September 14, 2011

What the Courts Did Over Our Summer Vacation: Three Days that Redefined the Corporate ATS Landscape

Posted by Susan Farbstein

It’s still 80 degrees and sunny in Cambridge, but I know summer is over because the students are back, roaming the halls and knocking on my office door.  Many are asking the same question: what happened in the corporate Alien Tort Statute (ATS) world over the summer?  The short answer is: a lot.  Here’s a quick summary to get folks up to speed.

The plaintiffs in Kiobel v. Royal Dutch Petroleum Co.  filed their petition for certiorari in early June, asking the Supreme Court to reverse the Second Circuit’s decision that corporations cannot be held liable under the ATS.  Amicus briefs from international human rights organizations, international law scholars, former ambassador David Scheffer, and professors of legal history—the last submitted by our own International Human Rights Clinic—supported the petition.

Then something interesting happened: in a matter of three days, two opinions were issued that transformed the Second Circuit’s Kiobel decision from defining the landscape to becoming an outlier.

On July 8, the D.C. Circuit issued a 2-1 ruling in Doe v. Exxon, a case in which Indonesian plaintiffs allege that Exxon Mobil aided and abetted human rights violations committed by the Indonesian military while protecting oil facilities.  The D.C. Circuit rejected Kiobel in finding that corporations can be held liable under the statute: “contrary to [the view] of the Second Circuit, we join the Eleventh Circuit in holding that neither the text, history, nor purpose of the ATS supports corporate immunity for torts based on heinous conduct allegedly committed by its agents in violation of the law of nations.”

(Also significant is the fact that Exxon broke with a prior Second Circuit ruling in the Presbyterian Church of Sudan v. Talisman case which had imposed a standard requiring that, to be held liable, corporations must act with purpose when they aid and abet human rights violations.  In contrast with that previous ruling, the D.C. Circuit adopted a standard that requires knowledge—the standard long-recognized under international law, as our Clinic previously argued in an amicus brief in support of the petition for certiorari in Talisman.  It was gratifying to see a court get this right.)

Three days later, on July 11, the Seventh Circuit followed suit in Flomo v. Firestone, a case that brings claims for child labor committed on Firestone rubber plantations in Liberia.  In a 3-0 decision authored by Judge Posner, the court labeled Kiobel an “outlier” and noted that, “All but one of the cases at our level hold or assume (mainly the latter) that corporations can be liable [under the ATS].”  The opinion is a stinging rebuke of Kiobel’s rationale on many fronts, from its misinterpretation of corporate liability in the wake of the Second World War, to its failure to distinguish between norms of behavior (which are defined by international law) and remedies (which are left to domestic jurisdictions).

(It’s important to note, however, that Firestone was not a true victory for the plaintiffs.  Despite the favorable ruling on corporate liability, the court ultimately dismissed the suit on the grounds that the plaintiffs had not adequately established that the alleged child labor practices violated international law.  The plaintiff’s petition for rehearing en banc on this issue was denied.)

So where does that leave things at the start of the school year, as the Supreme Court’s new term approaches?  Now that the opposition to the Kiobel cert petition and reply brief have both been filed, the Supreme Court may decide as early as the first week of October whether or not to grant certiorari.  Both the D.C. and Seventh Circuits, which joined the Eleventh Circuit in explicitly recognizing corporate liability under the ATS, have only underscored the circuit split that Kiobel created.  We’ll find out soon enough whether the Supreme Court is ready to enter the fray.

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