On June 17, 2021, the Supreme Court issued its 8-1 decision in Nestle USA, Inc. v. Doe et al and the consolidated case of Cargill, Inc. v. Doe I. In this case, six people from Mali who had been trafficked as child slaves onto cocoa farms in the Ivory Coast sued under the Alien Tort Statute, arguing that since the American companies Nestle and Cargill provided financial and technical support to those farms, they should be liable for aiding and abetting human trafficking.
The Ninth Circuit had reversed the District Court, finding that the respondents had adequately pled a domestic application of the Alien Tort Statute because the corporate decisions driving contracting with the Ivory Coast farms originated in the United States. The Supreme Court reversed the Ninth Circuit holding that the presumption against extraterritoriality required plaintiffs to establish relevant conduct in the United States and that general corporate activity like decision making was insufficient.
Justice Thomas announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I and II, in which Chief Justice Roberts and Justices Breyer, Sotomayor, Kagan, Gorsuch, Kavanaugh and Barrett joined. Justices Thomas, Gorsuch and Sotomayor all filed concurring opinions and Justice Alito dissented.
- Ilya Shapiro, Vice President and Director, Robert A. Levy Center for Constitutional Studies, Cato Institute
- William S. Dodge, John D. Ayer Chair in Business Law and Martin Luther King Jr. Professor of Law, UC Davis School of Law
- Moderator: Julian Ku, Senior Associate Dean for Academic Affairs, Faculty Director of International Programs, and Maurice A. Deane Distinguished Professor of Constitutional Law, Maurice A. Deane School of Law at Hofstra University
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As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.
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Guy DeSanctis: Welcome to The Federalist Society’s webinar call. Today, July 6, we discuss the Courthouse Steps Decision: Nestle USA v. Doe. My name is Guy DeSanctis, and I’m Assistant Director of Practice Groups at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today’s call.
Today, we are fortunate to have with us our moderator Julian Ku, Senior Associate Dean for Academic Affairs, Faculty Director of International Programs, and Maurice A. Dean Distinguished Professor of Constitutional Law, Maurice A. Dean School of Law at Hofstra University.
Throughout the panel, if you have any questions, please submit them through the Q&A feature or the chat so that our speakers will have access to them for when we get to that portion of the webinar. With that, thank you for being with us today. Julian, the floor is yours.
Julian Ku: Okay. Well, thank you, everyone, for joining us today. So I’m delighted to be able to introduce and moderate our discussion on the Supreme Court’s recent decision, Nestle v. Doe, which I think is a fascinating and important case for understanding the Court’s approach to a lot of really important issues for U.S. law, the extraterritorial application of U.S. law, the role of international law in U.S. courts, and the broader separation of power between the courts and Congress with respect to recognizing causes of actions.
And I’m honored to be able to host this discussion with two extremely accomplished, and effective, and well-known scholars on this topic, but also on many other topics, and so let me briefly introduce both of them before we begin.
So we’ll hear from Professor William Dodge, the John D. Ayer Chair of Business Law and Martin Luther King Jr. Professor of Law at the University of California Davis School of Law. But Bill’s a well-known scholar of international law and many other topics. And for this crowd, I’ll just note that in addition to his many books and articles, he’s also served as counselor in international law to the legal advisor at the U.S. Department of State and as co-reporter for the American Law Institute’s Restatement (Fourth) of Foreign Relations Law. And he’s also currently a member of the state department’s advisory committee on international law.
We are also grateful to be joined by Ilya Shapiro, a vice president of the Cato Institute, director of the Robert A. Levy Center for Constitutional Studies, and publisher of the Cato Supreme Court Review. In addition to Ilya’s many publications, both in academic and also in the general media, he has published several books, and most recently, I’ll note just in 2020—he didn’t waste the pandemic, I guess—Supreme Disorder: Judicial Nominations and the Politics of America's Highest Court, available on Amazon. Please order.
All right. So more to the point, also, both Ilya and Bill were involved in amicus briefs in this case, so they have lots of opinions about this case, in particular, and insights to share about it. We’re all going to benefit tremendously, myself included, from listening to them.
So I’m going to lead off, though, before I turn them over to our discussants, just take a few minutes to summarize the case in case you haven’t read the entire case and memorized it, and I’ll do the law school, summarize the facts and issue and holding thing. And then after that, we’re going to open—
Ilya Shapiro: I’m glad you’re not cold calling, Julian. Thank you for that.
Julian Ku: Yeah. Well, one of you guys out there in the participant list might be my victim today. So I’m going to lead off by taking a few minutes to summarize, then we’ll open a discussion. We’ll go issue by issue to the Court’s decision and giving each of them time to talk about the issues, and I’ll jump in as well. And that should take about 30 minutes, and then we’ll open things up to the audience for questions.
All right. Doe v. Nestle involves lawsuits by six individuals in Mali, who alleged they were trafficked into the Ivory Coast as child slaves to produce cocoa on cocoa farms there. Now, I’ll note this case was originally filed in 2005, so it’s not a recent case. It originally was a very different kind of – it involved many other defendants. It was a class action lawsuit, but we won’t be going into all that here.
For our purposes here, the petitioner defendants are Nestle USA and Cargill, who are both U.S.-based companies, as probably Nestle certainly guessed. They purchase, and process, and sell cocoa. Now, it’s undisputed that neither of the petitioners operated farms in the Ivory Coast where the alleged slave labor occurred. They did buy cocoa from those farms, and they did provide resources in exchange for exclusive rights to purchase cocoa from those farms.
