Recent Decisions in the Ninth Circuit Highlight U.S. Litigation Risk in Relation to Alleged Human Rights Violations Abroad

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. 


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 dismissed the claims, holding that the plaintiffs' allegations did not satisfy the ATS pleading burden or show that Cisco's conduct in the United States was sufficiently tied to the alleged human rights violations to overcome the presumption against extraterritoriality. Id. at *8. The Ninth Circuit reversed. It held that the plaintiffs sufficiently pleaded a plausible claim that Cisco provided assistance that had a substantial effect on cognizable violations of international law. Id. The Ninth Circuit also reversed the district court's dismissal of claims against certain Cisco executives under the Torture Victim Protection Act of 1991 ("TVPA"), 28 U.S.C. § 1350 note. 

The Ninth Circuit's decision is significant in two respects. First, the Ninth Circuit again held that aiding and abetting liability is a viable cause of action under the ATS, and that the Doe plaintiffs had pleaded sufficient facts for this claim. Doe, 2023 WL 486005, at * 8 (citing Doe I v. Nestle USA, Inc. ("Nestle I"), 766 F.3d 1013, 1023 (9th Cir. 2014)). Second, the Ninth Circuit held that plaintiffs had alleged facts sufficient to overcome the presumption against extraterritoriality.

Aiding and Abetting Liability Under the ATS: A plaintiff may sue under the ATS only if: (i) the tort passes Sosa's "high bar" for recognizing a cause of action; and (ii) the plaintiff overcomes the general presumption against extraterritoriality. Doe, 2023 WL 4386005, at *7-8 (citing Sosa v. Alvarez-Machain, 542 U.S. 692, 728 (2004)); Kiobel v. Dutch Petroleum Co., 569 U.S. 108, 123 (2013). Under the Sosa two-part test, a cause of action under the ATS must: (i) allege a violation of a "specific, universal, and obligatory" norm under international law; and (ii) seek a proper exercise of judicial discretion that does not overstep into foreign policy. Id. at *9 (quoting Jesner v. Arab Bank, PLC, 138 S. Ct 1386 (2018)). 

The Doe court held that "aiding and abetting liability is a norm of customary international law with sufficient definition and universality to establish liability under the ATS." Id. at *9. In reaching this conclusion, the Ninth Circuit "survey[ed] the types of international law identified by Sosa and Article 38(I) [of the Statute of the International Court of Justice], as applicable to aiding and abetting liability," and found that those "sources establish that customary international law recognizes aiding and abetting liability as a specific and universal form of liability," thereby satisfying step one of the Sosa test. Id. at *10. The court also held that recognizing aiding and abetting liability in the context of Doe's allegations was a proper exercise of judicial decision-making and did not overstep into foreign policy. Id. at *12. It observed that the suit was brought against a non-governmental, domestic corporation rather than a foreign government or corporation and therefore the case did "not raise the same internal comity and sovereignty issues" as cases against governmental entities. Id. at *12. The court also noted that neither the United States nor China (the foreign government involved) had objected to the suit proceeding. Id. at *12-13. The majority rejected the dissent's suggestion that courts should affirmatively solicit input from the State Department, instead finding that governmental silence serves as evidence of minimal foreign policy concern. Id

Having found that aiding and abetting claims are viable under the ATS and that foreign policy concerns did not weigh in favor of dismissal, the court next held that plaintiffs had adequately alleged a claim for aiding and abetting. The court credited plaintiffs' allegations that Chinese authorities told Cisco the goal of the project was to "eliminate Falun Gong adherents and activity," and that this goal was reflected in Cisco's marketing materials, internal reports, and files. Id. at *24. The court also cited plaintiffs' allegation that Cisco shareholders had raised concerns of human rights violations connected to the Golden Shield program in China. Id. The court found these allegations "sufficient to state a plausible claim that Cisco provided essential technical assistance . . . with the awareness that international law violations of torture" were substantially likely to take place. Id

The court similarly found that the allegations rebutted the presumption against extraterritoriality. The court cited allegations regarding "corporate decision-making and oversight in San Jose of actions taken in China to build and integrate Golden Shield technology provided by Cisco." Id. at *26. The court also relied on allegations regarding specific conduct in the United States. For example, "the complaint further notes that '[i]n addition [to general decision-making], the Defendants, from their San Jose headquarters, handled all aspects of the high-level design phases including those enabling the [targeting] of Falun Gong." Id. (emphasis in original). Thus, the court found that plaintiffs had alleged facts showing that more than "mere operational decisions" occurred within the United States, and that the U.S. conduct was tied closely to the alleged human rights violations abroad. Id. at *7-8.

