Conservatives dissent in 9th Circuit case accusing companies of human rights violations

Over the objection of eight Republican-appointed judges, the 9th U.S. Circuit Court of Appeals decided Friday not to reconsider its holding that domestic corporations may be subject to federal tort liability for human rights violations mostly occurring abroad.

Principal among the defendants are two conglomerate chocolatiers, Nestle USA Inc., and Cargill Inc. Co., which judges on the original circuit panel claimed "effectively control cocoa production in the Ivory Coast," where much of the world's chocolate originates.

Plaintiffs in the matter are former child slaves who were kidnapped and forced to work on West African cocoa farms without pay, for up to 14 hours per day. The plaintiffs sued Nestle and Cargill under the Alien Tort Statute, alleging the corporate defendants offered illicit payments and incentives to Ivory Coast producers operating the farms.

In October, a 9th Circuit panel concluded the plaintiffs had pleaded facts sufficient to survive the pleadings stage. On Friday, conservative-leaning judges critiqued that holding, finding it unduly exposed corporate defendants to liability the statute doesn't prescribe.

"The Supreme Court has told us that the Alien Tort Statute must be narrowly construed and sparingly applied," read the dissent penned by Judge Mark J. Bennett, which Judges Jay S. Bybee, Consuelo M. Callahan, Carlos T. Bea, Sandra S. Ikuta, and Ryan D. Nelson joined in full. "Instead, we have adopted a broad and expansive view of the statute that largely disregards recent Supreme Court precedent."

The dissenters' primary qualm was that, following the rationale from last year's U.S. Supreme Court ruling in Jesner v. Arab Bank, corporations were not intended to be defendants in suits brought under the Alien Tort Statute, legislation passed by Congress in 1789 as part of the Judiciary Act.

Jesner specifically dealt with, and restricted the liability of, a foreign corporation, but Bennett concluded the high court's rationale extended to companies both foreign and domestic.

"Applying the correct standard post-Jesner, corporations (foreign or not) are clearly not proper [Alien Tort Statute] defendants," Bennett wrote.

Paul L. Hoffman, a partner with Schonbrun Seplow Harris & Hoffman LLP who represents the plaintiffs, said in an interview Friday that the dissenters infer a conclusion -- corporations' categorical exclusion from liability -- that does not necessarily follow from the high court's recent opinion.

"If the Supreme Court had meant to say that, they would have; they could have saved everyone a lot of time," Hoffman said. "That's not what Jesner decided."

"The whole idea of corporations is that they limit liability of shareholders and individuals," Hoffman added. "From very early days, you could obviously sue corporations for torts."

The original panel ruling, which was filed several months after Jesner, also found no authority proscribing corporate liability under the Alien Tort Statute, which allows federal court jurisdiction to punish certain violations of human rights laws and other customary international norms.

"Since the prohibition of slavery is 'universal,' it is applicable to all actors, including corporations," Senior Judge Dorothy W. Nelson wrote in the three-judge panel's opinion.

Aside from the issue of corporate liability, Bennett's dissent alternatively reasoned that the plaintiffs hadn't shown how alleged human rights violations in West Africa sufficiently connected with the United States. Judges Milan D. Smith Jr., and Bridget S. Bade concurred with this portion of the dissent.

"The perpetrators... are slavers and cocoa farmers abroad," the dissenters continued, emphasizing that, in their view, the plaintiffs did not "allege that any of the named defendants engaged in slavery or are associated with any of the actual perpetrators beyond their status as buyers of cocoa."

In Nelson's view, sufficient connections between the defendants and the pervasive system of forced labor at cocoa farms existed to merit further litigation.

"Not content to rely on market forces to keep costs low, defendants have taken steps to perpetuate a system built on child slavery to depress labor costs," Nelson wrote.

With six new Trump-appointed members on a circuit long deemed resolutely liberal, the conservative-leaning chorus in full court votes has intensified. Last month, nine Republican-nominated judges criticized their colleagues for not blocking an employment discrimination suit against a Catholic elementary school. Biel v. St. James School, 2019 DJDAR 5725 (9th Cir. June 25, 2019).

A majority of the circuit's active judges -- who now number 27 -- must combine to trigger en banc review.

Nestle is represented by appellate veterans from Gibson, Dunn & Crutcher LLP and Hogan Lovells US LLP, including Theodore J. Boutrous Jr., Abbey Hudson, Theodore B. Olson, and Neal K. Katyal.

A spokesperson for Nestle responded via email to stress that "[f]orced child labor is unacceptable and has no place in our supply chain," and to reference the company's "explicit policies against it."

"In bringing such lawsuits, the plaintiffs' class action lawyers are targeting the very organizations trying to fight forced labor," the company statement added.