John Doe v. Nestle, S.A.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN DOE, I; JOHN DOE, II; JOHN No. 17-55435
DOE, III; JOHN DOE, IV; JOHN DOE,
V; and JOHN DOE, VI, each D.C. No.
individually and on behalf of 2:05-cv-05133-
proposed class members, SVW-MRW
Plaintiffs-Appellants,
v. ORDER AND
AMENDED
NESTLE, S.A.; NESTLE USA, INC.; OPINION
NESTLE IVORY COAST; CARGILL
INCORPORATED COMPANY; CARGILL
COCOA; CARGILL WEST AFRICA,
S. A.; ARCHER DANIELS MIDLAND
COMPANY,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted June 7, 2018
Pasadena, California
Filed October 23, 2018
Amended July 5, 2019
2 DOE V. NESTLE
Before: Dorothy W. Nelson and Morgan Christen, Circuit
Judges, and Edward F. Shea,* District Judge.
Order;
Dissent to Order by Judge Bennett;
Opinion by Judge D.W. Nelson;
Concurrence by Judge Shea
SUMMARY**
Alien Tort Statute
The panel filed (1) an order amending its opinion,
denying a petition for panel rehearing, and denying on behalf
of the court a petition for rehearing en banc; and (2) an
amended opinion reversing the district court’s dismissal of
claims of aiding and abetting slave labor in violation of the
Alien Tort Statute.
In its amended opinion, the panel reversed the district
court’s dismissal, which was based on the district court’s
conclusion that the complaint, brought by former child slaves
who were forced to work on cocoa farms in the Ivory Coast
against manufacturers, purchasers, and retail sellers of cocoa
beans, sought an impermissible extraterritorial application of
the Alien Tort Statute. In a two-step analysis, the panel
*
The Honorable Edward F. Shea, United States District Judge for the
Eastern District of Washington, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
DOE V. NESTLE 3
concluded that the ATS is not extraterritorial, but, looking to
the statute’s focus, the complaint alleged a domestic
application of the statute in defendants’ funding of child
slavery practices. The panel concluded that plaintiffs’
allegations painted a picture of overseas slave labor that
defendants perpetuated from headquarters in the United
States, and this narrow set of domestic conduct was relevant
to the ATS’s focus. The panel remanded to allow plaintiffs
to amend their complaint to specify, in light of Jesner v. Arab
Bank, 138 S. Ct. 1386 (2018), whether aiding and abetting
conduct that took place in the United States was relevant to
the domestic corporations named as defendants. The panel
held that plaintiffs had Article III standing to bring their
claims because they alleged concrete and redressable injury
that was fairly traceable to the challenged conduct of one
defendant, and their allegations against another defendant
were sufficient to allow a final opportunity to replead.
District Judge Shea concurred in the result.
Judge Bennett, joined by Judges Bybee, Callahan, Bea,
Ikuta, and R. Nelson; and joined by Judges M. Smith and
Bade as to Part II, dissented from the denial of rehearing en
banc. In Part I, Judge Bennett wrote that, after Jesner,
corporations, foreign or domestic, are not proper ATS
defendants. In Part II, Judge Bennett wrote that plaintiffs’
claims were impermissibly exterritorial because the
allegations in the complaint were clear that all the relevant
misconduct took place in Côte d’Ivoire, not the United States.
4 DOE V. NESTLE
COUNSEL
Paul L. Hoffman (argued), John Washington, and Catherine
Sweetser, Schonbrun Seplow Harris & Hoffman LLP, Los
Angeles, California; Terrence P. Collingsworth, International
Human Rights Advocates, Washington, D.C.; for Plaintiffs-
Appellants.
Theodore J. Boutrous, Jr. (argued), Abbey Hudson, Matthew
A. Hoffman, and Perlette Michèle Jura, Gibson Dunn &
Crutcher LLP, Los Angeles, California; Christopher B. Leach
and Theodore B. Olson, Gibson Dunn & Crutcher LLP,
Washington, D.C.; Colleen Sinzdak, David M. Foster, Craig
A. Hoover, and Neal Kumar Katyal, Hogan Lovells US LLP,
Washington, D.C.; for Defendant-Appellee Nestlé USA, Inc.
Andrew John Pincus (argued) and Kevin S. Ranlett, Mayer
Brown LLP, Washington, D.C.; Lee H. Rubin, Mayer Brown
LLP, Mayer Brown LLP, Palo Alto, California; for
Defendant-Appellee Cargill Incorporated.
Marc B. Robertson and Richard A. Stamp, Washington Legal
Foundation, Washington, D.C., for Amicus Curiae
Washington Legal Foundation.
DOE V. NESTLE 5
ORDER
The Opinion filed on October 23, 2018, is amended as
follows:
IV. Plaintiffs Have Standing to Bring Their Claims
Defendants argue that plaintiffs lack
Article III standing to bring their claims. To
have standing, plaintiffs must allege “[(1)] a
concrete and particularized injury [(2)] that is
fairly traceable to the challenged conduct,
[(3)] and is likely to be redressed by a
favorable judicial decision.” Consumer Fin.
Prot. Bureau v. Gordon, 819 F.3d 1179, 1187
(9th Cir. 2016), cert. denied, (quoting
Hollingsworth v. Perry, 570 U.S. 693, 704
(2013)).
Plaintiffs easily satisfy the first and third
requirements. Defendants do not dispute that
plaintiffs suffered concrete injury by being
abused and held as child slaves. In addition,
plaintiffs’ injuries are redressable because
when “one private party is injured by another,
the injury can be redressed in at least two
ways: by awarding compensatory damages or
by imposing a sanction on the wrongdoer that
will minimize the risk that the harm-causing
conduct will be repeated.” Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 127
(1998).
6 DOE V. NESTLE
Plaintiffs also satisfy the traceability
requirement as to Cargill because they raise
sufficiently specific allegations regarding
Cargill’s involvement in farms that rely on
child slavery. Baloco ex rel. Tapia v.
Drummond Co., 640 F.3d 1338, 1343 (11th
Cir. 2011); Bennett v. Spear, 520 U.S. 154,
169 (1997) (Article III traceability
requirement “does not exclude injury
produced by determinative or coercive effect
upon the action of someone else.”). Plaintiffs’
allegations against Nestle are far less clear,
though part of the difficulty is plaintiffs’
reliance on collective allegations against all or
at least multiple defendants. Notwithstanding
this deficiency, the allegations are sufficient
to at least allow plaintiffs a final opportunity
to replead. On remand, plaintiffs must
eliminate the allegations against foreign
defendants and specifically identify the
culpable conduct attributable to individual
domestic defendants.
With the Amended Opinion, a majority of the panel voted
to deny the petition for panel rehearing. Judges D. Nelson
and Christen voted to deny the petition for panel rehearing,
and Judge Shea voted to grant the petition for panel
rehearing.
Judge Christen voted to deny the petition for rehearing en
banc, and Judge D. Nelson so recommended. Judge Shea
recommended granting the petition for rehearing en banc.
The full court was advised of the petition for rehearing en
banc. A judge of the court requested a vote on whether to
DOE V. NESTLE 7
rehear the matter en banc. The matter failed to receive a
majority of the votes of non-recused active judges in favor of
en banc consideration. Fed. R. App. P. 35. No further
petitions for rehearing will be entertained.
The petition for rehearing and petition for rehearing en
banc are DENIED. Judge Bennett’s dissent from the denial
of rehearing en banc is filed concurrently herewith. Judges
Wardlaw, Watford, Owens, Friedland, Miller, and Collins did
not participate in the deliberations or vote in this case.
