Ninth Circuit: Foreign Civil War Subject to Federal Jurisdiction
Jonathan B. Stepanian, Litigation News Associate Editor – December 16, 2011

The U.S. Court of Appeals for the Ninth Circuit recently agreed in Sareiv. Rio Tinto, PLC [PDF] that federal courts may exercise jurisdiction over a foreign corporation for its alleged role in bankrolling a foreign civil war. The Court’s ruling was founded on a claim arising under the AlienTort Statute (ATS) and widens a circuit split.

The U.S. Supreme Court is set to rule in June on the scope of the U.S. courts’ authority pursuant to the ATS to adjudicate claims between foreigners that arise on foreign soil. The Ninth Circuit’s ruling, however, adds to the weight of authority in favor of what critics caution may represent a judicial power grab to “exercise jurisdiction all over the earth.”

The Ninth Circuit’s ruling aligns with the majority of circuit courts that have addressed this issue of international law. The Second Circuit is the outlier, ruling in Kiobel v. Royal Dutch Petroleum Co. [PDF] that the ATS is not a basis for holding foreign corporations liable in the United States for conduct against foreigners committed abroad. Just days before the Ninth Circuit issued Sarei, the Supreme Court agreed to weigh in on this issue, accepting Kiobel for review.

Rio Tinto’s Alleged Conduct Abroad
RioTinto is a British-Australian mining company that operated a copper and gold mine on the island of Bougainville in Papua New Guinea (PNG) in the late 1980s. The plaintiffs—current and former Bougainvilleans—alleged that Rio Tinto dumped chemicals and waste into a river and emitted chemical pollutants into the atmosphere, destroying aquatic life, making water unsafe for drinking or bathing, and damaging the island’s food crops.

In response to the environmental damage, militant Bougainvilleans provoked a popular uprising that subsequently developed into a civil war. Rio Tinto allegedly demanded that the PNG government send in defense forces to put down the uprising. According to the Sarei plaintiffs, Rio Tinto supplied the military with helicopters, vehicles to transport troops, and economic aid.

Plaintiffs allege the result was nearly a decade-long civil war during which an estimated 15,000 civilians were killed. The war allegedly sparked and funded by Rio Tinto left the island ravaged.

Bougainvilleans Sue Rio Tinto in the United States under the Alien Tort Statute
Current and former Bougainvilleans filed a class action against Rio Tinto in the U.S. District Court for the Central District of California. They alleged that the company was liable under the ATS for international law violations including genocide, war crimes, crimes against humanity, and racial discrimination.

The ATS provides that “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.” 28 U.S.C. § 1350. The U.S. Supreme Court, in Sosav. Alvarez-Machain [PDF], held that the ATS provides a cause of action for the violation of specific, universal, and obligatory international norms.

In a splintered opinion, a majority of the 11-judge Ninth Circuit panel that heard the case held that Rio Tinto could be held liable under the ATS for war crimes and crimes against humanity. The majority held that the U.S. courts’ jurisdiction under the ATS extends extraterritorially, and that corporations such as Rio Tinto can be liable for genocide and war crimes committed abroad.

Courts Struggle with the Jurisdictional Reach of ATS Claims
Courts have struggled with whether the ATS vests them with jurisdiction over claims brought by aliens against foreign corporations for conduct committed outside the United States. In Rio Tinto, Judge Andrew J. Kleinfeld wrote a dissenting opinion, joined by two of his colleagues, stating that the ATS was “intended to enable our courts to address wrongs done in the United States to foreigners and wrongs done outside any foreign state’s territory.”

Judge Kleinfeld warned that “[t]his claim of supervisory authority over the entire planet is unwise and legally incorrect.” Judge Sandra S. Ikuta further emphasized in a separate dissent that the ATS “authorized federal courts to hear actions where an alien sues a U.S. citizen, but gave federal courts no authority to hear suits between two aliens.”

“The dissent spent a great deal of time talking about jurisdiction, but for most human rights attorneys that’s not even a threshold issue based on cases already on the books,” observes Rebecca Farrar, Washington, D.C., cochair of the Human Rights subcommittee of the ABA Section of Litigation’s International Law Committee. She observes that appellate courts, including the Supreme Court, have addressed ATS claims involving foreigners arising from conduct on foreign soil without hesitating for jurisdictional reasons.

The Scope of Liability under the ATS
Circuit courts split over whether the ATS is limited to violations of international norms by individuals or if it extends to include corporate liability. The Ninth Circuit in Rio Tinto held that neither the ATS nor its legislative history suggests that Congress meant to exclude corporate liability or to limit the ATS to natural persons. Recent decisions in the Seventh and D.C. CircuitsFlomo v. Firestone Natural Rubber Co., LLC [PDF] and Doe v. Exxon Mobil [PDF]—similarly held that corporations can be sued under the ATS. The Second Circuit, in Kiobel, however, has taken the opposite view.

The Supreme Court is poised to address the issue of corporate liability in the context of Kiobel, which may be enough according to Edward M. Mullins, Miami, cochair of the Section of Litigation’s International Law Committee. “The Supreme Court at least will deal with the corporate liability issue, which practically speaking might answer a lot of questions related to the ATS because claimants are not really interested in going after individuals,” Mullins says. “Instead, they would prefer to pursue corporations for conduct that they believe was wrong and in a foreign country,” he adds.

“So much of human rights’ focus in recent years has been on international corporations. [This is] particularly true in Third World settings, [where corporations are] alleged to have engaged, abetted, or supported conduct that violates human rights with either the express or implicit permission of local governments,” agrees Lawrence G. Albrecht, Milwaukee, a long-standing member of the Steering Committee of the ABA International Law Human Rights subcommittee.

Extending corporate liability under the ATS, however, may impact investments and business in restless countries. Continuing operations in those countries can be “problematic because corporations are often held responsible for others’ conduct,” notes Mullins. “Corporations are not typically engaged in genocide. The problem is that they are often being held liable under aiding and abetting . . . for others’ acts,” he adds.

“Many viewed Rio Tinto with some excitement because it suggests Kiobel is even more of an outlier because all of these other courts are lined up saying that corporations can be held liable,” says Farrar. “That is huge from a human rights perspective because so often in these cases there’s a corporation involved,” she observes. As an example, she points to the alleged human rights violations at issue in Doe v. Unocal Corp.[PDF], which settled for an undisclosed amount while on appeal regarding application of the ATS to the company.

Depending on how the Supreme Court decides Kiobel, Rio Tinto may foreshadow future disputes between corporations and human rights groups. The ATS does not define the violations of international law that give rise to a viable remedy. “The Ninth Circuit, however, makes the argument that courts will be able to fashion appropriate prudential limitations on the types of claims that may be brought, and even rejected two of the claims before it,” notes Albrecht. He believes that the Ninth Circuit was “carefully informing potentially the Supreme Court that it is already applying prudential limitations and sorting out those claims that may be appropriate from those that are not.”

Keywords: litigation, Ninth Circuit, alien tort statute, jurisdictional scope, Sarei v. Rio Tinto, PLC, international litigation

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