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Kiobel v. Royal Dutch Petroleum Co.
Docket No. 10-1491
From: The Second Circuit

and

Mohamad v. Palestinian Authority
Docket No. 11-88
From: The District of Columbia
Argument Date: February 28, 2012

Case at a Glance

In these cases, the Court must determine whether corporations may be held liable for international human rights violations, under either the Alien Tort Statute (Kiobel v. Royal Dutch Petroleum Co.) or the Torture Victim Protection Act (Mohamad v. Palestinian Authority). The two cases will be argued in tandem.

 

 

Introduction
The Alien Tort Statute (ATS), 28 U.S.C. § 1350, provides for federal jurisdiction over a civil action by an alien for torts committed in violation of the law of nations. In Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the Court held that the ATS grants jurisdiction over clearly defined, widely accepted international law norms. The Torture Victim Protection Act (TVPA), 28 U.S.C. § 1350 note, provides a cause of action to individuals who, under color of law of any foreign nation, are subjected to torture or extrajudicial killing.

Issues
In Kiobel, is corporate liability under the ATS a merits question or an issue of subject-matter jurisdiction, and does the ATS authorize suits against corporations? In Mohamad, does the TVPA authorize actions only against natural persons?

Facts
Kiobel involves a suit filed in 2002 in the U.S. District Court for the Southern District of New York by twelve Nigerian nationals against three oil companies. The suit alleged the oil companies had aided and abetted various human rights violations committed by the Abacha dictatorship in the Ogoni region of the Niger Delta between 1992 and 1995. Petitioners allege, for example, that respondents enlisted the Nigerian military in a widespread and systematic campaign of torture, extrajudicial executions, and prolonged arbitrary detention to violently suppress a grassroots movement that protested against Shell’s operations in Ogoni.

The district court granted in part and denied in part respondents’ motion to dismiss, and certified its order for interlocutory appeal. See Kiobel v. Royal Dutch Petroleum Co., 456 F. Supp. 2d 457 (S.D.N.Y.
2006). The parties cross-appealed.

In a divided opinion, the U.S. Court of Appeals for the Second Circuit held that corporations could not be sued under the ATS for torts committed in violation of the law of nations. The majority determined that, under Sosa, plaintiffs in ATS cases had to demonstrate a customary international law norm of corporate liability and that no such norm existed for the plaintiffs’ claims. It thus held that Sosa required it “to determine both whether certain conduct leads to ATS liability and whether the scope of liability under the ATS extends to the defendant being sued,” rather than applying domestic law (under which corporations are liable as juridical persons). The majority further characterized corporate liability under the ATS as an issue of subject matter jurisdiction, which it was required to decide even though it had not been raised below. See Kiobel v. Royal Dutch Petroleum Co. 621 F.3d 111 (2d Cir. 2010).

Judge Leval concurred in the judgment only. He rejected both the majority’s reasoning and its conclusion regarding ATS corporate liability. He determined that international law generally takes no position
on whether to impose civil liability for law-of-nations violations but rather leaves that decision to each country to resolve individually. Judge Leval also disagreed with the majority’s determination that the absence of corporate criminal liability in modern international tribunals precludes corporate civil liability under the ATS. Judge Leval concluded, however, that petitioners’ allegations of respondents’ complicity in human rights violations failed to meet the pleading standards articulated in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). The Second Circuit declined by a 5-4 vote to hear the case en banc. See Kiobel v. Royal Dutch Petroleum Co., 642 F.3d 379 (2d Cir. 2011). The Supreme Court granted certiorari. 132 S. Ct. 472 (2011).

In Mohamad, Asid Mohamad filed suit under the TVPA against the Palestinian Authority (PA) and Palestinian Liberation Organization(PLO) in the U.S. District Court for the Southern District of New York. The suit alleged that respondents were responsible for the torture and extrajudicial killing of Asid’s father, Rahim, who died in custody following his arrest in the West Bank by PA/PLO security forces and whose body allegedly bore marks of torture.

After the PA and PLO failed to answer the complaint, the district court entered a default judgment against them. Respondents subsequently moved to vacate the default and to dismiss the complaint for lack of
personal jurisdiction, among other grounds. Petitioners then moved to transfer the case to the U.S. District Court for the District of Columbia, which exercised personal jurisdiction over respondents. Respondents moved to dismiss petitioners’ TVPA claim on the grounds that the TVPA does not apply to organizational defendants and, alternatively, that the PA and PLO did not act under apparent authority or color of law of a foreign nation, as the act requires.

