Corporations and the Courts

  • March 5, 2012

    by Nicole Flatow

    A case that started out as potentially the most significant test of corporate personhood since Citizens United v. FEC may now be decided on other grounds.

    The U.S. Supreme Court has ordered another round of arguments in Kiobel v. Shell Petroleum, this time on the question of whether the 200-year-old Alien Tort Statute applies to human rights violations that occur outside the United States.

    The ATS and another related statute, the Torture Victim Protection Act, have been used to hold corporations accountable when they commit or are complicit in human rights abuses that include genocide, war crimes and forced labor.

    The Supreme Court initially granted review of Kiobel on the question of whether the corporate entities themselves could be held accountable.

    But as Bloomberg’s Greg Stohr points out, a ruling on the broader issue of whether U.S. courts can review actions arising elsewhere would “potentially impose more sweeping limits on lawsuits, shielding corporate officers as well as the companies themselves.”

  • February 28, 2012
    Guest Post

    By Susan Farbstein and Tyler Giannini, Associate Clinical Director and Clinical Director of Harvard Law School’s Human Rights Program. Farbstein and Giannini are co-counsel in two Alien Tort Statute cases and have submitted amicus curiae briefs in numerous others, including in support of the petitioners in Kiobel v. Royal Dutch Petroleum Co.

    Today, the U.S. Supreme Court hears the most important human rights case of the term. Kiobel v. Royal Dutch Petroleum Co. will determine the fate of corporate liability under the Alien Tort Statute (“ATS”), a 1789 law passed by the First Congress. The plaintiffs allege Shell’s complicity in killings and crimes against humanity committed in Nigeria during the 1990s. Now the Supreme Court must decide whether corporations who profit from human rights abuse are exempt from civil liability for these activities — even though natural persons are unquestionably liable for the same acts.

    The case has attracted a slew of amicus briefs and recent press coverage. On one side, those like John Bellinger, a former U.S. State Department Legal Advisor, argue for completely exempting corporations from suit under the ATS. On the other side are those like Ka Hsaw Wa, the Executive Director of EarthRights International, who notes the importance of these cases to survivors of corporate abuse, and Peter Weiss, the Vice President of the Center for Constitutional Rights, who rightly points out that total corporate immunity would give corporations more rights and legal protections than people.

    The debate stems from a 2010 Second Circuit Court of Appeals decision, which held that people could be sued under the ATS, but corporations could not. That ruling broke with more than a decade of jurisprudence in which numerous courts had repeatedly found or assumed that corporations could be sued under the statute.

    Mr. Bellinger asserts that because the alleged violations often take place abroad, corporate ATS cases should not be allowed in U.S. courts. Corporations, however, routinely answer in U.S. courts for their activities overseas, whether in contract cases or run-of-the-mill product liability claims. And when there is a better forum to hear a case, defendants can — and do — request that the case be moved. Yet under Mr. Bellinger’s view even when there is no alternate forum, a suit still should not be allowed to proceed here against U.S.-based corporations. He would deny survivors of human rights abuses even this last resort. 

  • February 23, 2012
    Guest Post

    By John Knox, a law professor at Wake Forest University School of Law and a member scholar at the Center for Progressive Reform. This commentary is cross-posted at CPRBlog.

    On February 28, the Supreme Court will hear argument in Kiobel v Royal Dutch Petroleum, a case with far-reaching implications for efforts to hold corporations accountable when they commit or are complicit in abuses of human rights. 

    For over fifty years, Shell has extracted oil from Nigeria, causing great harm to the environment and people of the Niger delta. The Ogoni people living in the delta protested Shell’s operations, and in response the Nigerian government harshly oppressed them. Most infamously, in 1995 it executed the author Ken Saro-Wiwa, together with eight other leaders of the protests.     

