Kiobel v. Royal Dutch Petroleum (10-1491)

Oral argument: Feb. 28, 2012

Appealed from: United States Court of Appeals for the Second Circuit (Sep. 17, 2010)

ALIEN TORT STATUTE, CORPORATIONS, INTERNATIONAL LAW, TORT LIABILITY

Petitioners Esther Kiobel and others, on behalf of a class of residents of the Ogoni region in Nigeria, assert that Respondent Royal Dutch Petroleum Company is liable under the Alien Tort Statute (“ATS”) of aiding and abetting the Nigerian government in conducting arbitrary arrests and detentions, crimes against humanity, and torture. On appeal, the Second Circuit raised the question of subject matter jurisdiction, and held that the ATS does not provide a cause of action against corporations for these three alleged violations of international law. The parties now disagree over whether the question of corporate liability is jurisdictional or substantive, and whether corporations can be held liable for the alleged violations under the ATS. The Supreme Court’s decision in this case may affect the interests of American corporations with overseas operations, and may have an impact on the United States government’s relationships with foreign nations.

Questions presented

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.

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Issues

1. Whether courts must decide the liability of corporations under the Alien Tort Statute ("ATS") as a question of subject matter jurisdiction, or whether courts must decide on liability only after hearing the merits of the case.

2. Whether, under the ATS, corporations are immune from tort liability for international crimes as a matter of law, or whether a corporation’s liability may be determined in the same way as a natural person’s liability.

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Facts

In 2002, residents of the Ogoni region of Nigeria filed a class action complaint against the Royal Dutch Petroleum Company (“Royal Dutch”) and other defendants in the United States District Court for the Southern District of New York. SeeKiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 123–24 (2d Cir. 2010). Royal Dutch and the other defendants are corporations engaged in oil exploration in Nigeria. See id. In response to environmental degradation caused by oil exploration, Nigerian residents formed the “Movement for the Survival of Ogoni People.” See id. at 123.

The plaintiffs, Esther Kiobel and other Nigerian citizens (collectively “Kiobel”) alleged that, beginning in 1993, Royal Dutch and the Nigerian government worked together to suppress the Ogoni movement by attacking villages, destroying property, and beating, raping, and arresting residents. See Kiobel, 621 F.3d at 12324. Specifically, Kiobel claimed that Royal Dutch aided and abetted the Nigerian government in these violations by providing transportation, food, and compensation to soldiers who carried out the attacks. See id.

Kiobel grounded her claim in the Alien Tort Statute (“ATS”), which enables aliens to bring suits in American federal courts for certain violations of the law of nations. See Kiobel, 621 F.3d at 12324; 28 U.S.C. § 1350. However, in 2004, Royal Dutch moved to dismiss the case, arguing that Kiobel failed to state a claim under the United States Supreme Court’s recent decision in Sosa v. Alvarez-Machain. See Kiobel, 621 F.3d at 12324; Sosa, 542 U.S. 692 (2004).

The district court first reviewed the pre-Sosa case, Filartiga v. Pena-Irala. See Kiobel v. Royal Dutch Petroleum Co. (Kiobel I), 456 F. Supp. 2d 457, 460 (S.D.N.Y. 2006). According to the court, Filartiga construed the ATS as a jurisdictional statute, allowing foreigners to sue in U.S. courts for violations of international law. See id.Furthermore, the scope of international law, the court explained, is not limited to the law existing in 1789—when the ATS was passed—but instead contains contemporary views and norms that have evolved over time. See id.

The district court then addressed Royal Dutch’s argument under Sosa. See Kiobel I, 456 F. Supp. 2d at 461. In Sosa, the Supreme Court determined that an ATS claim could be rejected if it related to an international norm that was not widely accepted in 1789. See id.However, because the district court viewed the Sosa holding as narrow, the court determined that, in the absence of a clear violation, the Filartiga decision would still provide the governing law. See id. at 463. Therefore, the court granted summary judgment for Royal Dutch on Kiobel’s claims, except for those relating to torture, arbitrary detention, and crimes against humanity. See id. at 465–67.

Due to lingering uncertainty surrounding the interpretation of the ATS, the district court certified the case for interlocutory appeal to the United States Court of Appeals for the Second Circuit. See Kiobel I, 456 F. Supp. 2d at 467–68. The Second Circuit, reviewing the case de novo, found that past decisions never directly addressed whether the ATS provides jurisdiction over corporations. See Kiobel, 621 F.3d at 125.

