Major new corporate case at Court
on Jun 7, 2011 at 9:28 pm
UPDATE:Â The case has now been docketed as 10-1491.Â Â The response is now due July 13, unless the time is extended for it.
Lawyers for 12 individuals seeking to hold major oil companies legally responsible for human rights abuses in Nigeria in the 1990s have asked the Supreme Court to overturn a federal appeals court’s ruling that corporations are immune to such claims in U.S. courts.Â The new petition, in the high visibility case of Kiobel, et al., v Royal Dutch Petroleum, et al., raises what may be the hottest international law issue now affecting business firms.
In essence, the case is a kind of ultimate test of what Congress meant when, as part of the first federal courtsÂ law in 1789, it gave U.S. courts the authority to hear claims by foreign nationals that they were harmed by violations of international law.Â The case also seeks to test what the Supreme Court understood the law to mean in its ruling seven years ago in Sosa v. Alvarez-Machain, an international abduction case.
The law at issue is the Alien Tort Statute, a law that datesÂ from the first Congress but has grown in importanceÂ at the center of a wave of lawsuits overÂ the past three decades — lawsuits that were Â originally aimed at individuals, and then beganÂ targeting corporationsÂ in 1997.
The Second Circuit Court,Â in a ruling last September that arousedÂ hard feelings among the judges on the panel and on the en banc Court, Â became the first court to rule that ATSÂ does not apply at all to corporations, but only to individuals.Â The panel split 2-1, and the en banc Court divided 5-5 in refusing to reconsider the panel result.
Challenging that outcome, the new appeal argued: “Corporate tort liability was part of the common law landscape in 1789 and is firmly entrenched in all legal systems today.Â The notion that corporations might be excluded from liability for their complicity in egregious human rights violations is an extraordinary and radical concept.”
Invoking the grievous memory of atrocities by the I.G. Farben industrial complexÂ in Nazi Germany, the petition asserted that “there is nothing in the ATS’s history or purpose, the common law of the 18th Century, or international law that supports” the Second Circuit conclusion.
While many lawyers and legal scholars interpret the Supreme Court’s 2004 ruling in Sosa to mean that the Court drew no distinction between corporations and individuals sued under ATS, the Sosa decision itself was a primary source of authority claimed by the Second Circuit panel for its conclusion that corporations are immune.Â The other main authority for the panel’s ruling was its perception of the absence of corporate defendants in international crimes tribunal cases.
The Kiobel petition seeks to put two questions before the Justices.Â It is conceivable that, if the Court were to grant the first of the two questions, it might not reach the ultimate question of corporate liability, at least inÂ anÂ initial round of review.Â That is because the first issue is whether the Circuit Court should have reached the issue of corporate immunity at all.
In fact, the petition suggested that the Justices should consider summarily overturning the Circuit Court on a basic procedural point, and then send the case back to the Circuit Court to decide on the legal issues of liability that the Nigerian challengers had raised in what was a pre-trial appeal.Â
As the case moved up from a federal District Court, neither side had raised the issue of whether ATS applied to corporations.Â That question was not decided by the District judge, and was not an issue that the judge sent up to the Circuit Court.Â But the Circut Court panel majority, without deciding any of the issues sent up on appeal, optedÂ on its own to conclude that it had no jurisdiction to decide the case because ATS simply did not apply to corporations.
Challenging that conclusion in arguing the first question in the new petition, the Nigerians’ counsel contended that the question of ATS’s reach is an issue on the legal merits, not a jurisdictional question.Â If it is treated as a jurisdictional question, the petition predicted, virtually every significant issue in an ATS case from now on will be turned into a question of the court’s authority, “enabling any Circuit panel to render decisions on virtually any issue without prior notice, briefing, or decision in the district court.”Â Moreover, it said, every corporation sued under such a legal understanding would seek to make every question one of jurisdiction.
The second question posed in the petition is what it describes as the merits question: whether corporations are immune from tort liability for war crimes, crimes against humanity, and other human rights abuses perhaps even amounting to genocide, or are they as liable as any private indvidual would be under ATS.
On that point, the petition said, there is a direct conflict between rulings of the Second Circuit and the Eleventh Circuit.Â In addition, it argued, other Circuit Courts have considered ATS suits against corporations without questioning whether they are covered.
Moreover, according to the petition, the issue of corporate liability under ATS is now under review in three other federal appeals courts — the D.C., Seventh and Ninth Circuits.
“Today,” the petition said, “corporations may be sued under the ATS for their complicity in egregious international human rights violations in Miami or Atlanta, but not in New York or Hartford.Â This is contrary to the congessional intent that the ATS ensure uniform interpretation of itnernational law in federal courts in cases involving violations of the law of nations.”
The three companies involved in the case — Royal Dutch Petroleum Co., Shell Transport and Trading Co., and Shell Petroleum Development Co. of Nigeria Ltd. — will have a chance to respond to the petition before the Justices act on it.Â It is also possible that the Justices may seek the views of the federal government before acting.
There is no set timetable for the Court to act on the case, but it is a certainty that no action will come until the next Term, starting in October.