- Current political and economic issues succinctly explained.
The U.S. Supreme Court heard oral arguments [PDF] on December 1 in a case with potentially major implications for international human rights law. At stake in Nestlé USA, Inc. and Cargill, Inc. v. John Doe et al is a reparations claim by six former child slaves who labored for token compensation in the cocoa fields of the Ivory Coast. They were part of the supply chain for two major U.S. corporations that manufacture cocoa products, including candy bars. The 1789 Alien Tort Statute (ATS) allows foreign nationals to lodge civil suits against U.S. and foreign defendants for torts committed in violation of the “law of nations,” the term used centuries ago to describe international law.
In recent years, the Supreme Court has interpreted the ATS to cover only those cases [PDF] that “touch and concern” the United States, thus confirming the presumption against extraterritorial application of U.S. laws and denying liability [PDF] of foreign corporations altogether. The Ninth Circuit Court of Appeals ruled against [PDF] Nestlé USA and Cargill under the ATS, finding grounds for their corporate liability and role in aiding and abetting child slavery and forced labor in the Ivory Coast. Before the Supreme Court, Nestlé USA and Cargill argued that there is no corporate liability whatsoever under the ATS, even for companies incorporated under U.S. law with operations in the United States. In their view, only individuals can be sued under the ATS for violating universally accepted norms of international law.
Child Labor in West Africa
Nestlé USA and Cargill has been litigated for about fifteen years. During that time, the situation has hardly improved in West Africa despite the 2001 Harkin-Engel Protocol [PDF], under which eight of the industry’s largest companies—including Nestlé, Mars, and Hershey—committed to eradicating the “worst forms of child labor” in the cocoa supply chain. A consortium of transatlantic nongovernmental organizations has found the protocol to fall far short of its goals while oppressive child labor on cocoa farms has increased.
A 2020 report sponsored by the U.S. Department of Labor found that the proportion of children in Ghana and the Ivory Coast who work on cocoa farms increased from 31 percent to 45 percent [PDF] between 2008–2009 and 2018–2019. The children, many of whom are trafficked from Burkina Faso and Mali, earn less than $1 per day and labor under oppressive conditions, usually with no access to education.
The Washington Post reported last year that “chocolate companies still cannot identify the farms where all of their cocoa comes from, let alone whether child labor was used in producing it.” With their continued use of child labor, the Ivory Coast and Ghana—the world’s top cocoa producers—supply over 60 percent of the world’s cocoa. In 2019, U.S. companies imported $656 million worth of Ivorian cocoa and $225 million worth of Ghanaian cocoa beans and products. The year before, the United States was the third-largest importer of cocoa beans worldwide. Low prices for cocoa leave farmers desperate for cheap and efficient labor, which increases the demand for child laborers who perform the same arduous work for less pay than adult workers.
During the oral arguments, the defendant corporations had the difficult task of arguing for the immunity of U.S. corporations when they facilitate child slavery—which ranks high in the pantheon of crimes against humanity—in West African cocoa farming. The plaintiffs had to prove that the ATS remains enforceable against U.S. corporations, wherever the tort takes place in the world, and that there is enough involvement by those U.S.-based companies (by direct action or by aiding and abetting) that such illegal actions “touch and concern” the United States. Establishing the criminal intent and actual engagement of corporate officers is no easy task in the courtroom.
Neal K. Katyal, counsel for the defendant corporations, and Curtis E. Gannon, deputy solicitor general of the Justice Department, supported the corporate position. Katyal and Gannon were on the defensive as the justices peppered them with questions about the logic of their position. Indeed, the justices’ refrain of the day was: “How does this make sense?”
Working against the defendants’ argument is the fact that U.S. corporations, as Justice Stephen G. Breyer noted, have been sued under the ATS in more than 180 federal cases over the last three decades. Paul Hoffman, the plaintiffs’ counsel, asserted that U.S. corporations have been liable for torts throughout American history. Such corporate liability is enforced under the domestic laws of all countries as a general principle of law.
Justice Brett M. Kavanaugh cited an amicus brief by Yale Law Professor Harold Koh that stated Katyal’s position would “gut the statute.” Kavanaugh asked, “So why should we do that?” Katyal answered, “To preserve the status quo as it’s always been.” But the status quo has been U.S. corporate liability under the ATS. Given the tenor of the justices’ questioning, the court will tread cautiously and likely preserve such liability while emphasizing the criticality of sufficient evidence.
Aiding and Abetting
Although the case before the Supreme Court did not ask the parties to answer the question of whether U.S. corporations can be held liable for aiding and abetting child slavery abroad, the issue frequently arose in the oral arguments. Katyal and Gannon argued that there is no such liability as a rule of international law. Katyal said it is too “amorphous” a form of liability.
But aiding and abetting precedents are firmly embedded in international law. The pursuit of profits by a corporation does not shield it from liability just because corporate officers indirectly assist with inflicting a crime such as child slavery rather than committing that crime directly from halfway around the world. Globalization and the digital revolution have shrunk the global economy into a marketplace of fulsome knowledge about supply chains and have vastly enhanced the power of headquarters to influence labor and environmental standards.
Tremors for the Chocolate Trade?
If the Supreme Court upholds the Ninth Circuit’s ruling in favor of the plaintiffs, there could be repercussions worldwide for cocoa prices and the chocolate industry. Nestlé USA, Cargill, and other major cocoa importers will be under pressure to rebuild supply chains that rely on fairly compensated adult labor. The livelihoods of hundreds of thousands of West African workers would be affected, and an increase in prices of raw produce would ultimately be passed on to the consumer.
Beyond the cocoa industry, widespread rights abuses have been alleged in other global supply chains for U.S.-based companies. This judgment could bear on their future operations. Such companies would have to review and, if necessary, improve upon how they leverage their purchasing power with suppliers who violate labor rights. Some foreign governments might balk at pressure to enforce human rights standards, which would come with economic and perhaps political costs, in order to satisfy the legal obligations of U.S. importers.
The Supreme Court may decide to bring the parties back into the virtual courtroom to examine the issue of aiding and abetting more deeply as a matter of international law and the plaintiffs’ evidence supporting it in this case. Or the court may proceed directly to judgment by June 2021.
Editor’s note: The author contributed to a brief on aiding and abetting liability signed by international law scholars, former diplomats, and practitioners as amici curiae before the Supreme Court in support of the former child slaves in this case.