Bloomberg News

Companies Shielded as U.S. Court Cuts Human-Rights Suits

April 17, 2013

Companies Shielded as Top U.S. Court Cuts Human-Rights Suits

Chief Justice John Roberts said a company couldn’t be sued under the Alien Tort Statute simply because it had a “corporate presence” in the U.S. Photographer: Andrew Harrer/Bloomberg

The U.S. Supreme Court insulated multinational corporations from at least some lawsuits over atrocities overseas, scaling back a favorite legal tool of human-rights activists.

The justices threw out a suit accusing two foreign-based units of Royal Dutch Shell Plc (RDSA) of facilitating torture and executions in Nigeria. The majority said the 1789 Alien Tort Statute generally doesn’t apply to conduct beyond U.S. borders.

In the Shell case, “all the relevant conduct took place outside the United States,” Chief Justice John Roberts wrote for the court. The justices were unanimous on the outcome in the Shell case, while dividing in their reasoning.

The ruling may help a number of companies defeat similar lawsuits. Exxon Mobil Corp. (XOM:US), Cisco Systems Inc. (CSCO:US), Chiquita Brands International Inc. (CQB:US), Siemens AG, Daimler AG and Rio Tinto Group (RIO) are all fighting Alien Tort Statute claims.

Without specifically addressing those cases, Roberts said a company couldn’t be sued under the Alien Tort Statute simply because it had a “corporate presence” in the U.S.

He pointed to the “presumption against extraterritoriality,” saying that legal principle limits the reach of the Alien Tort Statute. The court’s four Democratic appointees -- Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan -- wrote separately to say they would have reached the same result using different reasoning.

Kennedy Opinion

Three other justices -- Anthony Kennedy, Samuel Alito and Clarence Thomas -- said in separate opinions that the ruling was a narrow one. Kennedy said the court “is careful to leave open a number of significant questions.”

Human-rights advocates say Alien Tort Statute suits let atrocity victims hold their perpetrators accountable. Alleged victims have invoked the law more than 150 times in the past 20 years.

“A majority of our highest court has chosen to make it easier for big corporations complicit in human-rights abuses to evade responsibility and vastly more difficult for their victims to get justice,” said Nan Aron, president of the Washington- based Alliance for Justice, in an e-mailed statement.

The suit before the high court was pressed by Nigerians who said two Shell units were complicit in torture and execution in the country’s Ogoni region from 1992 to 1995. Shell denies the allegations.

Shell Reaction

“Today’s decision doesn’t weaken the human rights of people around the world,” Shell’s legal director, Peter Rees, said in an e-mailed statement. “It makes it clear that the Alien Tort Statute does not provide a means for claims to be brought in the U.S. which have nothing to do with the U.S.”

Corporation lawyers said the ruling will wipe out the vast majority of Alien Tort Statute suits against companies.

“In terms of corporate liability, unless the underlying human-rights violation occurs in the United States, it’s not going to be possible to assert a claim under the standard the court has adopted,” said Andrew Pincus, a Washington lawyer at Mayer Brown LLP who represents Cargill Inc. in an Alien Tort Statute case.

Human-rights lawyers say cases involving U.S. corporations won’t necessarily be dismissed. Marco Simons, legal director of Earth Rights International in Washington, said a case accusing Cincinnati-based Chiquita of financing paramilitary death squads in Colombia, might still go forward.

Guilty Plea

Simons pointed to evidence that Chiquita’s board of directors was involved in the alleged wrongdoing and to the company’s 2007 guilty plea in U.S. court for paying protection money to Colombian terrorist groups.

“We think there’s a very strong likelihood that that case survives this decision,” Simons said.

Chiquita has said the claims are meritless and urged dismissal of the lawsuit. The company says a subsidiary paid money to ensure the safety of its employees.

“This decision is clearly a bad one for the plaintiffs’ lawyers suing Chiquita,” Tiffany Breaux, a spokeswoman for the company, said in an e-mail.

Roberts’s opinion didn’t explicitly say U.S. corporations could be sued, and suggested that they might be insulated, just like foreign companies.

“Even where 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,” the chief justice wrote. “Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices.”

Two Arguments

Breyer wrote separately to say he would allow lawsuits in several circumstances, including cases involving an American citizen as a defendant or a wrongdoing on U.S. soil. He also suggested that suits could go forward if the alleged perpetrator had taken refuge in the U.S.

The justices heard arguments twice in the case, first in their 2010-11 term on contentions that the Alien Tort Statute doesn’t permit suits against corporations.

The court then expanded its review, ordering re-argument in October on a potentially more sweeping question: whether the statute applies beyond U.S. borders. The court’s decision to focus on that question means its ruling may apply to corporate officers as well as the companies.

French Diplomat

The 33-word statute, enacted in 1789, was in part a reaction to an attack on a French diplomat in Philadelphia. The Alien Tort Statute then lay largely dormant for almost two centuries before being revived in the 1970s as a means of pressing human-rights lawsuits.

The pending Alien Tort Statute cases against other companies allege wrongdoing around the globe. Exxon is fighting claims that the company was complicit in murder, torture and sexual assault in Indonesia’s Aceh province.

Daimler’s Argentine Mercedes Benz unit is accused of collaborating with state security forces to kill and torture workers, while Siemens allegedly arranged the beating of a man who uncovered corruption in an Argentine government contract.

A lawsuit against Cisco contends the company aided human rights abuses in China by helping government officials gain access to private Internet communications and identify anonymous bloggers.

The Supreme Court case is Kiobel v. Shell Petroleum, 10-1491.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


Ebola Rising
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • XOM
    (Exxon Mobil Corp)
    • $92.86 USD
    • -1.19
    • -1.28%
  • CSCO
    (Cisco Systems Inc)
    • $25.03 USD
    • -0.14
    • -0.56%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus