By Peter SternMorrison and Foerster
The recent decision of the U.S. Ninth Circuit Court of Appeals in Doe I v. Unocal Corp., Nos. 00-56603, 00-57197, 2002 U.S. App. LEXIS 19263 (9th Cir. Sept. 18, 2002), represents a significant precedent in the field of corporate liability for international human rights violations under the Alien Tort Claims Act ("ATCA"), 28 U.S.C. Â§ 1350.
In an opinion authored by Judge Harry Pregerson and joined by Judge Wallace Tashima, Unocal held that a corporation may be civilly liable as an aider and abettor for human rights abuses carried out by a foreign government based on the company's "knowing practical assistance [or] encouragement . . . which has a substantial effect on the perpetration of the crime." Id. at *58 (citation omitted). Judge Stephen Reinhardt filed a concurrence agreeing with the majority's disposition of the case, but setting out a different formulation of the aider and abettor standard.
Unocal involved a host of important issues, including foreign sovereign immunity and the act of state doctrine. This update focuses solely on Unocal's standard for aider and abettor liability under the ATCA and the implications of that standard for future litigation.
Background to the Unocal Decision
The ATCA, enacted by the first Congress in 1789, provides that "[t]he district courts shall have original jurisdiction of 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." 28 U.S.C. Â§ 1350. Following the Second Circuit's decision in Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980), the ATCA has evolved into a vehicle for asserting a wide variety of claims based on alleged violations of customary international law, particularly in the area of human rights. For example, in Hilao v. Estate of Marcos, 103 F.3d 767, 773 (9th Cir. 1996), a class of 10,000 Philippine nationals brought suit against former Philippine dictator Ferdinand Marcos for acts of torture, execution, and disappearance occurring over a 14-year period. A second wave of such suits -- beginning with the Unocal cases, which were filed in 1996 -- has targeted corporations under the ATCA.
Unocal was an appeal from actions brought by villagers in the Tenasserim region of Myanmar (formerly Burma) against the oil company Unocal and other defendants. In 1992, Total S.A., a French oil company, contracted with the Myanmar government to obtain rights to produce, transport, and sell natural gas from an offshore location in Myanmar. The project involved construction and operation of a gas pipeline running through the interior of Myanmar to Thailand. Unocal obtained a 28% interest in this project from Total.
According to plaintiffs, the terms of the project called for the Myanmar Military to protect the gas pipeline. Plaintiffs allege that the Myanmar Military forced them to work on and serve as porters for the pipeline project. Plaintiffs further allege that in connection with security for the project, the Myanmar Military subjected them to murder, rape, and torture. Plaintiffs do not allege that Unocal employees physically carried out any human rights violations. Rather, plaintiffs claim that Unocal was aware of the Myanmar Military's abuses, and that Unocal's involvement in the project and its dealings with the Myanmar Military render it liable for these abuses.
The district court granted summary judgment for Unocal. The district court held that plaintiffs were unable to satisfy the state action requirement for their ATCA claims of murder, rape, and torture, and failed to show that Unocal controlled the Myanmar Military for purposes of establishing vicarious liability. 2002 U.S. App. LEXIS 19263, at *25. The district court further held that plaintiffs could not show that Unocal "actively participated" in the alleged forced labor practices of the Myanmar Military.
Analysis: Aider and Abettor Liability Under the ATCA
The central issue in Unocal was the proper legal standard for aider and abettor liability under the ATCA. To reach this issue, however, the Unocal court first had to resolve two key threshold issues: (1) whether plaintiffs were required to show that Unocal had engaged in state action; and (2) whether forced labor constituted a customary international law norm.
No State Action Requirement
Traditionally, international law has applied to states, not private parties. As a result, although courts have permitted claims based on international law to be brought under the ATCA against private parties (including corporations), they have required that plaintiffs establish "state action," i.e., an interrelationship between the conduct of the private party and a state. Largely owing to their familiarity with domestic civil rights law, U.S. courts have looked to 42 U.S.C. Â§ 1983 to supply the legal standard for this determination. The state action requirement has functioned in some cases as a barrier to ATCA suits.
Prior case law has held, however, that the state action requirement does not apply to a narrow class of particularly egregious human rights violations, including genocide, war crimes, and slave trading. See Kadic v. Karadzic, 70 F.3d 232, 243-44 (2d Cir. 1995). The Unocal court, following the Second Circuit's decision in Kadic, extended the subset of crimes for which state action need not be shown. Unocal held that "even crimes like rape, torture, and summary execution, which by themselves require state action for ATCA liability to attach, do not require state action when committed in furtherance of other crimes like slave trading, genocide or war crimes, which by themselves do not require state action for ATCA liability to attach." 2002 U.S. App. LEXIS 19263, at *31 (emphasis original). Because plaintiffs testified that acts of murder, rape, and torture were committed "in furtherance" of the Myanmar Military's forced labor program, the court concluded that no state action requirement applied to these claims. Id. at **56-57.
