Jesner et al. v. Arab Bank, PLC
Certiorari To The United States Court Of Appeals For The Second Circuit
No. 16-499. Argued October 11, 2017--Decided April 24, 2018
Petitioners filed suits under the Alien Tort Statute (ATS), alleging that they, or the persons on whose behalf they assert claims, were injured or killed by terrorist acts committed abroad, and that those acts were in part caused or facilitated by respondent Arab Bank, PLC, a Jordanian financial institution with a branch in New York. They seek to impose liability on the bank for the conduct of its human agents, including high-ranking bank officials. They claim that the bank used its New York branch to clear dollar-denominated transactions that benefited terrorists through the Clearing House Interbank Payments System (CHIPS) and to launder money for a Texas-based charity allegedly affiliated with Hamas. While the litigation was pending, this Court held, in Kiobel v. Royal Dutch Petroleum Co., 569 U. S. 108, that the ATS does not extend to suits against foreign corporations when “all the relevant conduct took place outside the United States,” id., at 124, but it left unresolved the Second Circuit’s broader holding in its Kiobel decision: that foreign corporations may not be sued under the ATS. Deeming that broader holding binding precedent, the District Court dismissed petitioners’ ATS claims and the Second Circuit affirmed.
Held: The judgment is affirmed.
808 F. 3d 144, affirmed.
Justice Kennedy delivered the opinion of the Court with respect to Parts I, II–B–1, and II–C, concluding that foreign corporations may not be defendants in suits brought under the ATS. Pp. 6–11, 18–19, and 25–27.
(a) The Judiciary Act of 1789 included what is now known as the ATS, which provides: “The 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. §1350. The ATS is “strictly jurisdictional” and does not by its own terms provide or delineate the definition of a cause of action for international-law violations. Sosa v. Alvarez-Machain, 542 U. S. 692, 713 –714. It was enacted against the backdrop of the general common law, which in 1789 recognized a limited category of “torts in violation of the law of nations,” id., at 714; and one of its principal objectives was to avoid foreign entanglements by ensuring the availability of a federal forum where the failure to have one might cause another nation to hold the United States responsible for an injury to a foreign citizen, see id., at 715–719. The ATS was invoked but a few times over its first 190 years, but with the evolving recognition—e.g., in the Nuremberg trials—that certain crimes against humanity violate basic precepts of international law, courts began to give some redress for violations of clear and unambiguous international human-rights protections. After the Second Circuit first permitted plaintiffs to bring ATS actions based on modern human-rights laws, Congress enacted the Torture Victim Protection Act of 1991 (TVPA), creating an express cause of action for victims of torture and extrajudicial killing in violation of international law. ATS suits became more frequent; and modern ATS litigation has the potential to involve groups of foreign plaintiffs suing foreign corporations in the United States for alleged human-rights violations in other nations. In Sosa, the Court held that in certain narrow circumstances courts may recognize a common-law cause of action for claims based on the present-day law of nations, 542 U. S., at 732, but it explicitly held that ATS litigation implicates serious separation-of-powers and foreign-relations concerns, id., at 727–728. The Court subsequently held in Kiobel that “the presumption against extraterritoriality applies to [ATS] claims,” 569 U. S., at 124, and that even claims that “touch and concern the territory of the United States . . . must do so with sufficient force to displace” that presumption, id., at 124–125. Pp. 6–11.
(b) Sosa is consistent with this Court’s general reluctance to extend judicially created private rights of action. Recent precedents cast doubt on courts’ authority to extend or create private causes of action, even in the realm of domestic law, rather than leaving such decisions to the Legislature, which is better positioned “to consider if the public interest would be served by imposing a new substantive legal liability,” Ziglar v. Abbasi, 582 U. S. ___, ___ (internal quotation marks omitted). This caution extends to the question whether the courts should exercise the judicial authority to mandate a rule imposing liability upon artificial entities like corporations. Thus, in Correctional Services Corp. v. Malesko, 534 U. S. 61, 72 , the Court concluded that Congress, not the courts, should decide whether corporate defendants could be held liable in actions under Bivens v. Six Unknown Fed. Narcotics Agents, 403 U. S. 388.
