Liu Bo Shan v. China Construction Bank Corp. , 421 F. App'x 89 ( 2011 )

10-2992-cv
Liu Bo Shan v. China Constr. Bank Corp.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
New York, on the 5th day of May, two thousand eleven.
PRESENT: REENA RAGGI,
Circuit Judge,
JOHN GLEESON,*
District Judge.**
--------------------------------------------------------------
LIU BO SHAN,
Plaintiff-Appellant,
v. No. 10-2992-cv
CHINA CONSTRUCTION BANK
CORPORATION,
Defendant-Appellee.
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APPEARING FOR APPELLANT: CHRISTIAN LEVESQUE (Terrence P.
Collingsworth, Piper Hendricks, on the brief),
Conrad & Scherer, LLP, Washington, D.C.
*
District Judge John Gleeson of the United States District Court for the Eastern
District of New York, sitting by designation.
**
Circuit Judge Guido Calabresi, who was a member of this panel, recused himself.
The remaining two panel members agree on the disposition and decide this appeal pursuant
to Second Circuit Internal Operating Procedure E(b).
APPEARING FOR APPELLEE: STEPHEN M. NICKELSBURG (James B.
Weidner, Todd A. Spiegelman, Clifford Chance
US LLP, New York, New York; Juan P. Morillo,
Clifford Chance US LLP, Washington, DC, on
the brief), Clifford Chance US LLP, Washington,
D.C.
Appeal from the United States District Court for the Southern District of New York
(Denise Cote, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment entered on June 29, 2010, is AFFIRMED.
Resident alien Liu Bo Shan appeals from the Rule 12(b)(6) dismissal of claims against
his former employer, defendant China Construction Bank Corporation (the “Bank”), for
torture in violation of the Torture Victim Protection Act (“TVPA”), 28 U.S.C. § 1350 note,
and (1) torture; (2) cruel, inhumane, and degrading treatment (“cruel treatment”); and (3)
prolonged arbitrary detention in China, pursuant to the Alien Tort Statute (“ATS”), 28 U.S.C.
§ 1350. See Liu Bo Shan v. China Constr. Bank Corp., No. 09 Civ. 8566, 2010 WL 2595095(S.D.N.Y. June 28, 2010). We review the challenged dismissal de novo, consistent with the
pleading standards articulated in Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009), and Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and mindful that we must accept all
allegations in the complaint as true and draw all reasonable inferences in Liu’s favor, see
Matson v. Bd. of Educ. of City Sch. Dist. of N.Y., 631 F.3d 57, 63 (2d Cir. 2011). In
applying these principles, we assume the parties’ familiarity with the facts and record of prior
proceedings, which we reference only as necessary to explain our decision to affirm.
2
1. Jurisdiction
Relying on this court’s recent decision in Kiobel v. Royal Dutch Petroleum Co., 621
F.3d 111 (2d Cir. 2010), pet. for reh’g en banc denied, 2011 WL 338151 (2d Cir. Feb. 4,
2011), the Bank argues that the district court lacked subject matter jurisdiction to hear an
ATS claim against a corporate defendant for violations of customary international law, see
id. at 145 (“Because corporate liability is not recognized as a specific, universal, and
obligatory norm, it is not a rule of customary international law that we may apply under the
ATS.” (internal citation and quotation marks omitted)). To the extent Liu submits that
Kiobel was wrongly decided, we are not free to consider that argument. See NML Capital
v. Republic of Argentina, 621 F.3d 230, 243 (2d Cir. 2010) (“[I]t is axiomatic that a panel
of this court is bound by the decisions of prior panels until such time as they are overruled
either by an en banc panel of our Court or by the Supreme Court.” (internal quotation marks
omitted)). Liu further argues that Kiobel does not apply here because this court expressly
limited its use of the term “corporation” and its holding to “private juridical entities,” Kiobel
v. Royal Dutch Petroleum Co., 621 F.3d at 120 n.19, and the Bank was state-owned at the
time of his injuries. We do not address this argument because even if jurisdiction exists, the
amended complaint was correctly dismissed for failure to state a claim. See, e.g., Conyers
v. Rossides, 558 F.3d 137, 150 (2d Cir. 2009) (exercising “hypothetical jurisdiction” where
jurisdictional question is statutory, not constitutional).1
1
For the same reason, we do not address the Bank’s contention that if it is considered
an instrumentality of the Chinese government, then it is immune from suit under the Foreign
Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1330, 1602-11. See 28 U.S.C. § 1603(a)
3
2. Failure to State a Claim
To state a claim under the ATS, a plaintiff must (a) be an alien (b) claiming damages
for a tort only, (c) resulting from a violation of the “law of nations,” i.e., customary
international law, or of a treaty of the United States. Presbyterian Church of Sudan v.
