Nestlé USA, Inc. v. Doe, The Alien Tort Statute and Corporate Human Rights Liability

Nestlé USA, Inc. v. Doe, The Alien Tort Statute and Corporate Human Rights Liability

By Carlos A. Alonso Gayon

On June 17, 2021, the United States Supreme Court reversed and remanded a Ninth Circuit decision admitting an Alien Tort Statute (ATS) claim against Nestlé USA Inc. and Cargill Inc.[1] The suit was filed by three Malian former child slaves that have been forced to harvest cocoa in the Ivory Coast, Africa.[2] The defendants were accused of aiding and abetting the violations of international law prohibitions on, inter alia, slavery and child labor.[3] According to the plaintiff’s complaint, Nestlé and Cargill directly funded and supported the cocoa farms that enslaved them while knowing that such practices were happening.

The Ivory Coast produces more than one-third of the world’s cocoa.[4] This cocoa farming infrastructure depends on the funding from transnational corporations like the defendants in this case.[5] The Ivory Coast has a preoccupying child labor issue.[6] These two conditions create a perfect storm for human rights abuse. With local law and courts being an ineffective tool to seek the protection of human rights, plaintiffs are drawn to the court systems of the developed countries where transnational companies are based to achieve justice.

The ATS provides, that “[t]he district courts shall have original jurisdiction of 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.”[7] In Nestlé, plaintiffs argue the main tort at issue was child slavery.[8] The U.S. is a party to the Convention No. 182 on the Worst Forms of Child Labor which commits its members to eliminate all forms of slavery or practices similar to slavery, such as the sale and trafficking of children.[9] Thus, according to the plaintiffs, an American company committed a tort against an alien in violation of a treaty of which the United States is a member.

What makes this case peculiar is that foreign nationals are suing American companies in American courts for conduct that happened outside of the United States. After Kiobel, as a general rule, when all relevant conduct that gives rise to a claim occurs outside of the United States, foreign defendants will fall outside of the reach of the ATS.[10] According to the Supreme Court’s holding in Kiobel, the applicability of the ATS requires that the claims touch and concern the territory of the United States with sufficient force to displace the statutory presumption against extraterritorial application.[11] In Nestlé, plaintiffs argued that the defendant’s corporate activity within the U.S. constituted enough conduct to give rise to an ATS claim.[12] The Ninth Circuit agreed with the plaintiffs holding that they could sue in federal court because the defendant corporations allegedly made “major operational decisions” in the United States.[13]

Justice Thomas, delivering the opinion for the Court, held that a plaintiff does not plead facts sufficient to support the domestic application of the ATS simply by alleging “general corporate activity” of a defendant.[14] Thomas continued asserting that making “operational decisions” is an activity too common for most corporations and too generic by itself to draw a sufficient connection between an ATS cause of action and domestic conduct.[15] Abiding by the Court’s decision, the Ninth Circuit affirmed the dismissal of the plaintiff’s claim.[16]

The issue with the Nestlé holding is that it is limited to saying what is not enough to link conduct in the U.S. with conduct in foreign countries for the enforcement of U.S. international obligations through the ATS, but it does not give a hint of what type of conduct would be enough for this sort of action. This uncertainty will be a big setback for the proponents of the enforcement of international human rights through the extraterritorial application of laws of developed countries such as the ATS.

[1] Nestlé USA, Inc. v. Doe, 141 S. Ct. 1931, 1935–36 (2021).

[2] Id.

[3] Id.

[4] Desirée LeClercq, Nestlé United States, Inc. v. Doe. 141 S. Ct. 1931, 115 Am. J. Int’l L. 694, 698 (2021).

[5] Id.

[6] Id.

[7] Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 113–14 (2013).

[8] Desirée LeClercq, supra note 4, at 697.

[9] Id.

[10] Kiobel, 569 U.S. at 124–25.

[11] Id.

[12] Nestlé, 141 S. Ct. at 1935.

[13] Id.

[14] Id. at 1937.

[15] Id.

[16] Doe, I v. Nestle SA, 4 F.4th 706 (9th Cir. 2021).