Jesner v. Arab Bank

JESNER v. ARAB BANK: CORPORATE LIABILITY AND THE “TOUCH AND CONCERN” TEST

By: Anthony Ufkin, Volume 102 Staff Member

In Jesner v. Arab Bank,[1] the Supreme Court will likely answer the question of whether corporations may be held liable for alleged human rights violations under the Alien Tort Statute (ATS).[2] The ATS grants non-citizens access to U.S. courts for alleged violations of “the law of nations or a treaty of the United States.”[3] Five years ago, in Kiobel II, the Court granted certiorari on the same question of corporate liability under the ATS but decided the case on alternative grounds, holding that victims of human rights abuse overseas cannot use the ATS as a pathway into courts of the United States unless the conduct at issue sufficiently “touch[es] and concern[s]” the United States.[4] Now, in Jesner, the question is posed squarely in front of the Court again: Does the ATS foreclose corporate liability?[5] While such liability might not be precluded in all circumstances, the Jesner case is likely to be dismissed no matter how the Court answers the question of corporate liability because the alleged relevant conduct likely fails the “touch and concern” test set forth in Kiobel II.

I. THE ALIEN TORT STATUTE: A BRIEF HISTORY

The Alien Tort Statute was passed by the First Congress in 1789.[6] In full, it reads that “[t]he district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”[7] This jurisdictional statute[8] went mostly unused for 200 years until Filartiga v. Pena-Irala in 1980.[9] Filartiga held that “deliberate torture perpetrated under color of official authority violates universally accepted norms of the international law of human rights, regardless of the nationality of the parties” and “whenever an alleged torturer is found and served with process by an alien within our borders, [the ATS] provides federal jurisdiction.”[10] In Filartiga, citizens of Paraguay who had applied for asylum in the United States brought suit under the ATS against a former Paraguayan government official who was in the United States on a temporary visa.[11] The plaintiffs alleged that the official caused the death of their son in Paraguay by state-sanctioned torture, a violation of the law of nations.[12] Thus, under Filartiga, so long as the plaintiff alleged (1) a violation of a norm of international law (i.e. a violation of the “law of nations” as stated in the ATS); and (2) the defendant is served within the United States, U.S. courts would have jurisdiction. After Filartiga, there was an influx of ATS cases brought in federal court against individuals and corporations accused of engaging directly or indirectly in human rights violations.[13]

By 2004, the Court began to cabin the ATS by limiting its jurisdictional reach.[14] In Sosa v. Alvarez-Machain, the Supreme Court held that the ATS conferred federal court jurisdiction only to enforce “a small number of international norms that a federal court could properly recognize as within the common law.”[15] The Court recognized three primary offenses as violations of the law of nations at the time the ATS was passed: “violation of safe conducts, infringement on the rights of ambassadors, and piracy.”[16] Thus, Sosa held, that any “claim based on the present-day law of nations” must “rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18th-century paradigms” discussed above.[17] Sosa therefore created a two-part test to determine whether a present-day violation of the law of nations had occurred: first, a court must determine whether the alleged violation is a norm of international law accepted by the civilized world, and second, whether the alleged violation is defined comparably to one of the three primary offenses the ATS was originally passed to address.[18] While Sosa did not deal with corporate liability directly, it was the start of the Court’s jurisprudential shift towards limiting the reach of the ATS. This shift would continue in 2013 when the question of corporate liability under ATS was first posed to the Court in Kiobel v. Royal Dutch Petroleum Co. (Kiobel II).[19]

Kiobel II arguably ended, as a practical matter, the ability of non-citizen victims of human rights abuses that occurred overseas to invoke ATS as a means to access the U.S. court system. Kiobel was a foreign-cubed case: foreign plaintiffs sued a foreign corporation for allegedly aiding and abetting human rights abuses that took place entirely on foreign soil.[20] The Second Circuit held (in Kiobel I) that the ATS did not authorize claims against foreign corporations because corporate liability was not a recognized international norm.[21] On appeal, the Supreme Court never reached the issue of corporate liability. Instead, the Court decided the case on alternative grounds, holding the presumption against extraterritorial application applies to the ATS and can only be overcome when the relevant conduct “touch[es] and concern[s]” the United States with sufficient force.[22] The Court examined the alleged conduct in Kiobel II and concluded that it was insufficient, holding that a “mere corporate presence” in the U.S., without more, does not pass the “touch and concern” threshold.[23] After affirming the Second Circuit’s ruling, albeit on other grounds, the case was dismissed.[24] Thus, the Court did not address corporate liability under ATS and did not disturb the Second Circuit’s holding in Kiobel I: the ATS did not permit corporate liability.[25] Even so, Kiobel I was an outlier; every other circuit court that considered the issue found the ATS to permit corporate liability.[26] It would take approximately five years for the question of corporate liability under the ATS to come before the Court yet again in Jesner, another case on appeal from the Second Circuit.

II. JESNER AND THE ATS

The plaintiffs in Jesner—all victims or relatives of victims that were injured or killed in attacks that took place overseas—brought suit in a New York federal court alleging that the defendant, Arab Bank, PLC (Arab Bank), “violated the law of nations insofar as it financed terrorism, and also insofar as it directly and indirectly engaged in genocide and crimes against humanity.”[27] The Second Circuit dismissed the case based upon their holding in Kiobel I regarding corporate liability and “grudgingly” denied a request to rehear the case en banc.[28] The Supreme Court then granted the plaintiffs Writ of Certiorari on the question of “[w]hether the Alien Tort Statute . . . categorically forecloses corporate liability.”[29] Part A will give a brief overview of the main arguments made by the petitioner and respondent in Jesner. Part B will discuss the likely outcome of the Jesner case and posit that even if the Court finds that the ATS does permit corporate liability, the Second Circuit’s dismissal of Jesner is likely to be affirmed as the relevant conduct likely lacks the connection to the United States the Court required in Kiobel II under the “touch and concern” test.

A. Jesner and Corporate Liability

The petitioners in Jesner argued that the text, history, and purpose of the ATS support allowing corporate liability under the ATS and that Sosa does not preclude corporate liability.[30] The text of the ATS supports corporate liability according to petitioners because the statute limits who may bring a suit (an “alien”), but does not differentiate between who can be sued. [31] Petitioners also argue in support of corporate liability because the statute uses the word “tort,” a term of art, which was widely understood at the time the statute was passed (and still today) to allow corporate liability.[32]

Further, petitioners argue the history and purpose of the ATS supports their textual interpretation permitting corporate liability. Historically speaking, petitioners point to two opinions from past Attorneys General, one given in 1797 and one in 1907, that support corporate liability under the ATS.[33] Effectuating the purpose of the ATS also supports petitioners textual reading, they argue, because if corporate liability were foreclosed, the statute would lack its intended deterrent effect and could allow wrongdoers to escape any meaningful liability by simply creating a corporation and acting under its color.[34] Finally, petitioners argue the Court’s ruling in Sosa does not preclude corporate liability because whether the defendant is a corporation is irrelevant to Sosa’s first step of determining whether the alleged conduct is a violation of a norm of international law.[35]

The respondents’ main argument against corporate liability rests on Sosa and the requirement that the alleged violation be a “specific, universal, and obligatory norm” of international law.[36] Respondents argue there is “nothing remotely resembling a specific, universal, and obligatory norm of imposing international-law obligations directly on corporations” and thus, there can be no violation of the law of nations.[37] Respondents further argue that even if corporate liability is permitted under the ATS, the case does not pass the “touch and concern” test laid out by Kiobel II and should be dismissed on those grounds.[38]

B. Jesner: What the Supreme Court Might Do

At least one commentator seems to believe that respondents had the advantage during oral arguments,[39] but putting too much stock into an analysis of oral arguments can sometimes backfire.[40] That said, even if the Supreme Court were to permit corporate liability, it is at least somewhat likely based on the Court’s decision in Kiobel II that the alleged relevant conduct would not pass the “touch and concern” test. Similar to Kiobel II, the case is foreign cubed—it involves a foreign plaintiff, suing a foreign defendant, for conduct that occurred on foreign soil.[41] The only alleged relevant conduct with the United States is that some of the funds used were automatically and electronically routed through New York.[42] This alleged conduct is far less than what was alleged in Kiobel II, where the defendants had an office in the United States, raised funds in the United States, and were listed on a United States stock exchange.[43] Petitioners make a reasonable argument that deciding the case on Kiobel II would be inappropriate because they have not had the opportunity to fully brief the issue, and the issues “are sharply contested and thus should be considered according to ordinary procedures of appellate review.”[44] Even so, given the more conservative leaning of the Court today and its general move towards cabining the ATS, it seems likely that the Second Circuit’s decision dismissing the case will be affirmed in one fashion or another—either by the Supreme Court now or on a subsequent appeal.

