Kiobel Insta-Symposium: Is Corporate Liability Jurisdictional?

[Jordan Wells is a third-year law student at New York University School of Law.]

The discussion up to this point naturally has centered on the “touch and concern” language of the majority opinion and what that opinion and the concurrences mean for ATS cases involving law of nations violations that occur abroad.  Relatively little analysis has focused on the original questions on which the Supreme Court granted certiorari—namely, whether corporations are immune from suit under the ATS and whether that immunity is an issue of subject matter jurisdiction or an inquiry going to the merits.  Remember, the Second Circuit dismissed the case sua sponte based on these two premises.  In contrast, the D.C., Seventh, Ninth, and Eleventh Circuits have rejected corporate immunity under the ATS.

While many commentators quickly observed that the Court did not explicitly rule on corporate liability, the majority opinion at least tacitly assumes the existence of corporate liability.  As specific evidence of the Court’s recognition of corporate liability, some have pointed to one of the majority opinion’s concluding lines:  “Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices.”  This sentence was quoted with approval in Justice Breyer’s concurrence.  The statement that a corporation’s mere presence does not suffice suggests that the inverse proposition is also likely to be true:  A corporation that is more than merely present in the United States – say, one that is domiciled in the United States or one that authorizes or ratifies a law-of-nations violation – could present a different case.  It would be pointless to draw this distinction unless, under some circumstances, the ATS countenanced corporate liability.

Whatever one’s take on corporate liability following Kiobel, I want to suggest that it probably is not an issue of subject matter jurisdiction (SMJ).  Although the Second Circuit’s dismissal was for lack of SMJ, and although the Supreme Court “affirmed” the judgment of the Second Circuit, it explicitly did so on other grounds. If those other grounds were non-jurisdictional, instead going to the merits, then the Court necessarily found SMJ.  See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83.  The question thus is whether the Supreme Court’s affirmance constituted a dismissal for lack of SMJ, or instead was a dismissal on the merits.

Contextual clues in the Chief Justice’s opinion—in particular, the application of the presumption against extraterritoriality (PAE)—indicate that the Court went beyond the issue of SMJ and reached aspects of the merits.  The Court concluded that “[o]n these facts,” the PAE barred relief in this case.  There are certain limited circumstances in which a federal court may dismiss on the basis of threshold issues before ascertaining its SMJ, see, e.g., Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S. 422 (2007) (dismissal on ground of forum non conveniens), Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999) (dismissal on grounds of personal jurisdiction), but the Supreme Court generally has treated the application of the PAE as going to the merits.  See, e.g., Morrison v. Nat’l Australia Bank Ltd., 130 S. Ct. 2869, 2877 (2010) (“[T]o ask what conduct § 10(b) reaches is to ask what conduct § 10(b) prohibits, which is a merits question.”); c.f. Burks v. Lasker, 441 U.S. 471, 476 (1979) (“[W]hether a cause of action exists is not a question of jurisdiction.”).  The Kiobel majority opinion does not depart from this understanding of the presumption’s application. See slip. op. at 5 (citing Morrison for proposition that “question of extraterritorial application was a ‘merits question,’ not a question of jurisdiction”).  The Court therefore appears to have dismissed the case on the merits, not for lack of SMJ.[1]

The fact that the ATS is “strictly jurisdictional” appears not to transform application of the PAE into a jurisdictional inquiry.  Although the Court does not use these exact terms, its application of the presumption clearly does not go to a federal court’s adjudicative power (i.e., its SMJ), but rather goes to its prescriptive jurisdiction—i.e., its federal common lawmaking authority to recognize private claims for law-of-nations violations.  See slip op. at 5-6; see also Hartford Fire Ins. Co. v. California, 509 U.S. 764, 813 (1993) (Scalia, J., dissenting) (distinguishing between these two types of jurisdiction).  For purposes of applying the presumption, the Court’s analogy is as follows:  as Congress is to conduct-regulating statutes, courts sitting in ATS jurisdiction are to federal common law recognition of causes of action (although unlike Congress, the courts are constrained by the scope of the ATS’ statutory grant and thus cannot overcome the presumption through their own lawmaking power).  In this way, the Court holds that the “principles underlying” the PAE “similarly constrain courts considering causes of action that may be brought under the ATS.” Slip op. at 5.

Assuming, as I have suggested, that the Court proceeded beyond SMJ and reached the merits, that means one of two things happened:  Either 1) the Kiobel Petitioners were correct that corporate liability simply never was an issue of SMJ, notwithstanding the Second Circuit’s contrary sua sponte holding; or 2) the Respondents were correct that corporate liability goes to SMJ but were incorrect in that the scope of the ATS jurisdictional grant reaches claims alleging corporate liability.  As explained in an amici brief by professors of federal jurisdiction filed in support of rehearing in the Second Circuit before the case went up on cert, the former explanation would hue more closely with the Supreme Court’s “recently and repeatedly expressed ‘[]marked desire to curtail’ the so-called ‘drive-by jurisdictional rulings’ that miss the critical distinction between ‘true jurisdictional conditions and nonjurisdictional causes of action.’”  Regardless of which explanation is accurate, however, going forward the fact that the defendant in an ATS action is a corporation should not bear on the subject matter jurisdictional analysis.

[1] But see Justice Breyer’s opinion concurring in judgment, at 14 (casting his decision—and the Court’s—in jurisdictional terms).