Case preview: When can U.S. companies be sued for alleged violations of international human rights?
on Nov 30, 2020 at 10:21 am
Enacted as part of the Judiciary Act of 1789, the Alien Tort Statute allows foreigners to bring lawsuits in U.S. courts for serious violations of international law. On Tuesday, the justices will hear oral argument in a pair of cases, Nestlé USA v. Doe I and Cargill, Inc. v. Doe I, that ask whether a lawsuit brought under the ATS by former child slaves in Ivory Coast can continue. The plaintiffs allege that the defendants, both U.S. companies, facilitated human-rights abuses on the plantations where the youths worked. The companies warn that allowing lawsuits like this one to go forward could be a drain on the U.S. economy and cause problems for U.S. foreign policy, while the plaintiffs counter that these are exactly the kinds of lawsuits that Congress intended to address with the ATS.
The late Judge Henry Friendly once described the ATS as a “kind of legal Lohengrin,” after the mythical German knight who arrives in a boat pulled by swans, because “no one seems to know whence it came.” From the time that it was passed in 1789 until the late 20th century, the ATS remained largely obscure. But in 1980, a Paraguayan doctor, Joel Filártiga, and his daughter, Dolly, relied on the ATS to file a lawsuit in federal court in New York against America Pena-Irala, a former Paraguayan police official living there. They claimed that Pena-Irala had kidnapped Joel’s son, Joelito, and tortured him to death in retaliation for Joelito’s opposition to the Paraguayan government. The U.S. Court of Appeals for the 2nd Circuit agreed with the Filártigas that it had the authority to hear the case under the ATS, reasoning that torture violates the law of nations.
After the 2nd Circuit’s decision in the Filártigas’ case, other lawsuits under the ATS seeking compensation for human-rights violations overseas followed – not only against foreign government officials, but also against multinational corporations for their role in aiding and abetting human-rights violations. The defendants in these cases resisted what they saw as efforts to make the United States, as Chief Justice John Roberts once put it, the “moral custodian” of the world. And in 2004, the court indicated that the kinds of claims that can be brought under the ATS are relatively limited. At Tuesday’s argument, lawyers for Nestlé and Cargill will urge the justices to place even more limits on those claims.
The plaintiffs in the dispute now before the court are six citizens of Mali who claim that as children they were sold to cocoa plantations in Ivory Coast. Once there, the plaintiffs say, they worked as many as 14 hours a day, six days a week, without pay and with very little food; they were “beaten with whips and tree branches” if they didn’t work fast enough. One plaintiff, known only as John Doe IV, says that when his efforts to escape failed, supervisors on the cocoa plantation tied him to a tree and beat him, cut the bottoms of his feet, and then rubbed chili pepper into his wounds.
The plaintiffs contend that Nestlé and Cargill aided and abetted human-rights abuses because they bought cocoa beans from cocoa plantations in Ivory Coast even though the companies knew that the plantations used child slavery. Nestlé and Cargill also provided the farmers with other support, the plaintiffs say, such as personal spending money and farming supplies such as fertilizers and tools.
A federal district court threw out the plaintiffs’ lawsuit. It ruled that the activities at the heart of the plaintiffs’ claims were normal for international corporations, and the only real connection to the United States was that Nestlé and Cargill are U.S. corporations. As a result, the district court concluded, the “focus” of the plaintiffs’ claims was outside the United States, and their lawsuit could not go forward under the ATS.
The U.S. Court of Appeals for the 9th Circuit reinstated the lawsuit. It reasoned that the “focus” of the ATS included conduct that could qualify as “aiding and abetting,” such as the plaintiffs’ claims that the defendants had provided spending money to the farmers, presumably at the direction of officials in the United States.
After a divided 9th Circuit denied the companies’ request for rehearing by the full court, both Nestlé and Cargill filed petitions for review last year. The justices asked the federal government to weigh in, and it recommended that review be granted. The justices announced in July that they would take up both cases, which they consolidated for one hour of oral argument.
