Opinion ID: 175476
Heading Depth: 1
Heading Rank: 11

Heading: The Complaint must be dismissed because its factual allegations fail to plead a violation of the law of nations.

Text: Although I do not share my colleagues' understanding of international law, I am in complete agreement that the claims against Appellants must be dismissed. [48] That is because the pertinent allegations of the Complaint fall short of mandatory standards established by decisions of this court and the Supreme Court. We recently held in Presbyterian Church of Sudan v. Talisman Energy, Inc., 582 F.3d 244 (2d Cir.2009), that liability under the ATS for aiding and abetting in a violation of international human rights lies only where the aider and abettor acts with a purpose to bring about the abuse of human rights. Id. at 259. Furthermore, the Supreme Court ruled in Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), that a complaint is insufficient as a matter of law unless it pleads specific facts that allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 1949. When read together, Talisman and Iqbal establish a requirement that, for a complaint to properly allege a defendant's complicity in human rights abuses perpetrated by officials of a foreign government, it must plead specific facts supporting a reasonable inference that the defendant acted with a purpose of bringing about the abuses. The allegations against Appellants in these appeals do not satisfy this standard. While the Complaint plausibly alleges that Appellants knew of human rights abuses committed by officials of the government of Nigeria and took actions which contributed indirectly to the commission of those offenses, it does not contain allegations supporting a reasonable inference that Appellants acted with a purpose of bringing about the alleged abuses.
Because the majority opinion focuses on the legal issue of whether international law allows a U.S. court to impose liability on a corporation, it is necessary to set out the allegations of the Complaint and the history of prior proceedings in detail. 1) Parties. As the majority note, Plaintiffs are, or were, residents of the Ogoni region of Nigeria. Plaintiffs allege that they (and others similarly situated whom they undertake to represent as a class) were victims of human rights abuses committed by the government of Nigeria, through its military and police forces, with the aid of Shell. Shell, as the designation is used in the Complaint and this opinion, refers collectively to the Royal Dutch Petroleum Company and Shell Transport and Trading Company PLC. [49] According to the allegations of the Complaint, those two entities are holding companies organized respectively in the Netherlands and the United Kingdom. They conduct petroleum exploration and production operations in Nigeria through a Nigerian subsidiary named Shell Petroleum Development Company of Nigeria, Ltd. (hereinafter SPDC). SPDC was named as a defendant, and is not a party to this appeal. The district court dismissed the suit against SPDC for lack of personal jurisdiction on June 21, 2010. 2) Allegations of the complaint. Plaintiffs' suit asserts the liability of Shell on the ground that Shell aided and abetted Nigerian government forces in the commission of various human rights abuses, directed against Plaintiffs. The Complaint alleges the following: Since 1958, SPDC, has been engaged in oil exploration and production in Nigeria, conducting extensive operations in the Ogoni region. [50] Ogoni residents initiated the Movement for Survival of Ogoni People (MOSOP) to protest environmental damage caused by SPDC's operations. Beginning in 1993, the Nigerian military engaged in a campaign of violence against MOSOP and the Ogoni, which was instigated, planned, facilitated, conspired, and cooperated in by Shell and SPDC. In February 1993, following a demand by MOSOP for royalties for the Ogoni people, Shell and SPDC officials met in the Netherlands and England in February 1993 to formulate a strategy to suppress MOSOP and to return to Ogoniland. In April 1993, SPDC called for assistance from government troops. The Nigerian government troops fired on Ogoni residents protesting a new pipeline, killing eleven. Later, SPDC's divisional manager wrote to the Governor of Rivers State (in which Ogoni is located) and requested the usual assistance to protect the progress of SPDC's further work on the pipeline. In August through October 1993, the Nigerian military attacked Ogoni villages, killing large numbers of civilians. SPDC provided a helicopter and boats for reconnaissance, provided transportation to the Nigerian forces involved, provided SPDC property as a staging area for the attacks, and provided food and compensation to the soldiers involved in the attacks. In an