After Kiobel, extraterritoriality is not a question of subject matter jurisdiction under the Alien Tort Statute – and neither is corporate liability

(Marco Simons is Legal Director of EarthRights International.  He is a graduate of Yale Law School, where he received the Robert L. Bernstein Fellowship in International Human Rights.)

The Supreme Court issued its decision in Kiobel v. Royal Dutch Petroleum a few weeks ago, and it has raised more questions than it has answered. Commentators and scholars have puzzled over what the Court did and what it means – all we really know is that the Court did not expressly rule on whether corporations could be sued for human rights abuses under the Alien Tort Statute (ATS) (the original question certified), and only began to elaborate under what circumstances an ATS suit could be brought for injuries arising in a foreign country (the question certified for reargument).

As to the extraterritoriality question, the Court held that some sort of presumption against extraterritoriality applied to ATS claims. Unlike the usual application of such presumptions, however, the Court did not suggest that this meant that no claims arising in foreign countries could be heard. Instead, the Court’s five-justice majority said that claims needed to be assessed on the basis of the extent to which they “touch and concern” the United States, and that where the only connection to the U.S. is the “mere corporate presence” of a foreign multinational, that is insufficient to allow an ATS claim to proceed.

This raises an interesting question of how this presumption is being applied. As the Supreme Court ruled in Sosa v. Alvarez-Machain, the ATS is a purely jurisdictional statute – claims under the statute come from federal common law. Ordinarily, the presumption against extraterritoriality does not apply to jurisdictional provisions; it only applies to substantive provisions. So Kiobel did not decide that the ATS is not an extraterritorial statute – it decided that the presumption against extraterritoriality applies to claims brought under the ATS.

Support for this conclusion is found in several places in the Kiobel majority opinion. Chief Justice Roberts did not expressly state that the presumption against extraterritoriality applied to the ATS, but rather that “the principles” underlying the presumption “constrain courts considering causes of action that may be brought under the ATS.” And the concluding section of the opinion further suggests that the presumption will be applied on a case-by-case basis: “[W]here the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.”

As far as I know, that’s different from all prior applications of the presumption against extraterritoriality; it’s a new presumption created for the ATS and assessed for each claim at issue. It’s fact-dependent. And it should be understood to not be a question of subject matter jurisdiction, but, in the words of Sosa, a question of whether the courts should “recognize certain causes of action” in particular cases. This confirms what Howard Wasserman argued in his post after the argument – that none of this is about jurisdiction at all, but “that all of these arguments about the scope and application of federal common law are, properly, arguments about the merits of the claim.”

Why does this matter? It’s more than just a question of whether motions challenging extraterritoriality of ATS claims are filed under Rule 12(b)(1) or 12(b)(6). It also raises questions of the viability of the Second Circuit’s decision in Kiobel, finding no corporate liability. This requires a bit of explanation.

If Kiobel extraterritoriality is a question of the scope of the cause of action, then the Supreme Court necessarily, if implicitly, determined that jurisdiction was present in Kiobel. This follows from the decision in Steel Co. v. Communities for a Better Environment, in which the Court rejected the notion that it could decide the cause of action before subject matter jurisdiction. (Other threshold issues – such as forum non conveniens – can be decided before jurisdiction in some cases, but not the cause of action.)

But the Second Circuit’s decision was not about the scope of claims brought under the ATS; it was that the ATS “simply does not confer jurisdiction over suits against corporations.” If my analysis of Kiobel is correct, then the Second Circuit’s decision cannot be – because the Supreme Court could not have reached the extraterritoriality issue without assuring itself of its own jurisdiction.

Thus, despite the fact that the majority opinion professed not to decide the corporate liability issue, it implicitly rejected the Second Circuit’s analysis. (This is further supported by majority’s statement that “mere corporate presence” is an insufficient connection to allow an ATS claim, which obviously assumes that there is jurisdiction to hear cases against corporations.) The Supreme Court affirmed the judgment of dismissal, but undermined the reasoning that dismissal was based on a lack of subject matter jurisdiction.

The Second Circuit’s decision on corporate liability remains an outlier, with four other circuits ruling that corporations can be sued. And the Second Circuit will soon have an opportunity, in several cases, to revisit this question. Of course, the court could always take the issue en banc and resolve the circuit split. But it probably doesn’t need to. Since the Supreme Court’s decision is inconsistent with the notion that courts lack jurisdiction to hear ATS claims against corporations, any panel of the Second Circuit could – and probably should – disregard that court’s prior decision in Kiobel.

