Jonathan Kaufman's blog

Last week, I finished working on the final brief of ERI’s client, Oxfam America, in the District Court lawsuit that the oil industry has filed to overturn landmark transparency legislation, American Petroleum Institute v. SEC.  In this brief, my  co-counsel and I underlined the lies and misleading references that the American Petroleum Institute (API) has spun in order to turn a common-sense, straightforward disclosure rule into a bug-eyed monster.

API’s argument revolves around three main themes.  First, they say it would violate their First Amendment free speech rights if oil companies were forced to publish information on the payments they make to governments.  In other words, they claim that companies have a constitutional right to make secret payments.  This argument is the legal equivalent of “swinging for the fences,” because if the court agrees with API, it could actually overturn the law instead of just invalidating the regulations that the SEC enacted under the law. 

It’s also the legal equivalent of a Hail Mary pass, because the argument is extremely thin.  In order to get there, API has to get the court to see these disclosures as a form of political coercion so that it can enjoy the same protections that political organizers receive when they seek to keep their supporters confidential.  To get First Amendment protection, you have to show that government is somehow controlling or chilling the expressive speech that you want make; it’s hard to see how these disclosures do that.

Of course, businesses can be required to disclose information all the time in the public interest, and it’s not political speech.  If API’s arguments were taken seriously, then the government couldn’t require companies to tell you what’s in the pesticides farmers use or to report to their . . .

In all the flurry surrounding last month’s decision in Kiobel v. Royal Dutch Petroleum, perhaps the clearest takeaway has been that the lower courts have their work cut out for them in applying the Supreme Court’s rule to actual cases where people have suffered abuses like torture, war crimes, and crimes against humanity.  The majority opinion, authored by Chief Justice Roberts, created a new presumption that claims arising out of human rights abuses that occurred abroad are not actionable under the Alien Tort Statute – a presumption that can be overcome in cases that “touch and concern the territory of the United States . . . with sufficient force.” 

We know that “mere corporate presence” of a foreign multinational company in the United States is not sufficient to overcome the new Kiobel presumption, but we also know that only Justices Alito and Thomas believed that all the conduct giving rise to a cause of action must take place on U.S. soil.  There is a broad spectrum of scenarios between the two extremes, and many of them are teed up for briefings in the coming weeks and months.

For example, this Friday, a judge in Virginia will hear arguments on how the Kiobel presumption applies in Al Shimari v. CACI Premier Technology, a case involving torture by a U.S. government contractor at the Abu Ghraib prison in Iraq.  According to the plaintiffs:

“Unlike in Kiobel, Plaintiffs’ claims arose out of conduct that occurred in a U.S. occupied territory and detention facility over which the United States had total authority; unlike in Kiobel, Plaintiffs’ claims challenge conduct undertaken by U.S. citizen employees of a U.S. corporation (domiciled in Virginia) in conspiracy with U.S. military personnel in carrying out (unlawfully) interrogations for the United States government and in violation of fundamental U.S. military and legislative prohibitions against torture and

. . .

I have to admit I'm confused and disappointed by the "U.S. Government Approach on Business and Human Rights," which was published recently.  The Government's scattershot "approach" appears to consist of a random collection of public-private partnerships, generally informative and aspirational guides, and legislative initiatives, most of which are years -- if not decades -- old.  Most glaring of all, despite enthusiastic references to the UN Guiding Principles on Business and Human Rights, the document completely ignores the need for victims to have access to justice and glosses over the administration's troubling record on remedies.

To be clear, it's not that the U.S. Government hasn't done anything on business and human rights -- undeniably, it has.  Congress has passed laws requiring transparency in the payments extractive companies make to governments and the due diligence companies undertake when sourcing metals from conflict-affected areas of Eastern Congo, and strengthening anti-human trafficking protections in government procurement.  Under President Obama, the U.S. has developed human rights reporting requirements for companies investing in Burma, pledged to implement the Extractive Industries Transparency Initiative, and put money and manpower into the Voluntary Principles on Security and Human Rights.

It's just that it galls me to see the government patting itself on the back for this smorgasbord of mostly voluntary initiatives at a time when it has actively worked to undermine access to justice for victims of human rights abuses connected to both U.S. and foreign companies.  Why doesn't this document mention the U.S. brief in Kiobel v. Royal Dutch Petroleum, in which it argued (successfully, as it turned out) to narrow the ability of U.S. federal courts to hear the claims of victims of human rights abuses abroad?  How can the U.S. trumpet the National Contact Point for the OECD Guidelines for Multinational . . .

I was thrilled last Thursday afternoon to hear that the SEC has blocked the oil industry’s first move in its attempt to undermine new transparency requirements.  The American Petroleum Institute (API) and other industry representatives petitioned the SEC to stay new disclosure requirements until the court’s decide on their lawsuit to overturn the law, but the SEC denied the request in no uncertain terms.

