Amicus Curiae Brief — Nestlé USA, Inc., Petitioner v. John Doe I, et al.

Supreme Court briefOct 21, 2020

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Nos. 19-416 and 19-453

In the Supreme Court of The United States

___________________

NESTLÉ USA, INC., Petitioner,

JOHN DOE I, ET AL., Respondents,

___________________

CARGILL, INC., Petitioner,

JOHN DOE I, ET AL., Respondents.

___________________

On Writ of Certiorari to the United States Court of

Appeals for the Ninth Circuit

___________________

BRIEF OF AMICI CURIAE OXFAM AMERICA

AND PROFESSORS OF ECONOMICS JOSEPH

E. STIGLITZ AND GEOFFREY M. HEAL

IN SUPPORT OF RESPONDENTS

___________________

MICHAEL D. HAUSFELD

COUNSEL OF RECORD

JEANNINE M. KENNEY

HAUSFELD LLP

1700 K STREET, N.W., SUITE 650

WASHINGTON, D.C. 20006

(202) 540-7200

mhausfeld@hausfeld.com

Counsel for Amici Curiae

LEGAL PRINTERS LLC ! Washington, DC ! 202-747-2400 ! legalprinters.com

TABLE OF CONTENTS

TABLE OF AUTHORITIES ...................................... ii

INTEREST OF AMICI CURIAE ............................... 1

SUMMARY OF ARGUMENT.................................... 5

ARGUMENT .............................................................. 9

Tort Liability Creates Appropriate Incentives

that Enhance Economic Efficiencies. .............. 9

II. Corporate Liability Will Deter Neither U.S.

Foreign Direct Investment in LDCs Nor

Foreign Investment in the United States. .... 13

A. Domestic Corporate Liability Will Not Deter,

and Can Be Expected to Promote, Foreign

Direct Investment in LDCs. .......................... 13

B. Domestic Corporate Liability Will Not Deter

Foreign Investment in the United States. ... 22

III. Corporate Liability Will Not Place U.S.

Corporations at a Competitive

Disadvantage. ................................................ 24

IV. Corporate Liability Will Not Discourage

Proactive Efforts to Address Human Rights

Abuses. ........................................................... 29

CONCLUSION ......................................................... 36

TABLE OF AUTHORITIES

Page(s)

Cases

Doe v. Exxon Mobil Corp.,

654 F.3d 11 (D.C. Cir. 2011) ................................14

Filartiga v. Pena–Irala,

630 F.2d 876 (2d Cir. 1980) .................................14

Flomo v. Firestone Nat’s Rubber Co.,

643 F.3d 1013 (7th Cir. 2011)..............................28

Nevsun Res. Ltd. v. Araya,

2020 SCC 5 (CanLII) (Can.). ...............................26

Sosa v. Alvarez-Machain,

542 U.S. 692 (2004) ........................................14, 16

Statutes

Foreign Corrupt Practices Act, 15

U.S.C. §§ 78dd-1, et seq.............................. 7, 25, 28

Alien Tort Statute, 28 U.S.C. § 1350 ..........................1

iii

Loi 2017-399 du 27 mars 2017 relative

au devoir de vigilance des sociétés

mères et des entreprises donneuses

d'ordre Journal Officiel de la

République Française [J.O.] Code de

commerce [C. com.] art. L. 225-102-5

(Fr.). ......................................................................26

Sarbanes–Oxley Act of 2002, P.L. 107204, 116 Stat. 745 ................................................28

Other Authorities

Admin. Office of the U.S. Courts,

Judicial Facts and Figures 2019, tbl.

4.1, Civil Cases Filed, Terminated

and Pending,

https://www.uscourts.gov/statisticsreports/judicial-facts-and-figures2019 ......................................................................17

Amnesty International, Exposed: Child

Labour Behind Smart Phone and

Electric Car Batteries (Jan. 16,

2016),

https://www.amnesty.org/en/latest/n

ews/2016/01/child-labour-behindsmart-phone-and-electric-carbatteries/ ..............................................................32

Antonie Fountain & Friedel HuetzAdams, Cocoa Barometer 2018,

https://www.voicenetwork.eu/wpcontent/uploads/2019/08/Cocoaborom

eter2018_web4.pdf ...............................................10

Apple Supplier Responsibility 2018

Progress Report,

https://www.apple.com/supplierresponsibility/pdf/Apple_SR_2018_P

rogress_Report.pdf ...............................................32

Business and Human Rights Violations

Overseas (June 8, 2020),

https://www.mofo.com/resources/insi

ghts/200608-uk-human-rightsviolations.html .....................................................26

Child Labor and Forced Labor Reports,

Côte D’Ivoire,

https://www.dol.gov/agencies/ilab/res

ources/reports/child-labor/cotedivoire ...................................................................27

Christiane Bode, et al., Corporate Social

Initiatives and Employee Retention,

26 Org. Science 1702 (2015) ................................34

Cone Comm’ns, 2017 CSR Study,

https://www.conecomm.com/2017cone-communications-csr-study-pdf ....................31

Corporate Human Rights Benchmark,

https://www.corporatebenchmark.or

g/ ...........................................................................32

Csongor István Nagy, The Reception of

Collective Actions in Europe:

Reconstructing the Mental Process of

a Legal Transplantation, 2020 J.

Disp. Resol. 413 (2020) ........................................23

Daniel Elfenbeim, et al., Reputation

Altruism and the Benefits of Seller

Charity in an Online Marketplace,

Nat’l Bureau of Econ. Research,

Working Paper 15614 (Dec. 2009) .......................31

David Kucera, The Effects of Core

Workers Rights on Labour Costs and

Foreign Direct Investment:

Evaluating the “Conventional

Wisdom”, Int’l Inst. for Labour

Studies, Discussion Paper No. 130

(2001) ....................................................................19

Donald Earl Childress, The Alien Tort

Statute, Federalism, and the Next

Wave of Transnational Litigation,

100 Geo. L.J. 709 (2012) ......................................16

Emmanuel Teitelbaum, Measuring

Trade Union Rights Through

Violations Recorded in Textual

Sources: An Assessment .......................................19

Erika George, Shareholder Activism

and Stakeholder Engagement

Strategies: Promoting

Environmental Justice, Human

Rights, and Sustainable

Development Goals, 36 Wis. Int’l L.J.

298 (2019) .............................................................35

European Commission, Study on Due

Diligence Requirements Through the

Supply Chain, Final Report (Jan.

2020),

https://www.traffickingmatters.com/

wpcontent/uploads/2020/02/DS0120017

ENN.en_.pdf.........................................................26

European Commission, The Regulation

Explained,

https://ec.europa.eu/trade/policy/infocus/conflict-mineralsregulation/regulation-explained/ .........................27

Federico Carril-Caccia & Elana

Pavlova, Foreign Direct Investment

and its Drivers: A Global and EU

Perspective, available at

https://www.ecb.europa.eu/pub/econo

micbulletin/articles/2018/html/ecb.ebart

201804_01.en.html#toc1 ......................................15

vii

Gary Clyde Hufbauer & Nicholas K.

Mitrokostas, Awakening Monster:

The Alien Tort Statute of 1789, Inst.

for Int’l Econ. (2003) ............................................14

Global Sustainable Investment

Alliance, 2018 Global Sustainable

Investment Review,

https://www.ussif.org/files/GSIR_Rev

iew2018F.pdf ........................................................34

Guido Giese, et al., Foundations of ESG

Investing: How ESG Affects Equity

Valuation, Risk and Performance, 45

J. Portfolio Mgmt. 69 (July 2019)........................35

H.S. Albinger and S.J. Freeman,

Corporate social performance and

attractiveness as an employer to

different job seeking population, 28

J. Bus. Ethics 243 (2000) .....................................33

Ishika Mookerjee, Bank of America

Says Buyers Pay Up for Top-Ranked

ESG Firms, Bloomberg Daily Green

(Sept. 24, 2020),

www.bloomberg.com/news/articles/2

020-09-24/bank-of-america-saysinvestors-pay-up-for-high-scoringesg-firms ...............................................................35

John C. Coffee, Jr., Law and the

Market: The Impact of Enforcement,

156 U. Pa. L. Rev. 229 (2007) ..............................28

viii

John G. Ruggie and Emily K.

