SCOTUS Votes 9-0 that Corporations Cannot Be Sued Under ATS for Extraterritorial Acts Without U.S. Interest At Stake
[Apologies for all the random short posts, I think what make blogging interesting, sometimes, is that one can think out loud online. Dangerous, I know, but fun too!]
Here is one quick take: As Deborah noted below, the Supreme Court voted 9-0 that the Kiobel plaintiffs should be dismissed because their claims against a foreign corporation for actions in a foreign jurisdiction did not belong within the jurisdictional ambit of the ATS.
Five justices (including the sometimes squishy Justice Kennedy) voted to apply the presumption against extraterritoriality, an interpretive rule, to the ATS. Although the language is a little mushy here and there, the court’s opinion makes very clear that the rule announced in Morrison v. National Australia Bank applies to the ATS. In Morrison, the Court held that there is a broad presumption that congressional statutes are not meant to regulate extraterritorial activity unless there is a clear statement in the statutory text. This presumption cannot be overcome simply because there is some minimal connection to the U.S, like being listed on the U.S. stock exchange or even doing business here. The exact contours of this rule are a little fuzzy, for instance, it is somewhat uncertain what the rule would be if the defendant was a U.S. corporation, but it seems clear to me that most of the corporate ATS defendants will win dismissals from their ATS lawsuits after this decision. Almost all of them are being sued for foreign conduct, and often through actions of foreign subsidiaries, and rarely with any action by the corporate actors based in the U.S.
It is also worth noting that the four justices who did not join the opinion, nevertheless would have voted to dismiss the case against Shell anyway because of the lack of a territorial nexus or connection to the national interest of the U.S. While the concurrers would have included preventing the U.S. from being a safe harbor for war criminals within the U.S. national interest, they would not have found that punishing corporations for their complicity with war crimes and torture abroad was enough to satisfy their test.
So this means that the ATS wars over corporate liability are almost over. I say almost because under the majority opinion, U.S. corporations might still be sued for domestic conduct and, perhaps, for foreign conduct if that conduct was also deeply connected with domestic acts. This seems unlikely in most ATS cases, and it is worth noting that the severity of the crime that the corporation was alleged to have committed does not change the analysis, even under the Breyer concurrence. A theory that the ATS can be justified in universal civil jurisdiction cases has been rejected, 9-0.
Bottom line: Corporate general counsels! Rest easy, your long, transnational ATS nightmare is over!