Courts may decide if Cargill, Nestle can be sued over child labor

WASHINGTON – The allegations are horrendous: Boys as young as 10 abducted from Mali and forced into slavery on cocoa farms in Ivory Coast, where they worked 12-14 hours a day, were whipped if not moving fast enough and then underfed and locked in crowded rooms at night.

All of it done to improve profits for farmers selling cocoa to the world's biggest chocolate makers, including Minnesota-based Cargill Inc.

In the next few months, the U.S. Supreme Court may decide if, when or how Cargill and Nestlé USA can be sued for contributing to human rights abuses under the Alien Tort Statute (ATS), a law Congress passed in 1789.

If the justices declare U.S.-based corporations immune from liability under the ATS, human rights advocates fear it could lead to increased commerce-driven abuses in other countries.

But if the justices declare them not immune, trade groups representing American companies said that could ruin global supply chains and hurt diplomatic relations.

The cocoa business is notoriously rife with problems. The majority of the world's cocoa is grown in two West African nations — Ghana and Ivory Coast — by multitudes of smallholder farmers. There are varying degrees of child labor, with some children working on their parents' farm and therefore being kept out of school, while a smaller number are forced or trafficked under false pretenses to farms where they harvest the beans.

This cheap, or free, labor can help keep prices low for commodity buyers, such as Cargill, which then sell to consumer chocolate makers like Nestlé.

Americans often see the country itself as a defender and champion of human rights. But the nation's relationship with taking on the responsibility to uphold those rights is a bit more complicated, said Christopher Roberts, a University of Minnesota professor of law.

The United States historically has supported universal human rights but stopped short of implementing an enforcement mechanism, or "duty," for its citizens and corporations to honor them in other countries, Roberts said.

"If you don't have a duty holder to protect someone's rights, you only have the words and the pious-sounding rhetoric. You don't have the guarantee that you will ever realize those human rights in practice," Roberts said. "It's only half the equation."

In asking for immunity, Cargill and Nestlé argue that Congress never intended for the courts to use the ATS to adjudicate child slavery in Ivory Coast or any other foreign country. Besides, Cargill and Nestlé say, the companies never actively participated in the inhumane bondage and did nothing to promote it.

Legal experts, trying to interpret how the court may be leaning on this ruling based on their questions during the hearing earlier this month, said it's possible that they send it back to a lower court or ask for further evidence on the issue of aiding and abetting.

For lawyers such as Jennifer Green, director of the Human Rights Advocacy Clinic at the University of Minnesota Law School, giving corporations blanket immunity for what happens in their international supply chains "would set a horrible precedent for child slavery" and other human rights abuses.

Green said companies as big and successful as Cargill have detailed knowledge of what goes on in their supply chains. They provide financing, technical advice, oversight and visit suppliers.

Asked to comment, Cargill referred the Star Tribune to John Bellinger III, a former general counsel to the U.S. State Department and now head of international practice at the law firm Arnold and Porter.

"Everybody agrees child slavery is wrong," Bellinger said in an interview. The question is whether Congress intended for the ATS to be used to curb it. If the law can be applied, then questions arise about how much Cargill knew about child slavery practiced by suppliers and how much decisionmaking in the U.S. contributed to those practices.

Bellinger filed a friend of the court brief in the case for the U.S. Chamber of Commerce. He predicted disruption for virtually all American multinationals should the justices let them be sued under the ATS.

These disruptions would include a proliferation of new "meritless" lawsuits similar to the one Cargill and Nestlé face, Bellinger wrote in the brief for the chamber. This, he wrote, creates "heavy legal and reputational burdens on companies on the basis that they conducted business with foreign actors" accused of violating human rights.

An example of those burdens came in Archer-Daniels-Midland's decision to sell its cocoa business in 2015. The original child-slavery suit, filed in 2005, named Archer-Daniels-Midland, along with Cargill and Nestlé, as aiding and abetting in child slavery.

As in so many cases that come before the high court, many specific facts in the Cargill and Nestlé case take a back seat to legal principles. The chocolate makers have battled for more than a decade to have the lawsuit, filed on behalf of the former child slaves, dismissed on technical grounds.

Regardless of their businesses, Green said, all multinational U.S. companies have a vested interest in carving out blanket immunity from any alien tort lawsuit that might be brought against them.

"If a ruling states that a U.S. corporation that does harm overseas cannot be held accountable, what does that say about the United States holding its own corporations responsible? We've actually become a bit of a safe harbor and it goes against the trends in Europe," said David Hess, a professor of business law and ethics at the University of Michigan.

Other wealthy countries, including Canada and France, have what's called mandatory "human rights due diligence" with the European Commission also signaling an intent to do so next year.

Arguments that this would open U.S. corporations up to unending litigation may be overstated, Hess said.

Hess compares due diligence standards, like those in Europe, to the civil liability of someone charged with negligence in a car crash.

"This is not strict liability. You aren't automatically liable if an instance of child labor was found in a tier 7 supplier," Hess said. "Instead, the court would ask: did you have a reasonable due diligence process?"

In the U.S., the Supreme Court has issued three decisions in the past two decades that all narrowed the reach of the ATS.

With the court adding three conservative justices during President Donald Trump's term in office, human rights advocates worry that the trend away from corporate accountability will accelerate.

While Cargill denies that it knew about child slavery among its suppliers, the company has said it does everything it can to reduce child labor in cocoa harvesting and has intensified oversight since these allegations occurred.

Cargill said it doesn't buy product from farmers who use child labor. The company also said it supports education programs for children in the Ivory Coast.

On Dec. 14, Cargill's chocolate division publicized a survey of Europeans that the company said demonstrated the willingness of consumers to pay more for "responsibly sourced brands, backed by concrete claims and compelling stories that connect the products they purchase with tangible progress on critical issues like child protection."

Cargill did not respond when asked if it had done a similar survey in the U.S.

Bellinger pointed out that companies such as Cargill "operate by U.S. standards around the world." So it is better have those companies working in markets such as the Ivory Coast than companies that are not as sensitive to human rights.

He also questioned the effectiveness of suits like the one Cargill and Nestlé face. In a statement, Nestlé expressed a similar view. "This lawsuit does not advance the shared goal of ending child labor in the cocoa industry," the company said.

But Hess said that, if the ATS is further diluted and domestic businesses are effectively shielded, it could be U.S. corporations that have the unfair competitive advantage.

"When the U.S. was the only nation that forbid its companies from bribing [officials abroad], we claimed it was unfair disadvantage," Hess said. "You could argue this is the inverse of that. U.S. companies can do things that others can't."

Green said that America's reputation for moral leadership in the world is on the line in the case.

"The U.S. holds itself out as a country that respects human rights," she said. "How can we write ourselves out of that? We have been a leader in this area. This [corporate immunity] would be a serious step backward."