    Esther Kiobel, the widow of one of the executed men, as well as other affected Ogoni, sued Shell in U.S. federal court, claiming that it aided and abetted the Nigerian government in its violations of human rights law. The plaintiffs relied on the Alien Tort Statute (ATS), a law enacted by the First Congress, in 1789, which gives federal courts jurisdiction over claims by aliens arising from torts committed in violation of international law. In 2004, in Sosa v Alvarez-Machain, the Supreme Court affirmed that the ATS still provides jurisdiction for international tort claims, but it cautioned federal courts not to recognize claims “for violations of any international law norm with less definite content and acceptance among civilized nations than the historical paradigms” familiar when the law was enacted. As an example of such a historical paradigm, the Court cited the long-standing prohibition against piracy. 

    Foreign plaintiffs have used the ATS to accuse corporations of committing grave human rights abuses, including genocide, war crimes, and forced labor.  A few of the suits have resulted in payments, including a 2009 settlement by Shell of another claim arising from its Nigerian operations. In 2010, however, the Second Circuit Court of Appeals rejected Esther Kiobel’s claim on the sweeping ground that corporations could never be liable for violations of customary international law, because customary international law never imposes any obligations on corporations. In short order, the Seventh, Ninth, and D.C. Circuits rejected the Second Circuit decision, holding that plaintiffs can sue corporations under the Alien Tort Statute. 

    Last fall, the Supreme Court granted certiorari to review the Second Circuit decision. Its ruling will be its first ATS decision since Sosa, and it will determine whether the many other pending ATS suits against corporations may continue. It’s possible that the Court will decide the case on grounds that allow it to avoid addressing corporate duties under international law. But if the Supreme Court does take on international law, as seems likely, what should it decide? Is the Second Circuit correct that international norms do not prohibit corporate abuses of human rights? 

  • October 21, 2011
    Guest Post

    By Marco Simons, Legal Director for EarthRights International.

    This week, the Supreme Court agreed to hear a case about whether a corporation can be sued, on the same basis as a human being, for its complicity in gross human rights abuses such as crimes against humanity and torture. The case, Kiobel v . Royal Dutch Petroleum, arises out of a military crackdown on Ogoni communities in the Niger Delta in the mid-1990s, which Shell Oil allegedly abetted.

    Among these abuses were the execution of Dr. Barinem Kiobel, an Ogoni leader, alongside other Ogoni activists including renowned environmentalist Ken Saro-Wiwa. Shell allegedly bribed witnesses to give false testimony against the executed leaders.

    Kiobel arises under the Alien Tort Statute (ATS), a federal law that allows the federal courts to hear cases brought by foreigners for violations of international law, including international human rights law. Courts have repeatedly allowed ATS cases for abuses such as torture, extrajudicial killings, war crimes, crimes against humanity, slavery, and genocide.

    Until recently, no federal court had ever questioned that corporations have the same responsibilities under international law as human beings do.

  • October 14, 2011

    by Nicole Flatow

    This week, the U.S. Supreme Court heard oral argument in a case about whether a consumer protection law that explicitly says “you have a right to sue” can be overridden by the fine print in a credit card contract.

    The case, in which plaintiffs are challenging hidden fees of as much as $257 on a card with a $300 limit, is the latest to test individuals’ ability to hold corporations accountable in the courts.

    Over the past few years, several important decisions have limited that right. In Wal-Mart v. Dukes, the court limited the scope of class actions in discrimination cases. In AT&T Mobility v. Concepcion, the court upheld a provision prohibiting class action lawsuits in a phone service contract. And in Ashcroft v. Iqbal and Bell Atlantic Corps v. Twombly, the court made it more difficult to initiate a civil lawsuit in court.

    But these are just a few of the decisions in which the Supreme Court has empowered corporations through “seemingly small” procedural rulings, explains Alan B. Morrison in his new ACS Issue Brief, “Saved by the Supreme Court: Rescuing Corporate America.” In fact, “[s]ince the late 1980s, on almost every occasion where big corporations have had a case of major significance in the High Court, the Court has ruled in their favor.” He explains: