Kiobel Insta-Symposium: Interpreting “Touch and Concern”

by Roger Alford

A few posts yesterday suggest that the reports of the death of the ATS have been greatly exaggerated. Oona Hathaway argues that “[t]hose celebrating the demise of the ATS may thus find themselves surprised to discover that the end result of the Supreme Court’s decision yesterday may not be the end of the ATS after all, but instead a renewed focus of ATS litigation on U.S. corporations.” Marty Lederman argues that “the language and history of the ATS provide no basis for wholly rebutting the presumption against extraterritoriality; but that there also remain unresolved sets of “significant” cases in which the conduct alleged might be sufficient to “displace[]” the presumption…. [T]he cases most amenable to such displacement would be those in which a U.S. person or corporation is responsible for the violation.”

In both cases they seize on the “touch and concern” language in Section IV of the majority opinion in Kiobel, which states as follows:

On these facts, all the relevant conduct took place outside the United States. And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application. See Morrison, 561 U. S. ___ (slip op. at 17–24). Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices. If Congress were to determine otherwise, a statute more specific than the ATS would be required.

They seem to suggest that “touch and concern” is not about U.S. conduct, but rather U.S. interests. I respectfully disagree.

One cannot interpret that phrase without looking to pages 17-24 of the Morrison slip opinion. That section of Morrison clearly addresses the question of conduct that partly occurs abroad and partly occurs at home.

Here’s a few choice excerpts from the relevant section of Morrison:

[I]t is a rare case of prohibited extraterritorial application that lacks all contact with the territory of the United States. But the presumption against extraterritorial application would be a craven watchdog indeed if it retreated to its kennel whenever some domestic activity is involved in the case…

“[W]e think that the focus of the Exchange Act is not upon the place where the deception originated, but upon purchases and sales of securities in the United States…. Those purchase-and-sale transactions are the objects of the statute’s solicitude. It is those transactions that the statute seeks to “regulate”; it is parties or prospective parties to those transactions that the statute seeks to “protec[t]….”

The Solicitor General suggests a different test, which petitioners also endorse: “[A] transnational securities fraud violates [§]10(b) when the fraud involves significant conduct in the United States that is material to the fraud’s success.” Neither the Solicitor General nor petitioners provide any textual support for this test. The Solicitor General sets forth a number of purposes such a test would serve … [b]ut it provides no textual support for the last of these purposes, or for the first two as applied to the foreign securities industry and securities markets abroad. It is our function to give the statute the effect its language suggests, however modest that may be; not to extend it to admirable purposes it might be used to achieve….

The Solicitor General points out that the “significant and material conduct” test is in accord with prevailing notions of international comity. If so, that proves that if the United States asserted prescriptive jurisdiction pursuant to the “significant and material conduct” test it would not violate customary international law; but it in no way tends to prove that that is what Congress has done….

Section 10(b) reaches the use of a manipulative or deceptive device or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States. This case involves no securities listed on a domestic exchange, and all aspects of the purchases complained of by those petitioners who still have live claims occurred outside the United States.

In light of Morrison, how should one interpret the Court in Kiobel when it says that “even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application. See Morrison, 561 U. S. ___ (slip op. at 17–24).” I think the answer can only be that it is a reference to conduct that occurs at least partly within the United States. I say that because the referenced language in Morrison addresses situations in which the presumption applies, but to avoid it being a “craven watchdog” must be reconciled with some U.S. activity. Section IV in Kiobel concerns situations in which there is both territorial and extraterritorial conduct. It is not a backdoor attempt to embrace Justice Breyer’s concurring opinion, or an attempt to convert domestic conduct into domestic interests.

The “significant questions” that remain unanswered by Kiobel are how much and what kind of domestic activity is sufficient to rebut the presumption against extraterritoriality. Consistent with Morrison, those questions must be answered in light of the text, history, and purpose of the statute as interpreted by the Court in Section III of Kiobel.

http://opiniojuris.org/2013/04/19/kiobel-insta-symposium-interpreting-touch-and-concern/

3 Responses

  1. Prof. Alford, How do you account for Justice Kennedy’s concurrence?  I realize he signed the majority opinion, including Part IV, but the whole point of the concurrence seems to be to signal his openness to cases with a lesser connection to the US than you have posited.  Your argument may prove persuasive among lower courts, but if another case were to reach the Supreme Court as presently configured, that case would seem to come down to whether there is enough connection to the US to move Justice Kennedy over to Justice Breyer’s side.  In that regard, Prof. Hathaway has a point that there may well be “foreign squared” cases capable of moving Justice Kennedy.  (On the other hand, since ScotusBlog doesn’t allow comments, Prof. Hathaway clearly overstates her case by raising the possibility of ATS “cases in which the plaintiff … is a U.S. national,” such as a case where “an American is harmed by a violation of the law of nations abroad.”  That possibility is clearly beyond the scope of the ATS.)

  2. Perry,

    It is a very important question, and one that will require much time and effort to address properly.  Given how cryptic and opaque Kennedy’s concurrence is, I don’t think there is a definitive answer as to what it means.  We might call it Kennedy’s new notorious mystery passage.

    The only reference in the Kennedy concurrence to human rights abuses committed abroad is with reference to the TVPA.  The last sentence of the concurrence indicates that the presumption against extraterritoriality applies to the ATS, but there are situations not covered by the reasoning and holding in today’s case.  What does this mean?  Who knows.  It would make more sense if he said there will be future cases that are not covered by today’s holding, but instead he said there will be future cases that are not covered by the holding or reasoning of the opinion.  What? So it’s a mystery to me at this point.

    I will say that nothing in the Kennedy concurrence suggests that there may be circumstances where the presumption against extraterritoriality does not apply to the ATS. My tentative guess is that the last sentence of his concurrence refers to cases where there is sufficient territorial conduct that the presumption may be rebutted for cases involving foreign human rights abuses. Given that he did not join Breyer’s concurrence, I don’t think he means that lower courts should simply interpret the ATS consistent with international law principles of prescriptive jurisdiction. My best guess is that he is signaling to lower courts that they must work out the details of the territorial nexus requirement, not that they should disregard the presumption altogether.  

    Roger Alford

  3. Thanks for your response.  “Cryptic and opaque” seems like a fair description.  Maybe Justice Kennedy wanted to create a Rorschach test?  Both advocates and opponents of ATS seem to see what they want to see in it.
    –Perry.

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