Corporate Liability Under The Alien Tort Statute, Splitting With Second Circuit

In two recent decisions, the United States Courts of Appeals for the District of Columbia Circuit and the Seventh Circuit each split with the Second Circuit’s 2010 decision in Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010), that corporations cannot be liable under the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350 . As we reported, the Second Circuit in Kiobel held that the scope of liability under the ATS does not extend to corporations because imposing liability on corporations for violations of the law of nations has not achieved a sufficiently “specific, universal, and obligatory” character so as to be considered a norm of customary international law. However, in Flomo v. Firestone Natural Rubber Co., No. 10-3675, 2011 WL 2675924 (7th Cir. July 11, 2011), and Doe VIII v. Exxon Mobil Corp., Nos. 09-7125, 09-7127, 09-7134, 09-7135, 2011 WL 2652384 (D.C. Cir. July 8, 2011), the D.C. and Seventh Circuits each concluded that the Second Circuit’s decision in Kiobel relied on factual inaccuracies and ignored the distinction between norms of conduct and remedies. The decisions deepen the circuit split on the question of corporate liability under the ATS, creating a likelihood that the conflict will be resolved by the United States Supreme Court.

Plaintiffs in Flomo were a group of children from Liberia, where defendant Firestone Natural Rubber Company (“Firestone”) operated a 118,000-acre rubber plantation through a subsidiary. Plaintiffs claimed that Firestone utilized hazardous child labor on the plantation and sued Firestone under the ATS. The ATS confers federal jurisdiction over tort actions brought by aliens for violations of the law of nations, or “customary international law.” Although Firestone did not employ children at the plantation, plaintiffs had argued that the production quotas that Firestone set for its employees were so high that employees were forced to enlist their children to help them. Firestone countered that corporations have never been prosecuted for violations of customary international law and that there is therefore no principle of customary international law that binds them.

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Published In: Business Organization Updates, Civil Procedure Updates, International Trade Updates, Personal Injury Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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