By Louis M. Solomon
Biomah Flomo, et al. v. Firestone
Natural Rubber Co., No. 10-3675 (7th Cir. July 2011) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] , addresses the issue of corporate liability under the Alien
Tort Statute, 28 U.S.C. § 1350 - an issue that has split the Circuits.
More interesting for our purposes, the decision rules on issues of
international litigation practice that apply more generally to the litigation
or dispute resolution of international business controversies. (Frankly, even
if the decision had no relevancy, reading yet another dazzling display of
judicial erudition in the panel's decision authored by Judge Posner would be
worth a detour in any event.)
At issue in the case are claims by 23 Liberian children
against a Firestone subsidiary, who allegedly utilized hazardous child labor on
its plantation, in violation of customary international law. Firestone did not
actually employ children; rather, the allegations went, Firestone set such high
daily production quotas for its employees (poor Liberian agricultural workers)
that, given that the pay is relatively good by local standards, there is an
incentive for the employee to "dragoon their wives or children into helping
them, at no monetary cost".
The Seventh Circuit affirmed the District Court's dismissal
of the complaint, but on an analysis different from that used by the District
First, the Court of Appeals felt it needed to address the
issue of whether
the ATS covers corporate conduct, on which we have posted before. The
Seventh Circuit joins the Eleventh and D.C. Circuits and splits with the Second
in Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010) [enhanced version / unenhanced version ],
to find no
preclusion of corporate liability under the ATS. The Seventh Circuit says,
among other things, that the "factual premise of the majority opinion in the Kiobel
case is incorrect" - the example given is the allied powers dissolution of
German corporations after the Second World War, which was done on the authority
of "customary international law". But the Seventh Circuit went further to say
that, even supposing "no corporation had ever been punished for violating
customary international law", "[t]here is always a first time for litigation to
enforce a norm; there has to be". For example, says the Court, there "were no
multinational prosecutions for aggression and crimes against humanity before
the Nuremberg Tribunal was created". The Court of Appeals also explains, "And
if precedent for imposing liability for a violation of customary international
law by an entity that does not breathe is wanted, we point to in rem
judgments against pirate ships".
Second, even though "corporate liability is possible" under
the ATS, the Court of Appeals could not find adequate justification for
imposing that liability on Firestone even assuming the truth of the allegations
of the complaint. The Court repeated the fact that Firestone did not actually
Third, the Court rejected the argument that "plaintiffs must
exhaust their legal remedies in the nation in which the alleged violation of
customary international law occurred", stating that the "implications of the
argument border on the ridiculous" (asks the Court, imagine having to sue in
Nazi Germany complaining about genocide before being able to sue under the ATS
in the U.S.).
Fourth, the Court rejected the argument that the ATS should
not be given extraterritorial application - limiting the ATS to those acts
committed in the U.S. or on the high seas. The statute had never
been given that interpretation, says the Circuit.
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