Are US corporations liable for human rights violations in partner companies if they happen overseas?
Not according to the latest judgement from the Supreme Court.
The court ruled Thursday morning that the concurrent cases of Nestlé USA, Inc vs John Doe, and Cargill, Inc vs John Doe, cannot be tried in US court, reversing a decision from the Ninth Circuit courts.
The cases were against Nestlé (the US-based subsidiary of the Swiss food empire) and Cargill. The first is a giant in the world of chocolate manufacturing and sales. The second is one of the world’s largest cocoa plant producers. Both companies have headquarters in the United States, but work globally, including in parts of West Africa.
About two-thirds of the world’s cocoa is grown in west African countries, including the Ivory Coast and Ghana. And in those countries, the lawsuits argued, children as young as five worked in hazardous conditions, and in some cases, were even held in slavery.
The companies were sued by six residents of Mali under the Alien Tort Statute (ATS), claiming that the companies knowingly aided and abetted instances of human rights violations in their efforts to harvest cocoa. And though the injuries and violations suffered by these men all occured in African countries, they alleged that the companies made “major operational decisions” in the United States and should face lawsuits here. They say that both companies had economic leverage over the farms, but declined to use it to help the workers. The respondents say that Nestlé and Cargill “knew, or should have known” what was happening at the farms they provided with training and resources.
The case made its way up the court system, with the previous judgement from the Ninth Circuit allowing the case to proceed.
The Supreme Court disagreed.
Justice Clarence Thomas wrote the majority opinion, stating that the ATS cannot be applied outside of the United States in this instance. He wrote that “nearly all the conduct that they say aided and abetted forced labor—providing training, fertilizer, tools, and cash to overseas farms—occurred in Ivory Coast.” And though the Ninth Circuit let the case proceed because the operational decisions were made in the US, Thomas states that “making ‘operational decisions’ is an activity common to most corporations, generic allegations of this sort do not draw a sufficient connection between the cause of action respondents seek—aiding and abetting forced labor overseas—and domestic conduct.”
The court stopped short of saying that corporations could not be held liable under the ATS, but this precedent will certainly make that outcome more difficult in future cases.
Companies have long sought to decrease their liability under the ATS, with lawyers for Nestlé
and Cargill arguing in this case that the companies were “not the locators, not the overseers, and not the farm.” The companies did not cause direct harm to the six John Does, or others who worked on the farm, their lawyers successfully argued.
Lawyers for the original plaintiffs claimed that because the companies had so much financial control over the supply chains, that was proof enough of harm done.
The case began in 2005, when the original plaintiffs ranged from 12 to 14 years old.