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Big Chocolate’s trip to the Supreme Court could have big implications for corporations

December 1, 2020, 9:14 PM UTC

After years facing accusations over child labor, Big Chocolate took its case on Tuesday to the U.S. Supreme Court, with two companies—Nestlé USA and Cargill—arguing that they are not liable for human rights abuses committed on cocoa farms in Ivory Coast, the country that supplies much of the raw ingredient for their chocolates.

At issue is a legalistic question of whether the 18th-century Alien Tort Claims Act, or Alien Tort Statute (ATS), can be used by foreigners to sue U.S. corporations for gross violations abroad, including ones that violate international law like child slavery. That debate seems abstract on the surface, but it could have major implications for American businesses, whose labyrinthine global supply chains may reach into poor countries with patchy labor conditions far away from corporate headquarters.

The foreigners at the heart of Tuesday’s Supreme Court hearing could hardly be a starker contrast to the nine justices sitting in Washington. Six Malian former child slaves were trafficked to Ivory Coast and forced to work up to 14 hours a day, six days a week, without pay, in the backbreaking harvest of cocoa beans, according to the lawsuit brought on their behalf against the two companies. The lawsuit says they slept on the ground under armed guard to prevent them from escaping. Ivory Coast and Mali supply about 70% of the world’s cocoa beans, including large quantities to U.S. chocolate companies. In October, a report commissioned by the U.S. Department of Labor found that 1.5 million children work on cocoa farms, despite repeated promises over the years by the $100 billion industry to try to root out the practice.

On Tuesday, Nestlé and Cargill, as well as the U.S. Solicitor General, asked the Supreme Court justices to throw out the case against them, which has wound its way through years of litigation. It’s a delicate line to tread as they try to defend themselves while still appearing not to condone the horrific abuses child cocoa pickers suffer.

“We are not seeking any sort of corporate impunity,” said Neal Katyal, the attorney arguing the case for both Nestlé, the world’s biggest food services company, and Cargill, one of the biggest privately traded U.S. companies. “We are saying you have to go after individuals.” He argued that the companies’ connection to the specific farms in the case was unproved—and unprovable—and that the ATS law should be used only when the actual wrongdoers are identified.

That argument did not go over well.

Katyal admitted that former slaves could sue a slave owner under the Alien Tort Statute, or even 10 slave owners, but not a company. “So, when those 10 slave owners form a corporation, why can’t you bring a suit against a corporation?” asked Elena Kagan, one of the court’s liberal judges. “What sense does that make?” Under that argument, Kagan said, slave owners would form corporations simply in order “to remove liability from themselves.”

That might well be the case, according to Los Angeles attorney Paul Hoffman, who represented the six former child slaves in Tuesday’s hearing.

Hoffman said U.S. chocolate companies had long tolerated the use of child labor on African farms since it enabled them “to gain a competitive advantage in the U.S. market,” knowing that they could operate cheaply and face few legal risks. “These corporations set up a supply chain where they know cocoa beans are being [farmed] by child labor,” he told the justices. “They knew exactly what they were doing.”

Despite its conservative tilt, the Supreme Court justices—like the chocolate companies—seemed wary of appearing to condone child labor, repeatedly asking Katyal why corporations should not have to face legal consequences for abuses in their supply chain. “Why would we allow suits by aliens only against individuals and only for torts that occurred in the U.S.?” asked Justice Brett Kavanaugh, who was nominated to the court by President Trump in 2017.

Katyal said that since the ATS was enacted about 230 years ago, “there has not been a single case like this ever.”

The justices are expected to rule before June.

But well before then, the incoming Biden administration could choose to withdraw the U.S. government’s support for Nestlé and Cargill and allow the case to advance. That issue—unspoken during Tuesday’s hearings—might have influenced the Supreme Court justices, according to the experts who submitted legal briefs in support of the former child slaves.

“A lot of the questions were quite skeptical of the corporate position,” said Beth Van Schaack, a human rights professor at Stanford Law School, speaking to reporters on a video call after the hearing, along with other legal experts. “This court does not want to be the court that says, ‘Yes, okay, the corporations should be immune on child labor and trafficking.’”

While the case focuses only on the chocolate industry, Hoffman says the impact could extend to many other businesses, including in up to 10 pending Alien Tort Statute cases. “What is at stake is whether the ATS is still available to bring any claims against U.S. corporations for their conduct in forced labor or other issues,” he told reporters. “That is an important question.”