From the Golden Shield to the Sword: The Expansion of the Alien Tort Statute to Reach U.S. Companies as Aiders and Abettors of Foreign Wrongs

On September 3, 2024, the U.S. Court of Appeals for the Ninth Circuit denied rehearing en banc in an Alien Tort Statute (“ATS”) case—Doe v. Cisco Systems—closely watched for its implications on the ATS and on U.S. companies that do business with foreign governments.

In the original opinion, a divided Ninth Circuit panel had reversed the district court’s grant of a motion to dismiss, holding that the plaintiffs had in fact stated a claim under the ATS, as well as under the Torture Victim Protection Act of 1991 (“TVPA”).  In so doing and in subsequently denying rehearing en banc, the Ninth Circuit has allowed a novel invocation of the ATS to proceed past the motion-to-dismiss stage, with potentially dramatic consequences for American businesses.

It appears likely that Cisco will seek to appeal the decision to the U.S. Supreme Court, given that Cisco has already moved to stay the Ninth Circuit’s mandate pending its filing of a petition for a writ of certiorari. The denial of rehearing en banc prompted a fulsome dissent by six judges, previewing arguments that could capture the attention of the Supreme Court.

Below, we analyze the original opinion, denial of rehearing, potential outcomes if the case goes to the Supreme Court, and best practices for companies that find themselves the target of a similar ATS suit. 

Procedural History and Background

The lawsuit in Cisco was originally filed over a decade ago in 2011*. Plaintiffs are practitioners of the Falun Gong religion in China, who alleged that they and their family members were victims of human rights abuses committed by the Chinese government.  The plaintiffs did not sue the Chinese government, but rather Cisco Systems, Inc., a California-based telecommunications conglomerate, along with two of its executives, for allegedly aiding and abetting (as well as conspiring with) Chinese officials in violation of the ATS and TVPA.

Namely, the plaintiffs alleged that Cisco—operating primarily out of its corporate headquarters in California—designed, implemented, and maintained for the Chinese government the “Golden Shield” system, a surveillance system allegedly capable of surveilling the entire country’s Internet usage for Falun Gong adherents and obtaining their detailed personal information and activities, which the plaintiffs allege were then used to persecute them and their family members over years.

The Original Panel Opinion and Dissent

In the original opinion, a divided panel of the Ninth Circuit reversed the district court’s grant of a motion to dismiss.  The panel majority held that the plaintiffs had in fact stated an aiding-and-abetting claim against Cisco under the ATS (as well as a claim under the TVPA). 

In so doing, the Court applied the two-part test articulated by the U.S. Supreme Court in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) for recognizing a cause of action under the ATS.  Judge Marsha L. Berzon began the majority opinion by acknowledging that the Supreme Court in Sosa had “delineated a ‘high bar’ for recognition of new causes of action under the ATS.”  Doe v. Cisco Sys., 73 F.4th 700, 714 (9th Cir. 2023).  The only three torts historically recognized under the ATS were the “violation of safe conducts, infringement of the rights of ambassadors, and piracy.”  Sosa, 542 U.S. at 715 (citing 4 William Blackstone, Commentaries *68). 

After acknowledging this high bar, the Ninth Circuit turned to the first step of Sosa’s two-part test: the requirement that the cause of action “rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to” the three historically recognized causes of actions.  Relying heavily on the Second Circuit’s opinion in Khulumani v. Barclay Nat’l Bank Ltd., 504 F.3d 254 (2d Cir. 2007)—namely a concurrence by Judge Robert A. Katzmann, the reasoning of which was adopted in a later Second Circuit opinion—the panel majority broadly explained that various international tribunals, treaties, and conventions recognized some form of aiding-and-abetting liability for violations of international law, and that therefore such liability was “sufficiently well defined and universally recognized to be cognizable under the ATS.”  Cisco, 73 F.4th at 718 (citing Khulumani, 504 F.3d at 277). The majority further noted that every federal court of appeals to have considered the question—which included the Second, Fourth, Eleventh, and D.C. Circuits—has held the same.  See id.

