Jesner v. Arab Bank: The Supreme Court Should Not Miss the Opportunity to Clarify the “Touch and Concern” Test

In Kiobel v. Royal Dutch Petroleum, the Supreme Court held that the Alien Tort Statute (ATS) is presumed not to apply to conduct on the territory of another country unless the plaintiff’s claims “touch and concern” the United States with sufficient force to overcome that presumption. For the last four years, plaintiffs, defendants and courts have struggled to define the contours of the Supreme Court’s cryptic “touch and concern” standard. Earlier this year, we discussed a split in the lower courts regarding whether to apply the “congressional focus” test set forth in Morrison v. National Australia Bank as the appropriate way to determine whether the touch and concern test is met. Although the Supreme Court’s decision in RJR Nabisco v. European Cmty. appeared to mandate that the focus test be applied to the ATS, plaintiffs have continued to insist that the issue remains unresolved. The Supreme Court has declined to review circuit court decisions interpreting the meaning of touch and concern (when it denied cert last year in an interlocutory appeal of Doe v. Nestle and again last week in Adhikari v. Kellogg Brown & Root). The court has, however, agreed to hear Jesner v. Arab Bank and will hear oral argument on Wednesday. Although Jesner primarily raises the issue of corporate liability under the ATS (left unresolved in Kiobel), it gives the court an opportunity to clarify the touch and concern standard. In this post, we review the pending ATS cases, the arguments advanced by the plaintiffs and defendants over “touch and concern” in the lower courts, and how they may arise in Jesner.

I. Key Pending ATS Cases

• In Jesner, the petitioners allege that Arab Bank provided financial services to various terrorist groups, resulting in attacks in foreign countries. The Second Circuit affirmed dismissal on the basis that corporations may not be held liable under the ATS, and the Supreme Court granted cert on this question. The Solicitor General has filed an amicus brief arguing that the ATS does allow for corporate liability but suggesting that, on remand, the suit should nevertheless be dismissed because the plaintiffs’ claims do not sufficiently touch and concern the United States.
• Currently pending in the Ninth Circuit is Doe v. Nestle, the long-running suit against three corporations, alleging that they aided and abetted child slave labor in the Cote d’Ivoire. John Bellinger has previously discussed this case here, here, and here. District Judge Stephen Wilson first dismissed the case in 2010, but the Ninth Circuit reversed his decision in 2013 and the Supreme Court denied cert in 2016. On remand, Judge Wilson again dismissed the suit earlier this year, holding that the plaintiffs’ claims did not satisfy the touch and concern test. In doing so, Judge Wilson relied on RJR Nabisco, which addressed the extraterritorial application of RICO but also discussed Kiobel. As we previously discussed here, RJR Nabisco strongly implied that the only conduct relevant for touch and concern purposes is the conduct relevant to the congressional focus of the ATS, i.e., the tort in violation of international law. The appellants’ opening brief in the Ninth Circuit is due in November.
• Also pending before the Ninth Circuit is Doe v. Cisco, a suit filed by a group of Chinese dissidents against Cisco Systems, the California-based Internet technology provider, and its CEO, John Chambers, for allegedly aiding and abetting the arbitrary detention and torture of the plaintiffs by the Chinese Government. The district court dismissed the case on the basis that the human rights abuses committed against the plaintiffs occurred in China and that any conduct by Cisco did not sufficiently touch and concern the United States to overcome Kiobel’s presumption against extraterritoriality. The Ninth Circuit heard argument on the appeal in April, and while reading the tea leaves of oral argument is always a risky proposition, the panel seemed hostile to Cisco’s arguments in favor of affirmance
• Salim v. Mitchell, a case brought in the Eastern District of Washington by several alleged victims of torture against the CIA and its psychologists, settled in August. But just before settlement, the court issued an order denying CIA’s motion for summary judgment, holding that “Defendants’ relevant conduct touches and concerns the United States with sufficient force to overcome the presumption against extraterritorial application of the ATS.” In doing so, District Judge Justin Quackenbush explicitly disagreed with his colleague Judge Wilson regarding the interpretation of touch and concern. Judge Quackenbush held that RJR Nabisco’s language regarding the focus of congressional concern does not control the touch and concern inquiry and that conduct besides that of where the alleged torts occurred is relevant to the touch and concern inquiry.
• Still pending in the District Court for the District of Columbia is Doe v. ExxonMobil. This suit was filed in 2001 by Indonesian villagers who alleged that military personnel hired by ExxonMobil as security guards killed and tortured local villagers. The case was previously remanded to the district court by the D.C. Circuit on the grounds that aiding and abetting liability is permitted by the ATS. In July 2015, Judge Royce Lamberth denied a motion to dismiss, holding that the plaintiffs had alleged sufficient facts showing that their claims do touch and concern the United States with sufficient force to overcome the presumption against extraterritoriality because plaintiffs alleged that ExxonMobil executives in the United States knew that ExxonMobil security personnel in Indonesia were committing human rights abuses and made decisions that facilitated those abuses. All discovery in the case has been stayed pending a decision in Jesner, with Judge Lamberth stating an expected trial date of “late 2018 or early 2019.”
• Before the Eastern District of Virginia is Al Shimari v. CACI, a case concerning Iraqi detainees at Abu Ghraib prison. This case has been dismissed twice by the district court, first on touch and concern grounds and then on political question grounds. But twice the case has been reinstated by the Fourth Circuit. Another motion to dismiss is currently pending before the district court.

