Nestlé United States, Inc. v. Doe. 141 S. Ct. 1931.

On June 17, 2021, the United States Supreme Court reversed and remanded a suit filed against Nestlé USA and Cargill under the Alien Tort Statute (ATS)¹ for lack of jurisdiction. This case has already garnered attention over the nature of the dispute (child slaves in Africa), the Supreme Court's treatment of jurisdiction under the ATS, and the finding shared by five of the nine Supreme Court justices that domestic corporations can potentially be sued under the ATS. This analysis focuses on the child slavery and global supply chain aspects of the decision.

The case was brought by six Malian nationals, all former child slaves who had been forced to harvest cocoa in the Ivory Coast, otherwise known as Côte d'Ivoire (Respondents). Their working conditions were perilous. They were forced to work for up to fourteen hours per day, six days per week, in hazardous conditions. They were starved and beaten, slept in locked rooms, and spent their days frightened that their overseers would maim them to keep them from leaving.

Respondents filed suit under the ATS, alleging that Nestlé and Cargill bore some responsibility for their injuries by aiding and abetting violations of international law prohibitions of slavery, forced labor, child labor, torture, and cruel, inhuman, or degrading treatment. They argued that the companies, which are major global chocolate producers, provided their enslavers with financial support, supplies, and training. Although Nestlé and Cargill “knew or should have known” that the cocoa farms were exploiting child slaves, those companies allegedly “continued to provide those farms with resources” (p. 1935). The Respondents were motivated to file suit in the United States because: (1) Mali contains no law allowing for civil damages for their injuries; (2) the Ivory Coast judicial system is notoriously corrupt; (3) Respondents worried that cocoa producers in the region would retaliate against them; and (4) the United States offers a legal basis for suit under the ATS. They argued that there were sufficient domestic connections to assert jurisdiction under the ATS because Nestlé and Cargill allegedly made “all major operational decisions from within the United States” (id.). Their case wound its way through U.S. federal courts for twelve years before the Supreme Court dismissed it.

The Nestlé decision is a complicated one. Rather than employing the conventional decisional architecture (majority opinion, concurrence, dissenting opinion), Nestlé is divided into three Parts, with different justices joining in on different Parts, two concurrences, and one dissent (Alito). Parts I and II form the majority opinion and center solely on whether the Respondents’ suit sufficiently pleads a domestic application of the ATS.

Examining the question of domestic application, the majority opinion (written by Justice Thomas) applied the Nabisco ² “two-step framework” (p. 1936). Under step one, the Court examines the reach of the jurisdiction-conferring statute. Recalling Kiobel,³ the Court reaffirmed that the ATS fails to “evince a ‘clear indication of extraterritoriality’” and thus that the Respondents had failed to rebut the presumption that the statute applies only domestically. Under step two of the framework, plaintiffs must establish that the conduct “relevant to the statute's focus occurred in the United States” (id.).

Assuming arguendo that the ATS encompasses claims of aiding and abetting forced labor overseas, the majority decided that “[n]early all the conduct” that gave rise to the aiding and abetting allegation—such as the provision of training, fertilizer, tools, and cash to the abusive farms—occurred in the Ivory Coast (p. 1937). The majority held that the Ninth Circuit erred by allowing the suit to proceed on the ground that “every major operational decision by both companies” had been carried out or approved in the United States. The majority explained that such “general corporate activity—like decision-making—cannot alone” satisfy the second step of the extraterritoriality framework (id.).

Because the majority found that the Respondents failed to establish that the relevant conduct occurred in the United States, it found it unnecessary to take up the Trump administration's assertion that the “conduct relevant to the . . . focus” of the ATS could never involve aiding-and-abetting causes of action (pp. 1936–37). Nor did it adjudicate the Respondents’ retort that the focus of the ATS is conduct that violates international law, including U.S.-based aiding and abetting of forced labor overseas.

In Part III, however, Justice Thomas (joined by Justices Gorsuch and Kavanaugh) agreed with the administration's position, arguing that the ATS only provides private rights of action for “three historical violations of international law” enumerated in Sosa (p. 1937).⁴ Those three violations consist of “violation of safe conducts, infringement of the rights of ambassadors, and piracy.”⁵ Noting that the ATS “is a jurisdictional statute creating no new causes of action,” the three justices opined that Congress had only established one new cause of action: the Torture Victim Protection Act of 1991, which authorizes civil suits against individuals by victims of torture and extrajudicial killings (pp. 1937–38).⁶ Going even further, Justices Gorsuch and Kavanaugh (through a joint concurring opinion) would have overruled Sosa, in which the Court had suggested that the “door” to future causes of action is “ajar subject to vigilant doorkeeping” (p. 1943). The justices would have closed that door to ensure that the Court did not seize “power we do not possess” (id.).

