Last fall, a panel of the Ninth Circuit issued a sweeping decision in the long-running Alien Tort Statute suit against Rio Tinto rejecting Rio Tinto’s defenses on nearly every issue and prompting dissenting judges to accuse the majority of deciding that “we on the Ninth Circuit now exercise jurisdiction over all the earth, on whatever matters we decide are so important that all civilized people should agree with us.” The Rio Tinto decision is now pending cert before the Supreme Court.
But the Rio Tinto decision is only one of three recent Ninth Circuit decisions that, if allowed to stand by the Supreme Court, may make the Ninth Circuit a magnet for foreign plaintiffs to sue U.S. and foreign corporations for their actions in other countries, even where those actions have no nexus to the United States. Taken together, and as I describe below, the decisions — Bauman v. DaimlerChrysler, Carijano v. Occidental, and Sarei v. Rio Tinto — will make it easier for courts in the Ninth Circuit to gain personal jurisdiction over foreign corporations; harder for corporate defendants to have cases dismissed for forum non conveniens; and harder for defendants to assert other abstention doctrines such as exhaustion, act of state, political question, and international comity. The Ninth Circuit rulings conflict, however, with the arguments of the Obama Administration in its recent amicus brief in the Kiobel case and may invite reversal by the Supreme Court on many points.
In Bauman, a Ninth Circuit panel held in May 2011 that Daimler AG, a German parent company with no operations or employees in the United States, could be sued under the Alien Tort Statute and the Torture Victim Protection Act by a group of Argentine nationals for human rights abuses allegedly committed by an Argentine subsidiary in collaborating with the Argentine government during the “Dirty War” in the 1970s, solely on the basis that a different U.S. subsidiary now distributes Mercedes Benz vehicles in the United States. Applying an agency theory, the panel concluded that Daimler AG had sufficient contacts with the state of California by virtue of the actions of its subsidiary Mercedes Benz USA to give California personal jurisdiction overthe German parent , even though Mercedes Benz USA had no involvement with the alleged facts in Argentina.
Rejecting concerns expressed by German courts that allowing the suit to proceed in the U.S. would infringe on German sovereignty, the Ninth Circuit said that exercising jurisdiction would advance California’s policy of “providing a forum to redress violations of international law by defendants who have enough connections with the United States to be brought to trial on our shores, even though the injury is to aliens and occurs outside our borders.”
Last November, over the vigorous dissent of eight judges, the Ninth Circuit denied a rehearing. The dissent called the majority opinion “a breathtaking expansion of general personal jurisdiction” and a “gratuitous threat to our nation’s economy, foreign relations, and international comity.” Daimler has now petitioned for certiorari, and the Supreme Court will consider whether to accept the case at its conference on September 24. If allowed to stand, the Bauman decision may not only make it easier for foreign plaintiffs to sue many foreign corporations in California courts for the actions of their affiliates in other countries; it may also encourage other countries to assert reciprocal jurisdiction over U.S. corporations and complicate efforts of the State Department to negotiate a multilateral convention on recognition of foreign judgments.
In Carijano, in June 2011, a different Ninth Circuit panel reversed a California district court’s dismissal of an environmental suit brought by a group of Peruvian villagers against Occidental Petroleum based on the actions of an Occidental subsidiary in Peru from 1972-2000. The district court had dismissed the case on the basis of forum non conveniens, finding, inter alia, that the witnesses and evidence were located in Peru, that Peru provided an adequate alternative forum, and that Peru had a far greater interest in regulating environmental conditions in its territory than California. The Ninth Circuit, however, concluded that the district court had failed to give sufficient weight to the “choice” of forum of Amazon Watch, a U.S.-based advocacy organization that later joined the suit previously filed by the Peruvian plaintiffs. Moreover, the panel found that the district court had “undervalued California’s significant interest in providing a forum for those harmed [i.e. Amazon Watch, which is headquartered in California] by the actions of its corporate citizens.” Amazon Watch itself however, did not allege environmental injuries of the kind asserted by the other Peruvian plaintiffs, asserting its standing based purely on the organization’s human rights interests.
In May 2012, the Ninth Circuit refused rehearing on the Carijano panel decision, again over the strong dissent of five judges who argued that the Ninth Circuit had failed to address whether Amazon Watch had standing as a plaintiff. It appears likely that Occidental will seek cert later this month. If it stands, the Carijano decision will give foreign plaintiffs a new tactic to avoid forum non conveniens dismissal in the Ninth Circuit by enlisting a U.S. advocacy group to serve as a nominal plaintiff.
Finally, in Sarei, in October 2011, a Ninth Circuit panel refused to dismiss a long-running Alien Tort Statute claim brought by villagers in Papua New Guinea against Rio Tinto (an Anglo-Australian corporation) relating to its mining operations in Papua New Guinea in the 1990s. Rejecting almost all of Rio Tinto’s arguments, the panel held that the ATS applies extraterritorially to alleged torts committed in other countries, applies to actions by corporations, and covers claims of aiding and abetting. The panel then further rejected Rio Tinto’s contentions that the claims are nonjusticiable on the grounds that they require prudential exhaustion, constitute political questions, are barred by principles of international comity, or invalidate acts of state.
Rio Tinto has petitioned for certiorari. The Supreme Court has held the Rio Tinto petition, presumably because the Kiobel case, which addresses many of the same issues, is currently pending.
In its amicus brief in the Kiobel case, the Obama Administration has stated positions that conflict with the Ninth Circuit’s decision in Sarei on numerous issues. The U.S. Government brief states not only that the ATS should not be applied extraterritorially to the acts of foreign corporations for aiding and abetting the acts of foreign governments inside their own territories, but also that doctrines such as exhaustion, forum non conveniens, political question, international comity, and act of state should be applied in ATS cases “at the outset of the litigation and with special force.” Indeed, the U.S. brief specifically invites the Supreme Court to overrule the Ninth Circuit’s holding that exhaustion should not be required in ATS cases. Moreover, “courts should not look at forum non conveniens arguments with a skeptical eye.” Rather, “if the parties and the conduct have little connection to the United States, and an adequate alternative forum exists, courts should presumptively dismiss.”
Taken together, the decisions in Bauman, Carijano, and Sarei, if allowed to stand, may indeed allow the Ninth Circuit to “exercise jurisdiction over all the earth,” inviting foreign plaintiffs to bring suits against both U.S. and foreign corporations for their actions in foreign countries and inviting Ninth Circuit judges to sit in judgment on the acts of foreign governments.