The lawsuit against the petitioners alleged these two U.S.-based companies, therefore, aided and abetted child slavery by these actions. Now, as a little background, the petitioner defendants were sued under the Alien Tort Statute, which I’m sure many of you know is part of the 1789 Judiciary Act and has been interpreted by the Court as a jurisdictional grant for federal courts to hear cases brought by aliens for violations of the law of nations and treaties.
For decades, it has been a primary statutory vehicle for lawsuits in U.S. courts, alleging violations of international law, usually for activities that occur outside the United States. It has been controversial. It has launched many of my own law review articles and many other 1,000s. Just do a Westlaw search for this.
In a series of decisions, since 2003, I think it’s fair to say the Supreme Court has cut back on what was probably originally the potentially broad scope of this law. In 2003 Sosa decision, they required much stricter judicial scrutiny of what international law norms be allowed as a cause of action. And in the 2013 Kiobel decision, they limited cases to matters which touched and concerned the territory of the United States. And in 2018, Jesner decision, they found that foreign corporations could not be sued under the Alien Tort Statue.
So this particular case was dismissed by district court on extraterritorial grounds because the only domestic conduct here was general corporate activity. The Ninth Circuit reversed this holding on extraterritoriality and further held that although the 2018 Supreme Court decision in Jesner required dismissing all foreign corporations from the case, U.S.-based corporations could still be sued because of those U.S.-based decisions to purchase and finance purchases from the Ivory Coast farms.
So the Supreme Court granted cert to resolve two questions: whether U.S. corporations are ever proper defendants, lawsuits brought under the Alien Tort Statute, and second, whether the domestic conduct alleged here is sufficient to satisfy the extraterritorial limitations imposed by the Court in 2013.
And interestingly, as a matter of law, the Court only answered the second question, that they agreed that the case exceeded—the respondent plaintiff claims—extraterritorial scope of the ATS. And it did so by a resounding and somewhat surprising, at least, to me, 8-1 majority opinion by Justice Thomas, and the only dissenting justice argued actually that they should’ve just resolved other issues first.
So I’ll let the panel – let’s discuss this in more detail. I’ll just note that on the other issues, the Court went all over the place. So Justice Gorsuch, Thomas, and Kavanaugh held that the limits arising from separation of powers and the Court’s power to recognize cause of action, under the Alien Tort Statute, should be really strict, even more strictly limited than had been applied and that this case should be dismissed on that ground, and then pretty much almost all ATS cases should be dismissed under these grounds.
Justice Sotomayor, and Kagan, and Breyer filed a concurrence rejecting this approach, adhering to a more traditional, I guess, approach to the ATS, and they also argued that U.S. corporations who should – told that U.S. corporations can be sued under the ATS. And interestingly, on this point—I’ll be interested to hear from our panelists—Justice Gorsuch came in with a somewhat surprising opinion, joined by Justice Alito, which agreed with Justice Sotomayor, Kagan, and Breyer, that, at least, on this point, U.S. corporations should be able to be sued on the ATS, just like any natural U.S. person could be sued, as long as there’s sufficient domestic conduct.
So there’s a lot here to unpack, and I don’t want to confuse our audience any longer and keep our panelists waiting any longer. So I want to go through some of these issues and open the door for them to share their views on this and also to have a discussion on this because these are really interesting and important issues. So for the bigger picture, I’ll just lead up to just a preview of what I hope to get to in the conversation. Let’s also think about the very end.
So what happens now? What happens to the Alien Tort Statute after this third Supreme Court decision on a major Supreme Court decision on this case, on this statute, and also on the future of these sorts of international law claims in U.S. courts? Okay. So with that very, very long lead up, let me open the conversation first.
And the first issue I want to talk about with our discussants is the Court’s opinion, which was the only holding of the case, which was the Court’s opinion that the conduct of the, what they call, general corporate activity of Nestle and Cargill here was insufficient to overcome an otherwise strict limitation on claims brought up.
I guess we call this the extraterritorial limitation on claims brought under the ATS, and the problem here essentially is that the argument is that the activity that Nestle and Cargill engaged in was not enough to justify the action they would have engaged in more activity in the U.S. to support ATS actions.
I know that Bill has some views on this particular issue that he’s already written about, so let me just offer him the first take on this, and then Ilya can share any thoughts he might have, and I’ll also have a few follow-ups if necessary. So let’s start with the—if you don’t mind, Bill—the extraterritoriality issue, and thanks again for joining us, and I’ll turn this over to you. So go ahead. What do you think about the extraterritoriality issue?
William S. Dodge: Great. Thanks, Julian, and thanks for having me. And since you allude to what I’ve written already, if people are interested in more detail, I have a post at the blog Just Security on this case, which I published the day after the opinion came down.
So extraterritoriality was the basis of the majority opinion, and eight justices agreed that these claims were impermissibly extraterritorial. I think Justice Alito, who dissented, probably agreed too, but he thought that the Court needed to decide other issues first before reaching the extraterritoriality issue. So it’s interesting that the Court did not apply the “touch and concern” test that it had articulated in Kiobel. Instead the Court applied the two-step framework for the presumption against extraterritoriality that it had articulated in RJR Nabisco v. European Community.
Under that framework, at step one, the Supreme Court looks for a clear indication of the geographic scope of the statutory provision. If it finds a clear indication, then it simply follows that and applies the statute, as Congress indicated. If it does not find a clear indication of geographic scope, then at step two, the Court has to decide whether applying the provision would be domestic or extraterritorial.
And it does this by first looking at the focus of the statute, and statutes can focus on a bunch of things. So obviously, they can focus on conduct, but the Supreme Court has also held that other provisions focus on a transaction, for example, or on injuries, effects, and if the focus is in the United States, then applying the statute might be considered domestic. There’s a question, which I’ll get to in a minute, about whether additionally, in addition to the focus being in the United States, there also has to be conduct related to the focus in the United States.
