By Greg Stohr, Bloomberg News
U.S. Supreme Court justices suggested they may bar victims of overseas atrocities from using a centuries- old law to sue corporations for complicity, as the court weighed a case stemming from Middle Eastern terrorism.
Hearing arguments Wednesday in Washington, the court’s conservative wing questioned whether the 1789 Alien Tort Statute, a favorite tool of human-rights activists in recent decades, permits suits against corporations in U.S. courts.
Victims of attacks in Israel and the Palestinian territories are seeking to sue Amman, Jordan-based Arab Bank Plc for allegedly using its New York branch to distribute millions of dollars to terrorists and their families.
Chief Justice John Roberts said he was concerned that corporate liability would cause “foreign entanglements,” alluding to the Trump administration’s contention the case has caused friction with the Jordanian government.
“I’m wondering if extending it to corporate liability is, in fact, going to have the same problematic result of increasing our entanglements, as it obviously has here with respect to the government of Jordan,” Roberts said.
Another potential swing vote, Justice Anthony Kennedy, used his only questions to cast doubt on a core premise of the argument made by the victims’ lawyer.
Multinational companies have faced dozens of suits accusing them of playing a role in human rights violations, environmental wrongdoing and labor abuses. Exxon Mobil Corp., Coca-Cola Co., Pfizer Inc., Unocal Corp., Chevron Corp., Daimler AG and Ford Motor Co. have all been sued under the Alien Tort Statute. A ruling against corporate liability would further weaken a law the Supreme Court has already undercut.
The victims’ lawyer, Jeffrey Fisher, said the volume of cases has dropped dramatically since the Supreme Court ruled in 2013 that the Alien Tort Statute generally doesn’t apply to conduct beyond U.S. borders. Over the next two years, that ruling prompted the dismissal of 70 percent of the 40 cases that had been pending, Fisher said.
Justice Elena Kagan suggested that issue might be a better reason for the dismissing the case against Arab Bank than a corporate shield would be. One possibility — urged by the Trump administration — is that the justices could allow suits against corporations but order a lower court to consider throwing out the case for other reasons.
“You have plenty of things to gripe about in this lawsuit,” Kagan told Paul Clement, the lawyer representing Arab Bank. “I think the question is do you have something to gripe about as to this particular point, which is corporate versus individual liability.”
The Supreme Court considered the corporate liability question in the 2013 case but never ruled on the issue. Most federal appeals courts to consider the issue have said the law allows suits against corporations, as well as individuals. The exception is the New York-based appeals court that threw out the Arab Bank case.
The law, enacted in part because of an attack on a French diplomat in Philadelphia, contains only 33 words. It reads: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”
Arab Bank contends that language doesn’t cover corporations because there’s no consensus around the world that they can be found liable under international law. The victims point to the general principle in U.S. law that corporations can be held liable for wrongdoing.
Kennedy’s questions indicated he agreed with Arab Bank on that part of the debate. He questioned Fisher’s contention that corporate liability was a matter of enforcing an international standard against financing terrorism.
“It tells corporations what they must do, how they must run their business,” Kennedy said.
Justices Samuel Alito and Neil Gorsuch also questioned whether corporations could be sued. Justices Ruth Bader Ginsburg, Sonia Sotomayor and Stephen Breyer suggested they would side with the victims. Justice Clarence Thomas, as is his usual practice, asked no questions.
The case is Jesner v. Arab Bank, 16-499.