What Rubicon knew – and ignored – is now at the center of a landmark ruling. Is your company next?
US companies can now face civil suits for attempting to profit from forced labor in their supply chains – even if the effort never paid off.
A federal appeals court handed down a significant ruling on February 20, 2026, one that compliance and HR professionals across the country would be wise to read carefully. The Ninth Circuit Court of Appeals cleared the way for a civil lawsuit to proceed against a US seafood distribution company over its alleged role in a forced labor scheme at overseas factories – even though the company never completed a sale of the goods in question.
The case began more than a decade ago. A group of Cambodian villagers alleged they were recruited to work at seafood processing factories in Thailand with promises of good pay and free housing. What they allegedly found instead was something far darker. According to the plaintiffs, they were underpaid, charged for accommodations, had their passports confiscated, and were subjected to abusive conditions. Workers who complained reportedly faced retaliation. Those who tried to leave were allegedly arrested. The alleged abuse spanned from 2010 to late 2012.
Rubicon Resources, a US company, sits at the center of the lawsuit. The company was set up to market and sell seafood from those same Thai factories to American buyers. Rubicon did not own the factories or employ the workers directly, but its staff allegedly conducted factory visits, arranged imports, coordinated sales – and even claimed in marketing materials to "control every aspect of production."
The red flags, according to the court, were hard to miss. In October 2011, Walmart rejected a Rubicon shipment of fourteen containers of shrimp over concerns about the factory's working conditions. By February 2012, Rubicon was aware of a newspaper report in which one of the plaintiffs alleged forced labor and said workers could not get their passports back. More articles followed. Rubicon's own managers passed them around internally. The company briefly paused its sales push before resuming it months later. It never successfully completed a US sale during this period.
Rubicon had won at the district court level, which ruled against the plaintiffs on three separate grounds – including that there was no evidence Rubicon actually benefited from the alleged trafficking, and that federal anti-trafficking law did not extend to companies that merely attempted to profit from such a venture. A three-judge appellate panel agreed.
Then Congress stepped in. Just fifteen days after the Supreme Court declined to take up the case in late 2022, three senators proposed an amendment to a pending bill – the Abolish Trafficking Reauthorization Act – that clarified attempting to benefit from a forced labor venture is enough to create civil liability. The Senate passed the amended bill the same day it was introduced. The president signed it into law on January 5, 2023
The plaintiffs moved to reopen the case. The district court refused, finding that the new law did not apply to past conduct. The Ninth Circuit, sitting with eleven judges, disagreed – and reversed.
The court found that Congress had made its intent clear: the amendment was a clarification of what the law always meant, not a brand-new rule. The speed at which Congress acted, the language it used, and the legal confusion the earlier ruling had created all pointed in the same direction.
The court also found that the district court had been too narrow in its reading of the case from the start. On the question of whether Rubicon participated in the venture at all, the court said the standard applied below was simply wrong – a company does not need to run or manage an operation to be considered a participant. And on the question of what Rubicon knew, the court found that a reasonable jury could well conclude that a company circulating news articles about forced labor at a factory it was actively trying to sell products from knew – or certainly should have known – what was happening there.
The case now goes back to the lower court for further proceedings. No finding of liability has been made against Rubicon.
For HR and compliance teams, the ruling is a practical wake-up call. The "knew or should have known" standard the court applied is not abstract. It means that once your company has credible information – a news report, a rejected shipment, or internal correspondence flagging labor concerns – continuing to pursue a business relationship with that supplier can form the basis of a federal lawsuit. Attempting to profit is enough. Actually succeeding is no longer required.
Supply chain due diligence has long been treated as a procurement issue. This ruling makes clear it is also a legal liability issue – and one that HR, compliance, and legal teams need to own together.
