fbpx
News
January 12, 2016

SCOTUS Decides Not to Review 9th Circuit’s Controversial Doe v. Nestle Decision

On January 11th, 2016, the Supreme Court announced that it would not review the Ninth Circuit’s controversial decision in Doe v. Nestle, which allowed a decade-old Alien Tort Statute suit to proceed against three American companies (Nestle USA, Archer Daniels Midland, and Cargill) that are alleged to have aided and abetted acts of child slavery by cocoa farmers in Cote d’Ivoire. The Supreme Court’s denial of certiorari suggests that the justices may not be ready to tackle another ATS case so soon after its important 2013 decision in Kiobel v. Royal Dutch Petroleum, 133 S. Ct. 1659, despite growing division among the lower courts on several key facets of the ATS.

The Ninth Circuit’s decision in Nestle created or widened circuit splits on three issues: (1) whether corporations are subject to liability under the ATS; (2) whether a corporation has the “purpose to facilitate” a human rights violation simply based on the company’s desire to maximize profits plus knowledge of another’s wrongdoing; and (3) whether courts are required to dismiss ATS suits unless the conduct that is the “focus of congressional concern”-that is, the human rights violation-occurred inside the United States.

The Ninth Circuit ruled against the corporate defendants on all three issues. Collectively, the Ninth Circuit’s errors have a compounding effect that permits ATS lawsuits to proceed against American companies for allegedly tortious acts committed outside the United States by foreign governments or persons with whom the company does business, so long as the company intended to turn a profit. Eight judges on the Ninth Circuit vigorously dissented from the court of appeals’ holding. Unfortunately, the Supreme Court’s denial of certiorari leaves the Ninth Circuit’s ruling in place for the time-being.

The Nestle case will return to the California district court, where plaintiffs will amend their complaint and the trial court will decide whether the new allegations sufficiently “touch and concern” the territory of the United States to overcome the presumption against extraterritorial application of the ATS announced in Kiobel. While the Nestlé case could still be dismissed before reaching the merits, the fact remains that the lower courts already have floundered on threshold legal questions for over a decade in the case.  Regrettably, this duration is typical of the Ninth Circuit’s approach in corporate ATS cases, many of which have been litigated for a decade or longer. Until the Supreme Court steps in to clarify the application of secondary liability under the ATS, lawsuits in the Ninth Circuit will continue to threaten substantial reputational harm and require considerable resources to defend.

Cookie Notice

By clicking “I Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

Cookie Notice

By clicking “I Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Review Settings