Supreme Court Backs Nestle, Cargill on Child-Slavery Suit

The U.S. Supreme Court gave companies a broader shield against lawsuits by victims of overseas atrocities, rejecting accusations that Nestle SA’s U.S. unit and Cargill Inc. were complicit in the use of child slavery on Ivory Coast cocoa farms.

The justices said the allegations against the companies lacked enough of a U.S. connection to go forward under the 1789 Alien Tort Statute.

The court stopped short of exempting corporations from liability under the law altogether. But lawyers on both sides of the dispute agree that the ruling makes it more difficult to sue.

“Today’s decision reinforces the longstanding legal presumption that, unless it explicitly says otherwise, a federal statute applies only domestically,” said Cory Andrews, general counsel and vice president of litigation at the Washington Legal Foundation.

“Given that the relevant conduct in the mine-run ATS case occurs overseas, the ATS should have very little purchase going forward,” said Andrews, who filed an amicus brief supporting the companies at the high court.

EarthRights International’s Richard Herz agreed the ruling limits claims going forward.

“We’re really disappointed that the Supreme Court thinks that, if a corporation decides in the United States to abet human rights abuses, that that doesn’t have enough of a connection to the United States to be actionable,” said Herz, who filed an amicus brief opposing the companies.

Six individuals from Mali say they were trafficked into Ivory Coast to make cocoa as child slaves. They sought to hold the U.S. companies liable for those alleged abuses, saying major decisions about those operations were made in the U.S.

“But allegations of general corporate activity -- like decisionmaking -- cannot alone establish domestic application of the ATS,” Justice Clarence Thomas wrote for the 8-1 majority.

Only Justice Samuel Alito would have let the case continue, saying the court decided an issue that the parties did not ask it to address.

Reversing a ruling by the California-based U.S. Court of Appeals for the Ninth Circuit, the decision is the latest to limit the ATS after federal courts expanded it in the early 2000s. Since then, plaintiffs have sought to use that law in U.S. courts to pursue claims for alleged rights abuses committed abroad with limited success. Multinational companies have faced dozens of Alien Tort Statute suits.

Paul Hoffman, who argued against the companies in the case decided on Thursday, said he’s still fighting.

“We are disappointed that the court’s decision makes it more difficult for our former child slave clients to obtain justice, but our claim is that the companies did more than engage in general corporate oversight from the U.S., so the decision leaves open the possibility that we can satisfy the court’s standard on remand,” said Hoffman, of Schonbrun Seplow Harris & Hoffman.

Calling child slavery “unacceptable,” Nestle said it was nevertheless pleased that the court agreed to halt the lawsuit. “Nestle never engaged in the egregious child labor alleged in this suit, and we remain unwavering in our dedication to combating child labor in the cocoa industry,” the company said in a statement.

Hogan Lovells partner Neal Katyal, who, backed by the Justice Department, argued for the companies, didn’t immediately respond to a request for comment.

©2021 Bloomberg L.P.

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