The second step of Sosa’s two-part test, the majority explained, asks courts “to consider foreign policy consequences and separation-of-power concerns before recognizing a cause of action or allowing a particular case to proceed.”  Cisco, 73 F.4th at 714 (emphases added) (citing Sosa, 542 U.S. at 728, 732-33).  The majority reasoned that aiding-and-abetting liability under the ATS would not trigger Sosa’s foreign policy concerns because it was “much more likely to be used to address the transgressions of nongovernmental actors [i.e., Cisco] than the actions of foreign governments [i.e., China] themselves.”  Id. at 720.

It also advanced a somewhat speculative argument that failing to provide this cause of action could result in foreign relations strife or embarrassment to the United States, given the “international concern with violations of human rights or the failure to provide an adequate forum for their vindication.”  Id.  The majority also found relevant the fact that there were no statements of interest filed by the U.S. or Chinese governments in this case, despite the length of the case’s pendency. 

And in regard to separation-of-power concerns, the majority held that existing statutes and regulations that Cisco identified as evidence of Congressional legislation in this area (which legislative function the judiciary would be infringing upon) did “not regulate the sale of computer networking software or hardware at all, for crime control or any other purpose, and so do not insulate such sales from otherwise applicable legal regimes, domestic or international.”  Id. at 724.  Having completed Sosa’s two-step test, the majority considered itself free to recognize aiding-and-abetting liability under the ATS. 

Judge Morgan B. Christen penned the dissent but started by acknowledging the “majority’s careful and cogent analysis of aiding and abetting liability under the Alien Tort Statute” and noted that in an “appropriate case,” she would likely have joined the majority.  Id. at 746.  However, she declined to do so in this case because “recognizing liability for aiding and abetting alleged human rights violations, committed in China and against Chinese nationals by the Chinese Communist Party and the Chinese government’s Ministry of Public Security, is inconsistent with the purpose of the Alien Tort Statute.”  Id.

Focusing largely on Sosa’s second step, Judge Christen argued that “a finding of liability in this case would necessarily require a showing that the Chinese Communist Party and Ministry of Public Security violated international law with respect to the Chinese-national Plaintiffs.”  Id. at 748.  Proving aiding and abetting by Cisco in this context would essentially require the plaintiffs to prove the primary violation by the Chinese government; the same is true of a conspiracy claim against Cisco.

The dissent further opined that “[s]uch a finding could have serious ramifications for Sino-American relations, fraught as they already are,” citing to various articles that highlighted the importance of China’s relationship with the United States and the heightened foreign policy risks associated with ATS litigation.  Id. at 749.  Judge Christen also noted that federal courts “were not designed to play a leading role in our nation’s international affairs,” and expressed her concern about “the practical consequences of allowing Plaintiff’s claims to go forward without input from the political branches.”  Id. at 748.  She argued that the Ninth Circuit should have taken the opportunity to solicit the position of the U.S. Department of State.  See id. at 750. 

The case law in this area indicates that the Executive Branch has typically favored limiting liability in the ATS context, and thus soliciting the State Department’s views could potentially have helped Cisco’s cause.  For example, in Jesner v. Arab Bank, PLC, 584 U.S. 241, 271 (2018), the State Department highlighted for the Supreme Court the “the perils of extending the scope of ATS liability to foreign multinational corporations” and noted that “this litigation has ‘caused significant diplomatic tensions’ with Jordan, a critical ally in one of the world’s most sensitive regions,” as Jordan considered the litigation to be a “‘grave affront’ to its sovereignty.”

The State Department weighed in yet again in the Supreme Court’s Nestlé II case, where it argued in an amicus brief that an aiding-and-abetting cause of action was not cognizable under the ATS, and that Jesner had made clear that Sosa’s second step alone precluded such liability. See Brief for the United States as Amicus Curiae Supporting Petitioners at 22, Nestlé USA, Inc. v. Doe (“Nestlé II”), 593 U.S. 628 (2021) (Nos. 19-416 & 19-453). 

And notably, the only veto by President Obama to have been overridden by Congress during his two terms was of the Justice Against Sponsors of Terrorism Act (“JASTA”), which made explicit an aiding-and-abetting cause of action under the Anti-Terrorism Act (“ATA”).  At that time, the Obama Administration had deep concerns that “JASTA would be detrimental to U.S. national interests more broadly.”

