Nestlé & Cargill v. Doe Series: In Oral Arguments, Justices Weigh Liability for Chocolate Companies

[Editor’s Note: This article is part of a Just Security series on the consolidated cases of Nestlé USA, Inc. v. Doe I and Cargill Inc. v. Doe I, which was argued before the Supreme Court on Dec. 1. The introduction to the series and all other articles can be found here.]

The Supreme Court recently concluded 90 minutes of oral arguments in the consolidated cases of Doe v. Nestlé and Doe v. Cargill. (Ambassador David Scheffer’s account of the argument is available here). The audio of the argument was aired on C-Span, and the transcript is available here. The corporate defendants, petitioners before the Court, were represented by former Acting Solicitor General Neal Katyal; long-time Alien Tort Statute (ATS) lawyer Paul Hoffman represented the plaintiffs/respondents; and Deputy Solicitor General Curtis Gannon appeared on behalf of the U.S. Government. The virtual format – with each Justice taking turns to present their line of questioning – took some time to get used to, and limited the more free-flowing colloquies of traditional oral arguments, but Chief Justice Roberts was scrupulous about giving each Justice equal time, interrupting the advocates mid-sentence if necessary. This post summarizes the main arguments with reference to the briefs in the record and other commentary on the arguments.

The Justices were clearly uncomfortable with the prospect of providing impunity for U.S. corporations that breach the law of nations, particularly given the sickening nature of the facts in question: child slavery, trafficking, and forced labor. Justice Alito specifically acknowledged that many of the petitioners’ arguments would leave child slaves with no remedies against a U.S. corporation that knowingly facilitates, and significantly profits from, their daily mistreatment—results “that are hard to take.” Katyal insisted that while the underlying conduct is “horrific,” the companies are not directly involved in these activities and are, rather, “an afterthought.”

In defense of his clients, Katyal addressed the two issues presented and briefed by petitioners: corporation liability and extraterritoriality. The first is a jurisdictional/legal argument that the ATS does not grant jurisdiction over U.S. corporations, an extension of the Court’s ruling in Jesner v. Arab Bank which reaches this conclusion with respect to foreign corporations. Katyal also focused – and tried to get the Justices to focus – on the factual allegation that there was insufficient U.S. conduct by petitioners to justify hearing the case in U.S. courts given the presumption against extraterritoriality. To address their concerns about leaving victims without a remedy, he drew attention to other remedies that might be available to the survivors, including the criminal law within Cote d’Ivoire, the United States’ suite of civil and criminal anti-trafficking statutes, and anti-forced labor trade remedies that now exist (but that post-date the harm alleged). The government largely echoed these points, insisting that the bar against extraterritoriality could not be overcome by the aiding and abetting allegations advanced by the plaintiffs.

Hoffman, for the plaintiffs, attempted to rebut each of these points, arguing that in passing the ATS, the First Congress provided a federal forum for foreign citizens to bring international law tort cases without limitation as to the nature of the defendant or the theory of tort liability. All the norms in question apply directly to private parties, including corporate actors who maintain child slavery in their foreign supply chains in order to gain an advantage against their competitors. Unlike in previous cases in which the Court has curtailed the reach of the ATS, this case does not seek liability against foreign corporations – which might raise foreign policy concerns – but rather against U.S. corporations. Indeed, Hoffman argued, the historical research demonstrates that the Founders were particularly concerned about providing a forum to resolve disputes involving torts committed by U.S. citizens that might lead to foreign entanglements. As such, the case at bar was within contemplation of the Framers and should be allowed to proceed.

Corporate Liability

Katyal began his argument with the proposition that the ATS applies to natural persons only and that there is no specific, universal, or obligatory norm of corporate liability under international law that has been accepted by the civilized world with the same degree of specificity as the 18th century paradigms (e.g., piracy, violations of safe conduct, or attacks on ambassadors). These so-called “Blackstone three” offenses – well-established international law norms when the ATS was adopted – serve as the standard against which subsequent ATS causes of action should be judged, as dictated by the Supreme Court in Sosa v. Alvarez-Machain.

