Death, Chocolate & the Corporate Court

While you are gorging on holiday chocolate, you might want to consider this: Right now Nestlé has a petition for certiorari pending at the U.S. Supreme Court in a case called Nestlé U.S.A. v. Doe. The case arose when several John Does from Cote D’Ivoire in Africa sued Nestlé for aiding and abetting their enslavement as children.

The suit started about a decade ago. It has been winding its way through the legal system as Nestlé makes all sorts of arguments about the Alien Tort Statute and why it shouldn’t apply to them and their business practices. If the Supreme Court takes the case and agrees with Nestlé, then these arguments could insulate all multinational corporations from answering for human rights abuses in U.S. courts.

Child slavery is prohibited under international law. Nestlé stands accused of aiding and abetting child slavery in the cocoa harvest in West African farms where it sources its cocoa for use in its chocolate. If this sounds familiar, that would be because Nestlé and other chocolatiers were accused of doing this in the 1990s as well. Congress got close to slapping FDA labels on food to inform consumers whether the chocolate had been produced with slave labor. To head off this legislation, the industry agreed to self-regulate and wean itself off of slave labor. This does not appear to have happened as they are back in court, several courts actually, standing accused of continuing to use forced child labor.

In 2014, Hershey’s had an institutional investor use its rights of inspection under Delaware’s General Corporation Law Section 220 to get more information about its use of slave labor in its supply chain. And in September 2015, Nestle, Hershey’s and Mars were sued for not letting customers know that their chocolate may have been produced with slave labor. But by far, the most troubling suit is by the John Does who claim to be the formerly enslaved children.

In the Ninth Circuit, Nestlé tried to have the John Does’ suit dismissed. The Ninth Circuit refused to dismiss the case. As the Ninth Circuit described the plight of the plaintiffs:

The plaintiffs in this case are three victims of child slavery. They were forced to work on Ivorian cocoa plantations for up to fourteen hours per day six days a week, given only scraps of food to eat, and whipped and beaten by overseers. They were locked in small rooms at night and not permitted to leave the plantations, knowing that children who tried to escape would be beaten or tortured. Plaintiff John Doe II witnessed guards cut open the feet of children who attempted to escape, and John Doe III knew that the guards forced failed escapees to drink urine.

As the good people at SCOTUSBlog note, the questions raised in Nestlé U.S.A., Inc. v. Doe at the Supreme Court are:

(1) Whether a defendant is subject to suit under the Alien Tort Statute for aiding and abetting another person’s alleged violation of the law of nations based on allegations that the defendant intended to pursue a legitimate business objective while knowing (but not intending) that the objective could be advanced by the other person’s violation of international law; (2) …whether a proposed application of the Alien Tort Statute would be impermissibly extraterritorial under Kiobel v. Royal Dutch Petroleum Co.; and (3) whether there is a well-defined international-law consensus that corporations are subject to liability for violations of the law of nations.

At the Supreme Court Nestlé is trying to expand on a case that allowed Shell (aka Royal Dutch Petroleum) to wriggle out of a human rights case called Kiobel in 2013. In Kiobel, the Supreme Court decided that the Alien Tort Statute did not apply to foreign cubed fact scenarios where there was a foreign defendant, a foreign plaintiff and the events took place in a foreign location.

The Supreme Court in Kiobel left the door open for suits that “touch and concern” the United States. Here Nestlé U.S.A. (an American defendant) is trying to argue that foreign squared fact scenarios should also be excused from suit. But Nestlé’s lawyers are going big with their arguments. They are also arguing that corporations (all of them) cannot be held liable for violating international law (a.k.a the law of nations). This seems extraordinarily broad, but if successful it could free every corporation from worrying about suit in American courts for human rights abuses abroad, no matter how heinous.

Many of the judges who have had to wrestle with these human rights cases against multinational corporations have come to the conclusion that merely incorporating cannot be a bar to international law applying to an entity’s actions. The Seventh Circuit’s Judge Richard Posner noted “[i]t is neither surprising nor significant that corporate liability hasn’t figured in prosecutions of war criminals and other violators of customary international law. That doesn’t mean that corporations are exempt from that law.” While, Judge Judith W. Rogers of D.C. Circuit held that, “[g]iven that the law of every jurisdiction in the United States and of every civilized nation, and the law of numerous international treaties, provide that corporations are responsible for their torts, it would create a bizarre anomaly to immunize corporations from liability for the conduct of their agents in lawsuits brought for shockingly egregious violations of universally recognized principles of international law.”

But the troubling thing is Kiobel, which let Shell of the hook, was decided 9–0. Who knows how many of the Supreme Court Justices would find a blanket exemption from the law of nations for corporations attractive in Nestlé U.S.A., Inc. v. Doe? Or maybe just like the darkest chocolate, that would leave too bitter a taste in the mouth.

— 30 —

Ciara Torres-Spelliscy is an associate professor of law at Stetson University College of Law and a Brennan Center Fellow. She has a forthcoming 2016 book on corporations and their role in our democracy.

Ciara Torres-Spelliscy

Written by

Curious about how the world works. Focused on money in politics. @BrennanCenter fellow @CorporateReform, @harvard @columbialaw. RT ≠ E http://bit.ly/11EB1ne