John Doe v. Nestle, S.A.

• Decision Date: 23 October 2018
• Docket Number: No. 17-55435,17-55435
• Citation: 929 F.3d 623
• Parties: John DOE, I; John Doe, II; John Doe, III; John Doe, IV; John Doe, V; and John Doe, VI, each individually and on behalf of proposed class members, Plaintiffs-Appellants, v. NESTLE, S.A.; Nestle USA, Inc.; Nestle Ivory Coast; Cargill Incorporated Company; Cargill Cocoa; Cargill West Africa, S. A.; Archer Daniels Midland Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

929 F.3d 623

John DOE, I; John Doe, II; John Doe, III; John Doe, IV; John Doe, V; and John Doe, VI, each individually and on behalf of proposed class members, Plaintiffs-Appellants,

v.NESTLE, S.A.; Nestle USA, Inc.; Nestle Ivory Coast; Cargill Incorporated Company; Cargill Cocoa; Cargill West Africa, S. A.; Archer Daniels Midland Company, Defendants-Appellees.

No. 17-55435

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 7, 2018 Pasadena, California

Filed October 23, 2018

Amended July 5, 2019

ORDER AND AMENDED OPINIONORDER

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, 133 S.Ct. 2652, 186 L.Ed.2d 768 (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, 118 S.Ct. 1003, 140 L.Ed.2d 210 (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, 117 S.Ct. 1154, 137 L.Ed.2d 281 (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 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 , ––– U.S. ––––, 138 S. Ct. 1386, 1410, 200 L.Ed.2d 612 (2018) (Alito, J., concurring) (alteration in original) (quoting Sosa v. Alvarez-Machain , 542 U.S. 692, 715, 124 S.Ct. 2739, 159 L.Ed.2d 718 (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 is "barred." Kiobel v. Royal Dutch Petroleum Co. (Kiobel II ), 569 U.S. 108, 124, 133 S.Ct. 1659, 185 L.Ed.2d 671 (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, 133 S.Ct. 1659. 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 , 542 U.S. at 728, 124 S.Ct. 2739 ). 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.

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, 124 S.Ct. 2739 ). "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, 133 S.Ct. 1995, 185 L.Ed.2d 863 (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 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...