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September 24, 2013

Should State Law Rule the World?

Earlier this year, the U.S. Supreme Court in Kiobel v Royal Dutch Petroleum, issued a landmark ruling that curbed a pernicious abuse of the Alien Tort Statute. While the ATS goes back as far as the Founding, it lay dormant until 1980 when it was used to bring war criminals and human-rights violators to trial. However, it wasn’t long before this new interpretation of the ATS was exploited by tort lawyers attempting to bring suit against corporations (mostly U.S.) for alleged human rights violations abroad. The Court, in Kiobel, held that the ATS does not reach conduct that “took place outside the United States” in most cases. 

As Donald Earl Childress III explains in his new paper, “Should State Law Rule the World?” the Kiobel decision is welcome news to corporate defendants. “As many corporations are well aware, the ATS has served as a favored vehicle in recent years for plaintiffs to challenge overseas business practices, especially the practices of U.S. corporations,” writes Childress, whose paper the Institute for Legal Reform is proud to release today. Yet Childress warns that the plaintiffs’ lawyers already have an ATS replacement at the ready: state law.

“While federal ATS claims have now been largely foreclosed by the Court’s Kiobel decision, it is likely that plaintiffs’ lawyers will plead state law claims (particularly common law tort claims) against corporations to challenge overseas business practices.  Such claims will substitute garden-variety, state law torts for federal ATS claims.”

Childress argues that federal and state courts should resist the plaintiff’s bar efforts and heed caution before applying state law to conduct outside the United States.  Childress also outlines possible federal legislation that would change federal fora and choice of law rules to protect corporate defendants from the extraterritorial application of state law.

On Thursday, Sept. 19, ILR convened a symposium of legal scholars at Pepperdine Law School in Malibu, CA, to discuss this and other matters related to transnational litigation.  Childress’ paper is a welcome addition to the discussion of the future litigation landscape post-Kiobel

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