Case 2:05-cv-05133-SVW-JTL Document 138 Filed 09/08/10 Page 1 of 161 Page ID #:1044 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 JOHN DOE I, Individually and on ) CV 05-5133 SVW (JTLx) 11 behalf of Proposed Class Members; ) JOHN DOE II, Individually and on ) 12 behalf of Proposed Class Members; ) JOHN DOE III, Individually and on ) ORDER GRANTING DEFENDANTS 13 behalf of Proposed Class Members; ) ARCHER-DANIELS-MIDLAND CO., GLOBAL EXCHANGE, ) NESTLE U.S.A., AND CARGILL 14 ) INC.’S MOTION TO DISMISS Plaintiffs, ) PLAINTIFFS’ FIRST AMENDED 15 ) COMPLAINT PURSUANT TO FED. R. v. ) CIV. P. 12(b)(6) FOR FAILURE TO 16 ) STATE A CLAIM NESTLE, S.A.; NESTLE U.S.A.; ) 17 NESTLE Ivory Coast; ARCHER ) [111] DANIELS MIDLAND CO.; CARGILL, ) 18 Inc.; CARGILL COCOA; CARGILL WEST ) AFRICA, S.A.; and CORPORATE DOES ) 19 1-10, ) ) 20 Defendants. ) ) 21 22 23 24 I. INTRODUCTION 25 On July 14, 2005, Plaintiffs John Doe I, John Doe II, John Doe 26 III, and Global Exchange (collectively “Plaintiffs”)1 filed this class 27 28 1 Global Exchange brings only a single cause of action (Cal. Bus. & Prof. Code § 17200). The Court’s use of the term “Plaintiffs” generally refers only to the “Doe” plaintiffs. Case 2:05-cv-05133-SVW-JTL Document 138 Filed 09/08/10 Page 2 of 161 Page ID #:1045 1 action for damages and injunctive relief. On July 10, 2009, Plaintiffs 2 filed a first amended complaint. The amended complaint asserts causes 3 of action under the Alien Tort Statute, 28 U.S.C. § 1350; the Torture 4 Victim Protection Act, Pub. L. 102-256, 106 Stat. 73 (1992); state-law 5 unjust enrichment; and Cal. Bus. & Prof. Code §§ 17200 et seq.2 6 Defendants are Nestle, S.A. (based in Switzerland), Nestle, 7 U.S.A., and Nestle Cote d’Ivoire, S.A. (collectively “Nestle”); 8 Cargill, Incorporated (“Cargill, Inc.”), Cargill Cocoa (based in the 9 United States), and Cargill West Africa, S.A. (collectively “Cargill”); 10 and Archer Daniels Midland Company (“Archer Daniels Midland”) 11 (collectively “Defendants”).3 12 Defendants Nestle U.S.A., Cargill Inc., and Archer Daniels Midland 13 have filed a Motion to Dismiss the First Amended Complaint for failure 14 to state a claim upon which relief can be granted. 15 16 II. LEGAL STANDARD 17 In order to survive a Rule 12(b)(6) Motion to Dismiss, a 18 plaintiff’s complaint “must contain sufficient factual matter, accepted 19 as true, to ‘state a claim to relief that is plausible on its face.’” 20 Ashcroft v. Iqbal, 556 U.S. __, 129 S.Ct. 1937, 1949 (2009) (quoting 21 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)). “A claim has 22 facial plausibility when the plaintiff pleads factual content that 23 2 In their Opposition, Plaintiffs have conceded their fourth and fifth 24 causes of action for breach of contract and negligence/recklessness 25 under California state law. 3 26 Plaintiffs allege that the subsidiary defendants were acting as agents of the parent defendants, and that the parent defendants 27 controlled and ratified the actions of their subsidiaries. Plaintiffs also allege that the subsidiary defendants were alter egos 28 of the parents. Plaintiffs also sue ten unnamed “Corporate Does.” 2 Case 2:05-cv-05133-SVW-JTL Document 138 Filed 09/08/10 Page 3 of 161 Page ID #:1046 1 allows the court to draw the reasonable inference that the defendant is 2 liable for the misconduct alleged.” Id. “Factual allegations must be 3 enough to raise a right to relief above the speculative level on the 4 assumption that all of the complaint’s allegations are true.” Twombly, 5 550 U.S. at 555. A complaint that offers mere “labels and conclusions” 6 or “a formulaic recitation of the elements of a cause of action will 7 not do.” Iqbal, 129 S.Ct. at 1951; see also Moss v. U.S. Secret 8 Service, 572 F.3d 962, 969 (9th Cir. 2009) (citing Iqbal, 129 S.Ct. at 9 1951). Courts should not “unlock the doors of discovery for a 10 plaintiff armed with nothing more than conclusions.” Iqbal, 129 S.Ct. 11 at 1950. 12 13 III. FACTS 14 The individual Plaintiffs are Malians who allege that they were 15 forced to labor on cocoa fields in Cote d’Ivoire. Plaintiffs seek 16 class status on behalf of similarly situated Malians who were forced to 17 labor in Cote d’Ivoire. The remaining Plaintiff, Global Exchange, is a 18 San Francisco-based human rights organization that promotes social 19 justice. 