BENNETT, Circuit Judge, with whom BYBEE,
CALLAHAN, BEA, IKUTA, and R. NELSON, Circuit
Judges, join, and with whom M. SMITH and BADE, Circuit
Judges, join as to Part II, dissenting from the denial of
rehearing en banc:
The Supreme Court has told us that the Alien Tort Statute
(“ATS”) must be narrowly construed and sparingly applied,
in line with its original purpose: “to help the United States
avoid diplomatic friction” by providing “a forum for
adjudicating that ‘narrow set of violations of the law of
nations’ that, if left unaddressed, ‘threaten[ed] serious
consequences’ for the United States.” Jesner v. Arab Bank,
PLC, 138 S. Ct. 1386, 1410 (2018) (Alito, J., concurring)
(alteration in original) (quoting Sosa v. Alvarez-Machain,
542 U.S. 692, 715 (2004)). The Court has given us a roadmap
to determine whether artificial entities like corporations can
be liable for ATS violations. And the Court has made it
equally clear that the ATS reaches only domestic
conduct—where a claim “seek[s] relief for violations of the
law of nations occurring outside the United States,” the claim
8 DOE V. NESTLE
is “barred.” Kiobel v. Royal Dutch Petroleum Co. (Kiobel II),
569 U.S. 108, 124 (2013). Violations of the law of
nations—like genocide, slavery, and piracy—are horrific. But
in its zeal to sanction alleged violators, the panel majority has
ignored the Court’s ATS roadmap. First, the panel majority
has failed to properly analyze under Jesner whether a claim
against these corporate defendants may proceed. And second,
the panel majority has compounded that error by allowing
this case to move forward notwithstanding that Defendants’
alleged actionable conduct took place almost entirely abroad,
turning the presumption against extraterritoriality on its head.
Jesner changed the standard by which we evaluate
whether a class of defendants is amenable to suit under the
ATS. Corporations are no longer viable ATS defendants
under either step one or step two of the two-step approach the
Court announced in Sosa, as applied in Jesner. The panel
majority, however, fails to apply Jesner’s controlling analysis
and applies an incorrect theory of ATS corporate liability
even as the Supreme Court suggests that we reach the
opposite conclusion.
The panel majority also all but ignores the Court’s
instruction that an ATS claim must “touch and concern the
territory of the United States . . . with sufficient force to
displace the presumption against extraterritorial application”
of the ATS. Kiobel II, 569 U.S. at 124–25. Plaintiffs’
allegations—based almost entirely on violations of the law of
nations that allegedly occurred in Africa—are wholly
insufficient to state a claim.
The Supreme Court has instructed that we must “exercise
‘great caution’ before recognizing new forms of liability
under the ATS.” Jesner, 138 S. Ct. at 1403 (quoting Sosa,
DOE V. NESTLE 9
542 U.S. at 728). We should have heeded this instruction and
taken this case en banc to hold that these corporations may
not be sued under the ATS and to make clear that the
presumption against extraterritoriality still applies in the
Ninth Circuit.1 Thus, I respectfully dissent from the denial of
rehearing en banc.
1
Although not within the scope of Defendants’ petitions for rehearing
en banc, I believe that it was error for this court to conclude in Doe I v.
Nestle USA, Inc. (Nestle I), 766 F.3d 1013 (9th Cir. 2014) that aiding-and-
abetting liability is available under the ATS. As the government
previously argued in another ATS case, “the adoption of aiding and
abetting liability is a ‘vast expansion of federal law’ that federal courts
must eschew in the absence ‘of congressional direction to do so.’” Brief
for the United States as Amicus Curiae in Support of Petitioners, at 8, Am.
Isuzu Motors, Inc. v. Ntsebeza, 553 U.S. 1028 (2008) (No. 07-919), 2008
WL 408389, at *8 (hereinafter “Br. for the U.S. as Amicus Curiae”)
(quoting Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver,
N.A., 511 U.S. 464, 183 (1994)). Thus, the fact that the ATS provides for
primary liability does not, in the absence of further congressional action,
create secondary liability. See Cent. Bank, 511 U.S. at 182 (“[W]hen
Congress enacts a statute under which a person may sue or recover
damages from a private defendant for the defendant’s violation of some
statutory norm, there is no general presumption that the plaintiff may also
sue aiders and abettors.”).
Just as Congress has not extended the ATS to corporations (and, in
fact, expressly limited the Torture Victim Protection Act to individual
liability, see infra Part I.C), it has not created ATS aiding-and-abetting
liability either. Courts, including our own, that have permitted plaintiffs
to bring claims for aiding-and-abetting ATS violations have, in the words
of the Solicitor General, “veered far off course under the ATS.” Br. for the
U.S. as Amicus Curiae at 10.
10 DOE V. NESTLE
I. After Jesner, Corporations Are Not Proper ATS
Defendants.
Just last term, the Supreme Court held in Jesner that the
ATS’s jurisdictional grant does not extend to foreign
corporations. 138 S. Ct. at 1407. This appeal presents the
question that the Supreme Court expressly left open in
Jesner: can corporations ever be proper ATS defendants? The
panel majority avoided this issue by relying on discredited
circuit precedent. Applying the correct standard post-Jesner,
corporations (foreign or not) are clearly not proper ATS
defendants. It was error for the panel majority to hold
otherwise, and we should have corrected that error en banc.
To determine whether to recognize a cause of action
under the ATS, we look to Sosa, which involves a “two-step
process.” Jesner, 138 S. Ct. at 1409 (Alito, J., concurring).
“First, a court must determine whether the particular
international-law norm alleged to have been violated is
‘accepted by the civilized world and defined with a
specificity comparable to the features of the 18th-century
paradigms.’” Id. at 1419 (Sotomayor, J., dissenting) (quoting
Sosa, 542 U.S. at 725). “Second, if that threshold hurdle is
satisfied, a court should consider whether allowing a
particular case to proceed is an appropriate exercise of
judicial discretion.” Id. at 1420. Corporate liability fails at
both steps.
In Sarei v. Rio Tinto, PLC, 671 F.3d 736, 760 (9th Cir.
2011) (en banc), vacated and remanded, 569 U.S. 945 (2013),
we held that if a norm of conduct is sufficiently established
to give rise to ATS liability, the only relevant liability
question is whether the defendant is capable of violating the
norm. Although the Supreme Court vacated Sarei in light of
DOE V. NESTLE 11
Kiobel II, we doubled down on Sarei’s erroneous reasoning
in Doe I v. Nestle USA, Inc. (Nestle I), 766 F.3d 1013 (9th
Cir. 2014), when we held that where there exists a “universal
and absolute” norm of conduct that is “applicable to ‘all
actors,’” any accused violator is subject to jurisdiction of the
United States courts under the ATS. Id. at 1022 (quoting
Sarei, 671 F.3d at 760). As far as I am aware, we have never
analyzed the corporate liability issue under Sosa step two.
The panel majority has neglected to do so here.
Judge Bea persuasively explained why the Sarei/Nestle I
approach to corporate liability was inconsistent with
established Supreme Court precedent, see Doe I v. Nestle
USA, Inc., 788 F.3d 946 (9th Cir. 2015) (Bea, J., dissenting
from the denial of rehearing en banc) (“Nestle I Dissental”),
and I do not repeat those arguments here. After Jesner,
though, there should be no serious doubt that our court’s
approach to this issue is incomplete, and the en banc court
should have stepped in to correct the panel majority’s failing.
A. Nestle I is no longer good law on the corporate-
liability issue.
In holding that foreign corporate defendants are
categorically not amenable to suit under the ATS, Jesner was
explicit that federal courts can and must—contrary to
Nestle I—determine whether certain categories of defendant
are beyond the reach of an ATS claim. See Jesner, 138 S. Ct.
at 1402–03. The panel majority’s application of Nestle I to
the corporate defendants here, post-Jesner, was at best
incomplete and at worst simply wrong. In addition, while
Jesner’s holding was limited by its terms to foreign
corporations, five justices in Jesner authored or joined
12 DOE V. NESTLE
opinions that called into serious doubt the validity of ATS
claims against domestic corporations.
1. We should have taken this case en banc to
expressly reject Nestle I’s approach to
corporate liability questions.
