Note on… Boimah Flomo v Firestone and corporate liability under ATS/ACTA

October 18, 2010

By Antoine Martin.
Following the findings of the US Court of Appeal for the Second Circuit in Kiobel v Shell, (see a previous Int’Law Notepad Note) the respondent (FNRC) in Boimah Flomo (Boimah Flomo, et al v Firestone Natural Rubber Company (United States District Court Southern District of Indiana Indianapolis Division, Case 1:06-cv-00627-JMS-TAB Filed 10/05/10) contended that “international law does not impose liability on corporations” so that the plaintiffs had no cognizable cause of action (p.2).

The Court, overall, concluded that although it had sufficient jurisdiction to hear the claim, the plaintiffs’ claim was to be rejected due to the absence of corporate liability for human rights violations under ATS/ATCA This note summarises the main findings of the Court’s partial decision.

Does the Court Have Jurisdiction to Hear the ATS Claim Filed Against FNRC?

According to the Kiobel findings, the Boimah Flomo decision recalled, federal courts have no jurisdiction to hear claims filed against corporations under ATS because “international law has never embraced the concept of corporate liability”.

The Boimah Flomo decision however, found that the Kiobel majority’s rule conflicted with the law in the Eleventh Circuit, and suggested that “courts not only have jurisdiction to decide whether corporations may be civilly liable under the ATS, (while) corporations are, in fact, liable”(p.4).

Citing Romero v. Drummond Co. (552 F.3d 1303, 1315, 11th Cir. 2008), it in addition affirmed that “the text of the Alien Tort Statute provides no express exception for corporations, (while) the law of this Circuit is that this statute grants jurisdiction from complaints of torture against corporate defendants.”

In the absence of a definitive solution by the Supreme Court and given the significant conflicting authority on the issue, the Court rejected the plaintiffs’ argument that corporate liability recognition under ATS was “wholly insubstantial and frivolous”. The Boimah Flomo Court nevertheless, characterised the Kiobel majority’s analysis as ‘compelling’for several reasons.

The Lack of Corporate Liability in International Criminal Law

While Judge Laval in is concurring opinion commented on the relationship between punishment justifications and the absence of corporate soul, the Boimah Flomo Court interpreted the point as cautioning against the recognition of corporate liability under International Criminal Law (p.9).

The Court in addition, emphasised that the Torture Victim Protection Act of 1991 “provides a cause of action for victims of torture committed by “[a]n individual” acting under color of foreign law [so that] requiring the defendant to be an ‘individual’ preclude(d) corporate liability—unlike the term “person” that Congress originally considered for the TVPA but rejected”. The decision in fact, cites a copy of the House committee markup of the TVPA, which received unanimous consent to change “person” to “individual” so as “to make it clear we are applying [the TVPA] to individuals and not to corporations”. (p10)

The decision, furthermore, emphasised the risks of a corporate liability finding by recalling the role of International Criminal Law towards bringing individual perpetrators to justice. The Court in fact, emphasised that the plaintiffs made no attempt to sue the low-level managers whom “encouraged” the incriminated behaviours, and concluded that permitting corporate liability under ATS would overall weaken the deterrent effect of litigation for individual actors and dissuade plaintiffs from suing an individual employee if the liability of “the deeper-pocketed corporate employer” could be found.

The decision therefore, considered that using ATS to ‘punish’ corporations rather than to ‘compensate’ victims “runs counter to internationally accepted norms […] because innocent third parties will be called upon to subsidize the malfeasance of any plantation employees who (allegedly) were responsible for Plaintiffs’ plight” (p10).

Corporate Liability: a matter of policy judgment

The Boimah Flomo Court, in addition, elaborated on the legitimacy of a corporate liability finding. Deciding to permit civil corporate liability, it held, essentially involves “a policy judgment better made by a legislature than a federal court that facilitating victim compensation is more desirable than deterring individual misconduct” (p.10).

Therefore refusing to render a law-making decision, it looked for congressional guidance acknowledging a form of corporate liability. The only guidance that the Court found, however, was the pre-Sosa ruling which considered but rejected corporate liability for ATS human rights violations anterior to the Torture Victim Protection Act of 1991 which for the first time codified liability in the specific and restricted circumstances of torture (p.11).

The plaintiffs’ claim however, consisted in allegations of a prohibited “worst form” of child labor under ILO Convention, and therefore fell out of the subject matter of the Torture Victim Protection Act of 1991.

Conclusion: jurisdiction acknowledgment and failure to establish a legally cognizable claim

The Court conclusion, as the extract below shows, was straight forward. The decision indeed, conclude that although the Court had jurisdiction to hear the case, the plaintiffs had nevertheless failed to establish a receivable claim given the absence of corporate liability for human rights violations under ATS.

“Plaintiffs have sued a corporation under the ATS for an alleged violation of international law. The Court has jurisdiction to hear Plaintiffs’ claim and concludes that Plaintiffs have failed to establish a legally cognizable claim because no corporate liability exists under the ATS. Accordingly, FNRC’s motion for summary judgment, is GRANTED.

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Also related:

Note on… Kiobel v Shell and corporate liability

One Response to “Note on… Boimah Flomo v Firestone and corporate liability under ATS/ACTA”

  1. […] The Sosa decision, as a matter of fact, suggested that authorizing ATS suits would have an “obvious potential to affect foreign relations”, a point confirmed in Boimah Flomo where the Court similarly held that permitting corporate liability under customary international law would essentially constitute “a policy judgment better made by a legislature than a federal court that facilitating victim compensation is more desirable than deterring individual misconduct” (p.10). […]

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