In Short
The Situation: In the last month, two courts in the Ninth Circuit allowed human rights focused cases to proceed beyond the pleading stage. These cases seek to impose liability on U.S.-based companies for alleged human rights abuses taking place abroad. The decisions allowing them to go forward diverge from earlier decisions dismissing similar claims.
The Result: These decisions may invite additional human rights cases against domestic companies for alleged involvement in human rights violations abroad. More of these cases may also survive motions to dismiss and proceed to costly and intrusive discovery.
Looking Ahead: Companies should review their compliance programs to ensure they adequately consider the human rights risks posed by subsidiaries, suppliers, customers, and other business partners located abroad. Companies should also carefully assess their worldwide corporate activities (including activities of their customers and suppliers) before making affirmative statements about their products and business operations.
Background
Two recent decisions in the Ninth Circuit demonstrate the continued litigation risk that corporations face from alleged involvement in human rights violations abroad. First, in Doe v. Cisco Systems, 2023 WL 4386005 (9th Cir. July 7, 2023), the Ninth Circuit refused to dismiss claims against Cisco alleging aiding and abetting liability under the Alien Tort Statute related to the use of Cisco's technology abroad to violate human rights. And, in Falcone, v. Nestle USA, Inc., 2023 WL 4551083 (S.D. Cal. July 13, 2023), the District Court for the Southern District of California denied a motion to dismiss a putative class action asserting violations of the California Consumer Legal Remedies Act, Cal. Civ. Code ' 1750 et seq. and the Unfair Competition Law, Cal. Bus. & Prof. Code ' 17200, et seq., alleging that Nestle falsely labelled its chocolate products as environmentally and socially responsible despite Nestle's having bought cocoa from farms that use child labor.
These cases, arising in different areas of substantive law, highlight the continued U.S. litigation risk, especially in the Ninth Circuit, corporations face related to alleged human rights violations abroad.
Doe v. Cisco: Ninth Circuit allows suit under Alien Tort Statute and Torture Victim Protection Act to proceed
On July 7, 2023, the Ninth Circuit reversed a lower court's dismissal of aiding and abetting claims under the Alien Tort Statute ("ATS") against Cisco Systems, Inc. for alleged use of its technology by Chinese authorities to persecute Falun Gong practitioners. 28 U.S.C. ' 1350; Doe, 2023 WL 4386005 at *1. Falun Gong is a religious movement whose practitioners allegedly have been tortured and placed in labor camps by the Chinese government. Id. at *3. Plaintiffs allege that Cisco developed the "Golden Shield" national public security network knowing it would enable the Chinese government to monitor and track Falun Gong adherents. Id. at *4-5. The district court...
