Another Fine Mess: An Assessment of the Most Recent Supreme Court Oral Argument in Kiobel v. Royal Dutch Petroleum

On the first day of this year’s October Term, the Supreme Court revisited Kiobel v. Royal Dutch Petroleum, a case involving the scope of the Alien Tort Statute (“ATS”).  The law, enacted by the first Congress in 1789, authorizes federal courts to hear “any civil action by an alien for a tort only, committed in violation of the laws of nations or a treaty of the United States.”

The ATS originally was intended primarily to address piracy and mistreatment of ambassadors.  It lay dormant in the modern era until the U.S. Court of Appeals for the Second Circuit ruled in Filartiga v. Pena-Irala, decided in 1980, that the statute could be applied to certain human rights claims brought against defendants in a federal court.

During the oral argument of Kiobel last term, in February 2012, the Court’s conservative justices focused the discussion on whether the ATS could apply to conduct outside of the United States.  If the Court’s answer is “No” that would substantially restrict the reach of the ATS.

Because neither the Second Circuit’s decision in Kiobel nor the parties’ briefs before the February argument addressed this issue, the Court held the case over for argument this term.  Based on the transcript of the second oral argument, held earlier this month, it seems that the Court is backing away from the ledge that it peered over last term.  Although that possibility may buoy lawyers who invoke the ATS to bring human rights claims, it also seems that the Court is inclined to affirm the Second Circuit’s dismissal of the plaintiffs’ lawsuit in Kiobel.

In this column, I will briefly summarize the history of the Kiobel litigation, analyze the recent oral argument before the Supreme Court, and explain my prediction that the Supreme Court will not limit the scope of the ATS to conduct within the United States, but will nevertheless affirm the dismissal of the plaintiffs’ case.

Kiobel involves the intersection of a number of complicated legal doctrines that presented a challenge for even the Justices to sort out.  (At one point during the argument, Justice Stephen Breyer, one of the more incisive members of the Court, could do no better than mention the name of a leading historical authority, Attorney General William Bradford’s Opinion of 1795, before stating,  “Isn’t there—all this stuff about—you know what I’m talking about.”)  Hence, any prediction of the outcome should be viewed with even greater caution than usual.

The Lower Court Decisions

The events giving rise to Kiobel occurred in Nigeria in the 1990s.  The plaintiffs were residents of the Ogoni Region.  In their complaint, filed in the United States District Court for the Southern District of New York in 2002, they alleged that a subsidiary of Royal Dutch Petroleum Company (“Royal Dutch”) and Shell Transport and Trading Company PLC (“Shell”) aided and abetted human rights violations that were committed by the Nigerian government in response to protests by residents of Ogoni against the environmental effects of oil exploration in the region.

To set the geographic stage:  when the events occurred, the plaintiffs resided in Nigeria.  Today, some of the plaintiffs in the class-action lawsuit live in the United States, having sought asylum here.  The defendants are foreign corporations—Royal Dutch is incorporated in the Netherlands, Shell in the United Kingdom.  (Their subsidiary was incorporated and did business in Nigeria.)  And, as noted earlier, the alleged human rights violations occurred in Nigeria.  Thus, in the parlance of the attorneys who argued before the Supreme Court, Kiobel is a “foreign-cubed” case, with foreign plaintiffs and defendants, and with the underlying events taking place outside of the United States.

The defendants moved to dismiss the complaint in the district court, arguing that the plaintiffs had not alleged legally sufficient claims and relying on the Supreme Court’s decision in another ATS case, Sosa v. Alvarez-Machain.  The district court granted the motion in part and denied it in part, allowing the plaintiffs to proceed on claims of aiding and abetting arbitrary arrest and detention, crimes against humanity, and torture.  The district court also allowed an interlocutory appeal—that is, an appeal that occurs in the midst of a case—of its decision.

The Second Circuit then affirmed the district court’s decision in part and reversed it in part, dismissing all of the plaintiffs’ claims.  Although that decision was unanimous, there was a fundamental disagreement between Judge Jose Cabranes, who wrote the opinion for the court, and Judge Pierre Leval, who wrote a separate concurring opinion.  Essentially, Judge Cabranes believed that corporations effectively were “immune” from being sued civilly under the ATS.  Judge Leval strongly disagreed with this interpretation of the statute but nevertheless believed that, properly applying the Supreme Court’s reasoning in Sosa, the plaintiffs’ claims should be dismissed because they failed to allege that the defendants acted with “a purpose to bring about human rights violations.”

