Doe v Nestle: Will SCOTUS Grant Cert to Clarify Unresolved Issues in Kiobel?

Less than three years after the Supreme Court’s decision in Kiobel v Royal Dutch Petroleum, which held that the Alien Tort Statute is presumed not to apply to conduct on the sovereign territory of other countries, the Supreme Court is considering whether to grant certiorari in another ATS case to clarify issues left unresolved in Kiobel. The case before the Court is Doe v. Nestle, in which a divided Ninth Circuit panel allowed a decade-old ATS suit to proceed against three American companies (Nestle USA, Archer-Daniels-Midland, and Cargill) alleged to have aided and abetted acts of child enslavement by coca farmers in the Cote d'Ivoire. The defendant companies have filed for cert, arguing that the Ninth Circuit’s decision conflicts not only with Kiobel but with post-Kiobel decisions of other circuit courts. The plaintiffs respond that it is premature for the Court to review the case and deny that there is a circuit split (although plaintiffs’ counsel one year ago told the Court in a different case that a circuit conflict in fact exists that should be resolved “to eliminate the uncertainty created by these conflicts”). The cert briefing is now concluded, and the Court is scheduled to decide on January 8 whether to take the case.

If the Supreme Court grants cert, it would be its third substantive analysis of the opaque 1789 Alien Tort Statute. In 2004, in Sosa v Alvarez Machain, the Court unanimously reversed a Ninth Circuit decision allowing an ATS lawsuit for arbitrary arrest and detention, holding that the ATS should be limited to those violations of the law of nations recognized in 1789 -- assaults against ambassadors, violations of safe conduct, and piracy -- and a "modest number" of other offenses "on a norm of international character accepted by the civilized world" and defined with a similar "specificity." In Kiobel, the Court limited the ATS still further, holding that the ATS is presumed not to apply to conduct within the territory of other countries unless an ATS claim “touches and concerns” the territory of the United States “with sufficient force to displace the presumption against extraterritorial application.” The Court did not clarify what it meant by “touch and concern,” and the lower courts have struggled for the last three years to define the contours of that test.

The Ninth Circuit has historically been the most solicitous of the appellate courts towards ATS lawsuits, allowing suits against Daimler, Occidental, Chevron, and Rio Tinto each to proceed for more than a decade. (In the Rio Tinto case, Judge Kleinfeld, dissenting from a panel decision in 2011 allowing the case to proceed, accused the majority of seeking to “exercise jurisdiction over all the earth, on whatever matters we decide are so important that all civilized people should agree with us.”) Accordingly, it was not surprising that the Ninth Circuit permitted the suit against Nestle, ADM, and Cargill to go forward, notwithstanding the Kiobel decision.

The Ninth Circuit’s Decision. As I have previously described here and here, in December 2013, the Ninth Circuit reversed a 2010 decision of Judge Stephen Wilson of the Central District of California dismissing the case on the basis that corporations are not subject to liability under the ATS and moreover that plaintiffs had not alleged that the defendants acted with the specific intent to employ child slave labor. In a brief order and a subsequent longer opinion, the Ninth Circuit panel held that 1) corporations are subject to liability under the ATS; 2) it was not necessary to decide whether the ATS requires a defendant to act with specific intent or simply with knowledge, concluding that the defendants’ conduct met even the higher intent standard because their desire for increased profits “support the inference that the defendants acted with the purpose to facilitate child slavery”; and 3) plaintiffs should be permitted to amend their complaint to show that the defendants’ conduct “touches and concerns” the United States with sufficient force to displace the presumption against extraterritoriality. The panel majority rejected the defendants’ argument that Kiobel had adopted the “focus test” enunciated in Morrison v. Australian National Bank, where the Supreme Court concluded that, in considering whether conduct that occurs both inside and outside the United States violates a statute without extraterritorial application, the courts should determine whether the conduct that is the “focus of congressional concern” occurred inside or outside the United States. The panel concluded that the Supreme Court “did not explicitly adopt Morrison’s focus test, and chose to use the phrase ‘touch and concern’ rather than the term ‘focus’ when articulating the legal standard it did adopt."