Forced Labor as Customary International Law Norm
Unocal also confronted the question whether forced labor was a violation of the law of nations for purposes of ATCA jurisdiction. The court had no difficulty concluding that it was, observing that "forced labor is so widely condemned that it has achieved the status of a jus cogens violation [of international law]." Id. at *29. Jus cogens norms are norms of international law that are binding on nations even if they do not agree with them. This status, according to the court, "by definition" denoted "a violation of â€˜specific, universal, and obligatory' international norms" actionable under the ATCA. Id. at **29 & n. 15 (quotations omitted). Indeed, for purposes of the state action analysis noted above, the court held that forced labor was "a modern variant of slavery," Id. at *32, thus justifying its treatment as one of a handful of crimes -- along with genocide and war crimes -- for which state action was not required.
Standard for Liability
In light of its holding that no state action requirement applied to plaintiffs' claims, the Ninth Circuit rejected the district court's ruling that plaintiffs had to show Unocal's "active participation" in the Myanmar Military's forced labor practices in order to establish that Unocal was liable under the ATCA. Rather, Unocal held that the proper standard for aider and abettor liability under the ATCA was "knowing practical assistance or encouragement that has a substantial effect on the perpetration of the crime." Id. at *36. Because "a reasonable factfinder could find that Unocal's conduct met this standard," id., the district court's grant of summary judgment was reversed.
Rejecting Unocal's argument that Myanmar law should govern aider and abettor liability, the Ninth Circuit looked to international law to provide the legal standard on this issue. The Unocal panel held that international law should be applied where violations of jus cogens norms were alleged, since "by definition, the law of any particular state is either identical to the jus cogens norms of international law, or it is invalid." Id. at *40. In addition, the Unocal court observed that applying international law was consistent with the nature and goals of the ATCA, given that "the basic policy" of this federal statute "is to provide tort remedies for violations of international law." Id. at *42.
The court held that recent decisions of United Nations International Criminal Tribunals for Rwanda ("ICTR") and the former Yugoslavia ("ICTY") were especially helpful in supplying the substantive law of aider and abettor liability under the ATCA. Based on the decisions of these tribunals, which involved accusations of war crimes and other atrocities, Unocal identified the nature of the act (actus reus) and mental state (mens rea) required to trigger aider and abettor liability under the ATCA.
According to the Unocal court, international authorities held that "the actus reus of aiding and abetting in international criminal law requires practical assistance, encouragement, or moral support which has a substantial effect on the perpetration of the crime." Id. at *45. Citing the ICTY case of Prosecutor v. Furundzija, IT-95-17/1-T (Dec. 10, 1998), Unocal sketched out the contours of this doctrine as follows:
. . . in order to qualify [for liability], "assistance need not constitute an indispensable element, that is, a conditio sine qua non for the acts of the principal." Furundzija at 209; see also Prosecutor v. Kunarac, IT-96-23-T &IT-96-23/1-T, 391 (Feb. 22, 2001), http://www.un.org/icty/foca/trialc2/judgement/index.htm ("The act of assistance need not have caused the act of the principal."). Rather, it suffices that "the acts of the accomplice make a significant difference to the commission of the criminal act by the principal." Furundzija at 233. The acts of the accomplice have the required "[substantial] effect on the commission of the crime" where "the criminal act most probably would not have occurred in the same way [without] someone acting in the role that the [accomplice] in fact assumed." Prosecutor v. Tadic, ITY-94-1, 688 (May 7, 1997), http://www.un.org/octy/tadic/trialc2/judgement/index.htm. Id. at **45-46. Notwithstanding its reliance on such ICTY authority, the Unocal majority elected to drop the reference to "moral support" from its formulation of the liability standard. Noting that "there may be no difference between encouragement and moral support," Id. at *50 n.28, the court nonetheless "[left] the question whether such liability should also be imposed for moral support which has the required substantial effect to another day." Id. at *50.
