Nestlé USA, Inc. v. Doe

Issues 

Under the Alien Tort Statute, can domestic corporations be held liable for aiding and abetting human rights abuses—specifically, child slavery—in a foreign country, when the aiding and abetting allegedly occurred on U.S. soil?

Oral argument: 
December 1, 2020

This case asks the Court to determine whether domestic corporations may be held liable for aiding and abetting human rights violations committed in foreign countries. Petitioners Nestlé and Cargill contracted for exclusive buyer-seller contracts with cocoa plantations on the Ivory Coast; Respondents John Doe et. al. were child slaves on those farms. John Doe alleges that Nestlé and Cargill aided and abetted the farmers from headquarters in the United States by providing monetary support while aware of the widespread use of child slavery on those farms, thus making them liable under the Alien Tort Statute. Nestlé and Cargill counter that the harm inflicted upon John Doe occurred exclusively on foreign soil, making the case impermissibly extraterritorial; furthermore, they argue recent Court cases determined that corporations were immune from liability under the Alien Tort Statute. The Court’s decision in this case will implicate political questions of foreign policy and foreign affairs, corporate incentives to invest in developing countries, and the United States’ support for human rights.

Questions as Framed for the Court by the Parties 

(1) Whether an aiding and abetting claim against a domestic corporation brought under the Alien Tort Statute may overcome the extraterritoriality bar where the claim is based on allegations of general corporate activity in the United States and where the plaintiffs cannot trace the alleged harms, which occurred abroad at the hands of unidentified foreign actors, to that activity; and (2) whether the judiciary has the authority under the Alien Tort Statute to impose liability on domestic corporations.

Facts 

In the Ivory Coast, cocoa plantations utilize child slaves to produce cheap cocoa. Doe I v. Nestle USA (“Nestle I”) at 1017. On these plantations, overseers force children to work without pay and food for up to fourteen hours per day, often six days a week; children who attempt to escape are beaten and tortured. Id. Despite the widespread knowledge of these practices, the Ivory Coast produces seventy percent of the world’s cocoa supply. Id. Nestlé USA and Cargill (“Nestlé and Cargill”) “dominate” the Ivory Coast cocoa market with the “unilateral goal” of finding the cheapest cocoa suppliers. Doe I v. Nestle USA, Inc. (“Nestle II”) at 32.

Petitioners Nestlé and Cargill, both headquartered in the United States, are titans of the cocoa industry. Id. As part of their business operations, the two corporations contract for exclusive buyer-seller relationships with the cocoa plantations in the Ivory Coast. Id. at 33. Nestlé and Cargill financially support the plantations, provide farmers with personal spending money, tools, farm maintenance training, and visit the farms on various occasions throughout the year. Id. On one of the farms with an exclusive relationship with Cargill, authorities rescued 19 Malian child slaves. Id. Despite their knowledge of the child slavery problem in the Ivory Coast, and that child labor helps farmers keep the prices down for cocoa, Nestlé and Cargill continued their business practices there and lobbied against legislation in Congress that would require corporation to certify their products as “slave free.” Nestle 1 at 1017–1018.

In 2013, three victims of child slavery on these cocoa plantations (“John Doe”) sued the two corporations in the 9th Circuit. Nestle I at 1017. Respondent John Doe filed a class action suit against Nestlé and Cargill for knowingly financing and continuing to do business in a child-slave chain that propagated kidnapping, forced labor, and torture against children who attempted to escape. Nestle II at 33. Specifically, John Doe contended that Nestlé and Cargill aided and abetted in child slavery and therefore violated the Alien Tort Statute. Id. at 33.

The 9th Circuit remanded the case, ordering John Doe to amend their complaint in order to specify the actions taken by the corporations that meet the requirements of aiding and abetting. Nestle I at 1026–27. Further, the court ordered John Doe to amend their complaint to address the “touch and concern” requirement of ATS Claims under Kiobel II in order to determine whether the corporations’ conduct in the Ivory Coast is tied to their United States presence. Id. at 1028.

On remand, the United States District Court for the Central District of California dismissed John Doe’s complaint, determining that it was an “impermissible extraterritorial application of the ATS,” because the corporations only engaged in “ordinary business conduct” within the United States. Nestle II at 33. On appeal, the 9th Circuit determined that the corporations engaged in “overseas slave labor . . . perpetuated from [their] headquarters in the United States,” and were therefore liable under the ATS. Id. at 40.

Nestlé and Cargill appealed. On July 2, 2020 the United States Supreme Court granted certiorari to hear this case.

