Analysis: Litigation & ChiquitaThis case study deals primarily with the issue of litigation. The case study focuses especially on litigation concerned with U.S. companies being held accountable in U.S. courts for their actions and influences in foreign countries. The main company highlighted within the case study is Chiquita, the largest employer of banana workers in Latin America. This analysis will dive deeper into the actual issue of litigation and will focus on the Alien Tort Statute (also called the Alien Tort Claims Act [ATCA]), which was a part of the Judiciary Act of 1789.
The issue of accountability and the analysis of multiple cases including Chiquita will be discussed in relevancy to litigation and the ATCA. Finally, the CSR issues dealing with the ACTA, along with the effects that this issue can have on all of a company’s stakeholders will be examined. The Issue:
Before one can understand the CSR issues within the case, they must have a decent background of the ATCA. According to Chapter 28 of the United States Code, Part IV, Chapter 85, Section 1350, “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” In other words, U.S. companies can be held liable in U.S. courts for their actions and operations in foreign countries.
Although the ATCA was initially intended for torts such as piracy, violations of safe conduct, and the interference of ambassadors, it has recently become much more relevant with the actions of large corporations. An example would be the 2000 case of Wiwa v. Royal Dutch Petroleum Co. According to Harvard Law (http://cyber.law.harvard.edu/torts3y/readings/update-a-02.html), Shell Oil (namely Shell Nigeria) was accused of being involved with the murders of several Nigerians, along with the famous author, Ken Saro Wiwa.
These murders were a result of disagreements over Shell wanting to start developing operations in the homeland of the Ogoni people. Wiwa and the civilians were killed by Nigerian military that received money, weapons, and logistics from Shell. Shell argued that the case be heard in England, but the ATCA brought the case back to the United States. On October 7th, 2008 Judge Kimba Wood of the U.S. District Court of Southern New York held a hearing to address the remaining disputes and motions that have been dormant since 2003 and 2004.
The trial date is set for February 9th, 2009 (http://ccrjustice.org/ourcases/current-cases/wiwa-v.-royal-dutch-petroleum,-wiwa-v.-anderson-and-wiwa-v.-shell-petroleum-d). Although the ATCA wasn’t referenced for nearly two centuries, it’s proving to be very valuable in the restoration and upkeep of the human rights for those foreign people being affected by American companies’ wrongdoings.
Where then does the accountability of these wrongdoings come into play? When a corporate misbehavior occurs, one’s natural inclination is to look for the causes of blame. Furthermore, it may be natural to blame the entity that directly caused the misbehavior – the corporation. However, further stringent questioning is needed. For instance, what allowed this entity to come into existence? Who, if anyone or any entity, is responsible for its actions? The answers can be found in how the corporations come into existence. A corporation is created by a state government through the chartering process.
Without the government, the legal entity we refer to as a corporation could not exist. Without the government, it would be a proprietorship, partnership, or mutual company and would not enjoy the many benefits such as limited liability, corporate personhood, or tax incentives. Since these incentivized wealth-seeking entities are born from the state governments, who else can wield ultimate blame for their misbehaviors but that of the creators themselves? In other words, the states which literally create these corporate entities should be responsible for the actions of the entities they create.
Businesses holding the legal status of a corporation have tremendous legal privileges over non-incorporated business. If the corporate entity wrongs the constitutional rights of others, shouldn’t the state that chartered the corporation be held accountable in some way? Moving forward, who then should hold the state governments accountable for their corporate entities misbehaving overseas if the state governments do nothing to remedy the situation?
Since the US Congress has the Constitutional authority to “regulate commerce… among the several States” as well as “with foreign Nations,” (Article 1, Section 8 of the US Constitution) should it not also have authority over states involved (via their corporate entities) in foreign commerce with citizens and businesses of other nations? Werther and Chandler raise the question of whether or not U.S. courts should be expanding their jurisdiction, or should these cases be a matter of U.S.foreign and trade policy? Regardless of one’s opinion, since the State governments bring the corporations into existence, they should be responsible for the actions taken by their corporations. Chiquita:
Another strong example and reinforcement of the ATCA was the lawsuit where 3,000 foreign banana workers were allowed to be heard in U.S. Courts in 2002. These banana workers represented a fraction of those that have been exposed to the pesticide dibromochloropropane (DBCP), also known as Nemagon and Fumazone.
Developed by Shell and Occidental Chemical, DBCP has been proven to cause migraines, vision loss, hearing loss, liver and kidney damage, infertility, cancer, miscarriage and birth defects. It was shipped to these foreign banana plantations throughout the 70’s and 80’s, even though the Environmental Protection Agency had banned the use of DBCP in the United States in 1979 because of a large amount of Occidental employees becoming sterile.
Some of the companies accused in the shipment of DBCP were Chiquita Brands International, Dole Food, Standard Fruit Company, and Del Monte Fresh Produce. The companies and developers of the pesticide did not alert the banana workers to the dangers of the product, despite the fact that they fully understood the side effects of being exposed to it. More cases followed the 2002 New Orleans case; 1,800 Nicaraguans filed suits against Chiquita in January, 2004 and thousands of Costa Ricans filed a suit in October, 2004 in a Las Angeles court against Chiquita along with for others (http://www.knowmore.org/wiki/index.php?title=Chiquita_Brands_International%2C_Inc). CSR Influences:
How do these lawsuits against Chiquita impact the company and all other stakeholders? Chiquita has been highly scrutinized for their negligence of the human rights of the banana workers that were involved with the use of DBCP. Chiquita has received an unimaginable amount of negative publicity, and some people are even boycotting Chiquita bananas. Stockholders and employees lost trust in the company because of the bad decisions made. If at all possible, this trust will be hard to regain. Our government, along with foreign governments, has questioned the integrity of Chiquita because of these bad decisions. Let us not forget about DBCP, and how it negatively
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