operation in October 1993, SPDC employees accompanied Nigerian military personnel in an SPDC charter bus to a village where the military personnel fired on unarmed villagers. In December 1993, SPDC's managing director, with the approval of Shell, asked the Nigerian Police Inspector General to increase security in exchange for providing Nigerian forces with salary, housing, equipment, and vehicles. Shortly thereafter, the Nigerian government created the Rivers State Internal Security Task Force (ISTF). Shell and SPDC provided financial support for the ISTF's operations, as well as transportation, food, and ammunition for its personnel. In April 1994, the Rivers State Military Administrator ordered the ISTF to `sanitize' Ogoniland, in order to ensure that those `carrying out ventures . . . within Ogoniland are not molested.' The head of the ISTF responded in May that Shell operations still impossible unless ruthless military operations are undertaken for smooth economic activities to commence. From May to August 1994, the ISTF engaged in numerous nighttime raids on Ogoni towns and villages. During these raids, the ISTF broke into homes, shooting or beating anyone in their path, including the elderly, women and children, raping, forcing villagers to pay `settlement fees,' bribes and ransoms to secure their release, forcing villagers to flee and abandon their homes, and burning, destroying or looting property, and killed at least fifty Ogoni residents. Plaintiffs and others were arrested and detained without formal charges and without access to a civilian court system, some for more than four weeks. In the detention facility, Plaintiffs and others were beaten and were provided inadequate medical care, food, and sanitary facilities. SPDC officials frequently visited the . . . detention facility and regularly provided food and logistical support for the soldiers who worked there. In 1994, the Nigerian military created a Special Tribunal to try leaders of MOSOP, including Dr. Barinem Kiobel, a Rivers State politician who objected to the tactics of the ISTF and supported MOSOP. Counsel to those brought before the Special Tribunal were subjected to actual or threatened beatings or other physical harm. The Complaint alleges also that, with Shell's complicity, witnesses were bribed to give false testimony before the Special Tribunal. In January 1995, the Nigerian military violently put down a protest against Shell's operations and the Special Tribunal, and the protesters who were detained were subjected to floggings, beatings and other torture[,] and money was extorted to obtain releases. Dr. Kiobel and others were condemned to death by the Special Tribunal and executed in November 1995. 3) Prior proceedings. In September 2002, Plaintiffs filed a putative class action in the United States District Court for the Southern District of New York alleging torts in violation of the law of nations, pursuant to the ATS. The amended complaint filed in May 2004 (the Complaint) charged seven counts of violations of the law of nations against Shell and SPDC. With respect to each count, the Complaint alleged that Shell and SPDC aided and abetted, facilitated, participated in, conspired with, and/or cooperated with the Nigerian military in its violations of the law of nations. Shell moved to dismiss on several grounds, including that the Complaint failed to state a violation of the law of nations with the specificity required by the Supreme Court's ruling in Sosa. Kiobel v. Royal Dutch Petroleum Co., 456 F.Supp.2d 457, 459 (S.D.N.Y.2006). [51] The district court granted the motion in part and denied it in part. The court first determined that where a cause of action for violation of an international norm is viable under the ATS, claims for aiding and abetting that violation are viable as well. Id. at 463-64. Turning to the substantive counts, the district court dismissed the claims of aiding and abetting property destruction, forced exile, extrajudicial killing, and violation of the rights to life, liberty, security, and association, on the ground that international law did not define those violations, as alleged, with the particularity required by Sosa. By contrast, the court denied the motion to dismiss the claims that Shell aided and abetted the Nigerian government's commission of torture, arbitrary arrest and detention, and crimes against humanity, concluding that such acts are clear violations of the law of nations. Id. at 464-67. The district court certified its order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Id. at 468. On December 27, 2006, we granted Plaintiffs' petition and Shell's cross-petition to entertain the interlocutory appeal. See Kiobel v. Royal Dutch Petroleum Co., Nos. 06-4800-cv, 06-4876-cv (2d Cir. Dec. 27, 2006).