Neither the language of the ATS nor precedent supports an exception to these general principles in this context. Separation-of-powers concerns that counsel against courts creating private rights of action apply with particular force in the context of the ATS, which implicates foreign-policy concerns that are the province of the political branches. And courts must exercise “great caution” before recognizing new forms of liability under the ATS. Sosa, supra, at 728. The question whether a proper application of Sosa would preclude courts from ever recognizing new ATS causes of action need not be decided here, for either way it would be inappropriate for courts to extend ATS liability to foreign corporations absent further action from Congress. Pp. 18–19.
(c) The ATS was intended to promote harmony in international relations by ensuring foreign plaintiffs a remedy for international-law violations when the absence of such a remedy might provoke foreign nations to hold the United States accountable. But here, and in similar cases, the opposite is occurring. Petitioners are foreign nationals seeking millions of dollars in damages from a major Jordanian financial institution for injuries suffered in attacks by foreign terrorists in the Middle East. The only alleged connections to the United States are the CHIPS transactions in Arab Bank’s New York branch and a brief allegation about a charity in Texas. At a minimum, the relatively minor connection between the terrorist attacks and the alleged conduct in the United States illustrates the perils of extending the scope of ATS liability to foreign multinational corporations like Arab Bank.
For 13 years, this litigation has caused considerable diplomatic tensions with Jordan, a critical ally that considers the litigation an affront to its sovereignty. And this is not the first time that a foreign sovereign has raised objections to ATS litigation in this Court. See Sosa, supra, at 733, n. 21. These are the very foreign-relations tensions the First Congress sought to avoid.
Nor are the courts well suited to make the required policy judgments implicated by foreign corporate liability. Like the presumption against extraterritoriality, judicial caution under Sosa “guards against our courts triggering . . . serious foreign policy consequences, and instead defers such decisions, quite appropriately, to the political branches.” Kiobel, supra, at 124. Accordingly, the Court holds that foreign corporations may not be defendants in suits brought under the ATS. Pp. 25–27.
Justice Kennedy, joined by The Chief Justice and Justice Thomas, concluded in Parts II–A, II–B–2, II–B–3, and III:
(a) Before recognizing an ATS common-law action, federal courts must apply the two-part test announced in Sosa. The threshold question is whether a plaintiff can demonstrate that the alleged violation is “ ‘of a norm that is specific, universal, and obligatory.’ ” 542 U. S., at 732. Assuming that such a norm can control, it must be determined whether allowing the case to proceed under the ATS is a proper exercise of judicial discretion or whether caution requires the political branches to grant specific authority before corporate liability can be imposed. Id., at 732–733, and nn. 20–21. With regard to the first Sosa question, the Court need not resolve whether corporate liability is a question governed by international law or whether that law imposes liability on corporations, because, as shown by the parties’ opposing arguments, there is at least sufficient doubt on the point to turn to Sosa’s second question: whether the Judiciary must defer to Congress to determine in the first instance whether that universal norm has been recognized and, if so, whether it should be enforced in ATS suits. Pp. 11–18.
(b) Especially here, in the realm of international law, it is important to look to analogous statutes for guidance on the appropriate boundaries of judge-made causes of action. The logical statutory analogy for an ATS common-law action is the TVPA—the only ATS cause of action created by Congress rather than the courts. Drafted as “an unambiguous and modern basis for [an ATS] cause of action,” H. R. Rep. No. 102–367, p. 3, the TVPA reflects Congress’ considered judgment of the proper structure for such an action. Absent a compelling justification, courts should not deviate from that model. Relevant here, the TVPA limits liability to “individuals,” a term which unambiguously limits liability to natural persons, Mohamad v. Palestinian Authority, 566 U. S. 449, 453 –456. Congress’ decision to exclude liability for corporations in TVPA actions is all but dispositive in this case. Pp. 19–23.