Many of the Justices seemed perplexed by this argument, newly advanced by the government alongside the defendants. Justice Breyer asked why it should make a difference if a violation of the law of nations was committed by an individual or authorized by a corporation. By way of example, he inquired whether the First Congress would have concluded that the victim was out of luck if a corporation had been responsible for the now-famous Marbois affair (which inspired the passage of the ATS), in which a French consul was assaulted in Philadelphia. Likewise, in a cascade of questions, Justice Kagan revealed the absurdity of a victim being able to bring a suit against a single slave trader, or ten slave traders, but not ten slave traders who decide to incorporate. Kagan asked the government: Why would other countries be less offended by leaving a foreign victim without a remedy when she is harmed by a U.S. corporation (versus a U.S. natural person) when most other countries do not make this distinction? Gannon responded that civil liability under the ATS is not the only way the United States has to ensure that U.S. persons are held accountable for their violations of the law of nations, noting that in drafting the Torture Victim Protection Act (TVPA), Congress did not think corporations needed to be liable to effectuate U.S. obligations under the international prohibition against torture.

When pushed to justify the impunity that would result from this line of argument, Katyal repeatedly insisted that there would always be a remedy against responsible individual corporate officials, so there is no need for entity liability. Indeed, at one point, Katyal argued that if the Court preserved corporate liability under the ATS, victims would be disincentivized to press their claims against the natural persons who were most responsible for committing the torts against the victims. One wonders whether the corporate principals of Katyal’s clients – those who would, under Katyal’s theory, be personally liable – would appreciate this line of argument.

Echoing a point made by Hoffman in his opening remarks about the original purpose of the ATS, Justices Kagan and Coney Barrett seemed to agree that the First Congress enacted the ATS out of concern that other nations would be offended by the United States’ failure to remedy international law violations, particularly those committed by U.S. citizens. When allowed to elaborate, Hoffman explained that Congress created a federal forum to hear these disputes precisely to avoid such foreign entanglements. Justice Coney Barrett asked Hoffman to elucidate the foreign policy implications that might result were the Court to fail to recognize a cause of action under these circumstances. Hoffman explained that in the early days of the nation’s existence, other countries did protest regularly when U.S. citizens violated the law of nations in their territory. Hoffman conceded that it is not clear whether, in today’s world, there would be protests of this nature were the case to be dismissed.

Justice Kavanaugh quoted from an amicus brief filed on behalf of former government officials by Professor Harold Koh and summarized here, which argued that the ruling sought by the corporations would “gut” the statute. Responding that such rhetoric was “over-heated,” Katyal reasoned that he was attempting to preserve the “status quo” in cautioning against the Court recognizing “new” causes of action absent action by Congress, which could always amend the ATS. In a rather strategic citation, Katyal invoked Justice (then Judge) Kavanaugh’s dissent in Exxon v. Doe, which raised a host of intricate policy questions best left handled by the political branches. In questioning Gannon, Justice Breyer, however, noted that there have been approximately 180 cases involving corporations under the ATS, many of which were resolved on other grounds, suggesting that a ruling by the Court in petitioners’ favor would actually upset the status quo.

Drawing on her deep knowledge of international law (on display in Jesner as well), Justice Sotomayor cited from a number of the international law amicus curiae briefs (summarized here), including one submitted by the Yale Law School’s Center for Global Legal Challenges cataloguing the provenance and force of the norms in question. Justices Sotomayor and Gorsuch noted that at common law, in rem actions were regularly brought against slave ships (not only against the individuals captaining or directing them) for violations of the prohibition on the slave trade, as detailed in the pioneering research by Dean Jenny Martinez. This historical fact suggests that the framers of the ATS would have been comfortable with corporate liability under similar circumstances as well, although such liability was still nascent at the time.

Justice Kagan also invoked comparative law in noting that many countries around the world with strong rule of law systems hold their own corporations civilly liable for breaches of international law, as detailed in an amicus brief submitted on behalf of foreign lawyers by Professor William Aceves. By way of example, Hoffman noted that the Netherlands is policing its own corporations and is now entertaining a case on behalf of the same plaintiffs against the same defendants originally sued under the ATS in Kiobel v. Royal Dutch Petroleum. Gannon tried to diminish this global precedent by observing that these other States do not have an ATS analogue and that Congress could create express civil corporate liability if it were so inclined.

