Ed. Note: This article is the latest in our series on the U.S. Supreme Court case Jesner v. Arab Bank, a case that is slated to resolve the question of whether corporations can be sued under international law for human rights violations and terrorism. Oral arguments were held October 11th.
Further to our previous coverage of the oral arguments (transcript is here) in Jesner v. Arab Bank (see Bill Dodge’s terrific contribution followed by Ed Swaine’s elaboration), below I summarize, Justice-by-Justice, some of the key issues raised by Supreme Court and the responses of the parties’ lawyers and the United States government as amicus curiae.
Justice Sonia Sotomayor evinced a very sophisticated understanding of international law with her questions. She pushed former Solicitor General Paul Clement, representing the Arab Bank, hard on the question of whether or not it was necessary for plaintiffs to affirmatively demonstrate the existence of an international norm for holding corporations civilly liable for human rights abuses and terrorism. She turned the question on its head a bit when she asked if it was also necessary to demonstrate the existence of an international norm allowing for natural persons to be civilly liable, which is exactly what the Alien Tort Statute (ATS) accomplishes. Clement did not have a ready response and simply returned to the defendants’ common reframe that international law speaks to the question of who or what kind of actor can violate international law.
To Assistant Solicitor General Brian Fletcher, representing the United States on behalf of neither party, Justice Sotomayor asked about whether the United States should in fact be worried about the foreign policy implications of such suits, as defendants argue. Fletcher responded that the way to deal with any risk of foreign entanglement is through undertaking the extraterritoriality analysis called for by Kiobel v. Royal Dutch Petroleum. He also noted that there may be similar foreign policy implications for suits involving corporate officers and principals, which would presumably replace suits against the corporate entity itself if the Court rules for defendants in Jesner. So, limiting the ATS to suits against natural persons will not eliminate these concerns. To Clement, she queried whether any potential friction with the state of Jordan would be lessened by suits brought under the Anti-Terrorism Act (ATA) as compared with suits under the ATS? Clement responded that under the ATS, the defendant is labeled a hostis humani generis—enemy of all mankind—a sobriquet that would be of greater concern than being considered a financière of terrorism.
When Clement tried to point out that none of the international tribunals allows for corporate criminal liability, Justice Sotomayor stated the obvious: that criminal law is different from civil law. Invoking an amicus brief by comparative law scholars and practitioners, she noted that many nations hold corporations civilly liable for international law breaches under a range of mechanisms and theories of liability. Under her approach, the Court should look to this general state practice to determine what the applicable international norm is.
Chief Justice John Roberts wanted to know whether the ATS was a unique remedy internationally. This question gave plaintiffs’ counsel Jeff Fisher of Stanford Law an opportunity to explain the plaintiffs’ position, which is that international law contains substantive rules, but leaves many details of its enforcement to individual states based upon the particularities of their diverse legal cultures and frameworks. Fisher pointed to the comparative scholars brief for examples of the ways in which different domestic systems have dealt with corporate breaches of international law. He conceded that the ATS is a unique feature of U.S. federalism and reflects a desire of the founders to keep international law cases out of state courts, which are courts of general jurisdiction.
To the U.S. government, Chief Justice Roberts wanted to know who would hold the United States accountable if we did not provide a forum and a remedy for such cases. He asked: Isn’t it the case that other nations are actually annoyed that we are providing a remedy? Fletcher again indicated that any such concerns should be dealt with on remand when the parties can fully brief the extraterritoriality issue.
Justice Samuel Alito focused in on the norm-identification process long established by Sosa v. Alvarez-Machain, which requires courts to consider whether the plaintiff has alleged an established rule of international law. In what he described as step 2 of this analysis, this inquiry inevitably involves “an element of judgment about the practical consequences of making that cause available to litigants in the federal courts,” including the international repercussions of allowing the suit. Fisher agreed, but also pointed to a number of other doctrines available to deal with these contingencies, including extraterritoriality, foreign non-conveniens, political question, comity, etc. He argued that there is a mismatch between these concerns and the categorical rule of corporate immunity sought by defendants.
Justice Alito was skeptical about whether or not denying an alien plaintiff a remedy for international law harms would itself have foreign policy implications. He queried whether there were other grounds to bring suit against U.S. corporations that breach international law, implying that United States does not need the ATS to carry out any remedial obligations under international law.