II. Plaintiffs’ Position

While Kiobel articulated the touch and concern test, it did not clarify what contacts and factors are relevant. Kiobel’s only guidance in this regard was the statement that “Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices.” Not surprisingly, plaintiffs in these ATS cases have sought to define touch and concern broadly, arguing that even minimum contacts with the United States suffice to overcome the presumption. Below are some factors that various plaintiffs have argued is sufficient to satisfy the touch and concern test.

Nationality

In all of the cases listed above (except for Jesner, since Arab Bank is not a U.S. corporation), plaintiffs have argued that the U.S. nationality of the defendant is sufficient to satisfy the touch and concern inquiry. This argument has the support of four Supreme Court justices (Breyer, Ginsburg, Sotomayor, and Kagan), who joined Justice Breyer’s concurring opinion in Kiobel. In ExxonMobil, Judge Lamberth observed that because “some have argued persuasively” that one of the focuses of congressional concern in passing the ATS was “policing the international law violations of its citizens as a matter of foreign policy,” “consideration of a defendant’s citizenship would coincide with the Morrison focus test,” suggesting a way forward for plaintiffs to argue the relevance of U.S. nationality even in jurisdictions that have adopted the Morrison focus test approach to interpreting the touch and concern test. Other courts have disagreed, however. For example, the Second Circuit in Balintulo v. Daimler AG held that nationality is “irrelevant” because “if all the relevant conduct occurred abroad, that is simply the end of the matter.”

Location of the Law of Nations Violation

Under Kiobel’s touch and concern test as clarified in RJR Nabisco, if the actual violation of the law of nations took place in the United States, this single factor would be dispositive of ATS jurisdiction. Such a fact pattern is likely to be rare, however. For example, in all of the above cases, the actual physical harm to the plaintiffs occurred overseas. But that has not stopped plaintiffs from seeking to broaden the definition of the violation of the law of nations. For example, in Adhikari v. Kellogg Brown & Root, Inc., which we covered here, while the majority held that the actual “trafficking” of the Nepali workers occurred overseas, Judge Graves in dissent adopted a more expansive view of the tort, opining that “human trafficking[] is a transnational crime that uses a global supply chain” and thus actions committed in the United States counted as part of the greater tort. Similarly, in Jesner, although most of the plaintiffs’ brief focuses on corporate liability, plaintiffs imply that their claims of terrorist financing touch and concern the United States because the case “involves corporate transgressions that occurred within the United States,” such as a bank “us[ing] its New York branch to transfer millions of U.S. dollars to finance suicide bombings.”

Location of Other Possibly Relevant Conduct

Plaintiffs have also pointed to any other conduct that, while not itself constituting the tort or the alleged law of nations violation, is nonetheless material to the violation. These actions may have furthered or ratified the violation, such as financing, planning, meeting, or ordering. In CACI for example, the plaintiffs argued that “the employees who allegedly participated in the acts of torture were hired by CACI in the United States to fulfill the terms of a contract that CACI executed with the United States Department of the Interior.” In Nestle, the plaintiffs argued that defendants made “decisions” in the U.S., provided U.S. funds, published statements on the topic in the U.S., and lobbied in the U.S. against a relevant bill. Likewise, in Giraldo v. Drummond Co., Inc., the plaintiffs argued to the district court that the CEO of the corporation “authorize[d] [and] made the . . . relevant decision-making to provide material support” in the United States. In ExxonMobil (which was decided before RJR Nabisco), Judge Lamberth accepted plaintiffs’ argument that a “complete tort” need not occur domestically; rather, it is enough if there are “specific, substantial allegations of conduct occurring in the United States.” On this basis, he determined that because elements of plaintiffs’ claim of aiding and abetting require examining “the site of the decision making,” and the decision making occurred in the United States, the plaintiffs made substantial and specific allegations of domestic conduct enough to displace the presumption against extraterritoriality.

