United States corporations transacting business internationally have faced the risk that malicious actors abroad will use their products to commit human rights violations. And victims of such crimes have often sued the company or its officers under the Alien Tort Statute (ATS) or Torture Victim Protection Act (TVPA), seeking to hold them liable for the way their products were misused. But in Cisco Systems, Inc. v. Doe, No. 24-856, in an opinion covering international diplomacy, piracy, and the separation of powers, the Court held that neither the ATS nor the TVPA contains causes of action for aiding and abetting. The Court's decision creates substantial clarity for companies doing business overseas.
Recent Efforts to Expand Liability Under the Alien Tort Statute and Torture Victim Protection Act
Statutes permitting liability for wrongs occurring outside the United States have a long history. In 1789, the First Congress passed the Alien Tort Statute to avoid diplomatic tensions arising from the inability of foreign nationals to bring claims in federal court for torts "committed in violation of the law of nations." At the time it was passed, the ATS covered three particular violations of international norms: "violation of safe conducts, infringement of the rights of ambassadors, and piracy." But in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the Supreme Court held that federal courts had narrow authority to create new causes of action under the ATS for violations of international norms. Seizing on this invitation, victims of all manner of human rights offenses began filing federal lawsuits alleging that domestic corporations had indirectly aided or abetted their abuse.
In 1991, Congress enacted the Torture Victim Protection Act. This modern statute allows suits to be brought against someone who "subjects an individual to torture." The TVPA applies only to natural persons, not corporations. But victims of human rights abuses have used this statute to sue corporate officers, directors, and employees for aiding and abetting human rights violations based on the misuse of the company's products. These indirect attacks on corporations have created additional exposure risks for companies doing business abroad.
The Supreme Court Rejects Judicially Created ATS Causes of Action
In Cisco Systems, the Supreme Court reined in the expanding theories of liability under both statutes. Members of Falun Gong, a religious movement that claimed persecution by the Chinese government, filed ATS and TVPA claims in the Northern District of California. Their complaint alleged that the Chinese government had subjected them to torture and other abuses in violation of international law—and that Cisco aided and abetted those actions by providing the technology the Chinese government used to create the "Golden Shield" surveillance network that identified them as Falun Gong members. The district court dismissed their complaints, but the Ninth Circuit permitted the claims to go forward after holding that aiding and abetting liability was available under both the ATS and the TVPA.
In a 6-3 opinion authored by Justice Barrett, the Supreme Court reversed, sharply limiting corporate liability under both statutes. Addressing the ATS, the majority closed the door left open by Sosa—holding that courts cannot create new causes of action under the ATS, including aiding and abetting liability. Justice Barrett explained that judicially created causes of action under the ATS intrude on both the executive and legislative branches. First, because the ATS reaches "violations of international norms," defining new causes of action for such violations would entangle courts in foreign policy issues and risk adverse foreign policy consequences. Second, creating new causes of action would infringe on Congress's exclusive power to "define and punish" violations of "the Law of Nations." U.S. Const. Art. I, § 8, cl. 10. To maintain the separation of powers, the Court declined to continue to "indulge the fiction" that judicially created causes of action are appropriate under the ATS.
Addressing the TVPA, Justice Barrett held that the statute's causation requirement is far too narrow to permit aiding and abetting liability. She observed that the statute does not mention aiding and abetting, a feature that "differentiates it from other civil statutes in which Congress expressly provided for that specialized form of liability." Moreover, the TVPA's liability for individuals who "subject" another to torture was too narrow to include such a theory. Defining "subject" as "to cause to undergo or submit to," Justice Barrett concluded that only individuals with "a causal connection" to the torture victim can be held liable for TVPA violations. That standard does not permit aiding and abetting liability, which "encompasses many forms of assistance" by individuals who may be less culpable and further removed.
The Decision Reduces Risk of Indirect Liability but May Encourage Congressional Action
The Court's decision in Cisco Systems provides clarity to litigants who no longer confront the illusion that courts will recognize new causes of action under the ATS. Additionally, this decision reduces the legal exposure of companies transacting business internationally by reducing the risk that they will face indirect liability when their products are used for malevolent purposes by a foreign counterparty. Nevertheless, while courts cannot create new ATS causes of action, Congress certainly can. The Supreme Court's decision may contribute to greater public scrutiny of companies doing business with foreign governments going forward. Companies are therefore advised to carefully scrutinize the way their products are used overseas to limit liability should Congress make further changes in the law.
To keep up with future developments from the Supreme Court, subscribe to Venable's newsletters and contact our experienced attorneys in the Administrative and Regulatory Litigation Group or International Trade and Logistics Group for assistance in navigating the international business landscape.
The authors thank John W. Schindler IV, a summer associate in our Baltimore office, for his assistance in writing this article.