Cross-posted by at On the Docket

The wave of tort suits under the Alien Tort Statute may not come to an end thanks to a decision issued last Friday by the U.S. Court of Appeals for the Second Circuit, but it is likely to subside considerably.  For the past several decades, the ATS has served as the favorite vehicle of human rights activists seeking to challenge the overseas business practices of U.S. corporations, but the Second Circuit has now ruled that corporate entities are not subject to the ATS.

The ATS is a 1789 law that grants federal courts jurisdiction to hear tort claims by aliens alleging violations of “the law of nations.”  The law lay dormant for two centuries, primarily because litigants assumed that the number of torts to which the law applied was extremely narrow – perhaps limited only to claims by foreign ambassadors alleging they have suffered assault in the U.S.  But in 1980, the Second Circuit held in Filartiga v. Pena-Irala that the ATS applied to a wide array of alleged human rights violations.  In the decades that followed, activists sued U.S. corporations under the ATS for an increasing variety of overseas activities, from operating facilities that allegedly polluted the environment, to administering medications without first providing informed consent, to giving financial support to oppressive foreign governments.  WLF has been actively involved in many of those suits, opposing expansive interpretations of the ATS.

But then last September, the Second Circuit (which along with the Ninth Circuit has handled the great majority of ATS cases) ruled 2-1 in Kiobel v. Royal Dutch Petroleum Co. that the ATS is inapplicable to corporations.  The court explained that because corporate liability is not a discernible norm of customary international law, courts should not interpret the ATS as having authorized suits against corporations.  Last Friday, by a 5-5 vote, the Second Circuit denied the plaintiffs’ motion for rehearing en banc.  As a result, numerous ATS suits against corporations that have been pending within the Second Circuit for years or decades will have to be dismissed.  That includes the granddaddy of them all, Khulumani v. Barclay Nat’l Bank Ltd., an ATS suit filed against virtually ever major corporation that did business in apartheid South Africa.

Kiobel still permits individual corporate officers to be sued for international human rights violations.  But such claims are likely to prove extremely difficult to establish.

The en banc vote seemed to be the subject of considerable infighting and intrigue within the Second Circuit.  Numerous concurring and dissenting opinions were issued in connection with the court’s order, some of them quite heated – particularly the dueling opinions of Senior Judge Pierre Leval (who supported rehearing) and Chief Judge Dennis Jacobs (who opposed it).  The slender nature of the three-judge panel decision’s survival was highlighted by the fact that Judge Leval would have cast the deciding vote in support of rehearing en banc had he been permitted to vote.  But although his membership on the initial panel entitled him to vote on the rehearing petition and to sit on the en banc panel had rehearing en banc been granted, his senior status disqualified him from actually voting on the petition for rehearing en banc.

Also, the court initially issued an order on December 22, 2010 denying the petition for rehearing en banc, but that order was withdrawn the very next day without explanation.  The withdrawal may have been part of an effort to solicit the participation of Judge Raymond Lohier in the en banc vote.  Judge Lohier was sworn in as the Second Circuit’s eleventh active judge on December 21, 2010.  Perhaps he was seen as a sixth and decisive vote in support of rehearing en banc.  But for reasons not explained by the court, he is not listed as a participant in today’s vote.