Wednesday, November 24, 2010

Supreme Court next?  Courts of appeals rule corporations not liable under alien tort, torture victim statutes
Joseph G. Finnerty III; Anthony Paul Coles; Barbara L. Seniawski

Two US appellate courts have addressed whether corporations may be named as defendants under the Alien Tort Statute and the Torture Victims Protection Act. Each court determined that corporations cannot be held liable under the statutes, a significant narrowing of the scope of claims that plaintiffs can assert both directly and on vicarious liability theories.

The Alien Tort Statute provides alien plaintiffs subject matter jurisdiction in federal courts to sue defendants for violations of the “law of nations” – essentially, egregious human rights abuses – or violations of a treaty of the United States. The Torture Victims Protection Act provides a cause of action for any plaintiff for torture and extrajudicial killing, but does not grant subject matter or personal jurisdiction.

Kiobel v. Royal Dutch Petroleum Co. (2nd Cir. Sept. 17, 2010)

In this case, the Second Circuit limited jurisdiction to suits against individuals, not corporations, under the Alien Tort Statute, 28 U.S.C. § 1350 (ATS). Nigerian residents living in that country’s Ogoni region sued Royal Dutch Petroleum Company, alleging that the company had aided and abetted human rights abuses against them in 1993 and 1994. According to plaintiffs, Royal Dutch enlisted the Nigerian military forces to suppress Ogoni resistance to Royal Dutch’s activities in the region. The military suppression is alleged to have included extrajudicial killings, beatings, rapes and arrests of residents.

The Second Circuit held that “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.” However, recourse may be sought against the individual persons who allegedly perpetrated abuses in violation of the law of nations, including corporate employees, managers, officers and directors, each of whom clearly is within the jurisdiction of the ATS.

Bowoto v. Chevron Corp. (9th Cir. Sept. 10, 2010)

In this case, the Ninth Circuit has held that individuals, but not corporations, can be held liable under the Torture Victims Protection Act, 28 U.S.C. § 1350 (TVPA). The case arose from violence inflicted by the Nigerian Government Security Forces (GSF) after a group of Nigerians took over the Parabe oil platform to protest Chevron Nigeria Limited’s alleged destruction of the environment and its refusal to employ the local population. On the fourth day of the protest, Chevron asked the GSF to end the protest. During those efforts, the GSF fired into the group of protestors, killing two.

Nigerian citizens then sued Chevron in California District Court, alleging violations of the TVPA, Nigerian law and California law. Regarding the TVPA claim, the court held that Chevron could not be held liable under the TVPA because it is a corporation. The court affirmed the district court’s holding and stated “[e]ven assuming the TVPA permits some form of vicarious liability, the text limits such liability to individuals, meaning in this statute, natural persons. The language of the statute thus does not permit corporate liability under any theory.” This decision does not impair a plaintiff’s established right to allege a TVPA claim against natural persons, as opposed to juridical entities, including corporate employees, managers, officers and directors.

Contrast among circuits foretells Supreme Court review

In contrast, case law in the Eleventh Circuit (the only other circuit-level court to address the issue of corporate liability) holds that corporations may be held liable under each of the ATS and TVPA. Because the recent decisions conflict with Eleventh Circuit law, the issue of corporate liability under either of the ATS and TVPA is ripe for Supreme Court review.