Court Watch Tracking Current Developments in International Law
Flomo v. Firestone: U.S. Federal Court Holds Corporations Can Be Liable Under ATS
On July 11, 2011, the U.S. Court of Appeals for the Seventh Circuit issued its ruling in the case of Boimah Flomo, et al v. Firestone Natural Rub- ber Co., LLC, finding that jurisdiction granted by the Alien Tort Statute (“ATS”) extends to civil actions against corporations. This decision con- tradicts the holdings of other U.S. circuit courts, thus meaning the issue of whether corporations are subject to suit under the ATS may soon reach the U.S. Supreme Court.
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The ATS, a provision in the 1789 Judiciary Act, provides U.S. courts with 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.” ATS lawsuits are often filed to redress various injuries, from human rights abuses to environmental damage, committed outside the United States. In Flomo v. Fires- tone, the plaintiffs, twenty-three Liberian chil- dren, alleged that the Firestone Natural Rubber Company, various Firestone affiliates, and other Firestone officers, employed children as workers at the company’s 118,000-acre rubber plantation in Liberia in violation of customary international law. Relying on the ATS as a basis of jurisdiction, the plaintiffs filed suit in a federal district court, accusing Firestone of “utilizing hazardous child labor” and sought relief in the form of compen- satory and punitive damages. Plaintiffs claim that while Firestone did not directly employ children as laborers, the daily quotas set by Firestone were so difficult to meet that it became neces- sary for adult employees of Firestone to enlist their families, including their children, to work on the plantation and help them meet the quotas.
The district court concluded that although it had
jurisdiction in this case, the plaintiffs’ ATS claim was to be rejected because “international law has never embraced the concept of corporate li- ability”. The plaintiffs appealed only the judgment in favor of the business entity, Firestone Natu- ral Rubber Company, LLC, asking the Seventh Circuit to decide “whether a corporation or any other entity that is not a natural person (in this case a Limited Liability Company) can be liable under the Alien Tort Statute, and, if so, whether the evidence presented by the plaintiffs created a triable issues of whether the defendant has violated ‘customary international law.’”
In an artfully written opinion by the Honorable Richard Posner, the Seventh Circuit parted ways with the district court and unanimously decided that corporations and LLCs may be held liable under the ATS. Nevertheless, the Court affirmed the dismissal of the suit, finding customary inter- national law does not impose liability on employ- ers that benefit from child labor.
In determining that corporate liability is possible under the ATS, the Seventh Circuit rejected the reasoning employed by the Second Circuit Court of Appeals in Kiobel v. Royal Dutch Petroleum. In that case, the Second Circuit held corpora- tions could not be sued for human rights viola- tions under the ATS because corporations have never been prosecuted in international law. The Seventh Circuit expressly disaffirmed the Kiobel court’s holding, stating that it was based upon an erroneous factual premise – that “corporations have never been prosecuted, whether criminally or civilly, for violating customary international law.” Encased in a number of illustrative analo- gies, the Seventh Circuit reasoned that although corporations have “rarely been prosecuted,” there “is always a first time for litigation to en-
ILSA Quarterly » volume 20 » issue 1 » October 2011
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