Judge Rawlinson disagreed with the panel’s latter two conclusions. She said: “I do not agree with the majority that the Supreme Court “did not incorporate Morrison’s focus test.” Majority Opinion, p. 30. Why else would the Supreme Court direct us to Morrison precisely when it was discussing claims that allegedly “touch and concern” the United States? Kiobel, 133 S. Ct. at 1669. In any event, at a minimum, the Supreme Court has made clear that not any old domestic contact will do. Rather, the Supreme Court has colorfully informed us that the burden of showing sufficient domestic contact is substantial. See Morrison, 561 U.S. at 266 (“[T]he presumption against extraterritorial application would be a craven watchdog indeed if it retreated to its kennel whenever some domestic activity is involved in the case . . . .”) (emphasis in the original). Judge Rawlinson also accused the majority of “[p]iling inference upon inference” to conclude that the defendants’ goal of making profits equated with an intent to enslave children.

Defendants’ Arguments. In their cert petition, the defendants argue that the Ninth Circuit’s decision creates and/or widens circuit splits on three ATS issues: corporate liability, extraterritoriality, and mens rea for aiding and abetting. Specifically, defendants argue that the panel’s conclusion that the Supreme Court did not adopt the Morrison “focus” test conflicts with the text of the Kiobel decision and with ATS decisions by the Second and Eleventh Circuits; that the panel’s conclusion that defendants had acted with the “purpose” of facilitating child slave labor because they wanted to maximize profits conflicts with the holdings of the Second and Fourth Circuits that the pursuit of legitimate business goals is not sufficient to show specific intent to violate international law; and that the panel’s holding that corporations are subject to liability under the ATS conflicts with the Second Circuit’s original 2010 decision in Kiobel and recently reaffirmed by the Second Circuit in In re Arab Bank. (Note: Although the Arab Bank case is still pending a possible rehearing en banc in the Second Circuit on the corporate liability question, this would not seem to be a good reason for the Supreme Court to wait for the Second Circuit to consider the issue again, given that the corporate liability issue was previously fully briefed and argued to the Supreme Court.) Defendants, and their amici, argue that the Ninth Circuit’s decision, if allowed to stand, will encourage another wave of ATS litigation and make the Ninth Circuit a magnet for ATS suits.

Plaintiffs’ Opposition. Plaintiffs oppose a grant of certiorari. They argue that the Ninth Circuit’s decision creates no circuit conflicts ripe for resolution. They argue that there is no split among the circuit courts on the issue of corporate liability (despite the Second Circuit’s decision in In re Arab Bank). They contend that the panel’s mens rea ruling is “narrow” and limited only to child slavery cases and therefore does not necessarily conflict with the Second Circuit’s decision in Talisman (which involved allegations of genocide, war crimes, and crimes against humanity) and the Fourth Circuit’s decision in Aziz (which involved supply of chemicals to the Saddam Hussein regime in Iraq). And they argue that the Ninth Circuit’s holding regarding the meaning of “touch and concern” is not definitive so that it is “difficult to determine whether the Ninth Circuit will adopt an approach in conflict with the emerging tests in the Second, Fourth, and Eleventh Circuits.” Plaintiffs do not address the clear circuit split regarding whether Kiobel adopted Morrison’s “focus” test. Plaintiffs’ omission of any reference to Morrison is even more remarkable given that in December 2014, plaintiffs’ counsel -- then urging the Supreme Court to grant cert and reverse the Eleventh Circuit’s decision dismissing an ATS case against Chiquita Brands -- argued that the Ninth Circuit’s decision in Nestle rejecting the “focus” test “conflicts with the holdings in the Second and Eleventh Circuit.” In their own cert petition, the plaintiffs’ counsel argued that “Review by this Court is necessary to eliminate the uncertainty created by these conflicts for both ATS defendants and victims of human rights violations seeking redress in U.S. courts.”

In my view, Plaintiffs’ counsel were correct in 2014 when they argued that Supreme Court review is warranted to resolve the circuit conflict over the meaning of Kiobel's "touch and concern" test, and the Nestle cert petition presents a suitable vehicle to clarify the meaning of "touch and concern" and other ATS issues left unresolved by Kiobel. Without further guidance from the Court clarifying the amount of domestic contact necessary to rebut the presumption against extraterritoriality and whether and when the ATS provides jurisdiction for aiding/aiding liability, the lower courts will continue to flounder with these issues.

Note: I submitted an amicus brief in support of the defendants’ cert petition on behalf of the US Chamber of Commerce, the National Foreign Trade Council, the National Association of Manufacturers, and the Organization for International Investment.