Symposium: A federal-common-law approach to corporate liability under the Alien Tort Statute
on Jul 26, 2017 at 10:48 am
Anton Metlitsky is a partner at O’Melveny & Myers LLP. He filed an amicus brief for the Chamber of Commerce of the United States of America and other organizations in support of neither party in Jesner v. Arab Bank, PLC.
Enacted as part of the Judiciary Act of 1789, the Alien Tort Statute provides: “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.” Despite its Founding-era provenance, the ATS lay largely dormant until 1980, when the U.S. Court of Appeals for the 2nd Circuit held in Filartiga v. Pena-Irala that the statute authorized a Paraguayan national to bring a civil damages suit against a former Paraguayan police officer based on allegations of torture. The Supreme Court has construed the statute only twice since then – first in 2003 in Sosa v. Alvarez-Machain, and again in 2013 in Kiobel v. Royal Dutch Petroleum Co. (“Kiobel II”). The court will get its third opportunity this term, when it considers Jesner v. Arab Bank.
The legal question before the Supreme Court in Jesner is whether private plaintiffs may sue corporations (as distinct from natural persons) under the ATS to enforce certain human-rights norms. The question may seem odd at first blush, because the language of the statute itself does not differentiate between types of defendants, or even refer to the defendant at all. Thus, one might assume that suits against corporations under the ATS should be treated just as suits against individuals are.
A closer look at the Supreme Court’s ATS precedent, however, demonstrates that the ATS does not authorize private suits at all. Sosa made clear that the ATS is only a grant of federal jurisdiction, and does not by itself provide a cause of action authorizing private damages actions. Rather, the court held in Sosa, private ATS actions based on human-rights norms can proceed only when federal courts are authorized to imply a private right of action to enforce such norms under federal common law. The court emphasized, moreover, that allowing private enforcement of human-rights norms without congressional authorization threatens significant, negative separation-of-powers and foreign-policy consequences. The court thus warned that federal courts must proceed with “great caution” not only in recognizing any common-law cause of action under the ATS, but also in determining its scope.
Under Sosa, what matters in considering the existence and scope of an ATS action in any particular circumstance is not the ATS itself, but rather the “cautious” federal-common-law approach Sosa established. And a faithful application of that framework compels the conclusion that federal common law does not authorize federal courts to recognize private human-rights claims against corporations without express congressional authorization.
The Supreme Court in Sosa did not purport to set forth all possible limits on ATS actions. The court did, however, elaborate a general approach to federal common law in this area. The court explained that judicial “caution” is warranted because the court’s “general practice has been to look for legislative guidance before exercising innovative authority over substantive law,” and “[i]t would be remarkable to take a more aggressive role in exercising a jurisdiction that remained largely in shadow for much of the prior two centuries.” The court also had “recently and repeatedly” stated that “a decision to create a private right of action is one better left to legislative judgment in the great majority of cases,” because the “creation of a private right of action raises issues beyond the mere consideration whether underlying primary conduct should be allowed or not—entailing, for example, a decision to permit enforcement without the check imposed by prosecutorial discretion.” And, the court emphasized, “the potential implications for the foreign relations of the United States of recognizing [private] causes” of action for violating international law “should make courts particularly wary of impinging on the discretion of the Legislative and Executive Branches in managing foreign affairs.”
Applying this framework, the Sosa court held that the ATS authorizes federal courts to imply under federal common law a cause of action to enforce “a very limited category” of law-of-nations norms that are as clearly defined and universally recognized as “the historical paradigms familiar when [the statute] was enacted” – i.e., offenses against ambassadors, violations of safe conduct, and piracy.
The Supreme Court also made clear that this threshold, international-law-based precondition was necessary but not sufficient for recognizing an ATS action under federal common law. The court explained that “[w]hatever the ultimate criteria for accepting a cause of action subject to jurisdiction under [the ATS], … federal courts should not recognize private claims under federal common law” that do not satisfy the rule of clear definition and universal acceptance. That rule was enough to resolve Sosa, because the international-law norm alleged there was not universally accepted or clearly defined. But the Sosa court made clear that federal courts considering ATS actions in other circumstances must similarly apply the cautious federal-common-law framework outlined in the case.
Crucially for Jesner, the Supreme Court also has emphasized that the same judicial caution that is required in defining the substantive scope of federal common law under the ATS applies to the question whether a particular type of party – such as a corporation – is a proper defendant in such an action. In Sosa, the court explicitly stated that a “related consideration” to whether an international norm satisfies the test of concrete definition and universal acceptance is “whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor such as a corporation or individual.” And in Kiobel II, the court noted that defining the scope of an international-law-based cause of action includes “specifying who may be liable.” The court’s ATS precedent therefore makes clear that courts should not assume that corporations are proper defendants in ATS actions, but instead must determine as a matter of federal common law whether they should be.