First, Jesner directly conflicts with the Nestle I
approach—in particular, our holding that “there is no
categorical rule of corporate immunity or liability” under the
ATS. Nestle I, 766 F.3d at 1022 (citing Sarei, 671 F.3d at
747). In Jesner, the Court explained that its “general
reluctance to extend judicially created private rights of action
. . . extends to the question whether the courts should exercise
the judicial authority to mandate a rule that imposes liability
upon artificial entities like corporations.” Jesner, 138 S. Ct.
at 1402–03. Justice Kennedy’s opinion for the Court
answered that question in the negative for foreign
corporations, and in the process invited the lower courts to
consider whether the question should be answered similarly
as to domestic corporations. See id. at 1402.
Here, the panel majority correctly acknowledged that
Jesner abrogated Nestle I to the extent that Nestle I permitted
an ATS suit against foreign corporate defendants. Doe v.
Nestle, S.A. (Nestle II), 906 F.3d 1120, 1124 (9th Cir. 2018).
But the panel majority’s subsequent conclusion that Jesner
left undisturbed this court’s treatment of domestic
corporations under the ATS, id., was incorrect. Jesner’s
holding, to be sure, was limited to foreign corporations, but
by acknowledging the existence of categorical rules
restricting the ATS liability of certain classes of corporate
actors, Jesner requires us to discard the approach we adopted
in Sarei (and re-embraced in Nestle I), which focused entirely
DOE V. NESTLE 13
on the question whether a norm of conduct is sufficiently
universal to support an ATS claim. Jesner thus confirmed
Judge Bea’s dissental’s conclusion in Nestle I: “there must be
a meaningful inquiry—not a mere labeling of norms as
‘categorical’”—into whether the ATS supports liability
against a given defendant. Nestle I Dissental, 788 F.3d at 955.
Not only did the panel majority fail to conduct a meaningful
inquiry into corporate liability, it inexplicably failed to
conduct any inquiry at all: “Jesner did not eliminate all
corporate liability under the ATS, and we therefore continue
to follow Nestle I’s holding as applied to domestic
corporations.” Nestle II, 906 F.3d at 1124. The en banc court
should have corrected that very clear error.
2. Five justices in Jesner strongly suggested
that the ATS forecloses corporate liability.
Although Jesner did not explicitly rule out domestic
corporate ATS liability, there is no basis for the panel
majority’s conclusion that Jesner preserved our court’s status
quo. Justice Kennedy’s three-justice plurality opinion does
not mince words in arguing that “[t]he international
community’s conscious decision to limit the authority of . . .
international tribunals to natural persons counsels against a
broad holding that there is a specific, universal, and
obligatory norm of corporate liability under currently
prevailing international law.” 138 S. Ct. at 1401 (plurality
op.).
Justice Alito’s view is similar:
Federal courts should decline to create federal
common law causes of action under Sosa’s
second step whenever doing so would not
14 DOE V. NESTLE
materially advance the ATS’s objective of
avoiding diplomatic strife. . . . All parties
agree that customary international law does
not require corporate liability as a general
matter. But if customary international law
does not require corporate liability, then
declining to create it under the ATS cannot
give other nations just cause for complaint
against the United States.
Id. at 1410 (Alito, J., concurring) (citation omitted).
Corporate liability would “not materially advance the ATS’s
objective of avoiding diplomatic strife.” Id.Finally, Justice Gorsuch would have gone even further
than the plurality and held that the courts lack authority to
create any new causes of action under the ATS other than
those recognized by the First Congress, which would not
include the claims that Plaintiffs here raise. Id. at 1412–13
(Gorsuch, J., concurring).
In short, five justices signaled in Jesner that they would
hold that corporations are not subject to the ATS. We should
have revisited en banc the panel majority’s holding that
Jesner had no impact at all on this issue.2
2
The panel majority’s application of Nestle I in this case was based
on Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en banc), in
which we held that “where the reasoning or theory of our prior circuit
authority is clearly irreconcilable with the reasoning or theory of
intervening higher authority, a three-judge panel should consider itself
bound by the later and controlling authority.” Id. Because Jesner is
“clearly irreconcilable” with Nestle I, Miller provides an additional
compelling reason for us to have taken this case up en banc to conduct the
analysis required by “higher authority.”
DOE V. NESTLE 15
B. No specific, universal, and obligatory norm of
international law extends liability to corporate
defendants, and such claims are not cognizable
under the ATS.
Because no sufficiently established norm of international
law subjects corporations to liability, an ATS claim cannot lie
against corporations.
1. International law, not federal common law,
supplies the rule of decision on corporate
liability.
As I explained above, the Court in Sosa directed lower
courts to consider “whether international law extends the
scope of liability for a violation of a given norm to the
perpetrator being sued, if the defendant is a private actor such
as a corporation or individual.” 542 U.S. at 732 n.20; see also
id. at 760 (Breyer, J., concurring) (restating the Court’s
holding that “[t]he norm must extend liability to the type of
perpetrator . . . the plaintiff seeks to sue”). Properly
understood, Sosa forecloses any argument that the ATS
provides authority for the creation of new causes of action
under federal common law.3 See Kiobel v. Royal Dutch
Petroleum Co. (Kiobel I), 621 F.3d 111, 127 (2d Cir. 2010)
(Sosa “requires that we look to international law to determine
our jurisdiction over ATS claims against a particular class of
defendant, such as corporations”).
3
This view is consistent with Judge Edwards’s concurrence in Tel-
Oren v. Libyan Arab Republic, 726 F.2d 774 (D.C. Cir. 1984), which
looked to the lack of “consensus on non-official torture” to conclude that
the ATS did not “cover torture by non-state actors.” Id. at 795 (Edwards,
J., concurring).
16 DOE V. NESTLE
Some courts have concluded that corporate liability is
permitted by the ATS, reasoning that while customary
international law supplies the cause of action (in this case, a
claim for redress of child slavery), “the technical
accoutrements to the ATS cause of action, such as corporate
liability[,] . . . are to be drawn from federal common law[.]”
Doe v. Exxon Mobil Corp., 654 F.3d 11, 51 (D.C. Cir. 2011),
vacated, 527 F. App’x 7 (D.C. Cir. 2013); see also Flomo v.
Firestone Nat. Rubber Co., 643 F.3d 1013, 1020 (7th Cir.
2011) (“International law imposes substantive obligations and
the individual nations decide how to enforce them.”).
These views are flatly inconsistent with Sosa, which
requires that courts evaluate the potential liability under
international law for certain classes of defendants. And
following Jesner, these views are even less tenable. Indeed,
Justice Sotomayor’s Jesner dissent specifically invokes the
distinction between norms of “substantive conduct,” which
she argues are determined by international law, and “rules of
how to enforce international-law norms,” which she argues
are left to the individual states. Jesner, 138 S. Ct. at 1420(Sotomayor, J., dissenting). That contention, however, only
garnered the support of four justices, and was characterized
by the plurality as “far from obvious,” id. at 1402 (plurality
op.). In any event, Sosa defines our inquiry and requires us to
determine questions of corporate liability by reference to
international law.
DOE V. NESTLE 17
2. An ATS claim does not lie against
corporations because there is no
universally accepted international law
norm of corporate liability.
Applying Sosa’s step one to the question of corporate
liability under the ATS, I agree with Justice Kennedy’s
plurality opinion in Jesner, Judge Cabranes’s opinion for the
Second Circuit in Kiobel I, and then-Judge Kavanaugh’s
dissent in Exxon Mobil, that allowing an ATS claim against
a corporation does not “rest on a norm of international
character accepted by the civilized world and defined with a
specificity comparable to the features of the 18th-century
paradigms” on which the ATS was based. Sosa, 542 U.S.
at 725; see also Jesner, 138 S. Ct. at 1401 (plurality op.)
(“The international community’s conscious decision to limit
the authority of these international tribunals to natural
persons counsels against a broad holding that there is a
specific, universal, and obligatory norm of corporate liability
under currently prevailing international law.”); Kiobel I,
621 F.3d at 141 (“[T]here is nothing to demonstrate that
corporate liability has yet been recognized as a norm of the
customary international law of human rights.”); Exxon Mobil,
654 F.3d at 81 (Kavanaugh, J., dissenting) (“[C]laims under
the ATS are defined and limited by customary international
law, and customary international law does not extend liability
to corporations.”).
