Nestle USA, Inc. may face liability in the U.S. for alleged complicity in use of forced labor and child labor in the Ivory Coast cocoa plantations, based on claims brought under the 224-year-old Alien Tort Statute.
The 9th U.S. Circuit Court of Appeals order Thursday relied on dicta in a recent U.S. Supreme Court decision to do what it, and two other appeals courts, have been unable to do in three prior cases – find corporations may be held to account for illegal conduct overseas.
The federal lawsuit filed in Los Angeles accused Nestle of buying cocoa from plantations where children allegedly worked 12 to 14 hours a day without pay and were beaten and threatened with guns. The suit alleged Nestle was aware of the conditions but continued to buy the cheaper cocoa.
The appellate ruling reinstates the civil suit, which was dismissed in 2010, based on a finding that corporations could not be held liable for violations of international law.
The order cited the Royal Dutch Petroleum decision by the Supreme Court earlier this year as “suggesting in dicta that corporations may be liable under ATS so long as presumption against extraterritorial application is overcome.”
Two prior 9th Circuit cases held corporations could be held to account under the ATS, but both cases were dismissed for other reasons. They included: the 9th Circuit case, Sarei v. Rio Tinto, a large mining company accused of pollution of a South Pacific island through mining operations; the D.C. Circuit case of Doe v. Exxon Mobil Corp., accused the company of aiding human rights violations, including murder and torture by Indonesian soldiers to protect its natural-gas operations and Flomo v. Firestone Natural Rubber, a 7th Circuit case in which Liberian children sued Firestone for alleged use of hazardous child labor in plantation operations.
The 9th Circuit revived the Nestle case and sent it back to the Los Angeles judge to allow the plaintiffs to amend the complaint to comply with the new ruling on the extraterritorial reach of the Alien Tort Statute.
The Alien Tort Claims Act was originally adopted in 1789 by the first Congress. It allowed aliens to use federal courts for certain international-law violations, including human rights violations. It was to allow redress for damage claims by diplomats and other foreign nations who may have been abused by Americans. It was little-used for nearly 200 years. In the 1980s, it was revived by lawyers as a potential weapon to hold multi-national companies or individuals responsible for human rights violations.
Judges Dorothy Nelson and Kim Wardlaw, with Johnnie Rawlinson in partial dissent, signed the order.
Case: Doe v. Nestle USA, No. 10-56739