So how does this apply to the ATS? Well, at step one, Kiobel had already decided that there was no clear indication of geographic scope. So the Court went to step two, and at step two, the parties disagreed about what the focus of the ATS is, but the Court found no need to answer that question because regardless of what the focus is, the Court said there was not enough conduct in the United States. There had to be conduct related to the focus in the United States, and here there just wasn’t enough.
So I think three things are significant here. First, doctrinally, under the presumption against extraterritoriality, there now seems to be this requirement of conduct in the United States, and that’s a change. The Court said this in RJR, but it was dictum in RJR. In both RJR and the earlier case, Morrison v. National Australia Bank, the test that the Court adopted did not require conduct in the United States, as long as the focus of the provision was in the United States. Nestle potentially changes that, and it has implications for other statutes, from securities, to antitrust, just all statutes that may apply extraterritorially across the board.
Second, with respect to ATS suits against corporations, the Court said the decision-making in the United States is not sufficient. This is going to make it hard to bring claims against U.S. corporations for human rights abuses abroad because generally the only thing that happens in the United States, in these cases, is decision-making. The decisions are carried out abroad, and the human rights violations occur abroad.
Third, with respect to ATS suits against individuals, it’s hard to see how any of these can continue. These cases never involve conduct in the United States, so the quintessential Filartiga type of case now seems to be a thing of the past. So let me stop there and turn it over to Ilya.
Julian Ku: Yeah. We lost Ilya for a sec there.
Ilya Shapiro: That was incredible timing. I don’t know what happened. I’m apparently still pandemic Zoom. New things can happen. My computer just crashed. I didn’t realize computers crashed anymore, but I just restarted it, and we’re back. So I missed Bill’s comment entirely, so I apologize what I say is either completely unresponsive or completely repetitive, I guess.
So great to be with you. This was a really interesting case, and I should note that Cato filed a brief supporting Nestle, making arguments that the Court didn’t fully address about how norms over aiding and abetting weren’t really settled with respect to corporations, at least, and that different jurisdictions treated them differently. But we can get to that.
What really struck me about this decision, first of all, and as Julian was running through the various precedents in the last 20 years of ATS litigation, what’s notable is that in both Kiobel and this case, the ostensible question presented was whether there’s corporate liability for violations of the law of nations under the ATS. And as, at least, Justice Alito, in dissent, here noted, the Court did not answer that question, and again, the Court answered a question about extraterritoriality.
So I don’t know whether that’s yet another example of the Roberts’ Court, whether in its current incarnation, or five years ago, or ten years ago, wanting to achieve a more narrow path than something that’s more controversial, and we’ll get to speculation or not so speculation on where the various justices stand on corporate liability per se. But I think it’s quite clear now that, similar to personal jurisdiction analysis, mere corporate operations or decisional operations, as the Court described, as Justice Thomas described, as majority opinion here, is not going to be enough to have ATS liability attach.
And so really you look at where the locust of the harm is, where the activity is taking place. Here it’s aiding and abetting. Well, all of that was, the Court held, took place in Ivory Coast, and so you can’t domesticate litigation over that, if you will, under the ATS, and obviously, skirmishes that we’ll get to over whether you need Congress to speak more clearly about that, whether Congress even can, if it wanted to, speak more clearly to create new liability, whether courts can read anything into it, but a remarkable level of unanimity indeed for the idea that [adhere 18:06] the operational decisions in the United States, then ATS liability cannot attach.
Julian Ku: So I wanted to – thank you, Ilya. I think that it was not repetitive, and so it’s kind of amazing. Let me just follow up with a couple of things with both of you, but let me start with Bill on this. Because one thing you didn’t hear Bill say, it was that he thought this might have the Court’s decision to take on the second step in RDR, in order to say, “Look, you have to have some domestic conduct, and then maybe – we’re not even sure how much. But some domestic conduct regardless of the focus of the statute.
Bill, I’m intrigued by your suggestion this might have an impact of other statutes. So the case, the classic one I’m thinking of from international business transaction, I guess, would be antitrust, right, which is very controversial anyways, but I’m just curious – so at this point, do we need some – in a classic antitrust case wouldn't that be situational where the decisions were made in the United States, but maybe the price fixing occurred, say, outside the United States, and so are we pretty much – we’re there already. But would this have impact on antitrust, the securities, and have you any initial thoughts on that, Bill? and then I’ll ask Ilya if he has any thoughts on that too.
William S. Dodge: So I would say, no, for antitrust, and, yes, for securities. But let me unpack that just a little bit. So the Supreme Court has held—it held in a 1993 case—Hartford Fire Insurance v. California, that the Sherman Act applies extraterritorially to conduct abroad, that causes substantial and intended effects in the United States. This is now precedent. And generally, when the Supreme Court interprets a statute, it adheres to that precedent until – well, regardless of whether various interpretive cannons change. In other words, the Court won’t revisit the precedent in light of changes in its interpretive approach to other statutes.
I think that securities is potentially – so I would say, no. The Sherman Act applies extraterritorially to conduct abroad, based solely on effects in the United States. I would say that the Securities Act is a little different because it was interpreted in Morrison v. National Australia Bank under the focus prong of this presumption against extraterritoriality and really was the genesis of this new two-step approach that we see to the presumption against extraterritoriality.
It has been interpreted in the lower courts as not requiring conduct in the United States; the Second Circuit said that explicitly in a 2012 decision. But now the Court has come along and applying the same approach, and another statute says, “Well, maybe, there is a requirement for conduct in the United States.” So maybe that’s changed.