The district court vacated entry of default and dismissed the case. It concluded that the term “individual”—which the TVPA uses to refer to violators of the act—includes only human beings and does not include organizations. Mohamad v. Rajoub, 664 F. Supp. 2d 20 (D.D.C.
2009). The U.S. Court of Appeals for the D.C. Circuit affirmed, concluding that the ordinary meaning of the term “individual” typically encompasses only natural persons and not corporations or other organizations.

The D.C. Circuit rejected petitioners’ argument that the term “individual” is ambiguous and their assertion that the term should be given the same meaning as “person” in other statutes. The D.C. Circuit thus concluded that the term “individual” exempts corporations or other organizations from liability under the TVPA. Mohamad v. Rajoub, 634 F.3d 604 (D.C. Cir. 2011). The Supreme Court granted certiorari. 132 S. Ct. 454 (2011).

Case Analysis
While they arise under different statutes, Kiobel and Mohamad both present the question whether corporations may be held civilly liable in U.S. courts for engaging or participating in human rights violations outside the United States.

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. In Sosa, the Supreme Court ruled that the ATS grants federal courts jurisdiction to redress violations of a small number of well-established customary international norms, such as war crimes, genocide, and crimes against humanity. But while Sosa addressed the scope of the ATS, it did not determine who—other than state actors— may be held liable under the act.

Much in Kiobel turns on the Court’s interpretation of footnote 20 of its Sosa decision, where it alluded to whether “international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor, such as a corporation or an individual,” but did not provide further guidance.

The Second Circuit majority relied on this controversial footnote for the proposition that customary international law must identify the particular category of private actor subject to suit under the ATS—i.e. that it must identify that corporations are civilly liable for the violation in question.
Before addressing this issue in Kiobel, however, the Court must decide the antecedent issue of whether the Second Circuit erred in treating corporate liability under the ATS as a jurisdictional rather than a merits question.

Petitioners argue that because corporate liability addresses the substantive reach of the ATS, it is a key element of a plaintiff’s claim, and not a question of subject-matter jurisdiction. Petitioners contend that the Second Circuit majority’s sua sponte holding to the contrary conflicts with Supreme Court rulings admonishing lower courts against overbroad uses of the term “jurisdiction” in labeling components of a federal statute and instructing courts to facilitate clarity by using the term “jurisdictional” only when apposite. See Arbaugh & Y & H Corp. 546 U.S. 500 (2006); Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010).

Respondents argue that the Second Circuit majority properly treated the question of whether the ATS covers petitioners’ claims as one of subject-matter jurisdiction, and therefore as open for consideration on appeal for the first time. The question of what constitutes a “violation of the law of nations,” respondents maintain, subsumes the question of who may violate that law, thus making the question of corporate liability for the alleged offenses one of subject-matter jurisdiction as well.

Respondents argue, in the alternative, that the Second Circuit had the authority to address the issue of corporate liability under the ATS sua sponte even if it is not one of subject-matter jurisdiction. According to the respondents, this is true because a court of appeals possesses discretion to consider dispositive merits issues for the first time on appeal.

The United States, in its amicus brief supporting petitioners, endorses respondents’ alternative argument, arguing that the Court should address the question of corporate liability under the ATS, even though it agrees with petitioners that it is a merits issue. The central dispute in Kiobel involves the important question of whether corporations may be held liable under the ATS. Resolution of this question may depend more on the Court’s interpretation of the ATS than on the content of international law itself.

Petitioners ground their argument for corporate civil liability in the text, history, and purpose of the ATS. The statute, they assert, places no limit on the universe of defendants; its history shows it was enacted to provide a neutral federal forum to adjudicate civil tort actions brought by aliens who had suffered damages resulting from violations of the law of nations; and its purpose was to guarantee that aliens had a federal forum in which to pursue such international law claims free from the parochial prejudices perceived in state courts of the revolutionary era—a purpose undermined by the Second Circuit’s ruling on corporate liability.

The crux of petitioners’ argument is that the Sosa Court found that federal common law, and not international law itself, provides the cause of action in ATS cases. Federal common law and the universal availability of corporate civil liability in all legal systems, they maintain, provide the foundation for ATS causes of action. Since, petitioners argue, Congress chose a system of common law remedies to enforce the law of nations, a plaintiff is not required to demonstrate an international law rule of corporate liability to bring suit under the ATS. To the contrary, international law leaves such issues to domestic legal systems.

Respondents dispute this construction of Sosa and of the relationship between the ATS and international law. Like the question of what conduct constitutes a “violation of the law of nations,” the question of who may be liable for such a violation is a matter of international law. Thus, respondents contend, it is not enough for petitioners to demonstrate merely that the alleged violations fall within a subset of well-established customary international law norms. In addition, petitioners must show that the there is an equally well-established international law norm of corporate civil liability for each violation.

