Supreme Court Appears Divided on Whether to Grant Corporations Immunity From Human Rights Suits

March 5, 2012

On Feb. 28, I watched the Supreme Court hearing in Kiobel v. Royal Dutch Petroleum, which will decide whether corporations can be sued under the Alien Tort Statute (ATS), a law that allows suits in federal courts for violations of international law. After reading some of the media reports on the argument, I can’t help but wonder if these reporters were in the same court as I was.

Several news stories and blog posts suggest that the Supreme Court is prepared to grant corporations immunity from human rights lawsuits. That was not a conclusion I thought could be easily drawn after the hearing. How will the Court actually rule? I don’t know, but it looks to me like a close vote. As usual, it may come down to Justice Kennedy.

In the Sosa case in 2004, the Supreme Court already ruled that the ATS, which was enacted in 1789, allows cases for egregious human rights violations — Justice Kennedy was part of the 6-3 majority that allowed for victims of abuses to sue perpetrators in U.S. court. In Kiobel the Court will consider whether corporations have any liability when they participate in abuses like torture, slavery and murder. The case involves allegations that the Shell oil company conspired with and abetted the Nigerian military in torturing and killing ethnic Ogoni activists who opposed Shell’s activities in the Niger Delta.

Justices Ginsburg, Breyer, Sotomayor, and Kagan all suggested that they saw no reason to grant a blanket immunity to corporations for human rights abuses. Kathleen Sullivan, who argued the case for Shell, dodged some questions and five times simply said “we disagree” in response to queries from these Justices. (The transcript of the hearing is available on the Supreme Court’s website.)

Justice Kagan, in particular, peppered Sullivan with questions about the proper approach to deciding the corporate liability question. Sullivan argued that corporations could only be sued if international law affirmatively provided some rule about holding corporations liable, but Kagan wasn’t buying it: “[T]he question of who can sue is a remedial question,” said Kagan, and therefore decided according to U.S. law (which always allows suits against corporations), not international law.

Justice Breyer also highlighted the ridiculousness of Shell’s corporate immunity position: “Do you think in the 18th century if they’d brought Pirates, Incorporated, and we get all their gold, and Blackbeard gets up and he says, ‘Oh, it isn’t me; it’s the corporation!’ Do you think that they would have then said, ‘Oh, I see, it’s a corporation. Goodbye. Go home.'” His statement had its intended effect, causing enthusiastic laughter in the courtroom. Ignoring the fact that the audience, like Justice Breyer, found this proposition absurd, Sullivan answered, “Yes, your honor, the corporation would not be liable.”

Sullivan even admitted that a corporation could be a plaintiff under the ATS and therefore that it could get the benefits of the protections of international law, ­but suggested that it still wouldn’t have any responsibilities under international law.

By the end of her argument, Sullivan seemed to get wind of the possibility that many of the Justices were uncomfortable with blanket immunity for corporate human rights abuses. She tried to convince the Court that Shell did “not urge a rule of corporate impunity here,” because corporate officers and employees could still be sued. That doesn’t change the fact, of course, that corporate impunity is exactly what Sullivan was urging, because like Blackbeard’s gold, the corporate treasury would be off-limits to victims even if the corporation directly profited from human rights abuses.

Paul Hoffman , a good friend of mine who was my co-counsel on the seminal corporate ATS case Doe v. Unocal, gave an effective presentation for the Kiobel plaintiffs, but got some hostile questions from the more conservative Justices. Of course, I already agree with his arguments, but I thought he not only answered their questions, he was also able to make strong arguments during his responses.

Chief Justice Roberts and Justice Alito voiced concerns about extending the ATS to acts that occur outside the United States, even though that issue has not been addressed in the Kiobel case. They questioned Hoffman about why this case was in U.S. courts at all, and whether a similar case could be brought anywhere else in the world.

Hoffman stressed that this was not the issue before the Court, and that federal courts have lots of other doctrines that limit consideration of cases with no connection to the U.S. For example, the rules of personal jurisdiction only allow lawsuits against defendants who are present in the U.S. or who have substantial business here, and the doctrine of forum non conveniens allows a court to dismiss a case when there’s another country where the litigation would be more appropriately heard.

Neither Justice challenged Hoffman on the substance of the corporate liability issue. I must admit that I found it a bit frustrating that they asked so many questions about whether international cases should be heard at all in our courts, which has already been decided in Sosa. But this may signal that, while the Justices don’t particularly like these cases, they don’t think ruling against corporate liability is a defensible position.

The plaintiffs’ position was also aided by the U.S. government, which submitted a strong amicus brief rejecting corporate immunity. Deputy Solicitor General Edwin Kneedler also presented an effective argument for the government.

During Hoffman’s main argument, Justice Thomas was characteristically, and Justice Scalia was uncharacteristically, silent. They both dissented in the Sosa case, however, so it’s safe to assume that they are still hostile to the use of the ATS in human rights cases, including those against corporations.

So it appears that the decision may come down to Justice Kennedy’s views. As is often the case, it’s hard to predict his vote from what he said. On the one hand, his first question was whether international law recognizes corporate liability for the abuses at issue. Hoffman spent much of his argument demonstrating that it does, and many of the briefs in the case were on that subject.

It is also important to note what Justice Kennedy did not ask. Kennedy did not say, as the Washington Post mistakenly reported, that “he did not think [the plaintiffs] could refute Shell’s argument that international law does not recognize corporate liability.” He quoted from Shell’s brief, which stated that international law did not recognize corporate responsibility, and then asked Hoffman to refute that proposition. Which, I think, Hoffman did, and did well.

I’ve read the transcript and looked at my notes to try to find some convincing indications of how this might turn out, and particularly how Justice Kennedy might vote. But for me, the most convincing moment in the argument, which cannot be lost on the other justices, was Justice Breyer’s example of Pirates Inc. This highlighted one of the most ridiculous potential outcomes should the Court side with Shell. Blackbeard and his corporate pirates get to roam the high seas, raping and pillaging as pirates are known to do. And since they’re a corporation, they get to do it — they’re above the law. If the Court rules for Shell, that’s precisely what it will mean: If you want to be shielded from liability for human rights abuses like genocide, torture and murder, all you have to do is form a corporation. If that’s the result, it won’t be funny at all. We’ll have to wait until June to find out.

Follow Katie Redford on Twitter: www.twitter.com/KatieRedford86

SOURCE