Unocal framed the intent requirement for aider and abettor liability as follows:
As for the mens rea of aiding and abetting, the International Criminal Tribunal for the former Yugoslavia held that what is required is actual and constructive (i.e., "reasonable") "knowledge that [the accomplice's] actions will assist the perpetrator in the commission of the crime." Furundzija at 245. Thus, "it is not necessary for the accomplice to share the mens rea of the perpetrator, in the sense of positive intention to commit the crime." Id. In fact, it is not even necessary that the aider and abettor knows the precise crime that the principal intends to commit. See Id. Rather, if the accused "is aware that one of a number of crimes will probably be committed, and one of those crimes is in fact committed, he has intended to facilitate the commission of that crime, and is guilty as an aider and abettor.
Id. at *47. Although it relied exclusively on international law in spelling out this standard, Unocal noted that "[a]t least with respect to assistance and encouragement, this standard is similar to the standard for aiding and abetting under domestic tort law." Id. at *49.
The Unocal court readily concluded that a reasonable jury could find Unocal liable for aiding and abetting the forced labor practices of the Myanmar Military under the above standard. The Ninth Circuit found that there were triable questions of fact not only about whether the Myanmar Military had used forced labor to build and maintain the pipeline, but also about whether Unocal "gave practical assistance to the Myanmar Military in subjecting Plaintiffs to forced labor." Id. at *52. Such practical assistance, according to the court, took the form (1) "of hiring the Myanmar Military to provide security and build infrastructure along the pipeline route in exchange for money or food," and (2) "of using photos, surveys, and maps in daily meetings to show the Myanmar Military where to provide security and build infrastructure." Id. at **52-53. The court likewise held that Unocal's assistance to the Myanmar Military "had a â€˜substantial effect' on the perpetration of forced labor, which â€˜most probably would not have occurred in the same way' without someone hiring the Myanmar Military to provide security, and without someone showing them where to do it." Id. at **53-54 (quoting Tadic at 688).
As to mens rea, the court likewise found that there was a triable issue of fact regarding whether Unocal knew or should have known that its actions would "assist the perpetrator [i.e., the Myanmar Military] in the commission of the crime [of forced labor]." Id. at *54. Under international law, the court noted, "it is not even necessary that the aider and abettor knows the precise crime that the principal intends to commit." Id. at *62. Nonetheless, according to the court, "the evidence does suggest that Unocal knew that forced labor was being utilized and that the Joint Venturers benefited from the practice." Id. at *54. The court thus concluded that "Unocal knew or should reasonably have known that its conduct -- including the payments and the instructions where to provide security and build infrastructure -- would assist or encourage the Myanmar Military to subject Plaintiffs to forced labor." Id. at **54-55.
Unocal further held that there would have to be a trial to determine the company's accomplice liability for the Myanmar Military's acts of murder and rape -- but not torture. The court held that there was a triable issue of fact as to whether the Myanmar Military had engaged in the murder and rape of plaintiffs or their family members in connection with work on the pipeline: "[B]ecause Unocal knew that acts of violence would probably be committed, it became liable as an aider and abettor when such acts of violence --specifically, murder and rape -- were in fact committed." Id. at *63. No such evidence was presented, however, with regard to torture, and therefore summary judgment was appropriately granted on plaintiffs' torture claims.
Judge Reinhardt's Concurrence
In his concurrence, Judge Reinhardt agreed with the outcome reached by the majority, but rejected an international law standard for aiding and abetting liability in favor of the application of "general federal common law tort principles, such as agency, joint venture, or reckless disregard." Id. at *85.
Judge Reinhardt observed that the ATCA was "silent" on the question of what law should apply to determine "whether a third party may be held liable in tort for a governmental entity's violation of the law of nations." Id. at *91. He offered multiple reasons for why the governing law on this issue should be derived from federal common law -- not international law -- in ATCA cases.
To begin with, Judge Reinhardt stated that because ATCA cases typically involve U.S. foreign relations, "unique federal interests" "support the creation of a uniform body of federal common law to facilitate the implementation of such [ATCA] claims." Id. at **92-93. Judge Reinhardt further found it appropriate to apply federal common law in order to "implement the policies underlying a federal statute [the ATCA] by fashioning appropriate remedies." Id. at *93. Judge Reinhardt also observed that "the question of when third-party liability arises is a straightforward legal matter that federal courts routinely resolve using common law principles." Id. at *95. In such a determination, Judge Reinhardt noted, federal courts could incorporate principles of international law into federal common law, without formally substituting the former for the latter. Id. at **95-96.
