Doe v. Nestle ATS Case Dismissed (Again)

The long-running Alien Tort Statute suit against Nestle, Archer Daniels Midland, and Cargill for allegedly aiding and abetting child slave labor in the Cote d’Ivoire—Doe v Nestle—has once again been dismissed. In a short but carefully-structured opinion issued March 2, Judge Stephen Wilson of the Central District of California held that the plaintiffs’ claims do not “touch and concern” the United States with sufficient force to rebut the presumption against extraterritorial application of the ATS set forth in the Supreme Court’s decision in Kiobel. Although a panel of the Ninth Circuit had concluded in 2013 that the Kiobel decision had not adopted the “focus” test enunciated in Morrison v National Australia Bank, Judge Wilson holds that the Supreme Court’s 2016 decision in RJR Nabisco makes clear that the Morrison focus test does apply to the ATS and that the defendants’ alleged conduct in the United States was not the focus of Congress’s concern when it enacted the ATS.

Doe v Nestle was filed in 2005. Judge Wilson first dismissed the case in 2010 in a 161-page opinion. (For anyone looking for an analysis of almost all ATS issues, both domestic and international, in a single case, his original decision is worth reviewing.) In December 2013, however, several months after Kiobel was decided, the Ninth Circuit vacated Judge Wilson’s judgment, holding that corporations could be held liable under the ATS and that the district court had erred by adopting the Second Circuit’s requirement of a showing of specific intent to commit an offense. The Ninth Circuit further held, over the strong objection of Judge Rawlinson, that the Supreme Court had not adopted the Morrison focus test, concluding that the Supreme Court in Kiobel “chose to use the phrase ‘touch and concern’ rather than the term ‘focus’ when articulating the legal standard it did adopt." The Ninth Circuit remanded the case to the district court to allow the plaintiffs to amend their complaint to show whether “some of the activity underlying their ATS claim took place in the United States.” The defendants petitioned for interlocutory review of the Ninth Circuit’s decision in light of the circuit split over the meaning of “touch and concern” (and I filed an amicus brief in support of the defendants), but the Supreme Court denied cert.

On remand, Judge Wilson holds that the claims in the plaintiffs’ amended complaint do not satisfy the Kiobel standards. He first finds that the Ninth Circuit’s conclusion that Kiobel had not adopted the Morrison focus test “is in irreconcilable conflict” with RJR Nabisco. He notes that his conclusion is bolstered by the Fifth Circuit’s recent decision in Adhikari v Kellogg Brown and Root (which Andy Wang and I discussed here).

Judge Wilson then finds that all of the defendants’ alleged conduct in the United States constituted ordinary business operations and did not involve planning and direction of child slave labor; accordingly, such conduct did not constitute the focus of congressional concern when Congress enacted the ATS, which was the violation of the law of nations. The court concluded that it would have reached the same conclusion even if it had applied the more amorphous “touch and concern” test originally directed by the Ninth Circuit. “Plaintiffs’ allegations are essentially that Defendants are U.S. corporations (that, unsurprisingly, provide legitimate funds and supplies to their overseas operations) and the Defendants had “general corporate supervision” over subsidiaries in the Cote d’Ivoire….These allegations do not ‘touch and concern’ the United States with sufficient force to displace the presumption.

Judge Wilson’s decision seems clearly correct in light of the RJR Nabisco decision. But even without RJR Nabisco, it is hard to conclude that jurisdiction is appropriate in this case in light of the Supreme Court’s admonishment in Sosa and Kiobel that lower courts should exercise “vigilant doorkeeping” and “great caution” and “judicial restraint” when “exercising their power under the ATS.”

Plaintiffs will presumably appeal this dismissal. Depending on the panel, the Ninth Circuit may this time affirm Judge Wilson’s dismissal in light of the intervening RJR Nabisco decision, or reverse him once again, potentially drawing on the arguments adopted by the dissent in Adhikari, which continued to argue that the Morrison test does not apply to the ATS and that courts should instead consider “the identity of the defendant . . . and any significant connections the alleged violation has to the United States.” Either way, Doe v Nestle may be heading back again to the Supreme Court in a few years.