Sunday, February 26, 2012

Corporate Liability under the Alien Tort Statute of 1789 - Kiobel v. Royal Dutch Shell Petroleum Co.

The U.S. Supreme Court will hear arguments on Feb. 28th in Kiobel v. Royal Dutch Shell Petroleum Co., case number 10-1491.  The plaintiff is invoking the Alien Tort Statute of 1789 (ATS), 28 U.S.C. Section 1350, to sue Royal Dutch Shell over allegations that Shell aided the Nigerian government in ending oil exploration protests using violence and torture well over a decade ago.  This blog post will simply provide a brief overview of the case.

I. Questions Presented

The questions before the Supreme Court in this case are:

1. Whether the issue of corporate civil tort liability under the Alien Tort Statute ("ATS"), 28 U.S.C. § 1350, is a merits question, as it has been treated by all courts prior to the decision below, or an issue of subject matter jurisdiction, as the court of appeals held for the first time.

2. Whether corporations are immune from tort liability for violations of the law of nations such as torture, extrajudicial executions or genocide, as the court of appeals decisions provides, or if corporations may be sued in the same manner as any other private party defendant under the ATS for such egregious violations, as the Eleventh Circuit has explicitly held.
The way the Supreme Court has worded the second question seems to favor the Plaintiffs especially the use of the word "immune" which the Second Circuit Court of Appeals majority actually refused to use in their holding along with the reference to the Eleventh Circuit's holding that corporations could be sued under the ATS.  The 11th Circuit Court of Appeals has held that a corporation could be held liable under the ATS in Sinaltrainal v. Coca-Cola Co. 578 F.3d 1252, 1263 (11th Cir. 2009); Romero v. Drummond Co., 552 F.3d 1303, 1315 (11th Cir. 2008); Aldana v. DelMonte Fresh Produce N.A., 416 F.3d 1242, 1253 (11th Cir. 2005).

II. Case Facts

Between 1993 and 1994 Nigerian forces allegedly shot and killed Ogoni residents and attacked Ogoni villages in Nigeria by beating, raping, and arresting residents and destroying or looting their property. The allegations against Shell are that one of Shell's subsidiaries provided 1) transportation to Nigerian forces, 2) allowed their property to be used as a staging ground for attacks, 3) provided food for soldiers involved in the attacks, and 4) provided compensation to the soldiers involved in the attacks.  The complaint alleges that these actions constitute aiding and abetting 1) extrajudicial killing, 2) crimes against humanity, 3) torture or cruel, inhuman, and degrading treatment, 4) arbitrary arrest and detention, 5) violation of the rights to life, liberty, security, and association, 6) forced exile, and 7) property destruction.  The complaint was filed in 2002 in the Southern District of New York and amended in May 2004.  The defendants moved for judgment on the pleadings under FRCP 12(b)(6) for failure to state a claim upon which relief can be granted.  The District Court dismissed some of the claims under FRCP 12(b)(6) for failure to state a claim, but refused to dismiss others.  The Second Circuit Court of Appeals dismissed all of the claims asserting that a corporation cannot be sued under the ATS in so far as the law of nations portion of the statute is invoked.

III. The Alien Tort Statute

The ATS states that "[t]he 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."  This statute grants federal district courts original jurisdiction over well-established violations of international law or treaties signed and ratified by the United States including human rights violations that occurred overseas. Between 1789 and 1980 the ATS was used as a basis for jurisdiction only a handful of times.  In 1980 the Second Circuit Court of Appeals revived the statute ruling in Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980)  that it provides federal courts jurisdiction over tort actions brought by aliens only for violations of the law of nations (customary international law) including war crimes, crimes against humanity, or crimes of a (enemy of all mankind).   For instance after a default judgment a jury in the Southern District of New York considering only the issue of damages awarded a $4.5 billion verdict against Radovan Karadzic for acts of genocide committed in Bosnia-Herzegovina by persons under his command.  Doe v. Karadzic, 2001 U.S. Dist. LEXIS 12928 (S.D.N.Y. Aug. 28, 2001).  As a practical matter suing someone with no assets in the United States would not make much sense as you would not be able to collect on the judgment unless they paid it voluntarily or had some mechanism to enforce the judgment against them where their assets are.