As Judge Leval’s concurrence in Kiobel I recognized,
“international law, of its own force, imposes no liabilities on
corporations or other private juridical entities.” Kiobel I, 621
F.3d at 186 (Leval, J., concurring). That conclusion is
dispositive—in the absence of a clearly defined, universal
norm of corporate liability under customary international law,
18 DOE V. NESTLE
the remaining domestic corporate defendants are entitled to
dismissal.
I note finally that only a few courts have argued that there
is, in fact, a specific, universal, and obligatory norm of
corporate liability under international law (Flomo, 643 F.3d
at 1016, for example, makes this argument). This view is the
minority and seems to be contrary to fact. Even Justice
Sotomayor’s Jesner dissent does not argue that such a norm
exists. Rather, Justice Sotomayor argues, echoing Judge
Leval and others, that there is no international-law reason to
distinguish between corporations and natural persons, and
thus federal common law (which recognizes corporate
liability) should supply the rule of decision. See Jesner, 138
S. Ct. at 1425 (Sotomayor, J., dissenting).
Looking to federal common law to fill the gaps where
international law is silent is problematic for several reasons.
First, it ignores Sosa’s requirement that we look to a given
defendant’s potential liability under international law to
determine whether an ATS claim lies. 542 U.S. at 732 n.20.
If there is no international law liability, the ATS does not
permit courts to impute liability from another body of
substantive law. Second, it simply ignores “the fact that no
international tribunal has ever been accorded jurisdiction over
corporations.” Kiobel I, 621 F.3d at 145. Third, it is a
completely backwards application of Sosa step one. Rather
than asking whether the norm of corporate liability “is
sufficiently definite” under international law, Sosa, 542 U.S.
at 732, it purports to derive a new type of ATS liability from
the absence of an international law norm distinguishing
between individual and corporate actors. See Jesner, 138 S.
Ct. at 1425 (Sotomayor, J., dissenting) (quoting Judge Leval’s
concurrence in Kiobel I, 621 F.3d at 175, for the proposition
DOE V. NESTLE 19
that “international law . . . takes no position on the question”
whether international law distinguishes between a corporation
and natural person). But the ATS does not give federal courts
the “power to mold substantive law.” Sosa, 542 U.S. at 713.
In the absence of a clear norm of corporate liability under
international law, we cannot extend the ATS to reach
corporate actors. See Kiobel I, 621 F.3d at 120–21 (“[T]he
responsibility of establishing a norm of customary
international law lies with those wishing to invoke it, and in
the absence of sources of international law endorsing (or
refuting) a norm, the norm simply cannot be applied in a suit
grounded on customary international law under the ATS.”).
C. The caution urged by the Court in ATS cases
counsels heavily against permitting an ATS
claim against corporations.
The inquiry should end at Sosa step one. But were we to
move to Sosa step two, dismissal would still be appropriate
because only Congress, not the courts, may extend the ATS’s
reach to corporate actors. Sosa step two, as the Supreme
Court applied it in Jesner, compels a holding that corporate
liability simply does not lie under the ATS absent express
congressional approval.
The appropriate inquiry here is “whether allowing [a] case
to proceed under the ATS is a proper exercise of judicial
discretion, or instead whether caution requires the political
branches to grant specific authority before corporate liability
can be imposed.” Jesner, 138 S. Ct. at 1399 (plurality op.).
Since Sosa, the Court has consistently urged lower federal
courts to exercise “great caution” before extending the ATS
to cover new forms of liability not contemplated by the First
Congress. Sosa, 542 U.S. at 728. In Kiobel II, for example,
20 DOE V. NESTLE
the Court observed that foreign policy concerns “are
implicated in any case arising under the ATS,” and reiterated
the need for deference to the political branches before
fashioning new ATS causes of action. 569 U.S. at 117.
In Jesner, the Court relied on this judicial reluctance in
declining to extend ATS liability to foreign corporations.
Highlighting foreign policy and separation-of-powers
concerns, the Jesner majority reiterated that the responsibility
for creating new causes of action—particularly in areas that
touch foreign policy (as any ATS case does)—lies with
Congress and the President. 138 S. Ct. at 1402–03, 1407.
The panel majority has failed to exercise the caution that
the Supreme Court demands in ATS cases. Following the
Court’s lead in Jesner, we should have held that corporate
ATS liability fails Sosa step two for two reasons: the
Congressional enactment of the Torture Victim Protection
Act of 1991 (“TVPA”), and the Court’s Bivens jurisprudence.
First, we have some “congressional guidance in
exercising jurisdiction.” Sosa, 542 U.S. at 731. The
TVPA—the only ATS cause of action created by Congress,
see 28 U.S.C. § 1350 note—expressly limits liability to
“individuals.” As the Jesner plurality explained, the fact that
corporations cannot be sued under the TVPA “reflects
Congress’ considered judgment of the proper structure for a
right of action under the ATS. Absent a compelling
justification, courts should not deviate from that model.”
138 S. Ct. at 1403 (plurality op.). The TVPA is “all but
dispositive” of the issue of corporate liability under the ATS.
Id. at 1404 (plurality op.). On the sole occasion it has
implemented the ATS for a specific class of conduct,
DOE V. NESTLE 21
Congress specifically chose to exempt corporations from
liability.
Second, insofar as the Court has expressed considerable
skepticism of expanding the breadth of the ATS in the
absence of Congressional guidance, its Bivens jurisprudence
(which “provides . . . the closest analogy” to the ATS, Sosa,
542 U.S. at 743 (Scalia, J., concurring in part)) is highly
instructive. In Jesner, the Court cited a Bivens case,
Correctional Services Corp. v. Malesko, 534 U.S. 61, 74
(2001), for the proposition that “[a]llowing corporate liability
would have been a ‘marked extension’ of Bivens that was
unnecessary to advance its purpose.” 138 S. Ct. at 1403. As
the Jesner Court then explained, “[w]hether corporate
defendants should be subject to suit was ‘a question for
Congress, not us, to decide.’” Id. (quoting Malesko, 534 U.S.
at 72). The Court then immediately observed that “[n]either
the language of the ATS nor the precedents interpreting it
support an exception to these general principals in this
context.” Id. at 1403.
Jesner’s discussion of Bivens and Malesko should dictate
the outcome here. In Malesko, the Court reasoned that
corporations are immune from Bivens actions because, “if a
corporate defendant is available for suit, claimants will focus
their collection efforts on it, and not the individual directly
responsible for the alleged injury.” 534 U.S. at 71. “[T]he
deterrent effects of the Bivens remedy would be lost.” Id.
at 69 (quoting FDIC v. Meyer, 510 U.S. 471, 485 (1994)).
The same principle applies with equal force here.
International criminal law is chiefly concerned with
punishing those natural persons directly responsible for
affronts to the law of nations. See The Nürnberg (Nuremberg)
22 DOE V. NESTLE
Trial (United States v. Goering), 6 F.R.D. 69, 110 (Int’l
Military Trib. 1946) (“Crimes against international law are
committed by men, not by abstract entities, and only by
punishing individuals who commit such crimes can the
provisions of international law be enforced.”). The complaint
here amply demonstrates that if given the choice between
pursuing a corporate defendant or the individuals responsible
for violating international law, plaintiffs will choose the
former. But, in the end, whether sound policy would counsel
for or against extending ATS liability to corporations, the
Supreme Court has clearly stated that such a policy
determination is for Congress and not the courts. Under
Malesko and Jesner, ATS liability does not attach to
corporate defendants, and we should have corrected the panel
majority’s opposite conclusion en banc.
II. Plaintiffs’ Claims Are Impermissibly
Extraterritorial.