In a separate concurring opinion, Justice Sotomayor (joined by Justices Breyer and Kagan) rejected Justice Thomas's narrow interpretation of Sosa (p. 1944). An interpretation limiting the ATS's reach to the three historical international law violations would, she contended, effectively “overrule Sosa . . . in all but name” (id.). The concurring justices explained that “the domestic and international legal landscape has changed in the two centuries since Congress enacted” the ATS (id.). Slave traders, they argued, are as much “an enemy of all mankind” as torturers are. Rather than limit private causes of action to the three torts that existed over two hundred years ago, the justices argued that Congress intended for the ATS to establish federal jurisdiction over “actionable torts under international law and to provide injured plaintiffs with a forum to seek redress” (p. 1946). The justices concluded by finding it untenable that “international law permitted the aiding and abetting of forced labor” (p. 1949).

Up to this point, nothing in the Supreme Court's opinion is remarkable. The justices maintained long-entrenched positions regarding their respective interpretations of the ATS and private causes of action. Far more remarkable is the agreement among five of the justices, although not set forth in a majority opinion, that domestic corporations can potentially be sued under the ATS (id. n. 4).⁷ Here again, the justices ignored the Trump administration's argument, which had strenuously objected to corporate liability.⁸ Rather, as argued by Justices Gorsuch and Alito, “[t]he notion that corporations are immune from suit under the ATS cannot be reconciled with the statutory text and original understanding” (p. 1940). Examining the text and history, the justices concluded that “[n]othing in the ATS supplies corporations with special protections against suit . . . nowhere does it suggest that anything depends on whether the defendant happens to be a person or a corporation” (p. 1941). Justice Alito would have decided the case solely on corporate liability, reasoning that “if a particular claim may be brought under the ATS against a natural person who is a United States citizen, a similar claim may be brought against a domestic corporation” (p. 1950). Corporate status, according to Justice Alito, “does not justify special immunity.”

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The facts of the Nestlé case are heartbreaking. They expose grave human rights atrocities committed against children in the Ivory Coast. The legal question is whether claims based on those facts can be litigated in U.S. courts. The Supreme Court has observed that it serves as a gatekeeper for extraterritorial adjudication. Decisions about where, when, and how widely to open that gate supposedly rest with Congress. Yet, for the ATS, Congressional intent with respect to extraterritorial corporate conduct is unclear. Nestlé demonstrates that there is sufficient ambiguity to enable the justices to maintain considerable discretion over whether plaintiffs can litigate international human rights claims in the United States.

In Nestlé, the Supreme Court exercised that discretion by creating an aperture to hear international human rights cases and then promptly closing it. Five of the justices (in dicta) found that domestic corporations are just as liable for their international torts under the ATS as natural persons. The majority held, however, that even when “every major operational decision by . . . companies is made in or approved in the U.S.,” domestic jurisdiction under the ATS is lacking (p. 1937). The discussion that follows explores the tension between those findings.

That tension will ring familiar to rights advocates cognizant of Jam v. International Finance Corp.,⁹ where the Supreme Court held that international organizations were not immune from suit under the International Organizations Immunities Act.¹⁰ The Court in Jam clarified that a suit under the Act must have a “sufficient nexus” to the United States.¹¹ As in Nestlé, the suit in Jam was dismissed for failing to establish that nexus.¹²

In both cases, the justices failed to appreciate the inherently global reach of multinational businesses and international organizations, and, thus, the transnational nature of the torts that they commit while headquartered in the United States.¹³ To understand this global reach, it is first helpful to understand the nature of the torts that violate international law. In the case of Nestlé, the main tort at issue was child slavery—which is undisputedly prohibited under international law. Convention No. 182 on the Worst Forms of Child Labor is the only treaty adopted by the International Labor Organization (ILO) that has achieved universal ratification.¹⁴ Under that Convention, ratifying states (including the United States) commit to eliminate, inter alia, “all forms of slavery or practices similar to slavery, such as the sale and trafficking of children. . . .”¹⁵ The ILO's supervisory system examines whether states are complying with the Convention, but the treaty leaves it to governments to determine how to ensure “effective implementation and enforcement,” including whether to create domestic causes of action.¹⁶ Recognizing the transnational nature of child labor, the Convention calls on states parties to “assist one another in giving effect to the provisions of this Convention through enhanced international cooperation and/or assistance for social and economic development. . . .”¹⁷

Despite universal ratification of ILO Convention No. 182, child labor is on the rise, in part owing to the opaque transactions of global supply chains. According to a recent ILO report, 160 million children were in child labor globally as of 2020, an increase of over 8 million since 2016.¹⁸ The increase is especially significant in sub-Saharan Africa, where there “are now more children in child labour . . . than in the rest of the world combined.”¹⁹ In the Ivory Coast in particular, child labor in the cocoa sector is increasing monthly.²⁰ Cocoa farms in the country produce more than one third of the world's cocoa. The farms benefit from lax domestic regulation and enforcement, thereby profiting from cheap labor, including the labor of young children. Cocoa farms depend on manufacturers such as Nestlé and Cargill, located at the end of this supply chain, for purchases and remittances.

