Extra Thoughts on Today’s 2nd Circuit ATS Decision

by Kenneth Anderson

I’ve now had a chance to read a little more closely the decision, majority and concurrence, in Kiobel v. Royal Dutch Petroleum (issued today by a 2nd Circuit panel of Judge Cabranes writing for himself and Judge Wood, and a concurrence in the judgment by Judge Leval).  On second reading, it still looks to me like a blockbuster opinion, both because of the ringing tone of the Cabranes decision and the equally strong language of a concurrence that, on the key point of corporate liability, amounts to a dissent.  With circuits having gone different directions on this issue, this perhaps tees up a SCOTUS review that would revisit its last, delphic pronouncement on the Alien Tort Statute in Sosa v. Alvarez-Machain. Here are a few thoughts that add to, but also partly revise and extend, things I said in my earlier post today.

Let me start by trying to sum up the gist of the majority opinion and its reasoning.  The Cabranes opinion sets out the form of the ATS, that single sentence statute, as having a threshold part, which is established by international law (treaties of the United States and the law of nations, or customary international law), and a substantive part, which is the imposition of civil tort liability as a matter of US domestic law.  It does not use quite those terms, but it seems to me to set up the statute in a way that I’ve sometimes characterized as a “hinge,” in which something has to “swing” between the threshold and the substantive command once the threshold is met.  The question has been whether the threshold that serves as a hinge to swing over to connect and kick start the substantive part of the ATS, so to speak, the US domestic tort law substance, must be international law.

The ATS cases in various district courts and circuit courts have gone various directions on this, and indeed some of the early cases did not seem to recognize that there is a threshold part and a substance part.  One sizable group of more recent cases have gone the direction of saying that even if the threshold has to be the law of nations or treaties of the United States, it is satisfied if there is some body of conduct that constitutes a violation of it (and further meets the requirements under Sosa).  Call this conduct the “what” of this threshold requirement in the ATS.  But what about the “who” of the conduct?  Do the legal qualities of the alleged perpetrator of the violative conduct matter?  Two possible answers are:

One is: if there is conduct, then the status under international law of whoever is alleged to have done it is not relevant. The existence of a “what” is enough, and the “who” is merely to show that this named defendant did it; further consideration of the juridical qualities of the defendant is irrelevant.

Alternatively, but to the same result of allowing a claim to go forward, even if it does matter, it is answered by looking to US domestic law in order to determine that it is an actor that can be held liable under the ATS.  Thus, under this latter view, a corporation could be such a party alleged to have engaged in conduct violating international law (and further meeting the Sosa standard).  Why? Because it is enough that US civil law recognizes that a corporation is a legal person that can be held to legal accountability.  So, for example, Judge Weinstein declared flatly in the Agent Orange litigation that notwithstanding weighty opinion that corporations are not subjects of liability in international law, well, as a matter of policy, they are so subject in US domestic law and that fact about US law will be enough to meet the threshold of the ATS international law violation.  Put in my terminology, the “hinge” to an ATS claim can be met by an actor determined to be liable under US, rather than international law, standards.  If there is conduct – the “what” under international law, such as genocide or slavery, meeting the Sosa standard – the question of “who” is subject to the ATS will be determined by the rules of US domestic law.  The US domestic rules accept the proposition of a corporation being so subject, hence a claim will lie under the ATS.

The Second Circuit majority sharply rejects that view.  It says that in order for the threshold of the ATS to be met, there must be a violation of international law.  Conduct might very well violate international law, but for there to be a violation, it must be conduct by something that is recognized as being subject to liability in international law.  If it is not something that is recognized or juridically capable of violating international law and being liable for it, then the conduct – whatever else it might be – is not actually a violation of international law by that party.  States can violate international law, are subjects of international law, and can be liable under international law.  Individuals under some circumstances can violate (a relatively narrow list of things in) international law, can be subjects of it, and can be liable under international law.  But what about juridical persons, artificial persons – corporations?  The opinion says flatly that corporations are not liable under international law – not even to discern a rule, let alone a rule that would meet the standards of Sosa.  To reach this conclusion, the opinion walks through the history of arguments over corporate liability since WWII, ranging from Nuremberg to the considered refusal of the states-party to include corporations in the Rome Statute of the International Criminal Court.

By that point, the court has done two things.  One, it has rejected the view that it is enough to find that US domestic law accepts corporate liability, and that it can be used to satisfy the threshold of an international law violation in the ATS.  The hinge has to be international law; the threshold must answer both “what” and “who” as a matter of international law, with no reach to US domestic law.  Hence, given that you can’t rely on US domestic law to reach it, then to satisfy the threshold, you have to show that it exists in international law as a treaty or customary norm (and then add to that the further burden of Sosa).  Two, then, as to that latter requirement, the court says, no, it is not the case that a corporation meets the requirements of liability under the current state of customary international law or treaty law.  The majority opinion accepts that if the international law threshold is met, then US domestic law in the ATS itself flips into civil tort mode.  But you can’t get there without an international law violation on its own terms – and that means that there must be a “what” of conduct that violates international law and a “who” in the sense of an actor that, on international law’s own terms, is regarded as juridically capable of violating it.