Justice Thomas pressed Gannon on the government’s dramatic volte face on this point, referring to the fact that the Trump administration had earlier filed a brief supporting the existence of corporate liability under the ATS, as Professor Bill Dodge discusses here. Gannon conceded, in rather convoluted language, that the government “did previously not urge the Court to adopt a categorical rule eliminating corporate liability under the ATS in the past.” He insisted, however, that the government is trying to remain consistent with Jesner, which rejected part of the government’s earlier reasoning and reinforced the need for caution about recognizing “new” causes of action.

Gannon reasoned that, now that Jesner has made foreign corporations immune from suit under the ATS, it would be incongruous to allow for U.S. corporations to be sued. He urged that Congress should be the entity to decide whether to “discriminate against” U.S. corporations by making them potentially liable where foreign corporations are not. In his estimation, the proper inquiry is: Is there reason to doubt whether Congress would want this damages remedy to be available against legal persons? Congress has specifically limited and expanded the reach of corporate liability in the past with respect to other civil statutes; courts should therefore not assume congressional preferences on the issue. (Incidentally, it has been argued that the incoming Biden-Harris administration should withdraw this brief and revert to the prior U.S. position).

Justice Kagan asked Hoffman to react to Justice Thomas’s question regarding the government’s decision to reverse position and oppose corporate liability in ATS cases. Hoffman noted that Sosa Step 2 – which weighs prudential and separation of powers concerns in recognizing causes of action under the ATS and which had been deployed to justify the elimination of  liability for foreign corporations in Jesner – is inapplicable with respect to domestic corporations under the ATS. On the contrary, Hoffman argued that the United States has a responsibility to police U.S. conduct and corporations.

Kagan further inquired how Jesner’s fractured opinion should be interpreted. Hoffman observed that there was no controlling majority about how to approach the question of U.S. corporate liability. Although the Jesner plurality fixated on whether there needs to be a specific, universal, and obligatory norm of corporate liability under international law, it was the Sosa Step 2 analysis that garnered the only majority of Justices. Hoffman argued that corporate tort liability in general is well established, was embraced by the Founders, and has been a part of U.S. domestic common law vis-à-vis corporations and, before that, ships, since the founding. He explained that international law provides the substantive norms; establishing the means of enforcing them – including whether to limit liability to natural persons or to include legal persons or to rely on criminal versus civil remedies – falls to individual nation-States. The First Congress chose tort liability using common law methods, but there is no requirement that there be mandatory corporate liability under international law.

Questioning Hoffman, Justice Thomas invoked the TVPA as a potential model for how the Court should interpret the ATS on these contentious points. He noted that this statute has been interpreted (in Mohamed v. Palestinian Authority) to apply only to natural persons, suggesting that Congress does not see the ATS the way respondents do. Justice Thomas also suggested that the TVPA does not support aiding and abetting liability. Hoffman argued that the Trafficking Victim Protection Act is a better analogy for the ATS in this case and challenged Justice Thomas’s assumption that there is no aiding and abetting liability under the TVPA. Indeed, as noted in the brief filed by the Center for Justice & Accountability (CJA) and Human Rights First (HRF), Hoffman’s position finds support in the Senate Report issued in connection with the enactment of the TVPA and subsequent appellate jurisprudence (e.g., Cabello v. Fernández-Larios and Mamani v. Sánchez Bustamante).

Extraterritoriality

Katyal also argued that the case should fail because it is impermissibly extraterritorial given that there is no domestic injury, plaintiffs have never been to the United States, and the tort occurred across the globe, in Mali (from where the youth were trafficked) and Côte d’Ivoire (where they were enslaved). While Gannon was at the virtual podium, Justice Alito cut to the chase in asking whether there are ATS suits based on conduct that occurred solely in the United States and why (and under what circumstances) someone would bring such a claim? Gannon was clearly stumped; after a long pause, he harkened back to the Marbois incident and then conceded that there are no contemporary cases involving purely U.S. conduct.

