The Supreme Court Denied a Child Labor Claim Against U.S. Firms: What to Know

Though Nestlé and Cargill were not held accountable for child labor in their supply chains, the Supreme Court upheld the precedent that corporate decisions are subject to international law.

A recent decision by the highest U.S. court has stirred concerns among human rights activists that grave abuses will continue in the cocoa fields of West Africa. But the July 17 judgment by the Supreme Court, though not finding major U.S. chocolate firms culpable for the violations, still upheld the underlying principle that allows American businesses to be held responsible for violating fundamental human rights. U.S.-based businesses will have to take heed.

What is the case background?

Six individuals from Mali sued Nestlé USA and Cargill, Inc., two of the largest manufacturers of cocoa products in the world, alleging they were trafficked into the Ivory Coast as children to work as slaves harvesting cocoa beans destined for the American market. They accused the companies of aiding and abetting child slavery with operational decisions made at the firms’ U.S. headquarters. After the Ninth Circuit Court of Appeals in San Francisco sided with the plaintiffs, the companies appealed to the Supreme Court, where oral arguments foreshadowing the final result were held last December. The Supreme Court reversed the Court of Appeals’ decision, but returned the case for further production of evidence and review.

Although the plaintiffs’ claim did not prevail, the court upheld with surprising clarity the law under which the claim was lodged, namely the Alien Tort Statute (ATS) of 1789. This centuries-old law allows foreign nationals to file civil suits against U.S. and foreign defendants for torts that violate the “law of nations.” The companies had sought to remove from the ATS any enforcement against U.S. corporations and deny claims of aiding and abetting the commission of torts, which in this context can include international crimes. They lost on both counts.

While corporate liability remains available under the ATS, so do claims of aiding and abetting. The court found that the Malian plaintiffs should have pleaded more evidence of the companies’ domestic conduct in the United States to sustain the claim of aiding and abetting child slavery in West Africa. Doing so will be the primary challenge in any further litigation of this case.

How did the court handle the Alien Tort Statute argument?

During the last decade, two Supreme Court rulings greatly narrowed the scope of ATS enforcement. The statute no longer has much extraterritorial application [PDF], and foreign corporations cannot be sued under it [PDF].

In the Nestlé case, defense attorneys sought to remove corporate liability altogether. The defendants sought to limit the actionable torts to only those three the court had previously identified as existing under international law in 1789: violations of safe conducts, infringements of the rights of ambassadors, and piracy.

Most of the justices, conservative and liberal, steered clear of the issue. Justice Clarence Thomas wrote the controlling opinion denying Nestlé USA and Cargill a clean win. No justice supported removing corporate liability from the ATS. Indeed, conservative Justices Neil Gorsuch and Samuel Alito opined that the ATS can be enforced against American corporations as a basic rule of tort law. The other justices did not even bother taking up the issue.

What does it mean for U.S. companies?

The court ruled that “mere corporate presence” and “general corporate activity” in the United States are not enough “to support a domestic application of the ATS.” Finding liability could now require proof that corporate officers actively plotted to aid and abet child slavery on another continent. One could need a whistleblower or very successful discovery orders to reveal internal documents showing such explicit corporate decisions.

If such evidence could be obtained to demonstrate that a multinational corporation’s decisions in its U.S. headquarters led to an atrocity crime such as child slavery in a foreign country, then the ATS could be enforced to inflict civil damages against that company. One worry among rights activists is that multinational firms would seek to find ways to move decision-making away from U.S. territory, such as by convening board meetings beyond U.S. borders.

Significantly, six justices preserved the court’s key ATS precedent of Sosa v. Alvarez-Machain (2004). In Sosa, the court confirmed [PDF] the enforceability of the three historical international torts of 1789 but also refused to “close the door” on recognizing additional “actionable international norms.” The Sosa test is that “courts should require any claim based on the present-day law of nations to rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18^th-century paradigms.”

Liberal Justices Sonia Sotomayor, Stephen Breyer, and Elena Kagan affirmed the precedent in a concurring opinion, while conservative Justices John Roberts and Amy Coney Barrett acquiesced with silence. Justice Alito recognized the strength of, but did not endorse, Justice Thomas’s contrarian view, which Justices Gorsuch and Brett Kavanaugh shared.

Drawing upon the Sosa reasoning, Sotomayor wrote in the concurring opinion, “Courts must, based on their interpretation of international law, identify those norms that are so specific, universal, and obligatory, that they give rise to a ‘tort’ for which Congress expects federal courts to entertain ‘causes’—or, in modern parlance, ‘civil action[s] [the ATS],’—for redress.”

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