Appeal from the United States District Court for the Central District of California Margaret M. Morrow, District Judge, Presiding D.C. No. CV-00-11695-MMM.
Argued and Submitted October 11, 2007 -- San Francisco, California
Before: Mary M. Schroeder, Harry Pregerson, Stephen Reinhardt, Andrew J. Kleinfeld, Barry G. Silverman, M. Margaret McKeown, Marsha S. Berzon, Johnnie B. Rawlinson, Consuelo M. Callahan, Carlos T. Bea, and Sandra S. Ikuta, Circuit Judges.
Opinion by Judge McKeown; Concurrence by Judge Bea; Dissent by Judge Ikuta; Concurrence by Judge Kleinfeld; Dissent by Judge Reinhardt.
McKEOWN, Circuit Judge, joined by Judges SCHROEDER and SILVERMAN
Current and former residents of Bougainville, Papua New Guinea ("PNG"), brought suit under the Alien Tort Statute ("ATS"), claiming that various war crimes, crimes against humanity, racial discrimination, and environmental torts arose out of Rio Tinto's mining operations on Bougainville. Plaintiffs allege Rio Tinto is liable not only for its actions that led to a civil war, but also vicariously for those of the PNG government, acting as Rio Tinto's agent or partner.
This case raises an important question of the role of exhaustion under the ATS, which bestows jurisdiction on United States courts for "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. Although the ATS does not itself require an alien to exhaust local remedies before invoking the jurisdiction of our courts, the Supreme Court signaled in Sosa v. Alvarez-Machain that a prudential or judicially-imposed exhaustion requirement for ATS claims "would certainly [be considered] in an appropriate case." 542 U.S. 692, 733 n.21 (2004). The application of Sosa to exhaustion under the ATS is a matter of first impression in this circuit, and we hold that this is "an appropriate case" to consider whether to invoke the exhaustion analysis.
Although we decline to impose an absolute requirement of exhaustion in ATS cases, we conclude that, as a threshold matter, certain ATS claims are appropriately considered for exhaustion under both domestic prudential standards and core principles of international law.*fn1 Where the "nexus" to the United States is weak, courts should carefully consider the question of exhaustion, particularly- but not exclusively- with respect to claims that do not involve matters of "universal concern." Matters of "universal concern" are offenses "for which a state has jurisdiction to punish without regard to territoriality or the nationality of the offenders." Kadic v. Karadzic, 70 F.3d 232, 240 (2d Cir. 1995) (citing Restatement (Third) Foreign Relations Law of the United States § 404 (1987) ("Restatement (Third)")). Because the district court did not analyze exhaustion as a discretionary matter, we remand for the district court to address this issue in the first instance, using the framework outlined below.
Bougainville is an island in the South Pacific located just off the main island of PNG. Rich in natural resources, including copper and gold, the island was targeted as a prime mining site by defendants Rio Tinto, plc, a British and Welsh corporation, and Rio Tinto Limited, an Australian corporation (collectively "Rio Tinto"). Rio Tinto is part of an international mining group that operates over sixty mines and processing plants in forty countries, including the United States. To operate a mine on Bougainville, Rio Tinto required and received the assistance of the PNG government. According to the complaint, beginning in the 1960s, Rio Tinto displaced villages, razed massive tracts of rain forest, intensely polluted the land, rivers, and air (with extensive collateral consequences including fatal and chronic illness, death of wildlife and vegetation, and failure of farm land), and systematically discriminated against its Bougainvillian workers, who lived in slave-like conditions.
In November 1988, some Bougainville residents revolted; they sabotaged the mine and forced its closure. After Rio Tinto demanded that the PNG government quash the uprising, the government complied and sent in troops. PNG forces used helicopters and vehicles supplied by Rio Tinto. On February 14, 1990, the country descended into a civil war after government troops slaughtered many Bougainvillians in what has come to be known as the "St. Valentine's Day Massacre."
Unable to resume mining, Rio Tinto threatened to abandon its operations and halt all future investment in PNG unless the government took military action to secure the mine. In April 1990, the PNG government imposed a military blockade on the island that lasted almost a decade. The blockade prevented medicine, clothing, and other necessities from reaching the residents. Under further pressure from Rio Tinto, according to the complaint, the government engaged in aerial bombardment of civilian targets, wanton killing and acts of cruelty, village burning, rape, and pillage. As a result, an estimated fifteen thousand Bougainvillians, including many children, died. Of the survivors, tens of thousands are displaced and many suffer health problems. In March 2002, the PNG Parliament formalized a peace accord that ended the civil war.
In November 2000, nearly a year and a half before the civil war formally ended, plaintiffs filed this class action, raising numerous claims under the ATS: (1) crimes against humanity resulting from the blockade; (2) war crimes for murder and torture; (3) violation of the rights to life, health, and security of the person resulting from the environmental damage; (4) racial discrimination in destroying villages and the environment, and in working conditions; (5) cruel, inhuman, and degrading treatment resulting from the blockade, environmental harm, and displacement; (6) violation of international environmental rights resulting from building and operating the mine; and (7) a consistent pattern of gross violations of human rights resulting from destruction of the environment, racial discrimination, and PNG military activities. Plaintiffs also raised various non-ATS claims ranging from negligence to public nuisance.
The district court determined plaintiffs stated various cognizable ATS claims: war crimes, crimes against humanity, racial discrimination, and violation of the United Nations Convention on the Law of the Sea ("UNCLOS"). Sarei v. Rio Tinto, PLC, 221 F. Supp. 2d 1116, 1149, 1151, 1155, 1162 (C.D. Cal. 2002). Nonetheless, the district court dismissed the entire complaint as presenting nonjusticiable political questions. Id. at 1198-99. The court alternatively dismissed the racial discrimination and environmental tort claims under the act of state doctrine, id. at 1193, as well as the doctrine of international comity, id. at 1207. Finally, it also held that the ATS did not require exhaustion of local remedies, but did not address exhaustion as a prudential or discretionary issue. Id. at 1132-39.