Shell contends the Complaint does not sufficiently plead facts that would render it liable for aiding and abetting Nigeria's violations of the law of nations. [52] In my view, this argument is dispositive. 1) Standard of review. Whether a complaint asserts a claim upon which relief may be granted is a question of law. This court reviews a district court's ruling on a such a question de novo. See Chapman v. New York State Div. for Youth, 546 F.3d 230, 235 (2d Cir.2008). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face. ' Iqbal, 129 S.Ct. at 1949 (emphasis added) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Facial plausibility means that the plaintiff's factual pleadings allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. A complaint that pleads facts that are merely consistent with a defendant's liability is not plausible. Id. Conclusory allegations that the defendant violated the standards of law do not satisfy the need for plausible factual allegations. Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (holding that courts are not bound to accept as true a legal conclusion couched as a factual allegation (internal quotation marks omitted)); see also Kirch v. Liberty Media Corp., 449 F.3d 388, 398 (2d Cir.2006) ([C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to [defeat] a motion to dismiss. (internal quotation marks and citation omitted) (second alteration in original)). This requirement applies to pleadings of intent as well as conduct. See Iqbal, 129 S.Ct. at 1954. 2) Inadequacy of the pleadings. The Complaint asserts three theories of Shell's liability. First, it alleges that Shell itself aided and abetted the government of Nigeria in the government's commission of various human rights violations against the Ogoni. Alternatively, it asserts that Shell is liable on either of two theories for the actions of its subsidiary SPDCeither as SPDC's alter ego, or as SPDC's principal on an agency theory. I address each theory in turn. a) Shell's direct involvement as aider and abetter. The Complaint pleads in a general manner that Shell willfully . . . aided and abetted SPDC and the Nigerian military regime in the joint plan to carry out a deliberate campaign of terror and intimidation through the use of extrajudicial killings, torture, arbitrary arrest and detention, military assault against civilians, cruel, inhuman and degrading treatment, crimes against humanity, forced exile, restrictions on assembly and the confiscation and destruction of private and communal property, all for the purpose of protecting Shell property and enhancing SPDC's ability to explore for and extract oil from areas where Plaintiffs and members of the Class resided. It pleads also in conclusory form that the Nigerian military's campaign of violence against the Ogoni was instigated, planned, facilitated, conspired and cooperated in by Shell. Such pleadings are merely a conclusory accusation of violation of a legal standard and do not withstand the test of Twombly and Iqbal. They fail to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6); see Twombly, 550 U.S. at 555, 127 S.Ct. 1955; Kirch, 449 F.3d at 398. The Complaint goes on to assert (1) that SPDC and Shell met in Europe in February 1993 and formulate[d] a strategy to suppress MOSOP and to return to Ogoniland, (2) that [b]ased on past behavior, Shell and SPDC knew that the means to be used [by the Nigerian military] in that endeavor would include military violence against Ogoni civilians, and (3) that Shell and SPDC provided direct, physical support to the Nigerian military and police operations conducted against the Ogoni by, for example, providing transportation to the Nigerian forces; utilizing Shell property as a staging area for attacks; and providing food, clothing, gear, and pay for soldiers involved. These allegations are legally insufficient to plead a valid claim of aiding and abetting because they do not support a reasonable inference that Shell provided substantial assistance to the Nigerian government with a purpose to advance or facilitate the Nigerian government's violations of the human rights of the Ogoni people. As outlined in Judge Katzmann's opinion in Khulumani, 504 F.3d 254, and adopted as the grounds of our recent decision in Talisman, 582 F.3d 244, a defendant may be held liable under international law for aiding and abetting the violation of that law by another [only if] the defendant (1) provides practical assistance to the principal which has a substantial effect on the perpetration of the crime, and (2) does so with the purpose of facilitating the commission of that crime. Id. at 258 (emphasis added) (quoting Khulumani, 504 F.3d at 277). The