On June 17, 2021, the US Supreme Court issued its decision in Nestlé USA v. Doe, a case brought on behalf of six Malian plaintiffs who had been trafficked and forced to work on cocoa farms in Cote d’Ivoire. The former forced child laborers allege that they had been tortured and enslaved. They further allege that Nestlé USA and Cargill aided and abetted the harms against them by providing financial and technical support for exclusive purchasing rights to farms it knew or should have known exploited children.
In yesterday’s decision, the Supreme Court reversed a Ninth Circuit ruling that had allowed the case to proceed. The case was remanded to the trial court. The Supreme Court’s majority opinion found that the plaintiffs (former forced child laborers) had not alleged enough domestic conduct by the defendants (Nestlé USA and Cargill) to sufficiently link the case to the United States.
While the reasoning in the decision is nuanced, the basic question before the Court was whether the defendants should be accountable for knowingly profiting from having forced child laborers in their supply chain. Eight justices found the answer to be no.
This blog post begins by discussing the Ivorian cocoa industry, explaining that the low price that companies pay for cocoa is the root cause of human rights abuses in the cocoa industry. It then discusses the case background and the Supreme Court’s decision.
The Cocoa Industry
Cote d’Ivoire is the largest producer of cocoa in the world, producing about one-third of the global cocoa supply. There are about 600,000 small-holder farmers in the country, who generally own small farms that average 3.4 hectares. While cocoa and chocolate companies (like Cargill and Nestlé) earn massive profits from cheap cocoa production, cocoa farmers often live in poverty -- many earn below the World Bank’s poverty line of $1.90 per day. Despite producing, drying, and fermenting the cocoa, farmers are estimated to earn just 5-6% of the total price of a chocolate bar.
Cocoa’s low price is the root cause of systemic issues in the cocoa industry, including farmer poverty, child labor, trafficking, and forced child labor. The poverty wages farmers earn mean they are often unable to pay workers. As a result, many rely on their families, including their young children, or on trafficked children working in conditions of forced labor. Companies like Cargill and Nestlé USA (and Hershey, Barry Callabaut, Ferrero, Mondelez, Olam, Ecom, and Sucden) know that some of their cocoa is produced by forced child labor, yet they rely on this cheap source of cocoa to keep their production costs down.
Cocoa and chocolate companies have repeatedly promised to eradicate child labor in the their cocoa supply chains, but these promises have produced few results other than positive PR. In 2001, cocoa and chocolate companies signed the voluntary Harkin-Engel Protocol, pledging to eradicate child labor by 2005. That deadline came and went, with companies making new promises to end child labor by 2010, followed by claims that they would reduce child labor by 70 percent by 2020. Despite these many promises, the number of children working in the cocoa industry today has actually increased over the past decade. These twenty years of failed programs demonstrate that voluntary programs by companies do not work. Companies like Nestlé and Cargill have managed to avoid liability while continuing to source from supply chains they know are tainted by forced child labor, putting profits over children’s lives. Unfortunately, they may not be held liable under the Alien Tort Statute (ATS) either.
Nestlé USA v. Doe: The Facts
Over fifteen years ago, in 2005, a group of former forced child laborers filed a class action against Nestlé, Cargill, and Archer Daniels Midland (ADM) under the ATS, a part of the Judiciary Act of 1789 under which non-US citizens can sue for torts they suffer. The plaintiffs allege that they were trafficked from Mali and forced to work without pay on cocoa farms in Cote d’Ivoire as children for up to 14 hours a day. They further alleged that they were locked into rooms when not working and that overseers physically abused them. The plaintiffs argue that the defendant companies aided and abetted their forced labor because of their control over the Ivorian cocoa sector and by “provid[ing] financial and technical assistance to cocoa plantations despite its knowledge of their use of slavery.”
Defendants (currently Nestlé USA and Cargill – ADM settled years ago) do not dispute that the treatment plaintiffs suffered violates international law. Nor do they dispute that forced child labor exists in their supply chains. Instead, they take issue with being held legally accountable for their role in perpetuating these abuses. Yesterday, the Supreme Court sided with the defendants, finding that the companies’ alleged conduct -- including major operational decision making-- was not sufficiently connected to the US for the claims to proceed under the ATS.
The Court’s Decision
The Court’s majority opinion, written by Justice Thomas, held that the defendants’ “general corporate activity” conducted in the United States does not amount to a permissible application of the ATS. As a result, the Court reversed and remanded the case. While the plaintiffs will now seek to amend their complaint to clarify the connection to the United States and continue the case, this decision demonstrates just how difficult and lengthy it often is for victims of corporate abuse to access remedy.
The Nestlé USA v. Doe case is the third in a line of cases since 2013 in which multinational companies have fought to limit the reach of the ATS, and in which the Supreme Court has been a willing collaborator. In the 2018 case Jesner v. Arab Bank, the Court held that foreign corporations could not be sued under the statute, limiting its jurisdiction to US companies.
Five years before, in Kiobel v. Royal Dutch Petroleum, the Court held that ATS cases must “touch and concern” the United States with such force as to rebut the presumption against extraterritoriality. The Court did not specify what types of facts would meet that bar but that “mere corporate presence” was not enough. Yesterday, the Supreme Court made clear that “general corporate activities,” including corporate decision making, are also not enough. Because multinational corporations outsource production and egregious human rights violations often occur outside the US, this greatly limits the number of cases that can be brought despite the prevalence of abuses overseas, even those connected only to US-based companies.
In many ways, today’s decision reasserts the Court’s view of the ATS over the past decade. While the Court upheld both aiding and abetting liability and corporate liability under the statute, it also held that Nestlé USA and Cargill’s “general corporate activity” in the United States does not sufficiently connect their conduct to the US to rebut the presumption against extraterritoriality. If lower courts decide that similar types of decisionmaking from US board rooms is not sufficient to rebut the presumption against extraterritoriality, companies like Nestlé USA and Cargill (and Nike, Coca Cola, Apple, etc.) will be able to use their economic power to establish and maintain supply chains that use forced child labor, torture, and other illegal and exploitative labor practices-- knowing that the ATS will not touch them. This would make it more difficult to hold US companies accountable for human rights abuses that occur overseas.
Why This Case Matters
US companies like Cargill and Nestlé USA earn millions in profits each year, yet are often shielded from liability for human rights abuses within their supply chains. The Alien Tort Statute is one of the only US human rights-related statutes that provides for corporate liability for overseas human rights violations and access to remedy for victims.
In bringing cases like this one on behalf of former child laborers, advocates and human rights attorneys seek remedy for victims of atrocious abuses. We need to ensure that the US legal system can provide remedies to victims of human rights abuses committed by US companies -- no matter where the harms occur. For this to take place, we must use every tool available to keep fighting corporate impunity -- whether that is through other existing legal strategies or by pushing Congress to pass new legislation that provides for accountability and remedy to victims.
Allie Brudney and Avery Kelly are Staff Attorneys at Corporate Accountability Lab.
In October 2020, CAL filed two amicus briefs in support of Respondents in Nestle v. Doe. Check them out here and here.