In Kiobel II, the Court held “the presumption against
extraterritoriality applies to claims under the ATS.” 569 U.S.
at 124. To sustain an ATS action, therefore, the allegations
underlying the plaintiff’s claim must “touch and concern the
territory of the United States, [and] they must do so with
sufficient force to displace the presumption against
extraterritorial application.” Id. at 124–25. When we seek to
apply the ATS to aiding-and-abetting claims, the locus of the
actual law-of-nations violation becomes even more
significant. See Doe v. Drummond Co., 782 F.3d 576, 592–93
(11th Cir. 2015) (Where, as here, “the [ATS] claim is for
secondary responsibility, we must . . . consider the location of
any underlying conduct, such as where the actual injuries
were inflicted.”).
DOE V. NESTLE 23
To determine whether a given “case involves a domestic
application of the statute . . . [courts] look[] to the statute’s
‘focus.’” RJR Nabisco v. European Cmty., 136 S. Ct. 2090,
2101 (2016). “[I]f the conduct relevant to the focus occurred
in a foreign country, then the case involves an impermissible
extraterritorial application regardless of any other conduct
that occurred in U.S. territory.” Id. Put another way, if “all the
relevant conduct occurred abroad, that is simply the end of
the matter.” Mujica v. AirScan Inc., 771 F.3d 580, 594 (9th
Cir. 2014) (quoting Balintulo v. Daimler AG, 727 F.3d 174,
190 (2d Cir. 2013)).
Because all relevant conduct took place abroad, we
should have corrected the panel majority’s decision to permit
this case to proceed.
A. Allegations of solely foreign misconduct cannot
sustain an ATS claim.
Plaintiffs allege that they were victims of child slavery in
Côte d’Ivoire. They allege that the perpetrators (who are not
named defendants) are slavers and cocoa farmers abroad.
They do not allege that any of the named defendants engaged
in slavery or are associated with any of the actual perpetrators
beyond their status as buyers of cocoa. “[T]he ATS’s focus is
. . . conduct that violates international law, which the ATS
‘seeks to “regulate”’ by giving federal courts jurisdiction over
such claims.” Adhikari v. Kellogg Brown & Root, Inc.,
845 F.3d 184, 197 (5th Cir.), cert. denied 138 S. Ct. 134(2017) (quoting Morrison v. Nat’l Australia Bank, Ltd.,
561 U.S. 247, 267 (2010)); see also Kiobel II, 569 U.S. at 127(Alito, J., concurring) (“[A] putative ATS cause of action will
fall within the scope of the presumption against
extraterritoriality—and will therefore be barred—unless the
24 DOE V. NESTLE
domestic conduct is sufficient to violate an international law
norm that satisfies Sosa’s requirements of definiteness and
acceptance among civilized nations.”). Here, that
conduct—Plaintiffs’ enslavement on cocoa plantations—took
place abroad, and thus their ATS claims must be dismissed.
The majority opinion identifies three examples of conduct
that, in its view, are sufficiently forceful to displace the
presumption against extraterritoriality: allegations that
1) “[D]efendants funded child slavery practices in the Ivory
Coast” in the form of “personal spending money to maintain
the farmers’ and/or the cooperatives’ loyalty as an exclusive
supplier,” which the panel majority characterizes as
“kickbacks”; 2) Defendants’ employees “inspect operations
in the Ivory Coast”; and 3) Defendants made “financing
decisions” in the United States. Nestle II, 906 F.3d at 1126.
The first two sets of allegations (provision of spending money
and inspections) relate solely to foreign conduct. The third,
which involves domestic corporate decision-making, cannot
sustain an ATS claim, even if we assume aiding and abetting
liability under the ATS.
Even if payments to cocoa farmers could be properly
characterized as “kickbacks” (though they were never
described in the complaint as such), the payments, like the
slavery, all took place in Africa. The complaint does not even
allege that the funds originated in the U.S., only that they
were paid to “local farmers.”4 Alleged “inspections” of cocoa
4
As to Defendant Nestle, the complaint does not even allege that any
Nestle entity made any payments to any farmer that used child slaves, only
that Nestle “was directly involved in the purchasing and processing of
cocoa beans from Côte d’Ivoire.” With respect to Defendant Cargill, the
complaint alleges that “19 Malian child slaves were rescued” from one of
DOE V. NESTLE 25
farms likewise took place in Africa. The panel majority fails
to identify any domestic conduct alleged in the complaint that
is “connect[ed] [to] the alleged international law violations.”
Adhikari, 845 F.3d at 198. Consistent with Kiobel II, alleged
misconduct that took place entirely abroad cannot sustain an
ATS claim.
B. Domestic corporate presence cannot support
an otherwise extraterritorial ATS claim.
The complaint does allege some domestic activity.
Indeed, “it is a rare case . . . that lacks all contact with the
territory of the United States.” Morrison, 561 U.S. at 266.
“But the 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.” Id. To the extent that the complaint alleges relevant
domestic conduct at all, it simply alleges corporate presence
and decision-making. That cannot form the basis for an
ATS/aiding-and-abetting claim.
To begin, no court has held that the mere fact that a
defendant is American is sufficient, on its own, to displace
the presumption against extraterritoriality. At most, the
domestic status of a corporation “may well be . . . one factor
that, in conjunction with other factors,” could establish a
the farms with which Cargill had an exclusive supplier relationship, but
does not allege that Cargill had any relationship with the farm in question
at a time it used slave labor, or that Cargill was specifically aware that the
farm used slaves.
26 DOE V. NESTLE
sufficient connection.5 Mujica, 771 F.3d at 594 (emphasis
added). But, as we explained, “the [Supreme] Court has
repeatedly applied the presumption against extraterritoriality
to bar suits” where the defendant was a U.S. corporation. Id.
(compiling cases).
The panel majority concludes that Defendants making
“financing decisions” in the United States is conduct
sufficient to displace the presumption against
extraterritoriality. But Mujica teaches us that vague
allegations of domestic “decisions furthering the []
conspiracy” will not imbue an otherwise entirely foreign
claim with the territorial connection that the ATS absolutely
requires. 771 F.3d at 591; see also Baloco v. Drummond Co.,
767 F.3d 1229, 1236 (11th Cir. 2014) (presumption not
displaced despite allegations of domestic decision-making).
Our holding here also conflicts with two other circuits
that have considered the question. In Doe v. Drummond, the
Eleventh Circuit held that the making of “funding and policy
decisions in the United States” does not displace the
presumption where the unlawful conduct itself took place in
Colombia. 782 F.3d at 598; see also Baloco, 767 F.3d at 1236
(holding that domestic decision-making does not displace the
presumption in the absence of allegations of “an express
agreement between Defendants” and actual perpetrators of
human rights abuses, which is not alleged here); Cardona v.
5
The Second Circuit, though, views the citizenship of the defendant
as an “irrelevant factual distinction[]” for purposes of the rule against
extraterritoriality. Balintulo, 727 F.3d at 190; see also Mastafa v. Chevron
Corp., 770 F.3d 170, 189 (2d Cir. 2014) (“We disagree with the
contention that a defendant’s U.S. citizenship has any relevance to the
jurisdictional analysis.”).
DOE V. NESTLE 27
Chiquita Brands Int’l, Inc., 760 F.3d 1185, 1191 (11th Cir.
2014) (holding that ATS claim against domestic defendant
must be dismissed because alleged acts of torture all took
place abroad); see also id. at 1192 (Martin, J., dissenting)
(faulting the majority for ordering dismissal notwithstanding
allegations that domestic defendant “review[ed], approv[ed],
and conceal[ed]” the scheme in the United States). And in
Adhikari, the Fifth Circuit held that domestic payments from
a U.S. corporation to a foreign subcontractor that was
allegedly involved in “human trafficking” did not displace the
presumption. 845 F.3d at 197.6 Had Plaintiffs filed in the
Fifth or Eleventh Circuit, their allegations would have been
dismissed for want of adequate allegations of domestic
conduct.
