TABLE OF CONTENTS I. INTRODUCTION II. THE CIRCUIT SPLIT: DEFINING CORPORATE LIABILITY ON TWO AXES A. The Kiobel Decision 1. The Y-Axis: Substantive Definition 2. The X-Axis: Narrow Definition B. The Flomo Decision (and the Kiobel dissent) 1. The Y-Axis: Jurisdictional Definition 2. The X-Axis: Narrow Definition C. The Doe Decision 1. The-Y-Axis: Jurisdictional Definition 2. The X-Axis: Broad Definition D. The Rio Tinto Decision 1. The Y-Axis: Substantive Definition 2. The X-Axis: Broad Definition III. THE BEST DEFINITION FOR CORPORATE LIABILITY: BROAD AND JURISDICTIONAL A. The Broad, Jurisdictional Definition Provides Clarity and Consistency in U.S. Law B. The Broad Jurisdictional Definition Recognizes the Role of Customary International Law C. The Broad, Jurisdictional Definition Avoids an Unjust Result IV. CONCLUSION I. INTRODUCTION
The Alien Tort Statute (ATS) has been described as "a jurisdictional provision unlike any other in American law, and of a kind apparently unknown to any other legal system in the world." (1) Its language permits aliens to sue in U.S. federal courts only for a tort "committed in violation of the law of nations or a treaty of the United States." (2) The ATS, in other words, grants jurisdiction for violations of treaties and of customary international law (CIL) (3) Although a part of U.S. law since 1789, the ATS has only recently become popular among human rights advocates seeking damages against perpetrators of human rights abuses abroad.
The Supreme Court has only once ruled on the scope and applicability of the ATS. (4) In Sosa v. Alvarez-Machain, the Court rejected the claims of a Mexican citizen (Alvarez) against another Mexican citizen (Sosa) for arbitrary detention that had occurred in Mexico, finding that the ATS permitted the Court to hear only a "very limited category defined by the law of nations and recognized at common law." (5) Those limitations were to be based on "norm[s] of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18th century paradigms recognized [by the Court]." (6) This was a category that arbitrary detention simply did not fit into, leading to the dismissal of Alvarez's claims.
Since Sosa, several ATS cases have been heard by district and circuit courts, raising new questions about the statute's scope. Most recently, four circuit courts in the last year have addressed the question of whether corporations may be held liable for violations of customary international law under the ATS. Although this question has been alluded to in prior ATS decisions, (7) these four cases are the first to decide the issue head-on. The Second Circuit in Kiobel v. Royal Dutch Petroleum Co. (8) held that corporations are not liable for CIL violations under the ATS, while the Seventh Circuit in Flomo v. Firestone Natural Rubber Co., (9) the Ninth Circuit in Sarei v. Rio Tinto, PLC, (10) and the D.C. Circuit in Doe v. Exxon Mobil Corp. (11) held the opposite. The Supreme Court will rehear the petition from Kiobel in the coming term. Against this backdrop, it is valuable to analyze these four decisions to distill the essential questions that the Supreme Court must answer in order to alleviate the current circuit split.
Although these four cases only come to two different conclusions about corporate liability for CIL violations, these decisions actually differ in more than one important respect. In order to see where these decisions differ, it is important to ask not only whether there is corporate liability under the ATS, but what corporate liability is in the first place. Asking whether corporate liability should be available under the ATS puts the cart before the horse, neglecting this first and more fundamental legal question.
In fact, the four circuit decisions are actually based on the answers to two basic questions about the definition of corporate liability: (1) whether corporate liability should be defined as part of the jurisdictional question or part of the substantive question (the y-axis of the corporate liability grid), and (2) whether corporate liability should be defined broadly or narrowly (the x-axis of the corporate liability grid).
On the first question, liability is a jurisdictional question flit is part of the court's discussion of whether it may hear the case at all. Jurisdictional matters are to be decided by the court in accordance with domestic law, so if the court discusses the corporate liability question as part of jurisdiction, it must apply domestic law to find the answer. On the other hand, if the court discusses corporate liability as part of the merits (once it has already decided that it has jurisdiction), under the ATS it is a substantive question that must be decided in accordance with international law. As a result, the place in the decision and the language used by the courts give us insight into whether the court views corporate liability as a jurisdictional or substantive question, and thus, whether the court will apply domestic or international law.
