USA Law and Practice Contributed by: Michael G. Congiu and Gillian Gilbert, Littler
Courts may choose to pierce the corporate veil and impose liability on the parent company based on several key factors, including: • the degree of influence the parent company exerts over the subsidiary’s operations, decision-making, and management; • commingling of assets between the parent and subsidiary; • failure to observe corporate formalities, such as maintaining separate books, records, and governance structures; and • representation of the subsidiary by the par - ent as an extension of itself, rather than as a distinct legal entity. Whether a parent company can be held liable is a fact-specific inquiry that depends on the nature of the claims and the surrounding cir - cumstances. Courts will assess the totality of the relationship between the parent and subsidi - ary to determine whether liability is appropriate. 4. Enforcement and Litigation 4.1 Enforcement Activities Enforcement of Section 307 by U.S. Customs and Border Protection Since 2016, U.S. Customs and Border Protec - tion (CBP) has significantly increased its enforce - ment of Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307), which prohibits the importation of goods produced, wholly or in part, with forced labour. CBP utilises two primary enforcement mecha - nisms: • Withhold Release Orders (WROs): CBP issues WROs when there is a reasonable suspi - cion that goods were produced using forced
labour. Upon issuance, CBP detains the goods at the port of entry. If the importer fails to successfully contest the WRO or remove the goods from the United States, CBP is authorised to seize and destroy the merchan - dise. • Findings: Following a more conclusive inves - tigation, CBP may issue a formal Finding that establishes goods were produced with forced labour. If an importer cannot provide suf - ficient rebuttal evidence demonstrating that the goods were not made with forced labour, CBP may proceed to seize and destroy the goods in question. These enforcement tools reflect the US govern - ment’s commitment to preventing the entry of goods linked to exploitative labour practices and ensuring compliance with federal trade and human rights standards. 4.2 Case Law California Consumer Protection Lawsuits In August and September 2015, six class action lawsuits were filed in federal courts in California against various companies for allegedly failing to disclose the use – or risk – of forced labour in their supply chains, particularly in Thailand and West Africa. Each case alleges violations of California’s consumer protection and unfair competition statutes. The plaintiffs argue that the companies had a duty to disclose the presence or likelihood of forced labour due to their superior knowledge of their own supply chains. This duty, they contend, was further reinforced by the companies’ public representations that they prohibit forced labour among their suppliers. These representations were found in several sources, including:
129 CHAMBERS.COM
Powered by FlippingBook