On June 17, 2021, the US Supreme Court ruled Nestle USA, Inc. against Doe, reiterating that the Alien Tort Statute (“ATS”) does not allow for extraterritorial cause of action and provided further guidance as to when a cause of action will be classified as extraterritorial as well as two other important questions.
In Nestle, six Malian citizens claimed they were abducted and enslaved from cocoa plantations in Ivory Coast. According to the ATS, these former child slaves tried to hold Nestle, Cargill, and other U.S. companies that buy, process, and sell cocoa allegedly to support child slavery on these foreign cocoa farms liable. US chocolate processors do not own or operate the cocoa farms in question, but they buy cocoa from those farms and provide those farms with technical and financial resources, including training, fertilizers, tools, and cash. The Ninth District found that the lawsuit was not inadmissible extraterritorial and could be continued.
The Supreme Court revised. In a letter to eight judges, Judge Thomas reiterated that the ATS does not apply extraterritorial and stated that plaintiffs’ claims are extraterritorial. “Almost all of the behavior that [the plaintiffs] say that there has been supported and promoted forced labor – the provision of training, fertilizer, tools, and cash to foreign farms – in Ivory Coast. “Domestic application of the ATS.” (Justice Alito, the lonely dissident, felt it was premature to address this issue and did not respond.)
The Court of Justice has thus given further, albeit modest, indications as to what type of domestic business activity is insufficient to make a plea of lawful domestic application of the ATS. In the Kiobel v Royal Dutch Petroleum Co. case, the court ruled that a defendant’s “mere corporate presence” was insufficient. Nestlé adds that “[p]Management of general business activity “is also not sufficient.
However, this involvement leaves an important question open that is certain to be brought to justice. What kind of US domestic corporate conduct must be alleged – beyond general corporate activity but without harming itself – for the court to determine domestic application of the ATS? The answer remained for another day.
While there was broad consensus on extraterritoriality, the Court was more divided on two other important issues: Are domestic companies immune from ATS liability? And can courts create new grounds for action under the ATS?
Five judges suggested that domestic companies can be sued under the ATS, although only a few years ago the court ruled in the Jesner v Arab Bank case that foreign companies are immune to ATS lawsuits. The unanimous opinion of Judge Gorsuch, who endorsed Judge Alito on this point, declined.[t]The view that companies are immune to lawsuits under the ATS is “not compatible with the legal text and the original understanding”. simply because they are legal rather than natural persons. “
However, there were not five votes for an opinion on whether courts can create new pleas under the ATS. In a letter to three judges, Judge Thomas argued that courts cannot “create grounds” under the ATS. “This job belongs to Congress, not federal justice.” He would therefore limit the ATS to “the three historical crimes likely to be on the mind of the First Congress” – safe conduct, ambassador interference, and piracy – as well as congressional causes such as the Victims of Torture Act. (Judge Gorsuch’s approval, who joined Judge Kavanaugh on this point, took the same position for similar and additional reasons. Judge Alito noted that these statements “make strong arguments that federal courts should never recognize new claims under the ATS “but he wouldn’t accomplish this problem.)
Judge Sotomayor, who wrote for three judges, disagreed with this view. In her view, courts can sometimes recognize new causes of action that go beyond “the three international crimes recognized in 1789”. Two judges did not comment on this question.
For now, the court has not closed plaintiffs asking lower courts to recognize new pleas under the ATS, at least if there has been sufficient conduct in the United States.