Pirates of the Corporation

Let’s play make-believe (sorry, lawyers call it “counterfactual”) with Justice Stephen J. Breyer. Imagine that Edward Teach, known as Blackbeard, had incorporated his buccaneering business as Pirates, Inc. Now Blackbeard is captured.

And sued. “Do you think in the 18th century if they'd brought Pirates, Incorporated [to court], 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. Good-bye. Go home[?]”

Kathleen Sullivan, the lawyer for the Royal Dutch Petroleum Company, did not flinch: “Justice Breyer, yes, the corporation would not be liable.” She helpfully added that under maritime law, Blackbeard’s victims could sue his ship and get its value. But as for the corporation, no.

A few minutes later, Breyer was back. “What about slavery? ... That seems like contrary to international law norms, basic law norms, it could be committed by an individual. And why, if it could be committed by an individual, could it not also be committed by a corporation in violation of an international norm?”

Sullivan replied that corporate liability would have to be established by a specific rule of international law. “There is no international norm applicable to corporations for violations of the human rights offenses” in the case before the Court, she said.

Nothing daunted, Breyer returned with a question about the very worst offenses under international law: “Could you not say, where an action is forbidden by the international law, and it is punishable ... by all laws of God and man, in such a circumstance there being no reason to deny corporate liability here, [should] we interpret the Federal common law to permit that remedy?”

No, Sullivan said. “The law of nations is uniform. It rejects corporate liability. It rejects corporate liability.”

You begin to see how argument went Tuesday in the case of Kiobel v. Royal Dutch Petroleum, in which a Shell subsidiary stood accused of helping the Nigerian government execute and torture members of the country's Ogni minority. Having won a sweeping victory in the court below, Royal Dutch Petroleum didn’t want to give any of it back. “We do not urge a rule of corporate impunity here,” Sullivan said. Then she laid out a rule of corporate impunity: “Corporate officers are liable for human-rights violations and for those they direct among their employees.” But corporations can’t be sued in federal courts for violations of human rights.

Kiobel is a closely watched case about international human-rights law in American courts; the oral argument drew so many top human-rights lawyers (including the president of the European Court of Human Rights) that an onlooker thought he was at a Secret Policeman’s Ball. At issue was whether the Alien Tort Statute (ATS), passed in 1789, gives U.S. courts jurisdiction to hear the case against Royal Dutch Petroleum.

The ATS, as it is called, is cryptic: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”  As Paul Hoffman, the lawyer for the Nigerian plaintiffs, noted in his argument, the statute sets out who the plaintiff must be (an alien) and what the claim must be (a tort in violation of international law). It doesn’t say who the defendant has to be—or can’t be.

In Kiobel, the Second Circuit Court of Appeals dismissed the plaintiffs’ case for the broadest possible reason. International law, it said, never allowed a federal lawsuit against a corporation for international-law violations (as opposed to violations of domestic law). That issue appeared more or less out of the sun; the District Court had made a preliminary decision that some of the plaintiffs’ claims were permitted under the ATS and others were not. The parties then took a special expedited appeal to the Second Circuit on the issue of the sufficiency of the claims. But without warning—or asking for briefs—the Second Circuit panel held that it had no jurisdiction over the case because no ATS case against a corporation could ever be heard. That’s the issue in front of the Supreme Court now. Judge Pierre N. Leval concurred in the result—he said the plaintiffs had not pleaded their claims in enough detail. But he bridled at the majority’s new rule:

The majority opinion deals a substantial blow to international law and its undertaking to protect fundamental human rights. According to the rule my colleagues have created, one who earns profits by commercial exploitation of abuse of fundamental human rights can successfully shield those profits from victims' claims for compensation simply by taking the precaution of conducting the heinous operation in the corporate form.

Other Courts of Appeals have rejected blanket corporate immunity, and the U.S. government joined with Kiobel and the other plaintiffs in asking the Court to reject the Second Circuit ruling.

