State Department files amicus favoring corporate liability

By Michael P. Tremoglie | Jan 23, 2012

WASHINGTON (Legal Newsline) - The U.S. Supreme Court soon will hear a key case on corporate liability.

The case -- Kiobel v. Royal Dutch Petroleum -- has two questions at issue.

They are:

* Whether corporate liability under the Alien Tort Statute is a merits question or a question of subject-matter jurisdiction.

* Whether a corporation can be held liable in a federal common law action brought under the Alien Tort Statue -- such as for violations of the law of nations such as torture, extrajudicial executions or genocide -- may instead be sued in the same manner as any other private party defendant under the ATS for such egregious violations.

The matter is a significant one because it can lead to a new wave of new litigation. It could be fertile ground for tort lawyers.

Indeed, the case, which will be heard Feb. 28, is so important that Solicitor General of the United States Donald B. Verrilli Jr. and Legal Adviser to the Department of State Harold Hongju Koh were co-signatories on an Amicus Brief in support of holding corporations liable for actions brought under the ATS.

The State Department declined to make a comment about their filing of an amicus brief for Kiobel. A spokesperson for State said the brief speaks for itself.

What the brief did say was that the interest of the U.S. government in this case is that the application of the ATS will have an effect on commercial relations and international law involving the US. The State Dept is also saying are corporations are amenable to be sued but they take no position on what the standard of liability should be.

It is worth noting that Koh, the former dean of the Yale University Law School was one of the prime movers of using the ATS to sue corporations, according to Pepperdine University law professor Donald B. Childress III.

Koh wrote in a 2004 article for the Journal of International Economic Law that many pundits, corporations and the Bush Administration were allied against human rights and environmental litigation against corporations using the Alien Tort Statute. He proceeded to try to disprove the arguments made against ATS litigation by arguing for a broad interpretation of the "aiding and abetting" liability of corporations for crimes that are committed by foreign nations in which those corporations are operating.

However, Tom Donohue, President and CEO of the U.S. Chamber of Commerce did issue a statement to the media last month.

"How can this Administration call for more growth and foreign investment, yet at the same time urge the Supreme Court to swing open our courthouse doors to foreign plaintiffs who want to sue companies for the acts of foreign governments on foreign soil?" Donohue said Dec. 22. "This is no time to encourage dubious new theories of liability against America's job creators.

"By submitting this "friend of the court" brief, the federal government is showing it is no friend of American business."

Donohue sent a letter to Secretary of State Hillary Clinton on Nov. 7 regarding this issue. He asked Clinton to have the State Department urge the Solicitor General to affirm the Second Circuit Court of Appeals opinion that the ATS does not confer U.S. jurisdiction over suits against corporations alleged to have violated the law of nations.

He went to say that international law and Supreme Court precedent support the idea that the ATS does not make corporations liable. Making them so would have a negative impact on global business and interfere with economic relations between the United States and other countries.

"These lawsuits hurt business in the United States and globally in three distinct ways," Donohue said. "First, mere allegations of human rights violations in ATS suits inflict greater financial and reputational damage to corporate defendants. Second, these costs, in turn, deter business activity abroad. Third the willingness of American courts to assume jurisdiction over these claims undermines the United States government's strategy of constructive engagement that has marked our economic relationship with much of the world for decades."

Donohue made it a point to say that the Chamber "unequivocally condemns human rights abuses." He concluded by requesting a meeting with Secretary Clinton.

Legal Newsline is owned by the Institute for Legal Reform, an affiliate of the Chamber.

Historically, the ATS was little used until the Center for Constitutional Rights, a lawyers' organization that has been criticized for its leftwing advocacy, used it in the 1980 Second Circuit Court of Appeals case of Filartiga v. Pena-Irala. This established the precedent whereby U.S. District courts could be used to sue by aliens for violations of international law or for treaties where the United States is a signatory.

The case involved Paraguayans who sued a Paraguayan police chief for torture committed in Paraguay. The parties came to the United States. While here the plaintiff sued and the Second Circuit found in their favor for ten million dollars.

Peter Weiss has been credited as the Center for Constitutional Rights who developed the idea of using the ATS for this purpose. Weiss is a vice president of the Center for Constitutional Rights and a Vice President of International Association of Lawyers Against Nuclear Arms.

There have been several previous cases where the ATS was used by foreigners to sue large corporations in the United States.

The World Organization for Human Rights filed suit against internet search engine Yahoo on behalf of some Chinese dissidents in 2007. Yahoo settled the case outside of court in November 2007.

Some Nigerian residents filed suit against Chevron Corp. in October 2008. The case went to trial in the U.S. District Court for Northern California. A jury exonerated Chevron in December 2008.

Some Colombians sued Coca Cola in August 2009. The U.S. District Court dismissed the complaint and the Eleventh Circuit Appeals Court upheld the dismissal.

The plaintiffs in many of these cases are often represented by advocacy groups. Common names seen in ATS actions are the Center for Constitutional Rights, World Organization for Human Rights, and Earthrights International.

What does this say about ATS actions? According to Childress, it says something unique about the American legal system.

"The US legal system creates incentives for private attorneys to find cases that will affect public policy," Childress said. "Public watchdog groups which are very well intentioned are looking to redress what they perceive as injustices. What is different here is that it is an international case and stretches the system of private attorneys beyond what was intended in the United States."

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