DC And Seventh Circuits Split From Second Circuit: Allow For Corporate Liability Under Alien Tort Statute

Originally published in Pratt's Journal of Bankruptcy Law

This article describes two recent decisions from appellate courts that allow for corporate liability under the Alien Tort Statute. These decisions conflict with a Second Circuit decision, setting the stage for possible Supreme Court review.

In Kiobel v. Royal Dutch Petroleum Co., the Second Circuit held last year that the jurisdiction granted by the Alien Tort Statute ("ATS")1 does not extend to civil actions against corporations.2 Two recent decisions from appellate courts outside the Second Circuit have reached the opposite conclusion, thus possibly setting up this issue for determination by the Supreme Court.

On July 8, 2011, a panel of the District of Columbia Circuit ruled 2-1 in Doe VIII v. Exxon Mobil Corp.3 that the jurisdiction granted by the ATS extends to corporations and other non-natural person entities. Three days later, on July 11, 2011, the Seventh Circuit similarly held, unanimously, in Flomo v. Firestone Nat. Rubber Co., LLC4 that the ATS allows for corporate liability as a matter of customary international law.

The immediate implication of the Exxon and Flomo decisions is that corporate defendants may be sued in the Seventh and District of Columbia Circuits pursuant to the ATS. While Kiobel remains good law in the Second Circuit, the magnitude of the Exxon and Flomo decisions, and their split from the Second Circuit on whether corporate liability is available as a matter of customary international law under the ATS, make it likely that the Supreme Court will grant certiorari regarding this issue in the near future.

The Exxon decision also concluded that the mens rea required for aiding and abetting liability under the ATS is a knowledge standard. This interpretation is at odds with the Second Circuit's decision in Presbyterian Church of Sudan v. Talisman, which held that aiding and abetting liability is available under the ATS, but only where mens rea meets the purposeful standard.5 Exxon thus makes the District of Columbia Circuit far more favorable to plaintiffs suing under the ATS, unless and until the Supreme Court decides the culpability question and harmonizes the standard.

BACKGROUND

Exxon was filed in 2001 by plaintiffs from the Aceh province of Indonesia, against Exxon Mobil Corporation ("Exxon"). Exxon had operated a natural gas extraction facility in Aceh in 2000 – 2001. The Exxon security detail for the Aceh facility was comprised of members of the Indonesian military...