The application of the presumption against extraterritoriality came up several times during the argument, even though this issue is technically not before the Court and has not yet been fully briefed by parties. For example, Justice Alito asked whether the presumption against extraterritoriality would apply where there are transactions in the United States. Plaintiffs’ counsel insisted that this issue is not before the Court, but then explained that, in any case, such transactions are not a de minimis function; they are actually core to the international financial system as explained in the brief by experts on financial regulation. Mirroring the thrust of its brief, see Zach Kaufman’s coverage here, the government raised extraterritoriality in its opening and closing remarks, arguing that the categorical rule of corporate immunity relied upon by the Second Circuit in Kiobel v. Royal Dutch Petroleum (Kiobel I) is the wrong one, but that the lower courts should look closely at whether the case sufficiently touches and concerns the United States to displace the presumption.
Justice Neil Gorsuch was quite fixated on a 2011 law review article suggesting that the ATS was drafted in order to address situations in which the defendant hails from the United States (Bill Dodge has refuted these arguments here). The theory is that the founders wanted to avoid giving just cause for war against the United States. Putting aside the fact that nothing in the text of the Statute suggests this limitation, Fisher countered that what little history we do have on the ATS belies this theory. Rather, extensive historical research has confirmed that the 1784 Marbois-Longchamps affair, which involved two foreigners, inspired the ATS. In any case, Fisher noted that these issues were hashed out in Sosa and were definitively rejected, and all the recent cases before the Court involve aliens on both sides. At one point, Justice Sotomayor interjected to remind her colleague that the ATS clearly would have applied to piracy, which would not fit this revisionist paradigm or raise any foreign policy concerns. (So odd was this this line of questioning that one press account described it as “Gorsuch’s strange detour”).
Justice Gorsuch suggested that cases involving ambassadors could be dealt with under the specific ambassadors clause of the Constitution. Or, they could be dealt with under federal question jurisdiction (§1331). Fisher noted, however, that one function of the ATS is to direct such cases to a federal forum.
Justice Ruth Bader Ginsburg, in connection with Justice Gorsuch’s line of questioning, reminded the participants that the Court has already held that international law is part of U.S. law. She asked the question of why international law would make a distinction between individual and corporate perpetrators? She observed that the major split within international law is between norms that require a showing of state action as an element of the offense (e.g., the conventional prohibition against torture, which requires a showing that the prohibited acts are “inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity”) and those that apply equally (or predominantly as is the case with piracy) to private actors.
She was skeptical about whether the Court needed to find an affirmative rule addressed to corporations that would draw an artificial line between individuals and legal entities. She also opined that this is a question of remedy, which national law should supply. Clement tried to argue that there is in fact a big difference in how international law deals with natural persons vice corporate entities, citing the Torture Victim Protection Act (TVPA) and the work of the international criminal tribunals since Nuremberg. Justice Ginsburg noted, however, that while international law may permit certain forms of redress, the U.S. Congress can decide not to extend liability to corporations, which it did in the TVPA.
Justice Ginsburg also invoked the Restatement, which recognizes corporate liability for international law violations. Clement responded that this text is not at the level of specificity required by Sosa. She noted that the United States had already sanctioned the Bank for its conduct. Clement responded that this is how these cases should be dealt with, not under the ATS.
Justice Elena Kagan also pursued this line of argument and wanted to know if it would be better to deal with these cases through the creation and enforcement of financial regulations rather than through private litigation. Fisher noted that the allegations here are not about simple negligent oversight; rather, the Bank was affirmatively funding acts of terrorism against U.S. citizens and the citizens of our allies. These allegations were proven in the ATA wing of the case and resulted in a significant money damage award for the plaintiffs.
Justice Kagan posed a weighty hypothetical: what about a United States corporation that is using alien slave labor under circumstances that pose no extraterritoriality concerns—should there be no liability under the ATS even though the law would normally provide a tort remedy for such corporate malfeasance? (This case is not a mere hypothetical, similar allegations arise in Doe v. Nestlé USA, which involves allegations that the company uses child slave labor to harvest cocoa in Côte d’Ivoire). Clement conceded that this is a difficult set of facts, but returned to the solution of simply suing the responsible corporate principals. When Justice Kagan raised concerns about judgment-proof defendants and noted that victims are more likely to get a meaningful remedy against the corporation itself, Clement argued rather lamely that (to paraphrase) “middle managers make good money.” When Justice Alito noted that the hypothetical would also give rise to potential felony liability, Justice Kagan retorted that victims would also be entitled to compensation, which would aide in their rehabilitation.