Middleton, Harvard Kennedy

School, Money, Millennials and

Human Rights—Sustaining

“Sustainable Investing” (June 2018),

https://www.hks.harvard.edu/sites/d

efault/files/centers/mrcbg/working.p

apers/CRI69_FINAL.pdf......................................34

Jonathan Drimmer & Sarah R.

Larmoree, Think Globally, Sue

Locally, Trends and Out-of-Court

Tactics in Transnational Tort

Actions, 29 Berkley J. Int’l L. 456

(2011) ....................................................................16

Jonathan Isham, et al., Civil Liberties,

Democracy, and the Performance of

Government Projects, 11 World Bank

Econ. Rev. 219 (1997) ..........................................18

Karen Moore, Corporate Social

Responsibility: Consumers Will

Remember Companies That Led in

2020, Forbes (Jul. 31, 2020) ................................30

Kelsey Chong, Millennials and the

Rising Demand for Corporate Social

Responsibility, Cal. Mgmt. Rev.

(Jan. 2017),

https://cmr.berkeley.edu/2017/01/mil

lennials-and-csr/ ..................................................31

Know the Chain,

https://knowthechain.org/ ....................................33

Manning Gilbert Warren III, The U.S.

Securities Fraud Class Action: An

Unlikely Export to the European

Union, 37 Brook. J. Int’l L. 1075

(2012) ....................................................................23

Mars, Protecting Children Action Plan,

www.mars.com/about/policies-andpractices/protecting-children-actionplan .......................................................................33

Michael Goldhaber, The Life and Death

of the Corporate Alien Tort, Am.

Lawyer (Oct. 12, 2010).........................................33

Michael Hiscox and Nicholas Smyth, Is

There Consumer Demand for

Improved Labor Standards?

Evidence from Field Experiments in

Social Product Labeling, Working

Paper (2005),

https://scholar.harvard.edu/hiscox/p

ublications/there-consumer-demandfair-labor-standards-evidence-fieldexperiment ...........................................................31

Mines & Metals, The World’s Top 10

Largest Cobalt Producers in 2019

(May 5, 2020),

https://www.minesandmetals.com/20

20/05/the-worlds-top-10-largestcobalt-producers-in-2019/ ....................................20

Mondelez, Cocoa Life, Stepping Up

Efforts to Help Address Child Labor,

www.cocoalife.org/ ...............................................33

Nestlé, How Has Nestle Improved Its

Seafood Sourcing?,

https://www.nestle.com/asknestle/human-rights/answers/nestleforced-labour-supply-chains ................................17

Nestlé Procurement, Responsible

Sourcing of Seafood at Nestlé,

https://www.nestle.com/sites/default/

files/assetlibrary/documents/creating-sharedvalue/responsible-sourcing/seafoodresponsible-sourcing-update2017.pdf ................................................................17

Nicol Jägers, et al., The Future of

Corporate Liability for

Extraterritorial Human Rights

Abuses: The Dutch Case Against

Shell, 107 Am. J. Int’l Law

Unbound 36 (2013) ..............................................26

Nielson Co., Investing in the Future:

Millennials are Willing to Pay Extra

for a Good Cause (July 23, 2014),

https://www.nielsen.com/us/en/insig

hts/article/2014/investing-in-thefuture-millennials-are-willing-topay-extra-for-a-good-cause/ .................................31

Office of the High Comm’r Human

Rights, United Nations, Corporate

Human Rights Due Diligence,

https://www.ohchr.org/EN/Issues/Bu

siness/Pages/CorporateHRDueDilige

nce.aspx ................................................................27

Organization for Economic Co-operation

and Development, Quantifying the

Costs, Benefits and Risks of Due

Diligence for Responsible Business

Conduct (June 2016),

http://mneguidelines.oecd.org/Quant

ifying-the-Cost-Benefits-Risks-ofDue-Diligence-for-RBC.pdf ..................................30

Press Release, Nestlé, Nestlé invests

CHF 2.5 million and partners with

the government of Côte d’Ivoire to

protect and restore the Cavally

forest reserve (July 20, 2020),

https://www.nestle.com/media/news/

nestle-partners-government-coteivoire-protect-cavally ...........................................17

xii

Press Release, Nestlé, Nestlé scales up

action against child labor and

expands cocoa sustainability

program (Dec. 10, 2019),

https://www.nestle.com/media/news/

nestle-action-against-child-laborcocoa-sustainability-program ..............................17

Press Release, Oxfam, Mondelez

International agrees to address

women’s inequality in chocolate

production (Apr. 3, 2013),

https://www.oxfam.org/en/pressreleases/mondelez-internationalagrees-address-womens-inequalitychocolate-production ............................................36

Raymond Vernon, International

Investment and International Trade

in the Product Cycle, 80 Q. J. Econ.

190 (1966) .............................................................22

Richard Florida, The Globalization of

R&D: Results of a Survey of ForeignAffiliated R&D laboratories in the

USA, 26 Research Pol’y 85 (1997) .......................22

Robert Knowles, A Realist Defense of

the Alien Tort Statute, 88 Wash. U.

L. Rev. 1117 (2011) ..............................................14

xiii

Sandra Polaski & Katherine Vyborny,

Labor Clauses in Trade Agreements:

Policy and Practice, 10 Integration

& Trade 95 (2006) ................................................10

Shannon L. Blanton & Robert G.

Blanton, What Attracts Foreign

Investors? An Examination of

Human Rights and Foreign Direct

Investment, 69 J. of Pol. 143 (2007) ....................18

Stephen J. Kobrin, Oil and Politics:

Talisman Energy and Sudan, 36

N.Y.U. J. Int’l L. & Pol. 425 (2004) .....................15

Talisman to Sell Its Stake in Company

in Sudan, N.Y. Times (Oct. 31, 2002) .................15

U.S. News Staff, Countries Seen to

Care about Human Rights, U.S.

News & World Reports (Apr. 21,

2020) .....................................................................12

Wade M. Cole, The Effects of Human

Rights on Economic Growth, 1965 to

2010, 2 Soc. of Dev. 375 (2016) ............................19

World Bank, Human Rights and

Development Trust Fund,

https://www.worldbank.org/en/progr

ams/human-rights-anddevelopment-trust-fund .......................................19

xiv

World Bank Grp., 2019/2020 Global

Investment Competitiveness Report,

Rebuilding Investor Confidence in

Times of Uncertainty (2020) ................................16

INTEREST OF AMICI CURIAE

This brief amici curiae is respectfully submitted by

Columbia University Professors of Economics Joseph

E. Stiglitz and Geoffrey M. Heal and by Oxfam

America. 1

Amici offer their research, expertise, and

experience to clarify central principles of investment,

economic development, and socially responsible

corporate behavior relevant to the question of

corporate liability under the Alien Tort Statute

(“ATS”), 28 U.S.C. § 1350, to address arguments,

presented by Petitioners and certain amici that

corporate liability under the ATS will deter

investment in both the United States and less

developed countries (“LDCs”), obstruct economic

development

LDCs,

undermine

the

competitiveness of U.S. corporations, and discourage

proactive efforts by domestic corporations to prevent

human rights abuses in the countries in which they

operate or from which they source inputs. Amici

demonstrate that there is no foundation for any of

these arguments.

All parties have consented to the filing of this brief.

Nestlé USA and Respondents filed with the Court letters

providing blanket consent. Cargill provided written consent. No

counsel for any party authored this brief in whole or in part, nor

did counsel for any party, any party itself, or any other person

make a monetary contribution to support this brief.

Joseph Stiglitz is a Professor of Economics at

Columbia University. He previously taught at

Princeton University, Stanford University, Yale

University, and the Massachusetts Institute of

Technology. In 2001, he was awarded the Nobel Prize

in Economic Sciences for his analyses of markets with

asymmetric information. He was a lead author of the

1995 Report of Intergovernmental Panel on Climate

Changes, which shared the 2007 Nobel Peace Prize.