And if I can beg your indulgence, just for a moment, I see in the Q&A there’s a question about what effect this has on employment discrimination cases, which might be worth answering at this point. And I think the answer there is nothing. Title VII and other employment discrimination statutes have an express statement of a clear indication from Congress of what their geographic scope is. So those cases get resolved at the first step of the presumption, and the Court will simply follow that. It’s not going to go to the second step, which is what we’re talking about.
So for Title VII, for example, Title VII applies extraterritorially to employment discrimination against American citizens abroad by U.S. companies and by foreign companies controlled by U.S. companies, unless that discrimination is required by foreign law. And I can say that off the top of my head because I teach it every year in international business transactions.
Julian Ku: Okay. Well, I know you know that anyways, Bill. Ilya, you can answer that, or I’m actually also curious, since you’re an expert on the dynamics of the Court, the 8-1, I thought, was a little interesting here, the three liberal – is this the Roberts’ thing? Oh, Roberts is not involved in this case as an opinion writer, but maybe a trend of – in this case, the liberals signing on. What Bill mentioned was, a potentially broad reaching opinion that would limit future ATS cases. I’m curious—or if you want to address another topic—whether that there’s something going on that might be explained some part of the dynamic here that getting to eight votes on that first point.
Ilya Shapiro: Well, I think there’s unanimity, or near unanimity, on the extraterritoriality with respect to ATS. Kiobel, remember, was unanimous—9-nothing. And so whatever disagreement there might be – and we’ll discuss that about corporate liability, perhaps, or whatever it is there might be on other issues, and Thomas writes about how Congress needs to create cause of action. Sotomayor disagrees with that, joined by Breyer and Kagan. So there’s disagreement there. But in terms of extraterritoriality, this isn’t something new this year. Kiobel was eight years ago, and that was unanimous as well.
So we have to be careful not to extrapolate too much of this analysis to antitrust, securities, employment discrimination, or anything else in the sense that this ruling was specifically about the extraterritorial reach of the ATS, and with the extraterritorial reach of other statutes, it depends on the text of the statute and whether Congress has spoken clearly. Bill talked about the two-step framework there that the Court reiterated in RJR Nabisco, and that’s about that.
So I guess the fact that the Court avoided the ostensible question presented about corporate liability to focus on the other question—I don’t know whether it’s narrower, but it’s just a different question about extraterritoriality just because they could gain more unanimity there—that’s certainly a hallmark of the Roberts’ Court. But again, that’s not something just with the last few years’ political developments. Kiobel, as well, was 9 to nothing, answering a different QP.
Julian Ku: Yeah. That’s a fair point.
William S. Dodge: Julian, can I jump in on that?
Julian Ku: Yes. Of course.
William S. Dodge: So I think the Court thought that – the justices thought they were settling in on a narrow holding, and I think part of this is that there were problems with the complaint. The complaints allegations were quite general, and Paul Hoffman, the lawyer for the plaintiffs, got a lot of flack for that at oral argument.
This is an example of the Roberts Court, at least, thinking it’s deciding something narrowly. As I wrote in the Just Security blog, I think that there are surprisingly broad implications to this decision. I don’t think that the liberals thought that they even thought about the fact that they were extinguishing the Filartiga line of cases against individuals under the ATS. If they had, I don’t think they would've joined.
And I don’t think the conservatives thought about how they might be unsettling extraterritoriality in other areas by adopting a conduct requirement in the United States. We’re going to have to decide – courts are going to have to decide how much conduct is enough under all of these statutes.
One of the reasons that Justice Scalia adopted this two-step framework in Morrison, and unsettled 40 years of interpretations in lower courts about the geographic scope of securities laws, is he thought he was adopting a bright line rule. This conduct requirement is not a bright line rule, and it’s an invitation to litigation that I think some of the justices may come to regret.
Julian Ku: That’s helpful. And I think that—
Ilya Shapiro: Now, can I just jump in? That spurred something, and I thought, Bill, I don’t know if you’ve looked at whether there’s any parallel or how we can read together this case and the Ford Motor Company personal jurisdiction case in terms of where the company makes decisions and things like that. It’s kind of apples and oranges, but as I said at the outset, there are similarities between personal jurisdiction and extraterritoriality analysis.
William S. Dodge: Yeah. They’re obviously different issues, and I think that – it’s been a while since I read Ford, so I think the Court, in Ford, and to some extent, liberalizes personal jurisdiction. Personal jurisdiction for stuff that happens outside the United States—
Ilya Shapiro: Is different.
William S. Dodge: —still tends to be quite difficult to establish, in part, because there’s no general jurisdiction over foreign companies in the United States, so you need some version of specific jurisdiction, which is obviously what Ford was dealing with. But beyond that, I’m not remembering Ford well enough. It’s an insightful point, and one that’s worth studying, but I can’t do it off the top of my head.
Julian Ku: Yeah. I do think that, in a weird way, there – just as a agenda item for scholars, litigators, the extraterritoriality stuff is important. Because as Bill put it, potentially, not necessarily, potentially broad reaching, if they’re serious about it, right, if they’re serious about following up on this in future cases with other statutes. Or maybe, they limit this – this is unusual circumstances of the ATS and its unusual statutes, certainly not analogous to the other statutes.
All right, let me just shift gears a little bit because I think there’s two other things on the case that, well, I want to discuss, and maybe, let’s just on this – this is the old, more traditional ATS fight about the scope of – or the power of courts to create cause of action. Again, this is broader implications beyond just the ATS context, right? But I think what the ATS is boiled down to, in terms of this, the Thomas, Gorsuch, Kavanaugh opinion versus Sotomayor, Kagan, Breyer, that disagreement boiled down to do we think, what they call, Sosa step two, but effectively that the Court should avoid creating a cause – or recognizing a cause of action, essentially, for a variety of prudential reasons, I think, not on the step one that lacks clarity or specificity under international law, but really essentially for – I don’t know how to phrase it quite right, but judicial prudence reasons or practicality.
