Corporate America Can Be A Powerful Force For Good To Root Out Modern-Day Slavery
August 12, 2020
Dechert LLP’s White Collar, Litigation, and Labor and Employment practices have been active in providing pro bono representation to victims of forced labor and human trafficking for many years. We have represented victims in a range of issues from litigation in federal and state court to assisting them to obtain lawful status in the United States through the nation’s immigration laws. Dechert’s lawyers are committed to working with their clients and other organizations to help eradicate slave, forced, and child labor through our counseling and investigations work for companies and their executives, pro bono matters, thought leadership, and other firm initiatives and partnerships. With a diverse, high-impact team of former federal prosecutors and other firm litigators, our cross-disciplinary team ensures efficient, accurate, speedy results that courts, regulators, and victims can trust and have confidence in.
Key Takeaways
- Slave, forced, and child labor is a modern-day reality impacting some 40 million people throughout the world, by some estimates. Such practices are—and have always been—repugnant, and certainly have no place in the 21st century.
- Companies and their executives can and should do more to help eliminate the practice and to ensure that their global supply chains are not tainted by such conduct.
- The time for companies, their leaders, and their partners to act is now. A focused, sustained effort can have a huge impact on wiping out slave, forced, and child labor. Acting proactively is the right thing to do. Failure to act also carries serious civil, regulatory, criminal, reputational, and consumer risks at the federal, state, and foreign level, including the potential for inter-agency, federal-state, and cross-border collaborations and “carbon copy” prosecutions.
Although the United States outlawed slavery more than 150 years ago, the abhorrent practice remains a modern-day reality in many parts of the world. According to the United Nations’ International Labour Organization’s latest estimates, around 40.3 million people are captive to modern slavery, including 24.9 million in forced labor.1 And one out of every four victims of modern slavery is a child.2 The scale of this global problem is staggering. According to the U.S. Department of Labor’s latest estimates, at least 148 different goods in 76 countries are the products of forced labor or child labor.3 In a combined 25 countries, consumer staples as basic as coffee and sugar are the products of forced labor or child labor; an estimated 2 million children work in the cocoa sector in West Africa alone; workers across sectors are frequently trafficked, trapped in debt bondage, forced to work without critical protective equipment, or worse.4
The United States is not insulated from the reach or effects of this immoral human rights plague. For example, just last month, on July 2, 2020, the U.S. Supreme Court granted certiorari in Cargill, Inc. v. Doe I and Nestle USA, Inc. v. Doe I, to address whether domestic corporations can be held liable under the Alien Tort Statute based on allegations of forced labor and related abuses that occurred abroad.5 The Respondents are former Malian child slaves who allege that they were enslaved by Ivorian cocoa farmers and that U.S. corporations aided and abetted those violations. One of the legal questions at issue is whether claims under the Alien Tort Statute (28 U.S.C. § 1350), which provides that “district courts shall have original jurisdiction of any civil action by an alien for a tort . . . committed in violation of the law of nations or a treaty of the United States,” can overcome the presumption against extraterritoriality where a U.S. corporation is alleged to have overseen its foreign operations from its U.S. headquarters, but the wrongful acts were committed and the injuries were sustained abroad.6 It is a must-watch case in its own right and because of its implications for other statutes with potential extraterritorial application.
Race, inalienable rights, and corporate social responsibility are now firmly and vividly in the public psyche in the United States. Social media companies, professional sports teams, and other corporations have recently faced advertising boycotts and pressure from corporate sponsors to take a stand on social justice issues.
However, the COVID-19 pandemic has also disrupted global supply chains in an unprecedented way and created new economic pressures on businesses with a global footprint. The temptation to choose the expedient over the moral is real: As some of the Partners on this OnPoint wrote elsewhere, “[i]n times of tremendous stress and financial turmoil, sometimes criminal wrongdoing and other malfeasance surfaces. . . . History teaches that extreme pressures sometimes cause people (and companies) to do things that they otherwise might not do.” A link to the article is available here.
Such short-termism is errant, ill-advised, and bad for business. A number of statutes, both inside and outside the United States, impose affirmative obligations on covered businesses to disclose their various efforts to combat the use of forced labor in their supply chains. Other statutes carry the consequence of potential criminal enforcement. But, in this day and age, civil, regulatory or criminal enforcement should not be the only—or even principal—stick to motivate companies to do the right thing in the area of slave, forced, or child labor. The legal imperative to “know better, do better” is as strong as ever. Corporate America can be a powerful force for good in this important area—where companies can be proactive on their own not because of the threat of litigation, investigation, or enforcement.
