Class action filed in US court against tech companies for benefitting from human rights violations in cobalt mining

Under-aged artisanal miners have filed a class action suit in a United States (“US”) District Court against some of the world’s largest tech companies, arguing that these enterprises knowingly benefit from child labour in cobalt mines in the Democratic Republic of Congo (“DRC”).

The court documents in Doe and Others v Apple Inc and Others have been made public and are analysed in this client alert to show the expanding relevance of Business and Human Rights (“BHR”).

Class action against end-users benefitting from conditions that fail to respect human rights

The suit, filed on 15 December 2019, was brought by 14 families whose children had suffered injuries or death in cobalt mines in the DRC (the “Plaintiffs”), on behalf of a proposed class of tens of thousands of other minors in similar circumstances. The complaint asserts that these children were forced by extreme poverty to become full-time artisanal cobalt miners, working in dangerous conditions where they were at risk of being killed or maimed by tunnel collapses and other known hazards common to cobalt mining in the DRC.

The action is novel in that it is brought not against the operators of the mines but against the corporate end-users of the raw materials produced by the operations where the alleged human rights violations occurred. It names as defendants five US-headquartered companies, namely Apple, Google owner Alphabet, Dell Technologies, Microsoft and Tesla (the “Defendants”). Cobalt is essential to power rechargeable lithium-ion batteries used in electronic devices and electric cars produced by the Defendants and numerous other companies in tech and car manufacturing.

Claim of extraterritorial jurisdiction for the US court

The suit is brought on four separate grounds: (1) violation of the US Trafficking Victims Protection Reauthorization Act (“TVPRA”) through reliance on forced labour; (2) unjust enrichment; (3) negligent supervision; and (4) intentional infliction of emotional distress.

The Plaintiffs argue that the US court has jurisdiction because: (a) the claims could not be addressed in the DRC for lack of a cause of action under DRC law; (b) the judicial system in the DRC is corrupt, dysfunctional and unable to offer an effective remedy; (c) Plaintiffs as well as their attorneys would likely come under threat of retaliation if they pursued proceedings in the DRC; (d) the Defendants are nationals of or present in the US; and (e) the US court has extraterritorial jurisdiction for the Plaintiffs’ claims under the TVPRA.

Claim that the Defendants benefitted from forced labour

Under the first count, the Plaintiffs allege that they and other proposed class members were unlawfully trafficked or forced as children to work in artisanal mines that supplied cobalt to the Defendants. The suit relies in this part on 18 U.S.C. §§ 1589 and 1595, allowing victims of forced labour to bring a civil action in an appropriate US District Court against an entity which knowingly benefits, financially or by receiving anything of value, from participation in a venture which that entity knew or should have known involved forced labour.

The complaint argues that the cobalt supply chain constitutes a “venture” within the meaning of 18 U.S.C. § 1595, with a purpose of maintaining a steady supply of cheap cobalt. The claim describes this supply chain, from ownership and operation of the mines where the relevant impacts occurred; via processing facilities; to the supply directly or via intermediary to the Defendants. The Plaintiffs assert that the Defendants gain significant financial advantage from participating in this supply chain, obtaining cobalt at a price that reflects the fact that the raw materials are mined by children earning USD 2-3 a day.

The Plaintiffs maintain that the Defendants had “specific knowledge” that the cobalt sourced for their products could be linked to child labour. They rely on the assertion that it is well documented that children perform artisanal mining under primitive and hazardous conditions in DRC cobalt mines. Moreover, they argue that various methodologies to establish traceable cobalt supply chains from the DRC by use of, e.g., ‘model sites’ or blockchain are ineffectual because industrial and artisanal cobalt is regularly mixed at various stages in the supply chain. Finally, they suggest that the Defendants would have had first-hand knowledge of the conditions, “[u]nless Defendants have never had a representative visit the cobalt mining areas of the DRC, which is extremely unlikely” (para. 81).

The suit dismisses as inadequate the programmes and measures put in place by the Defendants and thus challenge the extent and quality of their human rights due diligence. In strong language, it refers to the Defendants’ policies on child labour as “bogus programs” and argues that no Defendant did “actually perform the required due diligence to verify whether children are mining cobalt in their supply chains” (para. 79); nor did the Defendants implement existing policies and contractual requirements on suppliers. In fact, the complaint cites the existence of such programs, as well as financial contributions made to organisations and initiatives to end child labour in DRC mines, as evidence that the Defendants were aware of problems in the supply chain but failed to act on that knowledge.

The suit relies heavily on investigations by Amnesty International into compliance with the five-step program for cobalt under the OECD Guidelines. It includes statements given by the Defendants in response to queries from Amnesty, e.g., that cobalt is not traced through the “supply chain to the smelter level due to the complexity and resources required” (para. 60). In response, the Plaintiffs assert that “[c]ompared to the supply chain due diligence that many companies have started to develop in relation to 3T [i.e., tin, tungsten, tantalum] and gold, Amnesty’s research has shown that cobalt is no more difficult” (para. 76).

Claims of unjust enrichment, negligent supervision and infliction of emotional distress

In addition to the claim under the TVPRA, the Plaintiffs allege that the Defendants are being unjustly enriched from the unlawful use of forced child labour in cobalt supply chains and seek full restitution of this enrichment. Moreover, they allege that the Defendants had the authority and resources to supervise and regulate their cobalt supply chains and exercise control over the companies from which they sourced materials. In the Plaintiffs’ views, the Defendants’ failure to do so has contributed to harm, which occurred as “a direct and proximate result of Defendant’s negligent supervision”. Finally, the Plaintiffs allege that the Defendants “[b]y supporting and enabling a system that relies on forced child labour for higher profits” committed acts intended to cause severe emotional distress or showed reckless disregard for the risk of such distress.

Next steps

The Plaintiffs have requested a jury trial and seek injunctive relief as well as a range of different forms of damages, including punitive damages, disgorgement of profits and the creation of a fund for appropriate medical care for Plaintiffs and members of the class.

Several Defendants have issued initial public reactions to the claim, reaffirming their commitment to responsible sourcing and their protocols for investigating misconduct and removing suppliers that violate their codes of conduct.

The Plaintiffs’ representation has announced that it is continuing to investigate other tech and car companies and expects to add additional companies to the lawsuit.

Remarks

The relevance of this potential case is arguably limited to the US, because of the express reliance on US law as the primary cause of action. However, the suit is formulated in line with international BHR standards and could therefore serve as an international precedent. This should give international manufacturing companies pause as end-users of materials extracted from countries that struggle to establish sufficient human rights protection. The claim shows that the scope of targeted entities in human rights cases is growing broader. Plaintiffs’ attorneys and civil society are closely scrutinising the quality and effectiveness of corporate implementation of BHR standards, in particular with respect to due diligence and remediation. Companies should pay attention to the possibility that their adoption of policies could be perceived as acknowledging the existence of issues and should therefore ensure that such policies are adequately implemented and matched by concrete action. In targeting potential leverage on the part of major end-users, the claim is also likely to test the extent to which a business enterprise must exercise its influence to induce compliance with human rights in its value chain. It will no doubt add further to the body of case law which includes the case of Lungowe v. Vedanta, where the United Kingdom Supreme Court found that a parent company in certain circumstances assumes a duty of care with respect to its subsidiary because of the managerial influence it exerts over such an entity.

For further information about these developments and other issues related to Business and Human Rights, please contact Robert Volterra, Graham Coop or Maria Fogdestam-Agius.

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