Alien Tort Statute

Assessing the Impact of Jesner v. Arab Bank

By Zach ZhenHe Tan
Thursday, December 20, 2018, 4:00 PM

It has been half a year since the Supreme Court decided Jesner v. Arab Bank, which held that the Alien Tort Statute (ATS) did not permit federal courts to recognize causes of action against foreign corporations. When the Jesner ruling was announced, commentators disagreed about its impact. Some scholars declared that the court had functionally killed the ATS, while others emphasized that the holding was “technically” narrow. This post surveys Jesner’s impact six months after these predictions.

Jesner’s Holding and Reasoning

Jesner is the third major Supreme Court decision on the ATS. In 2004, the Supreme Court held in Sosa v. Alvarez-Machain that courts could recognize causes of action in ATS cases based on international norms sufficiently “specific, universal, and obligatory” if other prudential considerations were satisfied. Then, in 2013, the court in Kiobel v. Royal Dutch Petroleum Co. applied the presumption of extraterritoriality to the ATS and concluded that courts had jurisdiction over only ATS claims that “touch and concern” the territory of the United States with “sufficient force.” And finally, in Jesner, the court held that ATS causes of actions do not extend to foreign corporations. As Chinmayi Sharma noted for Lawfare, Jesner “produced an array of fractured opinions.” Justice Anthony Kennedy wrote for a five-justice majority on some issues in the case but secured only three votes for other issues.

Five justices, and thus the Supreme Court, agreed on two basic points. First, the court relied on decisions that refused to imply causes of action in the statutory context (Alexander v. Sandoval) and in the constitutional context (Ziglar v. Abbasi and Correctional Services Corp. v. Malesko) to conclude that it should not extend ATS causes of action to foreign corporate liability. The court noted that under these precedents, “there is an argument that a proper application of Sosa would preclude courts from ever recognizing any new causes of action under the ATS,” but it left this existential question for another day. Second, the court declined to recognize any ATS causes of action based on foreign corporate liability because of the risks of international diplomatic strife. While the ATS was intended to promote harmony in international relations, the court wrote, cases involving foreign corporations had instead sparked international tensions: In an amicus brief, the Jordanian government called the Jesner suit a “grave affront” to its sovereignty. The Supreme Court further noted that “courts are not well suited to make the required policy judgments that are implicated by corporate liability in cases like this one.”

Justice Kennedy, writing for a three-justice plurality, added three points. First, Kennedy reasoned that corporate liability did not qualify as a “specific, universal, and obligatory” norm under Sosa, given that there was “sufficient doubt” as to whether corporate liability was recognized under international law. Second, observing that Congress had decided against extending corporate liability under the analogous Torture Victim Protection Act, the plurality reasoned that doing so under the ATS would be an improper exercise of judicial power. Finally, the plurality furnished two practical reasons for denying corporate liability under the ATS: first, the availability of alternative remedies; and, second, the possible threat to U.S. companies that might result from a reciprocal extension of corporate liability by other jurisdictions.

How ATS Parties Have Used Jesner

The arguments made following Jesner in Doe v. Cisco Systems provide a good introduction to the debates Jesner has generated in the lower courts. Doe was an ATS suit filed in 2011 against Cisco, a California-based internet technology provider, for allegedly aiding and abetting the Chinese government’s arbitrary detention and torture of dissidents. In response to Jesner, the U.S. Court of Appeals for the Ninth Circuit requested supplemental briefing to address the implications of the Supreme Court’s ruling. The plaintiffs argued that Jesner is limited to its holding regarding foreign corporate liability and does not preclude domestic corporate liability against firms like Cisco. In particular, they argued that the foreign policy concerns raised in Jesner, such as the sovereignty concerns voiced by Jesner, do not apply in the imposition of domestic corporate liability.

Cisco, by contrast, argued that Jesner’s logic precludes domestic corporate liability. It argued that Jesner evinced a “general reluctance to extend judicially created private rights of action … even in the realm of domestic law” and thus should be interpreted to exclude domestic corporate liability as well. Cisco further argued that Jesner’s stated foreign policy concerns are inherent in all ATS litigation, including in cases involving domestic corporations and especially when domestic corporations are held liable for aiding and abetting foreign governments for conduct on foreign soil. In this regard, Cisco relied heavily on Justice Samuel Alito’s Jesner concurrence, which emphasized that the presence of foreign policy strife in a case demands dismissal in accord with the intent of the ATS framers.

