U.S. Supreme Court Again Restricts the Viability of International Human Rights Lawsuits in Federal Courts Under the 1789 Alien Tort Statute

Posted in: Injury Law

In Nestlé v. Doe, a near-unanimous majority of the U.S. Supreme Court dealt yet another blow to plaintiffs seeking to bring lawsuits against corporations for violations of international law—holding that mere “corporate activity” within the United States is not enough to satisfy the general presumption against the extraterritorial application of federal law. Nestlé represents the third time since 2013 that the Court has sharply limited the ability of plaintiffs to bring claims under the 1789 Alien Tort Statute (ATS), 28 U.S.C. §1350, which grants federal courts jurisdiction over torts by “aliens in violation of the law of nations….” The justices continue to disagree over what types of claims remain open under the ATS and declined to adopt a categorical rule precluding any ATS lawsuits against corporations.

Nestlé v. Doe arises out of lawsuits by six individuals in Mali, originally filed in 2005, who allege they were trafficked into the Ivory Coast as child slaves to produce cocoa. The Doe plaintiffs sued numerous corporations, including U.S.-based companies Nestlé USA and Cargill, that purchase, process, and sell cocoa from the Ivory Coast. Although neither of the defendant U.S. corporations operated farms where the alleged child slavery occurred, the plaintiffs alleged that the defendant U.S.-based companies’ ongoing business relationship with those cocoa farms “aided and abetted” child slavery by not acting against those practices of which they knew or should have known.

The Doe plaintiffs brought their lawsuit under the Alien Tort Statute, a section of the Judiciary Act of 1789 that has been interpreted as a jurisdictional grant for federal courts to hear cases brought by aliens for violations of international law. Although the government initially sought to limit the ATS to a jurisdictional grant only that did not itself authorize any private rights of action, the Court in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), kept the door ajar for ATS lawsuits ruling (technically dicta) that Congress intended to authorize federal courts to adopt a “limited class” of cause of actions exhibiting the specificity and universal acceptance of the historical international torts (recognized by Blackstone) of assaults on ambassadors, violations of safe-conduct assurances, and piracy, situations where either no other nation’s interests are affected (piracy) or the United States owes an established duty to provide redress.

Beginning in its 2013 Kiobel v. Royal Dutch Shell decision, the Court backpedaled from Sosa’s invitation, principally through its application of the presumption against extraterritoriality to ATS claims. This presumption, the Court held in Kiobel, required dismissal of ATS claims which did not “touch and concern” the territory of the United States. The Court further limited the ATS in Jesner v. Arab Bank, No. 16-499, 584 U.S. ___ (2018), when it invoked prudential concerns about judicial power to create causes of action that complicate foreign relations and ruled that  Congress did not intend to authorize ATS claims against foreign corporations. The Court left open the question of whether a similar bar applied to ATS claims against domestic corporations.

The limitations on extraterritorial ATS claims set out in Kiobel had led the district court in Nestlé v. Doe to dismiss the case, but the Ninth Circuit revived the Doe plaintiffs’ case against U.S.-based corporations because U.S.-based financing decisions to purchase from the Ivory Coast farms was enough domestic conduct to fall within the ATS.

Although the Court granted certiorari to resolve whether domestic corporations are ever proper defendants in lawsuits brought under the ATS, Justice Thomas’s opinion for the Court never answered that question and instead returned again to the question of whether there was sufficient domestic conduct to satisfy the Court’s prior admonitions against extraterritorial application of the ATS. In a resounding and somewhat surprising 8-1 majority opinion by Justice Thomas, the Court ruled that Nestlé’s and Cargill’s corporate activity within the United States was, without more, insufficient domestic conduct to support an ATS claim for alleged child slavery in the Ivory Coast. The unqualified support for this holding from the Court’s traditionally liberal justices suggests that even if the Court’s membership changes in the future, the Court will still bar any ATS claims except those that allege domestic misconduct with a much closer connection to the United States than present in Nestlé.

The Court’s unanimity on extraterritoriality did not extend, however, to other aspects of the ATS. For instance, Justices Thomas, Gorsuch, and Kavanaugh would have gone on to hold that separation of powers limits on the Court’s power to recognize causes of action under the ATS should confine any substantive ATS claims to the three causes of action that would have been allowed at the time of the ATS’ enactment: violations of safe conducts, piracy, and protection of ambassadors. If adopted, this approach would require almost all ATS cases, whether or not there was sufficient domestic conduct, to be dismissed. But this strict approach was flatly rejected in an opinion by Justice Sotomayor (joined by Justices Kagan and Breyer) that would have allowed newer international law wrongs to be recognized.

In our view, Justice Thomas’s opinion seeking to sharply limit the recognition of a new cause of action is the better approach. As we have argued in amicus briefs to the Court, the best historical understanding of the ATS’s purpose at the time of its enactment is to allow claims where the United States as a nation has breached an established duty to provide redress to aliens for violations of international law. This shifts the focus away from whether a new norm of international law is sufficiently specific and universal and toward whether allowing a particular ATS claim serves the purpose of fulfilling U.S. international law obligations toward foreign countries. We believe there is little basis for Justice Sotomayor’s continued insistence on allowing ATS claims (such as for overseas violations of international human rights) that have no connection to the U.S. government’s actions or duties.

In another surprising turn, however, Justice Gorsuch issued an opinion (joined by Justice Alito) that squarely rejected the defendants’ argument that corporate liability for international law violations is insufficiently settled to be cognizable under the ATS. Justice Gorsuch took the view, based on the text and the original meaning of the ATS in 1789, there should likely be no distinction between corporations and natural persons for the purposes of ATS liability. This approach ignored the analytical framework required by Sosa, which asked judges to consider whether a norm is sufficiently universal under modern international law in favor of a textualist and originalist solution. Justice Gorsuch’s opinion thus suggests that at least five justices now support allowing ATS suits against U.S. corporations, as long as there is sufficient domestic wrongful conduct. As we have argued in our amicus brief in this case, we think this view is mistaken because recognizing corporations as possible tortfeasors under international law is a relatively new, still nascent, development under international law that the 1789 Congress was unlikely to have addressed at the time of the enactment. More importantly, as the Court recognized in its 2018 Jesner decision exempting foreign corporations from the ATS, there remains substantial uncertainty about the scope and nature of corporate duties under international law.

It may be that the conflicting concurrences in Nestlé on the scope of future ATS claims or corporate liability may never be resolved if the vast majority of ATS claims are dismissed as a result of the Court’s reinvigorated extraterritoriality test. But if the ATS manages to survive the Court’s limitations in Nestlé, these lingering questions deserve a better and more complete resolution than the fractured Court has so far provided.

Reprinted with permission from the July 8 issue date of the “New York Law Journal” © 2021 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.

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