This article spotlights anti-slavery and anti-trafficking statutes that should be on the radar of every manufacturer, retailer, and company (for that matter) with a global supply chain, especially now. Indeed, the enforcement of these statutes should be consistent with any Administration’s enforcement priorities: For instance, on March 31, 2017, President Trump signed two executive orders directing “[t]he Attorney General, in consultation with the Department of Homeland Security, [to] develop recommended prosecution practices and allocate appropriate resources to ensure that Federal prosecutors accord a high priority to prosecuting significant offenses related to violations of trade laws”8 and ensuring that “our Nation’s trade laws” are “vigorously” enforced.9 Additionally, U.S. Immigration and Customs Enforcement (ICE) last year announced a partnership between its Homeland Security Investigations (HSI) arm and the non-government organization Liberty Shared to combat forced labor in global commerce.10 All this is consistent with the federal government’s stated “zero-tolerance policy” (announced by the Obama Administration) when it comes to “trafficking in persons, the procurement of commercial sex acts, or the use of forced labor” in federal government contracting.11 Given that the federal government is the single largest purchaser of consumer goods and services in the world at $550 billion dollars annually,12 the federal government is uniquely positioned to mandate and enforce supply chain integrity compliance through its policies, government contracts, and enforcement tools.
If these issues and statutes present unfamiliar terrain, it is not too late. Companies should promptly implement compliance policies and procedures that organically and seamlessly integrate these legal mandates into existing systems that exist within a company’s internal controls framework to comply with the Foreign Corrupt Practices Act (FCPA), other anticorruption laws, and supply chain integrity programs, among others. Under the existing statutory and regulatory framework, the Department of Justice (regardless of Administration or political party), the Securities and Exchange Commission (SEC), and other government agencies could pursue prosecutions related to slave, forced, and child labor, and do so without resorting to extraterritorial reach. The time to act is now, especially for those who have not acted already.
The California Transparency in Supply Chains Act
Effective January 1, 2012, the California Transparency in Supply Chains Act (the “California Act”) imposes the obligation on certain covered businesses to disclose their efforts to eradicate slavery and human trafficking from their global supply chains.
The California Act applies to businesses that (1) identify as retail sellers or manufacturers in their tax returns; (2) qualify as “doing business” in California; and (3) have annual worldwide gross revenues in excess of US$100 million.13 Covered businesses are required to disclose on their websites, with “a conspicuous and easily understood link to the required information,” their efforts in five specific areas:
1) Verification: Verifying that they have evaluated whether their product supply chains address the “risks of human trafficking and slavery”;
2) Audits: Auditing suppliers to evaluate supplier compliance with the company’s anti-trafficking and anti-slavery standards;
3) Certification: Requiring direct suppliers to certify that any materials incorporated into the company’s products comply with the slavery and human trafficking laws of the country or countries in which they do business;
4) Internal Accountability: Maintaining internal “accountability standards and procedures” for employees or contractors who fail to meet the company’s anti-slavery and anti-trafficking policies; and
5) Training: Training employees and management with direct responsibility over the supply chain on human trafficking and slavery, with a particular focus on mitigating risks within the supply chain.14
The California Act—and its disclosure regime—is enforced by the California Attorney General, but violations of the Act are also accompanied by the risk of private litigation, including potential class actions.
The U.K. Modern Slavery Act
The U.K. Modern Slavery Act of 2015 (the “U.K. Act”), another disclosure statute, is wider in scope and substance than the California Act.
It applies to a broader range of businesses than the California Act, including any company that (1) operates a business, or part of a business, in any part of the United Kingdom; (2) has total annual revenues of at least £36 million or approximately US$46 million (compared to the California Act’s US$100 million threshold); and (3) supplies goods or services (in contrast to the California Act’s more limited application to retail sellers and manufacturers only).15
Unlike the California Act, which requires disclosures on five discrete topics, the U.K. Act obligates companies to disseminate publicly a disclosure statement that is entirely accurate; is approved by the company’s board of directors, members, or partners; and addresses the company’s efforts “to ensure that slavery and human trafficking is not taking place . . . in any of its supply chains, and . . . in any part of its own business.”16
The U.K. Act is enforced by the U.K. Secretary of State, who is empowered to bring civil proceedings for injunctive relief against companies that fail to comply with the Act’s disclosure requirements.17 In addition, as with the California Act, there remains the risk of private litigation—including class actions—by shareholders, advocacy groups, and consumer groups, among others.
