A Nasty Split in U.S. Courts Over Human Rights

One federal bench breaks with the pack to block lawsuits against corporations for violations abroad.

Human rights activists protest against Shell.

Photographer: Sebastian D'Souza/AFP/Getty Images

A company whose violation of human rights abroad strongly affects the U.S. can be sued in any federal court in the country -- except New York and Connecticut’s Second Circuit. A decision there Tuesday means it will remain stubbornly outside the pack.

The U.S. Court of Appeals for the Second Circuit refused to reconsider an earlier decision that might have put it into conformity with the other circuits. The majority in the court's opinion said it wasn't worth bothering after the Supreme Court sharply reduced liability under international law in 2013. The dissenters thought the appeals court should fix what it saw as a mistake made in 2011 when it first held that corporations can’t be held responsible for human rights violations in other countries.

This matters for the ongoing saga of international human rights litigation in the federal courts. Although the Supreme Court drastically cut back on the reach of human rights litigation in its 2013 decision, the practice isn’t dead yet. To the extent it lives, corporate liability might be one of the key ways to press within the U.S. for greater respect for human rights abroad.

The Second Circuit is where international human rights litigation in federal court was first born, in the 1980 case of Filártiga v. Peña-Irala. The Filártiga case saw the appeals court making a highly creative use of the Alien Tort Statute, a legal oddity first enacted in 1789. Just a sentence long, the law says that federal courts shall have jurisdiction over “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.”

The original meaning of the law has been hotly debated and extensively discussed by scholars. What matters for our purposes is that, in 1980, the Second Circuit held that the law could be used by a foreigner to sue a foreigner in the U.S. courts for international law violations that took place outside the U.S.

Thus was born a key tool for human rights activists to draw domestic and international attention to human rights violations around the world. Well-publicized lawsuits under the Filártiga precedent included a suit against the Bosnian Serb war criminal Radovan Karadzic.

Skeptics wondered if this was all a good thing or not. But the litigation continued robustly until 2013. What upended it was an unexpected result from the Supreme Court in a case, Kiobel v. Royal Dutch Petroleum, that involved a suit against the European oil company known as Shell for alleged human rights violations that took place in Nigeria.

The case began in federal district court in New York, then made its way to the Second Circuit. A panel of the appeals court ruled that, while the Alien Tort Statute could be used against individuals, it couldn’t be used to sue a company. The reasoning was that, under international law, corporations can’t be made defendants. A dissent by Judge Pierre Leval argued that this was a misreading of international law, and created a split with other circuits.

The split brought the case to the Supreme Court, ostensibly to decide whether companies could be sued under the Alien Tort Statute. But after oral argument, the court asked for new briefings on a separate question -- whether the law could overcome the legal presumption against U.S. laws applying abroad, or “extraterritorially.”

The writing was on the wall for international human rights litigation. In an important decision, written by Chief Justice John Roberts, the court held that the Alien Tort Statute doesn’t apply to conduct occurring outside the U.S. that doesn’t “touch and concern” the U.S. This holding locks out the great majority of the kinds of cases that human rights advocates have traditionally brought in the federal courts since 1980. Most of those cases involved human rights violations abroad that had little or nothing to do with the U.S.

But the Supreme Court left a small ray of hope for international rights litigators who want to use U.S. courts -- the “touch and concern” exception. It didn’t say what that standard really means, leaving it to the lower courts to figure out.

And crucially, the Supreme Court never bothered to resolve the issue that brought the Kiobel case to it in the first place, namely whether corporations can be made defendants in human rights suits.

The Second Circuit case that ended yesterday involved a lawsuit by victims of Palestinian terror against the Arab Bank, which was alleged to have performed some basic banking functions for terrorist groups. When it reached the Second Circuit, the panel that heard the case did something highly unusual.

First, the panel held that the families’ suit was blocked by the Second Circuit precedent that said corporations can’t be made defendants under the Alien Tort Statute. That was the normal part: A panel of the circuit is obligated to follow circuit precedent. But then the panel said that the Second Circuit precedent was terribly wrong, and it called for the rest of the court to sit as a single panel  -- en banc in the court’s law-French parlance -- and reverse the precedent.

Four justices joined an explanatory opinion by Judge Dennis Jacobs explaining why the court shouldn't hold a rehearing en banc. Jacobs wrote that it would be pointless to revisit the precedent, because under the Supreme Court’s Kiobel ruling, there might be no more international human rights lawsuits in the Second Circuit at all.

He said derisively that rehearing “would do nothing but supply catnip for law clerks looking to teach.” As someone who was once a law clerk looking to teach, I suppose I take that remark a little personally. Jacobs was using the trope of clerks as future law professors to claim that rehearing would produce a result that was purely theoretical.

That’s wrong, as Judge Denny Chin retorted in an opinion that got three votes. The Supreme Court didn’t entirely kill human rights litigation in Kiobel. Therefore, the Second Circuit’s unique rejection of corporate liability still matters.

It’s noteworthy that this anti-human rights decision came in the Second Circuit, where the whole field started. Times have changed, and the federal courts, following the Supreme Court, are now uncomfortable with serving as the venue for adjudicating international human rights violations. The rights advocates’ task will remain a little harder in the Second Circuit. But they’re unlikely to give up until they’ve got no choice.

(Corrects description of court action in second and 15th paragraphs, and author of the Supreme Court opinion in the 10th paragraph of article published May 11.)
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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