Respondents argue that international law does not prescribe a specific and universal norm of corporate liability for the alleged offenses. In particular, respondents note that several international criminal tribunals, from the post-World War II Nuremberg tribunals through the International Criminal Court (ICC), have either expressly or in practice been limited to the prosecution of natural persons rather than corporations.

Petitioners counter that respondents’ reliance on the absence of jurisdiction over corporations by international criminal tribunals is misplaced. While there is universal consensus that corporations are civilly liable for the torts of their agents, states treat the imposition of criminal corporate liability differently, and there is no consensus that corporations can be criminally prosecuted. The absence of corporate criminal liability under the ICC and other international tribunals, however, does not mean corporations are immune from criminal responsibility, let alone civil liability, for violations of international law. Rather, it reflects that states have different approaches to corporate criminality.

Additionally, respondents argue that even if petitioners need not make this international-law showing on corporate civil liability (or if they satisfy it), they cannot show that a private cause of action should be afforded as a matter of federal common law. Respondents rely on the Supreme Court’s jurisprudence in the Bivens context, another area of federal common-lawmaking authority. Since the Court has refused to recognize a private cause of action for federal constitutional torts committed by corporations, see Correctional Services Corp. v. Malesko, 534 U.S. 61 (2001), it should refuse to recognize a private cause of action against corporations under the ATS. Respondents argue this is particularly true given the risk of adverse consequences to foreign policy and U.S. trade and investment abroad.

Indeed, respondents argue, these foreign policy and trade consequences independently counsel against affording a cause of action against corporations—echoing arguments made by the U.S. government in Bivens litigation for denying plaintiffs a civil remedy because “special factors counsel[] hesitation in the absence of affirmative action by Congress.”
Finally, respondents argue that the judgment may be affirmed on either of two alternative grounds: that the ATS does not apply (i) against corporations as aiders and abettors of the alleged international law violations (at least without a plausible allegation that the corporation purposely facilitated the violation); or (ii) the alleged misconduct occurred within a foreign nation rather than within the United States or on the high seas.

Like Kiobel, Mohamad raises the question of whether corporations may be held civilly liable for human rights violations. While the suit in Mohamad is against noncorporate entities, whether the TVPA permits actions against defendants other than natural persons subsumes the question of corporate liability under the act.

The TVPA provides, in relevant part:
An individual who, under actual or apparent authority, or color of law, of any foreign nation—

  1. subjects an individual to torture shall, in a civil action, be liable for damages to that individual; or
  2. subjects an individual to extrajudicial killing shall, in a civil action, be liable for damages to the individual’s legal representative, or to any person who may be a claimant inan action for wrongful death. 28 U.S.C. § 1350 note.

Petitioners argue that the TVPA applies to nonsovereign organizations responsible for torture and extrajudicial killings. While the TVPA’s text uses the word “individual” to describe violators of the act—a term that, in ordinary usage, often refers to a human being—the statute is not limited to natural persons.

The Supreme Court, petitioners note, has found that the statutory term “individual” can include organizational entities. See Clinton v. City of New York, 524 U.S. 417 (1998). Had Congress intended to depart from what petitioners posit as a default rule of organizational liability, it would have done so explicitly, either by limiting the TVPA to “natural persons” or explicitly excluding organizational entities.

Petitioners further argue that the TVPA’s application to organizational entities (and thus to corporations) is confirmed by the act’s structure and purpose. The TVPA was enacted against the backdrop of ordinary tort liability rules, which dictate that organizations are civilly liable for the acts of their agents. Congress did not evince any intent to depart from this default presumption of organizational liability—a presumption reflected in other statutes prohibiting and proscribing remedies for torture or extrajudicial killing, which are not limited to natural persons.

Additionally, petitioners argue, limiting the TVPA to natural persons would frustrate the statute’s purpose, which is to afford victims a meaningful remedy, deter conduct the act proscribes, and hold perpetrators accountable. As petitioners explain, victims (or the families of victims) often face obstacles when suing the individuals responsible for torture or extrajudicial killing. Not only do perpetrators commonly hide their identities, but it is often difficult to obtain jurisdiction over them or to collect judgments. The TVPA’s ambiguity should therefore be read as permitting organizational (and hence corporate) liability to fulfill the statute’s purpose.
Respondents, however, point to dictionaries, common usage, case law, and statutes, all of which show that the ordinary meaning of “individual” is a natural person or human being. Unlike the broader term “person,” the term “individual” does not have a specialized legal meaning that encompasses corporations and other entities.