Confronting the jurisdiction question itself, the Second Circuit opined that customary international law must govern the scope of liability for international violations. See Kiobel, 621 F.3d at 12526. To count as a binding rule of customary law, however, the court stated that a norm must be “specific, universal, and obligatory.” See id. at 131. According to the Second Circuit, no source of international law has established that corporate liability is a customary international norm. See id. at 145. Thus, the court dismissed all of Kiobel’s complaints for lack of subject matter jurisdiction. See id. at 149.

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Discussion

In this case, the Supreme Court will determine whether corporate liability for violations of international law under the Alien Tort Statute (“ATS” or “the Statute”) is a question of subject matter jurisdiction, or whether liability goes to the merits of a case. See28 U.S.C. § 1350. The Court will also decide whether corporations are immune from suit under the ATS. See id.Petitioners Esther Kiobel and other Nigerian citizens (collectively “Kiobel”) assert that permitting ATS suits against corporations would not be detrimental to U.S. foreign policy, and that, if some harm followed, Congress could amend the Statute at any time. SeeBrief for Petitioners, Esther Kiobel et al., at 58. In response, the Royal Dutch Petroleum Company (“Royal Dutch”) argues that allowing ATS suits against corporations will not only offend foreign sovereigns, but will also enable blackmail of companies, hurting both foreign and domestic business interests. SeeBrief for Respondents, Royal Dutch Petroleum Co. et al., at 45–46.

Government Interests: Foreign Policy and Precedent

Kiobel contends that allowing for corporate liability under the ATS would not adversely affect the foreign policy interests of the United States. SeeBrief for Petitioners at 58. To the contrary, Kiobel asserts that corporate immunity for violations of human rights norms would undermine the moral force of the international human rights efforts in which the United States plays a key role. See id.at 58–59. According to Kiobel, the ATS affirmed the United States’ early dedication to international law. See id.at 58. Further, Kiobel underscores that if ATS suits became too ubiquitous or were brought arbitrarily, Congress and the Executive could solve the problem through a new statute or other avenues. See id.

Royal Dutch, in contrast, maintains that foreign nations would take offense at the decision of U.S. courts to assume jurisdiction over acts occurring in foreign sovereign territories. SeeBrief for Respondents at 47. Royal Dutch notes that, in Sosa v. Alvarez-Machain, the Supreme Court cautioned that holding foreign citizens accountable to U.S. standards would effectively extend U.S. law into foreign jurisdictions. See id. at 45. Royal Dutch also argues that it is inconsistent with Supreme Court precedent to extend tort liability to corporate acts abroad. See id. at 43–44. Royal Dutch observes that the Court has declined to find liability for violations of constitutional rights for corporate contractors, suggesting that the Court should take a stricter approach to international claims. See id.

Business Interests: U.S. Competitiveness and Costs of Litigation

For Kiobel, harm to business interests is not a sufficient reason to provide corporate immunity for violations of human rights norms. SeeBrief for Petitioners at 59. Kiobel observes, for example, that companies that use child labor have a competitive advantage over companies that do not; however, this economic reality does not allow disadvantaged companies to disregard laws prohibiting the use of child labor. See id. Moreover, Kiobel contends that current case law offers several ways of guarding against frivolous claims against corporations. See id. For instance, Kiobel notes that, under Sosa, plaintiffs can only pursue claims involving well-established international norms, such as genocide and crimes against humanity. See id. at 59–60. In support of Kiobel, the United Nations High Commissioner for Human Rights points out that corporations have been held liable for such violations in the past—several companies, for instance, were found complicit in Nazi war crimes by the Nuremburg Tribunal. SeeBrief of Amicus Curiae Navi Pillay, the United Nations High Commissioner for Human Rights in Support of Petitioner, at 21–22.

In response, Royal Dutch asserts that Kiobel’s position does not account for the full range of costs corporations could face in ATS suits. SeeBrief for Respondents at 45. According to Royal Dutch, even frivolous claims could entail a significant amount of time and money in pre-trial expenses. See id. Furthermore, Royal Dutch notes that lawsuits, no matter how frivolous, could damage a company’s reputation; thus, companies may wish to settle even weak claims to avoid additional costs. See id. at 45–46. Were Kiobel to prevail, Royal Dutch contends that corporations might reduce their foreign operations, in fear of potential tort liability; the result, Royal Dutch argues, would be lost opportunities and wages for workers in high risk locations, such as developing countries. See id. at 46. Finally, Royal Dutch contends that expansive liability may also harm the U.S. economy, as foreign corporations would avoid U.S. operations, for fear of being subject to personal jurisdiction. See id.

