Guest Commentary

Konrad L. Cailteux*, a partner, and Jeremy T. Grabill, an associate, in the New York City office of the law firm Weil, Gotshal & Manges LLP.

For the last two decades, ever since plaintiffs began suing corporations under the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350, courts have simply assumed that corporate defendants could be sued under the statute.  Indeed, in recent years, judges have been crafting the scope of “aiding and abetting” liability under the ATS in cases involving corporate defendants, and two ATS cases involving human rights allegations against corporate defendants have even gone to trial (Nigerian plaintiffs sued Chevron in California, Columbian plaintiffs sued Drummond in Alabama; defendants won both trials).  However, in a landmark decision last week, the U.S. Court of Appeals for the Second Circuit analyzed this issue in detail and held that “[f]or now, and for the foreseeable future, the Alien Tort Statute does not provide subject matter jurisdiction over claims against corporations.”  Kiobel v. Royal Dutch Petroleum Co., Nos. 06-4800 & 06-4876 (2d Cir. Sept. 17, 2010).

Although obviously serious and deeply troubling if true, the plaintiffs’ allegations in Kiobel are garden-variety as far as modern ATS litigation is concerned.  The plaintiffs were residents of the Ogoni Region of Nigeria and alleged that Royal Dutch and Shell (corporations that had been engaged in oil exploration and production in the region since 1958) aided and abetted the Nigerian government in committing human rights abuses during the suppression of local protests in the early 1990s.  Specifically, the corporate defendants were alleged to have provided food, transportation, and compensation to government soldiers.  The soldiers, in turn, were alleged to have killed, beaten, raped, and arrested protesting residents during their attacks on Ogoni villages.

The Second Circuit’s conclusion that the defendant corporations could not be sued under the ATS rests on quite simple reasoning.  First, the Second Circuit faithfully followed the Supreme Court’s statement in footnote 20 of Sosa v. Alvarez-Machain, 542 U.S. 692 (2004)—the only ATS case the Supreme Court has ever decided—and held that it must look to customary international law to determine whether that body of law “extends the scope of liability for a violation of a given norm to the perpetrator being sued.”  Indeed, the Second Circuit’s majority opinion references Sosa’s footnote 20 no less than twelve times.

Second, upon a review of international treaties, the decisions and jurisdiction of international tribunals, and scholarly works, the Second Circuit concluded that corporate liability is not a norm of customary international law.  The majority principally relies on the fact that the London Charter, which established the International Military Tribunal at Nuremberg, only granted the tribunal jurisdiction over natural persons, and that the jurisdiction of the more recent International Criminal Tribunal for the former Yugoslavia, International Criminal Tribunal for Rwanda, and International Criminal Court was similarly limited to natural persons.  Indeed, the court was particularly moved by the refusal of the military tribunal at Nuremberg to impose liability on I.G. Farben, a company that produced the asphyxiating agent used in the gas chambers at Auschwitz and cooperated with the Nazi state in other ways, and which was described by the Second Circuit as “the most nefarious corporate enterprise known to the civilized world.” 

The majority’s conclusion that “[n]o corporation has ever been subject to any form of liability (whether civil, criminal, or otherwise) under the customary international law of human rights” is unassailable, and not even Judge Leval’s concurrence (which reads like a scathing dissent) takes issue with it.  Rather, Judge Leval concludes that the question of corporate liability is merely a matter of “remedy” that “international law leaves . . . to the independent determination of each State.”  Although the concurrence’s analysis ultimately strays too far from the text of the ATS and the Supreme Court’s guidance in Sosa, Judge Leval nevertheless would have affirmed the dismissal of the case on the alternative ground that the plaintiffs failed to plausibly allege that the corporate defendants acted with a “purpose” to bring about the human rights abuses, as required by recent “aiding and abetting” jurisprudence.

The impact of the Kiobel decision cannot be understated.  At least in the Second Circuit, corporate defendants should now be entitled to immediate dismissal of most, if not all, ATS claims on jurisdictional grounds.  However, as the Second Circuit is quick to point out, its opinion does not foreclose ATS claims against a corporation’s employees, managers, officers, or directors, and ATS plaintiffs can be expected to re-focus their allegations on these categories of individual defendants to try to avoid future dismissals.  Although the Supreme Court may eventually decide to weigh in on the question of corporate liability, it will likely first allow other Circuits an opportunity to evaluate the Second Circuit’s forceful decision in Kiobel.

*Mr. Cailteux has authored several publications for Washington Legal Foundation on the Alien Tort Statute available here.