9th Circuit skeptical law makes US company liable for foreign workplace harms

With the Supreme Court growing less amenable to human rights suits brought by foreign plaintiffs under the Alien Tort Statute, a collection of humanitarian groups is hoping to invoke a similar but lesser-known statute -- the Trafficking Victims Protection Reauthorization Act, or TVPRA -- to combat alleged abuses in global supply chains.

In an appeal considering a matter of first impression, counsel for a group of Cambodian plaintiffs argued to a panel of the 9th U.S. Circuit Court of Appeals Friday the TVPRA should make liable a California-based seafood distributor for purchasing fish from Thai companies that allegedly lured the plaintiffs into slave-like labor conditions. The distributor's attorney, also representing the Thai employers, argued the matter was essentially a foreign wage dispute not meant for resolution in U.S. courts.

The underlying suit also included Alien Tort Act claims, but that 1789 law -- conceived with piracy and ambassadors in mind and sparingly referenced before 1980 -- has gradually received high court disfavor after becoming a common method of bringing disputes over foreign harms into federal court.

The extended argument session addressed several convoluted, interlocking issues, but the panel comprising Circuit Judges Marsha Berzon, Ryan Nelson and Bridget Bade, the latter two recent Trump appointees, converged on the question of how involved the California distributor was in the workings of the Thai companies that arranged and maintained the alleged peonage. The TVPRA makes liable for civil penalties a party that "knowingly benefits ... from participation in a venture" involving human trafficking or forced labor.

For the plaintiffs, Paul Hoffman, of Schonbrun Seplow Harris & Hoffman LLP, argued the California-headquartered Rubicon Resources LLC was intimately familiar with the operations of the Thai businesses, chiefly co-defendant Phatthana Seafood Co. Ltd., and depended on its manipulated workforce, making Rubicon a suitable TVPRA defendant.

"The Phatthana Group and the Rubicon group have had a longstanding venture to process, market, and sell seafood products in the United States; ... that venture at least in part depended on the exploitation of workers in violation of the Trafficking Victims Protection Reauthorization Act," Hoffman argued. "They were working hand-in-glove on all aspects of the venture."

Both Bade and Nelson skeptically questioned whether Rubicon's purchase of Phatthana seafood amounted to their "participation" in any trafficking the Thai company might have undertaken.

"What about somebody who provides accounting services to Phatthana, or delivers paper, or janitorial services, are they part of this venture to engage in human trafficking?" Bade asked Hoffman. "I mean, how far do we go with that?"

"Buying shrimp, no matter how much you're buying, is that participation in the venture?" Nelson added. "Isn't the question just, 'Look, buying can't be participation in a venture?'"

District Judge John Walter reasoned similarly in 2017 when granting the defendants summary judgment. He concluded "participation" in a TVPRA violation required "some action to operate or manage the venture," something he said the plaintiffs hadn't demonstrated as to Rubicon.

On Friday Hoffman argued Congress intended the statute's terms to have a "general, broader meaning" and further asserted Rubicon was more closely related to Phatthana's operations in Thailand than a typical foreign purchaser.

"There is evidence in this record that [Rubicon] knew or should have known about this conduct, and that it is central to this business model," he said. Ratha v. Phatthana Seafood Co., Ltd., 18-55041 (9th Cir., filed Jan. 10, 2018).

Several international human rights organizations mustered to support the plaintiffs' appeal, writing in amicus briefs evidence of human trafficking and forced labor in the Thai seafood industry is "overwhelming." The TVPRA has become a more critical resort for such groups, as the Supreme Court has lately pared back the Alien Tort Statute's application to overseas harms.

Arguing for the defendants, Sheppard, Mullin, Richter & Hampton LLP partner Bryan D. Daly echoed concerns Supreme Court justices have arrayed against a broad interpretation of statutes purporting to provide relief to foreign plaintiffs.

"If [the TVPRA] is read the way that plaintiffs want it to be read, it will explode this statute," Daly argued.