Lower-Court Applications of Jesner

The Ninth Circuit has not yet ruled on the arguments made in Doe v. Cisco, but the appellate courts have grappled with Jesner’s reasoning in two additional cases. The first, also in the Ninth Circuit, is the long-running Doe v. Nestle ATS suit filed by former child slaves against Nestle, Archer Daniels Midland and Cargill—a group of defendants including both foreign and domestic corporations—for allegedly aiding and abetting child slave labor in the Cote d’Ivoire. The case was on appeal from a district court’s dismissal on the basis of extraterritoriality when the Ninth Circuit ordered the parties to file additional briefing addressing the impact of Jesner on the plaintiffs’ aiding-and-abetting claims.

In an Oct. 23, 2018, opinion, the Nestle court acknowledged that Jesner shifted the legal landscape for ATS claims but then made two further points. First, the court ruled that Jesner’s holding is limited only to foreign corporate liability and that Ninth Circuit precedent recognizing corporate liability under the ATS would still apply to domestic corporations. It reached this conclusion despite arguments by the defendants that Jesner’s rationale, including its emphasis on judicial restraint and foreign policy concerns, ought to apply to all forms of corporate liability. Notably, the Nestle court reaffirmed a Ninth Circuit precedent that emphasized a “norm-specific analysis” for imposing corporate liability, disavowed a “categorical rule of corporate immunity or liability,” and expressly held that “corporate liability under an ATS claim does not depend on the existence of international precedent.”

Second, in response to Nestle’s arguments that the plaintiffs failed to satisfy the elements for an aiding-and-abetting claim, the court addressed how Jesner ought to guide pleading practice in the future. The plaintiffs’ complaint, filed pre-Jesner, had discussed both foreign and domestic defendants as “a single bloc.” The Nestle court warned that this is a “problematic approach that plaintiffs would do well to avoid” in light of Jesner. Allowing plaintiffs the opportunity to amend the complaint, the court then asked that plaintiffs clearly “specify which potentially liable party is responsible for what culpable conduct,” such that the court may then determine if claims that survive Jesner—i.e., those against domestic defendants—fulfill the elements of an aiding-and-abetting claim.

The U.S. Court of Appeals for the D.C. Circuit also addressed Jesner in Kaplan v. Central Bank of the Republic of Iran, a suit by victims of a Hezbollah rocket strike against two foreign banks for allegedly funding Hezbollah attacks in northern Israel. In 2013, the district court dismissed the plaintiff’s ATS claims on the basis of extraterritoriality, but it did so before establishing personal jurisdiction over the defendants. This ruling set up on appeal the procedural question of whether Jesner’s bar on foreign corporate liability was a “non-merits threshold ground for dismissal” that could be affirmed without a prior analysis of personal jurisdiction. The D.C. Circuit panel reasoned that the foreign corporate liability bar was indeed such a “non-merits threshold ground for dismissal.”

Although the procedural posture of the case meant that the Kaplan court was not technically ruling on the scope of available causes of action post-Jesner, the court elaborated on Jesner in some detail. First, the court said that Jesner imposed a bar on “foreign corporate liability,” as opposed to a broader bar on all corporate liability. Next, the court identified and emphasized that the reason for such a bar was to “avoid the serious foreign policy consequences” that flow from hauling foreign corporations into U.S. courts, reasoning that would appear to be less compelling when applied to domestic companies. Kaplan thus hews to the Jesner majority’s specific holding rather than a broader view of Jesner that would preclude any form of corporate liability, whether foreign or domestic.