And I think this one, the Thomas, Gorsuch, Kavanaugh part of the opinion is what essentially, I think, limit, or could potentially limit, the ATS to really just the historically recognized cause of action, 1789, that the Court keeps referring to in Sosa, things like [inaudible 29:09] piracy or a few other very narrow claims that Blackstone would've recognized.
So I’m curious whether that – maybe, I’ll ask Bill again to start with his take on this one. That exchange, that is more a traditional fight we have over the ATS, not extraterritoriality. I was struck by the focus away from whether international law norm is clear or not, and shifting to this part, which is essentially – which I think has always been what ATS is about, which is the power of the courts to recognize cause of action or not, and whether you think this has – what your take is on that sort of exchange between those six justices.
Ilya Shapiro: For the record, those traditional violations of international law, at the time of the ATS’s enactment, were violation of safe conducts, infringement of ambassadors, and piracy.
Julian Ku: Okay. That’s right. Thank you. I had a blank there. Yes, thanks. Go ahead, Bill, what do you think?
William S. Dodge: So I think I can be fairly brief about this. So this is the fight that the Court had in Sosa. This is the issue on which Justice Souter recognized, as implied, federal common law and cause of action under the ATS for modern violations of the law of nations that are as well-established as these three historical paradigms that Ilya referred to. And Justice Scalia said, “No.” Erie intervened. And Erie says, “We don’t have federal common law, or we have very little federal common law,” and more recently, we get these cases starting – Ilya probably knows this, and Julian better than I, but in the 1980s, that put an end to creating new implied causes of action under statute. Something the court did regularly in the ‘60s and early ‘70s.
What I would say here is that there’s an interesting role reversal. Sotomayor is in the position of the originalist. She’s defending the continuing relevance of the choices that the First Congress made to allow suits to be brought by aliens for violations of international law, and while the First Congress had these three historical paradigms in mind, they could've written a statute that said, “For an alien, for piracy, violation of safe conducts, and infringement of the rights of the ambassadors,” and they didn’t, right? They knew international law could evolve. They knew it had evolved in the past. There are lots of references in the early writings of the framers about the modern law of nations.
And they wrote a statute that would evolve. They didn’t know how it would evolve, but they knew it would evolve. We see Justice Thomas here not as an originalist but instead arguing that the First Congress’s decision to permit suits for violation to the law of nations should be disregarded because of contemporary views about separation of powers and implied causes of action. And it’s interesting you see Sotomayor in the opinion, even calling Thomas out for being “a historical.” That’s not something you see very often, but to my mind, it’s accurate, and it sticks.
Julian Ku: Ilya, you have any thoughts on this part of this exchange between the two?
Ilya Shapiro: Yeah. I don’t know whether this is one of the 333 court; although, not the same alignment as has conventionally been talked about in the last week with – you mentioned that the Thomas, Gorsuch, Kavanaugh grouping, and the liberals on the other, but then you have Roberts, Alito, and Barrett who, I guess, have expressed no opinion on this question, at least, not in this case.
It’s an interesting point because we’re all originalists now. Everyone’s playing on the same playing field, trying to determine what the – we have a little bit about this in our brief about the First Congress and what they said about corporate liability, and aiding and abetting liability, and things like, “Oh, but they didn’t say about corporate liability, really.”
But given that Sosa is a judge-made rule, and that step two of Sosa, would allowing the case to proceed be proper exercised of judicial discretion? Well, that’s not exactly a bright line rule, right? So I think there’s a lot of wriggle room there, and it all depends on the jurists’ inclination, as Bill said, this debate that in the ‘80s starting reversing what was going on in the ‘60s with implied causes of action.
Julian Ku: So I guess the interesting originalist response would be that, in 1789, the judges would've recognized cause of action, but they would've had discretion to not recognize cause of action, so then is it originalist [inaudible 33:57] to – I guess it would be un-originalist to limit it strictly with those three, but it wouldn't be un-originalist, if that’s a word, to be extremely narrow in what you would recognize, right? Bill, I think you would agree with that.
William S. Dodge: Julian, I’m not aware of any support for the proposition that the framers thought judges had discretion not to recognize causes of action under common law. The framers thought – they followed Blackstone. They thought that the law of nations is here adopted in its full extent by the common law—Blackstone wrote in volume four. And you see references to that in early opinions. I don’t think the framers thought that judges had authority to say, “Well, there’s a claim under the common law, but I don’t like it, so I’m not going to recognize it.” Prove me wrong if you think [crosstalk 34:50].
Ilya Shapiro: The rub there though is that the law of nations, or international law as we now refer to it, is vague and unsettled, and different companies treat aiding and abetting liability claims differently. And so it’s unclear whether there is a norm that’s violated, which gets us back to the central issue.
And so even to the extent that the law of nations evolves and are implied cause of actions would evolve with it. That unsettling or lack of settled norms would auger, at least, those who don’t want to be more judicially restrained, not to create those new cause of action, or recognize them.
William S. Dodge: And I agree completely with Ilya on that point, but that’s a Sosa step one point, and I think that’s where the arguments ought to be hashed out. I will say I just don’t think Sosa step two should exist in the first place.
Julian Ku: Yeah. So speaking about that, the lingo – Sosa step one, just to remind folks who aren’t totally into – the step one of Sosa was I think – which I also agree with, to some degree, which is that the Court’s job here is not necessarily to say, “Well, I don’t feel like recognizing this norm, but that this norm is not specific and universal enough to be recognized and incorporated into the common law,” right, which I think is a slightly different question.
