Tuesday, May 01, 2018

What the SCOTUS Got Right in Jesner v. Arab Bank (Spoiler Alert: Not the Result)

by Michael Dorf

Largely overshadowed by the oral argument in the Travel Ban case last week, the Supreme Court issued a potentially important opinion in Jesner v. Arab Bank, further limiting the availability of relief for plaintiffs suing under the Alien Tort Statute (ATS). Although I disagree with the thrust of the Court's restrictive ATS jurisprudence in recent years, I'll have some words of praise for Justice Kennedy's majority opinion in Jesner, because it makes conceptual sense out of what had been a deep  puzzle since Justice Souter's 2004 majority opinion in Sosa v. Alvarez-Machain. Before reading on, be forewarned that this is a fairly wonky analysis aimed chiefly at Fed Courts nerds.

The ATS authorizes "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." What does that mean? History provides little guidance.  Judge Henry Friendly famously wrote in a 1975 Second Circuit case that the ATS "is a kind of legal Lohengrin; although it has been with us since the first Judiciary Act, § 9, 1 Stat. 73, 77 (1789), no one seems to know whence it came." For much of US history it lay mostly dormant, but then was revived in 1980 in the Second Circuit's Filartiga case, which treated the ATS as authorizing something like universal jurisdiction for tort plaintiffs alleging violations of human rights.

Two Supreme Court cases cut back on the broader readings the lower courts had been giving to the ATS post-Filartiga. In Sosa, Justice Souter wrote that the ATS is merely a jurisdictional statute; it does not provide a cause of action (i.e., a substantive right to relief); moreover, he said that an alien alleging a violation of a customary international law (CIL) norm may only obtain relief where the norm is "specific, universal, and obligatory." At the Founding, the Court said, the only examples would have been piracy and violations of safe conducts or the rights of ambassadors. The Court allowed for the possibility that other norms might meet the high bar but rejected the claim that an unlawful arrest on foreign soil did. Post-Sosa, it is not clear what CIL norms count beyond the original ones. (Genocide might, per a footnote in Sosa, citing a 1995 Second Circuit decision.)

The SCOTUS further limited the ATS in 2013 in Kiobel v. Royal Dutch Petroleum, holding that it does not apply to extraterritorial conduct. The Court attempted to distinguish piracy on the ground that, while occurring outside US territory, it does not take place within the territory of any foreign sovereign, and thus does not raise the sorts of concerns that the presumption against extraterritoriality addresses. There is a substantial literature analyzing and critiquing Kiobel, but that's not my interest right now.

Jesner might have addressed a question left open by Kiobel: When a foreign defendant commits acts both within and outside the US, does it fall within the scope of the ATS? The plaintiffs alleged that defendant Arab Bank, a foreign corporation, undertook financial transactions in its New York branch that facilitated foreign terrorism. Post-Kiobel, the issue looked to be whether there was a sufficient connection between the domestic and foreign conduct to count as a tort committed within the US. But  the majority opinion in Jesner made the determination irrelevant. The Court held that the ATS does not cover suits against foreign corporate defendants, full stop.

I don't agree with the bottom line in Jesner or with everything the Court says. But rather than explore my disagreement, I want to turn now to using the case to make sense of a puzzle that has been with us since Sosa. There, the Court said that the ATS "is in terms only jurisdictional" but went on to import the limits on the substantive causes of action that would have been cognizable within that jurisdiction at the Founding into contemporary limits on the sorts of suits that can be brought under the ATS. The question is why.

To see why there is a puzzle here, remember that in 1789, federal trial courts did not have jurisdiction over cases "arising under" federal law except in a few special categories. Such general "arising under" jurisdiction would not enter the US Code until 1875. But since that time, a case alleging a federal cause of action would fall within the successor act, currently codified at 28 USC § 1331. (The 1875 version of the law contained a minimum amount in controversy, which was eventually raised to $10,000. In 1980 Congress eliminated the minimum amount in controversy.) Thus, to read the ATS as purely jurisdictional renders it completely redundant with § 1331. In any case in which the ATS confers jurisdiction, the plaintiff will be relying on either a federal treaty that gives rise to private rights of action or federal common law incorporating CIL. Such a case arises under federal law under § 1331, and thus there is no need to rely on the ATS for jurisdiction.

Now we come to the puzzle: Why, if the ATS is a now-redundant jurisdictional provision, do the substantive limits on causes of action that would have been cognizable under it in 1789 limit the ability of plaintiffs to sue under the ATS or § 1331 today? Justice Souter gave no satisfying answer to that question in Sosa, which led some commentators to argue that the Court wasn't really treating the ATS as "only jurisdictional."

Jesner offers a way to make sense of what the Court did in Sosa. In Jesner the Supreme Court says that it will not subject foreign corporations to ATS lawsuits absent a clearer indication from Congress that it intends to allow such lawsuits. One way to make sense of that statement is that it continues a recent trend of dramatically cutting back on judge-made--i.e., federal common law--remedies for legal violations. In this view, Jesner is of a piece with cases like last term's decision (also featuring a lead opinion by Justice Kennedy) in Ziglar v. Abbasi, cutting back on the circumstances in which federal officials may be sued in a so-called Bivens action.

I think that this is definitely part of what's happening in Jesner. Indeed, in Jesner, Justice Kennedy cites Ziglar as authority for waiting for Congress to act. Yet seeing Jesner as simply of a piece with the cutting back on federal common law, or even as of a piece with cases cutting back on private rights of action implied from federal statutes, misses an aspect of the ATS setting. After all, if that's all we focus on, then Jesner itself is a bit of a puzzle. Justice Kennedy says the Court can't find an implied right to sue foreign corporate defendants, because that's for Congress to decide. But couldn't the plaintiffs respond that Congress did decide already? After all, the ATS language is categorical, containing no exceptions for foreign corporate defendants.

This is where the Sosa conclusion that the ATS is purely jurisdictional makes sense. What Congress decided in the ATS was that there would be jurisdiction over some class of cases. Using legal categories in an admittedly somewhat anachronistic fashion, we can say that the causes of action allowed by Sosa were implied from the purely jurisdictional ATS, and because implying rights of action from purely jurisdictional statutes is highly disfavored (for reasons explicated in Justice Frankfurter's Lincoln Mills dissent), the Court will be extremely reluctant to extend those causes of action to any circumstances beyond the ones that would have been cognizable in 1789.

To be clear, I don't like the modern Court's restrictive approach to judge-made causes of action. That said, understanding the cause of action in these cases as implied by the jurisdictional grant in the ATS at least makes internal sense.