Alien Tort Case Development: Foreign Corporations Are Not Appropriate Defendants in ATS Cases

On April 24, the U.S. Supreme Court held that plaintiffs may not bring claims against corporations domiciled outside the United States in Alien Tort Statute (“ATS”) cases.

In the years following the Supreme Court’s 2013 decision in Kiobel v. Royal Dutch Petroleum, courts have made clear that filing suit against a U.S.-domiciled company is not sufficient for plaintiffs to be able to overcome the presumption against extraterritoriality that is applicable to ATS litigation. In light of Tuesday’s decision, filing suit against a U.S.-domiciled company will now be necessary for plaintiffs seeking to bring claims pursuant to the ATS.

Plaintiffs in Jesner filed for Supreme Court review after the Second Circuit Court of Appeals upheld the dismissal of claims in five consolidated cases against Arab Bank, PLC. Plaintiffs in each of the cases had alleged that they, or their family members, had been harmed in attacks by terrorist organizations that had received financing, in part, as a result of accounts and transfers arranged by the bank.

Justice Kennedy wrote the plurality opinion affirming the Second Circuit’s dismissal, joined by Chief Justice Roberts and Justice Thomas. Justice Alito and Justice Gorsuch filed opinions concurring in the judgment, while not joining all parts of the plurality opinion. Justice Sotomayor wrote the dissenting opinion, joined by Justice Ginsburg, Justice Breyer, and Justice Kagan.

In Jesner, the Supreme Court could have determined that no corporation is an appropriate defendant in an ATS case. In granting the writ of certiorari, the Supreme Court seemed ready to confront the question of corporate liability once and for all. As stated in the original petition seeking Supreme Court review:

This case presents the question this Court granted certiorari to resolve, but ultimately left undecided, in Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013): Whether the Alien Tort Statute, 28 U.S.C. § 1350, categorically forecloses corporate liability.

While the plurality expressed considerable unease with respect to corporate liability pursuant to the ATS, it did not decide the issue. The plurality found the “judicial caution” counsels that courts should defer to Congress and the Executive Branch in cases that raise “serious foreign policy consequences.” Noting the “foreign corporate defendants create unique problems[,]” the Court determined that “courts are not well suited to make the required policy judgments that are implicated by corporate liability in cases like this one.” Therefore, the Court determined that:

…judicial deference requires that any imposition of corporate liability on foreign corporations for violations of international law must be determined in the first instance by the political branches of the Government.

In her dissent, Justice Sotomayor characterizes the majority as using “a sledgehammer to crack a nut.” As was highlighted in the oral arguments held before the Court in October 2017, many members of the Court had concerns about the specific facts of the case. That said, the dissent argued that “[f]oreclosing foreign corporate liability in all ATS actions, irrespective of circumstance or norm, is simply too broad a response to case-specific concerns that can be addressed via other means.”

With its decision in Jesner, the Supreme Court has once again significantly narrowed the types of claims that may be brought by plaintiffs seeking remedies for violations of international law. First, in its 2004 decision in Sosa v. Alvarez-Machain, the Court held that only claims alleging conduct that violates “specific, universal, and obligatory” international norms may be heard pursuant to the ATS. Then in 2013, the Kiobel decision held that the presumption against extraterritoriality applies in ATS cases. Now, going forward, plaintiffs will only be able to bring claims against U.S.-domiciled defendants, while also needing to meet the standards set in Sosa and Kiobel. The door to ATS cases against corporate defendants is not yet locked, but it is mostly closed.

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