(c) Other considerations relevant to the exercise of judicial discretion also counsel against allowing liability under the ATS for foreign corporations, absent congressional instructions. Corporate liability under the ATS has not been shown to be essential to serving that statute’s goals, the ATS will seldom be the only way for plaintiffs to hold the perpetrators liable, and plaintiffs still can sue the individual corporate employees responsible for a violation of international law under the ATS. That the corporate form can be an instrument for inflicting grave harm and suffering poses serious and complex questions for the international community and for Congress. And this complexity makes it all the more important that Congress determine whether victims of human-rights abuses may sue foreign corporations in federal court. Pp. 23–25.
(d) In making its determination, Congress might decide that violations of international law do, or should, impose that liability to ensure that corporations make every effort to deter human-rights violations, and so that compensation for injured persons will be a cost of doing business. Or Congress could conclude that neutral judicial safeguards may not be ensured in every country and that, as a reciprocal matter, ATS liability for foreign corporations should be subject to some limitations or preconditions. Finally, Congress might find that corporate liability should be limited to cases where a corporation’s management was actively complicit in the crime. Pp. 27–29.
Justice Alito concluded that the outcome in this case is justified not only by “judicial caution” but also by the separation of powers. Assuming that Sosa v. Alvarez-Machain, 542 U. S. 692, correctly held that federal courts, exercising their authority in limited circumstances to make federal common law, may create causes of action under the ATS, this Court should not create such causes of action against foreign corporate defendants. The objective for courts in any case requiring the creation of federal common law must be “to find the rule that will best effectuate the federal policy.” Textile Workers v. Lincoln Mills of Ala., 353 U. S. 448, 457 . The First Congress enacted the ATS to help the United States avoid diplomatic friction. Putting that objective together with the rules governing federal common law generally, the following principle emerges: Federal courts should decline to create federal common law causes of action whenever doing so would not materially advance the ATS’s objective of avoiding diplomatic strife. Applying that principle here, it is clear that courts should not create causes of action under the ATS against foreign corporate defendants. Customary international law does not generally require corporate liability, so declining to create it under the ATS cannot give other nations just cause for complaint against the United States. To the contrary, creating causes of action against foreign corporations under the ATS may instead provoke exactly the sort of diplomatic strife inimical to the statute’s fundamental purpose. Pp. 1–7.
Justice Gorsuch concluded that there are two more fundamental reasons why this lawsuit should be dismissed. Pp. 1–14.
(a) This Court has suggested that Congress originally enacted the ATS to afford federal courts jurisdiction to hear tort claims related to three violations of international law that were already embodied in English common law: violations of safe conducts extended to aliens, interference with ambassadors, and piracy. Sosa v. Alvarez-Machain, 542 U. S. 692, 715 . Here, the plaintiffs seek much more. They want the federal courts to recognize a new cause of action, one that did not exist at the time of the statute’s adoption, one that Congress has never authorized. They find support in a passage suggesting that the ATS may afford federal judges “discretion [to] conside[r] [creating] new cause[s] of action” if they “rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of the [three specified] 18th-century” torts. Id., at 725. This is doubtful, for the people’s elected representatives, not judges, make the laws that govern them. But even accepting Sosa’s framework, a proper application of that framework would preclude courts from recognizing any new causes of action under the ATS. When courts are confronted with a request to fashion a new cause of action, “separation-of-powers principles are or should be central to the analysis.” Ziglar v. Abbasi, 582 U. S. ___, ___. The first and most important question is whether Congress or the courts should decide, and the right answer “most often will be Congress.” Ibid. There is no reason to make a special exception for the ATS, which was designed as “a jurisdictional statute creating no new causes of action.” Sosa, 542 U. S., at 724. The context in which any Sosa discretion would be exercised confirms the wisdom of restraint. The “practical consequences” that might follow a decision to create a new ATS cause of action, see id., at 732–733, would likely involve questions of foreign affairs and national security—matters implicating the expertise and authority not of the Judiciary but of the political branches. Pp. 2–5.