Professor Stiglitz was a member of the Council of

Economic Advisers from 1993 to 1997, serving as its

chairman for two years. He was Chief Economist and

Senior Vice President of the World Bank from 1997 to

2000. In 2009, he was appointed by the President of

the United Nations General Assembly to chair the

Commission of Experts on Reform of the

International Financial and Monetary System. He

founded Columbia’s Initiative for Policy Dialogue,

which addresses international development, and is

co-chair of the High-Level Expert Group on the

Measurement of Economic Performance and Social

Progress at the Organization for Economic

Cooperation and Development.

Professor Stiglitz founded the Journal of Economic

Perspectives, co-founded the Journal of Globalization

and Development and Economists’ Voice, and has

authored or co-authored leading economics texts

including Economics of the Public Sector; Economics;

Principles of Macroeconomics; and Principles of

Microeconomics. He has authored or co-authored

popular and scholarly titles including Globalization

and Its Discontents; People, Power, and Profits;

Rewriting the Rules of the European Economy; Fair

Trade for All; and Making Globalization Work;

Stability with Growth.

Geoffrey Heal is a Professor of Economics at

Columbia University and the Donald C. Waite III

Professor of Social Enterprise. He previously taught

at the University of Sussex, the University of Essex,

Yale University, Stanford University, École

Polytechnique, Stockholm University, and Princeton

University. Professor Heal has made significant

contributions to economic theory and environmental

economics. He studies developments in energy

markets, the impact of climate change on business,

and the economics of corporate social responsibility.

Among the courses he teaches are “Business and

Society: Doing Well by Doing Good?” and “The

Business of Sustainability.”

Professor Heal currently serves as Chair of the

Board of the Coalition of Rainforest Nations and as a

member of the board of the Union of Concerned

Scientists. He sits on the advisory board of the

Environmental Defense Fund. He has also chaired a

National Academy of Sciences committee on valuing

ecosystem services, was a Commissioner of the Pew

Oceans Commission, was a coordinating lead author

of the Intergovernmental Panel on Climate Change’s

Fifth Assessment Report, and was a member of

President Sarkozy’s Commission on the Measurement

of Economic Performance and Social Progress.

He is the author of 18 books and over 200 articles.

His latest book, Endangered Economies: How the

Neglect of Nature Threatens our Prosperity, sets out

the economic and business case for environmental

conservation.

Oxfam America is a non-profit organization that

works to end the injustice of poverty and help people

build better futures for themselves, save lives in

disasters, and hold the powerful accountable for

violations of international law. Oxfam America is part

of a global Oxfam Confederation with offices located

in 67 countries. Oxfam focuses its humanitarian

efforts in economically, socially, and politically

volatile countries, providing grants and technical

support to boost local economies, improve food access

and labor conditions, establish land rights, and

address water quality and scarcity.

As part of that mission, Oxfam challenges

multinational companies through shareholder and

private sector engagement to use their power to

improve living and labor conditions in the countries

in which they operate or source their products and

inputs. Oxfam America’s Private Sector Department

works with some of the world’s largest companies

across a variety of industries, including the

agribusiness,

extractive,

financial,

and

pharmaceutical sectors. It works to ensure that

corporate practices align with international human

rights obligations, result in positive social and

environmental impacts for vulnerable communities,

and mitigate externalities of business operations—all

of which ultimately provide long-term financial

benefit to the companies.

Oxfam’s Private Sector Department has developed

rich expertise in the field of corporate human rights

obligations, providing it with unique insight into

norms that companies and states are expected to

adopt, and the financial impacts that result from

ensuring that companies respect human rights and

avoid contributing to egregious human rights abuses

such as child slavery.

SUMMARY OF ARGUMENT

This litigation asks whether a domestic

corporation can be liable for egregious human rights

abuses under the ATS. In addition to questions

involving statutory interpretation and international

law, Petitioners and their supporting amici have

raised economic and policy arguments concerning

corporate liability.

Persistent among these are whether corporate

liability will: (1) cause corporations to disinvest in less

developed countries (“LDCs”), undermining LDC

economic development, and deter foreign investment

in the United States; (2) place U.S. businesses at a

competitive disadvantage vis-à-vis their foreign

competitors; and (3) discourage proactive corporate

efforts to address human rights abuses in their supply

chains. 2 These arguments are without merit and

should be rejected.

2 E.g., Nestlé USA Merits Br. 47-50; Cargill Merits Br. 40, 50

48; Coca-Cola Merits-Stage Amicus Br. 6-12; World Cocoa

Found., et al. Merits-Stage Amicus Br. 17-21; Wash. Legal

Corporate civil liability under the ATS is one of

several incentives that induce firms to prevent

human rights abuses in their operations and supply

chains. This system of incentives includes civil

liability under the ATS as well as other federal, state,

and foreign laws that enforce compliance, and

marketplace and reputational pressures that

encourage voluntary compliance. Standing alone,

each of these is imperfect and have their own

limitations, but together they are complementary,

reinforcing incentives to prevent and mitigate the

worst human rights abuses and promote responsible

corporate behavior.

Among these mechanisms, corporate civil liability

under the ATS is an important and economically

efficient means of enforcing laws against the most

egregious human rights abuses because it puts

enforcement in the hands of those with the greatest

incentive to enforce compliance—the victims—and

targets the costs of non-compliance to those with the

greatest ability to police their own actions—

corporations. This is particularly so where local

regulatory systems and judicial enforcement

mechanisms are weak or non-existent. Corporate ATS

liability reduces transaction costs associated with

enforcing human rights law. It also promotes longterm economic development and foreign direct

investment in LDCs.

Found., et al. Merits-Stage Amicus Br. 13-14; Chamber of

Commerce, et al. Merits-Stage Amicus Br. 26.

Concerns that the expected cost of potential future

ATS suits will cause U.S. corporations to withdraw

from or decline to invest in LDCs and deter foreign

investment in the United States lack both empirical

support and any logical underpinning. Appropriate

analysis demands the opposite conclusion. Although

domestic corporations have faced the specter of ATS

liability for decades, those promoting corporate

immunity have not pointed to any credible evidence

that foreign direct investment (“FDI”) in LDCs has

declined. Corporations make investment decisions—

regarding investment in LDCs and investment in the

United States—based on a variety of economic

considerations. If investment is profitable, the risk of

potential liability is unlikely to dissuade economically

desirable investment in the United States or abroad.

Moreover, corporate liability incentivizes behavior

that can be expected to result in improved human

rights conditions in the LDCs in which they operate.

That, in turn, fosters stability and long-term

economic development and attracts further FDI—all

benefits that inure to U.S. corporations and to the

reputation of the United States.

Further, concern that U.S. firms would be

disadvantaged relative to their foreign competitors is

unsubstantiated and without merit. First, it rests on

the premise that bad businesses in the United States

should be on the same footing as bad businesses in

other countries. That is the wrong analysis and

creates a race to the bottom. Corporate accountability

under the ATS levels the playing field for U.S.

corporations that already comply with human rights

norms (and internalize the costs of doing so) vis-à-vis

their competitors that do not, and encourages a race

to the top to avoid liability. The U.S. experience with

the Foreign Corrupt Practices Act and the SarbanesOxley Act demonstrates that this race to the top

benefits U.S. corporations (and the United States)

and encourages compliance abroad.

Additionally,

many foreign competitors already face pressure to

comply with human rights norms and incur costs for

compliance and monitoring; domestic corporations

that are incentivized by the risk of ATS liability to do

the same are not disadvantaged vis-à-vis such foreign

competitors.

Additionally, domestic corporations whose conduct

comports with customary international law may

experience

competitive

advantage.

LDC

governments

that

lack

strong

enforcement

mechanisms but nevertheless seek investment by

corporations more likely to adhere to international

human rights standards are more likely to welcome

domestic corporations. Moreover, any short-term

disinvestment that might occur (despite lack of

evidence that it would) should be more than offset by

long-term improvements in LDCs’ economic and

social climate, which the ATS encourages and which

ultimately benefit U.S. corporations.

