THE LIABILITY OF CORPORATE DIRECTORS, OFFICERS, AND EMPLOYEES UNDER THE ALIEN TORT STATUTE AFTER JESNER V. ARAB BANK, PLC

The Supreme Court’s 2018 Jesner v. Arab Bank, PLC decision caused uncertainty for future and ongoing Alien Tort Statute (ATS) litigation in federal courts. In holding that foreign corporations are not subject to liability under the ATS, the Court foreclosed one avenue human rights plaintiffs have sought to use for the past few decades to garner attention, and in some cases receive significant monetary settlements, for the abuses. Further, the Court’s decision cast doubt on whether domestic corporations remain subject to the ATS given the weight the Court placed on separation of powers concerns in its decision. While foreign corporations, and perhaps domestic corporations, can no longer be haled into federal court using the ATS, both the Jesner Court and commentators suggest that plaintiffs are not without a remedy—the corporate officials responsible for the human rights violations remain liable.

This Note argues that suits against corporate officers, directors, and employees raise complicated choice of law issues the Court has avoided addressing in ATS suits against corporations, but courts will be forced to address in suits against individual corporate officials. The Note finds that the choice of law determination on ancillary liability issues will prove outcome determinative in these cases given the different liability laws for corporate officials in different jurisdictions. This factor will create significant uncertainty for courts and litigants about whether cases against corporate officers, directors, and employees can be brought under the ATS, as the Court’s current ATS jurisprudence provides little direction for resolving choice of law issues in ATS cases. The Note proposes that federal courts require the applicable choice of law inquiry to yield the conclusion that U.S. law (state or federal) controls all aspects of the case beyond the substantive allegation of a violation of the law of nations for any suit against a corporate official to be cognizable using the ATS.

The full text of this note may be found by clicking the PDF link to the left.

* J.D. Candidate 2020, Columbia Law School. The author would like to thank Professor Thomas H. Lee and the staff of the Columbia Law Review for support in connection with this Note.

Introduction

When the Supreme Court held in Jesner v. Arab Bank, PLC that foreign corporations cannot be held liable under the Alien Tort Statute (ATS), Justice Kennedy justified the decision by writing: “If the Court . . . [held] that foreign corporations have liability for international-law violations, then plaintiffs may well ignore the human perpetrators and concentrate instead on multinational corporate entities.” 1 Jesner v. Arab Bank, PLC, 138 S. Ct. 1386, 1405 (2018). After all, Kennedy noted, “plaintiffs still can sue the individual corporate employees responsible.” 2 Id. The Second Circuit made the same point as Justice Kennedy in its Kiobel v. Royal Dutch Petroleum Co. opinion foreclosing ATS liability for corporations, both foreign and domestic. The court specified that its holding did not “limit[] or foreclose[] suits under the ATS against the individual perpetrators of violations of customary international law—including the employees, managers, officers, and directors of a corporation.” 3 Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 122 (2d Cir. 2010), aff’d, 569 U.S. 108 (2013).

However, the expected suits against individual corporate officers, directors, and employees after Jesner raise a host of issues for ATS plaintiffs and courts. Because foreign corporations can no longer be found liable using the ATS, and significant doubt exists about whether domestic corporations can be sued under the statute, 4 While the Court only held that foreign corporations could not be sued under the ATS, a debate has ensued about whether any corporation could be sued under the ATS post-Jesner. In a concurring opinion, Justice Alito claimed that “[b]ecause this case involves a foreign corporation, we have no need to reach the question whether an alien may sue a United States corporation under the ATS.” Jesner, 138 S. Ct. at 1410 n.* (Alito, J., concurring). Some scholars have emphasized that while the Court did not foreclose suing domestic corporations, there are a host of reasons suggesting that corporate defendants will be able to use Jesner to try to limit the ATS to suits against individuals. See infra notes 55–59 and accompanying text. This Note does not take a position in the debate and instead focuses only on ATS jurisdiction over individual corporate directors, officers, and employees. plaintiffs have little choice but to sue individual corporate officers, directors, and employees to invoke ATS jurisdiction. 5 See Chimène Keitner, ATS, RIP?, Lawfare (Apr. 25, 2018), https://www. lawfareblog.com/ats-rip [https://perma.cc/VQ8U-VZBF]; see also infra text accompanying notes 55–60. While few such cases have been brought in the past, that is already beginning to change. 6 See Doe v. Drummond Co., 782 F.3d 576, 580 (11th Cir. 2015) (describing plaintiffs’ ATS allegation that corporate officials supported a paramilitary group that committed international law violations); Aragon v. Che Ku, 277 F. Supp. 3d 1055, 1061 (D. Minn. 2017) (describing plaintiffs’ ATS claim alleging both corporations and the CEOs of the corporations engaged in forced labor in violation of international law); In re Chiquita Brands Int’l, Inc., 190 F. Supp. 3d 1100, 1104 (S.D. Fla. 2016) (describing plaintiffs’ ATS claim against corporate officers alleged to have knowingly helped a paramilitary organization commit international law violations by providing funding); see also infra section I.C.2. Plaintiffs are already beginning to proceed with suits originally filed against foreign corporations before Jesner by dropping the corporations from the suit and instead suing the foreign corporation’s directors. See, e.g., Nahl v. Jaoude, 354 F. Supp. 3d 489, 495 n.2 (S.D.N.Y. 2018) (“Unlike the Previous Complaint, the Proposed Complaint no longer names corporate entities . . . as Defendants, presumably because Plaintiffs have no viable ATS claim against such entities.”). As a practical matter, given current indemnification policies, corporations may end up paying judgments in these cases anyway. 7 Dan A. Bailey, Bailey Cavalieri, Director and Officer Indemnification 2 https:// baileycav.com/site/assets/files/1431/director_and_officer_indemnification.pdf [https:// perma.cc/L4WY-2VPA] (last visited Jan. 18, 2019) (noting that in the United States, indemnification statutes exist in all states that either permit or require indemnification of the corporation when officers and directors are sued in their individual capacities for actions taken on behalf of the corporation). However, suits against corporate officers, directors, and employees raise a thicket of complicated legal issues—including choice of law, 8 See infra Part II. personal jurisdiction, 9 See Amy Howe, An Introduction to the Alien Tort Statute and Corporate Liability, SCOTUSblog (July 24, 2017), http://www.scotusblog.com/2017/07/introduction- alien-tort-statute-corporate-liability-plain-english/ [https://perma.cc/75KU-5LQM] (noting that plaintiffs arguing for corporate liability claim such liability is the only way to achieve accountability for violations given the difficulties of establishing jurisdiction, getting judgments, and deterring future violations in suits against individuals). and standards for aiding and abetting liability 10 See infra section II.C.2. —that are not as complicated in cases against corporations. And these issues are in addition to the restrictions in ATS suits previously articulated by the Court. 11 These include limiting when courts can create causes of action, Sosa v. Alvarez-Machain, 542 U.S. 692, 725 (2004), applying the presumption against extraterritoriality to the ATS, Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 117 (2013), and categorically excluding foreign corporations from suit, Jesner v. Arab Bank, PLC, 138 S. Ct. 1386, 1407 (2018).