Multinational corporations invest considerable resources in their overseas investments and partners. To address the reputational (and perhaps moral) costs of investing in countries and doing business with operations that may abuse human rights such as fundamental labor rights, corporations subscribe to various voluntary corporate codes of conduct. For instance, as mentioned in an amicus curiae brief in Nestlé, in 2001, the “eight largest actors in the cacao industry, including Nestlé, signed [the Harkin-Engel Protocol], promising to eliminate the ‘worst forms of child labor’ and forced labor on West African cocoa farms.”²¹ As part of that initiative, the firms develop corporate compliance programs to promote respect for human and labor rights.²² They hire auditors to assess work sites and use that information to assuage concerns of stakeholders and investors.²³ Decisions concerning those audits, reports, and discussions among corporations take place as a part of the companies’ business operations in the United States.²⁴

Voluntary corporate codes of conduct have failed, however, to ensure respect for human and labor rights in supply-side countries such as the Ivory Coast. Major news outlets have exposed the continuing use of child slaves on cocoa farms.²⁵ Acknowledging the failure of these private initiatives, various governments and courts have begun to introduce and impose corporate liability for human rights abuses along the supply chain. The European Union is proposing new rules for mandatory corporate human rights due diligence,²⁶ and courts in the Netherlands²⁷ and Canada²⁸ have recently held parent companies liable for the human rights violations of their subsidiaries.

The Supreme Court in Nestlé did not mention the momentum toward recognizing the link between parent companies and rights violations along supply chains. Nor did it give any weight to the corporate decisions made in the companies’ U.S. headquarters. Those omissions may reflect the allegations in the complaint, which focused more on the “control” that Nestlé and Cargill exercised over the cocoa farms than it did on corporate decisions carried out in the United States.²⁹ But even if the details of the U.S. operations had been pled with sufficient specificity, the justices may well have remained unsatisfied with the jurisdictional nexus.

Although the Supreme Court has proven capable of allowing federal statutes to evolve from their origins—such as by restricting immunities of international organizations in Jam and suggesting that domestic corporations are liable in Nestlé—it has not allowed federal jurisdiction to evolve in response to the increasingly transnational nature of commercial processes.

To illustrate, in determining the scope of private causes of action under the ATS, Justices Sotomayor, Breyer, Kagan, Thomas, Gorsuch, and Kavanaugh all centered their arguments on the intention of the First Congress in 1789. Examining Congressional intent and the text, the justices stressed that the ATS did not include an express or “clear indication of extraterritoriality” (p. 1936). Because the ATS did not include such an indication, the majority applied a strict two-step test to determine the statute's extraterritorial reach.

By contrast, five of those justices agreed that domestic corporations can be defendants in ATS suits. Yet the text of the ATS makes no more mention of corporations than it does extraterritoriality. Did Congress intend for corporations to be covered by federal legislation in 1789? Given that multinational corporations did not become actors in the global economy until the 1880s, one hundred years after the ATS was enacted, that argument would be doubtful if not implausible. Instead of following the strict analysis they had just endorsed for determining extraterritorial application, the justices relied on the fact that neither the text nor legislative history excluded corporations from liability under the ATS. Because the ATS did not expressly exclude corporate liability, the majority of justices would have applied the ATS to Nestlé and Cargill (had the jurisdictional element been satisfied).

Consequently, the Court broadened ATS liability to include domestic corporations while shielding the corporations’ transnational conduct from federal jurisdiction. This consequence is a setback for advocates and global victims. It also undermines the objectives of the First Congress. In her concurring opinion, Justice Sotomayor notes that the First Congress was ultimately concerned about the United States’ failure to provide redress for “infractions of treaties” (p. 1945). Congress’ intention in adopting the ATS, she points out, was to “avoid foreign entanglements by ensuring the availability of a federal forum where the failure to provide one might cause another nation to hold the United States responsible for an injury to a foreign citizen” (p. 1946). Nevertheless, by significantly limiting the ATS’ extraterritorial reach, the Court has ensured that “infractions of treaties,” such as Convention No. 182, and the injuries caused to foreign citizens by U.S. corporations, remain safely out of reach from suit.

Progressive protections against human rights abuses such as child labor may be elusive in a Supreme Court whose fidelities supposedly rest in centuries-old legislation. On the other hand, perhaps anchoring domestic jurisprudence to outdated conceptions of commercial behavior gives justices the space and security to evolve. Declaring actors such as international organizations and corporations liable under federal legislation is far less controversial when the implications of such declarations are inconsequential. Justices like Sotomayor may be playing the long-game here, waiting until the Supreme Court composition enables a more global-facing and equitable decision. Until then, however, the victims of fundamental human rights abuses will have to look elsewhere for justice.