Last, claims that liability will discourage domestic

corporations from taking proactive measures to

mitigate and prevent human rights abuses in their

supply chains and promote economic development in

LDCs are baseless. Corporations face pressures in

product, labor, and capital markets to undertake such

efforts, which are complementary with corporate civil

liability. Such proactive efforts are prompted, in part,

by the need to avoid or mitigate the reputational and

brand image harm that Oxfam and other nongovernmental organizations (“NGOs”) bring to bear

when they expose corporations with weak or no

human rights due diligence. The ATS reinforces these

marketplace incentives; it does not counter or

undermine them.

ARGUMENT

TORT LIABILITY CREATES APPROPRIATE

INCENTIVES THAT ENHANCE ECONOMIC

EFFICIENCIES.

Tort law represents an important part of an

efficient economic system. It provides incentives for

appropriate behavior by requiring those who injure

others, to pay damages to those whom they have

harmed. Permitting corporate liability under the ATS

(or any other law) might be unwelcome for bad

businesses but discouraging conduct that violates

human rights—as here—embodies the very purpose

of tort law. It requires firms to internalize the

negative externalities 3 their harmful acts impose on

others.

Tort law functions as a complement to other

mechanisms created to deter negative externalities

and infractions of law—including mandatory means

3 A negative externality occurs when one’s actions cause

harm that is neither compensated by enforcing private rights nor

addressed by public law means.

such as regulation, taxation, and sanctions, and

voluntary mechanisms like the Harkin-Engel

framework 4 in the cocoa industry. These means can

prevent only some violations from occurring and, in

the absence of an omniscient and omnipotent

regulator, persons and companies can continue to

cause harm to others. Tort law complements these

other mechanisms because it provides those with the

most information about the harm with the ability to

seek redress. And corporations’ awareness that such

redress is available provides incentives for market

participants to avoid injurious behavior in their

operations and supply chains, minimizing human

rights violations.

The literature on the economic impact of labor

standards provides some indication of the economic

efficiency of corporate tort liability and of the absence

of adverse investment effects. Even after the

establishment of labor standards, violations often

continue to occur because enforcement is never

perfect. Targeted penalties—imposed in the form of

fines—represent one incentive that has been

incorporated into several U.S. bilateral trade

agreements to extend in-country labor protections and

improve enforcement efficiencies. See Sandra Polaski

& Katherine Vyborny, Labor Clauses in Trade

4 Despite the framework, the VOICE Network, in which

amicus Oxfam is a member, reported that in 2018, no member of

the cocoa sector was anywhere near the goal of a 70% reduction

in child labor by 2020. Antonie Fountain & Friedel HuetzAdams,

Cocoa

Barometer

2018,

https://www.voicenetwork.eu/wpcontent/uploads/2019/08/Cocoaborometer2018_web4.pdf.

Agreements: Policy and Practice, 10 Integration &

Trade 95 (2006).

Corporate civil liability for

violations of human rights norms is analogous to

focusing penalties on non-compliant corporations and

would enhance both efficiency of oversight and

fairness to other market participants.

Private redress under the ATS is particularly

advantageous. This is because the harmful acts at

issue are the most egregious torts in violation of

customary international law and often occur in

locations in which domestic courts provide an

inadequate forum for pursuing and enforcing tort

claims, while other forms of sanctions, such as

regulation and taxes, are weakly applied.

Moreover, it is now well-recognized that in a

modern economy, the provision of appropriate

incentives (to avoid injury to others) must extend

beyond the imposition of liability to the person who

commits the injury. 5 In particular, corporations must

be provided with incentives to discourage and deter

their agents from engaging in such potentially

harmful acts and to develop monitoring systems that

promote compliance. Because corporations are in the

best position to monitor such activities, domestic

corporate liability can minimize enforcement

5 Petitioners claim that corporate ATS liability will

undermine the deterrent effect on natural persons (e.g., Nestlé

Merits-Stage Br. 50) ignores both (1) that corporate liability does

not foreclose suits against both natural persons that carry out

the violation and against corporations for secondary liability;

and (2) the difficulty of obtaining personal jurisdiction over

individual perpetrators located abroad.

transactions costs. In addition, the limited resources

of persons—as compared to those of the corporations

for which they work—attenuates the effectiveness of

liability on persons alone.

Similarly, specious reasoning lies behind the claim

that the specter of frivolous lawsuits counsels against

corporate liability. Like any other tool used to elicit

appropriate behavior, tort law has costs and benefits.

On the benefit side, it is often a more efficient means

than regulation for creating accountability and

inducing appropriate behavior. On the cost side, there

is frivolous litigation. But every advanced country

has, in a variety of arenas, concluded that it is

important to complement regulations with civil

liability; even with a reasonable regulatory structure,

the benefits of civil liability exceed the costs. This

argument is even more compelling with regard to the

ATS, reserved for the most egregious human rights

abuses and cases where there are marked deficiencies

in regulatory structures or their enforcement.

Furthermore, recognition of corporate liability

would demonstrate commitment to a variety of widely

shared principles. The liability imposed by the ATS

reflects universally recognized human rights norms.

The United States values, and benefits from, the

existence of such international norms. Its reputation

vis-à-vis human rights has declined at the same time

as the reputation of other countries has improved. 6

6 See, e.g., U.S. News Staff, Countries Seen to Care about

Human Rights, U.S. News & World Reports, Apr. 21, 2020,

www.usnews.com/news/best-countries/articles/the-10-countries-

The United States and its corporations benefit in the

increasingly global markets for labor, capital, and

consumers by improving this reputation.

II.

CORPORATE LIABILITY WILL DETER NEITHER

U.S. FOREIGN DIRECT INVESTMENT IN LDCS

NOR FOREIGN INVESTMENT IN THE UNITED

STATES.

Those seeking corporate immunity from the ATS

argue that domestic corporate accountability for

human rights violations will impede economic

investment in and development of LDCs that rely on

valuable FDI and discourage foreign corporations

from investing in the United States. But these claims

lack any empirical evidence, rest on unreasonable

implicit assumptions, and are

contradicted by

available empirical evidence and sound economic

principles.

A. Domestic Corporate Liability Will Not

Deter, and Can Be Expected to

Promote, Foreign Direct Investment in

LDCs.

Petitioners and certain amici erroneously assert

that without corporate immunity from the ATS,

domestic corporations will exit LDCs in which they

had invested and refrain from future investment.

that-care-the-most-about-human-rights-according-toperception.

This claim lacks any empirical support. 7 In fact,

although victims have used the ATS to enforce

violations of human rights for the last 40 years 8 and

courts have assumed for several

decades that

corporations may be subject to ATS liability, 9 to date,

no study has shown that this potential liability has

reduced investment in LDCs despite dire predictions

to the contrary. See Robert Knowles, A Realist Defense

of the Alien Tort Statute, 88 Wash. U. L. Rev. 1117,

1156–59 (2011) (discussing Gary Clyde Hufbauer &

Nicholas K. Mitrokostas, Awakening Monster: The

Alien Tort Statute of 1789, Inst. for Int’l Econ. (2003),

and noting those authors’ predictions that the ATS

would depress worldwide trade, result in lower FDI in

target countries, and cost the United States hundreds

of thousands of manufacturing jobs have not

materialized). In our judgment, corporate liability

ultimately promotes FDI, and, in particular, makes

LDCs more willing to accept profitable FDI from the

United States.

For example, Nestlé’s support for that proposition—

Sykes (2012)—offers no empirical evidence regarding such harm.

Nestlé Merits Br. 47. That author’s only evidence is Talisman

Energy’s exit from Sudan. As discussed infra, Talisman divested

for myriad other reasons.

See Sosa v. Alvarez-Machain, 542 U.S. 692, 743, (2004)

(recognizing Filartiga v. Pena–Irala, 630 F.2d 876 (2d Cir. 1980),

as the first of a series of cases applying the ATS to human rights

abuses in violation of international law).

See Doe v. Exxon Mobil Corp., 654 F.3d 11, 57 (D.C. Cir.

2011) (noting the issue of corporate liability has remained in the

background since the Second Circuit decided Filartiga and that

courts have assumed corporations were liable).

