Ninth Circuit En Banc Imposes Exhaustion Requirement on ATS Case

The Ninth Circuit yesterday rendered its long-awaited decision in Sarei v. Rio Tinto. The case was argued before the Ninth Circuit en banc in October 2007, with the fourteen month deliberations suggesting that the court struggled mightily with its decision. The decision was fractured, but the essential holding by six of the eleven judges was that exhaustion of remedies is required under this particular ATS case.

Here’s the quick breakdown of the opinions. Three judges (McKeown, Schroeder, and Silverman) held that exhaustion is appropriate in certain ATS cases. “Where the ‘nexus’ to the United States is weak, courts should carefully consider the question of exhaustion, particularly—but not exclusively—with respect to claims that do not involve matters of ‘universal concern.’… Because the district court did not analyze exhaustion as a discretionary matter, we remand for the district court to address this issue in the first instance.” The plurality opinion analyzed footnote 21 of Sosa, as well as the international standard of exhaustion to conclude that prudential exhaustion was appropriate in this case. The plurality concluded that this ATS case presented two divergent impulses: the impulse to safeguard and respect the principle of comity and the second impulse of the “American role in establishing collective security arrangements that support international institutions, including international tribunals.”

Two other judges (Bea and Callahan) concluded that the exhaustion requirement was mandatory not discretionary.

“I think the Alien Tort Statute … , and not mere judicial prudence, requires the district court to consider exhaustion…. The ATS does not create any cause of action on its own, but merely incorporates causes of action that exist in ‘the present-day law of nations’ and fit into the ‘18th-century paradigms,’ as if they were expressly written into the statute…. [Contrary to the plurality’s reasoning] it makes more sense to interpret the ATS as incorporating the whole of the law of nations: the rights it grants and the limitations [including exhaustion of remedies] it places on those rights.”

A sixth judge (Kleinfeld) argued with the dissent that the court lacked jurisdiction over the case, but concurred for the limited purpose of creating a majority. “[F]ailure to exhaust is an additional reason for dismissal and need not conflict with the reasons for dismissal stated by [the dissent].

Two judges (Ikuta and Kleinfeld) dissented, holding that the court lacked jurisdiction over this particular ATS case because there was not a sufficient nexus to the United States. “[I]n the absence of direction from Congress, we cannot read the ATS as authorizing an extension of jurisdiction to disputes lacking any nexus to United States territory, citizens or interests.”

Four other judges (Reinhardt, Pregerson, Berzon, and Rawlinson) dissented for a separate reason, concluded that there should be no exhaustion requirement, be it discretionary or mandatory. “Because I do not think that the Supreme Court ‘counseled’ us to adopt such a requirement, that there is anything about this case that makes it an ‘appropriate case’ in which to consider doing so, or that we should require an exhaustion analysis in ATS cases when Congress has not included such a requirement in the statute, I dissent.”

Did you catch all that? If you are doing the math at home, the equation is as follows: (Four + Two) – (Two + Four) = Four. With four judges opting for prudential exhaustion, two judges opting for mandatory exhaustion, two judges opting for jurisdictional dismissal, and four judges opting for neither exhaustion nor jurisdictional dismissal, hopefully this will lead to four justices voting to grant certiorari.