U.S. Supreme Courtroom requires greater than “common company exercise” in U.S. to carry Alien Tort Statute claims | Quinn Emanuel Urquhart & Sullivan, LLP

On June 17, 2021, the US Supreme Court ruled in Nestlé USA, Inc. v Doe, 593 US ___ (2021). The lawsuit was brought by a group of Malian citizens under the US Alien Tort Statute (“ATS“Claims that Nestlé and Cargill supported and encouraged child slavery and forced labor on cocoa plantations in Ivory Coast, where they claimed to have been traded as child slaves in order to produce cocoa. The ATS is a U.S. federal law first enacted in 1789 that gives U.S. federal courts jurisdiction over actions brought by non-U.S. Citizens for certain tortious acts that violate the law of nations or any U.S. treaty.

The District Court initially dismissed the lawsuit, but the Ninth District Court of Appeals overturned and ruled that plaintiffs argued that corporate defendants had made or approved “any major operational decision” in the United States. Nestlé and Cargill have successfully petitioned the US Supreme Court for a review.

Look beyond “general corporate activity”

On this point, the court found by an 8: 1 majority that the plaintiffs’ complaint raised the presumption against the extraterritorial application of the ATS in Kiobel v Royal Dutch Petroleum Co., 569 US 108 (2013) (a case where Quinn Emanuel Royal Dutch Petroleum before the Supreme Court). Because almost all of the conduct of companies allegedly promoting forced labor took place overseas in Ivory Coast, plaintiffs had to make specific allegations of fact about US-based conduct that supported these alleged extraterritorial violations in order to break the suspicion.

While the Ninth District allowed the lawsuit on the basis that plaintiffs alleged that the defendants made “operational decisions” in the United States, the Supreme Court ruled that “common business allegations – such as decision-making – alone cannot establish domestic law.” . Application of the ATS. ”Rather, Judge Thomas wrote for the court:

“To rely on facts sufficient to support domestic application of the ATS, plaintiffs must allege more domestic conduct than general corporate activity that is common to most companies.”

The court did not specify what type of additional US domestic conduct must be demonstrated, but the court’s decision will undoubtedly have practical implications for both plaintiffs and defendants in ATS cases. Now, to survive a dismissal motion, a plaintiff must provide specific details of US activities that “establish a specific link” between the foreign violation and domestic behavior, rather than “general allegations” made by “most corporations “Leave” activities. Conversely, corporate defendants have greater chances of dismissal in cases where ATS claims claim only generic corporate activities in the United States

In some ways, this approach differs from the more permissive trend seen in lawsuits in other jurisdictions against corporations for alleged violations of international law. For example, the UK Supreme Court dismissed various challenges to jurisdiction in Lungowe v Vedanta Resources Plc, [2019] UKSC 20 and Okpabi v Royal Dutch Shell Plc, [2021] UKSC 3, both of which concerned lawsuits against UK-based parent companies together with a foreign subsidiary. These lawsuits also concerned alleged damage that occurred abroad, but which the respective plaintiffs in both cases arose from the operational control of the English parent company. For example, under the Vedanta and Okpabi decisions, a lawsuit could be brought before the English courts on the basis of a business activity such as the promulgation of corporate policies or the management of a parent company of the activities of its subsidiaries.

One unanswered question about claims against US companies

An open question since the US Supreme Court decision in Jesner v Arab Bank, 138 S. Ct. 1386 (2018), according to which foreign corporations are not subject to ATS liability, determines whether domestic corporations are equally immune from such claims. While the issue of corporate liability under the ATS has now been referred to the Supreme Court three times (and presented directly in Nestlé), the court has to make a final decision each time whether domestic companies can be subject to ATS liability in the present case from narrower or alternative options Establish. While several of the judges at Nestlé supported the position that domestic companies could be subject to ATS liability, the court has yet to rule directly on this issue.

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