Invoking the test from Kiobel, Justice Coney Barrett honed in on the intersection of arguments addressed to aiding and abetting and extraterritoriality, asking whether in determining whether a case is impermissibly extraterritorial, courts should look to the primary conduct (i.e., what happened in Côte d’Ivoire) versus the conduct that “touches and concerns” the United States: corporate oversight, communications, training, and the provision of equipment etc. Gannon invoked Morrison v. National Australia Bank and RJR Nabisco v. European Community, arguing that the “focus” of the offensive conduct is abroad and there are insufficient allegations of domestic conduct to overcome the presumption against extraterritoriality.

In this regard, Hoffman highlighted groundbreaking new historical research by David Golove (discussed here and in a brief filed by the Harvard Law School International Human Rights Clinic) indicating that the First Congress intended the ATS to provide a federal remedy for U.S. citizens’ extraterritorial tortious conduct in violation for the law of nations. It was notable, however, that the Justices—for all that many of them may profess to be “originalists”—did not seem inclined to engage on this new research, perhaps because it is now uncontroversial.

Separation of Powers

Since it seemed incongruous that the prohibitions against slavery, trafficking, and forced labor were not sufficiently specific, universal and obligatory to be cognizable under the ATS, much time was spent specifically discussing the separation of powers concerns in Sosa Step 2.. Indeed, Justice Coney Barrett queried whether this case would be better addressed through Sosa Step 2, hinting at her aversion to ruling under Step 1 that the norms in question are not well-established under international law. That said, she also astutely implied that not just any prudential concerns should be enough, or Step 2 would effectively swallow Step 1. Katyal returned repeatedly to this separation of powers question, urging the Court to “proceed with caution” (a constant refrain) and desist from creating a “new” cause of action for aiding and abetting child slavery or corporate liability under the ATS. (Correctional Services Corp. v. Malesko, which rejected an invitation to extend Bivens v. Six Unknown Federal Narcotics Agents to create a new constitutional tort, was also invoked in this regard).

However, as Professor Koh noted in a press conference following the case, Katyal’s position would require the exercise of judicial activism, not restraint, since the statute is clear that it applies whenever an alien sues for a tort committed in violation of the law of nations. The Justices would have to, in essence, abandon judicial restraint and re-write the ATS to disallow corporate or secondary liability. Indeed, in another contribution to this symposium, Professor William Aceves catalogues the “amendments” the Supreme Court has made over the years to this parsimonious little statute – changes which have not, yet, included a prohibition on domestic corporate secondary liability or recourse to secondary forms of liability.

Foreign Policy Implications

In the context of Sosa Step 2, the parties also debated the foreign policy implications of this suit and others like it. Right off the bat, Chief Justice Roberts addressed both sides with the observation that, unlike in other ATS litigation involving foreign corporations, there have been no objections by foreign nations to this case moving forward. Indeed, he queried what objections foreign nations might possibly have to U.S. courts adjudicating claims against U.S. corporations under international law.

Defendants and the government stressed that the potential for friction was sufficient to militate against allowing such causes of action. Katyal pointed to the risk that U.S. corporate defendants could serve as “surrogates” for a foreign nation or a foreign parent corporation that might also be involved in an abusive course of action. When asked about this risk by Justice Coney Barrett, Hoffman conceded that if Nestlé USA’s parent company (headquartered in Switzerland) proved to be the driving force behind the alleged acts, then the suit against Nestlé USA would probably not be viable under Jesner (a prospect inapposite to Cargill, which is a U.S. company).

Gannon conceded that there are no foreign policy concerns at issue in the Nestlé case at the moment; however, he insisted that the case might later threaten foreign affairs if it were allowed to “come to fruition,” in part because it might potentially implicate the actions of foreign officials. He also implied that the lawsuit might interfere with the actions governments are taking to eliminate slavery in supply changes (e.g., under the Harkin/Engel Protocol).

Hoffman reinforced that there have been no formal objections to the case going forward and represented that they have had no resistance from Côte d’Ivoire in litigating the case as discovery, etc., has proceeded apace. Indeed, he noted that Congress’ passage  of the Trafficking Victim Protection Act (which post-dates this litigation and so was not available to these plaintiffs) confirms that Congress has already concluded that extraterritorial forced labor in U.S. supply chains is something for which damage remedies are appropriate as a matter of policy.