Analysis 

THE PRESUMPTION AGAINST EXTRATERRITORIALITY

Petitioner Nestlé argues that the Court determined in Kiobel II that a presumption against extraterritoriality, which denies jurisdiction to cases occurring outside of the United States, applies to the ATS. Brief for Petitioner, Nestlé USA (“Brief for Nestlé”) at 14–15. In order to overcome the presumption of extraterritoriality, Nestlé contends that the Court must determine the “focus” of John Doe’s ATS claim. Id. at 15. Petitioner Cargill asserts that the “focus” of the ATS is the “principal violation” of international law that directly injured John Doe. Brief for Petitioner, Cargill (“Brief for Cargill”) at 28. Similarly, Nestlé asserts that Court precedent and Congressional intent during the passage of the ATS indicate that the “focus” of the ATS relates to where the alleged injury occurred, not to action that may “initiate or further a foreign injury.” Brief for Nestlé at 21. Thus, Nestlé argues that, because the alleged harm of child slavery occurred completely outside of the United States in Mali and the Ivory Coast, there is no sufficient domestic injury to overcome the bar against extraterritoriality. Id. at 23. Cargill further argues that the alleged crime of aiding and abetting cannot be brought under the ATS because aiding and abetting could not have solely injured John Doe without the “principal violation” of child slavery. Brief for Cargill at 29–30.

Nestlé further argues that even if the “focus” test does not require limitation to the location of injury, John Doe did not assert “sufficient” domestic conduct to overcome the presumption against extraterritoriality. Brief for Nestlé at 23. Nestlé contends that John Doe only points to “corporate supervisory activity” and the corporation’s general awareness of a violation on international norms by “other parties” in “other countries” in order to establish domestic conduct. Id. at 26. Nestlé asserts that such corporate presence in the United States is not sufficient to overcome the bar against extraterritoriality. Id. at 24. Cargill claims that even if the domestic conduct of financing constituted aiding and abetting, such conduct is minimal in light of the numerous violations occurring in the Ivory Coast­—including the principal violation of child slavery and the alleged “actual provision of funds and other assistance to farmers.” Brief for Cargill at 35–36.

Respondent John Doe asserts that the correct test to apply when determining if the alleged conduct overcomes the presumption against extraterritoriality is not the “focus test;” rather, the Court in Kiobel II and in Jesner consistently applied a “touch and concern” test. Brief for Respondent, John Doe at 11, 14. John Doe explains that under the “touch and concern” test, claims brought under the ATS overcome the presumption against extraterritoriality if they sufficiently touch and concern United States territory. Id. at 11. Therefore, John Doe argues that “aid[ing] and abet[ting] child slavery and forced labor from the United States” sufficiently meets that standard, because the aiding and abetting in this case constituted a tort based on a violation of international law, committed largely on U.S. territory. Id. at 11–12. Further, John Doe contends that even if the Court requires the “focus” test to determine if the presumption against extraterritoriality is overcome, the claims brought sufficiently meet the requirements of that test because the true focus of the ATS is to permit a remedy for violations of international law. Id. at 24. In particular, John Doe alleges that the focus of the ATS is to provide a remedy for violations of international law that could provoke “foreign entanglement[s],” discernable from Court precedent in Jesner and the plain text of the statute. Id. at 21–22; 25. In this case, John Doe argues that aiding and abetting child slavery and forced labor is a tortious act, as understood by the writers of the ATS and in the plain text of the statute; thus, aiding and abetting is “itself a violation of the law of nations,” and comes within the focus of the ATS. Id. at 24–25.

Finally, John Doe contends that the Court must view the allegations of aiding and abetting favorably towards them, because they were unable to amend their complaint as ordered by the 9th Circuit to provide more detailed and specific descriptions of the actions taken by Nestlé and Cargill. Id. at 34. However, John Doe still argues that the action of Nestlé and Cargill of “maintaining the system of child slavery and forced labor on Ivorian cocoa plantations” is sufficient to establish aiding and abetting. Id. at 29. Finally, John Doe argues that Nestlé and Cargill’s actions are not too minimal to determine that aiding and abetting occurred: Nestlé and Cargill employees from the United States, inspected the plantations and provided trainings to the farmers, as well as funded and supplied the equipment for those contracted cocoa farms. Id. at 35. All this occurred while children were enslaved. Id. John Doe contends that, since similar actions have been deemed “substantial assistance” in many international courts, this case sufficiently presents evidence of aiding and abetting under the ATS. Id. at 35–36.

DOMESTIC CORPORATE LIABILITY UNDER COURT PRECEDENT

Nestlé contends that the Court has already decided the issue of corporate liability and has indicated, for reasons of international relations, that it should not extend liability to domestic corporations under the ATS. Brief for Nestlé at 34. Cargill also argues that the reasoning of Jesner, which determined that ATS liability does not extend to foreign corporations, “compels the conclusion” that domestic corporations are immune from liability. Brief for Cargill at 40–41. Additionally, Nestlé argues that, under the Jesner and Sosa precedent, the conduct must be “specific, universal, and obligatory” under international norms, and must not interfere or seriously disrupt foreign affairs. Brief for Nestlé at 35. Nestlé further assets that the Court would err in extending the ATS to find corporate liability because there is no international norm that supports such a finding. Id. Cargill similarly argues that there is “no international law norm of corporate liability,” and that therefore corporate liability fails the Jesner analysis.

