7th Cir Says Kiobel Wrong, Corporations Liable Under Alien Tort Law - U.S. Seventh Circuit
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7th Cir Says Kiobel Wrong, Corporations Liable Under Alien Tort Law

The Seventh Circuit Court of Appeals ruled this week that corporations can be held liable under the Alien Tort Act, raising the circuit-level are-they-or-aren't-they-liable decision count to 7 to 1. The Second Circuit's Kiobel v. Royal Dutch Petroleum Co. remains the lone outlier.

Writing for a unanimous panel in Flomo v. Firestone Natural Rubber Co., Judge Richard Posner criticized the Kiobel decision's underlying premise that there is no principle of customary international law that binds a corporation as "incorrect." Posner countered that the allied powers dissolved German corporations that assisted the Nazi war effort under the authority of customary international law. Even in the absence of precedent for corporate international law violation sanctions, Posner argued that "there is always a first time for litigation to enforce a norm."

The Flomo opinion noted that if, as Kiobel asserted, a plaintiff must show that civil liability for violations of the Act is a norm of international law, the Alien Tort Act is virtually unenforceable against corporations because the United States is the only country that has such a statute. Paul Hoffman, the lead plaintiffs' attorney for both Flomo and the Kiobel appeal, told Thomson Reuters, "It would be one thing if there were legislative history that indicates Congress didn't want corporations to be sued. There's not."

The court also rejected Firestone's arguments that the plaintiffs had not exhausted domestic remedies in Liberia before lodging their suit in the United States, and that the Alien Tort Act had no extraterritorial application, except customary international law violations occurring on the high seas.

While the Court rejected the defense's arguments related to the Alien Tort Act, it ultimately upheld the district court's judgment because the plaintiffs' case lacked "an adequate basis for inferring a violation of customary international law."

Still, with both the Seventh Circuit decision in Flomo and last week's DC Circuit decision in John Doe VIII v. Exxon Mobil upholding the application of the Alien Tort Statute against corporations, it will be interesting to see if the Supreme Court takes up the issue in the fall.

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