It is important to note that this is all logically prior to Sosa’s requirements.  What the Second Circuit has held here regarding corporate liability is not driven by Sosa at all.  Sosa says that even if a claim satisfies the requirement of a violation of international law, the nature of the violation must meet a set of additional criteria – criteria that are established not as a matter of international law, but as matter of US Constitutional law imposed by the Court upon international law as considered in US courts to ensure, for domestic law reasons, that these ATS claims are, so to speak, really serious ones.  The Second Circuit holding on corporate liability does not rest on the Sosa criteria; it never gets to them because it says that, quite apart from being “really serious” kinds of international law violations, the party alleged to have violated them must in the first place be a party capable in international law itself of violating them, in the sense of bearing legal liability.  Only if the “who” is met, in other words, do the Sosa requirements come up as a further, domestic-law burden on the “what” of the claims.

This leaves an important point, however – one that is not so relevant to this case, but which will presumably be deeply relevant in other settings, perhaps in a SCOTUS case on this.  On this I am somewhat less certain as to the court’s meaning, and will re-read the case and perhaps revise my views.  At this point however, I’d say this.  As the opinion observes, the nature of the ATS is to create in US domestic law a civil action in tort, premised upon meeting an international law threshold.  However, it is a liability in tort – a remedy in tort – for violations that have to be international law violations themselves.  We are now back at the “what.”  The violations have to be international law violations (done by a “who” capable of being liable); once those violations of international law are met (and then further meeting the Sosa burdens as a kind of further threshold requirement in domestic law), then a tort remedy is available.

Even if the “who” is an individual person – capable of violating at least some actionable things in international law, including meeting the Sosa standard – as a matter of international law today, all the violations are criminal. They are all international crimes.  International law recognizes no regime of civil liability in international law imposed upon persons; the violations that exist are such criminal acts as war crimes, crimes against humanity, genocide, and a few others that would meet the Sosa requirements.

To cut to the chase, the point is that nowhere in this list is there anything that looks like an environmental tort, because there is no international law of tort.  And what many ATS cases seek to do is create out of the putty of American tort law a regime of international civil liability that, alas, does not exist.  The court seems to recognize this implicitly, I think, although the holding about corporate liability does not turn on it.  Let me step beyond the case, however, to the implication of this second point in practical terms.

Where ATS plaintiffs seek to state a claim (and even leaving aside the question of “who”) there is a large and logically independent problem, in many instances, of how plaintiffs can succeed in plausibly pleading a “what,” given the short list of things for which individuals can be liable.  First off, they are all criminal. Particularly following Sosa, they are all criminal and all at the approximate level of serious war crimes and genocide.   Whereas the actual substantive acts that plaintiffs wish to sue over, if they could be honest about it in the pleadings, are environmental torts – perhaps very serious ones, but not genocide or war crimes.  The only way into the ATS, given that the threshold “what” are all the most serious international crimes in the canon, has the perverse result that plaintiffs or, anyway, their lawyers, today utterly and routinely submit pleadings alleging war crimes, genocide, crimes against humanity, etc., at every turn.

Speaking for myself, anyway, this is not a good thing from the standpoint of convincing anyone outside the US civil tort process that the US is serious about these crimes.  Trying to leverage the ATS into a global civil liability system in a sort of jerry-rigged, spliced together, bits of US and bits of international law, arrangement that has precedential value only in US District Courts, and only by citing each other – well, it seems like a bad idea.  I’m no fan of creating such a global system of civil tort liability, heaven knows, but if I were, I’d think this perhaps the worst of all worlds as a way of going about it.

But given the “whats” that can be plead, the result is inevitably a form of defining deviancy down.  Defendants in these suits from outside the United States in particular seem often stunned that American courts so freely entertain allegations of the most serious crimes possible.  In my personal experience, corporate defendants, in particular, often believe that they must fight to the wall even for things that in other circumstances they might be willing to negotiate as “ordinary” issues of labor rights, environmental claims, etc.  Part of it is simply calculation – if they settle, they risk being forever characterized as having settled claims of … genocide, crimes against humanity, etc., in what was actually a fairly routine labor rights dispute in the developing world.  But part of it, again in my experience, is that senior executives take this really personally; it is a slur on them and they won’t settle, not if the claims are war crimes rather than argument over ground water contamination.  I agree with them and think that those who see the ATS as somehow promoting the universal rule of law should consider the many ways in which it instead promotes cynicism about international human rights claims in their most serious form, or at least the meaning of human rights claims in US courts.