In response, John Doe contends that the tests set out in Jesner and Sosa do not create a blanket rule against corporate liability. Brief for Respondent at 37. Indeed, John Doe asserts that the Court did not “distinguish between classes of non-state actors,” because the ATS treats corporations and individuals the same. Id. Furthermore, John Doe argues that Nestlé and Cargill misinterpret Sosa’s “specific, universal, and obligatory” language. Id. at 44. Instead, John Doe contends that the Court can apply the ATS in this particular case because it passes the tests that the Court set out in Jesner and Sosa. Id. at 42. John Doe asserts, in particular, that the first step in the test refers to finding a violation of international law, which in this case relates to child slavery, not whether a corporation can be found liable. Id. In response to Jesner’s second step, John Doe contends that corporate liability would not offend other nations or result in retaliatory action, particularly because this case did not incite protest from the Ivorian government and, more broadly, other nations extend corporate liability in similar cases. Id. at 28, 54.

CONGRESSIONAL INTENT FOR DOMESTIC LIABILITY

Nestlé argues that the original Congress intended for the ATS to extend only to conduct that was in “violation of safe conducts, infringement of the rights of ambassadors, and piracy;” thus, the history of the ATS indicates that corporate liability was never considered under the ATS. Brief for Nestlé at 34–35. On this point, Nestlé claims that international norms traditionally only extended to sovereign nations themselves and later to individuals, not to corporations. Brief for Nestlé at 37. Nestlé also argues that a finding of “mens rea [for] a multimember [corporate] body” would be nearly impossible; thus, the international courts have been intentional in not extending corporate liability. Id. at 39.

Nestlé also looks to the Torture Victim Protection Act of 1991 (“TVPA”) to provide context to the ATS, explaining that Congress’s refusal to extend corporate liability under that statute parallels Congress’s intent to immunize corporations from the ATS. Id. at 42–43. In this case, Nestlé argues that allowing corporate liability and also extending it to a corporation’s subsidiaries would offend the rights of parent companies in contravention of the United States’ foreign policy. Id. at 45.

In response, John Doe argues that the plain language of the ATS gives the Court jurisdiction for tort claims; since corporations are a class of defendants in tort cases, the ATS must thus extend to corporations as well. Brief for Respondent at 38. John Doe asserts that corporate liability has been part of the laws of the United States since its inception. Id. at 36. John Doe argues that enforcing violations of international customary law comes from federal common law. Id. Because corporations can be found liable for various offenses in American federal courts, John Doe argues that Nestlé and Cargill may be found liable for the violation of international norms in this case. Id. at 43. Finally, John Doe argues that international norms prohibiting slavery apply to all private actors, including corporations; indeed, John Doe argues that the slave trade was a “quintessentially corporate activity.” Id. at 36–37, 45. Since multi-state conventions condemn slavery, John Doe argues that it would not violate international norms for the Court to hold Nestlé and Cargill liable. Id. at 46–47.

John Doe asserts that the TVPA is a secondary law under the ATS that applies to extraterritorial jurisdiction and that Congress made no action to replace or limit the ATS with the creation of this statute. Id. at 51. Furthermore, John Doe points out that Congress did not intend to replace the ATS with the TVPA, and the TVPA should therefore not be used to limit it. Id. at 52. Finally, John Doe argues that had Congress wanted to narrow the scope of the ATS, Congress would have specified that corporations could not face liability since Congress was intentional in choosing that ATS claims can be brought only “by aliens.” Id. at 39.

Discussion 

IMPACT ON FOREIGN RELATIONS AND INTERNATIONAL LAW

The United States (“US”), in support of Nestlé and Cargill, argues that bringing ATS cases against domestic corporations “embroils” the judiciary in sensitive matters of foreign affairs and diplomacy. Brief of Amicus Curiae US, in Support of Petitioners at 15. Moreover, the US contends that the “blunt instrument of ATS liability” would implicate the executive’s need for delicacy in achieving political objectives, such as the eradication of child slavery, in foreign relations. Id. at 18. Furthermore, the Chamber of Commerce of the United States of America et al. (“Chamber of Commerce”), argues that ATS liability for incidents of child slavery arising in the Ivory Coast would indirectly condemn the government of the Ivory Coast, which has the “prerogative and responsibility” to redress such human rights abuses. Brief of Amici Curiae Chamber of Commerce, in Support of Petitioners, at 14–15. It concludes that such condemnation results in “vigorous objection” from the foreign government, in defense of both their sovereign immunity and the reputational harm from being branded “complicit in human rights abuses.” Id. at 15–16.