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Analysis

In this case, the Supreme Court will decide whether the applicability of the Alien Tort Statute (“ATS” or “the Statute”) to corporations is a subject matter jurisdiction issue, or a substantive issue. See 28 U.S.C. § 1350. The Court will also decide whether the ATS provides a cause of action against corporations for aiding and abetting arbitrary arrest and detention, crimes against humanity, and torture. See id. Petitioners Esther Kiobel and other Nigerian citizens (collectively “Kiobel”) assert that corporate liability under the ATS is a substantive issue improperly handled by an appellate court, while Respondent Royal Dutch Petroleum Company (“Royal Dutch”) argues that liability is a question of subject matter jurisdiction that can be raised at any time. See Brief for Petitioners Esther Kiobel et al. at 12–13; Brief for Respondents Royal Dutch Petroleum Co. et al. at 11–12. Kiobel argues that corporations can be held liable under the ATS, because the Statute was intended to provide remedies for all violations of the law of nations, and because general principles of international law support holding corporations liable for human rights violations. See Brief for Petitioners at 23. In response, Royal Dutch asserts that, under the test established by the Supreme Court in Sosa v. Alvarez-Machain, international law has not established clear norms for causes of action against corporations. See Brief for Respondents at 25–26. Additionally, Royal Dutch argues that, even if international norms existed, finding a cause of action under the ATS might lead to conflicts in foreign affairs and hamper the abilities of U.S. companies to compete in international markets. See id. at 45–46.

Is Corporate Liability Under the Alien Tort Statute a Substantive or Subject Matter Jurisdictional Issue?

Kiobel asserts that the United States Court of Appeals for the Second Circuit improperly considered subject matter jurisdiction in dismissing Kiobel’s case; according to Kiobel, whether corporations can be sued under the ATS is a substantive inquiry, not a jurisdictional question. SeeBrief for Petitioners at 12–13. A decision to impose ATS liability on corporations, Kiobel avers, requires determining the proper scope or reach of the Statute—a merits-based analysis. See id.at 14. Furthermore, while the ATS does require that plaintiffs in an ATS case be “aliens,” Kiobel contends that Congress did not include any language that imposes limitations on the identity or nature of defendants. See id. at 16. Although Kiobel concedes that some aspects of the ATS are jurisdictional, she nevertheless asserts that the existence of some jurisdictional elements does not mean that the entire Statute lacks substantive elements. See id. at 17. Kiobel thus maintains that issues like corporate liability are substantive questions that must be dealt with on the merits, instead of at the summary judgment stage. See id. at 17–18.

In contrast, Royal Dutch claims that each element of the ATS is jurisdictional, and, therefore, that subject matter jurisdiction was properly raised by the Second Circuit. SeeBrief for Respondents at 11–12. Royal Dutch maintains that, previously, the question as to what might constitute a “violation of the law of nations” was considered a jurisdictional question; inquiring into what “constitutes a violation,” Royal Dutch adds, also necessarily includes determining who is violating the law. See id. at 12–13. However, even if ATS’ liability is not a subject matter jurisdiction issue, Royal Dutch maintains that the Second Circuit exercised a legitimate power in considering and deciding a dispositive merits issue on its own; the court could address the issue of corporate liability for human rights violations. See id. at 15–16.

Does the Alien Tort Statute Provide a Cause of Action Against Corporations?

Noting that the ATS does not explicitly exclude corporations from being sued, Kiobel argues that the history and purpose of the Statute support federal courts’ authority to provide remedies against any entity that violates the law of nations. See Brief for Petitioners at 23–24. Kiobel asserts that Congress’s original intent with the ATS was to reduce friction between nations by providing a way for aliens to bring international tort claims in a neutral forum. See id. at 23. Although the ATS requires a violation of the law of nations to give the federal courts jurisdiction over a claim, Kiobel argues that the ultimate purpose of the Statute—to compensate tort victims—cautions against excluding corporations from the class of possible defendants. See id. at 24.

