D.C. and Seventh Circuits Decide the Issue of Corporate Liability under the Alien Tort Statute

D.C. and Seventh Circuits Decide the Issue of Corporate Liability under the Alien Tort Statute

By: Judith A. Archer and Sarah E. O'Connell


Fulbright Briefing


 

Two circuit courts have recently addressed the issue of corporate liability under the Alien Tort Statute ("ATS"). On July 8, 2011, the United States Court of Appeals for the D.C. Circuit decided John Doe VIII v. Exxon Mobil Corp. [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], affirming the district court's dismissal of plaintiffs' Torture Victims Prevention Act claims, and reversing the dismissal of the claims asserted under the ATS. The 2-1 majority held that corporations are not immune from liability under the ATS. Three days later, on July 11, 2011, the United States Court of Appeals for the Seventh Circuit decided Flomo v. Firestone Natural Rubber Co., LLC, [enhanced version  / unenhanced version ] which affirmed the district court's grant of summary judgment, holding that corporations may be held liable under the ATS but that plaintiffs had not shown an adequate basis for inferring a violation of customary international law. With these decisions, the Seventh and D.C. Circuits joined the Eleventh Circuit in holding that corporations have liability under the ATS, rejecting the Second Circuit's recent decision to the contrary. 

The ATS provides that "[t]he district courts shall have original jurisdiction over 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. Although the ATS was originally thought to cover only violations such as the law of safe passage, infringement of the rights of ambassadors and piracy, federal courts have recently seen an increase in the number of ATS cases. Plaintiffs in those cases have asserted claims against multinational corporations under the theory that the corporations aided and abetted human rights violations through their cooperation with governments alleged to have engaged in such violations. 

Plaintiffs in Doe, villagers from the Indonesian territory of Aceh, are seeking to hold Exxon liable for actions taken by Indonesian military personnel allegedly employed by Exxon. Judge Judith Rogers authored the 112-page majority opinion, joined by Judge David Tatel, holding that aiding and abetting liability under the ATS is well established, and "neither the text, history nor purpose of the ATS supports corporate immunity for torts" committed by agents of the corporation. In dissent, Judge Brett Kavanaugh agreed with the Second Circuit's holding in Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010) [enhanced version  / unenhanced version ], that the ATS does not apply to claims against corporations. He further argued that the ATS does not reach conduct that occurs in a foreign country. 

Plaintiffs in Flomo, twenty-three Liberian children, sought to hold Firestone liable for utilizing child labor on a rubber plantation in violation of customary international law. Judge Richard Posner, writing for the court, addressed the district court's holding that a corporation cannot be liable for a violation of customary international law. Judge Posner examined the Second Circuit's decision in Kiobel, on which the district court relied, and held that the factual premise underlying the majority opinion in Kiobel, namely that there is no principle of customary international law that binds a corporation is incorrect. Judge Posner disagreed with the district court and held that corporations may be liable under the ATS. The court then turned to the substantive allegations against Firestone, and considered whether the treatment of child labor at the Firestone plantation constituted a violation of customary international law. Noting that Firestone did not employ children, rather that plaintiffs' argued that by imposing tough quotas, Firestone induced adult employees to enlist their children's assistance, the Seventh Circuit held that plaintiffs had not established a violation of customary international law, and affirmed the grant of summary judgment. 

In two separate opinions, the Eleventh Circuit previously held that corporations may be held liable under the ATS. Sinaltrainal v. Coca-Cola, 578 F.3d 1252, 1263 (11th Cir. 2009) [enhanced version  / unenhanced version ]; Romero v. Drummond Co., Inc., 552 F.3d 1303 (11th Cir. 2008) [enhanced version  / unenhanced version ]. In Kiobel,the Second Circuit reached the opposite result, holding that the jurisdiction granted by the ATS does not extend to civil actions brought against corporations. (For a more detailed discussion of the Second Circuit's decision in Kiobel, click here.) Petitioners in Kiobel have filed a petition for a writ of certiorari with the United States Supreme Court. That petition is pending. 

Visit the Fulbright & Jaworski Publications page for more analysis of International & Foreign Law issues.

For more information about LexisNexis products and solutions connect with us through our corporate site.