Tyler G. Banks, Corporate Liability Under the Alien Tort Statute: the Second Circuit?s Misstep Around General Principles of Law in Kiobel v. Royal Dutch Petroleum Co.

• Citation: Vol. 26 No. 1
• Publication year: 2010

CORPORATE LIABILITY UNDER THE ALIEN TORT STATUTE: THE SECOND CIRCUIT’S MISSTEP AROUND GENERAL PRINCIPLES OF LAW IN KIOBEL V. ROYAL DUTCH PETROLEUM CO.

INTRODUCTION

In Richard Wagner’s opera Lohengrin,1 a knight appears at the prayers of a maiden to defend her against accusations of murder.2 The knight agrees to wed her on the condition that she never ask his name or from whence he came.3 As such, when Judge Friendly called the Alien Tort Statute (“ATS”)4 a “legal Lohengrin,”5 he was referencing the peculiar origin and nature of this aged statute. Although we are well aware of the origins of the ATS, its inactivity for almost 200 years clouded it in an aura of mystery. Now, almost thirty years after its revival by the Second Circuit, that same court may have stripped the ATS of its ability to defend its maiden, the victims of tortious actions attributable to corporate entities.

The ATS has eluded much appellate review due to settlements and quick dismissals. The Supreme Court has seriously considered its jurisdictional grant in only one case.6 As such, there remains much mystery about its exact function and application. By requiring that courts look to the corpus of

international law to determine jurisdiction, the ATS opens the door to judicial conjecture and confusion on the content of the “law of nations.”7 Although the recognition of what constitutes substantive international law rules (such as standards for torture, extrajudicial killings, or forced exile) is a difficult enough task for the lower courts of the federal judiciary, the scope of those rules, such

as their source, has equally led to conflict among the courts.

1. RICHARD WAGNER, LOHENGRIN (Nicholas John ed., Amanda Holden trans., Riverrun Press 1993) (1850).

2. See id. at 55–56.

3. See id. at 57–58.

4. Alien Tort Statute, 28 U.S.C. § 1350 (2006).

5 IIT v. Vencap, Ltd., 519 F.2d 1001, 1015 (2d Cir. 1975).

6 See Sosa v. Alvarez-Machain, 542 U.S. 692, 712 (2004). The Court will review the ATS in the 2011 Term as they have granted certiorari in Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010),

cert. granted, 132 S. Ct. 472 (2011). See discussion infra Part V.D.

7 28 U.S.C. § 1350.

It is this conflict of scope that gave rise to the Second Circuit’s September 2010 holding in Kiobel v. Royal Dutch Petroleum Co.8 The Second Circuit, with no briefing of the issue from the parties, reversed an assumption underlying many ATS decisions against corporations up to that point: that the

ATS provided subject matter jurisdiction over actions against corporate entities.9 The U.S. District Court for the Southern District of New York dismissed Nigerian plaintiffs’ claims alleging human rights atrocities committed in connection with protests over the defendant corporation’s oil extraction activities.10 On appeal, the Second Circuit affirmed this dismissal.11

The Second Circuit held that subject matter jurisdiction under the ATS is not available for actions against corporations.12 In doing so, the court almost exclusively looked to one source of international law—custom.13 Yet, the Statute for the International Court of Justice (“ICJ Statute”),14 recognized as the authority for the sources of international law,15 lists another important and especially pertinent source: “general principles of law recognized by civilized

nations.”16 As this Comment shows, the Second Circuit’s failure to implement this source of international law is a fatal blow to its holding.

This Comment, in Part I, first looks to the history of the ATS and the case law leading up to the holding in Kiobel. Next, in Part II, the facts of this case are discussed, followed by an analysis of both the majority and concurring opinions. Part III contains a discussion of the general principles of international law as stated in the ICJ Statute, leading to a survey of the world’s legal systems in Part IV and their treatment of corporations and the imposition of tort liability. From this, Part V applies the general principles discovered from these legal systems through an analysis of the majority and concurring

8 Kiobel, 621 F.3d 111.

1. Id. at 145. The Supreme Court granted certiorari to determine whether the question dealing with corporate liability under the ATS is one that goes to the merits or is jurisdictional. See Petition for Writ of Certiorari, at i, Kiobel, 132 S. Ct. 472 (No. 10-1491). This issue will be discussed more thoroughly infra Part V.D.

2. Kiobel v. Royal Dutch Petroleum Co., 456 F. Supp. 2d 457, 468 (S.D.N.Y. 2006), aff’d in part, rev’d

   in part, 621 F.3d 111, cert. granted, 132 S. Ct. 472.

3. Kiobel, 621 F.3d at 149.

4. Id.

13 Id. at 125–45.

1. U.N. Charter, Statute of the International Court of Justice, June 26, 1945, 59 Stat. 1031 [hereinafter ICJ Statute].

2. DAVID J. BEDERMAN, INTERNATIONAL LAW FRAMEWORKS 13 (2d ed. 2006); see also ICJ Statute,

   supra note 14, art. 38(1).

