Recent Development on Corporate Liability in U.S. Courts for Conduct Outside the United States

by Orrick, Herrington & Sutcliffe LLP
Contact

This week the U.S. Supreme Court issued its much-awaited decision in Kiobel v. Royal Dutch Petroleum Co., which addressed the question of whether a federal court may recognize a cause of action under the Alien Tort Statute (“ATS”) for violations of the “laws of nations” occurring within the territory of a sovereign nation other than the United States.1  The Supreme Court ruled that a court’s power to recognize ATS causes of action is limited by the presumption against extraterritorial application, and rejected the claim in Kiobel on that basis.  While failing to address other significant issues such as corporate liability and whether ATS actions may be brought under an aiding and abetting theory, the Court’s opinion is a landmark victory for corporations, which, over the past 30 years, have been subject to an increasing number of U.S. lawsuits for their activities in foreign countries. 

The ATS is a jurisdictional statute, which the Supreme Court held in Sosa v. Alvarez-Machain provides U.S. courts jurisdiction to consider an alien’s federal common-law claim for violations of well-established and well-defined international law norms. 

The ATS claims in Kiobel were brought by 12 Nigerian nationals, now living in the United States, against certain Dutch, British, and Nigerian oil companies.  According to the complaint, these foreign corporations enlisted the help of the Nigerian government to violently suppress local residents’ protests of the subsidiary’s oil exploration and production activities in Nigeria.  The plaintiffs asserted claims of aiding and abetting Nigeria’s alleged human rights abuses committed in violation of international law.

The Second Circuit had dismissed the plaintiffs’ claims on the ground that corporations, unlike individuals, could not be held liable for violations of international law.  Although the Supreme Court originally granted certiorari on this issue, it later asked for additional briefing and oral argument on whether the ATS provides jurisdiction over extraterritorial conduct.  The Supreme Court’s decision, based on this broader issue, affirmed the Second Circuit’s dismissal of the claims.

In a majority opinion authored by Chief Justice Roberts (joined by Justices Scalia, Kennedy, Thomas, and Alito), the Supreme Court held that the presumption against extraterritoriality applies to the ATS and that the presumption is not rebutted by the ATS’s text, history, and purpose.  Accordingly, the Court held that the presumption “constrains courts from exercising their [federal-common law] powers under the ATS.”  The Court explained that nothing from the ATS’s history suggests that Congress “intended federal common law under the ATS to provide a cause of action for conduct occurring in the territory of another sovereign.”  The Court then applied its holding and ruled that “petitioners’ case seeking relief for violations of the law of nations occurring outside the United States is barred.”  In so holding, the Court noted that all of the alleged conduct at issue occurred abroad.

In addition to fully joining the majority, Justice Kennedy and Justice Alito (joined by Justice Thomas) wrote separate concurring opinions.  Justice Kennedy noted that many human rights abuse victims can seek redress through the Torture Victim Protection Act (“TVPA”).  He left open the possibility that there may be cases “covered neither by the TVPA nor by the reasoning and holding of today’s case,” and that in such cases, proper implementation of the presumption against extraterritoriality “may require some further elaboration and explanation.”  Justice Alito added that no ATS claim can overcome the presumption “unless the domestic conduct is sufficient to violate” the limited class of international law norms recognized in Sosa.

In a separate opinion, concurring only in the judgment, Justice Breyer (joined by Justices Ginsburg, Sotomayor, and Kagan) agreed that the ATS does not provide jurisdiction under the facts in this case.  The minority, however, rejected the presumption-against-extraterritoriality approach, finding that ATS jurisdiction attaches “where (1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant's conduct substantially and adversely affects an important American national interest, and that includes a distinct interest in preventing the United States from becoming a safe harbor . . . for a torturer or other common enemy of mankind.”

The Court’s ruling presents a sea change in ATS litigation by fully embracing the same type of strong presumption against extraterritorial application that is applied to other federal statutes.  Further, in expressly stating that there was no evidence that Congress “intended federal common law under the ATS to provide a cause of action for conduct occurring in the territory of another sovereign,” the Court did not appear to limit its reasoning to the situation presented in Kiobel, where both the plaintiffs and defendants were foreign and the tortious conduct all occurred abroad.  Exactly how far the rationale will extend to other circumstances—such as where the defendant is a U.S. corporation and/or some of the underlying conduct occurred in the United States—remains an open question. Further, the Court did not address the availability of aiding and abetting liability or resolve the conflict over the issue whether a corporation, as opposed to an individual, may be sued under the ATS.  Thus, although Kiobel is a true game changer and certainly provides a strong pro-defendant signal to the lower courts, there are open issues that will undoubtedly continue to be litigated in U.S. courts.

[1] The ATS provides: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”  28 U.S.C. §1350. 

Please click here to read more about the case and contact Bob LoebLaurie Strauch Weiss or James Stengel for more information or inquiries regarding any ATS issues that your company is facing.

Our Team

The litigators at Orrick have significant experience with ATS cases.  For example, Appellate partner Bob Loeb, while at the U.S. Department of Justice, was involved in most of the major ATS litigation in the last decade, including Kiobel, Doe v. Unocal, Alvarez-Machain v. Sosa (arguing to the Ninth Circuit sitting en banc), In re Apartheid Litigation, and Sarei v. Rio Tinto (arguing to the Ninth Circuit sitting en banc).

Laurie Strauch Weiss, head of Orrick’s Mass Torts and Product Liability (MTPL) practice, and James Stengel, a partner in the MTPL practice, have extensive experience with ATS litigation. In In re Agent Orange Product Liability Litigation, Laurie and Jim helped to secure a historic and complete win for The Dow Chemical Company in actions brought under the ATS alleging personal injuries from exposure to the herbicide Agent Orange during the Vietnam War. Their other significant and recent ATS matters include Abagninin v. Amvac Chemical Corp. and Viera v. Eli Lilly.

If you are interested in learning more about recent ATS case developments or more generally the application of U.S. law abroad, contact us for a free subscription to The World in U.S. Courts: Orrick’s Quarterly Review of Decisions Applying U.S. Law to Foreign Activities.

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.

© Orrick, Herrington & Sutcliffe LLP | Attorney Advertising

Written by:

Orrick, Herrington & Sutcliffe LLP
Contact
more
less

Orrick, Herrington & Sutcliffe LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!