Certain amici attribute Talisman Energy’s

divestment in Sudan to ATS litigation relating to its

complicity in the Sudanese government’s human

rights violations. 10 Talisman’s decision, however, was

influenced by a range of factors—a complex web of

political risks with adverse economic and public

relations outcomes. These include Canada’s

investigation of Talisman’s Sudanese operations, the

United States’ designation of Sudan as a statesponsor of terrorism, and a campaign by NGOs

targeted at both the U.S. and Canadian governments

and Talisman’s shareholders that caused a sell-off of

institutional investors’ shares, reducing Talisman’s

share price and enterprise value. Stephen J. Kobrin,

Oil and Politics: Talisman Energy and Sudan, 36

N.Y.U. J. Int'l L. & Pol. 425, 439–42, 444, 446–47 426

(2004). 11 Thus, Talisman would likely have divested

regardless of the ATS litigation.

Second, as Talisman’s divestment demonstrates,

corporations’ foreign investment decisions are

influenced by overall business opportunities. These

include access to new markets; access to

complementary assets, such as technology; access to

natural resources (as is the case with the Nestlé

investment in West Africa); and efficiency-seeking

largely through lower labor costs. Federico CarrilCaccia & Elana Pavlova, Foreign Direct Investment

and its Drivers: A Global and EU Perspective, ECB

13.

10 E.g., Wash. Legal Found., et al., Merits-Stage Amicus Br.

11 See also, Talisman to Sell Its Stake in Company in Sudan,

N.Y. Times, Oct. 31, 2002, at C15.

Econ. Bull., June 26, 2018. 12 Each of these factors

describe profit-generating activity, which in turn is

enhanced by political and economic stability in the

target country. Results from a survey of more than

2,400 CEOs of firms engaged in FDI identified the

most important factors to be political stability,

macroeconomic stability, and the legal and regulatory

environment. World Bank Grp., 2019/2020 Global

Investment Competitiveness Report, Rebuilding

Investor Confidence in Times of Uncertainty 16 (2020).

Notably, no respondent identified civil litigation risk

as a factor, let alone ATS litigation. 13

Available at https://www.ecb.europa.eu/pub/economicbulletin/articles/2018/html/ecb.ebart201804_01.en.html#toc1.

13 This may be because the ATS is reserved for the most

egregious human rights abuses. Sosa v. Alvarez-Machain, 542

U.S. 692 (2004). And those egregious cases require the safety net

the ATS provides.

As various amici admit, far from a flood of corporate ATS

litigation over the last 40 years, there has been but a trickle. See

e.g., Chamber of Commerce, et al. Merits-Stage Amicus Br. 24.

(stating there have been 155 ATS cases filed against

corporations) (citing Donald Earl Childress, The Alien Tort

Statute, Federalism, and the Next Wave of Transnational

Litigation, 100 Geo. L.J. 709, 713 (2012) (citing Jonathan

Drimmer & Sarah R. Larmoree, Think Globally, Sue Locally,

Trends and Out-of-Court Tactics in Transnational Tort Actions,

29 Berkley J. Int’l L. 456, 460)). But this number includes cases

that were consolidated, and only 120 involved cases even

plausibly fell under the statute, with the remainder involving

commercial or employment disputes, securities actions and the

like (sometimes brought by corporations). Drimmer, supra at 461

& nn.10, 33 (citing Michael Goldhaber, The Life and Death of the

Corporate Alien Tort, Am. Lawyer, Oct. 12, 2010) which

identifies the 155 actions). And the vast majority of those actions

Nestlé’s own conduct reinforces this conclusion.

Despite nearly two-decades of ATS litigation relating

to its cocoa operations in Côte D’Ivoire and

accusations that it sources inputs from fisheries in

Thailand that rely on forced labor, Nestlé continues

to source its inputs from, and invest in, both

countries. 14 Amicus Coca-Cola, too, lauds its

continued investment in LDC economic development

and human rights prevention in countries from which

it sources sugarcane despite the purported risk of

were not class actions, which Nestlé asserts impose intolerable

risk (Nestlé Merits Br. 33), but rather claims by individuals.

Contrast this with the 200,000 to 300,000 civil cases filed

annually in our federal courts over roughly the same period.

Admin. Office of the U.S. Courts, Judicial Facts and Figures

2019, tbl. 4.1, Civil Cases Filed, Terminated and Pending,

https://www.uscourts.gov/statistics-reports/judicial-facts-andfigures-2019.

14 See, e.g., Press Release, Nestlé, Nestlé scales up action

against child labor and expands cocoa sustainability program,

Dec. 10, 2019, https://www.nestle.com/media/news/nestleaction-against-child-labor-cocoa-sustainability-program; Press

Release, Nestlé, Nestlé invests CHF 2.5 million and partners

with the government of Côte d’Ivoire to protect and restore the

Cavally

forest

reserve,

July

20,

2020

;

https://www.nestle.com/media/news/nestle-partnersgovernment-cote-ivoire-protect-cavally; Nestlé, How Has Nestle

Improved Its Seafood Sourcing?, https://www.nestle.com/asknestle/human-rights/answers/nestle-forced-labour-supplychains; Nestlé Procurement, Responsible Sourcing of Seafood at

Nestlé,

https://www.nestle.com/sites/default/files/assetlibrary/documents/creating-shared-value/responsiblesourcing/seafood-responsible-sourcing-update-2017.pdf.

aiding and abetting liability. Coca-Cola Merits-Stage

Amicus Br. 8-10.

Consistent with the economic evidence discussed

supra, empirical evidence suggests that foreign

capital flows to countries that respect human rights

because such respect signals greater political stability

and reduced corporate vulnerability to consumer

outcries and facilitates an economic environment that

is conducive to developing human capital, which

attracts FDI. Shannon L. Blanton & Robert G.

Blanton, What Attracts Foreign Investors? An

Examination of Human Rights and Foreign Direct

Investment, 69 J. of Pol. 143, 153 (2007). Hence, as

corporate ATS liability incentivizes human rights

compliance, it can be expected to increase, not

decrease, capital flows to those LDCs, especially those

outflows that are particular benefit to LDCs. If FDI

were undertaken only because

human rights

violations make that investment profitable, neither

the United States nor the recipient country should

want to encourage it. Such investment would, as

amici argue elsewhere here, harm U.S. corporate

reputation and potentially discourage investment

from the United States.

The argument that U.S. corporations would divest

also assumes that economic development is unrelated

to respect for human rights. But several economic

studies show that respect for civil liberties and

human rights are associated with improved economic

performance in LDCs, potentially enhancing returns

from FDI. Among the most compelling evidence comes

from work done at the World Bank while amicus

Stiglitz was Chief Economist there. It found that

economic returns to World Bank-financed projects

were systematically higher in countries with higher

human rights and civil liberties scores. Jonathan

Isham, et al., Civil Liberties, Democracy, and the

Performance of Government Projects, 11 World Bank

Econ. Rev. 219, 229-30 (1997). There is empirical

evidence that protection of human rights and other

civil liberties is associated with increased investment

and economic growth and disregard for the same is

associated with poorer economic outcomes. 15 Wade

M. Cole, The Effects of Human Rights on Economic

Growth, 1965 to 2010, 2 Soc. of Dev. 375 (2016).

It is also important to recognize that worldwide

efforts to improve LDC labor standards have not

produced any measurable declines in FDI in LDCs;

indeed, evidence points in the opposite direction—

improved labor rights may be associated with greater

FDI. See David Kucera, The Effects of Core Workers

Rights on Labour Costs and Foreign Direct

Investment: Evaluating the “Conventional Wisdom” 2,

Int’l Inst. for Labour Studies, Discussion Paper No.

130 (2001); Emmanuel Teitelbaum, Measuring Trade

Union Rights Through Violations Recorded in Textual

Sources: An Assessment, 63 Pol. Res. Q. 461, 471–72

(2010). The movement to improve LDC labor

15 The World Bank has reported evidence linking human

trafficking to a range of development issues, including poverty,

human capital investment, gender inequality, and gender-based

violence. The World Bank, Human Rights and Development

Trust Fund, https://www.worldbank.org/en/programs/humanrights-and-development-trust-fund.

standards is, in some ways, analogous to the

application of ATS. It seems obvious that a firm is

more likely to run afoul of national laws regarding

labor standards than it is to violate international law

regarding human rights. Given that improved LDC

labor standards have had no measurable impact on

investment (in LDCs or in the United States), the

claim that liability under the ATS—which should

improve human rights standards in LDCs—will

result in a significant decrease in FDI appears farfetched.

