Supreme Court Decides Nestle USA, Inc. v. Doe

Faegre Drinker Biddle & Reath LLP

Faegre Drinker Biddle & Reath LLP

On June 17, 2021, the Supreme Court held in Nestle USA, Inc. v. Doe I, that a plaintiff seeking domestic application of the Alien Tort Statute, 28 U.S.C. § 1350 (“ATS”), must demonstrate that the facts giving rise to the cause of action center around the corporation’s domestic conduct; allegations of general corporate activity, such as “corporate decisionmaking,” are insufficient. The case was consolidated on appeal with Cargill Inc. v. Doe I, No. 19-453, an appeal from the U.S. Court of Appeals for the Ninth Circuit.

These appeals stem from lawsuits brought by former Ivory Coast child slaves under the ATS against Nestle, Inc., and Cargill, Inc. The ATS provides federal courts jurisdiction to hear claims brought “by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States[.]” The plaintiffs alleged that the defendants, both U.S. companies, facilitated human-rights abuses on the plantations where the youths worked by buying cocoa beans from cocoa plantations in Ivory Coast even though the companies knew that the plantations used child slavery.

A federal district court in California dismissed the lawsuit on the grounds that the activities alleged had no connection to the United States, except for the fact that Nestlé and Cargill are U.S. corporations. As a result, the district court concluded that the heart of plaintiffs’ claims was outside the United States, and their lawsuit could not go forward under the ATS. The U.S. Court of Appeals for the Ninth Circuit reversed and reinstated the lawsuit, reasoning that the conduct at the heart of the lawsuit involved corporate operational decisions that originated in the United States.

The Supreme Court reversed, holding that the plaintiffs could only bring a claim under the ATS when the claim is based on domestic conduct. The Court began its analysis by using its “two-step framework for analyzing extraterritorial issues.” Under this framework, the Court presumes that a statute, here the ATS, does not apply to foreign conduct. In other words, as the Court stated, the assumption is that “a statute applies only domestically,” and they “ask ‘whether the statute gives a clear, affirmative indication’ that rebuts this presumption.” The Court concluded that the ATS cannot be read to apply to foreign conduct because, although the Court has permitted courts to judicially create causes of action based on the text of the ATS, “the ATS does not expressly ‘regulate conduct’ at all, much less ‘evince a clear indication of extraterritoriality.’” The Court therefore concluded that courts are without power to “give ‘extraterritorial reach’ to any cause of action judicially created under the ATS.”

Having decided that the ATS cannot apply extraterritorially, the Court then shifted its focus to the second part of its analysis, explaining that “where the statute, as here, does not apply extraterritorially, plaintiffs must establish that ‘the conduct relevant to the statute’s focus occurred in the United States.’” The Court concluded that the plaintiffs could not meet this test because “[n]early all the conduct that they say aided and abetted forced labor — providing training, fertilizer, tools, and cash to overseas farms — occurred in Ivory Coast” rather than the United States.

Justice Thomas authored the opinion of the Court, which was joined by Chief Justice Roberts and Justices Breyer, Sotomayor, Kagan, Gorsuch, Kavanaugh, and Barrett.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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