President Obama wrote in his 2016 message to Congress, “As drafted, JASTA would allow private litigation against foreign governments in U.S. courts based on allegations that such foreign governments’ actions abroad made them responsible for terrorism-related injuries on U.S. soil.”  Id.  This would affect even foreign nations (and by extension, third parties affiliated with them) that were never “designated by the executive branch as state sponsors of terrorism.”  Id. Indeed, such litigation has proliferated in the years since JASTA’s passage, often based on tenuous claims lodged against financial institutions and other corporations with some affiliation to a foreign nation.

If the Supreme Court were to subsequently bless an aiding-and-abetting cause of action under the separate ATS, the same kind of litigation could proliferate against companies that work with foreign governments (even tangentially), potentially souring foreign relations, generating unnecessary work for courts and companies, and creating chilling effects on those companies in regard to business with foreign governments. 

The Denial of Rehearing En Banc and Expanded Dissent 

The Ninth Circuit’s subsequent denial of rehearing en banc, penned again by Judge Berzon, echoed many of the same arguments advanced in the original panel opinion.  But in a forceful dissent joined by five other Ninth Circuit judges, Judge Patrick J. Bumatay expanded upon the earlier, more limited dissent by Judge Christen and argued that the Ninth Circuit had made three main errors in refusing to rehear the case en banc:

1. The Ninth Circuit had failed to restrict liability under the ATS to the causes of action that were comparable to the three historically recognized torts under the ATS.  See Doe v. Cisco Sys., 113 F.4th 1230, 1237 (9th Cir. 2024) (Bumatay, J., dissenting). Moreover, the decision was overbroadly premised on a “norm of customary international law,” Cisco, 73 F.4th at 717, which could potentially justify aiding-and-abetting liability for all torts claiming a violation of international law, not just those under the ATS.  The dissent referenced a recent Supreme Court decision involving the separate ATA, Twitter, Inc. v. Taamneh, 598 U.S. 471, 506 (2023), that explained that aiding and abetting should be analyzed in reference to the specific “tort at issue.” It also referenced an older Supreme Court decision, Central Bank of Denver N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994), that rejected the argument that civil aiding-and-abetting liability was widespread under domestic law (unlike criminal aiding-and-abetting liability) and viewed that civil cause of action as having only shallow roots in the law.   
2. In the dissent’s view, the Ninth Circuit had violated the traditional separation of powers by creating a new cause of action in aiding and abetting an ATS tort, despite Congress’s active legislating in this area.  See Cisco, 113 F.4th at 1237.  The dissent pointed out that Congress had not only declined to amend the ATS to include aiding-and-abetting liability in the recodification of the ATS, but had also expanded the reach of the ATS in recognizing “torture” as a tort via the Torture Victim Protection Act of 1991 (“TVPA”).  See id.  Indeed, the original panel opinion in this case found that the plaintiff had stated a TVPA claim and therefore reversed the district court’s dismissal of the TVPA claim (the dissenting judge in the original opinion had joined in the TVPA portion of the opinion, but not in the ATS portion).  See Cisco, 73 F.4th at 746.
3. The dissent argued that the Ninth Circuit had ignored “serious foreign-policy concerns” in “permitting federal courts to intrude in the delicate relations with another world superpower.”  Cisco, 113 F.4th at 1237.  This ran counter to Congress’s purpose in enacting the ATS, which was to “shield the country from being drawn into disputes with other nations.”  Id. at 1238.  As the Supreme Court in Jesner had explained, “The ATS was intended to promote harmony in international relations by ensuring foreign plaintiffs a remedy for international-law violations in circumstances where the absence of such a remedy might provoke foreign nations to hold the United States accountable.”  584 U.S. at 270.  The dissent argued that the Ninth Circuit was impermissibly transforming the “shield” of the ATS into a “sword to punish foreign nations through their alleged aiders and abettors” and “to incite international conflict.” Cisco, 113 F.4th at 1238 (emphasis added).  The dissent further noted potential blowback in the form of reciprocal actions by China against U.S. citizens and officials.  See id. at 1238, 1248.