(b) Another independent problem is that this suit is by foreigners against a foreigner over the meaning of international norms. The original understanding of the ATS, which was but one clause in one section of the Judiciary Act of 1789, likely would have required a domestic defendant in order to comply with the requirements of the Diversity-of-Citizenship Clause of Article III. Precedent interpreting a neighboring provision of the Judiciary Act confirms that conclusion. See Mossman v. Higginson, 4 Dall. 12, 14. In any event, separation-of-powers limits on the judicial function and deference to the political branches should lead federal courts to require a domestic defendant before agreeing to exercise any Sosa-generated discretion to entertain an ATS suit. Pp. 5–14.
Kennedy, J., announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, II–B–1, and II–C, in which Roberts, C. J., and Thomas, Alito, and Gorsuch, JJ., joined, and an opinion with respect to Parts II–A, II–B–2, II–B–3, and III, in which Roberts, C. J., and Thomas, J., joined. Thomas, J., filed a concurring opinion. Alito, J., and Gorsuch, J., filed opinions concurring in part and concurring in the judgment. Sotomayor, J., filed a dissenting opinion, in which Ginsburg, Breyer, and Kagan, JJ., joined.
OIL STATES ENERGY SERVICES, LLC v. GREENE’S ENERGY GROUP, LLC, et al.
Certiorari To The United States Court Of Appeals For The Federal Circuit
No. 16-712. Argued November 27, 2017--Decided April 24, 2018
Inter partes review authorizes the United States Patent and Trademark Office (PTO) to reconsider and cancel an already-issued patent claim in limited circumstances. See 35 U. S. C. §§311–319. Any person who is not the owner of the patent may petition for review. §311(a). If review is instituted, the process entitles the petitioner and the patent owner to conduct certain discovery, §316(a)(5); to file affidavits, declarations, and written memoranda, §316(a)(8); and to receive an oral hearing before the Patent Trial and Appeal Board, §316(a)(10). A final decision by the Board is subject to Federal Circuit review. §§318, 319.
Petitioner Oil States Energy Services, LLC, obtained a patent relating to technology for protecting wellhead equipment used in hydraulic fracturing. It sued respondent Greene’s Energy Group, LLC, in Federal District Court for infringement. Greene’s Energy challenged the patent’s validity in the District Court and also petitioned the PTO for inter partes review. Both proceedings progressed in parallel. The District Court issued a claim-construction order favoring Oil States, while the Board issued a decision concluding that Oil States’ claims were unpatentable. Oil States appealed to the Federal Circuit. In addition to its patentability arguments, it challenged the constitutionality of inter partes review, arguing that actions to revoke a patent must be tried in an Article III court before a jury. While the case was pending, the Federal Circuit issued a decision in a separate case, rejecting the same constitutional arguments raised by Oil States. The court then summarily affirmed the Board’s decision in this case.
1. Inter partes review does not violate Article III. Pp. 5–17.
(a) Under this Court’s precedents, Congress has significant latitude to assign adjudication of public rights to entities other than Article III courts. Executive Benefits Ins. Agency v. Arkison, 573 U. S. ___, ___. Inter partes review falls squarely within the public-rights doctrine. The decision to grant a patent is a matter involving public rights. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration. Pp. 5–10.
(i) The grant of a patent falls within the public-rights doctrine. United States v. Duell, 172 U. S. 576, 582 –583. Granting a patent involves a matter “arising between the government and others.” Ex parte Bakelite Corp., 279 U. S. 438, 451 . Specifically, patents are “public franchises.” Seymour v. Osborne, 11 Wall. 516, 533. Additionally, granting patents is one of “the constitutional functions” that can be carried out by “the executive or legislative departments” without “ ‘judicial determination.’ ” Crowell v. Benson, 285 U. S. 22, 50 –51. Pp. 7–8.
