Supreme Court Holds that Plaintiffs Must Overcome Presumption Against Extraterritoriality in Alien Tort Statute Cases

Supreme CourtEarlier today the U.S. Supreme Court issued its long-awaited ruling in Kiobel v. Royal Dutch Petroleum, the case that was to decide whether the Alien Tort Statute (“ATS”) could be applied to corporations as legal persons and whether such lawsuits could be based on actions that occurred outside of the territory of the United States. The Court did not directly address the question of corporate liability and stated that, based on the facts of the case, petitioners’ claims had failed to overcome a presumption against extraterritoriality and thus affirmed the Second Circuit’s dismissal.

By stating that the presumption against extraterritoriality applies in ATS cases, the Court has established a high bar for potential plaintiffs to overcome, and many in the business community are celebrating today’s opinion as a victory.  That said, the Court clearly signals that that presumption could be overcome based on a different set of facts. Rather than bring clarity to an area of the law long-mired in confusion, therefore, the Court has left current and potential plaintiffs and defendants in ATS cases with a muddled playing field of substantive and jurisdictional questions.

Notably, nine justices agreed on the judgment and concluded that, under the facts presented by the case, extraterritorial application of the ATS cannot be sustained.  This unanimity, however, belies a deep and consequential divide regarding the reasoning needed to reach the judgment.

Chief Justice Roberts delivered the opinion of the Court, joined by Justices Scalia, Kennedy, Thomas, and Alito, concluding that the “presumption against extraterritoriality” requires that court interpret statutes as not having extraterritorial application unless Congress makes clear an explicit intent to the contrary. Roberts held that no such Congressional intent can be identified in the ATS.  Based on the facts presented in Kiobel, he found that the ATS cannot therefore be applied to a case where “all of the relevant conduct took place outside the United States” and “‘where the claims’ do not ‘touch and concern the territory of the United States … with sufficient force to displace that presumption [against extraterritoriality].’”

Justice Kennedy and Justice Alito (joined by Justice Thomas) each filed brief concurring opinions.  Justice Kennedy’s concurrence is only one paragraph long, but it is significant  for he underscores that “[t]he opinion for the Court is careful to leave open a number of significant questions regarding the reach and interpretation of the Alien Tort Statute[.]” Kennedy notes that

Other cases may arise with allegations of serious violations of international law principles protecting persons, cases covered neither by the [Torture Victims Protection Act] nor by the reasoning and holding of today’s case; and in those disputes the proper implementation of the presumption against extraterritorial application may require some further elaboration and explanation.

Justice Alito uses his concurrence to restate the Court’s explanation in Morrison v. National Australia Bank that more than a kernel of domestic activity is needed to overcome the presumption against extraterritorial application of a statute. Applying Morrison, he underscores that in order for a case’s territorial ties to the United States to be sufficient to sustain jurisdiction via the ATS, when 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.” Recalling Sosa v. Alvarez-Machain, he then elaborates that in order for an cause of action to displace the formidable presumption, it must be grounded in domestic conduct that “is sufficient to violate an international law norm that satisfies [the] requirements of definiteness and acceptance among civilized nations” — a very high, although not impossible, bar to meet.

Joined by Justices Ginsburg, Sotomayor, and Kagan, Justice Breyer filed a separate opinion, concurring in the judgment but challenging the Court’s reliance on the presumption against extraterritoriality. Rather than invoking the presumption, Breyer reaches to the “principles and practices of foreign relations law”, and concludes that where a case has sufficient ties to the United States, the ATS may indeed provide jurisdiction.

Specifically, relying heavily on Sosa and the Restatement of Foreign Relations Law of the United States, Breyer argues that jurisdiction is warranted where

(1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant’s conduct substantially and adversely affects an important American national interest, and that includes a distinct interest in preventing the United States from becoming a safe harbor (free of civil as well as criminal liability) for a torturer or other common enemy of mankind.

Breyer makes clear that this test has not been met in Kiobel, but he asserts that there are fact patterns under which the test will be met, especially where suit would “vindicate[] our Nation’s interest in not providing a safe harbor, free of damages claims, for those defendants who commit such conduct.”  To illustrate, he discusses lower court ATS decisions cited in Sosa including Filartiga v. Pena-Irala and In re Estate of Marcos, Human Rights Litigation. In citing to Filartiga and In re Estate of Marcos, Breyer notes that “in Sosa, we referred to both cases with approval, suggesting that the ATS allowed a claim in such circumstances.”

Although no justice directly addresses the corporate liability question as originally presented, the Court and the concurrences do not challenge the notion that corporations may indeed be found liable under the ATS, albeit only if the corporations have more than cursory ties to the territory of the United States. For example, Roberts opines that “[c]orporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices.” Similarly, Breyer notes that where “the defendants are two foreign corporations,” “plaintiffs are not United States nationals but nationals of other nations,” “the conduct at issue took place abroad,” and the defendants are alleged to have aided-and-abetted non-Americans rather than directly perpetrated “acts of torture, genocide, or the equivalent[.]”

In finding that jurisdiction in the case was not proper, Breyer also observed that defendants’ “only presence in the United States consists of an office in New York City(actually owned by a separate but affiliated company) that helps to explain their business to potential investors”, noting that defendants’ shares “like those of many foreign corporations” are traded on the New York Stock Exchange.

Looking ahead, the windows to jurisdiction hinted at by Roberts and Alito, and framed by Breyer, leave foreign and domestic defendants, including corporations, exposed to potential liability for conduct outside of the United States that violates the laws of nations. In the coming months, and years, considerable time by litigants and courts will be spent defining what sets of facts, if any, are sufficient to overcome the established presumption against extraterritoriality.

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