In determining the available causes of action under the ATS, Kiobel argues, past courts have looked to federal common law—which allows for corporate liability. See Brief for Petitioners at 24–25. According to Kiobel, past courts did not rely on international law to determine causes of action, because international law remains inconsistent on the subject. See id. at 24–25. Hence, with reference to federal common law, Kiobel stresses that the United States Court of Appeals for the Eleventh Circuit has explicitly allowed corporations to be sued under the ATS, and that other cases have proceeded before the D.C. Circuit, the Seventh Circuit, and the Ninth Circuit without a question as to whether corporations could be held liable. See id. at 41–43.

In response, Royal Dutch asserts that there is no cause of action available under the ATS against corporations. See Brief for Respondents at 16–17. Royal Dutch argues that, under the framework provided in Sosa v. Alvarez-Machain, the Court must undertake two discrete inquiries: first, the Court must determine whether the alleged cause of action is an international law norm that had definite content and acceptance among nations when the ATS was enacted; and second, the Court must consider the real-world consequences of making those causes of action available to plaintiffs. See id.; Sosa, 542 U.S. 692 (2004). According to Royal Dutch, the burden of proving that such international norms exist rests on the ATS plaintiffs. See Brief for Respondents at 28.

Under the Sosa framework, Royal Dutch maintains that there is no international law norm of corporate liability for the three violations alleged in this case—aiding and abetting arbitrary arrest and detention, crimes against humanity, and torture. See Brief for Respondents at 25–26. Royal Dutch claims that numerous sources of international law have intentionally chosen not to extend these causes of action to corporations. See id. at 27–28. For example, Royal Dutch notes that the International Criminal Tribunal for Former Yugoslavia explicitly limits its jurisdiction to “natural persons.” See id. at 32–33. The Rome Statute, which governs the International Criminal Court (“ICC”), similarly limits the ICC’s jurisdiction to “natural persons.” See id. at 34.

Additionally, Royal Dutch argues that, even if international law recognizes corporate liability for the offenses at issue here, allowing Kiobel’s claim to move forward would violate both federal law precedent and the “real-world” (second) prong of the Sosa test. See Brief for Respondents at43, 45–46. For instance, Royal Dutch contends that ATS litigation against corporations—whether well-founded or frivolous—may take years to resolve, tarnishing corporate reputations and possibly resulting in coerced settlements. See id. at 45–46. ATS suits, moreover, may cause corporations to reduce operations in high risk developing countries, depriving the local population of needed jobs and wages. See id. at 46. Royal Dutch also notes that ATS suits may lead to diplomatic frictions, as foreign nations may take offense at the decision of U.S. courts to hear disputes that arose overseas. See id. at 47.

Kiobel argues that, even if the courts find that their causes of action must be grounded in international law, the requirement is met, because corporate liability is a general principle common to all legal systems. See Brief for Petitioners at 43. Kiobel rejects a “norm-by-norm” approach, and asks instead whether there is universal consensus that corporations are civilly liable for the torts of their agents. See id. at 46–47. Ultimately, Kiobel contends that the status of corporations as “subjects” of international law is not a dispositive determination; Congress still has the right to enforce the law of nations under U.S. domestic law. See id. at 53–54. Finally, Kiobel contests the policy concerns raised by Royal Dutch, asserting that it is up to Congress to determine whether the impact of corporate liability on trade and foreign relations outweighs the benefits of providing tort victims with a cause of action. See id. at 57–58. Kiobel argues that the policy repercussions of ATS liability must be handled legislatively, especially because courts have a range of means at their disposal to restrict ATS claims. See id. at 58–59.

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Conclusion

In this case, the Supreme Court will determine whether the Second Circuit properly considered the question of corporate liability under the Alien Tort Statute as a jurisdictional question. The Court will also consider whether a cause of action exists under the ATS against corporations for aiding and abetting arbitrary arrest and detention, crimes against humanity, and torture. Petitioners Kiobel et al. contend that corporate liability under the ATS is a substantive question because Congress did not include any limitations on the appropriate class of defendants in an ATS suit. However, Respondent Royal Dutch asserts that a determination as to who can be sued under a statute is a question of subject matter jurisdiction, which can be properly raised at any time. The Supreme Court’s decision in this case may impact the interests of American businesses with overseas operations, as well as the relationship between the United States government and foreign nations.

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Authors

Prepared by: Cheryl Blake and Jennifer Uren

Edited by: Edan Shertzer

Additional Sources

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