And what’s interesting to me about the Court, in this case, is that everyone avoided that, even though that was presented because that is – and this leads to the last issue I want to talk about, the corporate liability issue, right? The corporate liability argument—at least, in my view, the strongest version of it for the petitioners—was it’s not specific universal and accepted enough internationally to recognize as a – incorporate into our common law, right, whereas a court – and interestingly, the Court just didn’t analyze under step one exactly, and, in fact, five justices end up endorsing corporate liability.
So let me start with you, Ilya, since you guys addressed this in great detail in your brief. Maybe, you have thoughts on the weird corporate liability result, which we thought, I think, a lot of this stuff would be resolved by this decision.
Ilya Shapiro: Yeah. And there it’s an unusual alignment. So you have Gorsuch, joined by Alito, in his relevant part with regard to corporate liability, and then Sotomayor, Kagan, Breyer separately writing, but probably also are okay with corporate liability. So my thinking was, and the basis of our brief, was that—and our brief I think in Kiobel as well, if I can remember that far—is that it’s an open question whether corporations can be liable, and modern corporations did not exist at the time of the enactment of the ATS. And so Congress needs to speak clearly if it wants to make corporations liable.
What Gorsuch writes – and this is intriguing. I’m still thinking through whether I agree with this or not, but he’s saying the focus isn’t on who’s liable; it’s on the tort itself. It’s the Alien Tort Statute. It’s not the alien tort fees, or statute, or something like that. And so if a wrong is committed, then whoever has committed the wrong should be liable, and since we hold corporations now, we moderns, to be legal persons, then that’s perfectly fine. There are some parallel with the Citizens United, our corporations, people sort of thing, and they are, and they aren’t, depending on the case and depending on the situation.
And Gorsuch is saying, “Look, if one person or a group of unincorporated people can commit torts and be held liable for ATS violations, then what does it matter if you filed a registration with the Secretary of State of Delaware to incorporate and what have you?” You can still be liable. And so you can’t achieve some sort of immunity, from suit, just by structuring yourself in a different way.
It’s a very short – I think it’s section 2. It’s about three pages of this opinion—again, joined by Alito. I think that’s interesting. I think that’s significant, and when you add the liberal to that, that’s five right there. So in effect, the Court did decide that issue without having to decide it, and so if that squarely presented in a situation where there’s not extraterritorial application, I think corporations should be wary.
Julian Ku: Bill, I know you have views on this one. Go ahead.
William S. Dodge: Yeah. So I think it’s important to frame the question correctly at step one, and I think it’s interesting that there’s no mention in the argument, as you noted, Julian, that customary international law does not recognize a norm of corporate liability. And that argument, which Julian has championed in his writing, was basis for Judge Cabranes’ opinion in the Second Circuit in Kiobel, saying there’s no corporate liability. It got three votes in Justice Kennedy’s plurality opinion in Jesner. In my view, this is the wrong way of framing the question.
Customary international law prohibits nations from violating certain human rights. It does not dictate to nations, whether or how, to provide remedies in their domestic legal systems. So as long as the human rights norm covers corporations—and that’s a separate question, but I would just say I think there’s very good evidence that all of the norms that are actionable under Sosa do cover corporations—then nations are free to decide for themselves whether to provide liability or not and how to limit liability.
But there’s no need for a norm of corporate liability in customary international law. That asked the wrong question. It’s simply not a question that international law deals with, and so that argument, I think, was – that issue was hashed out in Jesner. It received no attention here I hope because the Court is finally convinced that that’s a nonstarter, that that’s just the wrong question.
Now, sadly, I don’t think this emerging consensus, these five justices, is going to make any practical difference in the cases. First, these statements are dictum because the case was decided on other grounds. The four circuits that have recognized corporate liability are obviously going to continue to do so because that’s precedent in those circuits.
The circuits that have not recognized it might be a little more inclined to do so because of this dictum. And I think the Second Circuit, which is the only one that has said no corporate liability under the ATS, is unlikely to reverse its position, based on dicta in concurring opinions. So I just don’t think this is going to make any practical difference.
Julian Ku: Yeah. I do have some thoughts on this, but we are running out of time. I’ll just note that I think that what’s interesting is that the change from Jesner to here, and the reluctance to address the international law question, is striking. And I’m not as in love with Gorsuch’s approach, which I think also – he avoids the step one, right? He doesn’t address the step one. He’s just, “Well, I don’t care what international law.” Because even if international did have a norm, for instance, like it does for state liability, right, sovereign liability, he would say, “Ah, it doesn’t matter,” right? I don’t think he really means that.
But anyways, well, we could talk about that. I don’t want to [inaudible 42:20] all the time. I did want to ask for your brief thoughts, both of you, since you guys are both well-positioned. I’m going to start with Ilya. So where do go from here? Bill already gave us some of his thoughts on the implications for doctrine and the cases. Where do you think the ATS goes from here? Are you going to be filing more amicus briefs, Ilya, in the future on the ATS, you think?
Ilya Shapiro: I don't know. It depends what the specific issues are in any given case. My interest in making sure that American courts adjudicate American law and don’t go on for all it can detour. And so we didn’t file in Jesner. We did in Kiobel. We don’t file on every one of these high-profile international law cases.
I think the lesson to be taken from this is to file a detailed complaint, alleging specific activity in the U.S. by American companies and how they harmed established international norms. Easier said than done, but I think that’s the clear marching orders, oh, for activity that takes place, at worst, in international waters, I guess, but not abroad.