The argument also disregards that many

corporations that operate in an LDC to extract

resources may not have the option to divest because

there are few other alternative sources. For example,

in 2018, Côte D’Ivoire and Ghana accounted for

nearly two-thirds of global cocoa bean production, and

no country comes remotely close the Côte D’Ivoire’s

volumes. See 46 Q. Bull. of Cocoa Stat., Int’l Cocoa

Org. (2019/2020). And in 2019, the Democratic

Republic of the Congo (“DRC”) alone was responsible

for over 70 percent of the world’s mine cobalt supplies;

its next largest country competitor produced only 6

percent of the DRC’s volume. 16 Where resources are

geographically concentrated, ATS liability is unlikely

to have any effect on FDI. Where resources are not

geographically concentrated, even if ATS liability

changes FDI decisions (though no evidence suggests

16 Mines & Metals, The World’s Top 10 Largest Cobalt

Producers

2019

(May

2020),

https://www.minesandmetals.com/2020/05/the-worlds-top-10largest-cobalt-producers-in-2019/.

it does) that would at most shift investment to

countries with better practices, but not affect the

overall level of global investment. Again, the ATS’s

main effect is to encourage countries and companies

to adopt better practices, the consequences of which

are positive for the United States, domestic

corporations, investment in LDCs, and the LDCs

themselves.

ATS and other measures attempting to ensure

good corporate behavior may in fact have a positive

effect on the flow of capital to developing countries,

for several reasons. First, in many countries, there

are strong pressures from civil society and responsible

policy makers to restrict the entry of foreign firms

because of concern about abuses of the kind presented

here. Such pressures arise in part because of

concerns that local governments may not take

appropriate actions to curb these abuses. Confidence

in foreign investment is increased when corporations

are incentivized by ATS liability to adhere to human

rights norms. This particularly benefits the United

States

and other countries with similar tort

frameworks.

Moreover, some American shareholders (including

institutional investors) are reluctant to have the

companies in which they have invested make

investments in LDCs, lest they engage in practices

that are in violation of international law and norms—

knowing that there may be inadequate enforcement

in the local jurisdiction. The ATS helps assure that

the corporation and its executives have incentives not

to engage in such practices. As amici have noted,

better human rights practices create an economic and

political environment that is more conducive to

growth and investment.

B. Domestic Corporate Liability Will Not

Deter Foreign Investment in the U.S.

Because of the considerations that drive foreign

investment discussed supra, domestic corporate

liability under the ATS will not deter foreign

investment in the United States. Like their other

arguments discussed herein, proponents of corporate

immunity present no empirical evidence for such

claims, let alone any evidence that such an effect,

were it present, would have a significant adverse

effect on the US economy. The argument is based on

a fundamental misunderstanding of the determinants

of investment in the United States.

Foreign firms locating in the U.S. are typically

drawn by its large domestic market 17 or its unique

concentration

innovative

scientific

and

technological institutions and companies, and the

human capital of their researchers, engineers and

scientists. 18 Other factors attracting investment in

the U.S. include advanced infrastructure, strong

protection of property rights, social and political

Raymond Vernon, International Investment and

International Trade in the Product Cycle, 80 Q. J. Econ. 190

(1966).

Richard Florida, The Globalization of R&D: Results of a

Survey of Foreign-Affiliated R&D laboratories in the USA, 26

Research Pol’y 85 (1997).

stability, well-functioning capital markets, and a

highly educated and mobile labor force. Thus, the

benefits of operating in the U.S. are likely to outweigh

any potential liability under the ATS. 19

Moreover, the threat of foreign corporations

withdrawing from, or declining to invest, in the

United States would have a significant adverse

impact only if there were large numbers of foreign

companies with access to technology, knowledge, or

resources that were not available to U.S. firms.

Because there are few—if any—niches in the U.S.

market for which these conditions hold true, any

decrease in investment by the foreign firm would be

offset by increased investment by American firms.

Hence, even if one were to assume, arguendo, that

The argument also disregards that most foreign

corporations with U.S. operations do business here despite our

legal regime that may expose them to greater civil liability

generally than they may face at home as well as stronger

substantive law. Many countries lack mechanisms available

here that make redress more available, such as opt-out class

actions (that may increase potential damages), liberal discovery

rules, and the “American Rule” on fees and costs. See, e.g.,

Manning Gilbert Warren III, The U.S. Securities Fraud Class

Action: An Unlikely Export to the European Union, 37 Brook. J.

Int'l L. 1075, 1083 (2012); Csongor István Nagy, The Reception

of Collective Actions in Europe: Reconstructing the Mental

Process of a Legal Transplantation, 2020 J. Disp. Resol. 413, 426

(2020). For example, collective redress is nascent and limited in

Europe. See Istvan, supra at 426. If increased risk of liability in

the United States deterred investment, one would expect there

to be empirical evidence of the same. Yet neither Petitioners nor

their supporting amici offer any such support. One would not

expect domestic corporate ATS liability to change that result.

foreign firms might decrease their investment in the

United States, such disinvestment would not have a

significant negative impact on the U.S. economy.

III.

CORPORATE LIABILITY WILL NOT PLACE U.S.

CORPORATIONS

COMPETITIVE

DISADVANTAGE.

Proponents of corporate immunity claim U.S.

corporations will be disadvantaged vis-à-vis foreign

competitors that will displace domestic corporations

that disinvest in LDCs with a history of human rights

violations and that are not subject to jurisdiction

under the ATS. But proponents cite no credible

evidence to support this argument and logic suggests

that the opposite is more likely to be true.

First, as discussed supra, there is no convincing

evidence that the possibility of ATS litigation has ever

deterred U.S. companies from investing where that

investment is profitable, or that acting in a socially

responsible way (not engaging in human rights

violations) would make an investment that is

otherwise profitable unprofitable. 20 Corporations

that do not disinvest cannot be displaced. But even if

corporate liability under the ATS were to deter FDI in

the short-run, in the long-run it would create a more

attractive environment for U.S. FDI by inducing

governments to change their behavior. U.S.

disinvestment from countries that systematically

20 From a public policy perspective, if an investment were

only profitable, say, because of child labor, it is not clear that

investment should be encouraged.

violate human rights puts pressure on governments

to respect international law if they want to become

attractive to US investors.

Once governments ensure protection of human

rights, U.S. and foreign firms alike operating in LDCs

become accountable. The playing field becomes more

level. The Foreign Corrupt Practices Act (“FCPA”), 15

U.S.C. §§ 78dd-1, et seq., for example, has actually

created an international environment that is more

attractive for U.S. firms. While there were initial

complaints that domestic firms were disadvantaged

by not being able to bribe foreign officials (and to take

tax deductions for bribes) it led to an economic and

political environment in which bribery was

discouraged both by host countries and other source

countries. American businesses have been the overall

beneficiaries: in addition to the more conducive

business environment they now encounter, domestic

corporations also earn a reputational premium

because they are known to be good corporate actors.

Second, a vast number of multinational

corporations have at least some business presence in

the United States that subjects them to jurisdiction

(or at least creates the possibility of jurisdiction).

Foreign firms, operating in our markets, thus face a

similar risk. Some may also face risks of liability or

due diligence requirements in their home countries.

Human rights due diligence and corporate

accountability are global trends. Some jurisdictions

impose corporate liability for human rights violations,

including for conduct abroad. For example, the

Canadian Supreme Court permitted Eritrean

plaintiffs alleging forced labor and other human

rights abuses occurring at an Eritrean mine to pursue

in Canadian courts their claims for violations of

customary international law against a Canadian

defendant for the actions of its foreign sub-contractor.

