The Unattractive Question is Back: SCOTUS (Again) Considers Corporate Liability Under the Alien Tort Statute

Today, the U.S. Supreme Court agreed to hear the case of Jesner v. Arab Bank in order to resolve a single issue: “[w]hether the Alien Tort Statute, 28 U.S.C. § 1350, categorically forecloses corporate liability.” This post will briefly review the case and offer a quick assessment of the ATS corporate liability issue.  Longtime readers will not be surprised to read that I side with the Defendants on this issue, although I will also add that I think my side on this case will have an uphill battle to prevail in the high court. 

Should the Court have agreed to hear the case?

The Court’s decision to hear the case is a bit surprising given that it had refused to hear at least two cases raising the same issue in the previous two terms.  On the other hand, the Court’s decision to hear the case is also quite understandable given the fairly sharp split between lower circuit courts on the question. Such an enduring split among the opinions of lower courts is always an important factor for the Court in deciding whether to hear a case. The rather dramatic divisions among judges on the Second Circuit Court of Appeals on this issue probably caught the Court’s attention as well.

Still, it is also worth noting that the Court granted cert on this exact same issue not six years ago when it first agreed to hear Kiobel v. Royal Dutch Petroleum in the fall of 2011.  The parties submitted briefs and held oral arguments on the corporate liability issue itself.  But during argument, the Court decided that the question of whether the Alien Tort Statute has extraterritorial reach needed to be resolved first, and sent the case back for re-argument the next term.  That re-argued case eventually became the 2013 Kiobel decision sharply limiting the extraterritorial scope of lawsuits brought under the ATS to cases that “touch and concern” the territory of the U.S.  The corporate liability issue was left fully argued and untouched.

To be sure, since 2013, several other circuit courts have issued opinions on the corporate liability issue and all have split from the original Second Circuit Kiobel decision denying corporate liability under the ATS. And the Court may have a new member by the time Jesner v. Arab Bank is decided.  So while that is a possible reason for reversing course and granting cert, it is still unusual for a Court to hear a case on the exact same issue it already heard in argument a few years ago.

What Law Should Determine Whether Corporations Should Be Liable Under the Alien Tort Statute?

One of the more annoying hard-to-explain legal issues in ATS cases is also one of my favorite law-nerd issues: what law should govern?  On its face, the ATS calls for the application of “the law of nations” but courts have long disagreed about whether international law also applies to questions such as standards for aiding and abetting liability and whether a corporation can be liable.  ATS plaintiffs have typically argued that these questions should be governed by domestic law, that is to say, federal common law. Under federal common law, corporations are typically liable for torts and application of this law would almost certainly favor the plaintiffs on this question.

But the Court has never fully resolved this issue.  To me, it has always seemed that any questions affecting the substance of a case against an ATS defendants should be governed by international law, as the ATS’ text seems to demand.  The temptation to fill in the many gaps left by international law with U.S. common law is strong, but the ATS clearly sought to ask US courts to apply international law.  Getting past that textual directive will be difficult for me, and I suspect the textualist-oriented justices on the Court.

Will Justice(?) Gorsuch’s Vote Matter?

The circumstances of this grant for cert, which occurred after several prior opportunities were rejected, does not bode well for respondents.  Nor is the fact that the cert grant adopts the petitioners’ phrasing of the issue word-for-word.  I would be particularly troubled by the Court’s decision to phrase the question as whether the ATS “categorically” forecloses corporate liability. This is plainly language structured to favor the plaintiffs’ case.

My views on the ATS corporate liability question should be well known to most OJ readers.  I think the issue of corporate liability should be governed by international law and that the strict standards for recognizing an actionable norm under the Court’s prior decision in Sosa precludes recognizing an ATS cause of action against corporations.  I joined a great amicus brief saying basically that in the original Kiobel case back in 2012.

I have also recognized, however, that this is pretty formalistic argument that is unusually unattractive to most observers. Still, the international norms haven’t really changed since 2012.  Plaintiffs will not be able to cite to many (or any) sources that hold corporations liable for violations of international law norms.  But they can still pound the table and simply say it is ridiculous to “immunize” corporations for torts, which I think still has quite a bit of force.  The response has got to be that corporations are often liable for torts, but not always.  Even under domestic law, the U.S. Supreme Court has foreclosed corporate liability for certain statutes (like the Torture Victim Protection Act) or for constitutional norms in the context of Bivens actions).

This leads me to Judge/Justice Gorsuch.  Since the case will be heard next term, Judge Gorsuch will have a chance to rule on the case if he is confirmed.  Will he be willing to sign on to a formalistic/textualist interpretation that is extremely normatively unattractive?  I don’t know enough about Judge Gorsuch to know, but I am not sure this will matter. My guess is that Justices Roberts and Kennedy were sufficiently repulsed by the idea of ruling against ATS corporate liability back in 2012 that they sought (and found) a different way of resolving the case.  I suspect (without having any inside information) that they would like to find an out again.  If they can’t, I can see a 6-3 opinion for the plaintiffs, with Chief Justice Roberts writing an opinion that he tries to make as narrow as possible.

So that’s my first take on Jesner v. Arab Bank.  I will no doubt be back for more. Stay tuned!