  1. See Petition for a Writ of Certiorari at i, Jesner v. Arab Bank, PLC, No. 16-499, 2016 WL 6069100 (U.S. Oct. 5, 2016), at *i.
  2. 28 U.S.C. § 1350 (2012).
  3. Id.
  4. Kiobel v. Royal Dutch Petroleum Co, 569 U.S. 108, 124–25 (2013) (hereinafter Kiobel II).
  5. Petition for a Writ of Certiorari at i, Jesner v. Arab Bank, PLC, No. 16-499, 2016 WL 6069100 (U.S. Oct. 5, 2016), at *i.
  6. Kiobel II, 569 U.S. at 114; see also, Note, Clarifying Kiobel’s “Touch and Concern” Test, 130 Harv. L. Rev. 1902, 1904 (2017) https://harvardlawreview.org/2017/05/clarifying-kiobels-touch-and-concern-test/.
  7. 28 U.S.C. § 1350 (2012).
  8. Sosa v. Alvarez-Machain, 542 U.S. 692, 714, 124 S. Ct. 2739, 2755, 159 L. Ed. 2d 718 (2004) (stating the ATS “was intended” to be purely “jurisdictional in the sense of addressing the power of the courts to entertain cases concerned with a certain subject,” namely, either a violation of the law of nations or a treaty of the United States.
  9. 630 F.2d 876 (2d Cir. 1980).
  10. Id. at 878.
  11. Id.
  12. Id. (“The appellants contend that on March 29, 1976, [their son] was kidnapped and tortured to death by [the defendant], who was then Inspector General of Police in Asuncion, Paraguay. . . . The Filartigas claim that Joelito was tortured and killed in retaliation for his father’s political activities and beliefs.”).
  13. See Amy Howe, An introduction to the Alien Tort Statute and corporate liability: In Plain English, SCOTUSblog (Jul. 24, 2017, 10:57 AM), http://www.scotusblog.com/2017/07/introduction-alien-tort-statute-corporate-liability-plain-english/.
  14. 542 U.S. 692 (2004).
  15. Id. at 729.
  16. Id. at 724.
  17. Id. at 725.
  18. See Id.; see also 61 A.L.R. Fed. 2d 171 (Originally published in 2012) (“It is important to note that Sosa took a narrow view of the scope of liability under the ATS” requiring any claim based on present-day law of nations to “rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18th-century paradigms, offenses against ambassadors, violations of safe conduct and piracy, that Congress had in mind when it enacted the ATS”).
  19. 569 U.S. 108 (2013).
  20. Id. at 111–12 (“Petitioners, a group of Nigerian nationals residing in the United States, filed suit in federal court against certain Dutch, British, and Nigerian corporations. Petitioners sued under the Alien Tort Statute, 28 U.S.C. § 1350, alleging that the corporations aided and abetted the Nigerian Government in committing violations of the law of nations in Nigeria.”). Cases that deal with foreign plaintiffs suing foreign defendants for alleged conduct that occurred on foreign soil are often referred to as “foreign cubed” cases. See Oona Hathaway, Kiobel Commentary: The door remains open to “foreign squared” cases, SCOTUSBLOG (Apr. 18, 2013, 4:27 PM), http://www.scotusblog.com/2013/04/kiobel-commentary-the-door-remains-open-to-foreign-squared-cases/ (stating that “[f]oreign cubed cases—cases in which there is a foreign plaintiff suing a foreign defendant for acts committed on foreign soil—are off the table” after Kiobel) (internal quotations omitted).
  21. Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 145 (2d Cir. 2010), aff’d on other grounds, 569 U.S. 108 (2013) [hereinafter Kiobel I] (“Because corporate liability is not recognized as a ‘specific, universal, and obligatory’ norm, . . . it is not a rule of customary international law that we may apply under the ATS. Accordingly, insofar as plaintiffs in this action seek to hold only corporations liable for their conduct in Nigeria (as opposed to individuals within those corporations), and only under the ATS, their claims must be dismissed for lack of subject matter jurisdiction.”) (quoting Sosa v. Alvarez-Machain, 542 U.S. 692, 748 (2004)).
  22. See id. at 124–25; see also Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 268–72 (2012) (discussing the Extraterritoriality Canon and stating there is common presumption that statutes passed by a legislature are understood to apply within a territorial limit); EXTRATERRITORIAL, Black’s Law Dictionary (10th ed. 2014) (stating extraterritorial means “[o]ccurring outside a particular state or country; beyond the geographic limits of a particular jurisdiction”); JURISDICTION, Black’s Law Dictionary (10th ed. 2014) (stating extraterritorial jurisdiction is “[a] court’s ability to exercise power beyond its territorial limits”).