Government Contractor Anti-Trafficking Provisions (Federal Acquisition Regulations)
On January 29, 2015, the Federal Acquisition Regulatory Council, together with other agencies, promulgated rules to implement President Obama’s 2012 Executive Order mandating that all federal contractors take steps to combat slavery and human trafficking in their supply chains.18 The Federal Acquisition Regulations (FAR), codified at 48 CFR § 52.222–50, apply to all contractors and subcontractors to the U.S. government, irrespective of their size and the services they render.
Specifically, and in relevant part, the FAR provisions prohibit contractors, subcontractors, their employees, and their agents from “us[ing] forced labor in the performance of [a] contract.” And beyond that straightforward prohibition, the FAR also bars other human trafficking-related activities, including, among other things, “engag[ing] in severe forms of trafficking” including “sex trafficking;” “procur[ing] commercial sex acts during the period of performance of [a] contract”; and other practices that create the conditions for slave labor or forced labor, including “destroy[ing], conceal[ing], confiscat[ing], or otherwise deny[ing]” an employee access to identity or immigration documents; “us[ing] misleading or fraudulent practices during the recruitment of employees”; and “fail[ing] to provide return transportation or pay for the cost of return transportation” for employees at the end of their employment.19
Further, contractors and subcontractors are required to cooperate fully with, and provide reasonable access to, “contracting agencies and other responsible Federal agencies” investigating potential violations of the FAR provisions.20 Critically, they are also required to self-report “immediately” to contracting officers and the agency Inspector General “[a]ny credible information” of violations of the FAR provisions by their employees and agents.21 After all, as is well established in corporate criminal law, companies do not enjoy a Fifth Amendment right against self-incrimination.22
The provisions impose additional requirements on a certain class of contractors and subcontractors, specifically, those rendering “services to be performed outside the United States” or supplying goods “other than commercially available off-the-shelf items,” whose value exceeds US$500,000.23 Contractors and subcontractors who belong to this category are required to create and post a formal compliance plan that meets various minimum requirements, and to certify the implementation of such a plan and necessary “due diligence” and “remedial and referral actions” in response to identified employee misconduct.24
The consequences for non-compliance with the FAR regime include, among other possibilities, suspension of a contract or contract payments; termination of a contract; and debarment.25 As with the California Act and the U.K. Act, offending contractors and subcontractors face the possibility of private litigation—including class actions—by shareholders, advocacy groups, and consumer groups, among others.
Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307)
In its current form, 19 U.S.C. § 1307 (Section 307 of the Tariff Act of 1930) proscribes the “entry at any of the ports of the United States, and the importation” of any merchandise “mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor.”26 The statute, enforced by U.S. Customs and Border Protection (CBP), allows for the exclusion and seizure of such merchandise at the border.27
From 1930 until 2016, however, the statute’s potency was dramatically undercut by a carve-out: the “consumptive demand” clause in 19 U.S.C. § 1307 exempted goods from the statute’s reach even if they were the products of forced labor or indentured labor if they were not produced “in such quantities in the United States as to meet the consumptive demands of the United States.”28 For that reason, until 2016, if domestic demand in the United States exceeded domestic supply for a certain good, it was not subject to the statute’s importation prohibitions, a loophole that limited the statute’s practical effectiveness and significance.
That changed on February 24, 2016 with the enactment of the Trade Facilitation and Trade Enforcement Act (TFTEA), which repealed the statute’s “consumptive demand” exception, reinvigorated the statute, and revived the CBP’s enforcement efforts.29
The two principal enforcement tools in the CBP’s arsenal are (1) the issuance of withhold release or detention orders that prevent the release of banned merchandise from the border;30 and (2) the issuance of formal findings of fact in the Customs Bulletin and the Federal Register if the CBP Commissioner determines, after an investigation, that certain merchandise is the product of forced labor or indentured labor and therefore subject to the statute’s restrictions.31 In addition to exclusion and seizure of disqualifying merchandise, the reputational and consumer damage from such public announcements can be significant to companies and others whose supply chains are tainted by these practices. Indeed, under the TFTEA, the CBP must now also report every year to the House Ways and Means Committee and the Senate Finance Committee on the number of Section 1307 enforcement actions in the previous year and describe all merchandise denied entry at the border during that reporting period.32
Since 2016, the CBP’s enforcement efforts have seen a marked uptick: although the CBP had not issued a single detention order in the 16 years before the TFTEA’s passage, the CBP issued four in 2016 alone, and has issued multiple more since then.33 Given this Administration’s stated aim of ensuring that “our Nation’s trade laws” are “vigorously” enforced,34 corporate America should plan for the continued enforcement of 19 U.S.C. § 1307.