Justice Kagan wanted to know when other governments might take offense if the United States did not provide a remedy. Fletcher noted that the “heartland” of situations to be addressed by the ATS involved foreign citizens injured by international law violations in the United States, like the Marbois incident. Justice Kagan questioned whether a foreign government that might take offense at the filing of a suit here would necessarily care whether that suit was brought against a natural person or a legal entity. In Fletcher’s estimation, to remove liability for a corporation and disallow an ordinary tort remedy that would otherwise exist might equally raise objections.
In this exchange, Justice Kagan raised an interesting issue that has not received a lot of attention: what should be the scope of corporate liability assuming there is no categorical bar? Would there be full respondent superior or would the corporation be amenable to suit only if there was a corporate policy involved? It was noted that Judge Posner in Flomo v. Firestone Natural Rubber Co. LLC would require a high level of accountability, in part to overcome the presumption against extraterritoriality, similar to how the Court limited municipal liability in Monell v. Department of Social Services of the City of New York. In response, Fletcher replied that all the Court needs to do is reject the categorical bar; it need not announce any particular standard at this time. On this line of argument, Clement pointed out that the 1999 Terrorist Financing Convention at Article V only require the imposition of liability on someone in a control or management position who violates Article II.
To Clement, Justice Kagan pointed out that a universal standard of conduct is needed under Sosa, not a universal enforcement mechanism. International law does not require states to enact a provision similar to the ATS, but nothing in international law would prohibit states from following suit. If allowing a case to proceed under the ATS might have foreign affairs consequences, this should be dealt during the Sosa analysis.
Justice Anthony Kennedy stayed focused on the core question: does Sosa require plaintiffs to show that international law affirmatively recognizes a cause of action against corporations for international law violations? He insisted that this part of the conduct-regulating norm (as opposed to an ancillary or derivative inquiry addressed to modes of enforcement) since it would dictate standards of behavior to corporations. Fisher disagreed, indicating that the question of who could be sued and under what theory are elements of enforcement, but not core to identifying the scope of the norm itself. He took this occasion to remind the Court that this has been the consistent position of the U.S. government over two administrations.
Justice Stephen Breyer reasoned that Sosa and the treaties address both persons and entities. He noted that the United States did sign the Terrorist Financing Convention and implemented it by passing the ATA. The Convention obliges states party to provide a remedy when legal entities located in their territories or organized under their laws fund terrorism, and that this obligation has been reinforced by the Security Council in Resolution 1373, passed just following the attacks of September 11th. Later, Clement pointed out that are 6 treaties that directly impose civil liability on corporate entities; these are listed in footnote 40 of Judge Cabranes’s Kiobel I opinion (e.g. the 1969 International Convention on Civil Liability for Oil Pollution Damage). The United States, however, has not ratified any of them. But, Justice Breyer noted, if there is a rule against financing terrorism, it must apply to corporations or it would have little impact other than with respect to a few depraved billionaires. Clement argued that plaintiffs bear the burden of showing the existence of an applicable norm and that the terrorism treaties do not provide such a norm. Even the Terrorist Financing Convention treats corporations separately and does not impose duties directly on them, but rather on states parties to the treaty. The United States, for example, limited the remedy under the ATA to U.S. citizens—this is entirely understandable in Clement’s mind, because we have a special relationship with our citizens.
A couple of small issues also made cameo appearances. Justice Sotomayor asked about the Court’s new rules governing personal jurisdiction over corporations under Daimler Chrysler AG v. Bauman. Fisher noted that Daimler covers cases involving the exercise of general jurisdiction over corporations and requires them to be sued at the principal place of business or headquarters. The case at bar, by contrast, is a specific jurisdiction case involving actions taken in New York, the forum state.
Justice Ginsburg asked whether U.S. courts should impose or recognize an exhaustion of local remedies requirement as suggested in footnote 21 in Sosa. Plaintiff’s counsel explained that there was no viable alternative forum in Jordan. Plus, the ATS claims on behalf of alien plaintiffs proceeded in combination with ATA claims on behalf of U.S. citizens, so efficiency dictated that it made sense to bring the entire suit in one forum given the common nucleus of operative facts.