “[a] related consideration [for accepting a cause of action under the ATS] is whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor such as a corporation or individual.” The court interpreted this statement (I feel, incorrectly) to mean the courts must look to international law, not domestic law, for evidence as to whether or not corporations can be held liable for violations of the laws of nations. The court then used this footnote to analyze international customary law to conclude that it does not support corporate liability; only sovereign states and natural persons may be held liable. Kiobel was seen as a crippling blow to ATS litigation, and many believed it would lead to its slow downfall. But, this remains to be seen, especially since the Exxon and Firestone decisions.
In Exxon, plaintiffs, a group of Indonesian villagers, alleged Exxon security forces, who were Indonesian soldiers, murdered, tortured, raped and kidnapped local villagers. The D.C. Circuit allowed the case to continue and rejected the Second Circuit ruling. The court ruled that corporations can be held liable under the statute. The Court held that the question of corporate liability must be determined by domestic law as Sosa only asked that customary international law be analyzed to determine what rights, duties, and remedies exist and are violated, not who or what is owed such rights, duties, and remedies. Domestic law, not international customary law, governs how to react to such violations, as it is domestic laws obligation to lay out rules of procedure and evidence. Being so, domestic law clearly illustrates that corporations must be held responsible for their transgressions and the transgressions of their agents. The court also held that even if domestic law does not govern the question, the Kiobel court incorrectly overlooked sources of international law that point towards corporate liability, specifically the Nuremberg Trials. The court in Kiobel argued that corporate liability was absent from the Nuremberg Trials, falsely concluding that this meant corporations like I.G. Farben could be held liable. But, the court in Exxon explained how Farben was destroyed because of their violations of customary international law during the Nazi Regime. The Exxon decision is lengthy, about 112 pages, and this is a short summary of the rejection of the Kiobel holding. Please see the links below, and the actual case, for more of the court’s arguments.
In the Seventh Circuit, just days following Exxon, Judge Posner’s decision in Firestone, echoed the arguments of the D.C. Circuit, and further split the Circuits, 2-1 in favor of corporate liability (note some scholars feel the count is actually 3-1, including the Eleventh Circuit’s decision in Romero v. Drummond Co., although the decision did not give a complete analysis on the issue). The Circuit split foreshadows the likelihood that the Supreme Court will accept the Writ of Certiorari (the request for review by the U.S. Supreme Court), filed in June by the plaintiffs in Kiobel.
Conclusion:
The Circuit split illustrates the legal complexity surrounding corporate liability for human rights violations in U.S. courts under the ATS. From a normative perspective, corporations should be held liable for the actions of their agents, especially when they had knowledge or gave direction to such actors. The power and influence of corporations alone makes them a dangerous entity which frequently exacerbates the evil of individuals.
Supporters of the Kiobel position fret about the courts ruining and interfering with foreign affairs, which is something the political branches (Congress & the President) are responsible for. There is a fear of tarnishing relationships by dragging foreign corporations into U.S. courts for actions done off of U.S. soil. This fear is not unfounded as the Indonesian government in Exxon and the Nigerian government in Kiobel have both called for dismissal of the respective cases. But Congress has already made this decision with the passage of the ATS and its acquiescence to the development of ATS litigation. The courts are only applying the statute as it was passed, and interpreting it accordingly, just like they do for any other statute. Further, when these countries are involved with such activities (like Indonesian authorities guarding Exxon’s plant), shouldn’t normative values prevail?
Legally, the arguments are extremely close, and that is why there is a circuit split, which will likely lead to the Supreme Court either hearing the Kiobel appeal, or taking up Exxon or Firestone in the near future. I believe the Exxon camp has the stronger arguments based on a textual and historical analysis of the statute, especially considering Kiobel’s overemphasis of Sosa’s footnote 20. The need for strong international consensus under the ATS as explained in Sosa, only deals with the types of acts which are to be considered violations of the law of nations, not who is to be responsible for them. Often, those subject to such horrible acts as torture and rape, like in Exxon, cannot obtain sufficient remedies by seeking out individual pawns of a corporate scheme. It is up to the Supreme Court to decide whether or not the United States will be a legal venue to hear such claims.
For a wonderful in-depth legal and historical analysis of corporate liability under the ATS (although ultimately concluding against it), please read Professor Julian Ku’s paper, “The Curious Case of Corporate Liability Under the Alien Tort Statute: A Flawed System of Judicial Lawmaking.” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1721528
(note this paper was published prior to the Exxon and Firestone decisions)
For more information please watch Marco Simons, the legal director of Earthrights International, giving a speech following Kiobel on corporate liability under the ATS.
For more opinions and background please read:
Chimène I. Keitne: “Kiobel v. Royal Dutch Petroleum: Another Round in the Fight Over Corporate Liability Under the Alien Tort Statute,” available at http://www.asil.org/insights100930.cfm
John Bellinger: “DC Circuit ATS Decision in ExxonMobil Sharpens Circuit Split,” available at http://www.lawfareblog.com/2011/07/dc-circuit-ats-decision-in-exxonmobil-sharpens-circuit-split/
Karen McGregor: “Ogoni Nine hanged as Indifferent West Failed to Respond,” available at http://www.independent.co.uk/news/world/africa/ogoni-nine-hanged-as-indifferent-west-failed-to-respond-699325.html
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