After the plaintiffs filed their notice of appeal, the Supreme Court decided the landmark case of Sosa, which clarified that the ATS is a jurisdictional statute and held that "federal courts should not recognize private claims under federal common law for violations of any international law norm with less definite content and acceptance among civilized nations than the historical paradigms familiar when § 1350 was enacted." 542 U.S. at 732. As noted, the Court also adverted for the first time to exhaustion under the ATS.
On appeal, a three-judge panel affirmed in part, reversed in part, vacated in part, and remanded, with one judge dissenting. Sarei, 487 F.3d at 1223-24. The majority held that the district court had subject matter jurisdiction under the ATS because plaintiffs alleged nonfrivolous jus cogens violations for racial discrimination, war crimes, and crimes against humanity, including any claims that rested on vicarious liability. Id. at 1202. The panel concluded that the district court erred when it dismissed plaintiffs' claims as political questions. Id. at 1208. The panel further held that the district court erred by dismissing the racial discrimination claim under the act of state doctrine, and that the district court should reconsider its dismissal of the UNCLOS claim on this ground. Id. at 1209-10. The panel remanded so the district court could also reconsider its dismissal of the racial discrimination and UNCLOS claims under the doctrine of international comity. Id. at 1213.
Finally, as to the issue that is the sole focus of this en banc opinion, the panel majority held that the ATS does not require exhaustion of local remedies. Id. at 1223. The court reasoned that (1) the language of the statute does not require exhaustion; (2) the legislative history contains no reference to exhaustion or even to the ATS itself; (3) Congress's inclusion of an explicit exhaustion requirement in the Torture Victims Protection Act of 1991 suggests that Congress did not intend to require exhaustion of ATS claims; and (4) policy concerns did not justify creating an exhaustion requirement as a matter of judicial discretion. Id. at 1215, 1218, 1223.
In dissent, Judge Bybee addressed only the exhaustion issue. He concluded that international law requires exhaustion of local remedies and that in the exercise of judicial discretion, our federal courts should require exhaustion. Id. at 1237 (Bybee, J., dissenting).
Because this case presents a number of issues of exceptional importance, we ordered that it be heard en banc pursuant to Circuit Rule 35-3. Sarei v. Rio Tinto, PLC, 499 F.3d 923 (9th Cir. 2007).
I. EXHAUSTION IN ATS CASES
As the Supreme Court directed in Sosa, exhaustion of local remedies should "certainly" be considered in the "appropriate case" for claims brought under the ATS. 542 U.S. at 733 n.21. This is an appropriate case for such consideration under both domestic prudential standards and core principles of international law.
 Here, the district court declined to consider imposing exhaustion. The district court held that the ATS created a domestic cause of action-a view shared by many courts before Sosa-and that exhaustion of local remedies was not required to state a claim, because the statute itself did not explicitly incorporate exhaustion. Sarei, 221 F. Supp. 2d at 1138-39. The Supreme Court has since clarified that the ATS is a jurisdictional statute that does not create a cause of action and has noted the availability of exhaustion in an "appropriate case."
The parties, the district court, and the panel majority and dissent all analyzed the exhaustion question by initially asking whether the ATS requires exhaustion. The inquiry as to whether exhaustion is required by the statute leads with the wrong foot post-Sosa.
 Our starting point is the Court's explicit reference to exhaustion in Sosa:
This requirement of clear definition is not meant to be the only principle limiting the availability of relief in the federal courts for violations of customary international law, though it disposes of this action. For example, the European Commission argues as amicus curiae that basic principles of international law require that before asserting the claim in a foreign forum, the claimant must have exhausted any remedies available in the domestic legal system, and perhaps in other forums such as international claims tribunals. We would certainly consider this requirement in an appropriate case.
542 U.S. at 733 n.21 (internal citations omitted). See also id. at 760 (Breyer, J., concurring in part and in the judgment) ("The Court also suggests that principles of exhaustion might apply . . . ." (emphasis added)). Thus, the Court appears to consider exhaustion a prudential "principle" among others that courts should consider beyond the initial task of determining whether the alleged violations of the ATS satisfy the "requirement of clear definition." Id. at 733 n.21.*fn3
Approaching exhaustion as a prudential principle renders unnecessary our wading into the debate whether the Torture Victim Protection Act ("TVPA"), 28 U.S.C. § 1350, which was adopted in 1991 and explicitly incorporates an exhaustion requirement, offers insight into Congress's intent to impose the same requirement in the context of the ATS, which was enacted in 1789. See Sarei, 487 F.3d at 1215-19; id. at 1227-30 (Bybee, J., dissenting).*fn4 Not only does this TVPA comparison not particularly forward the discussion, Sosa's pronouncement relieves us of the need to engage in the comparison in the first place.
 Prudential exhaustion also avoids another jurisprudential debate remaining in the wake of Sosa: whether exhaustion is a substantive norm of international law, to which the "requirement of clear definition" applies; or if it is nonsubstantive,*fn5 what source of law-federal common law or international law -illuminates its content. See Sarei, 487 F.3d at 1221. Though Sosa is vague on this broad question of methodology, it unambiguously states that the "requirement of clear definition" of an international norm is distinct from the consideration of other factors that might also serve to limit the relief available through the ATS. 542 U.S. at 733 n.21. In the absence of any further comment by the Supreme Court, it is fair to assume (at least for the purposes of exhaustion) that we may freely draw from both federal ...