By Lawrence Hurley
WASHINGTON (Reuters) - The U.S. Supreme Court on Thursday threw out a lawsuit accusing Cargill Inc and a Nestle SA (SIX:NESN) subsidiary of knowingly helping perpetuate slavery at Ivory Coast cocoa farms, but sidestepped a broader ruling on the permissibility of suits accusing American companies of human rights violations abroad.
The 8-1 ruling authored by Justice Clarence Thomas reversed a lower court decision that had allowed the lawsuit, brought on behalf of former child slaves from Mali who worked at the farms, filed against the companies in 2005 to proceed.
The court ruled the claim could not be brought under the Alien Tort Statute, which lets non-U.S. citizens seek damages in American courts in certain instances, because the plaintiffs did not show that any of the relevant conduct took place within the United States.
"Nearly all the conduct that they say aided and abetted forced labor - providing training, fertilizer tools, and cash to overseas farms - occurred in Ivory Coast," Thomas wrote.
The business community has long sought to limit corporate liability under this law.
"Nestle 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," a Nestle spokesperson said.
A Cargill spokesperson said the company is committed to keeping child labor out of the cocoa supply chain.
"We do not tolerate the use of child labor in our operations or supply chains and we are working every day to prevent it," the spokesperson said.
Paul Hoffman, a lawyer for the plaintiffs, said the ruling "has delayed our clients' long quest for justice." But Hoffman added that he intends to refile the lawsuit with more detailed allegations on conduct that he said took place in the United States.
"It is significant that the court's ruling rejected the most extreme arguments for limiting human rights cases," Hoffman said.
The justices stopped short of definitively deciding the question of whether U.S. companies can ever be sued under the 1789 law. Cargill and Nestle had asked the court to bar such lawsuits in all circumstances.
The lawsuits targeted the U.S. subsidiary of Swiss-based Nestle, the world's biggest food producer, and commodities trader Cargill, one of the largest privately held U.S. companies.
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 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 upon the child slave labor.
The U.S. Chamber of Commerce and other business interests backed the two companies in the case.
The Supreme Court in 2013 and 2018 cases limited the ability of plaintiffs to sue corporations in U.S. courts under the Alien Tort Statute for overseas human rights violations. The court said in those rulings that there needed to be a strong connection between the alleged conduct and actions that took place in the United States.