Aiding and Abetting

The cognizability of aiding and abetting and other secondary claims under the ATS was not raised in the parties’ certiorari petitions or the questions presented by the Court, but the Acting Solicitor General nonetheless attempted to insert the issue into the litigation. Justice Thomas engaged with the question, asking if there was a universal norm on aiding and abetting under international law, particularly when it comes to slavery. Katyal ducked the international law issue by citing Central Bank of Denver v. First Interstate Bank of Denver, which held that although the 1934 Securities Exchange Act recognized primary civil liability, it did not automatically incorporate aiding and abetting liability.

Katyal also argued that the standard of secondary liability was insufficiently specific to be actionable absent guidance by Congress. Making a painful play on words by describing the plaintiffs’ claims as more akin to “aiding and amorphous” than aiding and abetting, Katyal reasoned that courts should not read policy choices into vague statutory language. When pressed, Katyal—stunningly—tried to split hairs on the Sosa Step 1 inquiry, reasoning that while there may be a norm against child slavery, per se, there is no universal norm against aiding and abetting child slavery (in response to questioning from Justice Thomas) or when it involves corporate defendants (in response to questioning from Justice Kagan).

Justice Alito noted that the government’s aiding and abetting arguments might also resolve the corporate liability question, given that corporations always act through natural persons. In other words, eliminating secondary liability would result in victims unable to sue domestic corporations under the ATS except under narrow respondeat superior circumstances. With this line of questioning, Justice Alito seemed to be suggesting a way to dispose of the case without reaching the uncomfortable conclusion that U.S. corporations cannot be held liable for breaching the law of nations and enslaving children. Such an outcome, however, would jeopardize suits between natural persons, many of which involve claims of secondary liability, as detailed in the CJA/HRF brief.

Justice Sotomayor hinted that, in her estimation, the complaint might not allege sufficient facts to make out a domestic aiding and abetting claim, but she pressed the lawyers to address the categorical question (the topic of the brief submitted by the Stanford Law Human Rights & International Justice Lab, discussed here) of whether there should be no secondary liability under the ATS at all, against either natural or legal persons. She noted that the First Congress clearly wanted the ATS to cover acts of piracy and their accomplices, whether the latter provided such assistance on land or on the high seas. She then rattled off a list of international courts providing for secondary forms of liability (albeit against natural persons and in the criminal context). Ignoring the thrust of her question, Katyal tried to place piracy in a category unto itself given that its occurrence on the high seas renders it jurisdictionally unique and outside the purview of any single sovereign.

By contrast, Hoffman emphasized that forms of secondary liability were widely available at common law, even in the civil context, and that the international courts have come up with the necessary elements for adjudicating complicity in violations of international law, as relied upon by all the U.S. circuits to consider the issue. Indeed, five circuits have independently reasoned that aiding-and-abetting liability presents grounds for recovery in ATS suits; others have assumed as much. See, e.g., Khulumani v. Barclay Nat’l Bank Ltd., in the Second Circuit, aff’d sub nom., Am. Isuzu Motors, Inc. v. Ntsebeza; Aziz v. Alcolac, Inc., in the Fourth Circuit; ; Doe I v. Unocal Corp., in the Ninth Circuit; Cabello v. Fernández-Larios, in the Eleventh Circuit; Doe VIII v. Exxon Mobil Corp., in the D.C. Circuit, vacated on other grounds. See also Flomo v. Firestone National Rubber Co.in the Seventh Circuit, allowing for corporate liability in ATS suits alleging violations of customary international law when “the violations are directed, encouraged, or condoned at the corporate defendant’s decision[-]making level.”

Hoffman noted that while there may be some variation in how international tribunals have formulated these forms of liability, all recognize a category of secondary liability. Justice Kavanaugh noted that such tribunals have not imposed corporate liability; Hoffman responded that that is true for reasons specific to those criminal tribunals, not because such liability is legally unavailable; in any case, corporate tort liability is the norm, not the exception, around the world.

