June 10, 2009 12:00 AM
A Win for Wiwa, A Win for Shell, A Win for Corporate Human Rights
Posted by Michael D. Goldhaber
For the second time in eight months, all eyes in the business and human rights community turned to U.S. federal court, as plaintiffs hoped to finally persuade a jury to hold a corporation liable for violating the law of nations under the Alien Tort Statute. Alas it was not meant to be.
In November a San Francisco jury found for the defendant in Bowoto v. Chevron. Late Monday, on the eve of trial in New York, the parties settled in Wiwa v. Shell. For those with longer memories, it was reminiscent of March 2005, when another case hyped as the great breakthrough for corporate human rights, Doe v. Unocal, settled before trial on the merits. All were part of a larger trend of natural resource claims in regions of conflict.
Absent a cathartic trial, can a winner be declared? That depends on whether you take a client perspective or a movement perspective. From a client perspective, the $15.5 million Shell settlement was a draw. Both clients struck a reasonable financial deal, but both lost the opportunity for public vindication. From a movement perspective, the edge goes to advocates of corporate human rights.
To Shell, $15.5 million is nuisance value. It is a fair bet that Shell spent more than that sum on its lawyers at Cravath, Swaine & Moore in the 13 years since Wiwa was filed--and was poised to spend as much again on the trial and subsequent appeals. (Cravath declined to comment for this story.) Moreover, the sum spent by Shell compares favorably with the $30 million spent by Unocal on alien tort settlement, according to Business Week, in the run-up to its acquisition by Chevron.
At the same time, $15.5 million is an immense sum for residents of the Niger Delta, and looks far more appealing to plaintiffs' lawyers than the goose eggs they saw in Bowoto. "It's a win-win," says Professor Chimene Keitner of UC Hastings College of Law.
Yet neither side will get to tell their story to the public, which each desperately wanted to do. The plaintiffs alleged that Shell was complicit--under principles of conspiracy, joint venture, and agency law--in the Nigerian military regime's murderous repression of the Ogoni region from 1990 to 1995, culminating in the wrongful hanging of Nobel peace prize nominee Ken Saro-Wiwa and his colleagues in a peaceful protest movement against environmental depredation and distributional injustice. Among other incidents, the trial lawyers planned to put on testimony proving the allegations that Shell paid for, called in, and transported the forces who massacred a plaintiff near the village of Korokoro; that a Shell lawyer was present when a man was pressured to give false testimony against Saro-Wiwa in the military hearing that led to his hanging; and that the managing director of Shell's Nigerian subsidiary offered to have Saro-Wiwa freed in return for social peace.
Shell's filings tell a different tale. A bit like Chevron, which characterized the Bowoto plaintiffs who were shot by soldiers elsewhere in the Niger delta as pirates, Shell depicted itself as the victim of an extortionary movement that advocated violence and secession, forced Shell to permanently withdraw from Ogoni in early 1993, and purposely incited the military to violence to provoke an international outcry. Shell characterized the Korokoro killing as part of a well-justified and restrained rescue mission, and maintained that the Korokoro raid was the only example of any limited cooperation between the company and the military, which plaintiffs labeled deep and routine. All testimony implicating Shell in bribery or extortion was dismissed as pure fabrication. "Shell has always maintained the allegations were false," says Shell executive director of exploration and production Malcolm Brinded in a conciliatory statement. "While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people, which is important for peace and stability in the region."
While the facts in dispute will never be settled, Wiwa has left its mark on law and legal culture--and in this respect the movement for business human rights is the big winner.
Wiwa was filed soon after the Second Circuit Court of Appeals established in 1995 that the law of nations reaches nonstate actors like the Bosnian Serb leader Radovan Karadzic--and by this indirect route opened the door to corporate alien tort claims.
None of the dozens of cases filed since have led to a plaintiffs' jury verdict on ATS grounds. There has been at least one trial victory of sorts--in Licea v. Curacao Drydock (S.D. Fla. 2008), the court entered a nonjury default judgment for $80 million. And in Jama v. Esmor Correctional Services (D.N.J. 2007), a jury rejected the ATS claim while finding the corporation liable for $100,001 on non-ATS grounds. But in the two first clearcut test cases for juries, Bowoto and Estate of Rodriguez v. Drummond Co. (N.D. Ala. 2007), plaintiffs were resoundingly defeated at trial. (The Rodriguez case is on appeal, and a new case based on similar facts has recently been filed against Drummond.)
What we have seen instead are corporate alien tort settlements. Beyond Shell and Unocal, there have been confidential settlements in Doe v. Gap (D.N. Mar. I. 2002), Doe v. Reddy (N.D. Cal. 2004), and Xiaoning v. Yahoo! (N.D. Cal. 2007). This is not to mention the Holocaust-related deals with Swiss and Austrian banks and German industry, also founded on alien tort theories, for more than $6 billion, collectively.
"A settlement is a victory," says Michael Hausfeld, an architect of the Holocaust settlements who was not involved in the Shell case. "Every settlement advances the principles of human rights law."
Professor Ralph Steinhardt of George Washington University Law School, who has argued other alien tort claims, singles out the Second Circuit's 2000 ruling on forum non conveniens as the precedent for which Wiwa will be best remembered. In that opinion, the appeals court reversed the case's dismissal, and, speaking for other U.S. courts, observed that “torture committed under color of law of a foreign nation is 'our business'".
But, as Steinhardt notes, Wiwa established plaintiff-friendly precedents too numerous to list. In a pretrial ruling just this April, Chief District judge Kimba Wood affirmed that extrajudicial execution is a violation of the law of nations (reversing her own previous ruling), as are cruel, inhuman and degrading treatment, and prolonged arbitrary detention. “After thirteen years, our clients felt they had made enough good law," says Wiwa counsel Jennie Green of the Center for Constitutional Rights.
More broadly, Wiwa has been part of a multifaceted global trend toward corporate social accountability, that has pushed industries to adopt codes of conduct, like the Voluntary Principles on Security and Human Rights, to which all the oil majors are signatories. "Both the Bowoto and Wiwa situations would have been handled differently today than they were at the time," says Jonathan Drimmer, a Steptoe & Johnson partner who counsels companies on human rights compliance. “There's been a cultural shift--and in no small part because of these high-profile, highly charged, highly damning lawsuits.”
Does there come a point when the cases stop settling, and the culture stops shifting, if the alien tort lawyers never sway a jury? As a good academic, Steinhardt concedes that the project might falter after six or ten perfectly tried cases with perfect-facts fail. But we are a long way away. This is not baseball, and the plaintiffs get more than three strikes.
Steptoe’s Drimmer agrees, and argues that the breakthrough case is a matter of time. "Plaintiffs' lawyers are getting smarter," he says. They learn from negative rulings. They learn from positive rulings. They learn from settlements. We're getting a body of law and experience that only accrues to the benefit of plaintiffs. We are getting closer and closer to a corporate alien tort jury verdict."
Michael D. Goldhaber is the senior international correspondent for The American Lawyer. He is the author of A People's History of the European Court of Human Rights, now available in paperback.Make a comment