Naomi Jiyoung Bang 0000-00-00 00:00:00
Human trafficking and forced labor reflect the dark side of globalization and modernization, where criminal gangs trade people through international channels, conducted through a rapidly growing network of electronic communications and transport. Unfortunately, it is not just the criminal element that is complicit in violating core standards enshrined in the International Labour Organization Declaration. Multinational corporations who contribute knowingly or unknowingly to the worldwide proliferation of these violations1 are sometimes liable, due to the massive emergence of corporate global production chains of subcontracting.2 In 2000, the United States enacted the Victims of Trafficking and Violence Protection Act,3 America’s first comprehensive law designed to combat the evils of forced labor and sex trafficking. Furthermore, in 2003, the TVPRA was specifically amended to include a civil remedy for trafficked victims, clearing a path to federal district court.4 Yet, victims still face numerous roadblocks in obtaining liability over the corporation in cases where they have been trafficked or forced into labor by one of the corporation’s overseas contractors. This article examines various avenues of secondary liability that victims have attempted to use to hold the corporation responsible in such global subcontracting scenarios. Overview of Liability Theories5 Aiding and Abetting Under Alien Torts Claims Act The Alien Torts Claim Act is a federal statute that bestows original jurisdiction in the U.S. district courts “of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”6 After years of active litigation, the concept of “aiding and abetting” was adopted by the courts as an accepted theory of secondary liability under the ATCA.7 Most of the relevant ATCA cases primarily involve corporations who have provided support or funding, or contracted with tortfeasors in serious violations of human rights.8 The most problematic hurdle is the high standard to prove aiding and abetting, which requires a showing of “purposefulness” on the part of the corporation as the requisite mens rea. This is a tall order. The elements of aiding and abetting for tort liability in the civil context include the following: “(1) the party whom the defendant aids must perform a wrongful act that causes an injury; (2) the defendant must be generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance; and (3) the defendant must knowingly and substantially assist the principal violation.”9 The Nestle case is particularly instructive in observing the destructive application of the “purposeful” standard.10 There, the court found that the plaintiffs — Malian children who were forced to labor in cocoa fields in Cote d'Ivoire — failed to prove the requisite mens rea to prove the corporation’s aiding and abetting liability where the multinational corporations assisted with the production and cultivation of cocoa beans, and dismissed the ATCA claim.11 Specifically, the court held that it was not enough to state that Nestle provided the guns and whips, or locks, or training, but that the plaintiffs needed to allege the purpose of each alleged item – such as the guns and whips being used to “threaten and intimidate the plaintiffs.” Given the U.S. Supreme Court’s decision regarding corporate liability under the ATCA in the Kiobel case,12 the future of the ATCA as a legal mechanism to hold corporations liable appears in jeopardy. In Kiobel, Nigerian residents filed putative class action, under ATCA, claiming that oil corporations aided and abetted Nigerian government in committing human rights abuses against them.13 The Second Circuit held that since customary international law did not recognize corporate liability, neither should ATCA. At oral arguments on Feb. 28, and Oct. 1, 2012, the justices appeared to be leaning toward abolishing both corporate liability and extra-territoriality. An opinion is forthcoming in early 2013. On the bright side, trafficking plaintiffs are still free to pursue claims under the TVPRA where grounds justifying extra-territoriality and corporate liability are supported by a stronger legislative history,14 and case law. Principal-Agent Theory of Liability Another theory of secondary liability attempted by plaintiffs in trafficking or forced labor cases is that of principal-agent. Although agency law is a matter of state law, the main tenets of agency tests appear anchored to common law notions. Under Texas law “to prove agency, evidence must establish that the principal has both the right: (1) to assign the agent's task; and (2) to control the means and details of the process by which the agent will accomplish that task.”15 The use of the agency concept in global contracting cases to find liability against the corporation for the trafficking acts committed by its contractors has also yielded mixed results. In Adhikari,16 a case currently pending in the Southern District of Texas case, plaintiffs alleged an agency relationship seeking liability over KBR, a military contractor, for the actions of its sub-contractor which committed various human rights violations including trafficking. Even though the court found that the plaintiffs had met the Twombly-Iqbal17 plausibility