Judge Reinhardt sought to argue that the factors properly considered "as part of a choice-of-law inquiry militate in favor of determining that the proper law to apply here is the federal common law." Id. at *98. These factors include "ease in the determination and application of the law to be applied," "certainty, predictability and uniformity of result," and the "justified expectations" of potential parties fostered by familiarity with federal common law principles of joint liability, agency, and reckless disregard. Id. at *98. Moreover, in Judge Reinhardt's view, the basic purpose of the ATCA -- "to provide an appropriate tort remedy for certain international law violations" -- is better served by the application "of third-party liability standards generally applicable to tort cases." Id. at *99.
Judge Reinhardt also pointedly criticized the majority's standard for aiding and abetting liability. This standard, Judge Reinhardt asserted, was not sufficiently well established to constitute customary international law -- it is "a novel standard that has been applied by just two ad hoc international tribunals," Id. at *104 -- and therefore cannot be applied as part of federal common law. For Judge Reinhardt, this standard was "far too uncertain and inchoate a rule for us to adopt without further elaboration as to its scope by international jurists." Id. at *105. Judge Reinhardt also questioned whether the majority could plausibly fashion an aiding and abetting standard without including the reference to "moral support" found in international law (see supra), going so far as to note that "liability for moral support raises the question whether political advocacy not imminently causing violence that would otherwise be protected by the First Amendment could be the source of ATCA liability under the majority's standard." Id. at *107 n.10.
On the facts of the case, however, Judge Reinhardt concluded that plaintiffs had shown a triable issue of fact as to Unocal's liability for the human rights abuses of the Myanmar Military based on theories of joint venture, agency, and reckless disregard. He stated: "[A] reasonable jury could conclude that Unocal freely elected to participate in a profitmaking venture in conjunction with an oppressive military regime -- a regime that had a lengthy record of instituting forced labor, including forced child labor." Id. at *111.
Unocal has important implications for ATCA cases in which corporate liability is premised on the human rights abuses of a foreign host government. Many key issues in Unocal will be of interest to ATCA litigants. These include the court's application of international law to what Judge Reinhardt termed "ancillary issues" arising under the ATCA (id. at *91), and, even more importantly, the court's holding that there is no state action requirement for forced labor, or for acts of murder, rape, and torture committed "in furtherance" of a forced labor program.
Unocal is particularly important in respect to the knowledge and causation requirements for aider and abettor liability. Under Unocal, vicarious liability requires more than simply showing that a corporation was aware of human rights abuses being carried out by a foreign government: the mens rea requirement entails "actual or constructive (i.e., reasonable) knowledge that the accomplice's actions will assist the perpetrator in the commission of the crime." Id. at *62. Nonetheless, Unocal presents an example of when this standard may be satisfied. Crucially, the Ninth Circuit did not require that plaintiffs put forward evidence that Unocal knew "the precise crime that the principal intend[ed] to commit" or the manner in which its actions would lead to crimes by the Myanmar Military. Id. Rather, it was enough that Unocal "knew that acts of violence would probably be committed [by the host government]" as a result of Unocal's conduct, which included "payments" to the Myanmar Military and "instructions where to provide security and build infrastructure." Id. at **62-63.
To avoid summary judgment, Unocal suggests that ATCA plaintiffs must show that a corporation knew -- actually or constructively -- that it was hiring a native security force with a documented record of human rights abuses, but not that the corporation knowingly supplied this security force with weapons or instructed it to commit specific acts of violence in furtherance of a joint business plan. As Unocal observed, citing a Nuremberg tribunal precedent, a corporation may be held liable where it "well knew that any expansion [of its business] would require the employment of forced labor." Id. at *38 n.22 (citation omitted).
Unocal's analysis of causation is equally significant. The Ninth Circuit's rejection of the district court's "control" standard in favor of a "forseeability" test for causation removes barriers to ATCA suits. The Ninth Circuit held that Unocal gave "practical assistance" to the Myanmar Military by "hiring the Myanmar Military to provide security and build infrastructure along the pipeline route in exchange for money or food," and by "using photos, surveys, and maps in daily meetings to show the Myanmar Military where to provide these services." Id. at *60. The Unocal court found that this assistance had a "substantial effect" on the military's commission of human rights abuses because abuses "most probably would not have occurred in the same way without someone hiring the Myanmar Military to provide security, and without someone showing them where to do it." Id. (citation omitted). In the court's analysis, Unocal knew that the Myanmar Military was likely to commit human rights abuses, yet facilitated and directed the introduction of this military into its business operations. For the court, this course of conduct sufficed to create a genuine issue of material fact as to whether Unocal aided and abetted the human rights violations of the military.
It remains for future cases to determine the full implications of Unocal's aider and abettor standard. Unocal represents the state of the law in the Ninth Circuit, and if followed by other courts, will change the legal landscape of ATCA actions against corporations.
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