A farmer prepares to collect a cocoa pod from a cocoa farm in Alepe, Ivory Coast, on December 7, 2020.
Luc Gnago | Reuters
The Supreme Court on Thursday overturned a lower court ruling that allowed six men to sue Nestle USA and Cargill over allegations that they were sold as child slaves on farms in the West African nation of Ivory Coast that run the two giant cocoa food companies supply.
Judge Clarence Thomas, who wrote for the 8-1 majority, said the US 9th District Court of Appeals falsely allowed the lawsuit because Nestle and Cargill allegedly made “important operational decisions” in the United States.
Thomas said the six plaintiffs, who are from Mali, wrongly tried to sue under the Alien Tort Statute for conduct outside the United States.
Thomas also said that plaintiffs had failed to demonstrate that the conduct relevant to the ATS “occurred in the United States … even if other conduct occurred overseas”.
CNBC policy
Read more about CNBC’s political coverage:
Paul Hoffman, an attorney for the defendants, said during a media briefing on the decision that “we are obviously disappointed” with the verdict, but also called it “the least possible loss we could have had in this case.” He found that a majority of the judges in the ruling agreed that companies can be sued under the Aliens Offenses Act.
Hoffman also said that “our intention is to file an amended complaint” which he believes may “meet the standards of the court” in order to make a claim under the ATS.
He said Nestlé and Cargill control every aspect of cocoa production in Ivory Coast, “and they should be held responsible for promoting a system of child slavery.”
The six plaintiffs alleged that these companies supported child slavery because they “knew or should have known” that the farms were using enslaved children.
No company owns or operates farms in Ivory Coast, but they had bought cocoa from them and also provided the farms with technical and financial resources in exchange for exclusive rights to their crops.
Plaintiffs alleged the companies had an economic impact on the farms “but failed to exercise it to end child slavery,” Thomas noted in his statement.
A US district court originally dismissed the lawsuit after the Supreme Court ruled that the Alien Tort Statute was not extraterritorial.
While plaintiffs were appealing this dismissal, the Supreme Court ruled that courts under the ATS cannot create new pleas against foreign companies.
The 9th District Court of Appeals then ruled in the Nestle and Cargill cases that the Supreme Court ruling “does not preclude the judicial establishment of indictments against domestic companies.” The 9th District also ruled that plaintiffs had properly relied on the ATS used in the cases because “funding decisions … came from the United States.”
But, in his opinion, Thomas wrote that almost all of the behavior alleged in the lawsuit “occurred in Ivory Coast”.
He also wrote that a “general corporate activity” claim in the United States is insufficient to link to conduct abroad for a claim under the ATS.
“To assert facts sufficient to support domestic application of the ATS, plaintiffs must allege more domestic conduct than general corporate activities common to most companies,” the statement said.
A Nestlé spokesman said in a statement on the ruling: “Child labor is unacceptable. That is why we are working so hard to prevent it.”
“Nestlé has never been involved in the outrageous child labor alleged in this lawsuit, and we remain steadfast in our commitment to [combating] Child labor in the cocoa industry and our ongoing collaboration with government partners, [nongovernmental organizations] and industry to address this complex, global problem, “the spokesman said.
“Access to education and improved farming practices and livelihoods are critical to tackling child labor in cocoa production. Addressing the root causes of child labor is part of the Nestlé Cocoa Plan and will continue to be at the heart of our efforts.”
Cargill said in a statement, “Today’s Supreme Court ruling confirms Cargill’s analysis of the law and confirms that this lawsuit has no basis in which to proceed.”
“Regardless, Cargill’s work to keep child labor out of the cocoa supply chain is unwavering. We do not tolerate the use of child labor in our operations or supply chains and work every day to prevent this, ”said the privately owned company. “We will continue to focus on the root causes, including poverty and lack of access to education. Our mission is to drive sustainable change in cocoa communities and empower families who depend on cocoa for income.”