The question for the Supreme Court in Jesner, then, is whether federal courts exercising “vigilant doorkeeping” and “great caution” as Sosa requires should recognize ATS private suits against corporations to enforce human-rights norms. The answer, under the Sosa federal-common-law framework, is no. Indeed, in the context of ATS actions that seek to enforce international human-rights norms, the reasons for rejecting corporate liability as a matter of federal common law are overwhelming.
For one thing, Sosa held that courts may not recognize an ATS action unless the underlying international norm being invoked applies “to the perpetrator being sued,” and international law does not recognize corporate liability for human-rights norms, as the 2nd Circuit persuasively explained in Kiobel I.
But even if the Supreme Court disagrees and concludes that corporate ATS liability is consistent with international law, recognizing corporate ATS liability would be inconsistent with basic principles of federal common law articulated in Sosa and Kiobel II.
As an initial matter, there is no basis to assume that federal-common-law private actions should extend to corporations in the circumstances here. Corporations are not subject to liability in the federal-common-law context most analogous to implied ATS actions: implied actions under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, to enforce constitutional guarantees against federal agents. As with the ATS, courts derive their authority to imply Bivens actions from a general grant of jurisdiction. As with the ATS, Bivens establishes a tort action meant to enforce fundamental norms, even when Congress has not expressly authorized their enforcement. As with the ATS, Supreme Court precedent requires courts to exercise “caution” when considering whether to recognize new Bivens actions. And as the Supreme Court held in Correctional Services Corp. v. Malesko, Bivens actions are not available against corporations.
That result is even clearer under the ATS, for several reasons.
First, courts fashioning federal common law must be guided by the policies established in analogous congressional enactments. The relevant statute here is the Torture Victim Protection Act, which was enacted by Congress under the ATS to create an express cause of action for certain human-rights norms (i.e., torture and extrajudicial killing). In creating that cause of action, Congress determined that only natural persons, not corporations, could be liable, as the Supreme Court held in Mohamad v. Palestinian Authority. Courts crafting federal common law are bound to follow Congress’ lead, so federal courts should apply the same policy Congress established for express causes of action under the TVPA to implied causes of action under the ATS. Indeed, judicially recognizing actions against corporations under the ATS would create an inexplicable and indefensible anomaly: Aliens could bring actions alleging torture against U.S. corporations, but U.S. citizens could not sue U.S. corporations for torture under either the ATS or the TVPA.
Second, recognizing corporate ATS liability would have adverse foreign-policy and separation-of-powers consequences. Congress specifically enacted the ATS to mitigate the international friction that could result were there no forum in which to adjudicate certain international incidents (e.g., assaults against ambassadors). Corporate liability under the ATS, however, has had the opposite effect. The history of corporate ATS actions demonstrates that corporate cases in particular are most likely to spark objections from foreign sovereigns and interfere with the foreign-policy prerogatives of the political branches. Indeed, when modern-day ATS litigation began with Filartiga in 1980, suits were limited to natural persons, and did not provoke any serious objections from foreign sovereigns. It was only with the advent of corporate suits – and the attendant promise of large settlements or verdicts – in the late-1990s that such suits proliferated, interfering with the U.S. political branches’ foreign-policy prerogatives.
Third, ATS suits are extraordinarily burdensome, and even completely meritless suits impose substantial and unjustified reputational, economic and other costs on corporate defendants. Sosa and Kiobel II instruct courts to consider such consequences when delineating the scope of ATS actions under federal common law. The Supreme Court held in Blue Chip Stamps v. Manor Drug Stores in the securities-fraud context that private rights of action should not be extended when doing so would “present a danger of vexatiousness different in degree and in kind from that which accompanies litigation in general.” Experience has demonstrated that this is an apt description of corporate ATS suits, which helps explain why Congress chose to limit analogous TVPA actions to natural persons. Considering the consequences of allowing corporate ATS actions confirms that federal common law, like the TVPA, should target only natural persons for violations of international human-rights norms.
ATS suits against corporations, in short, not only flout clearly enacted congressional policy, but also carry heightened risks of the very foreign-policy and other practical consequences that the Supreme Court has warned federal courts to avoid in fashioning federal common law and that the ATS itself was enacted to prevent. The Supreme Court should hold in Jesner that the federal-common-law cause of action authorized by the ATS does not extend to suits against corporations to enforce modern human-rights norms.