Ethics Matters: Dated law damages U.S. companies

Congress passed the Alien Tort Claims Act in 1789 to address the problem of piracy. The act gave U.S. federal courts jurisdiction in civil cases brought by aliens for wrongful acts committed in violation of U.S. treaties or the law of nations. Considered obsolete, the act remained largely forgotten for more than 200 years until its rediscovery by creative plaintiff lawyers.

Human rights abuses

Lawyers experienced in massive litigation actions against tobacco and asbestos companies now use the act against U.S. companies doing business in other countries. Lawsuits filed under the act seek to hold U.S. companies liable for human rights abuses committed by the U.S. companies’ foreign business partners, suppliers and the governments with which the companies do business.

For plaintiff lawyers, the act represents a new source for millions of dollars in legal fees.

Is it ethical, however, to use the act against U.S. companies legally doing business in foreign countries under those countries’ laws? Here are five cases to consider.

Case I: In 2007, Alabama-based Drummond Co. Inc. successfully defended its coal-mining operation in a case filed under the act for the deaths of union leaders killed in 2001 at the company’s mine near La Loma, Colombia. The United Steel Workers of America and International Labor Rights Fund sued Drummond on behalf of the slain men’s families. The plaintiffs claimed the company aided paramilitary groups involved in the slayings. A jury found no link between Drummond and the paramilitary groups.

Case II: Wal-Mart faces a class-action suit under the act brought for thousands of residents of China, Bangladesh, Indonesia, Swaziland and Nicaragua for the labor practices of Wal-Mart’s suppliers. The plaintiffs want the world’s largest retailer held vicariously liable for its suppliers’ alleged mistreatment of foreign workers.

Case III: The relatives of 17 men killed by a Colombian military air strike against rebel forces are suing Occidental Petroleum Corp. for the deaths. They claim a security contractor hired by Occidental worked with Colombia’s military to kill leftist rebels accused of sabotaging Occidental’s Colombian oil pipeline. The slain men’s families contend the air strike killed innocent civilians.

Case IV: Family members of Nigerians killed by Nigerian security forces sued Chevron for the deaths of protesters outside a refinery owned by a Chevron subsidiary.

Case V: ExxonMobil continues to fight a lawsuit filed against it for villagers who lived near ExxonMobil’s liquefied natural gas plant in the Aceh province of Indonesia. The villagers claim ExxonMobil hired security forces from Indonesia’s military to protect the plant and these forces murdered, tortured, sexually assaulted and falsely imprisoned villagers.

Improper forum

The Alien Tort Claims Act exposes U.S. businesses to financial liability and large legal defense costs under an obsolete act for legally doing business in foreign countries. U.S. courts are not the proper forum to address human rights abuses committed in foreign countries by non-U.S. citizens against other non-U.S. citizens.

John D. Copeland, J.D., LL.M., Ed.D., is an executive in residence at The Soderquist Center for Leadership and Ethics and professor of business at John Brown University in Arkansas.