Federal Criminal Statutes: 18 U.S.C. § 1589 (Forced Labor) and 18 U.S.C. § 545 (Smuggling)
Moreover, certain federal statutes in the United States present the risk of potential criminal liability. Notably, 18 U.S.C. § 1589 proscribes the direct and indirect use of forced labor. In relevant part, it provides that “[w]hoever knowingly benefits, financially or by receiving anything of value, from participation in a venture which has engaged in the providing or obtaining of labor or services by,” among other things, “means of force, threats of force, physical restraint, or threats of physical restraint” commits a felony punishable by up to 20 years’ imprisonment.35 If the violation results in death to the victim, or includes “kidnapping, an attempt to kidnap, aggravated sexual abuse, or an attempt to kill,” a term of imprisonment up to and including life imprisonment may be imposed.36
In addition, 18 U.S.C. § 545, which was adopted in 1948 and amended several times since, is the nation’s most powerful criminal enforcement statute as it relates to merchandise entering the United States “contrary to law.”37 As a federal prosecutor, one of the authors of this article relied on Section 545 to prosecute what Bloomberg Businessweek described as “the largest food fraud in U.S. history” in a series of cases that involved illegally-entered food products from China, which had netted losses to the United States of some US$260 million.
In relevant part, the second paragraph of Section 545 provides:
Whoever fraudulently or knowingly imports or brings into the United States, any merchandise contrary to law, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States contrary to law— commits a felony punishable by up to 20 years in prison.38
Section 545’s potency rests with its flexibility. It explicitly criminalizes the entire supply chain, once merchandise enters (or attempts to enter) the United States illegally, so long as those who handle the merchandise at the point of entry or thereafter know that it entered the country “contrary to law.”39 At the corporate level, “[c]orporations ‘know’ what their employees who are responsible for an aspect of the business know.”40 Indeed, as the Seventh Circuit has observed, “[m]ost federal statutes that make anything of corporate knowledge also require the knowledge to be possessed by persons authorized to do something about what they know.”41 And, prosecutors can choose which “law” they want to allege as the qualifying predicate. Indeed, some prosecutors might even go so far as to charge based on an alleged violation of a regulation—as opposed to criminal statute—that has the force and effect of law. That is because there is a circuit split “on the key question as to what ‘law’ must be violated for importation to be ‘contrary to law.’”42
The Ninth Circuit has narrowly construed the phrase “contrary to law” to require the underlying “law” to be either a criminal statute or regulation that “specifies that violation of that regulation is a crime.”43 The Fourth Circuit has adopted a more expansive reading of the phrase and held that “18 U.S.C. § 545 criminalizes importation in violation of any regulation having the force and effect of law.”44 And the Eleventh Circuit has adopted a hybrid approach that turns on the rule of lenity.45 Regardless of which charging theory federal prosecutors deploy—and even assuming they follow the Ninth Circuit’s more restrictive view on Section 545’s eligible predicates—there is no shortage of criminal statutes that prosecutors can deploy as qualifying predicates in a Section 545 prosecution. Indeed, estimates suggest that there are more than 300,000 federal crimes on the books, of which 5,000 are statutes enacted by Congress and signed into law by the President, while the remainder are criminally enforceable regulations.46 This “over criminalization,” as some may say, helped lead to the passage of the “Formerly Incarcerated Reenter Society Transformed Safely Transitioning Every Person Act” or the “FIRST STEP Act”, a bipartisan piece of legislation that was years in the making and was signed into law by President Trump at least in part to address mass incarceration and over-criminalization.47 This much is clear: Whether in the thousands or hundreds of thousands, there is a seemingly limitless number of crimes that federal prosecutors can charge as qualifying Section 545 predicates, however they are defined.
Elsewhere, the statute criminalizes “attempts” just as it does completed offenses, at least as it relates to the entry of merchandise illegally. And one important feature of the statute is its criminal forfeiture provision: “Merchandise introduced into the United States in violation of this section, or the value thereof, to be recovered from any person described in the first or second paragraph of this section, shall be forfeited to the United States.”48 Indeed, the statute itself even contemplates that, “[p]roof of defendant’s possession of such goods, unless explained to the satisfaction of the jury, shall be deemed evidence sufficient to authorize conviction for violation of this section,”49 a controversial provision that raises significant constitutional concerns, given its burden-shifting features.
