On June 17, 2021, the U.S. Supreme Court issued its judgment in Nestle USA Inc. v. Doe, a case involving six individuals from Mali who alleged that they were trafficked into Ivory Coast as children to produce cocoa. They sued Nestle USA Inc. and Cargill Inc. under the Alien Tort Statute (ATS) arguing that Nestle’s and Cargill’s purchase of cocoa from farms located in Ivory Coast, and their financial and technical support to those farms, amounted to aiding and abetting child slavery. The District Court dismissed the suit because the activities at issue took place overseas. The Ninth Circuit reversed, holding that the respondents had satisfied the domestic application standard in Kiobel because the companies’ major operational decisions occurred in the U.S. The Supreme Court reversed and remanded, holding that the respondents sought to improperly extend the Statute’s application.
Writing for the majority, Justice Thomas noted that when the issue of extraterritoriality of a statute is before the Court, it must first determine “whether the statute gives a clear affirmative indication” (RJR Nabisco) that rebuts the presumption of domestic application. The Court cited precedent to the effect that the ATS Statute does not rebut the presumption. Where (as here) the statute at issue does not apply extraterritorially, the plaintiffs must establish that “the conduct relevant to the statute’s focus occurred in the United States . . . even if other conduct occurred abroad” (id.). The Court found that nearly all the conduct that the respondents alleged as constituting aiding and abetting took place in Ivory Coast and that “mere corporate presence” is insufficient to trigger application of the statute (Kiobel). To successfully trigger application of the ATS, plaintiffs must point to domestic conduct other than general corporate activity, such as “operational decisions” because such activity is “common to most corporations.”
The Court then discussed the fact that the respondents sought “a judicially created cause of action to recover damages.” The Court cited its decision in Sosa in which it “suggested that a limited, residual amount [of federal ‘general’ common law] remained to create causes of action for violations of international law.” At that time, the Court imagined that the causes of action would relate to “violation of safe conducts, infringement of the rights of ambassadors, and piracy” and that future causes of action would likely be precluded. To deal with future decisions regarding whether to create a new cause of action, the Court developed a two-step test. First, the plaintiff must demonstrate that the defendant violated “‘a norm that is specific, universal, and obligatory’ under international law” and “‘defined with a specificity comparable to’ the three international torts that existed in 1789. Second, the plaintiffs must establish “that courts should exercise ‘judicial discretion’ to create a cause of action rather than defer to Congress.” This discretion should be exercised extraordinarily strictly. The Court focused on the second step, holding that it was “clear” that the respondents did not satisfy it. The Court held: “[o]ur decisions since Sosa, as well as congressional activity, compel the conclusion that federal courts should not recognize private rights of action for violations of international law beyond the three historical torts identified in Sosa. Moreover, “creating a cause of action to enforce international law beyond three historical torts invariably gives rise to foreign-policy concerns . . . because ‘[t]he political branches . . . have the responsibility and institutional capacity to weigh foreign policy concerns.’”
Justice Gorsuch, with Justices Alito and Kavanaugh, wrote a concurring opinion nothing that the “court granted certiorari to consider the petitioners’ argument that the ATS exempts corporations from suit” and that the Court’s decision not to address that question, but to rest its decision on other grounds was a “good thing” because “[t]he notion that corporations are immune from suit under the ATS cannot be reconciled with the statutory text and the original understanding.” He also wrote that “the time has come to jettison the misguided notion that courts have discretion to create new causes of action under the ATS.”
Justice Sotomayor, with Justices Breyer and Kagan, wrote a concurring judgment which agreed with the majority’s conclusion that the respondents failed to allege a domestic application of the Statute. They did not join in the majority’s limiting of the reach of the ATS to the three international torts recognized in 1789, writing that the majority’s approach “is unmoored from both history and precedent.” She wrote that from the enactment of the ATS, Congress “expected federal courts to identify ac¬tionable torts under international law and to provide in¬jured plaintiffs with a forum to seek redress.” She referred to the majority’s raising of foreign policy concerns and noted that foreign states “may take (and, indeed, historically have taken) umbrage at the United States’ refusal to provide redress to their citizens for international law torts committed by U.S. nationals within the United States.” This is equally a foreign policy concern.
Justice Alito dissented from the majority opinion. He felt that the issue of extraterritorial application of the Statute should not yet have been decided. Instead, the primary question was whether domestic corporations are immune from liability under the Statute. His answer to that question was that “if a particular claim may be brought under the ATS against a natural person who is a United States citizen, a similar claim may be brought against a domestic corporation.”
The case was reversed and remanded.