The only circuit court decisions that the panel majority
identifies to support its view are both Second Circuit cases,
Mastafa v. Chevron Corp., 770 F.3d 170 (2d Cir. 2014), and
Licci by Licci v. Lebanese Canadian Bank, SAL, 834 F.3d 201(2d Cir. 2016). Mastafa is clearly distinguishable. There,
plaintiffs alleged “multiple domestic purchases and financing
transactions” as well as “New York-based payments and
‘financing arrangements’ conducted exclusively through a
New York bank account”—allegations of “specific and
domestic” conduct altogether lacking here. 770 F.3d at 191.
Indeed, Mastafa supports dismissal of the claims here, as the
Second Circuit found the plaintiffs’ allegations that “much of
the decisionmaking to participate in the . . . scheme” took
6
The fact that Adhikari involved a claim for primary, rather than
secondary, liability is immaterial. Plaintiffs there sought to amend their
complaint to add an aiding-and-abetting claim, and the Fifth Circuit held
that such an amendment would be futile because the relevant facts alleged
did not displace the presumption. 845 F.3d at 199.
28 DOE V. NESTLE
place in the United States, “conclusory” and inadequate.
770 F.3d at 190.
Licci fares no better. The plaintiffs alleged that the
defendant’s domestic conduct “violated various terrorist
financing and money laundering laws.” 834 F.3d at 215.
Plaintiffs here do not allege that Defendants made payments
to Ivorian farmers to perpetuate law-of-nations violations, but
rather to “maintain the farmers’ . . . loyalty as an exclusive
supplier.” Nestle II, 906 F.3d at 1126. By permitting
Plaintiffs’ claims to go forward based on the allegations made
here, we essentially read out the presumption against
extraterritoriality.
Perhaps recognizing that the complaint alleges only
normal business conduct in the United States, the panel
majority asserts that Defendants paid “kickbacks” to the
farmers in the form of “spending money” (though again,
those payments were made in Africa, not the United States).
Those “kickbacks,”7 in the panel majority’s view, are far
more than normal corporate activity: Instead, Defendants are
“maintain[ing] ongoing relations with the farms so that
defendants could continue receiving cocoa at a price that
would not be obtainable without employing child slave
7
I understand “kickbacks” differently than the majority. For example,
The Anti-Kickback Enforcement Act of 1986 essentially defines a
kickback in the contract procurement sphere as providing money or
something else of value (to a contractor, subcontractor, or employee of
either) for the purpose of improperly obtaining or rewarding favorable
treatment. See 41 U.S.C. § 8701(2). Providing a farmer money (even extra
money) to keep supplying a product is not what I would ever have thought
of as a kickback (versus bribing the farmer’s plantation manager to steer
business, for example).
DOE V. NESTLE 29
labor.” Nestle II, 906 F.3d at 1126. This somehow pushes the
needle over the line.
But the complaint itself, which never uses the word
“kickback,” is devoid of any allegation that the provision of
“spending money” was improper or illegal, and on the facts
actually alleged, Plaintiffs could not plausibly make such an
assertion.8 The factual allegations in the complaint show only
that Defendants sought to stabilize their supply lines and
minimize costs by entering into exclusive-dealing
arrangements. We have recognized that such agreements
“provide ‘well-recognized economic benefits.’” Aerotec Int’l,
Inc. v. Honeywell Int’l, Inc., 836 F.3d 1171, 1180 n.2 (9th
Cir. 2016) (quoting Omega Envtl., Inc. v. Gilbarco, Inc.,
127 F.3d 1157, 1162 (9th Cir. 1997)). Indeed, the complaint
merely alleges that “spending money” is meant to “maintain
the farmers’ and/or the cooperatives’ loyalty as exclusive
suppliers.” Because the complaint lacks an allegation that
Defendants provided anything to the farmers for an illegal
purpose, the panel majority was flatly wrong to “infer”
“kickbacks” from the facts alleged.
The complaint here alleges clear, egregious, and terrible
violations of Plaintiffs’ basic human rights. But the
allegations are equally clear that all the relevant misconduct
took place in Côte d’Ivoire, not the United States. The panel
majority’s conclusion to the contrary is based on a
reconstruction and/or rewriting of the allegations in the
complaint in a way that essentially eliminates the
presumption against extraterritoriality. But, no matter how the
8
Tellingly, Plaintiffs’ response to the rehearing petitions does not
defend the panel majority’s use of the “kickback” label, except to repeat
that “all reasonable inferences are made in Plaintiffs’ favor.”
30 DOE V. NESTLE
complaint is viewed, it still alleges horrific conduct that took
place outside the United States.9
III. Conclusion.
The Supreme Court directs us to proceed cautiously when
interpreting the ATS. Instead, we have adopted a broad and
expansive view of the statute that largely disregards recent
Supreme Court precedent. I thus respectfully dissent from our
decision not to rehear this case en banc.
9
The panel majority also erred in allowing Plaintiffs the opportunity
to file yet another complaint in this action, which has been pending for
almost fifteen years—it will make their fourth overall. Rather than address
the complaint’s obvious pleading deficiencies, the panel majority asserts
that “Jesner changed the legal landscape on which plaintiffs constructed
their case,” and as a result, Plaintiffs must be allowed to “amend their
complaint to specify whether aiding and abetting conduct that took place
in the United States is attributable to the domestic corporations in this
case.” Nestle II, 906 F.3d at 1126–27.
Plaintiffs already had the opportunity to replead to allege domestic
aiding and abetting after Kiobel II. See Nestle I, 766 F.3d at 1028. Rather
than doing so, Plaintiffs lumped together foreign and domestic entities in
their complaint, see Nestle II, 906 F.3d at 1126, muddying, rather than
clearing up, questions surrounding the locus of the tortious conduct
alleged. Nothing in Jesner changes the requirement that domestic conduct
sufficient to displace the presumption against extraterritoriality is required
and Jesner is no reason to allow yet another amendment to Plaintiffs’
complaint as the total unallocated domestic conduct alleged here is clearly
insufficient.
DOE V. NESTLE 31
OPINION
D.W. NELSON, Circuit Judge:
OVERVIEW
Plaintiffs-Appellants (“Plaintiffs”), former child slaves
who were forced to work on cocoa farms in the Ivory Coast,
filed a class action lawsuit against Defendants-Appellees
Nestle, SA, Nestle USA, Nestle Ivory Coast, Archer Daniels
Midland Co. (“ADM”),1 Cargill Incorporated Company, and
Cargill West Africa, SA (“Defendants”). In their Second
Amended Complaint, plaintiffs alleged claims for aiding and
abetting slave labor that took place in the United States under
the Alien Tort Statute, 28 U.S.C. § 1350 (“ATS”). The
district court dismissed the claims below based on its
conclusion that plaintiffs sought an impermissible
extraterritorial application of the ATS. We reverse and
remand. In light of an intervening change in controlling law,
we think it unnecessary to consider the other issues this case
presents at this juncture.
BACKGROUND
I. Factual Background
We discussed much of the factual background of this case
in Doe I v. Nestle USA, Inc., 766 F.3d 1013 (9th Cir. 2014)
(“Nestle I”). Child slavery on cocoa farms in the Ivory Coast,
where seventy percent of the world’s cocoa is produced, is a
pervasive humanitarian tragedy.
1
Plaintiffs voluntarily dismissed ADM from this case.
32 DOE V. NESTLE
Plaintiffs are former child slaves who were kidnapped and
forced to work on cocoa farms in the Ivory Coast for up to
fourteen hours a day without pay. While being forced to
work on the cocoa farms, plaintiffs witnessed the beating and
torture of other child slaves who attempted to escape.
Defendants are large manufacturers, purchasers,
processors, and retail sellers of cocoa beans. Several of them
are foreign corporations that are not subject to suit under the
ATS. Jesner v. Arab Bank, 138 S. Ct. 1386, 1407 (2018).
