US justices consider liability for companies from overseas acts

Attorneys for Nestle USA Inc. and Cargill Inc. and former child slaves fielded sharp questions Tuesday from U.S. Supreme Court justices who will decide whether the companies must face liability under a 1789 statute.

"Many of your arguments lead to results that are pretty hard to take," Justice Samuel A. Alito Jr. told Hogan Lovells US LLP partner Neal K. Katyal, an attorney for Nestle.

Asked if children who were kidnapped in Africa by agents of an American corporation and held in bondage could not sue in U.S. courts, Katyal first said those facts didn't match the situation in this case.

But he added, "I don't think your hypothetical states a violation of the Alien Tort Statute because there is no domestic injury."

Alito, an appointee of President George W. Bush, also grilled the plaintiffs' attorney, Hermosa Beach-based Paul L. Hoffman of Schonbrun Seplow Harris Hoffman & Zeldes LLP, over why the complaints do not allege the companies "actually knew about forced child labor."

"They knew they were involved in the farms, including the six former child slaves involved in the case," Hoffman responded.

The Supreme Court was hearing an appeal from a decision by the 9th U.S. Circuit Court of Appeals, which reversed U.S. District Judge Stephen V. Wilson and ruled lawsuits against Cargill and Nestle could proceed. Nestle USA Inc. v. Doe 1 et al., 19-416; Cargill Inc. v. Doe 1 et al., 19-453 (S. Ct, filed Sept. 25, 2019).

Plaintiffs in the case say they are former child slaves who were kidnapped and forced to work without pay on the cocoa farms for up to 14 hours a day. Their lawyers allege the companies offered illicit payments to the Ivory Coast producers that run the farms.

Aside from Alito, several justices voiced concern about whether the plaintiffs had established the companies were aware the farms were using forced labor.

Justice Neil M. Gorsuch, an appointee of President Donald Trump, was skeptical of the claim that accuses the companies of aiding and abetting child slavery and said that should be left to Congress.

Justice Elena Kagan, an appointee of President Barack Obama, questioned the distinction between the liability of individual slave owners and a corporation. Katyal said individual slave owners could be sued but a corporation could not.

"What sense does this make?" she asked. "Ten slave owners form a corporation specifically to remove liability from themselves, and now you're saying you can't sue the corporation?"

Kagan cited an amicus brief filed by Yale Law School Professor Oona A. Hathaway, detailing that slave ships were held liable centuries ago.

"The prohibition on slavery is one of the most well-established, longstanding, and universal human rights protections under international law," she wrote. "The development of the prohibition on slavery began with the prohibition on the slave trade and cemented into the absolute prohibition of all forms of enslavement."

Katyal, however, cited a 2018 U.S. Supreme Court decision that limited the liability of foreign corporations. Jesner v. Arab Bank, PLC, 138 S. Ct 1386 (2018).

The Trump administration sided with the companies.

Deputy Solicitor General Curtis E. Gannon said a decision allowing the lawsuit to proceed "could threaten foreign affairs interests," adding the court should not adopt a different rule for domestic corporations than for foreign companies.

Hoffman, in an apparent bid to appeal to the conservative justices who comprise a majority of the court, said the nation's founders "understood aiding and abetting liability. It was in British common law."

A ruling in the case, which drew amicus interest from business organizations and human rights groups, is expected by June.