June 1, 2020

Trump administration reverses position on corporate liability under Alien Tort Statute

[Cross-posted from Just Security]

By William S. Dodge

In a brief filed last week, the Trump administration reversed its position on corporate liability under the Alien Tort Statute (ATS), urging the Supreme Court to grant certiorari in Cargill, Inc. v. Doe I and to hold that domestic corporations are not subject to suit for human rights violations under the ATS. The brief further urged the Court to reject the possibility of aiding-and-abetting liability under the ATS or, in the alternative, to hold that aiding-and-abetting liability is not available when the principal offense occurs outside the United States. Three months after the Canadian Supreme Court held that Canadian corporations may be sued in Canadian courts for human rights violations abroad, the Trump administration is advocating that the U.S. Supreme Court turn in precisely the opposite direction.

The ATS is a provision of the 1789 Judiciary Act giving federal courts jurisdiction over “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” In Sosa (2004), the Supreme Court recognized an implied cause of action under the ATS for well-established norms of human rights law. The Second Circuit subsequently held in Kiobel (2010) that corporate liability for human rights violations was not well-established enough to meet the Sosa standard. The Supreme Court granted certiorari to resolve the corporate liability question, but instead disposed of the case by applying the presumption against extraterritoriality to the ATS cause of action in Kiobel (2013). The Court granted certiorari again to decide the corporate liability question in Jesner (2018), but again avoided the question by holding that the ATS cause of action does not apply to foreign corporations.

The plaintiffs in Cargill have alleged that Cargill and Nestle operated a cocoa supply chain based on child slave labor, providing financial support and technical aid to growers in Ivory Coast while knowing that these growers used children as slaves. The Ninth Circuit noted that Jesner precluded ATS claims against foreign corporate defendants but not against the U.S. corporate defendants Cargill and Nestle USA. The Ninth Circuit further held that applying the ATS cause of action to these facts would be domestic rather than extraterritorial because the focus of the ATS includes conduct that aids and abets human rights violations, and plaintiffs had alleged that such conduct occurred in the United States.

In Kiobel and Jesner, two different administrations argued in favor of corporate liability under the ATS for human rights violations that meet the Sosa standard. In Kiobel, the Obama administration filed an amicus brief noting that actionable norms of international human rights law apply equally to natural persons and to corporations (at pages 20-21) and arguing that “[h]olding corporations liable in tort for violations of the law of nations” is “consistent with the common law backdrop against which the ATS was enacted and subsequently amended” (at page 26). In Jesner, the Trump administration filed an amicus brief reiterating that international-law norms of human rights apply equally to natural persons and to corporations (at pages 13-14) and arguing that “[t]he history of the ATS reinforces that it permits courts, in appropriate cases, to recognize common-law claims against corporations for law-of-nations violations” (at page 15).

The new brief from the Trump administration changes its position from just three years earlier. Significantly, the brief does not argue against corporate liability based on the content of customary international law. Although the Second Circuit in Kiobel (2010) framed the question as whether there is a “norm of corporate liability” under customary international law, I have explained both in scholarship and in an amicus brief that such a question makes no sense. The customary international law of human rights establishes norms of conduct; it does not dictate to States how those norms should be enforced. It is clear beyond doubt that international human rights norms (including the prohibition against slavery) apply to corporations. And therefore, it is open to the United States to apply those norms to corporations.

Instead, the new Trump administration brief argues against corporate liability solely as a matter of U.S. domestic law. Invoking separation-of-powers concerns, it argues that the decision to extend the ATS cause of action to corporations should be left to Congress (at pages 9-10). In a footnote, the administration explains its change of position on the ground that Jesner “rejected not only the government’s conclusion [with respect to corporate liability] but also its basic framework for analysis” (at page 9, note 3). This is not true. As I have noted previously at Just Security, the only parts of Justice Anthony Kennedy’s opinion in Jesner that commanded a majority were expressly limited to foreign corporations, and the concurring opinions by Justices Samuel Alito and Neil Gorsuch that provided the majority’s fourth and fifth votes explained that there are significant differences between ATS suits against foreign defendants and those against U.S. defendants.

It seems that I may not be the only one troubled by the unsupported change in the position of the United States. Deputy Solicitor General Edwin Kneedler, who was counsel of record for the United States in both Kiobel and Jesner, does not appear on the cover of the new Trump administration brief. That fact is particularly striking given his appearance on the covers of three other briefs filed the same day (herehere, and here).

It makes little sense to think that the act of incorporation should provide a shield from liability for human rights violations. Judge Pierre Leval’s separate opinion in Kiobel pointed out that, under the approach of the Second Circuit majority,

businesses will now be free to trade in or exploit slaves, employ mercenary armies to do dirty work for despots, perform genocides or operate torture prisons for a despot’s political opponents, or engage in piracy—all without civil liability to victims.