Nevsun Res. Ltd. v. Araya, [2020] SCC 5 (CanLII)

(Can.). 21 And many have enacted laws requiring

corporations to publicly report the actions they are

taking to prevent human rights abuses in their supply

chains 22 and, in some cases, impose standards for due

21 Courts in other countries have done likewise. See Morrison

Foerster, UK Companies Responsible for Business and Human

Rights

Violations

Overseas,

June

2020,

https://www.mofo.com/resources/insights/200608-uk-humanrights-violations.html; Nicol Jägers, et al., The Future of

Corporate Liability for Extraterritorial Human Rights Abuses:

The Dutch Case Against Shell, 107 Am. J. Int’l L. Unbound 3641 (2013), doi:10.1017/S2398772300009673.

The French “Duty of Vigilance” law provides a private right

of action for harms caused by failure to comply with their duty

to develop and implement a vigilance plan. Loi 2017-399 du 27

mars 2017 relative au devoir de vigilance des sociétés mères et

des entreprises donneuses d'ordre Journal Officiel de la

République Française [J.O.] Code de commerce [C. com.]

[Commercial

Code]

art.

225-102-5

(Fr.),

https://www.legifrance.gouv.fr/jo_pdf.do?id=JORFTEXT000034

290626.

22 See European Commission, Study on Due Diligence

Requirements Through the Supply Chain, Final Report 19 (Jan.

2020),

https://www.traffickingmatters.com/wpcontent/uploads/2020/02/DS0120017ENN.en_.pdf

(discussing

new and pending due diligence requirements throughout

European Union).

Contrary to the Cato Institute’s claims, Cato Inst. MeritsStage Amicus Br. 16-17, these due diligence laws have nothing

whatever to say about a country’s views on corporate civil

diligence to detect and prevent human rights

violations for which there is mandatory compliance. 23

Third, corporate ATS liability may make U.S.

firms with a reputation for human rights compliance

more attractive to LDC governments that are

concerned about violations of international law but

lack sufficient enforcement tools. Côte D’Ivoire is just

one example: it has strong labor laws but lacks

enforcement resources. See U.S. Dep’t of Labor, Child

Labor and Forced Labor Reports, Côte D’Ivoire,

https://www.dol.gov/agencies/ilab/resources/reports/c

hild-labor/cote-divoire. The threat of corporate

liability under ATS can encourage corporate behavior

that assures such governments that U.S. firms

respect human rights norms.

Fourth, corporate liability does not increase costs

for all companies equally. A company that does not

need to change its behavior to comply with

international human rights norms will not incur extra

liability; their focus is on prevention of the violations in the first

instance. See Office of the High Comm’r Human Rights, United

Nations,

https://www.ohchr.org/EN/Issues/Business/Pages/CorporateHR

DueDiligence.aspx. (“The prevention of adverse impacts on

people is the main purpose of human rights due diligence.”).

23 For example, the European Commission’s Conflict

Minerals Regulation requires importers of certain minerals

produced in countries in which sales and production perpetuates

human rights abuses to meet responsible sourcing standards.

European

Commission,

The

Regulation

Explained,

https://ec.europa.eu/trade/policy/in-focus/conflict-mineralsregulation/regulation-explained/.

costs of compliance. Corporate liability will put such

domestic companies on a more favorable footing with

corporations that have not implemented policies and

procedures to protect against such violations.

“Businesses in countries that have and enforce laws

against child labor are hurt by competition from

businesses that employ child labor in countries in

which employing children is condoned.” Flomo v.

Firestone Natural Rubber Co., 643 F.3d 1013, 1021

(7th Cir. 2011).

The impact of the Sarbanes–Oxley Act of 2002,

P.L. 107-204, 116 Stat. 745 (codified in scattered

sections of 15 U.S.C.), which imposed potentially

costly accounting standards on companies operating

in the United States, is instructive. Some foreign

companies chose to delist from U.S. exchanges. Yet

several studies found that the firms that delisted in

order to avoid compliance with the Act had weaker

corporate governance than foreign firms that did not

delist. These delisting decisions had economic

consequences: stock prices fell relative to those of

foreign firms that continued to cross-list. See, e.g.,

Peter Hostak, et al., An Examination of the Impact of

the Sarbanes-Oxley Act on the Attractiveness of U.S.

Capital Markets for Foreign Firm, 18 Rev. Acct. Stud.

522 (2013). Thus, when corporations are held to

account, compliant corporations can reap economic

benefits over non-compliant firms. See John C. Coffee,

Jr., Law and the Market: The Impact of Enforcement,

156 U. Pa. L. Rev. 229, 231 n.2 (2007) (noting that

foreign firms’ decision to list in U.S. may be the cause

of empirically observed U.S. listing premium).

IV.

CORPORATE

LIABILITY

WILL

NOT

DISCOURAGE

PROACTIVE

EFFORTS

ADDRESS HUMAN RIGHTS ABUSES.

Another speculative argument advanced by

certain amici and Petitioners is that without

immunity from the ATS, socially responsible

corporations will abandon or decline to undertake

proactive measures that both address and mitigate

human rights abuses in connection with their supply

chains or that promote economic and social

development in LDCs. As with their other arguments,

this contention lacks both empirical support and

foundation in the realities of modern markets.

Corporations that undertake these measures do so

because of the economic and reputational advantages

such efforts bring and to avoid or respond to public

campaigns that expose such abuses and other

negative externalities of multinational operations.

The risk of corporate liability under the ATS may

complement these motivations, but it will not

undermine or displace them.

Nestlé and amicus Coca-Cola Co., which advance

this argument, themselves demonstrate why it should

be rejected. Nestlé continues to publicly promote its

efforts to end child labor in Côte D’Ivoire despite years

of litigation, and, in 2016, voluntarily disclosed that

its pet food supply chain included sources using forced

labor after NGO reports exposed them and undertook

efforts to prevent such abuses, despite the risk it

would be sued for its knowledge of and monitoring of

the abuses. See supra n.14 and accompanying text.

And Coca-Cola extolls both its efforts to remediate

human rights violations associated with its foreign

business activities as well as its steadfast

commitment to these efforts, all despite the risk of

ATS liability. Coca-Cola Merits-Stage Amicus Br. 712. There are clear economic reasons why this is so.

Corporations necessarily operate in three

markets: for their products, for employees, and for

capital. Since the early years of this century, the

counterparties in these markets have increasingly

become concerned about the environmental and social

behavior of the corporations with whom they deal.

Today, attracting customers, capital, and employees

requires attention to human rights and other social

and environment impact.

In the product market, a proactive commitment to

positive social impact enhances a corporation’s

reputation and brand image. Reputation matters.

Retail consumers are increasingly voting with their

wallets and improved reputation translates into

improved

financial

performance.

See,

e.g.,

Organization for Economic Co-operation and

Development, Quantifying the Costs, Benefits and

Risks of Due Diligence for Responsible Business

Conduct (“OECD”) 8 (June 2016). 24 Consumers direct

their business to sellers whose values appear to align

with their own. Karen Moore, Corporate Social

Responsibility:

Consumers

Will

Remember

Companies That Led in 2020, Forbes, Jul. 31, 2020

http://mneguidelines.oecd.org/Quantifying-the-CostBenefits-Risks-of-Due-Diligence-for-RBC.pdf

(summarizing

studies).

(“If your brand and CSR are not in alignment, you run

the risk of alienating audiences and undermining

brand trust.”); Cone Comm’ns, 2017 CSR Study,

https://www.conecomm.com/2017-conecommunications-csr-study-pdf. This is particularly

true for an important set of consumers—millennials,

the largest living adult generation in the United

States. See, e.g., Kelsey Chong, Millennials and the

Rising Demand for Corporate Social Responsibility,

Cal. Mgmt. Rev., Jan. 201, 2017. 25 Research

buttresses the conclusion that customers respond

favorably to businesses that align with their concerns

and values. See e.g., Michael Hiscox and Nicholas

Smyth, Is There Consumer Demand for Improved

Labor Standards? Evidence from Field Experiments

in Social Product Labeling 2, Working Paper (2005)

(finding sales rose for products labeled as made under

good labor standards); 26 Daniel Elfenbeim, et al.,

Reputation Altruism and the Benefits of Seller Charity

in an Online Marketplace, Nat’l Bureau of Econ.