Torture Victim Protection Act: The Ninth Circuit also reversed the dismissal of TVPA claims against two high-level Cisco employees, holding that the TVPA provides a private right of action for aiding and abetting torture and that plaintiffs alleged sufficient facts to meet their burden. Id. at *29. Plaintiffs' allegations that the two employees "directly participated in the marketing, design, and implementation of Cisco's work on the Golden Shield" while knowing of the potential human rights abuse to the Falun Gong adherents were sufficient to state a TVPA aiding and abetting claim. Id. at *32. 

The Ninth Circuit's decision bucks the trend of courts dismissing claims seeking to hold U.S. corporations and their executives liable for alleged human rights abuses abroad. See, e.g., Nestle USA, Inc. v. Doe ("Nestle II"), 141 S. Ct. 1931, 1936 (2021); Ofisi v. BNP Paribas, S.A., No. 22-7083, 2023 WL 4378213, at *6 (D.C. Cir. July 7, 2023); Jesner, 138 S. Ct. 1386 at 1409. The decision is also arguably in tension with how the Supreme Court approached aiding and abetting liability in Twitter v. Taamneh. See 143 S. Ct. 1206 (2023). Cisco has indicated that it intends to file a petition for rehearing en banc. 

Falcone v. Nestle: District Court allows class action to proceed against Nestle alleging deceptive advertising due to human rights violations

On July 13, 2023, the District Court for the Southern District of California rejected Nestle's motion to dismiss a putative class action alleging deceptive product labelling on Nestle's chocolate products. Falcone, 2023 WL 4551083, at *1. Plaintiff Maire Falcone, on behalf of a nationwide class, alleged that several of Nestle's chocolate products featured product labels that "lead customers to believe that the products were produced in accordance with environmentally and socially responsible standards," such as affirmative statements saying that Nestle was "[s]upporting farmers for better chocolate" and used "sustainably sourced cocoa beans." Id. These advertisements, plaintiff alleged, are "deceptive because [Nestle] sources its cocoa from West African plantations which rely on child labor and child slave labor, contribute to deforestation, and use other practices harmful to the environment." Id. The putative class asserted claims under the California Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et seq. ("CLRA"), and the Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq. ("UCL"). 

Denying Nestle's motion to dismiss, the court found that the complaint "plausibly alleged that the challenged statements were deceptive." Id. at *4. Plaintiffs' allegations differed from past unsuccessful claims that chocolate companies violated California consumer protection laws by failing to state on product labels the possibility that their supply chain included child and forced labor. See, e.g., Hodson v. Mars, 891 F. 3d 857 (9th Cir. 2018); Dana v. Hershey Co., 730 F. App'x 460 (9th Cir. 2018); McCoy v. Nestle, 730 F. App'x 462 (9th Cir. 2018). Rather than alleging a mere failure to disclose, the plaintiff in Falcone alleged that Nestle made affirmative statements regarding its chocolate, in what essentially amounts to "greenwashing." The plaintiff alleged these affirmative statements led consumers to believe Nestle's products are environmentally and socially responsible when in fact they do not meet the standards advertised. 

Deceptive Advertising: The court rejected defendant's argument that the labeling was not deceptive as a matter of law. Falcone, 2023 WL 4551083, at *2. The CLRA and UCL prohibit not just false advertising, but also labeling that "is either actually misleading or which has the capacity, likelihood, or tendency to deceive or confuse the public." Id. To support the allegation that Nestle's product labels were deceptive, the plaintiff singled out the affirmative statements made by Nestle that could be refuted by Nestle's own website, as well as third-party sources, which showed that child labor increased from 2009 to 2014. Id. at *3-4. The court found these specific allegations "sufficient to support plaintiff's claim that [Nestle]'s advertising message of sustainable cocoa production and support for cocoa farmers was misleading." Id. at *4. 

The court's holding highlights the importance of care in making affirmative statements concerning actions abroad. Greenwashing and other similar claims have become more prevalent in recent years, demonstrating the need for companies to exercise caution in how they represent, among other things, their human rights and environmental compliance or certifications.

Three Key Takeaways

  1. Bucking decisions from the United States Supreme Court and other circuits, courts in the Ninth Circuit are showing a continued willingness to allow cases alleging corporate human rights violations abroad to move past the pleading stage, increasing litigation exposure.
  2. The Ninth Circuit's recognition of aiding and abetting liability as a cognizable claim under the Alien Tort Statute could breathe new life into that statute, inviting claims for secondary liability of U.S. actors in connection with alleged human rights violations abroad. 
  3. Corporations should take care in making affirmative statements or representations regarding compliance with human rights and environmental standards to consumers.
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