Julian Ku: Okay. Yeah. They do set a pretty high bar. Bill, do you think anyone can meet this bar in the future in ATS cases?
William S. Dodge: I doubt it. I think the ATS has suffered death by a 1,000 cuts, so the Court recognized and applied cause of action in Sosa and has now chopped it down to almost nothing. It opposed a “touch and concern” test in Kiobel; it immunized foreign corporations in Jesner, and now it’s replaced the “touch and concern” test with the requirement of conduct in the United States that goes beyond decision-making, which is going to be very hard to show in suits against corporations and impossible to show in suits against individuals, like Filartiga.
But I think human rights litigation in U.S. courts is not dead. It’s going to proceed under expressed causes of action, like the Torture Victim Protection Act, which allows suits against individuals but not corporations for torture and extrajudicial killing. It will proceed against corporations under expressed cause of action, like the TVPRA, which allows suits against those who benefit from slavery and human trafficking. That would've covered these claims if it had been retroactive.
And just responding to Mr. [Yurcho’s 44:36] question in the Q&A, I think it would cover Nike too. Benefiting from slavery or forced labor is a very broad standard, and the TVPRA does cover corporations, unlike the TVPA. There’s also the possibility that there will be congressional action to create new causes of action or expand existing ones.
Human rights is actually a bipartisan issue, so in the Nestle case, in addition to the briefs that Ilya filed and that I filed, Ken Starr organized a brief on behalf of the Center for Global Justice at Regent University, a Christian university. Many Republicans are deeply concerned about violations of religious liberty abroad and corporate complicity in those violations. So I think we may see some surprising bipartisan human rights efforts.
And finally, the evidence for litigation in other countries are increasing. The U.K. and the Netherlands have allowed their companies to be sued for human rights violations abroad. The Kiobel case was in fact refiled in the Netherlands. The Canadian Supreme Court decided last year that Canadian corporations can be held accountable, directly under customary international law for human rights violations abroad. Because in Canada, customary international law, the Court said, is part of the common law, following Blackstone. So human rights litigation is, in fact, thriving even as the ATS slowly dies.
Julian Ku: All right. Well, that’s a good – that’s a pretty strong and useful statement. Ilya, what do you think about – I’m just curious what your perspective is on this from the – I don’t want to make you the Cato representative on the law here. So the TVPRA—I can’t always say the acronym—the Trafficking Victims Protection Rights Act—
William S. Dodge: Reauthorization Act, I think.
Julian Ku: Reauthorization Act. So the idea of a statutory fix, I guess. So ATS not really doing anything, but we have these statutory fixes, but nonetheless, actually, Congress, they’re not going ahead and opening the door to lawsuits based on overseas activities. I assume that approach is more congenial. Because your criticisms, like mine, have been mostly on the ATS and the problems with the ATS, right, but if Congress would step up to the plate or – but is there a general concern about U.S. Congress now open the door to litigation over overseas activities?
Ilya Shapiro: I haven’t thought through the policy aspects of this. Would I support, what kind of law would I propose that Congress pass? I just haven’t spent a lot of time thinking about that, but as far as the law is concerned, yeah, I don’t think this is inconsistent with Justice Thomas’ opinion. In fact, it does invite congressional response. If Congress wants to create new cause of actions, if it wants to create an alien tort statute renewal act, or updating act, or something like that, it can do so.
Julian Ku: [crosstalk 47:38].
Ilya Shapiro: What’s that?
Julian Ku: ATRS, I guess.
Ilya Shapiro: Right. Right. The TVPRA was called the William Wilberforce TVPRA, so indeed, as Bill said, slavery is not very popular on Capitol Hill, and perhaps even in today’s polarized time, there can be a consensus or a super majority to create legislation to go after slavery of all kinds.
So I think the Court would be perfectly fine to enforce whatever cause of action it did, and the Court has even said that Congress can create extraterritorial effect, if it wanted to, so I think there is a lot of running room for a legislative fix, if there’s the political will to do so.
Julian Ku: Let me just encourage folks in our last 10 minutes here. We’ve really answered some of the questions Bill posed. Let me pose a couple and encourage people to put some more up there. So there’s one I just – just one narrow point, but just another – maybe, this is for Bill in terms of – as you’re a extraterritoriality expert. Everyone’s favorite overseas U.S. statute, the Foreign Corrupt Practices Act, here I think both the policy and the law is a little bit muddled, at least, in my view.
This is a enormously ambitious statute, right, that explicitly extends, I think, although not always, but to some degree extraterritoriality, and has received a little – it hasn’t had a lot of cases because it’s usually some deferred prosecution agreement, with not much litigation over it. But what do you – the FCPA has cut – there have been some concerns about its extraterritorial scope.
This is the Foreign Corrupt Practices Act, which bands U.S. corporations from bribing foreign governments, effectively, but I’ve often been baffled by some of the domestic nexus that support some of these prosecutions. Bill, I’m curious about this because there’s a lot of FCPA practitioners out there. I’m curious what you think the impact on a statute like that is.
William S. Dodge: Sure. The FCPA is another case, which if we’re applying the presumption against extraterritoriality, it gets resolved at step one of the RJR/Morrison framework. There is a clear indication of geographic scope here. It does apply extraterritorially. The bribery of foreign officials clearly happens abroad. So I don’t think there’s any question about that.
The FCPA applies to U.S. corporations. It applies to foreign corporations that are issuers, which is to say, let list on U.S. stock exchanges. It also applies to their employees, directors, agents, who can often be foreign individuals. So it’s very broad, and it clearly applies broadly extraterritorially, and the U.S. government prosecutes lots of foreign folks under this statute.