(ii) Inter partes review involves the same basic matter as the grant of a patent. It is “a second look at an earlier . . . grant,” Cuozzo Speed Technologies, LLC v. Lee, 579 U. S. ___, ___, and it involves the same interests as the original grant, see Duell, supra, at 586. That inter partes review occurs after the patent has issued does not make a difference here. Patents remain “subject to [the Board’s] authority” to cancel outside of an Article III court, Crowell, supra, at 50, and this Court has recognized that franchises can be qualified in this manner, see, e.g., Louisville Bridge Co. v. United States, 242 U. S. 409, 421 . Pp. 8–10.
(b) Three decisions that recognize patent rights as the “private property of the patentee,” United States v. American Bell Telephone Co., 128 U. S. 315, 370 , do not contradict this conclusion. See also McCormick Harvesting Machine Co. v. Aultman, 169 U. S. 606, 609 ; Brown v. Duchesne, 19 How. 183, 197. Nor do they foreclose the kind of post-issuance administrative review that Congress has authorized here. Those cases were decided under the Patent Act of 1870 and are best read as describing the statutory scheme that existed at that time. Pp. 10–11.
(c) Although patent validity was often decided in 18th-century English courts of law, that history does not establish that inter partes review violates the “general” principle that “Congress may not ‘withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law,” Stern v. Marshall, 564 U. S. 462, 484 . Another means of canceling a patent at that time—a petition to the Privy Council to vacate a patent—closely resembles inter partes review. The parties have cited nothing to suggest that the Framers were not aware of this common practice when writing the Patent Clause, or that they excluded the practice from the scope of the Clause. Relatedly, the fact that American courts have traditionally adjudicated patent validity in this country does not mean that they must forever do so. See post, at 8–10. Historical practice is not decisive here because matters governed by the public-rights doctrine may be assigned to the Legislature, the Executive, or the Judiciary. Ex parte Bakelite Corp., supra, at 451. That Congress chose the courts in the past does not foreclose its choice of the PTO today. Pp. 12–15.
(d) Finally, the similarities between the various procedures used in inter partes review and procedures typically used in courts does not lead to the conclusion that inter partes review violates Article III. This Court has never adopted a “looks like” test to determine if an adjudication has improperly occurred outside an Article III court. See, e.g., Williams v. United States, 289 U. S. 553, 563 . Pp. 15–16.
(e) This holding is narrow. The Court addresses only the constitutionality of inter partes review and the precise constitutional challenges that Oil States raised here. The decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause. Pp. 16–17.
2. Inter partes review does not violate the Seventh Amendment. When Congress properly assigns a matter to adjudication in a non-Article III tribunal, “the Seventh Amendment poses no independent bar to the adjudication of that action by a nonjury factfinder.” Granfinanciera, S. A. v. Nordberg, 492 U. S. 33, 52 –53. Thus, the rejection of Oil States’ Article III challenge also resolves its Seventh Amendment challenge. P. 17.
639 Fed. Appx. 639, affirmed.
Thomas, J., delivered the opinion of the Court, in which Kennedy, Ginsburg, Breyer, Alito, Sotomayor, and Kagan, JJ., joined. Breyer, J., filed a concurring opinion, in which Ginsburg and Sotomayor, JJ., joined. Gorsuch, J., filed a dissenting opinion, in which Roberts, C. J., joined.
SAS Institute Inc. v. Iancu, Director, United States Patent and Trademark Office, et al.
Certiorari To The United States Court Of Appeals For The Federal Circuit
No. 16-969. Argued November 27, 2017--Decided April 24, 2018
Inter partes review allows private parties to challenge previously issued patent claims in an adversarial process before the Patent Office. At the outset, a party must file a petition to institute review, 35 U. S. C. §311(a), that identifies the challenged claims and the grounds for challenge with particularity, §312(a)(3). The patent owner, in turn, may file a response. §313. If the Director of the Patent Office determines “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition,” §314(a), he decides “whether to institute . . . review . . . pursuant to [the] petition,” §314(b). “If . . . review is instituted and not dismissed,” at the end of the litigation the Patent Trial and Appeal Board “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” §318(a).