Research, Working Paper 15614 (Dec. 2009)

(charitable contributions lead to greater sales and

higher prices). Most major corporations are well

aware of the marketplace benefits of doing so.

25 https://cmr.berkeley.edu/2017/01/millennials-and-csr/; see

also, e.g., Nielson Co., Investing in the Future: Millennials are

Willing to Pay Extra for a Good Cause, July 23, 2014,

https://www.nielsen.com/us/en/insights/article/2014/investingin-the-future-millennials-are-willing-to-pay-extra-for-a-goodcause/.

https://scholar.harvard.edu/hiscox/publications/thereconsumer-demand-fair-labor-standards-evidence-fieldexperiment.

Public campaigns exposing human rights abuses,

particularly labor issues, and targeting companies

can have direct, negative economic effects on

businesses found to have engaged in them. Few

companies can afford to ignore scathing exposés, such

as the 2016 report by Amnesty International

regarding corporations’ use of inputs sourced from

cobalt mines in the Democratic Republic of Congo

using forced child labor. 27 Apple, one of the targets,

responded not by sticking its head in the sand and

discontinuing its supply chain monitoring program to

reduce ATS liability, but instead by expanding upon

it, publishing the names of its cobalt suppliers, and

promoting economic development projects in

Congolese mining communities. 28

NGOs, including amicus Oxfam, bring product

market pressures to bear by creating a market for

human rights. Oxfam and others rank brand sensitive

competitors on their human rights and other social

practices (or lack thereof). 29 In addition to partnering

27 Amnesty

International, Exposed: Child Labour Behind

Smart Phone and Electric Car Batteries (Jan. 16, 2016),

https://www.amnesty.org/en/latest/news/2016/01/child-labourbehind-smart-phone-and-electric-car-batteries/.

28 Apple Supplier Responsibility 2018 Progress Report 21-24,

https://www.apple.com/supplierresponsibility/pdf/Apple_SR_2018_Progress_Report.pdf.

Other NGOs have similar programs ranking

multinational corporations’ human rights practices. E.g.,

Corporate

Human

Rights

Benchmark,

https://www.corporatebenchmark.org/ (ranking the top publicly

traded multinationals across a range of human rights indicators,

with corporations to advance socially responsible

initiatives, including efforts to eliminate child labor,

Oxfam launched a “Behind the Brands” campaign,

which targets brand name products to raise consumer

awareness and scores the companies based on seven

factors, including labor. Among other corporations,

Oxfam annually ranked Nestlé and its competitors

Mondelez and Mars, generating competition for

favorable rankings, criticizing bad conduct, and

promoting these corporations’ proactive efforts to

address economic development and human rights

abuses, including child labor. 30 Oxfam’s finding that

scores for these companies gradually improved

supports

the

proposition

that

reputational

competition spurs proactive improved human rights

practices.

Similarly, in labor markets, there is growing

evidence that better-trained workers are choosing to

work with companies whose values reflect their own,

and that working for a company perceived as a “good”

company—meeting high ethical standards—boosts

employee morale and increases productivity. See, e.g.,

OECD, supra at 8-9, 39-41 (summarizing studies);

H.S. Albinger and S.J. Freeman, Corporate Social

including actual practices and response to allegations, including

Nestlé and Coca-Cola and their competitors); Know the Chain,

https://knowthechain.org/, (same, with respect to forced and

child labor).

E.g., Mars, Protecting Children Action Plan,

www.mars.com/about/policies-and-practices/protectingchildren-action-plan.; Mondelez, Cocoa Life, Stepping Up Efforts

to Help Address Child Labor, www.cocoalife.org/.

Performance and Attractiveness as an Employer to

Different Job Seeking Populations, 28 J. Bus. Ethics

243 (2000); cf. Christiane Bode, et al., Corporate

Social Initiatives and Employee Retention, 26 Org.

Science 1702 (2015).

In capital markets, a distinctive phenomenon of

the last few decades has been the rapid growth of

environmentally, socially, and environmentally

responsible investing (“ESG”), 31 a component of

which is attention to human rights. Recent estimates

suggest that in, the U.S., more than 26 percent of all

institutionally managed money has an ESG mandate,

accounting for some $11 trillion in assets under

management. Global Sustainable Investment

Alliance, 2018 Global Sustainable Investment Review

4. 32 Globally, investment funds using ESG factors

had more than $26 trillion in assets under

management. See also John G. Ruggie and Emily K.

Middleton, Harvard Kennedy School Money,

Millennials

and

Human

Rights—Sustaining

“Sustainable Investing” 2-3, (June 2018). 33 The

importance of ensuring corporate supply chains are

free of human rights abuses will only grow given

global demographics: studies have found that most

high net-worth millennial investors review their

31 ESG mandates refer to preferences for corporations with

good environmental, social and governance records.

Available

https://www.ussif.org/files/GSIR_Review2018F.pdf.

Available

https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/w

orking.papers/CRI69_FINAL.pdf.

assets for ESG components. Ruggie, supra at 4. ESG

indicators are also correlated with lower risk and

better financial performance. See, e.g., Guido Giese, et

al., Foundations of ESG Investing: How ESG Affects

Equity Valuation, Risk and Performance, 45 J.

Portfolio Mgmt. 69 (July 2019). Research shows that

top-ranked ESG companies outperform other

corporations in both the short- and long-term. 34

Corporations thus have incentives to engage in

proactive efforts to stem human rights abuses and

promote economic development in LDCs to attract

and retain investors.

Shareholder ESG engagement is also an

important incentive for proactive corporate human

rights initiatives. See, e.g., Erika George, Shareholder

Activism and Stakeholder Engagement Strategies:

Promoting Environmental Justice, Human Rights,

and Sustainable Development Goals, 36 Wis. Int'l L.J.

298, 339-348 (2019). Oxfam and other NGOs hold

investments in companies and use their rights as

shareholders to push these companies, through

shareholder resolutions, to internalize the costs

necessary to prevent human rights abuses for a more

equitable society. These resolutions, even if rarely

successful in themselves, draw unwanted publicity to

corporations and have successfully prompted the

34 See, e.g., OECD, supra at 7-10 (summarizing studies);

Ishika Mookerjee, Bank of America Says Buyers Pay Up for TopRanked ESG Firms, Bloomberg Daily Green, Sept. 24, 2020,

www.bloomberg.com/news/articles/2020-09-24/bank-of-americasays-investors-pay-up-for-high-scoring-esg-firms (good ESG

firms have better returns on equity, lower earnings volatility,

lower share price volatility, and lower debt costs).

corporations Oxfam has targeted, such as Nestlé’s

competitor Mondelez, to voluntarily adopt reforms in

exchange for withdrawal of the resolutions that would

impose reputational harms. 35 And last year, an

Oxfam shareholder resolution demanding that

Amazon conduct human rights assessments in its

supply chains garnered the votes of nearly 40 percent

of independent shareholders, demonstrating that

shareholders, including mainstream asset managers,

value efforts to prevent human rights abuses.

Given these considerations, domestic corporate

liability for human rights violations complements,

rather than undermines, marketplace pressure to

undertake proactive efforts to reduce human rights

abuses. Initiatives and human rights due diligence

(whether legislatively mandated or voluntarily

undertaken), are, however, no substitute for civil

liability to redress human rights harms.

CONCLUSION

For the foregoing reasons, this Court should reject

policy arguments asserting adverse economic

consequences from corporate liability under the ATS

and affirm the judgment below.

35 See, e.g., Press Release, Oxfam, Mondelez International

agrees to address women’s inequality in chocolate production,

Apr.

2013,

https://www.oxfam.org/en/pressreleases/mondelez-international-agrees-address-womensinequality-chocolate-production.

Respectfully submitted,

Michael D. Hausfeld,

Counsel of Record

Jeannine M. Kenney

HAUSFELD LLP

1700 K Street, N.W., Suite 650

Washington, D.C. 20006

(202) 540-7200

Counsel for Amici Curiae

October 21, 2020

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