That said on my own part, the Cabranes opinion is careful to emphasize that the Second Circuit has accepted that in appropriate cases, there can be aiding and abetting and secondary liability.  The standard is a demanding one, to be sure, under the Second Circuit’s own holdings.  In addition, the opinion emphasizes that individuals are, of course, liable in international law for certain serious crimes.  Which goes to a question that Kevin Jon Heller posed in the comments, and on which I do not regard myself as expert.  What is the big deal about this decision on corporate liability, if the same claims can simply be refiled against corporate officers and executives and other individuals?  Why is the loss of corporate level liability such a big deal?  I don’t regard myself as sufficiently expert in litigation to say definitively, and I welcome expert answers.  However, for what it is worth, everyone I’ve dealt with with – plaintiff side or defendant side – in these cases thinks it is a very big deal, in terms of what has to be proved as well as damages.  I leave this to those more knowledgeable than I – but I have never had any sense that anyone in this practice area thought it was a red herring, although perhaps people will re-think it.

The majority opinion as well as Judge Leval’s concurrence both say quite a lot about the parlous issue of authority in answering the vexed questions of what constitutes customary international law.  The role of experts, scholars, and “publicists” in the traditional term is discussed in both opinions.  Certainly in the majority, professors do not come off so well, despite the fact that the Cabranes opinion leans heavily on declarations by Professor James Crawford and then-Professor (now Justice) Christopher Greenwood in speaking to the content of customary international law.  Without saying so in so many words, it seems clear that the court took into account that these are both globally important defenders of “international law” in its received sense, and not merely American academics; the court seemed implicitly to use them as an anchor for suggesting that international law needed to be tested, not merely within the parochial precincts of the US District Courts, citing each other in a gradually upward cascade of precedents, increasingly sweeping but also increasingly removed from sources of “international” law outside themselves, but against something genuinely international.

One can, of course, dispute whether Crawford and Greenwood are the right sources for that.  But the opinion perhaps seemed to sense that ATS doctrines are increasingly sweeping but increasingly issued in a hermetically sealed US ATS system with less and less recourse to international law as the rest of the world sees it.  I don’t know how else one takes a magisterial declaration by Judge Weinstein that it would simply be against public policy not to have corporate liability in a US court, irrespective of the authority for the proposition, or not, in actual international law.  Maybe that is just me seeing what I want, to be sure; I think it is a correct concern, in any case.

Ironically, then, for those who would argue that the Cabranes opinion undermined “international law,” I would say that a view held more widely than one might guess (looking only to the sympathies that often lie with these claims) among international law experts outside the United States is that ATS jurisprudence actually undermines international law by contributing to its fragmentation among “communities of authority and interpretation,” as I’ve sometimes called it.  International law is fracturing into churches and sects that increasingly do not recognize the existence or validity of others.  The existence of more and more courts and tribunal systems contributes greatly to this fragmentation, I believe, because unlike the traditional ways of seeing international law as a pragmatic fusion of diplomacy, politics, and law in a loose sense – with the implied ability to see other points of view and accept them in a pluralist way – tribunals thrive in large part by asserting their own authority, on their internal grounds, in ways that achieve maximum authority inside their own systems precisely by denying the validity of other views.  After all, if you’re going to lock up some defendant at the ICC, you have maximum claims to legitimacy for the holding if you take zero account of any other community of interpretation that thinks there is no ground to do so.  The authority of courts, by contrast to the authority of Ministries of Foreign Affairs, is very much one that maximizes legitimacy by going “inside.”  I’ve talked about this a lot in my own work – the fractious question of “Who owns international law?”

I do not want to try and characterize Judge Leval’s eloquent and passionate opinion; I don’t understand it as well at this point, and being less sympathetic to its point of view, I fear that without more careful study, I would characterize it unfairly.  But I would note that the disputes between his opinion and that of the majority over experts and professors might best be settled by getting rid of us professors pretty much in toto.  I am pleased to say that I said so in my own expert declaration in the Agent Orange case; I thought it incumbent on me to tell Judge Weinstein that I didn’t think that professors’ opinions merited much weight if any, including my own.

And now a final thought, one that reaches far outside the case.  It seems to me that this Second Circuit opinion is moving toward a much more confined ATS.  There were other ways in which the court reserved on ways in which it might be curtailed still further – in passing, the court noted but declined to take a view on whether the ATS might have no extraterritorial application, limiting it to conduct within the United States.  Once corporations were understood as targets, once everyone understood that neither plaintiff nor defendant required any traditional connection to the United States, as parties, in conduct, nothing, and once the plaintiffs bar saw opportunities to join forces with the NGOs and activists, the trend of the ATS has been to turn into a kind of de facto tort forum for the world. Whatever else it might be legally, politically this is a role suited for a hegemonic actor able to make claims against corporations stick on a worldwide basis.  What happens if the hegemon goes into decline?