20 Plaintiffs allege that they have filed suit in the United States 21 because: (1) there is no law in Mali allowing civil damages for their 22 injuries caused by non-Malian cocoa exporters (as all Defendants are 23 American, European, or Ivorian corporations); (2) no suit can be 24 brought in Cote d’Ivoire because “the judicial system is notoriously 25 corrupt and would likely be unresponsive to the claims of foreign 26 children against major cocoa corporations operating in and bringing 27 significant revenue to Cote d’Ivoire” (FAC ¶ 2); (3) Plaintiffs and 28 3 Case 2:05-cv-05133-SVW-JTL Document 138 Filed 09/08/10 Page 4 of 161 Page ID #:1047 1 their attorneys would be subjected to possible harm in Cote d’Ivoire on 2 account of general civil unrest and “the general hostility by cocoa 3 producers in the region”; and (4) the United States has provided an 4 appropriate forum for these claims through the Alien Tort Statute and 5 the Torture Victim Protection Act, 28 U.S.C. § 1350. 6 Plaintiffs claim that Defendants have aided and abetted violations 7 of international law norms that prohibit slavery; forced labor; child 8 labor; torture; and cruel, inhuman, or degrading treatment. Plaintiffs 9 also seek relief under state-law unjust enrichment. All Plaintiffs 10 (including Global Exchange) allege violations of Cal. Bus. & Prof. Code 11 § 17200. 12 Plaintiffs allege that Defendants obtain an “ongoing, cheap supply 13 of cocoa by maintaining exclusive supplier/buyer relationships with 14 local farms and/or farmer cooperatives in Cote d’Ivoire.” (FAC ¶ 33.)4 15 These exclusive contractual arrangements allow Defendants “to dictate 16 the terms by which such farms produce and supply cocoa to them, 17 including specifically the labor conditions under which the beans are 18 produced.” (Id.) Defendants control the farms’ labor conditions “by 19 providing local farmers and/or farmer cooperatives inter alia ongoing 20 21 4 Plaintiffs identify certain of Defendant Nestle’s exclusive 22 relationships with suppliers Keita Ganda and Keita Baba from plantations in Daloa, and supplier Lassine Kone from plantations in 23 Sitafa. (FAC ¶ 35.) Plaintiffs identify certain of Defendant Archer Daniels Midland’s exclusive relationships with suppliers including a 24 farmer cooperative called “SIFCA.” (FAC ¶ 39.) Plaintiffs identify 25 certain of Defendant Cargill’s exclusive relationships with Dote Colibaly, Soro Fonipoho, Sarl Seki, Lenikpo Yeo (“from which 19 26 Malian child slaves were rescued,” FAC ¶ 42), Keita Ganda, and Keita Hippie. (FAC ¶ 42.) The Court notes that among the allegedly 27 “exclusive” suppliers identified by Plaintiffs, one—Keita Ganda—is alleged to be an “exclusive” supplier of both Nestle and Cargill. 28 (FAC ¶¶ 35, 42.) 4 Case 2:05-cv-05133-SVW-JTL Document 138 Filed 09/08/10 Page 5 of 161 Page ID #:1048 1 financial support, including advance payments and personal spending 2 money to maintain the farmers’ and/or the cooperatives’ loyalty as 3 exclusive suppliers; farming supplies, including fertilizers, tools and 4 equipment; training and capacity[-]building in particular growing and 5 fermentation techniques and general farm maintenance, including 6 appropriate labor practices, to grow the quality and quantity of cocoa 7 beans they desire.” (FAC ¶ 34.) This oversight requires Defendants to 8 engage in “training and quality control visits [that] occur several 9 times per year and require frequent and ongoing visits to the farms 10 either by Defendants directly or via their contracted agents.” (Id.) 11 Plaintiffs identify certain of Nestle’s representations in which 12 Nestle states that it “‘provides assistance in crop production’” and 13 performs “‘tracking inside our company supply chain, i.e. from the 14 reception of raw and packaging materials, production of finished 15 products to delivery to customers.’” (FAC ¶ 36 (quoting Nestle 16 “Principles of Purchasing,” 2006).) Nestle also states that “‘[i]n 17 dealing with suppliers, Purchasing must insist on knowing the origin of 18 incoming materials and require suppliers to communicate the origin of 19 their materials,’” and that it “‘actively participate[s] as the first 20 link in an integrated supply chain,’ ‘develop[s] supplier 21 relationships,’ and ‘continually monitor[s] the performance, 22 reliability and viability of suppliers.’” (Id.) Nestle also states 23 that its “‘Quality System covers all steps in the food supply chain, 24 from the farm to the consumer of the final products . ., includ[ing] 25 working together with producers and suppliers of raw . materials.’” 26 (FAC ¶ 37.) Finally, Nestle has stated that “‘[w]hile we do not own 27 any farmland, we use our influence to help suppliers meet better 28 5 Case 2:05-cv-05133-SVW-JTL Document 138 Filed 09/08/10 Page 6 of 161 Page ID #:1049 1 standards in agriculture. Working directly in our supply chain 2 we provide technical assistance to farmers.’” (FAC ¶ 38.) This 3 assistance “‘ranges from technical assistance on income generation to 4 new strategies to deal with crop infestation, to specific interventions 5 designed to address issues of child labour,’” including “‘[s]pecific 6 programmes directed at farmers in