The mens rea standard under Section 545 is the familiar general intent “knowledge” standard. Courts have held that knowledge can include “willful ignorance,” “willful blindness,” “deliberate ignorance” or “conscious avoidance” of certain “red flags.” Meaning, as the U.S. Court of Appeals for the Second Circuit observed in United States v. Ferguson, “[r]ed flags about the legitimacy of a transaction can be used to show both actual knowledge and conscious avoidance.”50
Picking the Seventh Circuit’s pattern criminal jury instructions on knowledge as an example, a jury “may find that the defendant acted knowingly if [it] find[s] beyond a reasonable doubt that [the defendant] believed it was highly probable that” the relevant fact or facts were present and that the defendant “took deliberate action to avoid learning” those facts.51 Thus, the Seventh Circuit has vividly articulated the following categories of evidence for the willful blindness jury instruction: “evidence of ‘overt physical acts,’ and evidence of ‘purely psychological avoidance, a cutting off of one’s normal curiosity by an effort of will.’”52 In other words, in the latter case, intentionally not wanting to know something “by cutting off [ ] one’s normal curiosity by an effort of will” is the same as actually knowing it. That is because, as many other federal appellate courts have recognized, the law does not distinguish between actual knowledge and willful blindness.53
The Department Of Justice Can Use Section 545 to Combat Slave Labor Under Section 1589
Because of its breadth, Section 545 can be a highly effective tool for combatting slave, forced, and child labor—not because Section 545 can reach the actual execution of these repugnant labor practices, but because it can attach to the very products that result from such abhorrent conduct when those products enter (or attempt to enter) the American marketplace. In the same way that federal law has proscriptions against allowing certain U.S. technology from being exported to certain countries, such as Cuba, Iran, and North Korea,54 the United States also has a variety of laws that prohibit products from being imported into the country when those products do not reflect our nation’s values, such as products made with slave, forced, or child labor; counterfeit products; and adulterated or misbranded products under the Food, Drug, and Cosmetic Act (and its implementing regulations), among others.
Recall, Section 545 applies to “merchandise” that enters “contrary to law” or that passes through the supply chain with a defendant’s knowledge that it made entry “contrary to law.” That means Section 545 can work in tandem with anti-slave labor laws such as Section 1589 to result in the criminal prosecution of anyone—whether a company or person—who knowingly imports or brings into the United States, any merchandise made from labor or services that are the result of “force, threats of force, physical restraint, or threats of physical restraint” anywhere in the world. And, the government can take the position that those who transact in such goods at various points in the supply chain are not beyond the reach of federal prosecutors either. That’s because the law applies equally to those who “receive[], conceal[], buy[], sell[], or in any manner facilitate[] the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States” in violation of anti-slave labor laws.55
Section 1589 Has Been Enforced in its Own Right and the Potential For Continued Enforcement as a Predicate or Freestanding Crime is Real—Regardless of Politics
Separately, the Department of Justice (DOJ) has also been charging freestanding violations of Section 1589. Section 1589, the federal forced labor statute, criminalizes knowingly providing or obtaining forced labor, as well as knowingly benefitting financially from forced labor. In 2019, a total of 28 defendants were charged with 48 counts of violating Section 1589: 24 of those counts alleged that the defendant engaged in the trafficking of forced labor; three alleged that the defendant benefited financially from forced labor; and the remaining 21 alleged both.56 As with the Foreign Corrupt Practices Act (FCPA), which took roughly three decades to become a top prosecutorial priority, there is no reason to think that the DOJ might not similarly ramp up its investigation and prosecution of Section 1589 cases against individuals or companies—either independently or in tandem with violations of Section 545. Indeed, other agencies may follow suit: for example, query whether the SEC might also take the position that inaccurate books and records and/or ineffective (or absent) policies with respect to slave-, forced-, or child-labor can give rise to an enforcement action—in the same way that the agency enforces the 1934 Securities Exchange Act’s accounting provisions in FCPA cases.57
Indeed, such prosecutions and enforcement actions should be consistent with any Administration’s priorities—regardless of political party. The current Administration has already stated that the enforcement of the country’s trade and customs laws is a “high priority.”58 And, although it is often difficult to predict where the DOJ might invest its prosecutorial resources, regardless of who might win the presidential election, it would seem that combatting modern-day slave, forced, and child labor—and using the nation’s importation and other statutes to do so—is one area where everyone should be able to agree.
