Can U.S. Companies Can Be Sued in the U.S. for their Supplier's Human Rights Violations? Supreme Court to Weigh In.

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Last month, the U.S. Supreme Court heard oral argument in a pair of cases that question the role of the U.S. court system in holding companies accountable for profiting from child slavery in foreign countries. The Alien Tort Statute (ATS) gives federal courts jurisdiction to hear lawsuits filed by non-U.S. citizens for some violations of international law. In two related cases, the Supreme Court will decide whether U.S. corporations--as opposed to individuals--may be liable under the statute, and whether the allegations of corporate wrongdoing in these cases were sufficiently connected to the U.S.  

In the consolidated cases before the Court, Nestlé USA, Inc. v. Doe I and Cargill, Inc. v. Doe I, six former child slaves sued U.S. corporations Nestlé USA and Cargill--two of the world's largest purchasers of West African cocoa--for aiding and abetting human rights abuses perpetrated by their Ivory Coast cocoa bean suppliers. After being trafficked from Mali as children, the respondents were forced into hard labor on the cocoa farms without pay, where they lived in deplorable conditions and suffered physical and emotional abuse. Respondents contend that U.S. executives at Nestlé USA and Cargill knew about the slave conditions at their suppliers' farms and, moreover, provided financial and technical assistance to these farms in spite of the slave labor, all to benefit their bottom lines. These cases raise important questions about the scope of liability for U.S. companies who may willfully turn a blind eye to the practices of their overseas partners or, worse, facilitate those practices. 

The Supreme Court has previously ruled that foreign corporations cannot be sued under the ATS, but at oral argument several justices appeared skeptical of extending this bar to domestic corporations, where concerns about interfering with foreign relations are absent. If the Court finds that U.S. corporations can in theory be held liable for violations of the ATS, it will confront whether the accusations against Nestlé USA and Cargill are specific enough, and sufficiently focused on the United States, to allow the suits to go forward. In other words, the Court will address whether decision-making regarding purchasing cocoa beans and supporting farmers is too attenuated from the child slavery at the heart of the case. The Court's answers to these questions will have serious implications for the level of oversight required of U.S. companies who work closely with overseas suppliers or other partners. A decision is expected by Summer 2021. 

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