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9 Responses

  1. Orin Kerr says:

    You write:

    If Kiobel extraterritoriality is a question of the scope of the cause of action, then the Supreme Court necessarily, if implicitly, determined that jurisdiction was present in Kiobel. This follows from the decision in Steel Co. v. Communities for a Better Environment, in which the Court rejected the notion that it could decide the cause of action before subject matter jurisdiction.

    I don’t follow. How can a Supreme Court decision on one subject implicitly rule on a different subject based on a case that wasn’t mentioned or cited?

  2. Marco Simons says:

    I am not suggesting that the Supreme Court decided the question of whether corporations can be sued for their complicity in human rights abuses under the ATS. But if extraterritoriality is a question of the scope of the claim and not jurisdiction, then the Court necessarily did decide – if only implicitly – that the Second Circuit was wrong in concluding that the ATS provides no jurisdiction in a case such as Kiobel. While the Court has sometimes said that an assumption of jurisdiction where the question is not argued should not be taken as precedential, this isn’t such a case – the very decision below said there was no jurisdiction, so the issue wasn’t merely lurking in the record. And the principle of Steel Co. is a basic principle that is always on the minds of the justices – that jurisdiction comes before the cause of action.

  3. Joshua says:

    I think the problem with this statute is how it clearly speaks in terms of jurisdiction and ties that jurisdiction directly to what is or is not customary under international law. After Sosa’s “strictly jurisdictional” yet quasi-substantive holding, there seems to be something of a feedback loop with how these two aspects of the statute should work with one another.

    At the end of the day, though, Kiobel will probably not be read to have rejected the Second Circuit’s corporate non-liability holding. Looking at the procedural record of how the Court took up the foreign-cubed issue and specifically chose not to address the Second Circuit’s reasoning should signal to lower-court judges that anything in Kiobel that may inferentially touch upon corporate liability would be, at best, dicta.

    The real difficulty here is how they just don’t make jurisdictional statutes like they used to–probably for good reason.

  4. Orin Kerr says:

    I appreciate the response, Marco, but I’m unpersuaded. The Court only decided the issue before it: It didn’t implicitly decide anything that wasn’t mentioned or even argued. The notion that the other issue was implicitly decided because it must have been on the minds of the Justices strikes me as weak. First, the Justices are generalists who often don’t know or remember the basic principles of law immediately outside the specific case they are deciding. Second, even if one or more of them were thinking of the issue, I don’t see how that possibility changes the meaning of the published opinion that doesn’t mention the issue.

  5. Howard Wasserman says:

    Orin: Is it fair to say that the logic of Kiobel means corporate liability is non-jurisdictional, because the question of “who” is liable is logically merits-based in the same way as the question of “for what” he is liable?

  6. Marco Simons says:

    Joshua: Back in the day, before Sosa, many courts did take the view that the cause of action was basically coextensive with jurisdiction under the ATS – that there was no jurisdiction if there wasn’t a viable cause of action. But this has not been the dominant view since Sosa clarified that the ATS is jurisdictional only and the cause of action comes from federal common law; for example, in Doe v. ExxonMobil, the court held that “the question here is not whether the ATS applies extraterritorially but is instead whether the common law causes of action that federal courts recognize in ATS lawsuits may extend to harm to aliens occurring in foreign countries.” Obviously the Supreme Court came to a slightly different answer to this question than the DC Circuit did, but I think the framing of the question is consistent with Kiobel.

  7. Joshua says:

    Thanks very much for your reply and explanation, Marco.

  8. Alex K. says:

    Professor Kerr, if the issue of corporate liability as a jurisdictional matter were squarely addressed by the Kiobel court, there would be no need for a blog post about it. What Marco does is make a very convincing argument that the rationale of the Court’s decision does not comport with the Second Circuit’s holding that ATS jurisdiction does not extend to corps. (Practicing lawyers often make arguments about extending the law and filling in the gaps between the holdings of controlling cases.)

  9. Orin Kerr says:

    Alex K, is that what lawyers do? Who knew. But seriously, my point is just that I don’t find the argument convincing for the reasons I point out.