On October 17, 2011, the Supreme Court granted a certiorari petition to review a decision issued by a divided panel of the Second Circuit Court of Appeals in Kiobel v. Shell Petroleum N.V.1 The majority in Kiobel held that corporations could not be held liable for alleged tort violations under the Alien Tort Statute ("ATS") and that, therefore, the court lacked subject matter jurisdiction to hear the suit. Thus, Kiobel presents the significant question of whether violations of the ATS apply to an entity other than a natural person.
Kiobel v. Shell Petroleum N.V.
In Kiobel, a proposed class of plaintiffs, residents of Nigeria, filed a tort action under the ATS against three oil companies. The plaintiffs alleged that the oil companies aided and abetted the Nigerian government in committing, among other things, various human rights violations against the plaintiffs in response to protests by the plaintiffs against the alleged environmental effects of oil exploration in the region.
The ATS, enacted in 1789 (28 U.S.C. § 1350), grants federal courts jurisdiction over claims "by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." The Second Circuit noted that the Supreme Court in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) held that the ATS: is a jurisdictional statute only; creates no new causes of action; and only permits claims that rest on "norm[s] of international character accepted by the civilized world and defined with a specificity comparable to features of" certain 18th-century paradigms. Based on international law, Sosa, and Second Circuit precedent, the majority in Kiobel concluded "that international law, and not domestic law, determined the scope of liability for violations of customary international law under the ATS." Upon review of various sources of customary international law, the majority in Kiobel concluded that "[n]o corporation has ever been subject to any form of liability (whether civil, criminal, or otherwise) under the customary international law of human rights" and, thus, "corporate liability has not attained a discernable, much less universal, acceptance among nations of the world in their relations inter se[.]" Accordingly, the majority in Kiobel held that corporate liability cannot form the basis of a tort action under the ATS.
Since the Second Circuit issued its decision in Kiobel, the D.C. Circuit (by a divided panel) and Seventh Circuit, in Doe VIII v. Exxon Mobil Corp. and Flomo v. Firestone Nat. Rubber Co., LLC, respectively, have disagreed with the holding in Kiobel and ruled that corporations can be held liable under the ATS.
Mohamad v. Rajoub
The Supreme Court will also hear Mohamad, in which the D.C. Circuit concluded that corporations are not liable under the TVPA. The TVPA was enacted in 1992 and authorizes both aliens and U.S. citizens to bring "a civil action for recovery of damages from an individual who engages in torture or extrajudicial killing."
In Mohamad, the D.C. Circuit noted that the TVPA applies to liability of "an individual". Since the TVPA does not define the term "individual", the court in Mohamad ascribed to the term its ordinary meaning, "which typically encompasses only natural persons and not corporations or other organizations[.]" In addition, the court noted that the structure of the TVPA validates the plain meaning of the text?to wit, the liability provision of the TVPA uses the term "individual" five times in the same sentence: four times to refer to the victim of torture or extrajudicial killing, "which could only be a natural person," and once to the perpetrator. The court commented that there was no reason "to think the term 'individual' has a different meaning when referring to the victim as opposed to the perpetrator." In sum, the TVPA applies only to natural persons.
The possible significance and relevance of Mohamad to Kiobel is suggested by Judge Kavanaugh's partial dissent in Exxon Mobil and his statement that: "Sosa told courts in ATS cases to look to Congress for guidance, and Congress has specifically delineated what limits should attach to civil suits for torture and extrajudicial killing. Consistent with that direction in Sosa, we should follow the TVPA when fashioning the contours of the famously vague ATS." Judge Kavanaugh further noted that permitting corporate liability under the ATS but not under the TVPA produces "the rather bizarre outcome that aliens may sue corporations in the U.S. courts for aiding and abetting torture and extrajudicial killing, but U.S. citizens may not sue U.S. corporations" for the same conduct.
By granting certiorari in Kiobel and Mohamad, the Supreme Court may determine critical issues regarding corporate and juridical person liability under the ATS and TVPA.