Apple and other major tech companies don’t have to compensate victims of forced child labor that provided cobalt for the lithium-ion batteries used in many electronic devices, a US appeals court ruled. The lawsuit filed by former miners from the Democratic Republic of the Congo alleged that Apple, Alphabet, Dell, Microsoft, and Tesla violated a trafficking law that makes it illegal to participate in a “venture” that engages in forced labor.
“The plaintiffs allege the technology companies participated in a venture with their cobalt suppliers by purchasing the metal through the global supply chain,” the US Court of Appeals for the District of Columbia Circuit noted in its ruling issued yesterday.
A US District Court previously dismissed the lawsuit, and a panel of three appeals court judges unanimously affirmed the dismissal yesterday. “Purchasing an unspecified amount of cobalt through the global supply chain is not ‘participation in a venture’ within the meaning of the TVPRA [Trafficking Victims Protection Reauthorization Act of 2008],” the ruling said. “We therefore affirm the district court’s dismissal of the complaint.”
The plaintiffs in John Doe 1, et al. v. Apple Inc., et al. include four former miners, seven legal representatives of former miners who are still children, and five representatives of child laborers who were killed in cobalt mining operations, the ruling said. The miners were “recruited as children to engage in dangerous mining operations and suffered tunnel collapses, falls, and other accidents that left them paralyzed, disfigured, or worse,” the ruling said.
“The forced labor was organized or overseen by agents or subsidiaries of the Tech Companies’ cobalt suppliers,” judges wrote. Plaintiffs “began mining at a young age to avoid starvation and to support their families,” and say they were pressured to remain in the mines despite unsafe and exploitative working conditions.
Buying cobalt doesn’t create a “venture”
Companies such as Glencore, Huayou, and Eurasian Resources Group obtain cobalt from subsidiaries in the DRC. Glencore sells cobalt to Umicore, which “refines the cobalt and sells it to Apple, Alphabet, and Microsoft, as well as to intermediaries that in turn sell to Dell and Tesla,” the ruling said. Huayou sells processed cobalt to Apple, Dell, and Microsoft, and Eurasian Resources owns a mine from which it sells cobalt to Tesla.
“Several plaintiffs insist they were trapped in a ‘debt bondage situation’ where ‘sponsors’ gave out food and funds as an advance but deducted the amount of the advance, along with other costs, from the plaintiffs’ earnings when the cobalt was sold,” the ruling said. “Other miners were told that if they did not continue working in the mines, they would be blacklisted and barred from working at any other mines in the region.”
In a brief, tech companies said the lawsuit targeted “five purchasers of refined cobalt far removed from the labor abuses allegedly occurring at cobalt mines.” The brief said the defendants “have established policies and due-diligence practices to eradicate child labor in the international network of their suppliers,” and that the “alleged injuries are not fairly traceable” to any of the defendants’ conduct.
Plaintiffs argued that the global cobalt supply chain is a “venture” as defined in the US law and that tech companies “participated in that venture with the full knowledge that cobalt suppliers and their subsidiary mining companies employed and trafficked in forced labor,” the ruling said. They sought financial damages, injunctive relief, and other remedies on behalf of themselves and “a class of similarly situated child miners in the DRC.”
Appeals court judges ruled that the plaintiffs have standing to pursue damages claims for injuries and deaths, but they didn’t agree with plaintiffs that the US tech companies are liable:
The plaintiffs have not adequately alleged the Tech Companies participated in a venture because there is no shared enterprise between the Companies and the suppliers who facilitate forced labor. The Tech Companies own no interest in their suppliers. Nor do the Tech Companies share in the suppliers’ profits and risks. Although a formal business relationship is not necessary to be a participant in a venture, something more than engaging in an ordinary buyer-seller transaction is required to establish “participation” in an unlawful venture.
Allegations fall short of standard
The TVPRA allows plaintiffs to sue defendants who are involved with slavery indirectly, the ruling said. But the allegations in this case “differ markedly from other cases finding participation in a venture under the TVPRA,” judges wrote. For example, the 7th Circuit appeals court “recently found a plausible TVPRA violation based on close cooperation between business entities” in a case involving Salesforce and Backpage.com.
In that case, “the alleged ‘business relationship’ was more than just a purchasing agreement,” the DC Circuit ruling said. “The defendant Salesforce provided direct support, specific business advice, and productivity enhancing software to Backpage.com, which hosted prostitution ads, thereby ‘facilitat[ing] the growth of… a business… whose business model was built upon systematic and widespread violations of [federal sex trafficking law].'”
In the Apple case, plaintiffs “have not alleged a factual basis to infer a common purpose, shared profits and risk, or control… nor do they allege the Tech Companies and the cobalt suppliers had the type of direct and continuous relationship that existed between the parties in Salesforce,” the ruling said.
Plaintiffs argued that tech companies had a “tacit agreement” to regularly obtain cobalt from suppliers whose subsidiary mining companies used forced labor. “The purported agreement, however, was merely to buy and sell cobalt. And purchasing a commodity, without more, is not ‘participation in a venture’ with the seller,” the court said.
No “evidence of control” over cobalt suppliers
Arguing that tech companies have a contractual right to inspect cobalt suppliers, plaintiffs pointed to Apple performing an audit of Huayou after facing public criticism. But this “third-party investigation is not evidence of a contractual right to inspect, let alone evidence of control” over the business using forced labor, judges decided.
“The Tech Companies may exhort their cobalt suppliers to employ humane practices, and companies can mutually pledge to follow better labor standards, but neither circumstance gives buyers control over their suppliers or results in the sharing of risks and rewards,” the ruling said.
Plaintiffs also alleged that the tech companies could have forced changes in mining practices by halting their purchases of cobalt. But judges said the plaintiffs didn’t provide enough detail on how much of the cobalt was purchased by the five defendants compared to other buyers.
The lawsuit alleged that the five defendants “and other members of the venture” control at least 80 to 85 percent of the DRC cobalt supply chain. But the purported venture included at least the cobalt suppliers and “might include more firms, and the relative power of each participant is never specified,” the ruling said.
“Without more specific allegations, the question is whether the Tech Companies’ purchasing an unspecified amount of cobalt from a supply chain originating in DRC mines plausibly demonstrates ‘participation in a venture’ with anyone engaged in forced labor in that supply chain. We hold that it does not,” judges wrote.