In their briefs on the merits, Nestlé and Cargill begin by condemning child slavery – which, they say, they have taken steps to fight in Ivory Coast. But that is not what this case is about, they stress. Instead, they tell the justices, the issue is whether the plaintiffs can rely on the ATS to bring their lawsuit in U.S. courts – which, they argue, the plaintiffs cannot.
There are two main questions in the case. The first is whether U.S. corporations can be defendants in lawsuits brought under the ATS; the second is whether the ATS applies when the conduct at the heart of the case took place outside the United States. Addressing the first question, Nestlé and Cargill point to a recent Supreme Court decision holding that foreign corporations cannot be sued under the ATS and contend that all of the same logic applies to U.S. corporations. To recognize a new cause of action under the ATS, they explain, the Supreme Court has required that the international law norm at issue be specifically defined and universally recognized. But, they continue, there is “at best ‘weak support’” for the idea of holding corporations liable under international law. International law initially applied only to countries, but since the Nuremberg trials it has also applied to individuals. The Nuremberg prosecutors considered charging some corporations – including the firm that supplied the gas that the Nazis used to kill millions of Jews in concentrations camps – but did not, opting instead to prosecute the owner and two employees. People, “not abstract entities,” commit violations of international law, they conclude.
And even if the court could recognize a cause of action against U.S. corporations under the ATS, Nestlé and Cargill continue, that doesn’t mean that it should. Such a decision is best left to Congress, they say, particularly in light of the “significant foreign-affairs risks” that would arise if U.S. corporations could be sued under the ATS. If domestic affiliates of foreign corporations can be sued in U.S. courts, the companies posit, other countries may decide that turnabout is fair play and allow foreign affiliates of U.S. corporations to be sued in their courts for alleged violations of international law. On the other hand, the companies write, plaintiffs might try to get around the ban on suing foreign corporations in the U.S. by bringing lawsuits against the foreign corporations’ U.S. affiliates. The companies suggest that the rule that the plaintiffs are advocating could also prompt U.S. corporations to decide that it is too costly to invest in countries with “tarnished human-rights records — often developing countries that need foreign investment most.” And more broadly, the companies caution, allowing lawsuits against U.S. corporations under the ATS will hurt the U.S. economy, by requiring corporations to devote time and resources to defending lawsuits – even when they are meritless.
Nestlé and Cargill reassure the justices that a rule banning lawsuits against U.S. corporations under the ATS will not foreclose lawsuits under the ATS altogether. Instead, they explain, it would simply require plaintiffs to sue the individuals who were actually responsible for their injuries. Moreover, they add, perpetrators of genocide, forced labor, human trafficking, terrorism and torture can be held criminally liable under U.S. law.
In their brief, the plaintiffs accuse Nestlé and Cargill of having “long supported and maintained a system of child slavery and forced labor in the Ivory Coast” that is “extremely profitable” for them. The companies “could end the system,” the plaintiffs suggest, but instead they “chose profits over ending their exploitation of children.”
On the question of whether the ATS applies to corporations, the plaintiffs contend that the international norms barring child slavery, forced labor and human trafficking are exactly the kinds of universally accepted norms that can be the subject of lawsuits under the ATS, “just as piracy applied to entities in 1789.” “Those involved in modern day slavery,” the plaintiffs declare, “are truly the pirates of our times.”
History and practice indicate, the plaintiffs contend, that these norms can be enforced against corporations. For example, the plaintiffs note, after the transatlantic slave trade was abolished in the early 19th century, the ban was enforced against private companies by seizing their ships.
And nothing in the text of the ATS suggests that corporations cannot be defendants in lawsuits brought under the statute, the plaintiffs assert. To the contrary, they note, in other provisions of the ATS, Congress did place restrictions on who could be held liable; the absence of similar limits here indicates that Congress did not intend to do so.