Inter-Agency, Federal-State, Cross-Border Collaborations & “Carbon Copy” Prosecutions
The confluence of a global problem (demanding a global focus) and the varied jurisdiction-specific approaches described above—including civil enforcement under the California Act, the U.K. Act, 19 U.S.C. § 307, and the FAR provisions, and criminal enforcement under Sections 545 and 1589—creates a multi-dimensional threat to corporate compliance regimes. These overlapping regimes are likely to lead to domestic and cross-border collaboration among the DOJ, the SEC, state and foreign authorities, as well as serial (or simultaneous) prosecutions in multiple jurisdictions. Indeed, as to this latter point, the DOJ and SEC acknowledged in their 2020 edition of the FCPA Resource Guide that they have coordinated resolutions with foreign authorities in numerous FCPA cases, a practice that is consistent with the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Dec. 17, 1997, S. TREATY DOC. NO. 105-43 (1998).59
The prospect of inter-agency, federal-state, and cross-border collaborations is all the more real because of the DOJ’s recently implemented anti-“piling on” policy, which directs DOJ attorneys to “endeavor, as appropriate, to coordinate with and consider the amount of fines, penalties, and/or forfeiture paid to other federal, state, local, or foreign enforcement authorities that are seeking to resolve a case with a company for the same misconduct.”60 A link to this firm’s commentary on the 2020 edition of the FCPA Resource Guide is available here.
At the same time, this potential for collaboration does not mitigate the threat of “carbon copy prosecutions,” a term one of the authors of this OnPoint coined years ago to describe “successive, duplicative prosecutions by multiple sovereigns for conduct transgressing the laws of several nations, but arising out of the same common nucleus of operative facts.”61 In fact, in the United States, unlike the United Kingdom or Canada, for example, an individual or company convicted in a foreign country of being involved in the use of slave, forced, or child labor overseas may also be convicted for the same underlying conduct in the United States without offending the Double Jeopardy Clause, or so the DOJ may argue.62 In fact, in the United States, as the U.S. Supreme Court recently recognized in Gamble v. United States, the “dual-sovereignty doctrine” permits successive prosecutions by separate sovereigns—including successive state and federal prosecutions—without violating the Double Jeopardy Clause because “a crime under one sovereign’s laws is not ‘the same offence’ as a crime under the laws of another sovereign.”63 This reasoning extends to the international arena because, as the Gamble court recognized, the United States has an interest in prosecuting crimes committed abroad against U.S. nationals, even if a foreign sovereign has already prosecuted the underlying conduct.64
In contrast, as legal commentators have observed, in Britain and Canada, “courts tend to view verdicts by foreign courts relating to the same crime or conduct as a categorical bar to any further proceedings by domestic prosecutors.”65 Indeed, “[a]s early as 1726, it was recognized under British law that ‘where a foreign court has jurisdiction, and the persons are within it, the sentence of that Court must bind.’”66
Thus, as with FCPA violations, an initial tip from an informant or whistleblower may well expose ongoing slave, forced, or child labor practices contained in a company’s supply chain. If so, any enforcement action taken in a foreign jurisdiction generally would not prevent U.S. law enforcement authorities from taking successive action—or perhaps even multiple sovereigns from taking an even broader coordinated enforcement response across jurisdictions. Indeed, not surprisingly, the DOJ and SEC report that other common catalysts for an investigation include “information developed in other investigations; self-reports or public disclosures by companies; referrals from other offices or agencies; public sources, such as media reports and trade publications; and proactive investigative techniques, including risk-based initiatives.”67 When dealing with a repugnant practice such as slave, forced, or child labor, the willingness of whistleblowers or other actors to come forward and report such conduct may be as strong—if not stronger—than that of any other motivation.
Conclusion
Federal, state, and foreign statutes, whether civil, regulatory, or criminal, all underscore that companies should be implementing compliance protocols to detect and root out slave, forced, or child labor in their supply chains. The scourge of modern slavery and forced labor is real—especially to the more than 40 million people who currently suffer from the unconscionable practice. That is unacceptable. In the 21st century, there is simply no excuse for slavery of any kind to exist anywhere in the world. To be sure, it will take a considerable and collective global effort to make slavery a thing of the permanent past. But, companies—big and small, public and private, American and foreign—can step up and play their part to make that long overdue goal a reality. And companies may do so both because it is the right thing to do and because they face the very real threat of reputational damage and civil, administrative, and consumer actions, including those brought under the California Act, the U.K. Act, 19 U.S.C. § 307, and the FAR; potential criminal liability under Section 545 and Section 1589; and potential inter-agency, federal-state, and cross-border collaborations and “carbon copy” prosecutions.