The effect of Jesner in tandem with plaintiffs’ habit of
describing defendants en masse presents a challenge we
address below. For now, we describe the case as plaintiffs
present it. We take their plausible allegations as true and
draw all reasonable inferences in their favor. See Nestle I,
766 F.3d at 1018.
Because of their economic leverage over the cocoa
market, defendants effectively control cocoa production in the
Ivory Coast. Defendant Nestle, USA is headquartered in
Virginia and coordinates the major operations of its parent
corporation, Nestle, SA, selling Nestle-brand products in the
United States. Every major operational decision regarding
Nestle’s United States market is made in or approved in the
United States. Defendant Cargill, Inc. is headquartered in
Minneapolis. The business is centralized in Minneapolis and
decisions about buying and selling commodities are made at
its Minneapolis headquarters.
Defendants operate with the unilateral goal of finding the
cheapest source of cocoa in the Ivory Coast. Not content to
rely on market forces to keep costs low, defendants have
taken steps to perpetuate a system built on child slavery to
depress labor costs. To maintain their supply of cocoa,
DOE V. NESTLE 33
defendants have exclusive buyer/seller relationships with
Ivory Coast farmers, and provide those farmers with financial
support, such as advance payments and personal spending
money. 19 Malian child slaves were rescued from a farm
with whom Cargill has an exclusive buyer/seller relationship.
Defendants also provide tools, equipment, and technical
support to farmers, including training in farming techniques
and farm maintenance. In connection with providing this
training and support, defendants visit their supplier farms
several times per year.
Defendants were well aware that child slave labor is a
pervasive problem in the Ivory Coast. Nonetheless,
defendants continued to provide financial support and
technical farming aid, even though they knew their acts
would assist farmers who were using forced child labor, and
knew their assistance would facilitate child slavery. Indeed,
the gravamen of the complaint is that defendants depended
on—and orchestrated—a slave-based supply chain.
II. Procedural History
Plaintiffs began this lawsuit over a decade ago, and we
had occasion to consider it once before in Nestle I. On
remand after Nestle I, defendants moved to dismiss the
operative complaint and the district court granted the motion.
In its order, the district concluded that the complaint seeks an
impermissible extraterritorial application of the ATS because
defendants engaged domestically only in ordinary business
conduct. The district court did not decide whether plaintiffs
stated a claim for aiding and abetting child slavery.
Plaintiffs timely appealed.
34 DOE V. NESTLE
STANDARD OF REVIEW
We review a dismissal for lack of jurisdiction de novo.
Corrie v. Caterpillar, Inc., 503 F.3d 974, 979 (9th Cir. 2007)
(citing Arakaki v. Lingie, 477 F.3d 1048, 1056 (9th Cir.
2007)). “A dismissal for failure to state a claim is reviewed
de novo. All factual allegations in the complaint are accepted
as true, and the pleadings construed in the light most
favorable to the nonmoving party.” Nestle I, 766 F.3d at
1018 (quoting Abagninin v. AMVAC Chem. Corp., 545 F.3d
733, 737 (9th Cir. 2008) (internal citations omitted)).
DISCUSSION
The legal landscape has shifted since we last considered
this case, including during the pendency of this appeal. The
Supreme Court’s decisions in Jesner and RJR Nabisco, Inc.
v. European Community,136 S. Ct. 2090 (2016), require us to
revisit parts of Nestle I.
I. Corporate Liability Post-Jesner
In Nestle I, we held that corporations are liable for aiding
and abetting slavery after applying three principles from our
en banc decision in Sarei v. Rio Tinto, PLC, 671 F.3d 736,
746 (9th Cir. 2011) (en banc), vacated on other grounds by
Rio Tinto PLC v. Sarei, 133 S. Ct. 1995 (2013). Nestle I,
766 F.3d at 1022. Our court in Sarei adopted a norm-specific
analysis that determines “‘whether international law extends
the scope of liability for a violation of a given norm to the
perpetrator being sued.’” Sarei, 671 F.3d at 760 (quoting
Sosa, 542 U.S. at 732 n.20). “First, the analysis proceeds
norm-by-norm; there is no categorical rule of corporate
immunity or liability.” Nestle I, 766 F.3d at 1022 (citing
DOE V. NESTLE 35
Sarei, 671 F.3d at 747–48). Under the second principle,
“corporate liability under an ATS claim does not depend on
the existence of international precedent enforcing legal norms
against corporations.” Id. (citing Sarei, 671 F.3d at 760–61).
“Third, norms that are ‘universal and absolute,’ or applicable
to ‘all actors,’ can provide the basis for an ATS claim against
a corporation.” Id. (citing Sarei, 671 F.3d at 764–65). We
reaffirmed these principles in Nestle I and held that since the
prohibition of slavery is “universal,” it is applicable to all
actors, including corporations. Id. at 1022.
As we have noted, the Supreme Court in Jesner held that
foreign corporations cannot be sued under the ATS. Jesner,
138 S. Ct. at 1407. Jesner thus abrogates Nestle I insofar as
it applies to foreign corporations. But Jesner did not
eliminate all corporate liability under the ATS, and we
therefore continue to follow Nestle I’s holding as applied to
domestic corporations. See Miller v. Gammie, 335 F.3d 889,
893 (9th Cir. 2003) (en banc).
II. Extraterritorial ATS Claim
In Kiobel v. Royal Dutch Petroleum Co. (Kiobel II), the
Supreme Court held that the ATS does not have
extraterritorial reach after applying a canon of statutory
interpretation known as the presumption against
extraterritorial application, which counsels that “[w]hen a
statute gives no clear indication of an extraterritorial
application, it has none.” 569 U.S. 108, 115 (2013) (citing
Morrison v. National Australia Bank Ltd., 561 U.S. 247, 248
(2010)). The Court acknowledged that the canon is not
directly on point given that the ATS “does not directly
regulate conduct or afford relief.” Id. But given the foreign
policy concerns the ATS poses, the Court stated that “the
36 DOE V. NESTLE
principles underlying the canon of interpretation similarly
constrain courts considering causes of action that may be
brought under the ATS.” Id.The Court in Kiobel II left the door open to the
extraterritorial application of the ATS for claims made under
the statute which “touch and concern the territory of the
United States . . . with sufficient force to displace the
presumption.” Id. at 123 (citing Morrison, 561 U.S. at264–73). Because “all the relevant conduct” in Kiobel II took
place abroad, the Court did not need to delve into the
contours of the touch and concern test. Id. The only
guidance the Court provided about the “touch and concern”
test was that “mere corporate presence” would not suffice to
meet it. Id.In announcing the “touch and concern” test, the Supreme
Court cited to its decision in Morrison v. National Australia
Bank Lt. In Morrison, the Supreme Court undertook a two-
step analysis, known as the “focus” test, to determine whether
Section 10(b) of the Securities Exchange Act of 1934 applies
extraterritorially. Morrison, 561 U.S. at 262. Under the first
analytical step, the Court asked if there is any indication that
the statute is meant to apply extraterritorially, and concluded
there is not. Id. at 265. Under the second step, the Court
asked what the “‘focus’ of congressional concern” was in
passing Section 10(b). Id. The Court found that the “focus
is not on the place where the deception originated, but on
purchases and sales of securities in the United States. Section
10(b) [therefore] applies only to transactions in securities
listed on domestic exchanges and domestic transactions in
other securities.” Id. at 249.
DOE V. NESTLE 37
In the first appeal of this case, we reasoned that
“Morrison may be informative precedent for discerning the
content of the touch and concern standard, but the opinion in
Kiobel II did not incorporate Morrison’s focus test. Kiobel II
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.”
Nestle I, 766 F.3d at 1028.
Defendants argue that the Supreme Court’s recent
decision in RJR Nabisco requires us to apply the focus test to
claims under the ATS. In RJR Nabisco, the Court applied the
Morrison focus test to the Racketeer Influenced and Corrupt
Organizations Act (“RICO”) and reiterated that Morrison
reflects a two-step inquiry regarding extraterritoriality. Id. at
2103. The Court further stated that “Morrison and Kiobel
[also] reflect a two-step framework for analyzing
extraterritoriality issues.” Id. at 2101.