standard in establishing the principal agency relationship, this initial agency determination appears based on both the existence of the contract and additional allegations that the contractor “had the authority to supervise, prohibit, control, and/or regulate (the subcontractor).”18 Although this is a tentatively positive sign that an agency argument could prevail in the global contracting context, it appears that success may depend on the existence of evidence supporting the “control” aspect of the principal- agent relationship. Similar theories are being advanced in other courts.19 Civil RICO Theories Enacted as part of the Organized Crime Control Act of 1970, the RICO20 Act focuses allows for the leaders of a syndicate to be tried for the crimes that they ordered others to do or assisted them. On the surface, the RICO statute offers some glitzy benefits: Treble damages for damages, attorneys’ fees, and the fact that civil RICO claims can be brought as a Rule 23 class action. Although the Fifth Circuit has recognized that alleged victims of trafficking violations have RICO standing for claims of denied wages,21 pursuing a RICO claim is not for the faint-hearted. Perhaps the most popularly used theory of liability over a corporation is conspiracy.22 In general, plaintiffs must prove that the corporation was engaged in labor trafficking on a systematic, widespread scale, that the American defendant gained substantial economic benefit through this activity, and this gain occurred at the expense of trafficked workers.23 The pleading requirements of RICO are extensive and complex. Furthermore, the plaintiffs “must show at least two racketeering predicates that are related, and that they amount to or pose a threat of continued criminal activity.”24 Even if victims can overcome the defendants’ motions to dismiss, they must still endure arduous discovery to satisfy the numerous prerequisites of each individual RICO claim. Moreover, the RICO statute has also been subject to extra-territoriality arguments in overseas actions, although courts have rejected this argument.25 Finally, the statute of limitations of four years is relatively short for victims who suffered unspeakable physical abuse and the debilitating effects of psychological abuse. Arguments such as equitable tolling have generally not been successful.26 Other Theories of Liability Other plaintiffs have argued that they were third-party beneficiaries of the global supply contract between the corporation and the contractor. They have attempted to construe a duty to the workers stemming from the contractual relationship between the contractors and corporation within the terms of the global supply contracts relating to the work conditions of the workers.27 Yet, other plaintiffs have tried to impute liability onto the corporation through the contracting entity by claiming that it was the “alter ego” of the parent – i.e., that they are not really separate entities, but one. However, finding evidence to fulfill the standard that incorporation was undertaken in bad faith is not an easy feat. Other victims have used the criminal justice system to seek restitution, which is normally tied to fraud loss or losses associated with non-payment or under-payment of wages from work performed. However, even when victims are successful in a criminal case, compensation is still not guaranteed. In the Daewoosa case, where the plaintiffs obtained a judgment of $3.5 million, and where one of the traffickers was sentenced to 40 years of imprisonment,28 more than a decade later, not one dollar has been recovered.29 Conclusion In light of the above legal hurdles associated with existing theories of corporate liability discussed above, advocates are encouraged to move away from applications of antiquated common law concepts. This conundrum is also why courts and practitioners must filter through the conflated agency and unrelated premise liability theories often advanced by corporations as red herrings. Instead, they should look to other theories of liability, such as the economic realities test of joint employment, that focuses on the worker’s economic dependency vis-a-vis the corporation.30 By using the “economic realities” test that encourages a meaningful examination of worker dependency in a globalized world, courts could more readily understand, accept, and find that the corporation is as responsible as its contractors.31 Only by according due weight to crucial factors as price and turnaround deadlines dictated by the corporation – which directly correlate to low wages and long hours – can the court’s rulings accurately come in line with the 21st century context of globalization, and dismantle the façade of the “independent contractor.” Continuing to apply yesterday’s laws to today’s facts will only result in continuation of the status quo, while the true economic reality of the circumstances will continue to be ignored. Notes 1. F. Gamillscheg and M. Franzen, Conflicts of Laws in Employment Contracts and Industrial Relations ¶ 37, in Comparative Labour Law and Industrial Relations in Industrialized Market Economies 213–230 (Roger Blanpain ed., Kluwer Law International, 2004). 2. Id. at ¶ 27. 3. Victims of Trafficking and Violence Protection Act of 2000, Pub. L. 106-386, 114 Stat. 1464 (codified as amended at 22 U.S.C. §7101). 