For his part, Gannon insisted that even if aiding and abetting liability exists under international law, the Court could (and should) eliminate it under Step 2 of the Sosa analysis, which Justice Sotomayor noted was a more “nuanced” argument than set forth in the government’s brief which leaned toward rejecting the concept altogether. Gannon then insisted that this inquiry is not about the scope of international law, but rather is a function of the Court’s precedent in Central Bank of Denver.

Justice Gorsuch asked Hoffman why the Court should be in the business of creating new aiding and abetting causes of action when U.S. law has all but abandoned federal common law (or has proclaimed to have done so) after Erie Railroad Co. v. Tompkins? (Although it is worth recalling that the day the Court decided Erie, it also decided a case relying upon federal common law to resolve an interstate water dispute). Hoffman noted that Sosa mandates such an inquiry, so long as the norm in question is Sosa-qualified, and insisted that the concept was within the British common law received into U.S. law, as evidenced by the so-called Bradford opinion about an incident involving U.S. nationals who aided and abetted a French attack in Sierra Leone in 1795. In passing the ATS, Congress was not looking to restrict potential liability but to codify existing liability; as such, they would not have exempted corporate actors or modes of secondary liability.

Although the particulars of aiding and abetting liability had not been briefed by petitioners or respondents, Hoffman nonetheless received a number of questions about what constitutes aiding and abetting under the ATS. Justice Breyer asked whether just doing business in a country that tolerates child labor – which, while terrible, is widespread around the world – or with producers who themselves are engaged in child labor, would be enough. Hoffman made clear that it would be necessary to show that the company knowingly facilitated such conduct within their supply chains. He emphasized that U.S. judges could adjudicate these cases based upon international principles of aiding and abetting to determine whether any particular corporation had crossed the line between just doing business and affirmatively facilitating an offense.  Here, he made reference to the briefs submitted by Tony Chocolonely and other artisanal chocolate companies confirming that it is possible to profitably produce chocolate without relying on child slave labor.

Justice Alito had questions about the sufficiency of the allegations regarding the mens rea of these particular defendants. He seemed troubled by the fact that with 15 years to refine the complaint, the language remains uncertain. In particular, he invoked para. 50 in the Joint Appendix (which contains the Second Amended Complaint), which indicates that defendants in general purchase cocoa from farms that they knew or “should have known” relied on forced child labor. Invoking Rule 11 (which requires lawyers to confirm that their factual contentions have evidentiary support or face sanctions), Alito seemed skeptical that recklessness would be enough for aiding and abetting liability under either international or U.S. law. Hoffman conceded that a showing that a corporation “should have known” was insufficient; rather it was necessary to show actual knowledge (e.g., through reports received through the supply chain, visits to the region, etc.). Although he did not have particular paragraph citations at his fingertips, he noted that more information has come to light given recent investigations. (Plaintiffs have not been able to amend their complaint or prove their claims given the granting of certiorari).

Justice Sotomayor followed up with a set of sharp questions about what more in the form of affirmative acts would be necessary beyond mere knowledge. Hoffman indicated that plaintiffs would show decision-making, corporate policy, exclusive marketing relationships, and the provision of staff, training and equipment were all arranged from headquarters. Hoffman cautioned that if the Court wants to reach the issue of aiding and abetting, it would benefit from a full briefing on this issue.

And with that, the case was submitted. A decision is expected in June.

Image: A cocoa producer of the Yakasse-Attobrou Agricultural Cooperative (Cooperative Agricole de Yakasse-Attobrou – CAYAT) poses with cocoa pods in front of a panel reading “CAYAT says no to child labour” at a certified fair trade label cocoa plantation in Adzope on Agust 28, 2018. – To obtain the label, a production must comply with environmental standards (regulated pesticides), provide a decent income for the farmers and prohibit child labor.  (Photo by SIA KAMBOU/AFP via Getty Images)

 

About the Author(s)

Beth Van Schaack

Leah Kaplan Visiting Professor of Human Rights, Stanford Law School; Former Deputy to the U.S. Ambassador-at-Large for War Crimes Issues in the U.S. State Department. All views are her own. Member of the editorial board of Just Security. Follow her on Twitter (@BethVanSchaack).