U.S. Supreme Court takes up Nestle, Cargill appeals over human rights claims

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WASHINGTON (Reuters) – The U.S. Supreme Court will decide whether American corporations can be sued for alleged human rights abuses occurring abroad under a 1789 law, agreeing on Thursday to hear appeals by two companies – Cargill Inc and a Nestle SA (S:NESN) subsidiary – accused of knowingly helping perpetuate slavery at Ivory Coast cocoa farms.

The two companies are asking the nine justices to reverse a lower court ruling that allowed the lawsuit, filed on behalf of former child slaves from Mali who worked on the farms, against the companies filed under the Alien Tort Statute to proceed.

The lawsuits targeted the U.S. subsidiary of Swiss-based Nestle, the world’s biggest food producer, and commodities trader Cargill, the largest privately held U.S. company.

The case concerns the 18th century U.S. law called the Alien Tort Statute that lets non-U.S. citizens seek damages in American courts in certain instances. The business community has long sought to limit corporate liability under the Alien Tort Statute.

The plaintiffs accused the companies of aiding and abetting human rights violations through their active involvement in purchasing Ivory Coast cocoa and turning a blind eye to the use of slave labor on the farms despite being aware of the practice in order to keep cocoa prices low.

A federal district court in Los Angeles dismissed the lawsuit twice, most recently in 2017. That court found that the claims were barred by recent Supreme Court decisions that have made it harder for plaintiffs to sue corporations in U.S. courts for alleged violations overseas.

The San Francisco-based 9th U.S. Circuit Court of Appeals in 2018 revived the claims, citing the allegations that the companies provided “personal spending money” to local farmers to guarantee the cheapest source of cocoa. The 9th Circuit found that the payments were akin to kickbacks and that the low price of cocoa was dependant on the child slave labor.

The U.S. Chamber of Commerce, the Coca-Cola Company (N:KO) and Chevron Corp (N:CVX) all filed briefs asking the court to hear the Nestle and Cargill appeals.

The Supreme Court in 2013 and 2018 cases has curbed the ability of plaintiffs to sue corporations in U.S. courts under the Alien Tort Statute for overseas human rights violations, but has not definitively ruled that U.S. companies can never be sued under that law.

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