A US district court judge who dismissed a forced labour case against five technology companies was found to have investments in four of the firms, with a separate court now ruling against the victims’ motion for reversal that there was no conflict of interest
- Sebastian Klovig Skelton,
Published: 01 Jul 2022 9:00
A US court has denied a motion to reverse the dismissal of a lawsuit against five major technology companies over the cobalt mining deaths of Congolese children, after the presiding judge was found to hold significant stocks and shares in four of the firms.
The lawsuit against Alphabet, Apple, Dell, Microsoft and Tesla was originally filed in Washington DC, in December 2019, by human rights group International Rights Advocates, on behalf of 14 families who accused the technology firms of knowingly aiding and abetting – and subsequently benefiting from – forced labour practices in the Democratic Republic of the Congo (DRC).
As many as 11 of the children sustained injuries, including smashed limbs and broken spines, while five others were killed by tunnel collapses or falling into unprotected mining shafts.
The lawsuit marked the first legal challenge of its kind against a technology company, many of which rely on their cobalt supply chains to power products such as electric cars, smartphones and laptops.
After a protracted legal battle, US district court judge Carl J Nichols dismissed the legal case on the basis there was not a strong enough causal relationship between the firms’ conduct and the miners’ injuries.
On 24 June, Forbes reported that Nichols – a long-time corporate lawyer appointed to the US District Court for the District of Columbia in 2019 by President Donald Trump – held bonds in both Apple and Microsoft when he was assigned to the case, before purchasing further bonds in 2020 while the case was pending before him.
This information is based on Judge Nichols’s financial disclosure forms, which were obtained by the Congolese families’ lawyer, Terrence Collingsworth, and show that in 2020 he purchased bonds in Apple seven times and Microsoft five times, with his holdings valued between $60,000 and $200,000.
The forms also show that Nichols held between $265,00 and $550,000 stock in Vanguard Growth, an exchange-traded fund dominated by shares in Apple, Microsoft, Alphabet and Tesla. Based on the shares in these companies held by Vanguard Growth, Nichols held an interest valued between $90,000 and $192,000 in the companies that were listed as defendants in the lawsuit.
However, on 28 June, the US Court of Appeals for the District of Columbia Circuit ordered that the motion to vacate Nichols’s decision be denied: “Neither Judge Nichols’s purchases of bonds issued by several appellees, nor his purchases of mutual funds or exchange-traded funds, resulted in violations” of Section 455, the section of the relevant US code that deals with the disqualification of judges.
“As the Judicial Committee on Codes of Conduct has persuasively reasoned, because ‘debt interests are not considered to give rise to a financial interest in the debtor that issued the debt security . . . disqualification is not required solely because a party in a matter before the judge is a corporation . . . that has issued a debt security owned by the judge’.”
It added that Section 455 “explicitly excludes ‘ownership in a mutual or common investment fund that holds securities’ from being considered a ‘financial interest’ requiring recusal ‘unless the judge participates in the management of the fund’, which is not alleged to be the case here”.
However, according to International Rights Advocates, the Court of Appeals is still separately looking into Nichols’s decision “on the merits” of the case (which victims always planned to appeal since the dismissal), with the court entering a briefing schedule for this on 29 June.
Nichols declined Computer Weekly’s request for comment, but his office provided a copy of the Court of Appeals’ decision.
Computer Weekly asked each of the five technology companies – which jointly challenged the lawsuit – if they were aware of Nichols’s financial holdings in their firms either before or during the case.
Microsoft said it had nothing to share, while Dell said it only learned of the allegations when they were raised by plaintiffs after the dismissal. “The Court of Appeals has already ruled on the matter finding Judge Nichols did not violate statute or the Judicial Code of Conduct. We have nothing further to add on this matter,” said a Dell spokesperson. Apple, Alphabet and Tesla had not responded by the time of publication.
According to Collingsworth, executive director of International Rights Advocates – who described Nichols’s dismissal decision as “unusually and unnecessarily enthusiastic” – it took about six months for the US’s judicial oversight commission to send him the judge’s financial disclosure forms.
“Thankfully, we were able to get access Judge Nichols’s financial disclosure forms and discovered that the judge had significant financial investments in Tesla, Apple, Microsoft and Google, and more shocking to us, that he increased those investments after he was assigned the case and before he dismissed it,” he told Computer Weekly before the Court of Appeals decision came through, adding that he hoped the court would “vacate the tainted judgment and order the recusal” of Nichols so a new judge could be appointed “who will provide a fair and unbiased ruling in the case”.
Responding to the decision, Collingsworth added: “We are very disappointed in the Court of Appeals’ decision that Judge Nichols’s ownership of and major new investments in these companies (except Dell) was not a conflict of interest sufficient to vacate his decision dismissing the case.”
He added, however, that the Court of Appeals entered a separate briefing schedule to review Nichols’s decision “on the merits” on 29 June, which was previously suspended while the court reviewed International Rights Advocates’ “motion to vacate based on corruption”.
He added: “We remain confident that the Court of Appeals, mindful of this situation, will provide a fair and impartial review of Judge Nichols’s decision on the merits. We do not read the decision as foreclosing future recusal of Judge Nichols. We will revisit that issue once we succeed on appeal and reverse the dismissal decision.”
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