Talisman Energy, Inc., 582 F.3d 244, 255 (2d Cir. 2009) (citing 28 U.S.C. § 1350).2 The
scope of liability for ATS violations is derived from international law. See id. at 258; accord
Sosa v. Alvarez-Machain, 542 U.S. 692, 732 n.20 (2004); Kiobel v. Royal Dutch Petroleum
Co., 621 F.3d at 126. Liu submits that the district court erred in concluding that the amended
complaint failed to state a claim against the Bank for the alleged violations of customary
(defining “foreign state” to include, inter alia, “an agency or instrumentality of a foreign
state”); Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443 (1989)
(holding that FSIA provides sole basis for obtaining jurisdiction over a foreign state and that
none of the FSIA’s enumerated exceptions applied to extraterritorial tort claims under the
ATS); Flores v. S. Peru Copper Corp., 414 F.3d 233, 246 (2d Cir. 2003) (observing that the
“[FSIA] bars most suits against foreign sovereigns, including those brought under the
[ATS]”). Nor do we address the Bank’s argument that the ATS does not apply
extraterritorially. See Kiobel v. Royal Dutch Petroleum Co., 621 F.3d at 117 n.10
(characterizing question of whether the ATS applies extraterritorially as “lurking” in our
ATS precedents).
2
Liu asserts a claim for torture under both the ATS, i.e., as a violation of customary
international law, and the TVPA, which provides a cause of action for damages against any
“individual who, under actual or apparent authority, or color of law, of any foreign nation . . .
subjects an individual to torture.” 28 U.S.C. § 1350 note (a)(1); see Arar v. Ashcroft, 585
F.3d 559, 567 (2d Cir. 2009) (en banc). Although the requirements for stating a torture claim
under the ATS and TVPA might differ in some respects, see Flores v. S. Peru Copper Corp.,
414 F.3d at 247 & n.21, the district court did not articulate different standards for application
of the two statutes, and neither party has argued on appeal that it should have. Accordingly,
any such arguments have been waived. See In re Wireless Data, Inc., 547 F.3d 484, 492 (2d
Cir. 2008). Thus, our reasons for concluding that Liu fails to state a claim for torture under
the ATS compel the same result with respect to the TVPA claim.
4
international law on any of three theories: direct liability, aiding and abetting, or conspiracy.
a. Direct Liability
Liu does not quarrel with the district court’s determination that to establish direct
liability under international law, the Bank must have “participated, physically or otherwise
directly, in the material elements of a crime whether [individually] or jointly with others” or
“planned, instigated, ordered, solicited, or induced” the alleged violations. Liu Bo Shan v.
China Constr. Bank Corp., 2010 WL 2595095, at *4 (citations and internal quotation marks
omitted); see, e.g., Kadic v. Karadzic, 70 F.3d 232, 242 (2d Cir. 1996); Filartiga v. Pena-
Irala, 630 F.2d 876, 878, 883-84 (2d Cir. 1980). Rather, Liu contends that the Bank’s direct
liability was adequately pleaded by allegations that (1) the Bank called the police to arrest
Liu, see Am. Compl. ¶ 12; (2) the Bank manufactured false evidence to induce Liu’s arrest,
see id. ¶ 14; and (3) while torturing Liu, the police said that he should not have released his
audit, which purportedly uncovered wrongdoing at the Bank, see id. ¶ 28. Like the district
court, we conclude that these allegations are insufficient to support a reasonable inference
of direct liability by the Bank for conduct – torture, cruel treatment, and prolonged arbitrary
detention – that the amended complaint repeatedly asserts was “committed by the Chinese
government police,” not the Bank, id. ¶¶ 34, 38, 44, 48; see also id. ¶ 26 (stating that it was
“the police who physically injured [Liu]”), only after Liu came into police custody, see
Ashcroft v. Iqbal, 129 S. Ct. at 1949 (“A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” (emphasis added)). Liu’s urged inference,
5
i.e., that the Bank directed the Chinese police to abuse him, lacks any support in the pleading.
Such an inference is not reasonably supported by allegations that the Bank falsified evidence
or that the Chinese police knew about the audit. At most, these allegations suggest that the
Bank procured Liu’s arrest on false charges in retaliation for his release of the audit. Even
if true, such an inference does not support a plausible claim that the Bank is directly liable
for the alleged violations.3
Liu nevertheless contends that, because the Bank and the police “both operated as
arms of the Government of China” at the time of his mistreatment, Appellant’s Br. 27, the
Bank may be held directly liable for police violations of customary international law. We
are not persuaded. “[G]overnment instrumentalities established as juridical entities distinct
and independent from their sovereign should normally be treated as such.” First Nat’l City
Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 626-27 (1983) (“Bancec”).