Footnotes
1) International Labour Organization, “Forced labour, modern slavery, and human trafficking”.
2) Id.
3) United States Department of Labor, “U.S. Department of Labor’s 2018 List of Goods Produced by Child Labor or Forced Labor,”. at 16
4) Id. at 20.
5) See Cargill, Inc. v. Doe I, No. 19-453.
6) Cargill v. Doe I, Question Presented; Nestle USA v. Doe I, Question Presented.
7) On this issue, see Andrew S. Boutros and John R. Schleppenbach, “The New Face of White Collar Enforcement: President Trump Signs Executive Orders Directing DOJ to Make Trade, Customs Fraud Enforcement a ‘High Priority,” White Collar Crime Report.
8) Executive Order 13785, “Establishing Enhanced Collection and Enforcement of Antidumping and Countervailing Duties and Violations of Trade and Customs Laws,” 82 Fed. Reg. 16719 (Mar. 31, 2017).
9) Executive Order 13786, “Omnibus Report on Significant Trade Deficits,” 82 Fed. Reg. 16721 (Mar. 31, 2017).
10) “ICE HSI Global Trade Investigations Division partners with Liberty Shared to combat forced labor,” ICE Newsroom (July 31, 2019).
11) Executive Order 13627, “Strengthening Protections Against Trafficking In Persons In Federal Contracts,” (Sept. 5, 2012).
12) See, e.g., United States Environmental Protection Agency, “Selling Greener Products and Services to the Federal Government”.
13) See State of California Department of Justice, “The California Transparency in Supply Chains Act.”
14) See id.; see also “The California Transparency in Supply Chains Act: A Resource Guide.”
15) See Section 54, Modern Slavery Act 2015.
16) Id.
17) Id.
18) See Executive Order 13627, “Strengthening Protections Against Trafficking In Persons In Federal Contracts,” (Sept. 5, 2012).
19) 48 C.F.R. § 52.222–50(b).
20) Id. at 52.222–50(g).
21) Id. at 52.222–50(d).
22) See, e.g., United States v. White, 322 U.S. 694, 699–700 (1944) (“Since the privilege against self-incrimination is a purely personal one, it cannot be utilized by or on behalf of any organization, such as a corporation.”).
23) Id. at 52.222–50(h).
24) Id.
25) Id. at 52.222–50(e).
26) 19 U.S.C. § 1307.
27) See U.S. Customs and Border Protection, “Forced Labor".
28) See Id.
29) See Trade Facilitation and Trade Enforcement Act, Pub. L. 14-125, 130 Stat. 122, §910(a).
30) See 19 C.F.R. § 12.42(e).
31) See id. at § 12.42(f).
32) See Trade Facilitation and Trade Enforcement Act, Pub. L. 14-125, 130 Stat. 122, § 910(b).
33) See U.S. Customs and Border Protection, “Withhold Release Orders and Findings.”
34) Executive Order 13786, “Omnibus Report on Significant Trade Deficits,” 82 Fed. Reg. 16721 (Mar. 31, 2017).
35) 18 U.S.C. § 1589(b), (d) (emphases added).
36) Id. at § 1589(d).
37) Of course, there are a variety of federal statutes that criminalize a wide variety of conduct that involves the importation and exportation of goods to and from the United States. See 18 U.S.C. §§ 541–555.
38) 18 U.S.C. § 545 (emphases added).
39) Id.
40) United States v. Ladish Malting Co., 135 F.3d 484, 492 (7th Cir. 1998).
41) Id. at 492–93.
42) United States v. Izuerieta, 710 F.3d 1176, 1179 (11th Cir. 2013).
43) United States v. Alghazouli, 517 F.3d 1179, 1187 (9th Cir. 2008).
44) United States v. Mitchell, 39 F.3d 465, 470 (4th Cir. 1994).
45) Izuerieta, 710 F.3d at 1181–1182.
46) See, e.g., Gary Fields and John R. Emshwiller, “Many Failed Efforts to Count Nation’s Federal Criminal Laws,” The Wall Street Journal (July 23, 2011); Rafael A. Mangual, “The next step after the First Step Act: Purge the US criminal code,” New York Post (Jan. 1, 2019); Neil M. Gorsuch, Law’s Irony, 37 Harv. J.L. & Pub. Pol'y743, 747 (2014) (“But today we have about 5000 federal criminal statutes on the books, most added in the last few decades. And the spigot keeps pouring, with hundreds of new statutory crimes inked every few years. Neither does that begin to count the thousands of additional regulatory crimes buried in the federal register.”).