allegation that representatives of Shell and its Nigerian subsidiary met in Europe to formulate a strategy to suppress MOSOP and to return to Ogoniland implies neither an intent to violate human rights nor the provision of substantial assistance in human rights abuses. Neither of the alleged goalsto suppress MOSOP and return to Ogonilandimplies that human rights abuses would be involved in carrying them out. The additional allegation that Shell knew the Nigerian military would use military violence against Ogoni civilians as part of the effort to suppress MOSOP also does not support an inference that Shell intended for such violence to occur. [53] As Talisman made clear, proof that a private defendant knew of the local government's intent to violate the law of nations is not sufficient to support aider and abetter liability. Talisman, 582 F.3d at 259. The further allegations of providing physical support to the operations of the Nigerian military and police, including transportation, use of SPDC property for staying, food, clothing, gear, and pay for soldiers fail for the same reasons as those which compelled the award of judgment to the defendant in Talisman. In Talisman, the evidence showed that Talisman Energy, an oil developer with operations in Sudan, had improved roads and air strips used by the Sudanese military to stage attacks on civilians, paid royalties to the Sudanese government, and provided fuel for military aircraft that participated in bombing missions. Talisman, 582 F.3d at 261-62. We ruled that the suit could not be maintained because the evidence failed to show a purpose of facilitating the Sudanese government's human rights abuses. The plaintiffs' evidence showed that the oil company provided assistance to the Sudanese government in order to receive security required for the defendant's oil exploration, and was sufficient to show the assistance was provided with knowledge that the Sudanese government would use the defendant's assistance in the infliction of human rights abuses. The evidence, however, was insufficient to support the inference of a purpose on the defendant's part to facilitate human rights abuses. Id. Similarly, in this case, Shell is alleged to have provided financial support and other assistance to the Nigerian forces with knowledge that they would engage in human rights abuses. But the Complaint fails to allege facts (at least sufficiently to satisfy the Iqbal standard) showing a purpose to advance or facilitate human rights abuses. The provision of assistance to the Nigerian military with knowledge that the Nigerian military would engage in human rights abuses does not support an inference of a purpose on Shell's part to advance or facilitate human rights abuses. An enterprise engaged in finance may well provide financing to a government, in order to earn profits derived from interest payments, with the knowledge that the government's operations involve infliction of human rights abuses. Possession of such knowledge would not support the inference that the financier acted with a purpose to advance the human rights abuses. Likewise, an entity engaged in petroleum exploration and extraction may well provide financing and assistance to the local government in order to obtain protection needed for the petroleum operations with knowledge that the government acts abusively in providing the protection. Knowledge of the government's repeated pattern of abuses and expectation that they will be repeated, however, is not the same as a purpose to advance or facilitate such abuses, and the difference is significant for this inquiry. In sum, the pleadings do not assert facts which support a plausible assertion that Shell rendered assistance to the Nigerian military and police for the purpose of facilitating human rights abuses, as opposed to rendering such assistance for the purpose of obtaining protection for its petroleum operations with awareness that Nigerian forces would act abusively. In circumstances where an enterprise requires protection in order to be able to carry out its operations, its provision of assistance to the local government in order to obtain the protection, even with knowledge that the local government will go beyond provision of legitimate protection and will act abusively, does not without more support the inference of a purpose to advance or facilitate the human rights abuses and therefore does not justify the imposition of liability for aiding and abetting those abuses. [54] b) Vicarious liability of shell for the acts of SPDC. [55] In addition to asserting Shell's liability for its own acts of aiding and abetting in human rights violations, the Complaint asserts that