Kiobel Insta-Symposium: Questions of Personal Jurisdiction Lurk Beneath the Surface

[Ishai Mooreville is an attorney at Baker & Miller PLLC, Washington, DC.  His forthcoming article on the 1795 Bradford Opinion regarding the Alien Tort Statute can be found here.]

The opinions expressed in this article belong to the author alone, and the author has not received any compensation from any party for writing this article.

The question of personal jurisdiction over the defendant in Kiobel, which was raised during oral argument and mentioned in passing in Justice Breyer’s concurrence, may have had a significant effect on the outcome of the decision.    But the issue was not before the Court in this case, and had not been raised by the defendant as a reason for dismissal, apart from asserting the defense in their answer to the complaint filed in 2006.

Let’s back up and review the facts.  When Plaintiffs filed their original suit in 2002, they chose to sue only two Shell entities: the Shell parent entity, based in the Netherlands and U.K. (“Shell Europe” for the purposes of this post), and Shell’s Nigerian subsidiary, which allegedly aided and abetted the human rights violations at issue.

However, the District Court Judge dismissed Shell’s Nigerian subsidiary from the case for lack of personal jurisdiction, as it had no minimum contacts with the United States.  Kiobel  v. Royal Dutch Petroleum Co., No. 02-CV-7618, 2010 WL 2507025, at *1 (S.D.N.Y. June 21, 2010).  That left only Shell Europe, whose only presence in the United States (as of the year 2000) was operating an office in New York through which it managed its listing on the New York Stock Exchange.

Shell’s U.S. subsidiary, which clearly would have been subject to personal jurisdiction, was not named as a defendant in this action.  This is probably because plaintiffs anticipated it would be difficult to show that Shell-USA possessed any control over Shell-Nigeria.  Eventually, if they had established jurisdiction under the ATS, plaintiffs would have had to demonstrate that Shell Europe’s executives directed or controlled the activities of Shell-Nigeria to establish liability.

In an earlier companion case, the Second Circuit had decided that Shell Europe’s office in New York was sufficient to establish general personal jurisdiction over the entity for any international law violations it might have committed in any part of the world.  Wiwa v.Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir. 2000) (“Wiwa”). Though Shell appealed the decision to the Supreme Court, certiorari was denied at that time.  After the Kiobel companion complaint was filed in 2002, Shell-Europe raised personal jurisdiction as a defense in its answer but did not litigate the issue further.

Then, in 2011, the Supreme Court issued its Goodyear opinion, which severely curtailed the scope of general all-encompassing personal jurisdiction over foreign corporations which have limited contacts with the United States.  Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011).  In light of the Goodyear decision, it remains unclear whether Wiwa is still valid and binding law.  This is what Justice Breyer alludes to in Part III of his concurrence, and may have been why the concurring justices agreed that this case should be dismissed on other grounds.

The easiest way for the Court to dispose of the Kiobel case against Shell Europe would have been to essentially overturn the Wiwa decision and say that the contacts Shell Europe had with the United States were insufficient to establish general all-purpose personal jurisdiction over that entity.  Even the U.S. Solicitor General’s Brief criticized the Wiwa decision.  Supplemental U.S. Brief at 25, n.13 (June 2012).

But since Shell Europe had essentially abandoned that line of argument in Kiobel, the Justices could not address this issue directly.  A defense asserting lack of personal jurisdiction must be raised and litigated by the defendant promptly at the outset of the litigation, or it can be deemed waived.  Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982); City of New York v. Mickalis Pawn Shop, LLC, 645 F. 3d 114, 133-34 (2d Cir. 2011).  It is possible that Shell Europe did not continue to assert this defense as a result of increased contacts with the United States since the Wiwa decision in 2000. However, the question of subject-matter jurisdiction can be raised sua sponte by a Court at any point in the litigation, which is essentially what the Supreme Court decided to do.

If the issue had been litigated, it is possible a majority of the Supreme Court would have concluded that personal jurisdiction was not present on the facts established in Wiwa, and therefore the scope of the ATS would have been left open to another day.  In the future, foreign corporate defendants with minimum U.S. contacts are likely to challenge personal jurisdiction at the outset of cases, especially since Justice Breyer has suggested that Wiwa is of dubious validity going forward.

As a result, the question of personal jurisdiction will continue to be relevant to many cases involving foreign defendants, not just those filed under the ATS.