We've written in previous posts about Section 1504 of the Dodd-Frank Act, which directs oil, gas, and mining companies to publish the payments they make to the governments of the countries where they operate.  The SEC issued regulations for Section 1504 in late August, requiring companies to publicly disclose their payments for every project in each country where they operate, with no exceptions.  API sued the SEC, complaining that the law would be costly to comply with and would harm covered oil companies’ ability to compete for business abroad.  They claimed that at least four countries prohibit disclosure and predicted that they might have to withdraw from those countries, incurring tremendous financial losses, rather than violate their laws. (ERI and others had previously refuted each of these claims.)   Oxfam America – represented by ERI and two law firms – is currently defending the rules against API’s challenge to ensure that they go into effect as planned.

API asked the SEC to stay the rules and postpone the compliance date until after the legal challenge is concluded – which could take anywhere from five months to two years.  ERI and its co-counsel forcefully opposed a suspension, but convincing the SEC was an uphill battle.  The Commission had granted industry a suspension in the Business Roundtable litigation – an earlier case in which industry successfully overturned business regulations – and seemed inclined to do . . .

An important chapter in the search for justice by survivors of a massacre in the Democratic Republic of Congo came to a disappointing end this week, when the Supreme Court of Canada rejected their appeal of a lower court’s dismissal of their claims against Anvil Mining.

In 2004, an estimated 100 civilians died when the Congolese army attacked the town of Kilwa, which served as the base of operations for Anvil Mining, a Canadian/Australian company.  The survivors alleged that Anvil employees transported the soldiers to Kilwa, paid them, and gave them logistical support, including driving them around Kilwa during the massacre.  A Superior Court judge in Québec initially gave the plaintiffs a green light to pursue their claims, but the decision was later overturned by the Québec Court of Appeals, which ruled that the case should instead proceed in Congo or Australia. (I analyzed this decision in a previous blog post.) 

The Supreme Court’s decision to turn aside the plaintiffs’ appeal means that the Canadian courts are closed to their claims.  This outcome is not exactly surprising; Canadian courts have been quite aggressive in their use of the forum non conveniens doctrine to rid themselves of international human rights cases.  It’s disappointing, though, because for a brief moment the Canadian judiciary appeared to be willing to exercise the authority it has to apply universal human rights standards to companies that benefit from doing business in Canada.

Does anything go in corporate litigation, or does the international human rights system impose some limitations on the arguments and objectives of lawyers and corporate defendants?  Professor John Ruggie asks this question in a recently posted thought piece, concluding that whatever the legal merits of their position in Kiobel, the dishonest tactics and dishonorable goals of Shell and its legal team risk destroying their reputation and dashing society’s expectations of ethical conduct.

Professor Ruggie’s point of departure is the body of work he produced as the former U.N. Special Representative for human rights and business.  Over six years, the Ruggie mandate commissioned several research reports on the legal and social aspects of corporate human rights obligations.  Most prominently, the Special Representative developed a widely accepted framework positing that companies have a responsibility to respect human rights, avoid infringing on the rights of others, and address those harms that they cause or contribute to.  Shell’s lawyer at the Supreme Court, Kathleen Sullivan, cited one of Ruggie’s reports as support for her contention that the United Nations has found that companies do not have human rights obligations.

The problem, as my colleague Rick noted Monday, is that Ruggie and his team never made this statement.  The misuse of his work disturbed the Special Representative so much that he submitted an amicus brief to the Supreme Court to correct the record: Ruggie’s team actually found that while international human rights treaties do not appear to apply directly to companies, there is a steadily expanding web of legal liability that holds corporations accountable for human rights abuses.  And Shell’s misleading statements don’t end there.  Professor Ruggie points out that Shell’s briefs fudge the truth on a number of matters, from the false suggestion that U.S. litigation against companies that abetted the crimes of the apartheid regime in South Africa caused international . . .

Shell has fired its latest round in the Kiobel case in an attempt to create immunity for itself and all other companies that abet grave violations of universally recognized human rights.  In a brief filed with the Supreme Court on Wednesday, the oil giant makes arguments that range from misleading to false to offensive, all with the aim of proving that in no circumstances may U.S. courts consider claims under the Alien Tort Statute (ATS) involving human rights abuses that took place abroad.  If Shell’s proposed rule had been law for the last twenty years, Holocaust survivors, victims of international terrorism, and persecuted religious groups would have found U.S. courts closed to their claims and would not have been able to obtain compensation and justice.

Even a brief skim reveals classic tactics employed by the company’s high-paid lawyers to draw attention from the absurdity of the position they are defending.  Most offensively, the company includes some assertions that demean human rights victims and the strategies they select in their struggle for justice.  For example, Shell points to a letter from South Africa protesting ATS litigation but ignores a subsequent letter from the South African Minister of Justice commending the ATS as a helpful part of the country’s recovery from apartheid. 