This Note addresses one of those complicated issues that is likely to be outcome determinative in suits against corporate officers, directors, and employees: choice of law. Choice of law issues in ATS cases have always been present and engender significant debate when they arise. 12 Beth Stephens, Judith Chomsky, Jennifer Green, Paul Hoffman & Michael Ratner, International Human Rights Litigation in U.S. Courts 36 (2d ed. 2008) (noting “what body of law governs particular issues “is among the most unsettled” ATS issues, and because “[f]ederal common law crafts rules by choosing among multiple sources of law . . . international law, federal statutory law, federal common law, state law, and foreign law may all govern one or more . . . issues”). Rather than making conclusive judgments about what substantive law governs ATS cases, scholars and courts often avoid the question, or claim the debate is “inconsequential” and that the result would be the same under international law, domestic law, or foreign law. 13 See, e.g., Jennifer M. Green, Corporate Torts: International Human Rights and Superior Officers, 17 Chi. J. Int’l L. 447, 452 (2017) (“Under international and domestic law, corporate officers can and should be held liable under a superior responsibility standard for human rights violations that constitute torts . . . .”); Beth Van Schaack, The Inconsequential Choice-of-Law Question Posed by Jesner v. Arab Bank, 24 ILSA J. Int’l & Comp. L. 359, 361 (2018) (declaring that “regardless of whether courts look to U.S. law or to international law, the ATS supports corporate tort liability”). However, as this Note shows, choice of law issues in ATS suits against individual corporate officials will often prove outcome determinative. 14 See infra section II.C. This factor, when combined with the Supreme Court’s other limitations on ATS jurisdiction, creates significant uncertainty for courts and litigants about whether cases against corporate officials for human rights violations can be brought under the ATS. 15 See infra section II.D.2. This Note proposes a solution to clarify the legal standard in such cases that will benefit both litigants and courts: U.S. courts should permit ATS suits against corporate officials only if the applicable choice of law inquiry yields the conclusion that U.S. law (state or federal) controls all aspects of the case beyond the substantive allegation of a violation of the law of nations. 16 There is a minority view that the ATS refers only to the identity of the alien plaintiff and not the substantive law at all. See Thomas H. Lee, The Three Lives of the Alien Tort Statute: The Evolving Role of the Judiciary in U.S. Foreign Relations, 89 Notre Dame L. Rev. 1645, 1652 (2014) [hereinafter Lee, Three Lives] (explaining that “[t]he words ‘in violation of the law of nations or a treaty of the United States’ were necessary to specify which aliens could sue, not to specify the body of law that originated the claim” (citations omitted) (quoting 28 U.S.C. § 1350 (2012))). For a detailed explanation of that view, see generally Thomas H. Lee, The Safe-Conduct Theory of the Alien Tort Statute, 106 Colum. L. Rev. 830, 871–900 (2006) [hereinafter Lee, Safe Conduct].

Part I provides a brief history of ATS jurisprudence and addresses the current law surrounding the liability of corporate officials in the ATS context. Part II addresses the significant choice of law problems courts will face in transnational ATS suits against corporate officials, directors, and employees. Part II further shows that choice of law may prove outcome determinative on the ancillary issues in ATS cases against corporate officers, and that current ATS jurisprudence provides courts little guidance on how to resolve choice of law issues. Part III provides a possible solution to the problem, arguing that courts should require the choice of law inquiry to yield U.S. law applies to the ancillary aspects of ATS cases against corporate officials for ATS jurisdiction to vest at all.