On Monday, OTC speculated that before the U.S. Supreme Court takes up the issue of whether corporations are liable to victims of international human rights atrocities under the Alien Tort Statue, it might want to wait for more federal appellate courts to weigh in. Turns out the Court won’t have to wait long: Late Monday the U.S. Court of Appeals for the Seventh Circuit ruled in a case involving a Firestone subsidiary’s Liberian rubber plantation that corporations can be sued under the ATS. (The appeals court affirmed the dismissal of the case on other grounds.) That decision comes just four days after the D.C. Circuit revived an ATS suit against Exxon with a similar ruling on corporate liability for abetting human rights abuses. Taken together, the D.C. and Seventh Circuit rulings leave the Second Circuit increasingly isolated in its 2010 holding, in a case known as Kiobel, that corporations aren’t liable under the Alien Tort Statute.
Judge Richard Posner, who wrote the Firestone opinion on behalf of a unanimous panel that also included Judges William Bauer and Daniel Manion, managed to dispose of the question of corporate liability in a mere 15 pages (in contrast to the D.C. Circuit’s 154-page history lesson of a ruling). “The factual premise of the majority opinion in the Kiobel case is incorrect,” Posner wrote, calling the Kiobel decision an “outlier.” The judge didn’t even spend much time justifying the Seventh Circuit’s conclusion that the Alien Tort Statute encompasses claims against corporations.
Much of the opinion instead ruminates on why the Second Circuit’s analysis of ATS corporate liability—which rests on the premise that corporations can’t face civil suits because they aren’t prosecuted for international human rights crimes—is misguided. Companies that abetted the Nazis, Posner said, had been punished “on the authority of customary international law.” he wrote.
The Nazi analogy was suggested by human rights appellate lawyer Paul Hoffman of Schonbrun DeSimone Seplow Harris & Hoffman, who’s at the center of the furor over corporate liability under the Alien Tort Statute. Hoffman argued the D.C. and Seventh Circuit cases for the plaintiffs, and he’s the lead lawyer on the Kiobel plaintiffs’ petition for Supreme Court review of the Second Circuit ruling. He told OTC Tuesday that he’s not surprised at the beating the Second Circuit’s Kiobel ruling has taken, particularly from Judge Posner, who was “openly skeptical” of the Kiobel court’s reasoning at oral arguments in the Firestone case in June.
“I’ve always thought [Kiobel] is an outlier,” Hoffman said. “I’ve never understood how [the Second Circuit majority] got there, based on a crazy reading” of the Supreme Court’s ruling in Sosa v. Alvarez-Machain. Hoffman has argued in many briefs and hearings on ATS corporate liability that the Second Circuit’s Kiobel ruling would leave no avenue for suits against even egregious abettors – including companies that helped the Nazis perpetrate the Holocaust.
“Why would you do that? It makes no sense,” Hoffman said. “It would be one thing if there were legislative history that indicates Congress didn’t want corporations to be sued. There’s not.” The Second Circuit ruled the way it did in Kiobel, he asserted, because “Chief Judge [Dennis] Jacobs has an agenda,” Hoffman said. “He’s upfront about it. He doesn’t like these suits.” (Hoffman makes the same argument about Judge Jacobs in Kiobel’s June 13 petition for certiorari.)
Hoffman told OTC that the flap over corporate liability is “one of these weird little detours that sometimes happen.” He envisions a couple ways Kiobel could be undone. The Supreme Court could agree to take up the corporate liability question, or the Second Circuit, which has brought in two new judges since refusing to hear the Kiobel appeal en banc, could revisit corporate liability in a future ATS case. In either scenario, Hoffman said, once the Kiobel issues are put to rest, ATS litigators will return to the question that occupied them before the corporate liability diversion.
“The real action, the real controversy is, what is the right standard for corporate aiding and abetting?” Hoffman said, noting that the D.C. Circuit’s Exxon ruling addresses this question as well.
OTC asked whether it’s been frustrating for Hoffman, who’s been working on ATS cases for two decades, to have to re-establish corporate liability as a result of the Kiobel decision. He said that’s what you sign on for as a human rights lawyer. “The struggle to get accountability—particularly in the corporate area, where you have such resistance from companies—is a long process,” Hoffman said. “Ultimately there’s going to be success in that area, but it takes a long time.”
(Reporting by Alison Frankel)