Case May Signal New Risks for U.S. Companies’ Global Supply Chains

The Trafficking Victims Protection Reauthorization Act (TVPRA) has emerged as a favored legal avenue for NGOs pursuing compensation on behalf of foreign supply chain workers from U.S. companies. 

The advocacy group International Rights Advocates recently filed a federal class action lawsuit against Starbucks on behalf of eight Brazilian workers. 

• The complaint, brought under the TVPRA, accuses the company of exploiting labor on its suppliers' farms in Brazil, involving trafficking and "slavery-like conditions."  

Why it matters: The results of this case will determine whether the TVPRA can be successfully used to obtain damages against U.S. companies for alleged labor rights violations in their supply chains in addition to reputational harm.

Go deeper: Due to the lack of adequate legal frameworks in Brazil, Brazilian workers decided to sue the company in the U.S. under the TVPRA to receive compensation. This was not the first time this law was invoked to solve supply chain forced labor issues.  

In March 2024, The D.C. Circuit Court issued a ruling in the case where several U.S. tech companies were accused of benefiting from forced labor in cobalt mining in the Democratic Republic of the Congo.  

• To establish a successful claim, plaintiffs must demonstrate that they suffered financial or other harm due to a defendant's participation in a venture that they knew or should have known was involved in human trafficking. 

•  The court upheld the plaintiffs’ standing but ruled that merely purchasing cobalt through the global supply chain does not constitute "participation in a venture," a requirement for liability under the TVPRA. 

• The ruling suggests a broader definition of "participation in a venture" that includes taking part in an enterprise involving risk and gain. However, buying a commodity alone doesn't meet this threshold. 

• Additionally, the court didn't address whether the TVPRA's civil remedy applies extraterritorially, leaving open questions for future cases involving forced labor abroad. 

The bottom line: Despite similar unsuccessful cases, here the NGO argued that Starbucks imports coffee from farms included as part of Brazil's "dirty list," which are linked to forced labor practices. The company’s disregard for the list could give new leverage to the workers.  

What's next: With ongoing lawsuits and increased scrutiny, global companies should reassess their supply chain practices to ensure compliance with ethical standards and conduct regular supplier audits using public government lists to identify supply chain entities involved in forced labor practices.