Justice Elena Kagan seemed skeptical of Sullivan’s argument. Sullivan kept insisting that no convention, no adjudicated case, no doctrine supported corporate liability. Kagan called her back to a point made by Hoffman—that the international human-rights norms forbid acts such as torture or slavery; they don’t necessarily spell out all possible defendants. “It's as if somebody came and said ... this norm of international law does not apply to Norwegians. And ... there's no case about Norwegians. And it doesn't specifically say ‘Norwegians.’ But, of course, it applies to Norwegians because it prevents everybody from committing a certain kind of act.” Sullivan responded that since international law forbids corporate liability, there wouldn’t be the same ambiguity as with the Norse.

Judging from the justices’ questions, the outlook seems to be for a 5-4 decision, and probably good news for Royal Dutch Petroleum. (Justice Anthony Kennedy’s questions quoted verbatim from the company’s brief.) The Court seems unlikely to go as far as Sullivan wanted it to, but there are many other grounds on which the Court could uphold the result without embracing blanket corporate immunity.

Now, again at the behest of Justice Breyer, let’s play (not making this up) cricket. Mohamad v. Palestinian Authority raised a similar question about a different statute. In 1991, Congress became concerned that the courts were going to read the ATS to prevent all human-rights suits. It passed (over executive opposition), the Torture Victim Protection Act (TVPA), which says that “an individual who, under actual or apparent authority, or color of law, of any foreign nation ... subjects an individual to torture ... or  subjects an individual to extrajudicial killing” can be sued in federal court by “that individual ... the individual's legal representative, or … any person who may be a claimant in an action for wrongful death.”

Azzam Rahim, a naturalized American citizen born in Palestine, visited his home in the West Bank in 1995, not long after the beginning of self-rule there by the Palestinian authority (PA). He was immediately kidnapped by PA security agents. When his body was returned, it bore marks of torture. A U.S. government report concluded that he had been held in a PA prison and tortured to death there. His widow and sons have sued the Palestinian Authority under the TVPA. The question before the Court Wednesday was whether the PA, which is not a sovereign government but is also not a “natural person,” is “an individual” of the type that can be sued under the TVPA.

Early in the argument, Justice Breyer had a warning for Jeffrey Fisher, co-director of the Stanford Law School Supreme Court Litigation Clinic: “I have to say that you are on a weak wicket.” Fisher spent the rest of his time dodging googlies; he cut manfully at the ball, but was unable to drive. He argued that the word “individual” has a special meaning in international law—“anyone but the state.” (The PA, thus, not being a state, would be covered by the TVPA.) Fast-bowling was Justice Kagan, who said, “It’s obvious that "individual" doesn’t usually mean what you want it to mean.” Another spinner was hurled by Justice Scalia: “If Congress wanted "individual" to mean what you say it doesn’t mean, what word would they have used instead? I mean, if individual is a code word for person, what’s the code word for individual?” Chief Justice Roberts, who throws right at the wicket when words are involved, protested that “your reading gives a different meaning to ‘individual’ in two sentences that are right ... actually it’s in the same sentence.”

Laura G. Ferguson, arguing for the PA, had a considerably easier innings: The point of TVPA, she said, was to cover cases like Filartiga v. Peña-Iralta, in which a Paraguayan family living in Washington, D.C., discovered that the former secret policeman who had tortured and killed their son in Paraguay had moved to Brooklyn. So “individual,” she reasoned, meant, well, “individual” as in an individual like the secret policeman. Curtis Gannon, arguing for the government in support of the PA, seconded that argument: “The paradigm they were thinking about was the torturer who is found in the United States who is—who is walking on the streets. There is an individual moral accountability that—that everybody understood needed to happen there.”

Torture, it seems, is an individual matter. Justice Sotomayor gave the ball a cynical spin when she asked Ferguson, “So it's OK to keep out individuals who subject others to torture, but corporations, we want their money so they should invest here, because we're going to protect them from liability for people that they torture?”

The underlying disputes these cases present are agonizing. But the cases turn on issues that non-lawyers hate: questions of jurisdiction and statutory interpretation. The Court’s moral sense, such as it is, is probably not enough to overcome the words of the statute. The betting in Mohamad was a unanimous verdict for, of all parties, the Palestinian Authority.

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