IV. Sosa v. Alverez-Machain

In 2004 the Supreme Court ruled in Sosa v. Alverez-Machain, 542 U.S. 692 (2004) that the Alien Tort Statute provides the federal courts with jurisdiction over these claims regardless of where they occurred, but does not provide a separate cause of action.  Instead a cause of action may come from the law of nations which is a limited subset of international law of a core set of norms binding universally on world states (piracy, ambassadors, safe conduct) or a treaty obligation of the United States.  The ATS permits an alien plaintiff to file a tort action against any person that the United States has personal jurisdiction over regardless of citizenship and regardless of whether the tortuous act took place within or outside the territory of the United States.  In the Sosa case Alverez-Machain was a doctor accused of aiding a Mexican Drug cartel in torturing and killing a U.S. DEA agent by keeping the agent alive to prolong his agony and for the cartel to extract more information from him.  Alverez-Machain was indicted in the United States for this crime.  Unable to obtain his extradition from Mexico the U.S. government engaged Sosa, the defendant, and some other individuals to kidnap Alverez-Machain from Mexico and bring him to the United States where he was arrested.  He was acquitted at his criminal trial.  After he returned to Mexico he sued the federal government under the Federal Tort Claims Act, but that case was dismissed.  He also filed suit against his Mexican kidnappers under the Alien Tort Statute, but all of his claims were dismissed except for his claim against Sosa.  He recovered a $25,000 verdict against Sosa for emotional distress damages.  The Supreme Court in an opinion by Justice Souter reversed on the basis that although arbitrary arrest was actionable in the United States and Mexico the Alien Tort Statute was limited to violations of customary international law and U.S. treaty obligations.  As Alverez-Machain's kidnapping was not in violation of any well-established binding norm of customary international law or any self-executing treaty signed and ratified by the United States he had no cause of action under the Alien Tort Statute. 

Justice Scalia's concurrence in Sosa concluded that there could be no international common law as Erie v. Tompkins abolished the old federal common law and forced federal courts to apply state law in cases heard under diversity jurisdiction.  Scalia reasoned that the international common law, referred to in the Alien Tort Statute as violations of the law of nations, was really part of federal common law and that it was abolished by Erie.  That would leave violations of self-executing treaties signed and ratified by the United States as the only basis for a cause of action using the jurisdiction provided by the Alien Tort Statute unless one were to assume that what Scalia really meant was that Alien Tort Statute jurisdiction is analogous to diversity jurisdiction and that the court should apply the laws of the country where the violation occurred.  Some commentators think that this is unlikely to be the case as these claims receive federal jurisdiction as federal questions relating to a federal statute (the Alien Tort Statute of 1789) and do not fall under diversity jurisdiction making Erie inapplicable.  Another view could be that the Alien Tort Statute is a separate basis of jurisdiction independent from federal question and diversity jurisdiction.  Both federal question and diversity jurisdiction were powers that could be granted to the federal judiciary by congress provided that congress passed a law doing so.  Congress passed a law granting the judiciary diversity jurisdiction in 1789, but did not pass a law granting the courts federal question jurisdiction until 1801. That federal question jurisdiction law was repealed the next year and not restored until 1875.  Apparently, congress' reluctance to pass federal question jurisdiction into law was based on fears that the federal judiciary might become too powerful.  Hence the Alien Tort Claims jurisdiction is actually older than federal question jurisdiction which is an argument for considering it as an independent separate basis of federal courts jurisdiction.  However, it is also possible to argue that congress created the Alien Tort Claims Act in 1789 as a more limited version of the federal question jurisdiction that it declined to extend in full at that time.  If this argument is accepted then one could conclude that the jurisdiction provided by the Alien Tort Claims Act was perhaps subsumed into federal question jurisdiction when congress finally granted it to the federal courts in 1875.  The main problem with that is that congress has never repealed it.

V. The ATS After Sosa

The Court in Sosa left open a number of questions including what constitutes the law of nations and which treaties are actionable, the asymmetry of right if an alien plaintiff enjoys rights under the ATS which a U.S. Citizen would not, and whether entities could be sued under the ATS as Sosa was only concerned with natural persons.  The last question on whether entities such as corporations could be sued under the ATS is now before the Court in Kiobel.   

VI. The Second Circuit Court of Appeals Opinion in Kiobel

The Second Circuit Court of Appeals ruled that a corporation could not be sued under the ATS.  That corporations are liable under domestic law does not mean that they are liable under the law of nations or customary international law.  Customary international law or the law of nations includes "those standards, rules, or customs (a) affecting the relationship between states or between an individual and foreign state, and (b) used by those states for their common good and/or dealings inter se." ITT v. Vencap, Ltd, 519 F.2d 1001, 1015 (2d Cir. 1975).  The majority asserts that before World War II the law of nations only concerned states and relations between them.  The Second Circuit found that while customary international law has expanded since World War II to encompass individuals in addition to states, that expansion has "been limited to natural persons--not 'juridical' persons such as corporations--because the moral responsibility for a crime so heinous and unbounded as to rise to the level of an 'international crime' has rested solely with the individual men and women who have perpetrated it."  Kiobel v. Royal Dutch Shell Petroleum Co., 621 F.3d 111, 119 (2nd Cir. 2010).  That expansion to include natural persons within customary international law has been limited to war crimes tribunals such as the Nuremberg trials and the International Criminal Court for "a limited number of international crimes--including war crimes, crimes against humanity (such as genocide), and torture..."  Id. at 120.  The Second Circuit held that "[l]ooking to international law, we find a jurisprudence, first set forth in Nuremberg and repeated by every international tribunal of which we are aware, that offenses against the law of nations (i.e., customary international law) for violations of human rights can be charged against States and against individual men and women but not against juridical persons such as corporations. As a result, although customary international law has sometimes extended the scope of liability for a violation of a given norm to individuals, it has never extended the scope of liability to a corporation."  Id.  The Court noted that nothing precluded a suit against a corporation's employees, managers, officers, or directors as individual natural persons under the ATS and that congress could amend the ATS to allow for corporate defendants or there might be liability under laws other than the ATS.  Id. at 149. 

Judge Leval concurred in the result of dismissing the complaint as the complaint did not plead specific facts supporting a plausible inference that the aider and abetter acted with a purpose to bring about human rights abuses.  However, he strongly disagreed with the holding that corporations were not subject to the ATS stating that the majority position "deals a substantial blow to international law and its undertaking to protect fundamental human rights. . . .  Without any support in either the precedents or the scholarship of international law, the majority take the position that corporations, and other juridical entities, are not subject to international law, and for that reason such violators of fundamental human rights are free to retain any profits so earned without liability to their victims."  Id. at 149-150 (Leval, J., concurring).  In response to the majority's contention that international tribunals have been established without jurisdiction to impose punishment on corporations Judge Leval states, "[t]he reasons why international tribunals have been established without jurisdiction to impose criminal liability on corporations have to do solely with the theory and objectives of criminal punishment, and have no bearing on civil compensatory liability.  The view is widely held among the nations of the world that criminal punishments (under domestic law, as well as international law) are inappropriate for corporations."  Id. at 151 (Leval, J., concurring).  Leval also cited the 11th Circuit rule that corporations can be sued under the ATS as support for his position.


Sosa v. Alverez-Machain:

Kiobel v. Royal Dutch Shell Petroleum:

Second Circuit Ruling:,0,6647821.story

s/ Kurt Koehler
308 1/2 S. State Street Suite 36
Ann Arbor, Michigan 48198
(Washtenaw County)

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