November 2012: Appellate Litigation Update

by Quinn Emanuel Urquhart & Sullivan, LLP
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Quinn Emanuel Opens Supreme Court’s October 2012 Term: On Monday, October 1, 2012, the Supreme Court reconvened for its first oral arguments after the summer recess. Quinn Emanuel’s Kathleen Sullivan argued in the very first case of the new Term, Kiobel v. Royal Dutch Petroleum Co., No. 10-1491, on behalf of the respondents, the Dutch and English corporations Royal Dutch Petroleum Company and Shell Transport and Trading Company (collectively, “Shell”). This is the second time the case was argued, after the Court took the unusual step of ordering re-argument after Shell’s argument last Term.

At issue is the scope of the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350, which the First Congress enacted in 1789. The Act was motivated by concern that international law violations, like assaults on foreign ambassadors on U.S. soil, required redress in the nation’s nascent Federal Courts lest State-Court indifference to such violations lead to international conflict. The ATS accordingly 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.”

The ATS was rarely invoked until 1980, when the U.S. Court of Appeals for the Second Circuit gave it new life in Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980). Filartiga allowed an ATS suit alleging that a former Paraguayan government official had tortured the plaintiff in Paraguay in violation of international human rights norms. Filartiga opened the door to numerous other ATS cases for conduct on foreign soil—including many naming corporations as defendants.

In 2004, in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the Supreme Court kept the door open for such ATS actions, if only just ajar. Sosa held that, while the ATS provides only jurisdiction, federal common law provides a cause of action for offenses against the law of nations so long as they have no “less definite content and acceptance among civilized nations than the historical paradigms familiar when [the ATS] was enacted”—namely, violation of safe conducts, infringement of the rights of ambassadors, and piracy. Id. at 732. Sosa imposed a second screen on ATS actions as well, requiring that Federal Courts exercise their “judgment about the practical consequences of making [a new ATS] cause available to litigants in the federal courts.” Id. at 732-33.

Kiobel raises the question whether an ATS suit may proceed against a foreign corporation for alleged conduct aiding and abetting a foreign government on foreign soil. It involves a suit by Nigerian citizens alleging that Shell aided and abetted human rights violations in Nigeria by a prior Nigerian government. In 2010, the Second Circuit, in a divided opinion, held that international law does not recognize liability for corporations (as opposed to natural persons) for the violations alleged, and thus dismissed the case. The Supreme Court granted review in October 2011, and Shell retained Quinn Emanuel to represent it in the Court.

The Court granted review on the question whether international law holds a corporation (as opposed to a natural person) responsible for the violations alleged. Shell argued that it does not, but also argued, in the alternative, that the ATS and federal common law do not apply at all to conduct within the territory of a foreign sovereign. During oral argument on February 28, 2012, several Justices posed questions concerning that extraterritoriality issue, asking what the case had to do with the United States. The following week, the Court issued an unusual order asking the parties to prepare briefs on that issue over the summer and setting the case for re-argument this Term.

Kiobel in its two rounds has attracted over 85 amicus briefs from the U.S. and international business communities, human rights organizations, and governments, including the United States, which argued on the first Monday in October, in support of Shell, that the ATS cannot apply to a “foreign-cubed” action involving foreign conduct by a foreign corporation alleged to have aided and abetted a foreign government. Numerous other corporations and groups filed amicus briefs agreeing with Shell that the ATS equally cannot apply to “foreign-squared” actions against U.S. corporations alleged to have aided and abetted foreign government conduct on foreign soil. A decision is expected by June 2013.

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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