Petitioner SAS sought review of respondent ComplementSoft’s software patent, alleging that all 16 of the patent’s claims were unpatentable. Relying on a Patent Office regulation recognizing a power of “partial institution,” 37 CFR §42.108(a), the Director instituted review on some of the claims and denied review on the rest. The Board’s final decision addressed only the claims on which the Director had instituted review. On appeal, the Federal Circuit rejected SAS’s argument that §318(a) required the Board to decide the patentability of every claim challenged in the petition.
Held: When the Patent Office institutes an inter partes review, it must decide the patentability of all of the claims the petitioner has challenged. The plain text of §318(a) resolves this case. Its directive is both mandatory and comprehensive. The word “shall” generally imposes a nondiscretionary duty, and the word “any” ordinarily implies every member of a group. Thus, §318(a) means that the Board must address every claim the petitioner has challenged. The Director’s “partial institution” power appears nowhere in the statutory text. And both text and context strongly counsel against inferring such a power.
The statute envisions an inter partes review guided by the initial petition. See §312(a)(3). Congress structured the process such that the petitioner, not the Director, defines the proceeding’s contours. The ex parte reexamination statute shows that Congress knew exactly how to authorize the Director to investigate patentability questions “[o]n his own initiative, and at any time,” §303(a). The inter partes review statute indicates that the Director’s decision “whether” to institute review “pursuant to [the] petition” is a yes-or-no choice. §314(b).
Section 314(a)’s requirement that the Director find “a reasonable likelihood” that the petitioner will prevail on “at least 1 of the claims challenged in the petition” suggests, if anything, a regime where a reasonable prospect of success on a single claim justifies review of them all. Again, if Congress had wanted to adopt the Director’s claim-by-claim approach, it knew how to do so. See §304. Nor does it follow that, because §314(a) invests the Director with discretion on the question whether to institute review, it also invests him with discretion regarding what claims that review will encompass. The rest of the statute confirms, too, that the petitioner’s petition, not the Director’s discretion, should guide the life of the litigation. See, e.g., §316(a)(8).
The Director suggests that a textual discrepancy between §314(a)—which addresses whether to institute review based on claims found “in the petition”—and §318(a)—which addresses the Board’s final resolution of the claims challenged “by the petitioner”—means that the Director enjoys the power to institute a review covering fewer than all of the claims challenged in the petition. However, the statute’s winnowing mechanism—which allows a patent owner to concede one part of a petitioner’s challenge and “[c]ancel any challenged patent claim,” §316(d)(1)(A)—fully explains why Congress adopted the slightly different language.
The Director’s policy argument—that partial institution is efficient because it permits the Board to focus on the most promising challenges and avoid spending time and resources on others—is properly addressed to Congress, not this Court. And the Director’s asserted “partial institution” power, which is wholly unmentioned in the statute, is not entitled to deference under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837. Finally, notwithstanding §314(d)—which makes the Director’s determination whether to institute an inter partes review “final and nonappealable”—judicial review remains available consistent with the Administrative Procedure Act to ensure that the Patent Office does not exceed its statutory bounds. Cuozzo Speed Technologies, LLC v. Lee, 579 U. S. ___, distinguished. Pp. 4–14.
825 F. 3d 1341, reversed and remanded.
Gorsuch, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, and Alito, JJ., joined. Ginsburg, J., filed a dissenting opinion, in which Breyer, Sotomayor, and Kagan, JJ., joined. Breyer, J., filed a dissenting opinion, in which Ginsburg and Sotomayor, JJ., joined, and in which Kagan, J., joined except as to Part III–A.