By Jonathan Stempel
NEW YORK (Reuters) - A federal appeals court threw out a lawsuit accusing the Firestone tire company of illegally using child labor in Liberia, but found that U.S. law allows companies to be held liable for human rights abuses abroad.
In an opinion written by Judge Richard Posner, the 7th U.S. Circuit Court of Appeals in Chicago said companies are not immune from liability in U.S. courts under the Alien Tort Statute for human rights abuses outside the country.
Posner nonetheless rejected claims by 23 Liberian children who challenged working conditions on a 118,000-acre latex-producing rubber tree farm in Liberia. Firestone has operated in the west-central African country since 1926.
"We won the war but lost the battle," Terry Collingsworth, a lawyer for the children, said in an interview on Tuesday. "It is a huge win for the effort to use the Alien Tort Statute to hold corporations accountable for human rights violations in the global economy."
Collingsworth said he is evaluating his options in the Liberia case.
A lawyer for Firestone declined to comment on the ruling, which was released on Monday. Firestone is a unit of Japan's Bridgestone Corp, the world's largest tire maker.
The 7th Circuit's findings concerning the Alien Tort Statute, a 1789 law, mirrored those set forth in a decision on Friday by the federal appeals court in Washington, D.C.
That court allowed Exxon Mobil Corp to be sued by Indonesian villagers over alleged murder and torture committed by soldiers the oil company hired to provide security for a natural gas plant. [ID:nN1E7670PG] Collingsworth also represented plaintiffs in the Exxon case.
These decisions conflict with last September's ruling by the 2nd Circuit Court of Appeals in New York to shield corporations from liability, in a case involving Royal Dutch Shell Plc's ties to the Nigerian government. That decision has been appealed to the U.S. Supreme Court.
NO VIOLATION SHOWN
According to court papers, the 23 Liberian children, ages six to 16, worked on the rubber tree farm with their guardians, who were "tappers" employed by Firestone to extract latex from the trees.
The tappers, most of whom grew up on the farm, found that to meet their production quotas, they needed help from their children, who were not employed by Firestone.
A typical workday would begin at 4 a.m. and end in the late afternoon, according to the plaintiffs' lawyers.
Writing for a three-judge panel, Posner, considered among the most influential federal judges, concluded there was an inadequate basis to infer that Firestone violated customary international law in using the child labor.
He said it was unclear how many children work on the farm and work as hard as the plaintiffs, how much work the average child does and how hard that work is, and how different the situation is for Liberian children who do not live on the farm.
"Conceivably, because the fathers of the children on the plantation are well paid by Liberian standards, even the children who help their fathers with the work are, on balance, better off than the average Liberian child, and would be worse off if their fathers, unable to fill their daily quotas, lost their jobs or had to pay adult helpers," he wrote.
Posner nonetheless accepted the plaintiffs' argument that corporate liability could exist under the Alien Tort Statute where "violations are directed, encouraged, or condoned at the corporate defendant's decision making level."
He said the 2nd Circuit ruling concluded incorrectly that because corporations have never been prosecuted for violating customary international law, there was no principle under that law to bind them.
The case is Flomo et al v. Firestone Natural Rubber Co, 7th U.S. Circuit Court of Appeals, No. 10-03675.
(Reporting by Jonathan Stempel; Editing by Gary Hill)