Respondents also argue that the TVPA’s text shows Congress used “individual” to refer only to natural persons. Congress specifically used the term “individual” to refer to the defendant or the victim, and a victim can only be a natural person, assert respondents. By contrast,  Congress used the broader term “person” or “claimant” in the TVPA to refer to potential plaintiffs, which may include organizations.

Respondents acknowledge that the Clinton Court construed “individual” to include organizations. But, they argue, the Court adopted that construction only to avoid the absurd outcome that would have resulted from giving the term its ordinary meaning. By contrast, Congress had legitimate reasons to limit the TVPA to natural persons, including a desire to preclude ideologically motivated suits against corporations or political entities over diplomatically sensitive acts abroad and to focus the statute’s impact on those who directly engage in the misconduct.

Mohamad may thus turn on the degree to which the Court finds the TVPA ambiguous, thus justifying a reading grounded in the statute’s purpose. Even more likely, the result in Mohamad will depend on Kiobel. A ruling that the ATS allows suits against corporations but that the TVPA does not would create a seeming anomaly: it would mean that aliens may sue corporations in federal court for torture and extrajudicial killings but U.S. citizens may not, as the ATS is limited by its terms to suits by foreign nationals.

SIGNIFICANCE
Kiobel presents the important question of corporate liability under the ATS. While Sosa left open a window for civil enforcement of a subset of core human rights norms, Kiobel will determine whether, and to what extent, corporations may be held liable for violating those norms (assuming that the Court does not dispose of the case on an alternative ground). Kiobel should thus resolve the current circuit split over corporate liability under the ATS. See Doe VIII v. Exxon Mobil Corp., 654 F.3d 11 (D.C. Cir. 2011) (corporations may be held liable under the ATS); Flomo v. Firestone Natural Rubber Co., 643 F.3d 1013 (7th
Cir. 2011) (same).

Both cases pit strong competing interests against one another.
As respondents suggest, corporate liability under the ATS or TVPA threatens business interests with the costs and risks of litigation, particularly when corporations operate in developing nations and conflict zones. Foreign governments have also opposed ATS litigation against corporations, which they view as undermining their economic development strategies.

On the other hand, Kiobel and Mohamad have high stakes for the enforcement of human rights norms in U.S. courts—a concern manifested by the array of amicus briefs filed in support of the petitioners
in the two cases. Even if the Court refuses to recognize civil corporate liability under the ATS, a foreign national who has suffered a cognizable law-of-nations violation under Sosa may presumably still sue a corporation’s employees, managers, officers, directors, or any other person who commits, or purposefully aids and abets, violations of international law (or so the Second Circuit majority concluded). Similarly, a suit may still be brought under the TVPA against those individuals responsible for a person’s torture or extrajudicial killing under color of foreign law. But a ruling exempting corporations from civil liability under the ATS and TVPA would limit enforcement of human rights violations in U.S. courts by, among other things, making it more difficult for a plaintiff to secure jurisdiction over alleged perpetrators and to obtain a favorable judgment.

Paradoxically, it is the respondents in Kiobel that lean more heavily on the corpus of international law. They argue that jurisdiction over corporations under the ATS depends on the existence of a customary international law norm of civil corporate liability. By contrast, the petitioners in Kiobel frame the issue as one primarily of domestic law, arguing that the ATS incorporates domestic tort remedies and procedures, which provide for the enforcement of substantive international law norms. Respondents also press an interpretation of Sosa that could chill ATS litigation outside the corporate context. Respondents argue that Sosa requires courts to undertake a second step after determining that an international law violation is well-established and universally accepted. Relying on the Court’s Bivens jurisprudence—another area of federal common-lawmaking authority—respondents maintain that a court can refuse to recognize a cause of action under the ATS based on its assessment of the practical consequences of litigation. In fact, the passage in Sosa to which respondents refer discusses only the need for a court to take into account practical consequences when making the threshold determination as to the clarity of the substantive international law norm. Sosa does not indicate the need for an additional step once that determination has been made. Should, however, the Court adopt respondents’ approach, it could provide a basis for dismissal of any ATS suit based, for example, on concerns about the foreign policy consequences of allowing litigation to proceed.

Jonathan Hafetz is an associate professor of law at Seton Hall University School of Law. He can be reached at jonathan.hafetz@shu.edu or 973.642.8492.

 PREVIEW of United States Supreme Court Cases, pages 197–201.
© 2012 American Bar Association.

 

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