The plaintiffs argue that concerns about interference with U.S. foreign policy “ring hollow” in ATS cases – like this one – involving claims against U.S. corporations. They note that no foreign country, including Ivory Coast, has objected to the ATS claims against Nestlé and Cargill. And although the federal government filed a “friend of the court” brief arguing against ATS liability for U.S. corporations – citing, among other things, the “potential” for such suits “to interfere with U.S. foreign-policy priorities” — the U.S. State Department has not expressed any concern about the effect of this case on the country’s foreign relations, the plaintiffs observe. To the contrary, the plaintiffs emphasize, the U.S. government has repeatedly criticized the Ivorian government for the continued use of child labor in the cocoa industry.
The plaintiffs add there is no reason to believe that – contrary to the companies’ suggestion – allowing claims like theirs to go forward will put U.S. corporations at a competitive disadvantage, especially when other countries would allow their own corporations to be held liable to similar claims. By contrast, the plaintiffs posit, allowing companies like Nestlé and Cargill to continue to benefit from child slavery will put U.S. corporations that operate ethically at a disadvantage. Along the same lines, the plaintiffs contend, there is no reason to believe that allowing these claims to go forward will cause foreign countries to retaliate by holding U.S. companies liable in foreign courts.
Nestlé and Cargill argue that the plaintiffs cannot sue them under the ATS for a second reason: All of the conduct at the heart of the plaintiffs’ claims – Cargill’s purchase of cocoa, the trafficking of the plaintiffs, and their forced labor on the cocoa plantations – took place outside the United States, in either Ivory Coast or Mali. The Supreme Court has already ruled that there is a general presumption that the ATS does not apply outside the United States, the companies observe. And here the conduct relating to the “focus” of the ATS – which, for the ATS, is where the injury resulting from a serious violation of international law took place – also occurred outside the United States, the companies stress.
This interpretation of the ATS, the companies contend, is consistent with Congress’ purpose in enacting the statute, which was to ensure that foreign officials who were injured in the U.S. could obtain relief, because the absence of a remedy in such cases could have led to foreign relations problems and even war. There is no reason to believe that Congress wanted to provide a remedy for foreigners injured in other countries, the companies reason, because those countries could provide a remedy instead.
Even if the “focus” of the ATS extends beyond the place where the plaintiffs were injured, the companies continue, there is still not enough of a connection in this case between the plaintiffs’ injuries and the United States to allow the case to go forward. All that the plaintiffs allege, the plaintiffs write, is that the companies supervised their activities from the United States and were aware of the conduct by other individuals and entities overseas. “But that would be true of nearly every large company that purchases goods sourced from overseas,” the companies tell the justices.
The plaintiffs counter that the presumption that the ATS does not apply outside the United States is not implicated when, as here, the claims “touch and concern” the United States: All of the major decisions about the companies’ business, including decisions about its cocoa supply chain in Ivory Coast, are made in the United States. This is exactly the kind of case to which the Founders would have wanted the ATS to apply, the plaintiffs say, because the whole purpose of the ATS was to provide a remedy to foreigners for violations of international law by U.S. citizens in situations when the United States’ relationship with foreign countries might be jeopardized if a remedy were not available. This is so, the plaintiffs explained, because when Congress passed the ATS in 1789, the United States would have been held responsible by other countries for wrongdoing by U.S. citizens – for example, an attack by a U.S. citizen on a foreign ambassador. And in particular, the plaintiffs point out, one of the main things for which the ATS was designed to provide a remedy was piracy, which would have occurred outside the United States.
Even if the “focus” of the ATS were relevant, the plaintiffs continue, rather than whether the companies’ conduct “touches and concerns” the United States, their claims can still go forward under the ATS. This is because the “focus” of the ATS isn’t where the injury occurred, they allege, but instead avoiding “foreign entanglements” – which could result if a foreign national were injured and did not have access to a remedy in U.S. courts.
This post was originally published at Howe on the Court.