One Federal Appeals Court Is Still Deciding Whether Corporations Can Be Liable For Torture

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Ah, déjà vu. In 2010, the Second Circuit Court of Appeals was an outlier, holding that corporations couldn’t be sued under the Alien Tort Statute (ATS) for gross human rights abuses. It’s now 2015 and the Second Circuit is the only circuit that thinks this is an open question. Every other circuit court to address the issue agrees: corporations can be sued under the ATS.

The case is In re South African Apartheid Litigation. And it was filed in 2002 against a number of corporate defendants, including IBM and Ford. The plaintiffs were victims of the apartheid regime in South Africa who sued the corporate defendants for assisting the regime carry out its racist reign of terror. After a decade, those corporations claim they still can’t be sued under the ATS.

The argument for corporate immunity is crazy (and for more than one reason). If you want the wonky explanation, you can read our amicus, but it is quite simple:

First, the Second Circuit would be a lonely island of corporate immunity. Every other circuit agrees that corporations are liable (read: can be sued) under the ATS.

Second, the Supreme Court has already rejected the argument of corporate immunity that the companies continue to push in the Second Circuit. In Kiobel – the 2013 Supreme Court case that limited the extraterritoriality of the ATS – the Supreme Court was presented with the corporate immunity question. And they said nothing about it. This might not seem like much, but it is. The question of whether a corporation can be sued under the ATS is a question of jurisdiction (read: the power of a court to hear the case). But the question of extraterritoriality is a question of the merits of a claim (read: whether the claim is good, not whether the court has power to hear it). And here is the rub: federal courts cannot decide merits issues before they decide jurisdictional issues. So, when the Supreme Court answered the extraterritoriality question, they accepted that corporations were subject to suit under the ATS. And if this Supreme Court agrees that corporations can be sued . . . C’mon.

Finally, corporate immunity just makes no sense. Under US law, under international law, and under the laws of almost every nation, corporations are liable for the torts that the corporation commits. That is the whole point of incorporation: a new “person” is created that can be sued for the wrongs done in its name. And that is the case for garden-variety torts like negligence. The Apartheid defendants would turn the whole notion of incorporation on its head and they would do it for the most offensive conduct imaginable.

We expect that the Second Circuit will agree with its sister circuits, the Supreme Court and common sense and rule that corporations can be liable under the ATS. But it is disappointing that corporate defendants continue to peddle these arguments. Le sigh.

 

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