Supreme Court Again Reins in Scope of Claims Under the Alien Tort Statute | Jones Day
On June 17, 2021, the U.S. Supreme Court decided Nestle USA, Inc. v. Doe, reaffirming that the Alien Tort Statute (“ATS”) does not permit extraterritorial causes of action and providing further guidance on when a cause of action will be deemed extraterritorial as well as two other important issues.
In Nestle, six citizens of Mali claimed they were trafficked into and enslaved on cocoa farms in the Ivory Coast. Pursuant to the ATS, these former child slaves sought to impose liability upon Nestle, Cargill, and other U.S. companies that purchase, process, and sell cocoa for allegedly aiding and abetting child slavery on those foreign cocoa farms. The U.S. chocolate processors do not own or operate the cocoa farms in question, but they do buy cocoa from those farms and provide those farms with technical and financial resources, including training, fertilizer, tools, and cash. The Ninth Circuit held that the suit was not impermissibly extraterritorial and could proceed.
The Supreme Court reversed. Writing for eight Justices, Justice Thomas reaffirmed that the ATS does not apply extraterritorially and held that plaintiffs’ claims were extraterritorial. “Nearly all the conduct that [the plaintiffs] say aided and abetted forced labor—providing training, fertilizer, tools, and cash to overseas farms—occurred in Ivory Coast.” And, he continued, “allegations of general corporate activity—like decisionmaking” in the United States—”cannot alone establish domestic application of the ATS.” (Justice Alito, the lone dissenter, thought it was premature to reach this issue and did not address it.)
The Court thus provided further, albeit modest, guidance on what sort of domestic corporate activity is insufficient to render a cause of action a permissible domestic application of the ATS. In Kiobel v. Royal Dutch Petroleum Co., the Court had held that the “mere corporate presence” of a defendant did not suffice. Nestle adds that “[p]leading general corporate activity” also does not suffice.
That holding, however, leaves open an important question that is sure to be litigated. What sort of domestic U.S. corporate conduct needs to be alleged—beyond general corporate activity but short of an injury itself—for the Court to find a domestic application of the ATS? The answer was left for another day.
While there was broad agreement on extraterritoriality, the Court was more divided on two other important issues: Are domestic corporations immune from ATS liability? And can courts create new causes of action under the ATS?
Five Justices suggested that domestic corporations may be sued under the ATS, even though the Court held just a few years ago in Jesner v. Arab Bank that foreign corporations are immune from ATS suits. Justice Gorsuch’s concurring opinion, joined by Justice Alito on this point, rejected “[t]he notion that corporations are immune from suit under the ATS” as irreconcilable “with the statutory text and original understanding.” Justice Sotomayor’s concurrence for three Justices agreed that “there is no reason to insulate domestic corporations from liability for law-of-nations violations simply because they are legal rather than natural persons.”
There were not five votes, however, for any position on whether courts can create new causes of action under the ATS. Writing for three Justices, Justice Thomas argued courts cannot “create a cause of action” under the ATS. “That job belongs to Congress, not the Federal Judiciary.” He would thus limit the ATS to “the three historical torts likely on the minds of the First Congress”—violations of safe conduct, interference with ambassadors, and piracy—as well as congressionally created causes of action like the Torture Victim Protection Act. (Justice Gorsuch’s concurrence, joined on this point by Justice Kavanaugh, took the same position for similar and additional reasons. Justice Alito noted that these opinions “make strong arguments that federal courts should never recognize new claims under the ATS,” but he would not reach this issue.)
Justice Sotomayor, writing for three Justices, disagreed with that view. In her view, courts may sometimes recognize new causes of action beyond “the three international law torts that were recognized in 1789.” Two Justices did not take any position on the issue.
For the time being, then, the Court did not shut the door on plaintiffs asking lower courts to recognize new causes of action under the ATS, at least where sufficient conduct occurred in the United States.