  23. Kiobel II, 569 U.S. at 124–25. For a helpful summary of the case and its holding, see Kiobel v. Royal Dutch Petroleum, Oyez, https://www.oyez.org/cases/2011/10-1491 (last visited Feb 4, 2018).
  24. Kiobel II, 569 U.S. at 125 (“Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices.”).
  25. See In re Arab Bank, PLC Alien Tort Statute Litig., 808 F.3d 144, 151 (2d Cir. 2015), as amended (Dec. 17, 2015) (the Second Circuit affirmed their decision in Kiobel I regarding the ATS and corporate liability “despite our view that Kiobel II suggests that the ATS may allow for corporate liability and our observation that there is a growing consensus among our sister circuits to that effect. Indeed, on the issue of corporate liability under the ATS, Kiobel I now appears to swim alone against the tide”).
  26. See In re Arab Bank, PLC Alien Tort Statute Litig., 822 F.3d 34, 41 (2d Cir. 2016) (Judge Pooler, dissenting) (stating that their decision in Kiobel I is “almost certainly incorrect but continues to maintain a needless circuit split with every other circuit to address the question of whether corporations may be held civilly liable under the [ATS]”); Flomo v. Firestone Nat. Rubber Co., LLC, 643 F.3d 1013, 1017 (7th Cir. 2011) (noting Kiobel I is an outlier and listing cases from the D.C., Eleventh, Fifth, Ninth and even the Second (pre-Kiobel I) that hold or assume corporations may liable under the ATS);
  27. Brief for Petitioners at 9, Jesner v. Arab Bank, PLC, No. 16-499, 2017 WL 2687507 (U.S. June 20, 2017), at *9.
  28. In re Arab Bank, PLC Alien Tort Statute Litig., 822 F.3d 34, 35 (2d Cir. 2016) (denying an en banc hearing and stating the Second Circuit “grudgingly rejects plaintiffs’ claim as barred by” Kiobel I “which held that customary international law” as enforced by the ATS “does not regulate corporate conduct” and the judges are “constrained unhappily to follow it”).
  29. Petition for a Writ of Certiorari at i, Jesner v. Arab Bank, PLC, No. 16-499, 2016 WL 6069100 (U.S. Oct. 5, 2016), at *i; Jesner v. Arab Bank, PLC, 137 S. Ct. 1432 (2017) (granting the petition for writ of certiorari).
  30. Brief for Petitioners at 15, 17–25, Jesner v. Arab Bank, PLC, No. 16-499, 2017 WL 2687507 (U.S. June 20, 2017), at *15, 17–25.
  31. Brief for Petitioners at 15, 20–21, Jesner v. Arab Bank, PLC, No. 16-499, 2017 WL 2687507 (U.S. June 20, 2017), at *15, 20–21.
  32. Id. at 18–19, *18–19 (“Corporate liability has always been one of the bedrock principles that attaches to tort actions. . . . In fact, the rule that tort actions presumptively may be brought against corporations has become “so well settled as to not require the citation of any authorities in its support.’”) (quoting Balt. & Potamac R.R. Co. v. Fifth Baptist Church, 108 U.S. 317, 330 (1883)).
  33. Id. at 24, *24.
  34. Id. at 25, *25.
  35. Id. at 26, *26.
  36. Brief for Respondents at 14–15, Jesner v. Arab Bank, PLC, No. 16-499, 2017 WL 3668990 (U.S. Aug. 21, 2017), at *14–15.
  37. Id. at 22, *22.
  38. Id. at 18, *18 (“There are a number of readily available grounds to affirm. Most obviously, as the United States explains, petitioners’ claims are barred by Kiobel II. … Under Kiobel II, it should be clear that this case does not touch and concern the United States.”).
  39. See Amy Howe, Argument analysis: Corporate liability for violations of international law on shaky ground, SCOTUSblog (Oct. 11, 2017, 3:01 PM), http://www.scotusblog.com/2017/10/argument-analysis-corporate-liability-violations-international-law-shaky-ground/.
  40. See, e.g., John M. Broder, Vindication for Maligned Lawyer in Justices’ Decision, N.Y. Times, June 29, 2012, http://www.nytimes.com/2012/06/30/us/in-health-ruling-vindication-for-donald-verrilli.html; Adam Liptak, Are Oral Arguments Worth Arguing About?, N.Y. Times, May 5, 2012, http://www.nytimes.com/2012/05/06/sunday-review/are-oral-arguments-worth-arguing-about.html.
  41. Brief for Respondents at 52, Jesner v. Arab Bank, PLC, No. 16-499, 2017 WL 3668990 (U.S. Aug. 21, 2017), at *52.
  42. Id.
  43. Id. at 51–55, *51–55 (discussing the alleged conduct in Kiobel and comparing it to the alleged conduct in Jesner).
  44. Reply Brief for Petitioners at 19, Jesner v. Arab Bank, PLC, 2017 WL 3977222 (U.S. Sep. 8 2017), at *19.