47) See FIRST STEP Act, H.R. 5682, 115th Cong. (2018).
48) 18 U.S.C. § 545.
49) Id.
50) 676 F.3d 260, 278 (2d Cir. 2011).
51) Pattern Criminal Jury Instructions of the Seventh Circuit, 2012 Edition (plus 2015-2019 changes).
52) United States v. Carrillo, 435 F. 3d 767, 780 (7th Cir. 2006) (internal citations and quotations omitted).
53) See, e.g., United States v. Perez-Melendez, 599F.3d 31, 41 (1st Cir. 2010) (“Willful blindness serves as an alternate theory on which the government may prove knowledge.”); United States v. Caraballo-Rodriguez, 726 F.3d 418, 420 n.2 (3d Cir. 2013) (“[T]he government could satisfy the ‘knowledge’ requirement by demonstrating actual knowledge or willful blindness, which is ‘a subjective state of mind that is deemed to satisfy a scienter requirement of knowledge.’”) (quoting United States v. Wert–Ruiz, 228 F.3d 250, 255 (3d Cir. 2000)); United States v. Antzoulatos, 962 F.2d 720, 724 (7th Cir. 1992) (“It is well settled that willful blindness or conscious avoidance is the legal equivalent to knowledge.”); United States v. Hiland, 909 F.2d 1114, 1130 (8th Cir. 1990) (“In essence, a willful blindness instruction ‘allows the jury to impute knowledge to [the defendant] of what should be obvious to him, if it found, beyond a reasonable doubt, a conscious purpose to avoid enlightenment.’”) (quoting United States v. Zimmerman, 832 F.2d 454, 458 (8th Cir. 1987)); United States v. Jewell, 532 F.2d 697, 700 (9th Cir. 1976) (upholding jury instruction that a defendant “knowingly” possessed marijuana even if he was not actually aware that it was in his car if “his ignorance in that regard was solely and entirely a result of his having made a conscious purpose to disregard the nature of that which was in the vehicle, with a conscious purpose to avoid learning the truth.”); United States v. Gallo, 543 F.2d 361, 367 (D.C. Cir. 1976) (recognizing that “[i]t may be true in a given case, such as where the notice was clear and was wilfully ignored, that evidence of such facts may be considered by the jury as part of the proof that an accused possessed the requisite knowledge”).
54) See 15 CFR § 746.
55) 18 U.S.C. § 545.
56) The Human Trafficking Institute, “2019 Human Trafficking Report” at 51, 84.
57) See 15 U.S.C. § 78m(b)(2)(A) (books and records provision); 15 U.S.C. § 78m(b)(2)(B) (internal accounting controls provision); see also A Resource Guide to the U.S. Foreign Corrupt Practices Act, Second Edition, at 38–47.
58) See Executive Order 13785; see also Executive Order 13786.
59) See FCPA Resource Guide, Second Edition, at 71; see also United States v. Jeong, 624 F.3d 706, 710-12 (5th Cir. 2010) (“Article 4.3 states that two signatories with concurrent jurisdiction over a relevant offense must, ‘at the request of one of them,’ consult on jurisdiction.”).
60) Justice Manual at § 1-12.100, (emphasis added).
61) Andrew S. Boutros and T. Markus Funk, “‘Carbon Copy’ Prosecutions: A Growing Anticorruption Phenomenon in a Shrinking World,” The University of Chicago Legal Forum, Vol. 2012.
62) United States v. Villanueva, 408 F.3d 193, 201 (5th Cir. 2005).
63) Gamble v. United States, 139 S. Ct. 1960, 1964 (2019).
64) Id. at 1967; see also Jeong, 624 F.3d at 712 (“The Constitution of the United States has not adopted the doctrine of international double jeopardy.”); United States v. Martin, 574 F.2d 1359, 1360 (5th Cir. 1978); see also Bartkus v. Illinois, 359 U.S. 121, 128 n.9 (1959); Chua Han Mow v. United States, 730 F.2d 1308, 1313 (9th Cir. 1984) (describing a contrary argument as “frivolous”).
65) Tyler Hodgson, Limiting Liability for Crimes Committed Abroad: “Double jeopardy” has no standard international meaning, Litigation Journal (Winter 2013).
66) Id. (citation omitted).
67) FCPA Resource Guide, Second Edition at 54.
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