Legal

Morrison v. National Australia Bank-- the 2010 U.S. Supreme Court ruling that nominally barred U.S. securities claims against foreign countries but has since been invoked in all sorts of cases against foreign defendants -- may have finally met its match. On Tuesday six judges on the U.S. Court of Appeals for the 9th Circuit concluded that Morrison does not preclude Alien Tort Statute claims against Rio Tinto, rejecting arguments by Rio Tinto's lawyers at O'Melveny & Myers. This probably isn't the end of the story for Morrison and the Alien Tort Statute, though. Three other 9th Circuit judges, in a dissent written by Judge Andrew Kleinfeld, held that under Morrison's reasoning, the Alien Tort Statute should only apply to atrocities committed on U.S. turf.

The 9th Circuit's split ruling -- covering, in addition to the Morrison issue, the hot-button question of corporate liability under the Alien Tort Statute -- concludes that about 10,000 Papua New Guinea residents can proceed with claims that Rio Tinto and the Papua New Guinea government used deadly force to stamp out a protest at the company's copper and gold mines. The appellate win is a testament to the perseverance of plaintiffs' lawyer Steve Berman of Hagens Berman, who filed this case back in 2001 and who has been mired in two 9th Circuit panel hearings and en banc reviews for most of the time since.

Morrison was a relatively late addition to Rio Tinto's defense, since the Supreme Court's ruling came down only four months before oral arguments before the en banc panel last October. According to Berman, only Judge Kleinfeld even asked about Morrison at those arguments. (Sri Srinivasan argued for Rio Tinto before leaving O'Melveny to join the U.S. Solicitor General's office.)

Kleinfeld's dissent argues that the Alien Tort Statute was enacted way back in 1789 to give non-U.S. citizens a right to sue in federal court. "It does not say that such torts give rise to federal jurisdiction despite the absence of any American nexus -- that is, when the torts are committed in other countries by and against aliens," he wrote. And under Morrison, the judge said, courts should not infer an authority that Congress and judicial precedent does not grant. "The authority of American courts does not generally extend to all heinous wrongs committed by anyone, against anyone, anywhere in the world," Kleinfeld wrote. "Ambiguous statutory language is not enough to get around Morrison's 'bright line rule.'"

But the majority disagreed with Kleinfeld and the two judges who joined his dissent. Morrison is the first issue addressed in the 9th Circuit's fractured, 116-page ruling, and the six judges who sided with opinion author Mary Schroeder held that the history of the Alien Tort Statute shows it was always intended to apply to conduct outside of the United States. Morrison, wrote Schroeder, "did not require that Congress use the precise word 'extraterritorial' in a statute to establish such applicability. It required only that there be a 'clear indication,' stating that such an indication may come from either the text or the context of the statute. There is more than one 'clear indication' of extraterritorial applicability in both the ATS's text and its context."

Plaintiffs' lawyer Berman told me the appeals court only had to look back to the U.S. Supreme Court's landmark 2004 ATS ruling, Sosa v. Alvarez Machain, to support the law's application to foreign conduct. "The Supreme Court in Sosa held that a line of cases in which the statute applied to foreign acts was good jurisprudence," Berman said.

Of course, the 9th Circuit's Rio Tinto ruling may be rendered moot by the Supreme Court, which agreed last week to consider the question of whether corporations can be held liable under both the ATS and the Torture Victims Prevention Act. In Rio Tinto, the 9th Circuit joined the D.C., 11th, and 7th Circuits in holding that corporations can be liable to alien tort victims. That would seem to make the 2nd Circuit, which held otherwise in the case the Supreme Court agreed to hear, more of an outlier than ever.

Berman said that the 9th Circuit may have timed the release of its opinion to let the Supreme Court to know its views on corporate liability, although the appellate decision does not mention the Court's grant of certiorari. The pending Supreme Court argument will probably complicate O'Melveny's strategy in the Rio Tinto case, Berman said . "I'm sure they'll ask for a stay, and we'll fight them on that," he said. "They may petition for Supreme Court review -- to be heard with Kiobel or to raise new issue, like Morrison. That would be just my luck."

I left a message with Jonathan Hacker, the O'Melveny partner who took over the Rio Tinto case when Srinivasan left the firm, but didn't hear back.

(Reporting by Alison Frankel)