U.S. technology companies doing business abroad are discovering a new risk under a very old statute. Foreign plaintiffs have begun bringing lawsuits in U.S. courts under the Alien Tort Statute (ATS), alleging that technology companies and their executives are violating international law by facilitating human rights abuses through the use of their products and should be held accountable here.
The ATS, enacted in 1789 to provide a weapon against piracy and affronts to U.S. diplomats abroad, has enjoyed a renaissance over the past 30 years as U.S. companies have expanded their global operations. Technology companies appear to be the target du jour. Recent cases present chilling tales of human rights violations by foreign governments, with U.S. companies and their executives alleged to be facilitators, through their products, of the illegal acts.
ATS cases can impose a huge toll on defendants, subjecting them to years of costly litigation, to say nothing of the glare of media coverage. But some relief may be in sight.
In October 2011, the U.S. Supreme Court agreed to hear on appeal Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010), taking up the question of whether corporate defendants can ever face liability under the ATS. If the answer is “No,” as held by a divided panel of the Second Circuit, that would end the use of the ATS as a weapon against corporations accused of human rights violations. But corporate executives take note: The battleground will likely shift from corporate defendants to individual defendants, raising new legal issues that are presently working their way through the lower courts.
A Brief History
The ATS, enacted as part of the Judiciary Act of 1789, provides that “district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States” (28 U.S.C. § 1350). The ATS was largely dormant until the 1990s, when foreign plaintiffs “rediscovered” it as a tool for targeting multinational corporations in U.S. court actions.
Plaintiffs have pursued ATS litigation against corporations from a wide variety of industries, including manufacturing, industrial chemicals, and finance. These complaints have raised a litany of allegations, ranging from torture, crimes against humanity, and human trafficking to environmental pollution, inhumane working conditions, and medical experimentation—all cast as violations of international law.
Technology companies are increasingly finding themselves as defendants in ATS litigation. The trend began in 2002, when plaintiffs accused IBM and Fujitsu of aiding and abetting the South African regime’s apartheid policies by supplying it with technology systems that enabled it to monitor its population. The case is still pending in court. More recently, in 2007, the World Organization for Human Rights USA filed an ATS claim against Yahoo, alleging that it violated international law by providing Chinese authorities with online user information that enabled them to identify and arrest Chinese dissidents. Yahoo’s CEO and general counsel had to answer questioning by members of the U.S. Congress during a hearing of the Foreign Affairs Committee, and Yahoo eventually settled the case.
This year, practitioners of Falun Gong filed an ATS claim against Cisco Systems and certain of its executives, arguing that they aided and abetted China’s human rights violations by helping to design Golden Shield, an alleged Internet censorship and surveillance program used to identify and track members of Falun Gong. Cisco’s motion to dismiss the plaintiffs’ amended complaint was terminated without prejudice to the motion being re-filed after the Supreme Court decides Kiobel.
