Barbary pirates

Barbary pirates

Cross-posted at WLF’s contributor site

The wave of tort suits under the Alien Tort Statute (ATS) may not be brought to an end as a result of a decision issued yesterday by the U.S. Supreme Court, Kiobel v. Royal Dutch Petroleum, 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 Supreme Court has now ruled that the ATS applies only to conduct within the United States or on the high seas.

The ATS is a 1789 law that grants jurisdiction to federal courts 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 that they had been assaulted in this country.  But in 1980, the U.S. Court of Appeals for 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 allegedly 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, including through an amicus brief in Kiobel.

But then in 2010, the Second Circuit (which along with the Ninth Circuit has handled the great majority of ATS cases) ruled 2-1 in Kiobel that the ATS is inapplicable to corporations.  The court explained that because corporate liability is not a discernible norm of customary international law, the ATS should not be interpreted as having authorized suits against corporations.  The Supreme Court agreed to review Kiobel during its 2011-12 Term, but was unable to come up with a decision and instead asked the parties to submit new briefs on whether the ATS applies extraterritorially.  ATS litigation across the country has been on hold for the past year as lower courts awaited the Supreme Court’s decision.

Yesterday’s decision (unanimous in the holding but split 5-4 on rationale) will lead to the dismissal of virtually all pending ATS cases.  The majority decision, written by Chief Justice Roberts, said that its decision was controlled by “the presumption against extraterritoriality”:  Congress is presumed not to intend its statutes to apply outside the United States unless it provides a “clear indication” otherwise.  The Court discerned no such intent on the part of the 1789 Congress.  Indeed, the Court noted, the first Congress appears to have adopted the ATS in order to provide foreign ambassadors the ability to seek redress in the federal courts if they were attacked while in the United States – as very famously happened twice in the 1780s.  Noting that assertions of jurisdiction by American courts over events that occur in a another country could have negative foreign policy ramifications for the United States, the Court said that any decision to permit such suits should be made by Congress explicitly, not by the courts.

The Court’s rejection of extraterritorial suits was not as broadly worded as it might have been, with the result that human rights activists are highly likely to resist efforts to dismiss their suits.  The Chief Justice may have been required to use less categorical language in order to garner the vote of Justice Anthony Kennedy, widely regarded as the swing vote on ATS issues.  In particular, the majority opinion recognized that ATS cases in which a portion of the conduct occurred overseas may still be sustainable, so long as at least some portion of “the relevant conduct” occurred within the United States.  While stating that “mere corporate presence” in the United States is insufficient to qualify as the requisite “relevant conduct,” the Court never spelled out just what conduct would qualify.

While it is unlikely that the majority had in mind a mere meeting in a New York office at which corporate executives discussed the corporation’s operations in the country where alleged human rights abuses occurred, plaintiffs’ lawyers will undoubtedly raise such claims in an effort to distinguish Kiobel.  They are also likely to cite the following passage from Justice Kennedy’s concurring opinion that provides a small ray of hope to overseas plaintiffs:

Other cases may arise with allegations of serious violations of international law principles protecting persons, cases covered neither by the [Torture Victim Protection Act] nor by the reasoning and holding of today’s case; and in those disputes the proper implementation of the presumption against extraterritorial application may require some further elaboration and explanation.

Plaintiffs’ lawyers are likely also to assert that their allegations of overseas human rights abuses can go forward as common law tort actions alleging violations of state law.  States are largely free to craft their tort law without interference from the federal government, so plaintiffs’ lawyers barred from raising overseas human rights claims in federal court under the ATS may well decide to file their lawsuits in state courts instead.  Of course, most states are likely to decide, for many of the same reasons that motivated the Supreme Court in Kiobel, that it would be inappropriate for them to stand in judgment of events that took place in foreign countries.  But if even one state makes known its willingness to hear suits alleging overseas human rights abuses, one can reasonably expect plaintiffs’ lawyers to flock there.

In sum, yesterday’s Kiobel decision is likely to make it far more difficult for human rights activists to sue U.S. corporations based on the corporation’s overseas activities.  But the decision left activists with sufficient wiggle room that we can expect to see multinational corporations regularly being sued for their overseas activities for the foreseeable future.