What happens, that is, when plaintiffs in Africa decide to start using the ATS to sue Chinese multinationals engaged in very, very bad labor or environmental practices in some poor and far away place?  Does anyone believe that China would not react – in ways that others in the world might like to, but can’t?  Does anyone believe that the current State Department would not have concerns – or more precisely, the Treasury Department?  So let me end by asking whether a possible long run effect of this Second Circuit opinion, if followed in other circuits, and by SCOTUS, and perhaps other things that confine the ATS, is not over the long run an ATS for a … post-hegemonic America?

http://opiniojuris.org/2010/09/17/extra-thoughts-on-todays-2nd-circuit-ats-decision/

5 Responses

  1. Ken,

    This is a very interesting and thought-provoking post.  My only comment is that I suspect that the reason that the decision is “a big deal” is largely for jurisdictional reasons. Many corporations are subject to personal jurisdiction in the State of New York because they maintain a permanent presence in the state.  Even if the New York entity is distinct from the entity that allegedly violated the ATS, plaintiffs can always plead that the NY entity is an alter ego or mere department of the corporation involved in the human rights violation.

    Substituting directors and officers for the corporation is problematic because it will be much harder to plead that these individuals committed acts in NY that would give rise to  jurisdiction over them.

  2. Very interesting post, although I have to say that I disagree somewhat with your analysis of how limiting the ATS prepares us for a post-hegemonic world.  I mainly take issue with what it implies–that the limiting of the ATS will prevent China from taking some unknown (but certainly bad) action against the United States for allowing human rights lawsuits to proceed in its courts. This sounds a bit like the apocalyptic, doomsday predictions that defense councils always launch against the ATS. However, a survey of recent ATS suits against corporations shows that many of the ATS suits against corporations are dismissed (I would venture to say well over half). They are dismissed for a host of reasons–forum non conveniens, political question, international comity and failing the Foreign Sovereign Immunities Act. If the US State department or Treasury had a serious problem with the lawsuit, they could intervene, and the lawsuit would likely be dismissed for political question (Corrie v. Caterpillar comes to mind–a case against a corporation involving crimes occurring in Israel, dimissed for political question).

    Perhaps Judge Cabranes’ inability to come up with more cites for the multi-million settlements that he claims corporations are often forced concede should be a sign that, in fact, there really are very few ATS cases that have settled for this much, if at all. A quick conversation with plaintiffs firms that do this work will indicate that ATS litigation is not lucrative. ATS lawsuits usually take years, and there is a high likelihood they will be dismissed for the aforementioned reasons. Perhaps for that reason they are actually far fewer successful ATS claims than many on the bench or in the corporate board rooms would like everyone to think.

  3. Response…
    Was there any attention to Opinions of the U.S. Attorneys General? like the 1795 Opinion recognizing rights of companies under the ATCA for violations of international law? or the 1907 Opinion recognizing liability of a Texas dredging company under the ATCA for violation of a treaty? And was there recognition of the U.S. S.Ct. opinion in 1899 that recognized a claim of right of a private company under a treat?  See, Paust, Van Dyke, Malone, International Law and Litigation in the U.S. 9, 18-20 (3 ed. 2009).

  4. I am less convinced than other that this will kill this brand of litigation.  My guess is that the initial reaction is based on the probably generally correct notion that plaintiff’s lawyers will be deterred from bringing suit if they are limited to suing individuals and are not able to go against deep-pockets corporation.  With ATS litigation, though, it strikes me that the plaintiffs’ bar is composed of a large number of activists and human rights organizations who won’t really care about the financial impact of this decision  and will just continue, business as usual, to bring these cases, simply naming individual defendants, rather than corporate defendants.

    As for whether they need to find a link between an individual plaintiff’s conduct and NY (or anywhere else in the US), I don’t see why they would need to.  Filartiga did not involve any conduct that was linked to NY.  My recollection is that the defendant just happened to be in the U.S. and was thus able to be served and sued in the EDNY.  If ATS suits are brought against American citizen corporate officers, it will not be difficult to find a district court with personal jursidiction over the defendant(s).  Even if defendants are non-citizens, their ability to travel to and within the US would be restricted by the threat of being served.

    Finally, I wonder whether corporations will still continue to involve themselves in defenses of these suits — if indeed they keep being brought — because of the similar, albeit slightly less direct, potential for corporate embarrassment.  In addition, I wonder whether the possibility of settlement actually goes UP in the context of ATS suits against corporate officers, since the corporation can more plausibly deny direct responsibility  even as they agree to make payment on behalf of their employees/officers to make the case go away.  (Though I am also unconvinced given the motivations of the plaintiffs that any of these cases are incredibly likely to settle compared to other types of litigation.)
     

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