Opinion analysis

Justices scuttle lawsuit against Nestlé, Cargill for allegedly aiding child slavery abroad

This article was updated on June 17 at 7:15 p.m.

The Supreme Court on Thursday threw out a lawsuit alleging that two U.S.-based companies, Nestle and Cargill, facilitated human-rights abuses on cocoa plantations in the Ivory Coast. By a vote of 8-1, the justices ruled that the lawsuit cannot go forward because it is based on conduct that occurred overseas. Although the decision was obviously a victory for the two companies, it was not the sweeping one that the business community had sought. The justices left open for another day the question of whether the federal law at the heart of the case allows lawsuits against U.S. corporations at all.

Thursday’s decision came in a lawsuit filed by six citizens of Mali, who claimed that as children they were enslaved on cocoa plantations in Ivory Coast. The conditions there, the plaintiffs contended, were horrific: They worked for long hours without pay and with very little food, and if they didn’t work quickly enough, they were beaten with whips and tree branches.

The plaintiffs filed a lawsuit in federal court in California against Nestle and Cargill, alleging that the companies had aided and abetted human-rights abuses because they had purchased cocoa beans from the plantations even though the companies knew that the plantations used child slavery. The companies also provided the cocoa farmers with support, the plaintiffs added, such as personal spending money and farming supplies such as fertilizers and tools.

The plaintiffs relied on the Alien Tort Statute, an 18th-century law that permits foreigners to bring lawsuits in U.S. courts for serious violations of international law. The trial court dismissed the lawsuit, reasoning that the activities at the heart of the plaintiffs’ complaint were normal for multinational corporations, but the U.S. Court of Appeals for the 9th Circuit reinstated it. The lawsuit could go forward, the 9th Circuit reasoned, because Nestle and Cargill made “major operational decisions” in the United States, and the “financing decisions … originated” there as well. The companies appealed to the Supreme Court, which agreed to weigh in last year.

In a brief opinion by Justice Clarence Thomas that was joined in relevant part by Chief Justice John Roberts and by Justices Stephen Breyer, Sonia Sotomayor, Elena Kagan, Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett, the court agreed with the companies and the federal government, which filed a “friend of the court” brief supporting the companies, that the plaintiffs were asking U.S. courts to apply the Alien Tort Statute outside the United States, where U.S. laws normally do not apply. Because the ATS does not apply outside the United States, Thomas explained, the plaintiffs’ lawsuit can go forward only if conduct that is relevant to the focus of the ATS occurred in the United States. Although the two sides do not agree on what that conduct is, Thomas continued, under any interpretation the plaintiffs would still be seeking to have the ATS apply extraterritorially. “Nearly all of the conduct that they say aided and abetted forced labor — providing training, fertilizer, tools, and cash to overseas farms — occurred,” Thomas emphasized, in Ivory Coast. General allegations about corporate decision-making in the United States cannot, without more, establish a domestic application of the statute.

In a section of his opinion joined only by Gorsuch and Kavanaugh, Thomas wrote that the plaintiffs’ lawsuit could not continue for yet another reason, wholly unrelated to extraterritoriality: The plaintiffs did not have a cause of action to sue in the first place. The ATS does not itself create a right to sue, Thomas observed, and the court’s recent rulings on the ATS have made clear that federal courts should not recognize private rights of action beyond three historical and serious violations of international law – piracy, crimes against ambassadors, and violations of the right of safe passage – because of the foreign-policy problems that could arise from doing so. “Whether and to what extent defendants should be liable under the ATS for” wrongdoing beyond those three sets of offenses is for Congress to decide.

In a concurring opinion joined in different parts by Alito and Kavanaugh, Gorsuch noted that the court had agreed to decide (but ultimately did not) whether corporations can be sued under the Alien Tort Statute at all. “That is a good thing,” Gorsuch reasoned. “The notion that corporations are immune from suit under the ATS cannot be reconciled with the statutory text and original understanding” of the law. However, Gorsuch continued, the “real problem with this lawsuit and others like it” is that the ATS “nowhere deputizes the Judiciary to create new causes of action.”

Sotomayor criticized what she described as Thomas’ effort to cabin the scope of the ATS, to provide a cause of action only for the three violations of international law that were recognized in 1789. Such an interpretation, Sotomayor argued, is contrary to both the Supreme Court’s 2004 ruling in Sosa v. Alvarez-Machain and the text and history of the ATS. It is also, she suggested, a “gross overreaction to a manageable (and largely hypothetical) problem.”

Justice Samuel Alito dissented. Although, he acknowledged, Thomas and Gorsuch “make strong arguments that federal courts should never recognize new claims under the ATS,” he concluded that the court should not address that question here because the companies did not raise it. Instead, he would have rejected the companies’ contention that they cannot be sued and would have sent the case back to the lower courts for further proceedings.

This article was originally published at Howe on the Court.