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U.S. Supreme Court Considers How the Alien Tort Statute Applies to Corporations in California and Around the Country

churchA plaintiff must establish that the court in which they are filing suit has jurisdiction over their claims. Questions of jurisdiction can quickly become complicated, especially when a lawsuit cites multiple sources of law. The Alien Tort Statute (ATS) gives foreign citizens the right to file suit in U.S. district courts for certain tort claims. U.S. courts have allowed claims against individuals. The U.S. Supreme Court is now considering whether the ATS allows claims against foreign corporations in Jesner v. Arab Bank, PLC. While the case is not likely to have much effect on California business litigation, it offers a useful look at how U.S. courts can exercise jurisdiction over international business disputes.

The Judiciary Act of 1789, one of Congress’ very first laws, created the ATS. The statute gives federal district courts jurisdiction over “causes where an alien sues for a tort only in violation of the law of nations or a treaty of the United States.” 1 Stat. 77 (1789), 28 U.S.C. § 1350. It does not define “alien.” Federal law defines that term elsewhere as “any person not a citizen or national of the United States.” 8 U.S.C. § 1101(a)(3). The term “law of nations” refers to international law, which mostly consists of treaties, conventions, and other agreements.

The ATS was largely forgotten until 1980, when the Second Circuit ruled on a claim by the parents of a teenager who had been “kidnapped and tortured to death” in 1976 by the defendant, who was the “Inspector General of Police in Asuncion, Paraguay” at the time. Filártiga v. Peña-Irala, 630 F.2d 876, 878 (2d Cir. 1980). After the defendant moved to New York in 1978, the plaintiffs filed suit against him under the ATS for violations of the United Nations Charter, the Universal Declaration on Human Rights, and other sources of international law. The Second Circuit affirmed the verdict in favor of the plaintiff, which included a damages award of $10.4 million.

The Supreme Court affirmed an ATS claim against a foreign individual in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), but it ruled against plaintiffs asserting a claim against a foreign corporate defendant in Kiobel v. Royal Dutch Petroleum Co., 569 U.S. ___ (2013). That case involved Nigerian citizens who alleged that actions by various oil companies in the Niger Delta violated U.S. and international law. The Supreme Court held that ATS claims are limited by the “presumption against extraterritoriality,” which states that a U.S. statute does not apply outside U.S. territory unless it expressly states that it does. The ATS, it held, was not specific enough about the reach of U.S. law to corporations.

In Jesner, the Supreme Court is considering whether the ATS allows any claim at all against a foreign corporation. The plaintiffs are victims, or family members of victims, of attacks by multiple Palestinian organizations, including Hamas. They allege that the defendant, a bank with locations in New York, provides assistance to these organizations in violation of the Anti-Terrorism Act. 18 U.S.C. § 2333(a). The Second Circuit affirmed the lower court’s rejection of their claims. 808 F.3d 144 (2d Cir. 2015). See also Doe I v. Nestle USA, Inc., 766 F. 3d 1013 (9th Cir. 2014) (cert. denied).

For over 40 years, business litigation attorney James G. Schwartz has represented Bay Area businesses and business owners in cases involving fraud or misrepresentation, among other causes of action. You can contact us online or at (925) 463-1073 today to schedule a free and confidential consultation with a member of our experienced and knowledgeable team.

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California Lawsuit Claims Fraud, Negligence Against Business for Alleged Pricing Scheme, Pleasanton Business & Commercial Law Blog, September 28, 2016

Supreme Court Limits Jurisdiction of U.S. Courts over Foreign Corporations with Domestic Subsidiaries, Pleasanton Business & Commercial Law Blog, March 28, 2014

Photo credit: Freddy Weber (Own work) [GFDL or CC-BY-SA-3.0], via Wikimedia Commons.