3. ICJ Statute, supra note 14, art. 38(1)(c).

   opinions, a look to the Second Circuit’s denial of rehearing en banc, and a discussion of the dual issues certified by the Supreme Court when it granted certiorari in Kiobel. Finally, Part VI concludes the Comment with a discussion of alternatives to the Second Circuit’s bright-line denial of ATS jurisdiction over corporations, the potential implications of the decision as it stands, and best alternatives to which the Second Circuit could have looked when deciding Kiobel.

   
   

   1. THE ALIEN TORT STATUTE

      
      

      Included in the Judiciary Act of 1789, the ATS states: “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.”17 Thus, plaintiffs looking to overcome the ATS’s jurisdictional barrier must be

      aliens suing in tort for a violation of the law of nations. Unlike other sources of original federal court jurisdiction, the ATS does not look to the relationship between the parties,18 nor to the source of the conflict in federal law,19 but asserts its power under the auspices of international law. This reference to international law, on its face, creates clear and unavoidable choice of law20 and separation of powers issues,21 among others. Additionally, there is a general difficulty raised when municipal courts must construe and apply international law.

      
      

      Despite the ATS’s potential to raise these complex issues,22 it lay relatively dormant for almost 200 years.23 It was awakened by the Second Circuit in

      
      

4. 28 U.S.C. § 1350 (2006); accord Judiciary Act of 1789 § 9(b), 1 Stat. 73, 77. Some courts have also referred to the ATS as the Alien Tort Claims Act or the ATCA. See Doe I v. Unocal Corp., 395 F.3d 932, 943 (9th Cir. 2002); Doe I v. Karadzic, No. 93 Civ. 0878, 2001 U.S. Dist. LEXIS 12928, at *2–3 (S.D.N.Y. 2001).

The Supreme Court has used ATS, Sosa v. Alvarez-Machain, 542 U.S. 692, 697 (2004), and, on this basis, this Comment references the statute in the same manner.

18 Compare 28 U.S.C. § 1350, with 28 U.S.C. § 1332(a) (2006).

19 Compare 28 U.S.C. § 1350, with 28 U.S.C. § 1331.

1. See Khulumani v. Barclay Nat’l Bank Ltd., 504 F.3d 254, 286 (2d Cir. 2007) (Hall, J., concurring) (“Lacking the benefit of clear guidance, I presume a federal court should resort to its traditional source, the

   federal common law, when deriving the standard.”); Unocal, 395 F.3d at 963 (Reinhardt, J., concurring) (“I do not agree that the question of Unocal’s tort liability should be decided by applying any international law test at all. . . . [It] should be resolved by applying general federal common law tort principles.”). But see Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 126 (2d Cir. 2010), cert. granted, 132 S. Ct. 472 (2011) (noting that the scope of international law is defined by international law itself).

2. Filartiga v. Pena-Irala, 630 F.2d 876, 885–89 (2d Cir. 1980).

3. See INT’L COMM’N OF JURISTS, CIVIL REMEDIES 57 (2008) [hereinafter CIVIL REMEDIES].

4. See Taveras v. Taveraz, 477 F.3d 767, 771 (6th Cir. 2007). Before its revival in 1980, the ATS established jurisdiction in two cases, Adra v. Clift, 195 F. Supp. 857 (D. Md. 1961), and Bolchos v. Darrel, 3

   Filartiga v. Pena-Irala,24 a decision which created a doctrine that has become “a touchstone for promoting effective remedies for serious human rights violations.”25 In Filartiga, two citizens of Paraguay brought an action to recover for the death of a family member by torture at the hands of a former Inspector General of Police.26 The trial court dismissed on jurisdictional grounds; the Second Circuit interpreted the trial court’s dismissal as reflecting that, although “official torture violates an emerging norm of customary international law,”27 the trial court felt “contstrained by dicta” to construe the ATS as excluding law governing the relations between a state and its citizens.28 The Second Circuit disagreed. Reviving the little-used ATS, the majority looked to domestic court opinions,29 the UN Charter,30 the Universal Declaration of Human Rights,31 and even municipal constitutions32 to hold that “official” torture is “unambiguous[ly]” and “clear[ly]” prohibited by the law of nations.33

   
   

   Filartiga was a groundbreaking decision and victory for human rights.34 Since that case was decided, the ATS has substantially protected victims and

   
   

   F. Cas. 810 (D.S.C. 1795) (No. 1607). In Adra, the U.S. District Court for the District of Maryland resolved a custody dispute between divorced Iraqi and Lebanese nationals. See 195 F. Supp. at 859, 867. In Bolchos, the

   U.S. District Court for the District of South Carolina, having established jurisdiction under the ATS, resolved a dispute between two parties over the “rightful” ownership of slaves. See 3 F. Cas. at 810–11.

5. See Filartiga, 630 F.2d 876.

6. Brief of Amici Curiae International Jurists in Support of Affirmance at 13, Sosa v. Alvarez-Machain, 542 U.S. 692, 712 (2004) (No. 03-339).

7. Filartiga, 630 F.2d at 878.

8. Id. at 880.

9. Id. This constraint came from the earlier Second Circuit cases of Dreyfus v. Von Finck, 534 F.2d 24 (2d Cir. 1976), and IIT v. Vencap, Ltd...