Did the Supreme Court Implicitly Reverse Kiobel’s Corporate Liability Holding?

Way back in 2010, the U.S. Court of Appeals in the Second Circuit held that corporations cannot be held liable under customary international law in ATS lawsuits.  That decision, which was the original basis for the Supreme Court’s consideration of the Kiobel case, has remained the law of the Second Circuit (New York, Connecticut, Vermont) though no other circuit court in the U.S. has followed it.  The Supreme Court was initially going to review that original Kiobel decision, but then decided Kiobel on other grounds, namely, that the presumption against extraterritoriality applies to claims brought under the Alien Tort Statute.  In recent cases, ATS plaintiffs have raised questions about the viability of the original Kiobel corporate liability holding. Did the Supreme Court leave that question open or had it reversed the lower court’s corporate liability decision sub silentio?

The argument that the Kiobel corporate liability holding no longer stands has two parts.  First, a plain reading of the Supreme Court’s Kiobel decision turns up language suggesting that corporations could be liable under the Alien Tort Statute.  In the majority opinion, Chief Justice Roberts stated that ““[c]orporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices [to displace the presumption against extraterritorial application].”  The argument here is that although “mere corporate presence” is not enough, corporations with other, deeper connections might displace the presumption against extraterritoriality. (Since the Court in other places explicitly stated it was not reaching the corporate liability question, I am skeptical of this argument).

Second, and more persuasively, you might argue that because the Supreme Court dismissed the Kiobel case on the grounds that the presumption against extraterritoriality applied to the Alien Tort Statute and that the presumption only applies if the court has reached the merits (e.g. whether the statute applies to the facts at hand).  Because the corporate liability defense was a jurisdictional ruling, this line of reasoning goes, then the Supreme Court must have implicitly found that it had jurisdiction over corporations in order to dismiss the case on the merits.

This second argument has some force to it (it was previewed in our insta-symposium last spring), and it was accepted by Judge Shira Scheindlin in a separate New York district court ATS case even though she ended up dismissing that case on other grounds.   It looks like the plaintiffs in another ATS case, Jesner v. Arab Bank, will get the appeals court to consider the issue as well, according to this NY Law Journal write up of oral argument in that case.

I think it is unlikely that the panel will conclude that the Kiobel corporate liability holding has been implicitly reversed, but I do think there is enough of an argument here to attract review of the full en banc Second Circuit. The tricky part here is that the ATS is itself a “jurisdictional” statute, and as the Supreme Court in Kiobel acknowledged, the presumption against extraterritoriality doesn’t typically apply to jurisdictional statutes.  So the Kiobel presumption is a little different and its application to causes of action that can be brought under the ATS is not exactly the same as when the standard presumption against extraterritoriality is applied to a regular non-jurisdictional statute. But it is unclear whether it is different enough to matter.

I am still coming to my own point of view on this issue. I don’t think the defendants in Jesner really addressed this issue effectively in their brief, but it is a complex issue.  At the very least, I think it will be resolved in the near future by the Second Circuit, either by this panel or by the full court. Corporate liability under the Alien Tort Statute is not quite a dead issue, but ti will take some time to figure out how alive it is.