Litigation Update: Plaintiffs Survive Motion to Dismiss in Case Involving Claims of Forced Labor in Corporate Supply Chains

Today, January 11, is National Human Trafficking Awareness Day, and therefore a good time to revisit some recent litigation developments. On November 9, a date on which most of the American media was focused on the Presidential election results, there were significant developments in the Keo Ratha v. Phattana Seafood Co. litigation, a case involving allegations of human trafficking in corporate supply chains. The District Court for the Central District of California issued an order that will allow the case to go forward, while dismissing some of the plaintiffs’ claims.

The case highlights the potential litigation risk for companies that know, or should know, that they are benefiting from acts of human trafficking in their supply chains. Plaintiffs in the case allege that they were victims of human trafficking as a result of their recruitment to and subsequent forced labor at factories in Thailand producing seafood for export to the United States. Defendants in the case include both Thai-based companies and U.S.-based companies that import and distribute seafood from Thailand.

Plaintiffs filed suit pursuant to the Trafficking Victims Protection Reauthorization Act (“TVPRA”), which allows victims of human trafficking to bring civil claims against persons or entities that have knowingly benefited from participation in a venture that was engaged in trafficking or forced labor. Plaintiffs also brought claims pursuant to the Alien Tort Statute (“ATS”).

Defendants’ motion to dismiss argued that the civil liability and “knowingly benefiting” provisions of the TVPRA do not apply to extraterritorial conduct and that plaintiffs had not alleged facts sufficient to support claims of human trafficking and forced labor. The Court disagreed with these assertions, finding that the TVPRA, as amended in 2008, does apply to the types of extraterritorial conduct alleged by plaintiffs and that the scope of the court’s extraterritorial jurisdiction does include civil actions. The Court also stated that “courts have uniformly upheld extraterritorial jurisdiction over TVPRA claims against corporations.” The Court thus denied defendants’ motion to dismiss the TVPRA claims.

The Court, however, did dismiss plaintiffs’ ATS claims on the basis that the “activities at issue…unquestionably occurred on foreign soil.” The Court relied on the Supreme Court’s decision in Kiobel v. Royal Dutch Petroleum, Co., in finding plaintiffs could not overcome the presumption against extraterritorial application of the ATS.  Since Kiobel, courts have largely found that mere corporate presence in the United States is not sufficient to overcome that presumption

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