Nestlé USA/Cargill v. Doe: Using Civil Procedure to Shirk Corporate Responsibility
Written by: Stephanie Durr
On June 17, 2021, the Supreme Court ruled against trafficking survivors in their efforts to hold companies in the United States liable for aiding and abetting child trafficking. The Court, consolidating Nestlé USA, Inc. v. Doe and Cargill, Inc. v. Doe, limited the scope of the Alien Tort Statute and thus stripped trafficking survivors of their ability to recover against corporations for torts committed abroad.
Background of the Case
Nestlé USA and Cargill, two United States-based companies, buy cocoa from farms in the Ivory Coast and supply them with technical and financial resources, such as training, fertilizer, tools, and cash. In Nestlé USA, Inc. v. Doe and Cargill, Inc. v. Doe, (“Nestlé/Cargill”), six individuals from Mali filed suit against Nestlé USA and Cargill, alleging cocoa farms trafficked them for child labor and that Nestlé USA and Cargill’s funding aided and abetted child slavery.
Although the resource distribution and plaintiffs’ injuries occurred outside the United States, the plaintiffs argued they could file suit under the Alien Tort Statute in federal court because Nestlé USA and Cargill made all major operational decisions from within the United States.
The Alien Tort Statute
Congress adopted the Alien Tort Statute (“ATS”) in 1789, which grants federal courts original jurisdiction over “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.”
Historically, the ATS only recognized three causes of action that violated the law of nations: (1) violations of safe conduct, (2) infringements on the rights of ambassadors, and (3) piracy. However, in Sosa v. Alvarez-Machain, the Supreme Court held that the ATS allowed federal courts to recognize certain causes of action derived from international law if the plaintiffs satisfied a two-step test.
Regardless of which cause of action a plaintiff states, the Supreme Court has repeatedly held that the ATS does not apply extraterritorially. Simply put, a party cannot use the ATS to hold a party liable for conduct that occurred outside the United States. However, under Kiobel v. Royal Dutch Petroleum, a plaintiff could state a cause of action under the ATS if the claims “touch and concern” the United States.
The Court clarified Kiobel‘s holding in RJR Nabisco Inc. v. European Community, stating that when the conduct occurs inside and outside the United States, courts should instead examine whether the action was the “focus” of congressional interest deviating from the “touch and concern” standard.
Respondents attempted to use Sosa’s framework to seek a judicially created cause of action for aiding and abetting forced labor overseas. Under Kiobel, the “focus” of the ATS is conduct that violates international law; thus, aiding and abetting forced labor is a violation of international law, and domestic behavior can aid and abet an injury that occurs overseas. In response, Petitioners argued that aiding and abetting is not a tort itself but rather secondary liability for a tort. Therefore, the conduct relevant to the ATS’s focus should be the conduct that directly caused the injury. Additionally, under RJR Nabisco, a plaintiff who does not overcome the presumption against extraterritoriality must allege and prove a domestic injury.
Rather than relying on Sosa’s framework to determine whether the plaintiffs could assert a judicially created cause of action, the Court relied on RJR Nabisco to dispose of the case on jurisdictional grounds. The Court held that to overcome the presumption against extraterritoriality, plaintiffs must allege a “sufficient domestic nexus” to claim liability under the ATS.
The Court found that respondents’ complaint sought impermissible extraterritorial application of the ATS because all conduct occurred in the Ivory Coast. Without more, allegations of general corporate activity cannot establish the domestic application of the ATS. Operational decisions are the most common activity among corporations, and there is no sufficient connection between aiding and abetting forced labor overseas and domestic conduct. Plaintiffs thus failed to plead facts sufficient to support a domestic application of the ATS.
Implications of the Nestlé/Cargill Holding
The Nestlé/Cargill holding limits the scope of the ATS and is another barrier that trafficking survivors must overcome to hold their traffickers accountable. It’s easy to understand why the Court mandated that claims under the ATS have a “strong domestic nexus” because to have access to American courts, the conduct must have some American connection.
But regardless of understanding why the Court ruled this way, the Nestlé/Cargill holding leaves both the plaintiffs and human rights activists with a lingering sense of injustice. This holding creates an avenue for United States companies to shirk corporate responsibility. Companies face little to no repercussions for keeping slave labor in their supply chains by claiming foreign third parties trafficked individuals overseas. More than that, corporations can hide behind civil procedure to defeat claims attempting to hold them accountable for their corporate actions.
In dicta, Justice Thomas argued that the Trafficking Victims Protection Reauthorization Act of 2008 (“TVPRA”) created a cause of action to hold defendants who are indirectly involved in slavery accountable. But, as Justice Thomas notes, the plaintiffs, in this case, cannot rely on the TVPRA because Congress explicitly chose to make the TVPRA nonretroactive. Thus, any plaintiff seeking to hold a company liable for aiding and abetting trafficking cannot do so if the trafficking occurred before 2008.
The Nestlé/Cargill holding all but states that United States companies cannot be held liable for trafficking absent the acts of trafficking occurring within United States borders. Trafficking survivors whom foreign companies have trafficked in United States supply chains are barred from seeking justice in American courts and are forced to seek justice elsewhere. To remedy this injustice, Congress should amend the TVPRA to apply retroactively and clarify that corporations cannot use civil procedure to shirk corporate responsibilities.