III. Defendants’ Position

Defendants have argued for a narrow application of the touch and concern test, citing the Morrison “focus” test. In Morrison, the court held that, in considering whether conduct that occurs both inside and outside the United States violates a statute without extraterritorial application, courts should determine whether the conduct that is the “focus of congressional concern” occurred in the United States. In RJR Nabisco, the Supreme Court appeared to affirm that “[to] determine whether the case involves a domestic application of the statute . . . we . . . look[] to the statute’s ‘focus.’ If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application . . . but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U.S. territory.”

Defendants have relied on this language to argue that because the “focus of congressional concern” for the ATS is torts in violation of international law, the only conduct and locale relevant to the touch and concern inquiry is where the alleged physical harm and the entire tort occurred. No other factor would matter, including U.S. citizenship. This interpretation echoes Justice Alito’s concurrence in Kiobel that only when “the domestic conduct is sufficient to violate an international law norm,” is there ATS jurisdiction, which, as Judge Lamberth in ExxonMobil put it, is “the most limited reading of the touch and concern test.” While some courts have interpreted touch and concern in line with Justice Alito’s reading, such as the Fifth Circuit in Adhikari, other courts have not, such as Judge Lamberth in ExxonMobil. As he put it, “Justice Alito’s concurrence stating that the domestic conduct must allege a completed ATS cause of action on its own . . . failed to win a majority of the Court.”

In those cases where plaintiffs have argued that there has been some domestic conduct (even if the physical harm occurred abroad), defendants have argued that minimal domestic actions are not sufficient to overcome the presumption against extraterritoriality. In Jesner, for example, where plaintiffs allege that terrorist financing occurred domestically because the New York branch of Arab Bank routed and cleared the funds in question, Arab Bank has argued that the routing of funds is a “ministerial aspect of banking services” and that the case otherwise lacks a nexus to the United States as the “petitioners are foreign plaintiffs seeking relief against a foreign defendant for injuries that occurred on foreign soil.”

The U.S. Government’s amicus brief supports Arab Bank in this regard. The Government argues that “the automated domestic clearance of dollar-denominated transactions in isolation does not in itself constitute a sufficient domestic nexus.” Moreover, the government draws a distinction between the relevance of clearing activity in ATS and non-ATS cases. The Government states that in “some non-ATS contexts [such as the basis for a criminal indictment or a civil enforcement action], automated clearance activity in the United States would alone be sufficient to support the application of U.S. law that is not explicitly extraterritorial.” In other words, the United States agrees that in non-ATS contexts, the action of routing funds in the United States would touch and concern the United States enough such that the non-ATS statute at issue could be deemed as having a domestic, as opposed to extraterritorial, application.

But the government then explains that such conduct “in isolation does not in itself constitute a sufficient domestic nexus for recognizing a common-law claim” in “the context of the ATS.” This is because under the ATS, there is a “need for judicial caution” regarding “foreign policy concerns,” and courts “must therefore consider whether, in light of the particularized role of the ATS, a proposed common-law claim exhibits a domestic connection of ‘sufficient force to displace the presumption against extraterritorial application.’” In other words, the government is urging the Supreme Court to apply a heightened Morrison focus test inquiry, such that conduct that would otherwise suffice to render conduct sufficiently domestic for a non-ATS statute is nonetheless insufficient in the ATS context. Indeed, the government explains that this is necessary because of principles of international comity: a “foreign actor’s preference for dollar-denominated transactions, and the consequent likelihood that a transaction will be automatically routed through a bank’s U.S. branch or affiliate, are not generally circumstances for which the international community might validly deem the United States to be responsible.”

IV. Jesner: An Opportunity to Clarify Touch and Concern

The Supreme Court will presumably finally resolve the issue of corporate ATS liability in the Jesner case. But the court should also use the opportunity presented by Jesner to clarify the meaning of the touch and concern standard and to resolve the circuit split in the lower courts. The government’s amicus brief in Jesner provides a useful blueprint to provide guidance regarding the kind and level of domestic activity by defendants required to overcome the presumption against extraterritoriality. Absent further Supreme Court guidance, lower courts will remain divided regarding the meaning of the touch and concern test.