The Potential Outcome at the Supreme Court 

Given the current composition of the Supreme Court, Cisco may have decent prospects on review, should the Supreme Court grant certiorari.  The decision to grant certiorari requires votes from four Justices.  Based on an analysis of Supreme Court’s Nestlé II decision, it appears that Justices Alito, Gorsuch, Kavanaugh, and Thomas have each blessed (some more explicitly than others) a narrower version of ATS liability that is generally confined to the three historically recognized torts under the ATS. 

Part III of Justice Thomas’s plurality opinion in Nestlé II, which was joined by Justices Gorsuch and Kavanaugh, took a narrow view of liability under the ATS, arguing that beyond the three historically recognized torts under the ATS, the Court’s precedents since Sosa “have clarified that courts must refrain from creating a cause of action whenever there is even a single sound reason to defer to Congress,” and further noting that the Court has “never created a cause of action under the ATS.”  593 U.S. at 635.  This part of the plurality opinion further noted that the Court’s recent precedents had stressed that “judicial creation of a cause of action is an extraordinary act that places great stress on the separation of powers.”  Id. at 636.  A plurality opinion is, of course, nonbinding on the Court but hints at how certain Justices would rule if presented again with similar issues.  Justice Gorsuch echoed these same points in Part II of his concurrence, which Justice Kavanaugh also joined.

Justice Alito did not join those parts and instead dissented, noting that the plurality opinion went further than needed “at this juncture” in terms of reaching questions of extraterritoriality and of the cognizability of new claims under the ATS, and was “begin[ning] to take on the flavor of an advisory opinion.”  Nestlé II, 593 U.S. at 657-58 (Alito, J., dissenting).  However, Justice Alito hinted that he agreed with Justices Thomas, Gorsuch, and Kavanaugh, writing, “To be sure, Part III of Justice Thomas’s opinion and Part II of Justice Gorsuch’s opinion make strong arguments that federal courts should never recognize new claims under the ATS.  But this issue was not raised by petitioners’ counsel, and I would not reach it here.”  Id. at 658.

Given that four of the Justices have expressed a willingness to rule that new claims such as aiding and abetting are generally not cognizable under the ATS, should Cisco raise that very issue, there is at least a reasonable chance that certiorari will be granted.  And to prevail on that issue, Cisco would have to convince one of the five remaining Justices.  Justice Sotomayor’s concurrence (which Justices Breyer and Kagan joined) suggested her agreement with Sosa, which she described as having explicitly left the door open to new causes of action under the ATS.

Where the Justices differ appears to be the standard for Sosa’s second step, which Justice Thomas and others view as “extraordinarily strict,” but which Justice Sotomayor and Kagan interpret in a more flexible manner, so as to give the ATS “practical effect.”  In support of her more flexible view, Justice Sotomayor argued that “from the moment the ATS became law, Congress expected federal courts to identify actionable torts under international law and to provide injured plaintiffs with a forum to seek redress,” Nestlé II, 593 U.S. at 650 (Sotomayor, J., concurring), and federal courts might have greater expertise for that task than Congress.

Given how things shaped out in Nestlé II, how Chief Justice Roberts and Justice Barrett approach this issue would quite likely be determinative for the outcome of this case.  While neither joined in Part III of Justice Thomas’s plurality opinion (nor in Part II of Justice Gorsuch’s concurrence), their reasons for not joining are not apparent from the result.  They may, like Justice Alito, simply have believed that the issue was not properly before the Court.  Their views in other cases concerning implied rights of action might suggest, however, that they could be receptive to Cisco’s arguments on appeal. 

Best Practices for U.S. Companies Working with Foreign Nations

There are certain lessons to be gleaned from the Cisco case for U.S. companies that do business with foreign nations, particularly when some of those nation’s activities may implicate the ATS.   

The Ninth Circuit had also found relevant, in regard to the foreign policy implications, that neither the U.S. Department of State nor the Chinese government had weighed in on the case.  As the original dissent by Judge Christen noted, “It is less realistic to expect the Department and foreign governments to monitor all 94 federal district courts for any ATS litigation raising foreign policy concerns.”  Cisco, 73 F.4th at 750.

