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June 2014: Quinn Emanuel Knocks Out China Suit Against Cisco

June 2014

In the year since the Supreme Court decided Kiobel v Royal Dutch Petroleum Co., 133 S. Ct. 1659, 1669 (2013), which held that the Alien Tort Statute (“ATS”) does not provide relief for “violations of the law of nations occurring outside the United States” (in a win obtained for Shell by Quinn Emanuel), many district courts have faced new questions about what remaining ATS suits may still be brought against corporations doing business abroad. In one notable such case, the firm recently obtained dismissal of an action in which the plaintiffs had sought to hold Cisco Systems Inc. and its CEO liable for the alleged use of Cisco technology by Chinese government officials in China. Daobin v. Cisco Systems, Inc., No. 11-1538, -- F.Supp.2d ---, 2014 WL 769095 (D. Md. Feb. 24, 2014).

In the complaint, several Chinese residents alleged that they had been apprehended by Chinese authorities using Cisco networking equipment that Cisco had lawfully sold in China under U.S. export rules, and on this basis argued that Cisco was liable for physical injuries the Chinese police and prison officials later allegedly inflicted. The complaint asserted international law claims under the ATS, as well as various state-law tort claims. The district court dismissed the complaint with prejudice on multiple independent grounds:

First, the court held the Complaint nonjusticiable under the political question doctrine, reasoning that its adjudication would intrude into the Executive and Legislative branches’ “finely balanced approach to foreign relations and human rights” in China, id. at *6, and would impermissibly “require the Judiciary to determine whether the U.S. rules and regulations surrounding the export of products to China are sound,” id. The court additionally found the complaint nonjusticiable under the act-of-state doctrine, holding that its adjudication would unacceptably require a U.S. court to second-guess the sovereign acts of the Chinese government in enforcing Chinese law against Chinese citizens in China. Id. at *7.

Second, as an independent ground for dismissal, the district court held that the plaintiffs had not plausibly alleged that Cisco acted with the purpose of facilitating Chinese officials’ wrongdoing or in a manner that substantially assisted such wrongdoing. Id. at *10. As the Court explained, “[f]rom all that appears, Cisco technology remains a neutral product that can be used in innumerable non-controversial ways,” and the plaintiffs had failed “to indicate with any logic what it means to customize technology that would permit” the alleged wrongdoing at issue. Id. at *11.

Third, the Court dismissed all claims against Cisco’s CEO for lack of personal jurisdiction, id. at *4, and all state tort-law claims for lack of federal supplemental jurisdiction once all the federal claims were dismissed, id. at *11.

The decision thus provides important new guidance for U.S. companies facing similar ATS suits post-Kiobel, and shows that numerous grounds for dismissal remain in addition to extraterritoriality based on Kiobel itself.