Lawsuit: Yahoo should break Chinese law

by David Nieporent on September 28, 2007

We recently covered the Caterpillar lawsuit, in which an American company was sued because of the way a foreign government used its products. Although the suit was dismissed by the Ninth Circuit, it wasn’t because it’s absurd to blame a manufacturer for how its products are used; rather, it was because — as Walter noted — the Caterpillar products were actually paid for by the U.S. government. Given that, it may not be much comfort to other companies being sued over the actions of foreign governments.

In 2004 and 2005, various Chinese citizens were arrested in China by the government of China, prosecuted for their pro-democracy activities, convicted, and sent to jail. They allege that, while in these Chinese prisons, they have been treated poorly by the Chinese government, and that they have suffered physical and mental anguish as a result.

So, in April of this year, these Chinese prison inmates sued the obviously-responsible party: Yahoo, naturally. In California. They sued Yahoo for violating federal law against torture. And for assault, battery, false imprisonment, unfair competition, intentional infliction of emotional distress, and for violating the U.S. Electronic Communications Privacy Act. In China. What was Yahoo’s wrongdoing? The company — or, rather, its Chinese subsidiary — allegedly provided evidence to the Chinese government which enabled the government to identify these people and prosecute them for breaking Chinese law.

Now, one may have no love for the Chinese government, or for companies that do business in China. One can argue that, ethically, Yahoo should refuse to cooperate with the Chinese government. But those are policy questions, and however one comes down on them, one can’t argue that a federal court in California can order a company to break the laws of another country. (The flaws in this should be readily apparent; as Yahoo notes in its motion to dismiss the case, under the logic of the plaintiffs, “A court in France could issue an injunction mandating that French companies doing business in America refuse to provide evidence in cases where the defendant might be subject to the death penalty.”) One can’t argue that a federal court in California can order a company to get a prisoner released from a Chinese prison (Yes, that’s in the lawsuit.) One can’t argue that a federal court in California can act as an appeals court for a Chinese trial, finding Chinese laws unconstitutional.

Yahoo is seeking to dismiss the case in its entirety. (Washington Post)

(Incidentally, it should go without saying that my introduction was not intended to compare the actions of Israel’s government in fighting terrorism with the actions of China’s government in punishing peaceful dissent. The only parallel here is the attempt to hold an American company responsible for the actions of a foreign government.)

Meanwhile, in other attempts to use the U.S. courts to run world affairs, a group of Bolivians have sued the former president of Bolivia, in the United States, for human rights violations that took place in Bolivia. (Reuters)

{ 6 comments }

1 Jim Collins 09.28.07 at 8:10 am

……..and the lawyers get paid.

2 Horatio 09.28.07 at 8:59 am

Of course one can argue this – all sorts of stuff is argued in courts all the time. And courts can rule on this – they rule on nonsense every day. But as Andrew Jackson once opined – “[Chief Justice] Mr. Marshall has made his decision, now let Mr. Marshall enforce his decision.”

States – and the US – tax income earned by residents and companies from foreign sources, and hold them up for criminal penalties if they refuse to pay for whatever reason. The same could be done in this case. Of course chaos would ensue…

You are correct – this is a policy decision, although courts have a hard time keeping out of policy decisions.

3 Benjamin Cooper 09.28.07 at 10:25 am

The question really boils down to whether the “international” standards of conduct regarding torture and other inhumane treatment are so well-accepted by U.S. law that any entity in the United States that provides support to a country that violates those standards is, in essence, violating U.S. common law.

It’s sort of a common law “crime against humanity” tort.

Now, I can understand the policy reasons against allowing Bolivians to get revenge against their own government in U.S. courts, but a United States corporation may have to accept that doing business with China opens it up to liability for violations of what the U.S. (or the European courts) deem violations of the international consensus on human rights.

I’d rather Congress actually sorted this out, but I am very sympathetic to the plaintiffs in this one – I would rather that U.S. companies be dissuaded from business in China than supporting basically unconscionable violations of human rights. I think the Rachel Corrie case is distinguishable as there were all sorts of factual disputes as to who bought the bulldozer, the knowledge of Caterpillar as to the intent of the Israeli government in buying the bulldozer, and U.S. State Department immunity which are not implicated here.

4 Robert 09.28.07 at 11:00 am

Your anology does not hold. I can agree that caterpiller can not be responsible for a piece of equipment that it sold being used by another entity, but in the Yahoo case it is an employee of the company doing the damage. The anology would be more like if an employee of caterpiller was driving the bulldozer that ran over the girl that died.

What if chinese law stated that the employee of Yahoo had to take part in the execution style killing of dissidents found to be using the Yahoo service. If Yahoo still chose to do business in china with that law in effect, and such a killing took place, would that still absolve the company of wrongdoing by it’s employees?

5 David Schwartz 09.28.07 at 5:52 pm

There’s a fundamental hypocrisy here that’s very difficult to fix.

We all basically agree that “I was following orders” is not a defense. You can’t justify any action on the grounds that a corrupt government authorized it and it was entirely inside the boundaries of territory controlled by that government.

However, we put people in jail for following their conscience when it conflicts with the laws of our own country.

For example, consider a reported ordered by a court to give up her source’s identity. She may know that this subjects her source to imprisonment. She may believe that this imprisonment (say, for a victimless ctime) would be as unjust as imprisoning a dissident.

We don’t permit her to act on her conscience. We require her to follow the law.

So where do you, in principle, draw the line? And by whose principles do you do it?

6 Melvin 09.28.07 at 6:40 pm

Seems to me another case of “Catch-22″ legalism; do what is legal in one country, get “busted” or sued in another. (Similar to companies who get sued under, say, the Americans with Disabilities Act because of the fact that the company is following federal rules/laws which seem to contradict the ADA.) Seems like this kind of lawsuit should be thrown out as frivilous; when a person or company does something legal in one country, it shouldn’t be sued in another.

Comments on this entry are closed.