The Center for Global Justice (“CGJ”), in support of John Doe, argues that “no one can reasonably assert” that ATS cases against domestic corporations would result in diplomatic friction, and point out that no foreign state has requested that ATS be limited in that way. Brief of Amicus Curiae CGJ, in Support of Respondents at 13–14. Moreover, Former Government Officials (“FGOs”) assert that there has been no concrete foreign policy harm stemming from holding domestic corporations accountable for human rights abuses. Brief of Amici Curiae FGOs, in Support of Respondents at 17. Rather, the FGOs, as well as CGJ, contend that ATS liability for domestic corporations in the realm of human rights abuses is consistent with the long history of U.S. foreign policy. Brief of CGJ at 9–13; Brief of FGOs at 18. In particular, the FGOs argue that holding U.S. corporations accountable for human rights abuses comports with the U.S. foreign policy aim of being a “moral leader” in business, human rights, and international law. Brief of FGOs at 23.

INCENTIVIZING CORPORATE INVESTMENT IN DEVELOPING COUNTRIES

The US, in support of Nestlé and Cargill, asserts that extending ATS liability to domestic corporations risks deterring investment in “certain developing countries,” particularly when those investments are required to promote human rights. Brief of US at 16. Further, the Washington Legal Foundation (“WLF”) contends that extending ATS liability to domestic corporations “whenever they enter into a contract with a foreign government or foreign business that violates human rights” would ultimately deter corporations from working in foreign countries. Brief of Amici Curiae WLF, in support of Petitioners at 20. The WLF asserts that such liability would lead to “perverse” outcomes in which corporations no longer do business with developing countries out of fear of provoking ATS liability. Id. at 20.

The Coca Cola Company (“Coca Cola”), in support of Nestlé and Cargill, argues that expanded ATS liability would threaten the “vital” role corporations play in improving socioeconomic conditions in developing countries. Brief of Amicus Curiae Coca Cola, in Support of Petitioners at 6. In the cocoa industry in particular, the World Chocolate Foundation (“WCF”) argues that the U.S. Congress and the Department of Labor have already established the Harkin-Engel Protocol, which, although voluntary, brought together the cocoa industry to eliminate child slavery, boost farmer income, and provide education and housing opportunities for children in countries where such human rights abuses occur. Brief of WCF, in Support of Petitioners at 11, 16. The WCF asserts that, since 2001, the cocoa industry has invested more than $215 million in the fight against child labor in the Ivory Coast, and that an expanded ATS would condemn the “very acts—‘provid[ing] financial support and technical farming aid’ and ‘personal spending money’ to those who supply petitioners’ cocoa—that experts and the political branches have encouraged.” Id. at 19.

CGJ, in support of John Doe, argues that immunizing domestic corporations from ATS liability would only incentivize American countries to engage in human rights abuses abroad in search of “more favorable market outcomes.” Brief of CGJ at 15–16. Moreover, Oxfam America et al. (“Oxfam”), points out that the “potential liability” under ATS has not deterred domestic corporations from investing in foreign countries over the past forty years. Brief of Amici Curiae Oxfam America, in Support of Respondents at 14. The Grant & Eisenhofer ESG Institute (“ESG”) contends that ATS liability would incentivize corporate and private investments in foreign countries by providing a viable tool for protecting the interests of who would be motivated to take advantage of environmental or human abuse just to save money and maximize profits. Brief of Amicus Curiae ESG, in Support of Respondents at 9. Finally, Tony Chocolonely (“Tony”) and Small and Midsize Cocoa and Chocolate Companies (“Cocoa Companies”) both argue that ATS liability levels the corporate playing field, ensuring that corporations are incentivized to “invest in a way that promotes human rights.” Brief of Amicus Curiae Tony, in Support of Respondents at 14; Brief of Amici Curiae Cocoa Companies, in Support of Respondents at 12.

ESG, in support of John Doe, argues that the Harkin-Engel Protocol has been insufficient to ensure corporations respect human rights, noting that child labor has increased on cocoa farms due to the lack of incentives to “end the abuse.” Brief of ESG at 18–19. Cocoa Companies argue that ATS liability for domestic corporations would “complement” the Harkin-Engel Protocol by providing legal recourse for violations, pointing out that it is “absurd” that a voluntary protocol could “completely shield an entire industry.” Brief of Cocoa Companies at 28. Oxfam further asserts that corporations, including Nestlé, continue to invest in countries, despite the risk of ATS liability, thus showing that “socially responsible corporations” will not abandon their work in countries with human rights abuses. Brief of Oxfam at 29.

Edited by 

Acknowledgments 

The authors would like to thank Professor Muna Ndulo for his guidance and insights into this case. The authors would like to thank Professor Muna Ndulo for his guidance and insights into this case.

Additional Resources