Later, Shell implies that an ATS lawsuit pushed Talisman – a Canadian company accused of assisting the Sudanese army to attack communities surrounding its operations – to withdraw from Sudan, only to be replaced by a Chinese company that was even more compliant with the government’s genocidal wishes.  Here, Shell suggests that it’s no problem for Western companies to actively assist in crimes against humanity and also ignores the much larger campaign including victims and investors alike that convinced Talisman it was better off doing business in locations other than . . .

Last month, the U.S. government weighed in on the side of Royal Dutch Petroleum/Shell in the Kiobel case, opposing everyday people who claim to have suffered when the oil giant’s pursuit of profits led it to collude with the Nigerian military government to commit human rights abuses.

The government’s brief, authored by the Justice Department, was offensive, deeply troubling, and legally deficient. It argued that the United States judicial system is not available to victims of human rights abuses in cases like this one, where a foreign company that is otherwise subject to our courts was complicit in atrocities abroad.  This argument flies in the face of decades of precedent and weakens the protections of a law that is over 200 years old.

Now we’re pushing back. A number of key signatures are conspicuously absent from the brief, indicating that there were internal struggles within the administration over the government’s position. Most notable was the lack of a signature from Harold Koh, the top lawyer in the State Department and a longtime human rights advocate. In fact, neither the State Department nor the Commerce Department signed the brief, despite having joined a previous Kiobel brief in support of the victims.

Why didn’t the government’s top foreign and trade policy officials sign this brief? Their absence is particularly glaring given that the brief relies almost solely on arguments about the effects of human rights claims on foreign affairs.

We want to know how this strange brief came to be, so we have submitted three Freedom of Information Act (FOIA) requests, asking for relevant communications regarding the decision-making surrounding the government’s Kiobel brief. If disclosed, this information will help reveal whether or not the business interests of Attorney General Eric Holder or Deputy Solicitor General Sri Srinivasan influenced the government’s position in . . .

This week I'm posting a series of updates on recent developments in human rights cases around the globe. Wednesday I wrote about a Dutch court awarding damages to a Palestinian doctor who survived torture in Libya, yesterday I highlighted a criminal complaint filed against Nestlé for complicity in the murder of a union leader, and today I conclude this series with an update on corporate liability in the U.K. . . .

One of the most interesting and exciting recent advances in corporate liability has come out of the U.K. courts in an asbestosis case.  In Chandler v. Cape plc, the England and Wales Court of Appeals decided last month that Cape plc could be liable for failing in its duty of care to exercise proper supervision of health and safety conditions for employees of its South African subsidiary.

This is the latest case to affirm the principle that courts can hold parent companies responsible for the actions or omissions of their subsidiaries in a variety of circumstances.  By incorporating subsidiaries, parent companies create a “corporate veil” that cannot usually be “pierced” when the subsidiaries incur tort or tax liabilities.  The corporate form allows parents to claim that their subsidiaries are solely responsible, and they do not share in that responsibility.  Courts will normally pierce the corporate veil only when there’s evidence that the subsidiary is a sham, created only to allow a parent company to fraudulently avoid responsibility for wrongful acts. 

However, as U.S. and U.K. courts have made clear, when the subsidiary is acting on behalf of the parent, or – as in the Cape case – when the parent has direct responsbility for the subsidiary, the parent can be held responsible even if the subsidiary’s business is legitimate.

The judgment in Cape is particularly important . . .

This week I'm posting a series of updates on recent developments in human rights cases around the globe. Yesterday I wrote about a Dutch court awarding damages to a Palestinian doctor who survived torture in Libya. Today we move onto Colombia and Switzerland...

Luciano Romero, a leader of the Colombian trade union SINALTRAINAL, was assassinated in September 2005 as he prepared to attend a meeting of the Permanent People’s Tribunal to testify against his former employer, Nestlé subsidiary Cicolac – for its ties to paramilitary violence.  A Colombian criminal investigation into the responsibility of Cicolac officials, who had spread false rumors of Romero’s membership in guerilla groups and incited violence against him by telling milk suppliers with paramilitary ties that Romero’s activities would drive down their profitability, is stalled.  Meanwhile, the responsbility of Nestlé, the Swiss parent company, has simply been ignored by judicial authorities

The European Center for Constitutional and Human Rights (ECCHR), along with SINALTRAINAL , recently took a step toward addressing that gap by filing a criminal complaint in the company’s headquarters in Zug, Switzerland.  They claim that Nestlé acted with criminal neglect because it knew that its local representatives’ accusations against Romero and its economic ties to paramilitaries amounted to a death sentence for Romero but refused to take mitigating steps.  As the numbers of assassinated Cicolac labor leaders mounted, the trade union asked the parent company to intervene, but Nestlé responded that Cicolac had sole responsibility for its actions.  This is irreconcilable with Nestlé’s own policy statements, in which it pledges to take responsibility for the whole group’s compliance with internationally recognized labor rights.

The case is important in a number of ways.  First, it may definitively answer the question of whether a parent company can divest itself of legal responsibility for . . .