Several district courts have discussed Jesner as well. The most elaborate analysis can be found in Al-Shimari v. CACI Premier Technology Inc., in which Iraqi nationals are suing a domestic U.S. government contractor under the ATS for alleged human rights abuses committed while the plaintiffs were held in custody and subject to interrogation. The defendants argued that Jesner precluded jurisdiction in the case for two reasons: first, that the “separation-of-powers concerns inherent in [the] ATS” were applicable to the case at hand; and, second, that allowing the case to proceed would not “further [the] ATS’s objective of preventing friction between the United States and foreign nations.” The district court rejected these arguments in turn. First, the court observed that the U.S. Court of Appeals for the Fourth Circuit had already rejected extraterritoriality and political question objections to the present suit and thus had dismissed any concerns about the risk of “international discord resulting from unintended clashes between our laws and those of other nations” and “unwarranted judicial interference in the conduct of foreign policy.” Then, the court made the positive case for an assertion of jurisdiction. It reasoned that this suit by foreign nationals against American nationals for an international law violation abroad fell precisely within the original goals of the ATS. Buttressing this lack of foreign policy concerns was the absence of any foreign or U.S. governmental objection to the lawsuit.

Other district courts have demonstrated more ambivalence about the implications of Jesner on the broader question of corporate liability—particularly the court in Brill v. Chevron, which addressed Jesner in some detail. Brill involved ATS claims against Chevron, a U.S. corporation, for aiding and abetting terrorist attacks by paying kickbacks to Saddam Hussein. Chevron had argued that the reasoning of Jesner ruled out all corporate liability, including against U.S. corporations. The federal district court characterized Jesner as a “patchwork decision” that flits between reasoning specific to foreign corporations and arguments generalizable to all corporate liability. However, it reserved “the question of whether Jesner’s holding on foreign corporations should be extended to a domestic corporation such as Chevron” for “another day,” instead dismissing the complaint with prejudice on the basis that the plaintiffs repeatedly failed to allege the requisite mental state on Chevron’s part to make out an aiding-and-abetting claim. Separately, at least two district courts have suggested that Jesner might entail a corporate liability bar for domestic as well as foreign corporations.

Jesner and Causes of Action

Courts have also used Jesner beyond the ATS context in support of skepticism about judicially implied causes of action. Five district courts to date have cited Jesner in denying recognition for new Bivens causes of actions. This category includes cases denying the extension of Bivens actions to First Amendment violations (Bentley v. Hilliard, Clemmons v. United States and Kirtman v. Hielbig), claims arising from alleged post-9/11 detainee abuse in the long-running Turkmen v. Ashcroft litigation, and claims arising from alleged denial of access to courts and unconstitutional conditions of confinement in violation of the Fifth and Eighth Amendments (Williams v. Lynch). In each of these cases, the courts’ assessment of Jesner is largely cursory: Courts cite to it in passing when discussing a more general emphasis on judicial restraint and the increasingly limited scope of Bivens.

While Jesner also cited to cases regarding implied statutory causes of action and advocated judicial restraint there, no cases thus far have applied Jesner in this context. But Jesner’s impact has been felt outside the Bivens context in other ways. Specifically, in rejecting federal common-law suits by the cities of New York and Oakland against British Petroleum, two district courts have cited to Jesner’s recognition of judicial (in)capacity in “managing foreign affairs” and the resulting need for deference to the political branches as reasons for rejecting federal common-law actions of nuisance and trespass based on cross-border pollution.

Conclusion

Six months after Jesner, the trickle of opinions and supplemental briefing already paint a discernible outline of the issues that will arise in the next chapter of ATS litigation:

  1. Is Jesner’s broad skepticism about implying causes of action limited to ATS cases involving foreign corporations, or does it extend to ATS cases involving domestic corporations as well?
  2. Are the foreign policy concerns at the heart of the Jesner opinion limited to the issue of foreign corporate liability, or do they apply to a broader class of cases? For example, in the cases against Cisco Systems forwarded on a theory of aiding and abetting foreign governments, could Jesner’s call for avoiding diplomatic strife also apply to preclude these claims?
  3. If fears of foreign policy conflict are now the crux of the ATS inquiry, do defendants need to show evidence of actual diplomatic strife, such as those present in Jesner?
  4. To what extent can lower courts rely on the portions of Jesner, such as its “specific, universal, and obligatory” analysis, that garnered only a three-justice plurality?
  5. How much does Jesner add to the broader inquiry concerning judicially implied causes of action?