Big Chocolate wins its child-labor case in Supreme Court

The ruling seemed to narrow the prospects of a lawsuit brought by six Malian boys, which has wound its way through various federal courts for more than 15 years. In it, the boys—now in their 20s—report being forcibly trafficked to cocoa farms in Ivory Coast, where they worked long hours picking beans and sleeping under armed guard to prevent them from escaping, and, in return, were paid little beyond basic food.

At stake in the Supreme Court was whether an 18^th-century law called the Alien Tort Statute, or ATS, could be used to hold multinationals to account for rampant labor abuses committed in some parts of their supply chain—including those occurring far away, and out of sight of top executives.

In the end, the justices decided companies were not, in fact, legally liable for what happened in Ivory Coast—even though it appeared to constitute a form of child slavery, which is outlawed internationally. The key weakness, they said, was that the case failed to show that a lot of the business decisions leading to child labor happened on U.S. soil.

“Nestlé USA and Cargill are U.S.-based companies that purchase, process, and sell cocoa,” said the decision, written by Justice Clarence Thomas. “They did not own or operate the farms in Ivory Coast. But they did buy cocoa from farms located there,” he wrote. “They also provided those farms with technical and financial resources—such as training, fertilizer, tools, and cash—in exchange for the exclusive right to purchase cocoa.” Even so, he argued that the ATS could not be used outside the U.S.

To child-labor activists who have fought giant chocolate companies for years, the ruling came as a blow.

“They decided on the budgets, they decided on the planning, on the business aspects—all those things were done from the U.S.,” said Terry Collingsworth, executive director of International Rights Advocates in Washington, which brought the lawsuit in 2005 against the two companies on behalf of the six Malian boys. He told Fortune his legal team intended rewriting the lawsuit, arguing that much of Nestlé and Cargill’s decisions made in the U.S. paved the way to the use of child slaves in Ivory Coast. “We see a path out, and we are going to pursue it,” he said.

More than 1 million kids

Chocolate giants face mounting bad publicity over the harsh treatment on African cocoa farms. Even though the world’s biggest chocolate companies agreed in a nonbinding deal in 2000 to eliminate child labor, the numbers have steadily grown—because, say activists, the economic advantages of using underage farmworkers are simply too attractive to multinational companies, especially in countries with minimal oversight.

Last October, a report commissioned by the U.S. Department of Labor estimated that about 1.56 million children, some as young as five, worked picking cocoa beans in Ivory Coast and Ghana, which supplies a good portion of the world’s cocoa. Astonishingly, the number of child cocoa workers had increased about 14% since the previous estimates a decade earlier.

As such, Big Chocolate had to tread a fine line when it petitioned the Supreme Court last year, arguing that they could not be sued under the ATS.

Nestlé USA said in a statement after Thursday’s ruling that the company “never engaged in the egregious child labor alleged in this suit, and we remain unwavering in our dedication to combating child labor in the cocoa industry.” It said it would continue focusing on “the root causes” of child labor, investing millions in education programs in the cocoa region.

No denial of “the horrors”

In a hearing about the case last December, the companies stressed that while they condemned all forms of slavery, but were not responsible for it. “We are not seeking any sort of corporate impunity,” the companies’ lead attorney Neal Katyal argued. “We are saying you have to go after individuals.”

Collingsworth told Fortune he still hopes that children toiling in the cocoa plantations might still find redress in U.S. courts, especially with a growing chorus of consumer and activist groups assailing the conditions in producing chocolate. “None of the Justices and none of parties deny that children like the plaintiffs continue to suffer the horrors of trafficking and slavery,” Collingsworth said.

He says he and other human-rights lawyers will work to find alternative paths to justice, other than the 1789 Alien Tort Statute. In February, he filed a new lawsuit on behalf of child slaves on cocoa farms in Ivory Coast, this time against Nestlé, Cargill, Barry Callebaut, Mars, Olam, Hershey and Mondelēz. The case, in federal court in Washington D.C., was brought under a 2017 law designed to eradicate human trafficking.