June 17, 2021
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Adopted on June 17, 2021
Nestlé USA, Inc. v Doe, No. 19-416, consolidated with Cargill, Inc. v. Doe, No. 19-453
Today, the 8-1 Supreme Court ruled that plaintiffs suing domestic companies for aiding and abetting international violations of law abroad did not allege sufficient domestic context for the conduct to establish liability under the Aliens Tort Act.
The Alien Tort Statute (“ATS”) gives federal courts jurisdiction over “any civil action brought by a foreigner solely for tort committed in violation of the law of nations or a treaty of the United States.” 28 USC § 1350. Plaintiffs in these consolidated cases sued Nestlé USA, Inc. and Cargill, Inc. – both domestic companies – under the ATS for alleged aiding and abetting child slavery on cocoa farms in Côte d’Ivoire. The defendants applied for dismissal on the grounds that the ATS only reached domestic violations and that the plaintiffs’ violations occurred exclusively abroad. The defendants also argued that according to Jesner v. Arab Bank, PLC, 138 S. Ct. 1386 (2018) – in which the court ruled that foreign companies cannot be sued under the ATS – domestic companies are not liable for violations of international law under the ATS.
The Ninth District disagreed and allowed plaintiffs to proceed with their claims. It found that the ATS covered any conduct that could constitute aid and that plaintiffs’ claims under that standard were not extraterritorial, as plaintiffs had alleged that defendants had personal pocket money to maintain Côte d’Ivoire farmers their loyalty provided. The Ninth District also noted that Jesner only addressed whether foreign companies can be sued under the ATS, since lawsuits against domestic companies do not raise the same foreign policy concerns.
Does the ATS extend liability to domestic companies?
Does the ATS extend to lawsuits alleging that a domestic company has endorsed and facilitated illegal behavior by unknown foreign actors based on corporate activities in the United States?
Place of jurisdiction:
The ATS does not extend to lawsuits alleging that doing business in the United States has supported and facilitated violations of law ultimately committed overseas by independent foreign third parties.
“[A]Claims about general corporate activities – such as decision-making – cannot alone justify the domestic application of the ATS. “
Judge Thomas, writes for the court
What it means:
- Plaintiffs filing a lawsuit under the ATS must establish a strong, domestic context for their claim. It is not enough for plaintiffs to simply invoke general corporate decisions in the United States.
- Domestic companies will have strong arguments that they cannot be held solely liable in ATS lawsuits for participating in a global supply chain in which foreign third parties may have violated international law.
- The Court has not resolved the question of whether companies can be held liable under the ATS, despite five judges expressing their view that companies are not exempt from liability under the ATS.
- Although not decided in this case, the various individual reports show disagreement between the judges as to whether courts are empowered to recognize new causes of action under the ATS or whether they are limited to the three specific offenses (violation of safe conduct, violation of rights by ambassadors and piracy) identified in Sosa v. Alvarez Machai, 542 US 692 (2004).
The Court’s opinion is available here.
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Appeal and constitutional practice
Related Practice: Transnational Litigation