Tag Archives: US Supreme Court

Suing Multinational Corporations in US Courts: Kiobel v. Shell

oil pollution

The Alien Tort Statute (ATS)… grants American district courts jurisdiction over “any civil action by an alien for a tort only, committed in violation of the law of nations or of a treaty of the United States”. At the age of 190 it sprang back to life on April 6th 1979, when it was used to allow two Paraguayans to sue a former Paraguayan policeman in an American court for acts of torture committed in Paraguay.Since then, roughly 150 lawsuits have been filed against American and foreign corporations for actions committed around the world. Four local plaintiffs used the ATS to sue Unocal in a federal court in Los Angeles for human-rights violations allegedly committed during the construction of an oil pipeline in Myanmar. A human-rights organisation used it to sue Yahoo on behalf of two Chinese democracy activists for actions committed in China by a subsidiary. ATS suits against DaimlerChrysler and Rio Tinto, among others, are pending. Though most ATS cases have been dismissed or settled, the costs of settlements can be high and the negative publicity damaging.

Multinational companies will therefore cheer the Supreme Court’s unanimous decision in Kiobel v Royal Dutch Petroleum (Shell), released on April 17th, 2013. It dramatically limits the ability of plaintiffs to file suit against corporations in American courts for actions committed abroad.  The ruling stems from a case brought in New York by 12 Nigerian plaintiffs living in America. They allege that Shell was complicit in human-rights violations—including murder, rape, theft and destruction of property—committed by Nigeria’s armed forces in the region of Ogoniland. A federal appeals court dismissed their suit, arguing that the ATS provides no grounds for corporate-liability lawsuits. But as the 150 ATS suits show, other courts have disagreed. The Supreme Court agreed to hear the case in order to settle the question.

In an earlier ruling, in 2004, the court cautiously ruled that the ATS permitted lawsuits for “a modest number of international law violations”, such as piracy and crimes involving ambassadors, which would have been recognised when it was adopted. The court’s Kiobel ruling goes much further. It holds that the ATS does not apply to actions committed by foreign companies, and noted a strong presumption against applying American law outside the United States, “There is no indication,” wrote John Roberts, the chief justice, “that the ATS was passed to make the United States a uniquely hospitable forum for the enforcement of international norms”.  In a separate concurrence, four of the court’s liberals took a slightly softer tack, arguing that the ATS should allow suits that prevent America from becoming “a safe harbour…for a torturer or other common enemy of mankind”. But that reasoning still does not permit foreign nationals to use American courts to sue foreign companies for acts committed on foreign soil.

Extraterritoriality: The Shell game ends, Economist, Apr. 20, 2013, at 34

Global Warming:global lost in the local

The Obama administration and environmental interests generally agree that global warming is a threat that must be dealt with. But they’re on opposite sides of a Supreme Court case over the ability of states and groups such as the Audubon Society that want to sue large electric utilities and force power plants in 20 states to cut their emissions.  The administration is siding with American Electric Power Co. and three other companies in urging the high court to throw out the lawsuit on grounds the Environmental Protection Agency, not a federal court, is the proper authority to make rules about climate change. The justices will hear arguments in the case Tuesday.

The court is taking up a climate change case for the second time in four years. In 2007, the court declared that carbon dioxide and other greenhouse gases are air pollutants under the Clean Air Act. By a 5-4 vote, the justices said the EPA has the authority to regulate those emissions from new cars and trucks under that landmark law. The same reasoning applies to power plants. The administration says one reason to end the current suit is that the EPA is considering rules that would reduce carbon dioxide emissions from power plants. But the administration also acknowledges that it is not certain that limits will be imposed. At the same time, Republicans in Congress are leading an effort to strip the EPA of its power to regulate greenhouse gases.

The uncertainty about legislation and regulation is the best reason for allowing the case to proceed, said David Doniger, a lawyer for the Natural Resources Defense Council, which represents Audubon and other private groups dedicated to land conservation. “This case was always the ultimate backstop,” Doniger said, even as he noted that the council would prefer legislation or EPA regulation to court decisions. The suit would end if the EPA does set emission standards for greenhouse gases, he said.  The legal claims advanced by six states, New York City and the land trusts would be pressed only “if all else failed,” he said.

When the suit was filed in 2004, it looked like the only way to force action on global warming. The Bush administration and the Republicans in charge of Congress doubted the EPA’s authority to regulate greenhouse gases.  Federal courts long have been active in disputes over pollution. But those cases typically have involved a power plant or sewage treatment plant that was causing some identifiable harm to people, and property downwind or downstream of the polluting plant.

Global warming, by its very name, suggests a more complex problem. The power companies argue that any solution must be comprehensive. No court-ordered change alone would have any effect on climate change, the companies say. “This is an issue that is of worldwide nature and causation. It’s the result of hundreds of years of emissions all over the world,” said Ed Comer, vice president and general counsel of the Edison Electric Institute, an industry trade group.

The other defendants in the suit are Cinergy Co., now part of Duke Energy Corp. of North Carolina; Southern Co. Inc. of Georgia; Xcel Energy Inc. of Minnesota; and the federal Tennessee Valley Authority. The TVA is represented by the government and its views do not precisely align with those of other companies.

Eight states initially banded together to sue. They were California, Connecticut, Iowa, New Jersey, New York, Rhode Island, Vermont and Wisconsin. But in a sign of the enduring role of partisan politics in this issue, New Jersey and Wisconsin withdrew this year after Republican replaced Democrats in their governor’s offices.

Another complication is that the administration and the companies may be on the same side at the Supreme Court, but the power industry is strongly opposing climate change regulation. The Southern Co. is a vocal supporter of GOP legislation to block the EPA from acting.  “It’s two-faced for them (the companies) to come into court and say everything is well in hand because EPA is going to act,” said Doniger, the NRDC lawyer.

Comer said the key point is that judges should not make environmental policy. “This has important implications for jobs. If you raise energy costs in the U.S., does that lead industry jobs to go elsewhere and if it does, do you get the same emissions, just from another country?” Comer said. “These judgments are properly made by elected officials.”  Justice Sonia Sotomayor, who was on the federal appeals court panel that heard the case, is not taking part in the Supreme Court’s consideration of the issue.

The case is American Electric Power Co. v. Connecticut, 10-174.

MARK SHERMAN, New climate change case headed to Supreme Court, Associated Press, Apr. 18, 2011