As to the second question, courts view corporate liability broadly when they look for precedent or past practice of holding corporations liable in the criminal context as well as the civil, in the international context as well as the domestic, and for treaty and domestic law violations as well as CIL violations. Those courts that define corporate liability narrowly look only to precedent for civil liability for CIL human rights violations. When courts limit the scope of the precedent that they weigh in evaluating corporate liability, they also limit the scope of corporate liability itself. In other words, these definitional terms (although not used by the court) delimit the way that the court views corporate liability and whether it exists under the ATS.
The four decisions before us locate themselves in different quadrants based on their answers to these two questions: Kiobel adopts a narrow, substantive definition; Flomo uses a narrow, jurisdictional definition; Doe uses a broad, jurisdictional definition; and Rio Tinto uses a broad, substantive definition (see Table 1). This Note will argue in Section II that the Supreme Court, in its decision on the pending Kiobel petition, (12) will need to decide which of these definitions is correct if it is to resolve the questions of corporate liability under the ATS once and for all.
This Note will further argue in Section III that the broad, jurisdictional definition espoused by the D.C. Circuit in Doe is the best definition for corporate liability in light of the relevant principles of domestic and international law. Although the Doe court does not fully elucidate why it selects this definition, the Supreme Court should take this opportunity to adopt the broad, jurisdictional definition for corporate liability because it will create clarity and consistency in domestic law, will place CIL in the appropriate role in ATS cases, and will avoid unjust results in ATS litigation. Although the Supreme Court ordered a rehearing of the Kiobel petition on the issues of extraterritoriality and secondary liability on March 5, 2012, (13) ultimately the court still may still address the issue of corporate liability (having already received written briefs and heard oral argument on the issue on February 28, 2012). As a result, how the courts define corporate liability when they do reach that question is still of utmost importance.
THE CIRCUIT SPLIT: DEFINING CORPORATE LIABILITY ON TWO AXES
The Kiobel Decision
In Kiobel, a group of Nigerian residents filed suit under the ATS claiming that three large oil and gas companies had aided and abetted the Nigerian Government in the commission of serious human rights abuses. (14) The allegations against these companies included providing transportation, food, and payment to the Nigerian Army during their attacks on Ogoni villages. (15) These attacks included killing, raping, beating, and arresting the village residents and destroying and looting their homes. (16) They also included permitting the attacks to be staged on company property. (17) The resulting claims were aiding and abetting extrajudicial killing; crimes against humanity; torture; arbitrary arrest and detention; violation of rights to life, liberty, security, and association; and property destruction. (18) The defendant companies were all foreign: Royal Dutch Petroleum (RDP) is Dutch, Shell Transport and Trading Company (Shell) is British, and Shell Petroleum Development (SPDC) is Nigerian. (19)
The Second Circuit issued three main holdings: first, that CIL governs the scope of ATS jurisdiction; second, that the ATS does not create jurisdiction over corporations as a matter of first impression; and third, that RDN, Shell, and SPDC are not liable under the ATS due to their status as corporations. (20) In coming to these conclusions, the Second Circuit adopted a definition of corporate liability that was substantive and narrow.
The Y-Axis: Substantive Definition
The Kiobel court defined corporate liability as part of the substantive issue before it: the result of this definition is that the Second Circuit looked to international law to decide whether corporate liability exists under the ATS, rather than domestic law. (21) It held, in fact, that "all liability concepts, adjective as well as substantive, must originate in international law norms" (22) As a result, although the United States has a "legal culture long accustomed to imposing liability on corporations," "the ATS requires federal courts to look beyond rules of domestic law--however well-established--to examine the specific and universally accepted rules that the nations of the world treat as binding in their dealings with one another." (23) The Kiobel court went even further, holding that it is not even sufficient for purposes of liability under the ATS that many (if not all) countries observe a certain legal...