D.C. Circuit Expands Federal Court Jurisdiction over Foreign Activities of U.S. Companies

D.C. Circuit Expands Federal Court Jurisdiction over Foreign Activities of U.S. Companies

 

By: Mark E. Nagle , Julie Mendoza , Donald B. Cameron, Jr. , Jeff M. Cohen

The ruling by the U.S. Court of Appeals for the D.C. Circuit in Doe v. Exxon Mobil Corporation [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] allows non-U.S. citizens to bring suit in U.S. courts for wrongful acts or omissions that allegedly violate established rules of the law of nations and/or a treaty of the United States. The decision expands the jurisdiction of federal courts over suits against U.S. companies for events occurring abroad.

The case arises under a U.S. Code provision called the Alien Tort Statute. First adopted in 1790, the statute has been seldom invoked until recent years. The Doe plaintiffs, a group of Indonesian nationals, claimed that U.S. security personnel assigned to an Exxon gas production facility in Aceh province caused extensive damage to property and injuries to persons living in villages near the plant. The plaintiffs alleged knowledge on the part of Exxon officials in the United States, but all relevant events occurred in Indonesia. 

The District Court dismissed plaintiffs' claims on jurisdictional and other grounds. On appeal, the D.C. Circuit Court reversed the District Court's decision. The Circuit Court found that the complaint alleged acts that, if proven, would constitute aiding and abetting the violation of human rights, liability for which has been established with sufficient clarity under the law of nations to subject Exxon to suit in the United States. The Court's analysis of the current state of international law, and its process for discerning established norms of the law of nations, leave the door open to recognition of other forms of tortious conduct that may be deemed violative of international law. 

Potential Impact
The Exxon decision conflicts with rulings from the Second and Seventh Circuits, which may enhance the prospects for further review. Unless and until the full D.C. Circuit Court or the U.S. Supreme Court overturns this decision, however, U.S. or foreign companies having sufficient contacts with the District of Columbia may be sued in D.C. federal court for acts, omissions or events occurring abroad that may be described as "aiding or abetting" violations of human rights. Not every routine tort rises to a matter of international law, but plaintiff's lawyers and advocacy groups now have greater flexibility in framing their allegations to take advantage of the Court's opinion. And any case filed in the federal courts requires compliance with the Federal Rules of Civil Procedure and Evidence, including document retention obligations and all the other requirements of modern federal court litigation. 

What you can do to protect your company?
Prudent monitoring of overseas operations can go far to avoid the risk of a lawsuit under the Alien Tort Statute. Rigorous standards for personnel recruitment and selection, careful screening of contractors and monitoring of their performance, and sound record maintenance policies are just a few examples of cost-effective practices that can limit the danger that actionable misconduct may occur. Training programs can be tailored to instill appropriate sensitivity to local political and cultural concerns, and reporting systems devised so that any potentially actionable conduct is rapidly identified and corrected. Troutman Sanders attorneys can assist in designing and implementing such compliance measures. 

If a lawsuit is filed, Troutman's clients will benefit from our litigators' extensive experience in defending claims under the Alien Tort Statute, as well as other complex tort actions. We aggressively litigate the case in the courtroom and, when appropriate, engage the appropriate Executive Branch agencies and officers to secure the best possible resolution.

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