At a Glance
- Any company with a global supply chain could be subject to a TVPRA lawsuit. Such lawsuits typically allege that one or more defendants obtain resources or products from a region where labor violations are rampant.
- Because TVPRA cases are commonly brought as class actions, there is a substantial risk of costly proceedings and high exposure to damages should the case proceed to trial, as well as reputational risk from the allegations alone.
- The TVPRA creates a civil remedy against direct perpetrators and beneficiaries who (1) knowingly benefit (2) from participation in a venture (3) that the person knew or should have known has engaged in forced labor, human trafficking, or other specified acts related to trafficking or slavery. A company may have several defenses to a TVPRA claim based on the absence of one or more of these elements.
In an era of increasing demand for responsible business practices and corporate transparency, governments across the world are scrutinizing corporate conduct and passing laws to motivate companies to be more transparent about the risks of exploitation in their global supply chains. For example, Australia passed its Modern Slavery Act in 2018, and California passed its Transparency in Supply Chains Act in 2010, both of which require companies to report or disclose how they are addressing and combating human trafficking and modern slavery. In addition, working conditions overseas are more and more frequently the subject of media reports, and streaming services offer eye-catching content that vividly brings these issues and images to life for the public.
Given the increased scrutiny on corporate supply chains and growing public interest about them, numerous U.S. companies have been, and continue to be, defendants in lawsuits predicated upon expansive theories of liability based upon their dealings in global markets. In recent years, the Supreme Court has limited the scope of several federal statutes used to target global enterprises, including the Alien Tort Statute (ATS) and the Racketeer Influenced and Corrupt Organizations Act (RICO). See Nestle USA, Inc. v. Doe I, 593 U.S. 628 (2021) (finding that the ATS does not apply extraterritorially); RJR Nabisco v. Eur. Cmty., 579 U.S. 325 (2016) (finding that RICO does not provide a private right of action for purely extraterritorial conduct). Since these decisions, the plaintiffs’ bar has identified another statute to continue its efforts to hold downstream purchasers civilly liable for alleged use of forced labor and human trafficking at the far end of the global supply chain — the Trafficking Victims Protection Reauthorization Act (TVPRA).
Any company with a global supply chain could be subject to a TVPRA lawsuit. Such lawsuits typically allege that one or more defendants obtain resources or products from a region where labor violations are rampant. Foreign workers allege that the company is responsible for the labor practices they endured at the hands of a supplier, asserting that purchasers are complicit because worker exploitation increased profit margins throughout the supply chain. Because TVPRA cases are commonly brought as class actions, there is a substantial risk of costly proceedings and high exposure to damages should the case proceed to trial, as well as reputational risk from the allegations alone.
Recent examples of media reports alleging labor abuses in foreign markets connected to Western businesses include:
- Companies that use cobalt obtained from mines in Africa, including Apple and Google. See, e.g., Annie Kelly, Apple and Google named in US lawsuit over Congolese child cobalt mining deaths, Guardian (Dec. 16, 2019).
- Car manufacturers using parts from Chinese suppliers connected to alleged forced labor in China. See, e.g., Ana Swanson & Jack Ewing, Senate Inquiry Finds BMW Imported Cars Tied to Forced Labor in China, N.Y. Times (May 20, 2024).
- Soft-drink companies obtaining sugar from India. See, e.g., Megha Rajagopalan & Qadri Inzamam, The Brutality of Sugar: Debt, Child Marriage and Hysterectomies, N.Y. Times (Mar. 25, 2024).
Some of these allegations have already resulted in TVPRA lawsuits.
What Any Company With a Global Supply Chain Needs to Know
Here is what any company with a global supply chain needs to know: The TVPRA creates a civil remedy against direct perpetrators and beneficiaries who (1) knowingly benefit (2) from participation in a venture (3) that the person knew or should have known has engaged in forced labor, human trafficking, or other specified acts related to trafficking or slavery. 18 U.S.C. § 1595 (providing private right of action for violations of the TVPRA); see Ratha v. Phatthana Seafood Co., 35 F.4th 1159, 1175 (9th Cir. 2022) (articulating standard); see also, e.g., 18 U.S.C. § 1589 (criminalizing forced labor); id. § 1591 (criminalizing sex trafficking). A company may have several defenses to a TVPRA claim based on the absence of one or more of these elements.
For example, while knowledge is a well-recognized concept, courts generally require specific knowledge about the particular TVPRA violation at issue. Generally knowing that there are reports of labor violations in an industry or country is insufficient without specific knowledge of the abuse of the plaintiffs. See Ratha, 35 F.4th at 1177 (rejecting “[s]weeping generalities about the Thai shrimp industry” as basis for knowledge); S.J. v. Choice Hotels Int’l, Inc., 473 F. Supp. 3d 147, 154 (E.D.N.Y. 2020) (“[K]nowledge or willful blindness of a general sex trafficking problem in low-budget lodgings does not satisfy the mens rea requirements of the TVPRA.”). The majority view requires an alleged participant to have plaintiff-specific knowledge.1 But some courts have required only constructive knowledge of the specific victim bringing the civil claims.
Courts have defined the phrase “participation in a venture” as a common undertaking or enterprise that involves risk, danger, or uncertainty and potential gain or profit. Doe 1 v. Apple Inc., 96 F.4th 403, 415 (D.C. Cir. 2024); Doe #1 v. Red Roof Inns, Inc., 21 F.4th 714, 725 (11th Cir. 2021).
The recent decision in Doe 1 v. Apple Inc. provides an illustrative example of these principles. Plaintiffs alleged that various technology companies were all liable for participating in a venture with cobalt mines in the Democratic Republic of Congo that used or endorsed child labor. Plaintiffs also brought claims for unjust enrichment, negligent supervision and intentional infliction of emotional distress related to the venture. The U.S. Court of Appeals for the District of Columbia Circuit affirmed the dismissal of all claims against the defendants, finding that a venture requires more than “engaging in an ordinary buyer-seller transaction.” Apple, 96 F.4th at 415. Merely “purchasing a commodity, without more” does not satisfy the participation in a venture requirement under the TVPRA, so the plaintiffs failed to state a claim. Id. at 416. Moreover, the Apple court held that neither defendants’ potential ability to pressure suppliers by threatening to cease their purchasing arrangements nor an alleged contractual right to conduct third-party audits established control over the suppliers. Id. Finally, because there was no venture under the TVPRA, the remaining claims failed to state a claim because they were all based on the existence of a venture. Id. at 416-17.
The Apple case provides a roadmap for defending TVPRA claims in other industries and provides at least some protection for companies who are concerned that their efforts to eliminate forced labor from their supply chains, such as by conducting third-party audits of supplier labor practices, will be used against them.