Shell is liable for the acts of its subsidiary SPDC, either as an alter ego or as a principal for the acts of its agent because Shell dominated and controlled SPDC. It is a general principle of corporate law deeply ingrained in our economic and legal systems that a parent corporation . . . is not liable for the acts of its subsidiaries. United States v. Bestfoods, 524 U.S. 51, 61, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998). However, this principle of corporate separateness may be disregarded when a subsidiary acts as an agent of its parent. See Kingston Dry Dock Co. v. Lake Champlain Transp. Co., 31 F.2d 265, 267 (2d Cir.1929) (L. Hand, J.). The Restatement (Second) of Agency § 1 defines agency as the fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act. A principal is liable for the acts of an agent acting within the scope of the agency. See Meyer v. Holley, 537 U.S. 280, 285, 123 S.Ct. 824, 154 L.Ed.2d 753 (2003); Karibian v. Columbia University, 14 F.3d 773, 780 (2d Cir.1994); Restatement (Second) of Agency § 219. A principal may also be liable for the unauthorized acts of its agent if, for example, the agent's conduct is aided by the existence of the agency relationship, Restatement (Second) of Agency § 216 cmt. a, or the principal ratifies the agent's acts, Phelan v. Local 305 of United Ass'n of Journeymen, 973 F.2d 1050, 1062 (2d Cir.1992). A parent corporation may also be held liable for the acts of its subsidiary when the subsidiary is merely an alter ego of the parent. Alter ego liability exists when a parent or owner uses the corporate form to achieve fraud, or when the corporation has been so dominated by an individual or another corporation (usually a parent corporation), and its separate identity so disregarded, that it primarily transacted the dominator's business rather than its own. Gartner v. Snyder, 607 F.2d 582, 586 (2d Cir.1979) (interpreting New York law). In deciding whether to pierce the corporate veil, courts look to a variety of factors, including the intermingling of corporate and [shareholder] funds, undercapitalization of the corporation, failure to observe corporate formalities such as the maintenance of separate books and records, failure to pay dividends, insolvency at the time of a transaction, siphoning off of funds by the dominant shareholder, and the inactivity of other officers and directors. Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 18 (2d Cir.1996). The Complaint alleges that, [s]ince operations began in Nigeria in 1958, Shell has dominated and controlled SPDC. This conclusory allegation does not satisfy the Iqbal requirement to plead facts that plausibly support an inference that would justify disregard of the corporate form or a finding of an agency relationship. The further allegations described abovethat Shell and SPDC representatives met in Europe after November 1992 to discuss strategies for suppressing MOSOP and that SPDC did certain acts with the approval of Shellare likewise insufficient. Ordinarily, subsidiary corporations are not deemed to be the agents of their corporate parents. See Kingston Dry Dock, 31 F.2d at 267 (Control through the ownership of shares does not fuse the corporations, even when the directors are common to each.). The Complaint does not even plead that Shell and SPDC had an agreement establishing an agency relationship. Cf. Cleveland v. Caplaw Enters., 448 F.3d 518, 523 (2d Cir.2006) (finding a pleading of corporate agency adequate where the complaint incorporated by reference an agency agreement). Nor does it plead facts showing that they conducted their operations in an agency relationship. [56] The allegations that Shell approved certain conduct undertaken by SPDC does not show an agency relationship. Similarly, a claim sufficient to overcome the presumption of separateness afforded to related corporations, De Jesus v. Sears, Roebuck & Co., Inc., 87 F.3d 65, 70 (2d Cir.1996) (internal quotation marks omitted), is not established by the bare allegation that one corporation dominated and controlled another. No facts alleged in the Complaint plausibly support the inference that SPDC was a mere instrument of its corporate parents. There is no allegation that SPDC was undercapitalized, failed to maintain corporate formalities, or that its officers ceded control to Shell, from which we might infer domination. See Bridgestone/Firestone, 98 F.3d at 18. The mere allegation that Shell and SPDC engaged in certain conduct does not plausibly plead specific facts which would justify treating SPDC as the alter ego of Shell. Accordingly, on the facts alleged, the Complaint fails to plead a basis for a claim of agency or alter ego liability.