Kiobel in the Supreme Court

At the first Supreme Court oral argument in Kiobel, in February, the conservative justices made it clear that they were considering an even more restrictive reading of the ATS than the Second Circuit had given the statute. Justices Anthony Kennedy and Samuel Alito Jr. and Chief Justice John Roberts peppered the plaintiffs’ attorney with questions focused on, as Justice Alito asked, “What business does [this] case have in the courts of the United States?”

The Justices’ questions indicated that the Court was considering whether to limit the ATS to cases with more of a connection to this country than Kiobel had.  And, within one week of the argument, the Court ordered the parties to address whether the ATS applies to conduct that occurred outside of the United States. The parties filed supplemental briefs on this issue over the summer and, as noted above, reargued the case earlier this month.

In their brief, Royal Dutch and Shell emphasized the canon of statutory construction that, “When a statute gives no clear indication of an extraterritorial application, it has none.” Because the “ATS nowhere indicate[d] Congress’s intent to overcome this presumption,” the defendant corporations argued, the Court should affirm the Second Circuit’s decision dismissing the plaintiffs’ complaint in its entirety.

The plaintiffs, by contrast, contended that the ATS has “a geographic scope commensurate with the reach of the law of nations and treaty violations it was enacted to adjudicate,” which authorized the statute to apply extraterritorially—and contended, too, that the Supreme Court already had confirmed this point in Sosa.

The most interesting supplemental brief was filed by the United States. Having initially filed an amicus curiae brief in support of the plaintiffs’ arguments against the Second Circuit’s holding with respect to corporate liability under the ATS, the government now sided, at least in part, with the defendant corporations.

In his supplemental brief, the Solicitor General argued that the Second Circuit decision should be affirmed, but that the Court should not adopt a general rule against extraterritorial application of the ATS.  That is, the government argued that the statute could apply to “suits based on conduct occurring in a foreign country” in certain circumstances, just not those in this case, where the plaintiffs claimed that Nigerian military and police committed human rights violations, but only sued private corporations for allegedly aiding and abetting those violations.

The Second Oral Argument in Kiobel

If the first oral argument in the Kiobel case seemed to be partisan—with the conservative justices asserting that the ATS should be construed even more narrowly than the Second Circuit did and the liberal justices resisting that interpretation—the second oral argument unfolded differently.  Although Justice Kennedy initially questioned plaintiffs’ attorney, Paul Hoffman, about the consequences of applying the ATS outside of the United States, the Court’s liberal justices asked the most probing questions posed during the argument.

Justices Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan pressed Hoffman on the issue of exhaustion—the argument that a “foreign-cubed” case should not be heard in a United States court until it was clear that the alien plaintiffs had attempted to litigate their claims in a forum that was more closely connected to the case.  In Kiobel, that would mean requiring the plaintiffs to attempt to first bring their lawsuit in Nigeria (where the underlying events occurred) or the Netherlands or United Kingdom (where the defendants are incorporated) before being able to sue in the United States—and only if the courts in those other countries were unable to adjudicate the case.

In her argument, Kathleen Sullivan, the corporate defendants’ attorney, had a difficult time persuading the Court that the presumption against extraterritorial application of U.S. law dictated the decision in this case.  (This was in marked contrast to the first argument, when Sullivan not only adeptly answered the Justices’ questions but also seemed to control the flow of the argument.)

Both liberal and conservative Justices indicated that under the existing case law interpreting the ATS and, in particular, the Second Circuit’s decision in Filartiga reviving the statute more than three decades ago, as well as the Supreme Court’s more recent decision in Sosa, the courts already have allowed the ATS to apply to conduct that occurred outside of the United States.  As Justice Sotomayor summarized succinctly, “[Y]ou’re asking us to overturn our precedents.”

Solicitor General Don Verrilli, Jr. argued on behalf of the United States and capably defended the government’s nuanced approach to interpreting the ATS.  With the last word in rebuttal, Hoffman insisted that the Court did not need to revise or reconsider its interpretation of the statute; the Court’s reasoning in Sosa, along with existing procedural doctrine, he argued, would ensure proper application of the ATS.

Should the Court agree with Hoffman’s rebuttal argument, such a decision would be quite an accomplishment, given the tenor of the Justices’ questions in both arguments.  Such a victory still may not be sufficient to overturn the decision of the Second Circuit, however, because even Judge Leval concluded that, applying Sosa, the plaintiffs’ complaint should be dismissed.

My own view is that the Court is likely to expressly adopt some form of exhaustion requirement as a way of restricting ATS lawsuits from being filed in the United States except in circumstances where there is a clear nexus between the case and this country.  Exhaustion seemed to be the one issue where the concerns of both conservative and liberal justices converged.  Ultimately, as in the Affordable Care Act case, National Federation of Independent Business v. Sebelius, the Court’s more provocative questions may be a prelude to what turns out to be a more moderate decision.