It is not fanciful to think that U.S. corporations might engage in some of these activities. U.S. corporations have been sued under the ATS for torture and war crimes. And, of course, Cargill itself involves allegations that U.S. corporations aided and abetted slavery.

The new Trump administration brief also argues that the Supreme Court should reject the possibility of aiding-and-abetting liability under the ATS, although the petition for certiorari did not ask for review of this question and the Courts of Appeals have unanimously recognized such liability. As with corporate liability, the brief does not argue against aiding-and-abetting liability based on customary international law. The brief acknowledges that aiding-and-abetting liability is well-established under international law (at pages 14-15), as Chimène Keitner has also discussed in detail (at pages 81-94). Instead, the new Trump administration brief again invokes separation-of-powers concerns to argue that the decision whether to recognize such liability should be left to Congress (at pages 15-17).

It is important to recognize that the Trump administration’s position on aiding and abetting is not limited to suits against corporations but would apply equally to suits against natural persons. One of the leading international-law cases on aiding and abetting liability is the so-called Zyklon B case, in which individuals were tried and convicted by a British military tribunal for supplying poison gas to concentration camps “well knowing” that the gas would be used for extermination. Bruno Tesch was hung for aiding and abetting war crimes. But under the Trump administration’s position, he would not have been civilly liable.

In the alternative, relying on the presumption against extraterritoriality, the brief argues that aiding-and-abetting liability should not be permitted when the human rights violation itself occurred outside the United States (at pages 18-19). As I have recently explained, under the Supreme Court’s current approach, the presumption analysis proceeds in two steps. At the first step, a court asks whether the presumption has been rebutted by a clear indication of geographic scope. If not, then at the second step, a court asks whether applying the provision should nevertheless be considered domestic because whatever is the focus of the provision occurred in the United States (at pages 1608-09). Typically, ancillary criminal statutes, like aiding-and-abetting statutes, are given the same geographic scope as the underlying criminal offense (at pages 1616-17).

But the analysis with respect to the ATS cause of action is different. In Kiobel, the Supreme Court applied the presumption against extraterritoriality to the ATS cause of action. At step one, Kiobel concluded that the ATS had no clear indication of extraterritoriality. But oddly the Court never reached the focus question at step two. If it had done so—I have argued in the same article (at pages 1607-08)—it should have concluded that the focus of the ATS was either on providing redress for violations of international law by U.S. citizens or on providing redress for violations of international law more generally. In either case, the focus of the ATS cause of action would be nongeographic, and the location of the human rights violation would not matter. Of course, that is not what the Kiobel Court did. Instead, it simply announced that the claims in an ATS case must “touch and concern” the territory of the United States. Courts are divided on exactly what that means (as I have discussed here), but the Second and Ninth Circuits have reasonably concluded that conduct in the United States that aids and abets violations of human rights violations abroad is sufficient.

What should we make of the Trump administration’s basic argument that any decision to extend the ATS cause of action should be left to Congress? It is worth recalling that the second Bush administration argued in Sosa that any decision to create an ATS cause of action should be left to Congress. The Supreme Court in Sosa expressly rejected that argument as inconsistent with the understanding of the first Congress in 1789 that the common law would provide a cause of action for torts in violation of the law of nations, a legal category that would inevitably evolve and expand over time. The “leave it to Congress” argument has now been recycled as a refusal to extend the existing cause of action rather than as a refusal to create a new one.

Sosa held out the promise of an ATS cause of action whose contours were shaped coherently by customary international law. Such a cause of action would apply to a limited set of human rights norms, but it would apply to corporations (because international law does) and it would recognize aiding-and-abetting liability (because international law does). Such a cause of action would give effect to the understanding of the first Congress in 1789 that no express cause of action was required for torts in violations of the law of nations, but would of course be subject to control by today’s Congress, which could grant an express cause of action (as it did in 1992 with the Torture Victim Protection Act) or limit the implied cause of action (as it has never done so far).

Instead, the Supreme Court has produced an ATS cause of action that draws incoherent distinctions to dispose of particular cases under the guise of deferring to Congress. In Jesner, the Court distinguished between U.S. and foreign corporations—a distinction that even the new Trump administration brief complains is inconsistent with congressional intent (at page 11). The Trump administration is now urging the Court to draw further incoherent distinctions between corporations and natural persons and between liability as an aider and abettor and liability as a principal.

The Trump administration’s Jesner brief argued that the First Congress “did not have a good reason to distinguish” between suits against natural persons and suits against corporations. Pointing to a 1787 incident involving infringement of the rights of the Dutch ambassador, Jesner brief argued that infringement of such rights by a company “could perhaps best be vindicated (and compensation paid) through a private suit against that company” (at page 17).

There is similarly no good reason to think that today’s Congress would want to protect a modern-day Bruno Tesch, who aids and abets human rights violations, or would want to allow the act of incorporation to shield U.S. defendants from liability for torture or slavery. Those, however, are the distinctions that the Trump administration would have the Supreme Court draw, supposedly in deference to Congress.