WASHINGTON -- The Supreme Court on Monday morning agreed to hear a case over whether corporations can be sued in federal courts for human rights violations occurring overseas.
The case, Kiobel v. Royal Dutch Petroleum, arises out of a suit by a dozen Nigerian plaintiffs claiming that Royal Dutch and two of its Shell Oil subsidiaries worked with the Nigerian government to torture and extrajudicially execute individuals protesting against the companies' oil exploration.
The plaintiffs filed suit in United States district court under the Alien Tort Statute, which empowers the federal courts to hear cases by "an alien" bringing a civil suit for wrongs committed "in violation of the law of nations." The first Congress passed the ATS into law in 1789.
While the ATS indicates who can sue, it does not say who or what can be sued. In Kiobel, the 2nd Circuit Court of Appeals held, by a 2-1 vote, that only natural persons, and not corporations, may be held liable under the ATS. "Corporate liability is not discernible" under the ATS, wrote the majority, because "no corporation has ever been subject to any form of liability (whether civil or criminal) under the customary international law of human rights."
The D.C. Circuit and 7th Circuit split with the 2nd Circuit shortly after its Kiobel decision. Judge Richard Posner of the 7th Circuit, in his opinion for a unanimous panel, found the "factual premise of the majority opinion in the Kiobel case incorrect," citing the allied powers' dissolution of German corporations that had aided the Nazi government in violation of customary international law.
Even so, Posner continued, that fact "has nothing to do with the issue of corporate liability." Rather, as the D.C. Circuit put it, courts should look to whether the cause of action -- in Kiobel, a claim such as torture -- is "clearly established in the law of nations," and then ask whether corporations are generally held liable in domestic lawsuits.
The Supreme Court will now step in to resolve the circuit split, but Kiobel's outlier status does not signal an easy reversal. The D.C. Circuit's dissenter, Judge Brett Kavanaugh, agreed with the 2nd Circuit's approach in Kiobel and found that "customary international law does not recognize corporate liability." Kavanaugh's dissents in the past have served as clarion calls for the Court's conservatives, so what he believes may be a good indicator for how the justices may come out. And Kavanaugh, a former clerk for Justice Anthony Kennedy, believed that "it would be quite odd for a U.S. court to allow a customary international law-based ATS claim against a corporation when no international tribunal has allowed a customary international law claim against a corporation."
Yet for many, it would also be quite odd for the Court, which found in Citizens United that the Framers intended the First Amendment to apply to corporate persons, to reject the concept when it comes to corporate liability for crimes against humanity under a Founding-era statute.
The Court will likely schedule oral argument in Kiobel for February, with a decision to be handed down by late June.
How will Trump’s administration impact you? Learn more