Because RJR Nabisco has indicated that the two-step
framework is required in the context of ATS claims, we apply
it here. See Miller v. Gammie, 335 F.3d at 893. First, we
determine “whether the [ATS] gives a clear, affirmative
indication that it applies extraterritorially.” RJR Nabisco,
136 S. Ct. at 2101. The Court in Kiobel II already answered
that the “presumption against extraterritoriality applies to
claims under the ATS, and that nothing in the statute rebuts
that presumption.” Kiobel II, 569 U.S. at 185.
Because the ATS is not extraterritorial, then at the second
step, we must ask whether this case involves “a domestic
application of the statute, by looking to the statute’s ‘focus.’”
RJR Nabisco, 136 S. Ct. at 2101. Defendants insist that any
acts of assistance that took place in the United States are
38 DOE V. NESTLE
irrelevant because the extraterritoriality analysis should focus
on the location where the principal offense took place or the
location the injury occurred, rather than the location where
the alleged aiding and abetting took place. We disagree.
The focus of the ATS is not limited to principal offenses.
In Mastafa v. Chevron Corp., the Second Circuit held that
“the ‘focus’ of the ATS is on . . . conduct of the defendant
which is alleged by plaintiff to be either a direct violation of
the law of nations or . . . conduct that constitutes aiding and
abetting another’s violation of the law of nations.” 770 F.3d
at 185 (emphasis added); see also Adhikari v. Kellogg Brown
& Root, Inc., 845 F.3d 184, 199 (5th Cir. 2017) (stating that
aiding and abetting conduct comes within the focus of the
ATS). We also hold that aiding and abetting comes within
the ATS’s focus on “tort[s] . . . committed in violation of the
law of nations.” 28 U.S.C. § 1350.
As part of the step two analysis, we then determine
“whether there is any domestic conduct relevant to plaintiffs’
claims under the ATS.” Adhikari, 845 F.3d at 195. Under
RJR Nabisco, “if the conduct relevant to the statute’s focus
occurred in the United States, then the case involves a
permissible domestic application even if other conduct
occurred abroad.” RJR Nabisco, 136 S. Ct. at 2101
(emphasis added).
In Mastafa, the Second Circuit held that the following
constituted “specific, domestic conduct”: “Chevron’s [Iraqi]
oil purchases, financing of [Iraqi] oil purchases, and delivery
of oil to another U.S. company, all within the United States,
as well as the use of a New York escrow account and New
York-based ‘financing arrangements’ to systematically enable
illicit payments to the Saddam Hussein regime that allegedly
DOE V. NESTLE 39
facilitated that regime’s violations of the law of nations.”
Mastafa, 770 F.3d at 195.
In Licci by Licci v. Lebanese Canadian Bank, SAL, the
Second Circuit again held that the Lebanese Canadian
Bank’s (“LCB”) “provision of wire transfers between
Hezbollah accounts” through a United States bank constituted
domestic conduct which rebutted the presumption against
extraterritoriality. 834 F.3d 201, 214–15, 219 (2d Cir. 2016).
There, LCB made “numerous New York-based payments and
‘financing arrangements’ conducted exclusively through a
New York bank account.” Id. at 217 (citing Mastafa,
700 F.3d at 191).
Like in Mastafa and Licci, plaintiffs have alleged that
defendants funded child slavery practices in the Ivory Coast.
Specifically, plaintiffs allege that defendants provided
“personal spending money to maintain the farmers’ and/or the
cooperatives’ loyalty as an exclusive supplier.” Because we
are required to “draw all reasonable inferences in favor” of
plaintiffs, Mujica v. Airscan, Inc., 771 F.3d 580, 589 (9th Cir.
2014), we infer that the personal spending money was
outside the ordinary business contract and given with the
purpose to maintain ongoing relations with the farms so that
defendants could continue receiving cocoa at a price that
would not be obtainable without employing child slave labor.
Contrary to the district court’s reasoning, providing personal
spending money to maintain relationship above the contract
price for cocoa is not ordinary business conduct, and is more
akin to “kickbacks.” Mastafa, 770 F.3d at 175. Defendants
also had employees from their United States headquarters
regularly inspect operations in the Ivory Coast and report
back to the United States offices, where these financing
decisions, or “financing arrangements,” originated. Licci by
40 DOE V. NESTLE
Licci, 834 F.3d at 217 (citing Mastafa, 770 F.3d at 191). In
sum, the allegations paint a picture of overseas slave labor
that defendants perpetuated from headquarters in the United
States. “This particular combination of conduct in the United
States . . . is both specific and domestic.” Id. at 191. We thus
hold that foregoing narrow set of domestic conduct is relevant
to the ATS’s focus.
III. Aiding And Abetting Claim
Defendants invite us to rule in the alternative that
plaintiffs have not sufficiently alleged the elements of aiding
and abetting. We think it unnecessary to reach that issue at
this time. As we have explained, Jesner changed the legal
landscape on which plaintiffs constructed their case. The
operative complaint names several foreign corporations as
defendants, and plaintiffs concede those defendants must be
dismissed on remand. The operative complaint also discusses
defendants as if they are a single bloc—a problematic
approach that plaintiffs would do well to avoid. In light of
Jesner, it is not possible on the current record to connect
culpable conduct to defendants that may be sued under the
ATS.
As we observed in Nestle I, “[i]t is common practice to
allow plaintiffs to amend their pleadings to accommodate
changes in the law, unless it is clear that amendment would
be futile.” See Nestle I, 766 F.3d at 1028 (citations omitted).
We are mindful that this case has lingered for over a decade,
and that delay does not serve the interests of any party. But
we cannot conclude that amendment would be futile, so we
remand with instructions that plaintiffs be given an
opportunity to amend their complaint. On remand, plaintiffs
must remove those defendants who are no longer amenable
DOE V. NESTLE 41
to suit under the ATS, and specify which potentially liable
party is responsible for what culpable conduct.
IV. Plaintiffs Have Standing to Bring Their Claims
Defendants argue that plaintiffs lack Article III standing
to bring their claims. To have standing, plaintiffs must allege
“[(1)] a concrete and particularized injury [(2)] that is fairly
traceable to the challenged conduct, [(3)] and is likely to be
redressed by a favorable judicial decision.” Consumer Fin.
Prot. Bureau v. Gordon, 819 F.3d 1179, 1187 (9th Cir. 2016),
cert. denied, (quoting Hollingsworth v. Perry, 570 U.S. 693,
704 (2013)).
Plaintiffs easily satisfy the first and third requirements.
Defendants do not dispute that plaintiffs suffered concrete
injury by being abused and held as child slaves. In addition,
plaintiffs’ injuries are redressable because when “one private
party is injured by another, the injury can be redressed in at
least two ways: by awarding compensatory damages or by
imposing a sanction on the wrongdoer that will minimize the
risk that the harm-causing conduct will be repeated.” Steel
Co. v. Citizens for a Better Env’t, 523 U.S. 83, 127 (1998).
Plaintiffs also satisfy the traceability requirement as to
Cargill because they raise sufficiently specific allegations
regarding Cargill’s involvement in farms that rely on child
slavery. Baloco ex rel. Tapia v. Drummond Co., 640 F.3d
1338, 1343 (11th Cir. 2011); Bennett v. Spear, 520 U.S. 154,
169 (1997) (Article III traceability requirement “does not
exclude injury produced by determinative or coercive effect
upon the action of someone else.”). Plaintiffs’ allegations
against Nestle are far less clear, though part of the difficulty
is plaintiffs’ reliance on collective allegations against all or at
42 DOE V. NESTLE
least multiple defendants. Notwithstanding this deficiency,
the allegations are sufficient to at least allow plaintiffs a final
opportunity to replead. On remand, plaintiffs must eliminate
the allegations against foreign defendants and specifically
identify the culpable conduct attributable to individual
domestic defendants.
CONCLUSION
For the reasons set forth above, we REVERSE the
district court and REMAND to allow plaintiffs to amend
their complaint to specify whether aiding and abetting
conduct that took place in the United States is attributable to
the domestic corporations in this case.
SHEA, District Judge:
I concur in the result.