To the extent feasible, a defendant in a similar ATS context should certainly consider outreach to the State Department or the relevant foreign government to request a statement of interest or amicus brief.  Indeed, Cisco may well have done so; the State Department resists requests for participation in litigation before U.S. courts for the same reasons it sought decades ago to replace the practice of “suggestions of immunity” with the statutory scheme for adjudicating immunity decisions in the Foreign Sovereign Immunities Act.  Frequent participation by the State Department encourages courts to draw inferences about its views even when the State Department does not make a filing (as the panel majority did here, in the Ninth Circuit).  Still, if the Supreme Court takes up its appeal, it becomes much more likely that the State Department or the Chinese government would weigh in at this more advanced stage, especially given the Solicitor General’s role before the Court.  

Notably, this case not only implicates Sino-American relations, but also impacts the potential willingness of U.S. companies to do business with the Chinese government for fear of expanded ATS liability, even if they were to have done nothing wrong, if the Chinese government uses the U.S. company’s product in a way later deemed inappropriate.  In that way, such litigation truly does impact U.S. foreign affairs, including the U.S. government’s ability to pursue a diplomacy of “engagement” through business ties. 

On a practical level, the Ninth Circuit panel decision, if it stands, could lead some U.S. companies to relocate overseas certain of their activities in conjunction with foreign governments.  One issue raised in the panel opinion was extraterritoriality (or lack thereof) of Cisco’s conduct as it relates to the ATS.  In Kiobel v. Dutch Petroleum Co., 569 U.S. 108 (2013), the Supreme Court held that the ATS does not apply extraterritorially, and the Supreme Court subsequently held in Nestlé II that an ATS plaintiff “must establish that the ‘conduct relevant to the statute’s focus occurred in the United States,’” beyond mere corporate presence or general corporate activity in the United States.  593 U.S. at 633 (quoting RJR Nabisco, Inc. v. European Cmty., 579 U. S. 325, 337 (2016)).

Because Cisco was alleged to have designed, implemented, and maintained the “Golden Shield” system primarily in California, the original Ninth Circuit panel concluded that this lawsuit was a permissible domestic application of the ATS, even if other conduct had occurred abroad.  See Cisco, 73 F.4th at 739.  Given the lack of extraterritorial application of the ATS, if a U.S. company has any projects with a foreign government that may raise potential ATS concerns, and that company has the ability to house those projects in (or relocate them to) a foreign office, doing so may be prudent for reducing exposure under the ATS for aiding and abetting. 

Given the Supreme Court’s narrowing of the potential contexts in which the ATS may be applied, plaintiffs seeking to use U.S. courts to hold defendants liable for alleged international human rights offenses have explored numerous alternative theories, including the transitory tort doctrine, as Ropes & Gray discussed in an earlier blog post regarding an unprecedented district court judgment upholding that theory.  As a consequence, even the Supreme Court’s consistent narrowing of ATS liability does not mean that liability will not attach to international conduct.  And, of course, if the Supreme Court does not take up an appeal in Cisco, ATS aiding and abetting would remain a viable cause of action in the Ninth Circuit (and in the various other Circuits that have found the same).

* The procedural history of the Cisco case is long, involving the district court’s grant of a motion to dismiss, its later denial of a motion for consideration, a subsequent appeal of that denial, and various stays throughout the litigation—at both the district court and appellate levels—as a result of an array of relevant, then-pending Supreme Court cases.

About our Practice

Ropes & Gray has a leading ESG, CSR, and business and human rights compliance practice.  Our lawyers have also worked on significant cases brought under the ATS as well as under the ATA, both of which have seen recent expansions of aiding-and-abetting causes of action (the ATS through the Ninth Circuit’s Cisco case, for example, and the ATA through the enactment of JASTA, as discussed).  We offer clients a comprehensive approach in these subject areas through a global team with members in the United States, Europe, and Asia.  Senior members of the practice have advised on these matters for more than 30 years, enabling us to provide a long-term perspective and depth and breadth of experience that few firms can match.  For further information on the practice, click here.

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