The justice department has tried to extend it even further by using conspiracy theories, and under conspiracy, if you – everyone who’s involved in the conspiracy, all of the acts are attributable to the other conspirators. In the Hoskins case, Mr. Ponomarev mentions in the question, the Second Circuit pushed back on that. It said, “Look, Congress has defined the scope of the FCPA, and you, the Department of Justice, don’t get to expand that scope by using theories of complicity.” I think that was the right decision, but this is clearly a statute with broad extraterritorial impact.
Julian Ku: I guess what I was thinking about was that when Congress does get involved, sometimes they are quite ambitious, like with the FCPA, and other countries are not as happy when the U.S. applies its laws extraterritorially. Antitrust, they’ve come to some sort of equilibrium on that, but I think FCPA is a little bit awkward in some cases. I’m also thinking of the U.S. sanctions laws, which I’m very interested in, which have enormously broad scope, and some of the prosecutions even under those.
But I think you’re right, they may not address the doctrinal. This is more of a policy problem. Do we really think the U.S. legal system should be adjudicating or the U.S. prosecutor should be trying to prosecute people for activities that occur abroad? And the answer in the U.S. law, essentially, is, if congress wants them to, they can, right? And the Court, though, is not going to infer that, I guess, broadly speaking, and that’s the way the doctrine’s heading. It’s not going to interpret the statutes to go there without a clear indication. It’s not a very clear indication.
I’m curious whether there’s a trend here, whether the Court really is – can we say the Court, at least, in its extraterritoriality jurisprudence, starting with Morrison and going to Kiobel, have really started to roll back the U.S. ambition, internationally, with its statutes, even though Congress might be out there passing new laws. This is—
Ilya Shapiro: So that’s an op-ed, Julian. The America First Court.
Julian Ku: I think the Court is moving – there is something to this. At least, they’re not willing to infer this, and I think it’s quite reasonable on separation of powers grounds, to say “Look, we’re going to wait for Congress to do this.” This is a traditional conservative approach to central interpretation. Also, the conservative antipathy toward plaintiff’s lawyers, I think, has been driving some of the ATS concerns here, right, and believe that plaintiff’s lawyers would take advantage of statutes like the ATS.
And I think that to think about what you’re saying, Bill, the TVPA and the TV, although, they do authorize human rights lawsuits, they are really different, right, because you have to follow the statutory language in a much closer way. And like you said, the TVPA effectively does immunize corporations from TVPA.
So I’m happy with that result if that’s where we end up after all this. We can continue to hear these cases but under the rule set by Congress, but Congress goes in weird ways, right? All right, so let’s close up here since—
William S. Dodge: And can I briefly comment on that, Julian. do we have time?
Julian Ku: Yes. Yes, of course, we do.
William S. Dodge: So I think there’s a tension between what the Supreme Court is doing and what Congress is doing. Congress often does regulate extraterritorially, and in areas like sanctions, that Congress has delegated broad authority to the Executive, the Executive is very happy to regulate extraterritorially. The caution, you see, is from the courts, and in fact, the Court, under the presumption against extraterritoriality, under narrowing of jurisdiction—you can see it in a lot of different areas—is dialing back the scope of U.S. laws in ways that sometimes conflict with what Congress has in mind, and you see it, I think – one stark example is the Antiterrorism Act, which allows suits by U.S. citizens for terrorism abroad. Many of those suits are now being dismissed for lack of personal jurisdiction.
Congress wanted to authorize them. Courts are limiting them under rules of personal jurisdiction, that are of court’s rules that Congress can’t change, so you get a very isolationist court, joined with a much more expansionist Congress and Executive. And I’m not sure that what the Court is doing, in this area, is entirely justifiable. I think they’re asserting their own views of international relations and not, in fact, often following the views of the political branches.
Julian Ku: Okay. That’s a fair point. Discerning the views in the political branches is the name of the game here, and expressing those views as statutes has been tricky.
Ilya Shapiro: I think the Court doesn’t want to get ahead of its skis. It wants to make sure that because decisions in this area affect international relations, and diplomacy, and what have you, it wants to make sure that the political actors are the ones who are breaking new ground here. And so if Congress and the president want there to be these cause of action or new kinds of liability, then they should say so explicitly, and so it’s not so much that the Court is hampering or changing American diplomacy as making sure that if the political branches that explicitly say what that should be.
Julian Ku: I think we’re going to – we’ll see how this equilibrium evolves, but I think, maybe, the dynamic of the Court being more – I don't know. The word is not isolationist, but more cautious about the [inaudible 56:45] scope than the political branches are. And I agree with Bill totally that the political branches are moving in the opposite direction on a lot of fronts. If you just look at sanctions laws, [inaudible 56:55], and prosecutions for economic espionage, or whatever it is.
So you might see some conflicts, otherwise. This is one interesting implication of this case, that as we put the ATS to bed, I think, we can sense one takeaway from this conversation: if Bill Dodge says the ATS is fading away, then it’s going to fade away, I think. But it doesn’t mean that there aren’t going to be other lawsuits, but they’ll take a very different form and under a different statutes, and it will I think have, at least, in my view anyways, a more explicit authorization from the political branches. But I know somebody who might disagree with respect to ATS.
All right, so let me just wrap up the discussion. I want to thank those of you for joining me, and this has been a great discussion. I always learn a lot from reading your work and now talking to you guys both, so I do appreciate it. And I want to thank all of our viewers, listeners – I don't know what the right term is out there.
Ilya Shapiro: Zoomers.
Julian Ku: Zoomers. And, yeah, thanks again. I really enjoyed it. So take care, you guys.
Ilya Shapiro: Thanks, everyone.
Julian Ku: Thanks.
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