4. 18 U.S.C. §1595. 5. For a more in-depth discussion of liability theories in this context, see Naomi Jiyoung Bang, “A New Route to Justice for Victims of Human Trafficking and Forced Labor: Why Current Theories of Corporate Liability Don’t Work,” 43 U. Mem. L. Rev. [page #] (2013). To be presented at University of Memphis Symposium on Human Trafficking on March 22, 2013. 6. 28 U.S.C.A. §1350 (West); See also Beth Stephens et al, International Human Rights Litigation in U.S. Courts 7, 79-80 (Martinus Nijhoff Publishers, 1996) (stating that “slavery and the slave trade are internationally recognized torts of long historical standing.”) 7. There appears to be a split in whether the aiding and abetting concept applies to the TVPA. Compare Doe v. Exxon Mobil Corp., 654 F.3d 11, 58 (D.C. Cir. 2011) with Cabello v. Fernandez-Larios, 402 F.3d 1148, 1157 (11th Cir. 2005) (“An examination of legislative history indicates that the TVPA was intended to reach beyond the person who actually committed the acts, to those ordering, abetting, or assisting in the violation,” relying on S. Rep. No 102-249, at 8-9 (1991)). 8. Adhikari v. Daoud & Partners, 697 F. Supp. 2d 674 (S.D. Tex. 2009); Doe v. Nestle, S.A., 748 F. Supp. 2d 1057 (C.D. Cal. 2010); In re Chiquita Brands Int'l, Inc. Alien Tort Statute & S'holder Derivative Litig., 792 F. Supp. 2d 1301 (S.D. Fla. 2011); Almog v. Arab Bank, PLC, 471 F. Supp. 2d 257 (E.D.N.Y. 2007) 9. Doe v. Exxon Mobil Corp., 654 F.3d 11, citing inter alia, Restatement (Second) of Torts § 876 (1979). 10. Doe v. Nestle, S.A., 748 F. Supp. 2d 1057, 1082-87 (C.D. Cal. 2010). 11. Id. at 1111. 12. Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 145 (2d Cir. 2010) reh’g denied, 642 F.3d 268 (2d Cir. 2011) and cert. denied, 132 S. Ct. 248, 181 L. Ed. 2d 142 (U.S. 2011) and cert. granted, 132 S. Ct. 472, 181 L. Ed. 2d 292 (U.S. 2011). 13. Id. at 123. 14. See, e.g., Mohamed Y. Mattar, Interpreting Judicial Interpretations of the Criminal Statutes of the Trafficking Victims Protection Act: Ten Years Later. 19 AM. U.J. GENDER SOC. POL’Y & L. 1247 (2011). 15. Indian Harbor Ins. Co., Valley Forge Ins. Group, 535 F.3d 359, 364 (5th Cir. 2008). 16. Adhikari v. Daoud & Partners, 697 F. Supp. 2d 674, 679–680 (S.D. Tex. 2009) 17. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)(To survive a motion to dismiss for failure to state a claim upon which relief can be granted, factual allegations must be enough to raise a right to relief above the speculative level); See also, Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) 18. Adhikari v. Daoud & Partners, 697 F. Supp. 2d 674, 684 (S.D. Tex. 2009)(citing Texaco Exploration & Prod., Inc. v. AmClyde Engineered Prods. Co., 448 F.3d 760, 778-79 (5th Cir. 2006); Avondale Indus. v. Int'l Marine Carriers, 15 F.3d 489, 494 (5th Cir. 1994). 19. See Second Amended Complaint, 2010 WL 4970720, at *[page 14, paragraph 68], David Signal v. Intern., LLC, 257 F.R.D. 114 (E.D. La. 2009) (No. 08- 1220)(citation concerns protective orders and discovery issues.) 20. Racketeer Influenced and Corrupt Organizations Act [RICO], Pub.L. 91-452, 84 Stat. 922 (1970) (codified as amended at 18 U.S.C. § 1961–1968). 21. Adhikari v. Daoud & Partners, 697 F. Supp. 2d 674, 691 (S.D. Tex. 2009) (citing Abraham v. Singh, 480 F.3d 351 (5th Cir.2007)). 22. See, e.g., Id. at 693. 23. Id. at 690. 24. American Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1291 (11th Cir. 2010) (citing H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 240, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989).) 25. Adhikari v. Daoud & Partners, 697 F. Supp. 2d 674 (S.D. Tex. 2009) (court found that RICO had extra-territorial application in trafficking case). 26. See, e.g., Forbes v. Eagleson, 228 F.3d 471, 489 (3d Cir. 2000). 27. Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677 (9th Cir. 2009) 28. United States v. Lee, No. 05-10478, 2006 WL 2379688, at *4 (9th Cir. Jan. 25, 2006). 29. To date, plaintiffs in the Daewoosa case, despite numerous legal and political attempts to collect from the Vietnamese government, have not collected one dollar. Interview with Virginia Sudbury, co-counsel for Plaintiffs, August 2012. See “Sweatshops in Paradise,” written by Virginia Sudbury, due to be published October 2012. 30. (Kathleen Kim & Daniel Werner, civil litigation on behalf of victims of human trafficking 17, n.82 (Southern Poverty Law Center 2005) (citing Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992)). 31. For an in-depth discussion on the economic realities theory in this context, see Naomi Jiyoung Bang, “Unmasking the Global Supply Contract Charade: A Novel Theory of Corporate Liability in Human Trafficking and Forced Labor Cases,” 35 Hous. J. Int’l L. [page #] (2013). Naomi Jiyoung Bang is a Houston-based federal immigration litigation attorney and a clinical/adjunct professor of the Asylum/Human Trafficking Clinic at South Texas College of law. She is the founding director of Lawyers Against Human Trafficking, which has handled several federal human trafficking cases, and was recently appointed to the Mayor's Human Trafficking Committee in Houston.
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