While this presumption of separateness can be overcome where (1) the corporate entity is “so
extensively controlled by its owner that a relationship of principal and agent is created,” or
(2) “recognizing the instrumentality’s separate status would work fraud or injustice,” EM
Ltd. v. Republic of Argentina, 473 F.3d 463, 477 (2d Cir. 2007) (internal quotation marks
omitted), Liu fails to allege sufficient facts to demonstrate that the Bank is the “alter ego” of
the Chinese government or that disregarding the Bank’s separate juridical status is “necessary
3
Even if these allegations might support a claim against the Bank for false arrest or
malicious prosecution, Liu does not contend that such torts are cognizable under customary
international law. Cf. Sosa v. Alvarez-Machain, 542 U.S. at 738 (holding “single illegal
detention of less than a day, followed by the transfer of custody to lawful authorities and a
prompt arraignment,” not actionable under the ATS).
6
to avoid fraud or injustice,” id. at 480; see also Letelier v. Republic of Chile, 748 F.2d 790,
794 (2d Cir. 1984) (“Joint participation in a tort is not the ‘classic’ abuse of corporate form
to which the Supreme Court referred [in Bancec].”). Indeed, to conclude otherwise would
mean that the Bank could be held liable for any violations of customary international law
perpetrated by the Chinese government or its instrumentalities.
Relying on the “state action” principle in 42 U.S.C. § 1983 jurisprudence, Liu argues
that the Bank may be held directly liable for the alleged violations of customary international
law because it acted jointly with the Chinese police. See Abdullahi v. Pfizer, Inc., 562 F.3d
163, 188 (2d Cir. 2009) (“A private individual will be held liable under the ATS if he ‘acted
in concert with’ the state, i.e., ‘under color of law.’” (quoting Kadic v. Karadzic, 70 F.3d at
245)). In the absence of any factual allegation demonstrating personal participation or willful
direction, however, the mere assertion that the Bank acted “jointly” with the Chinese police
is insufficient to establish direct liability for the alleged abuses. See Presbyterian Church of
Sudan v. Talisman Energy, Inc., 582 F.3d at 257 (construing allegation that defendant was
“complicit in Government’s abuses,” but not “personally engaged in human rights abuses,”
as aiding and abetting claim (emphasis added)); Khulumani v. Barclay Nat’l Bank Ltd., 504
F.3d 254, 283 (2d Cir. 2007) (Katzmann, J., concurring) (concluding it was “not relevant
whether the plaintiffs sufficiently allege[d] that the defendants acted under color of law in
the commission of genocide as long as they sufficiently alleged that the defendants
7
committed genocide”).4 Accordingly, we conclude that Liu failed to state a claim against the
Bank on a theory of direct liability under international law.
b. Accessorial Liability
Liu submits that the amended complaint nevertheless adequately alleges the Bank’s
liability as an accessory to the Chinese police’s violations of customary international law on
theories of aiding and abetting and conspiracy.5 To state a claim for aiding and abetting
under international law, a plaintiff must allege that defendant (1) provided “substantial
assistance” to the perpetrator; and (2) acted with the “purpose” of facilitating the alleged
offenses, rather than with mere knowledge. Presbyterian Church of Sudan v. Talisman
Energy, Inc., 582 F.3d at 247; see also Khulumani v. Barclay Nat’l Bank Ltd., 504 F.3d at
277 (Katzmann, J., concurring). A conspiracy claim requires the same proof of mens rea as
an aiding and abetting claim. See Presbyterian Church of Sudan v. Talisman Energy, Inc.,
582 F.3d at 260.6
4
In this regard, Liu’s reliance on § 1983 malicious prosecution cases is misplaced.
A private individual who deliberately falsifies evidence to induce another’s prosecution may
be held liable for malicious prosecution not merely because he acted jointly with a state
actor, but rather because the knowing provision of false evidence satisfies an essential
element of the tort, i.e., the “initiation” of a prosecution. See, e.g., Rohman v. N.Y.C. Transit
Auth., 215 F.3d 208, 217 (2d Cir. 2000). By contrast, the Bank’s alleged provision of false
evidence to the Chinese police to induce Liu’s arrest does not satisfy the actus reus necessary
to establish direct liability for violations of international law.
5
As Liu acknowledges in the amended complaint, if the Bank were part of a unitary
government of China, it “could not conspire with or aid and abet” the Chinese police. Am.
Comp. ¶ 13. For purposes of assessing Liu’s accessorial liability theory, therefore, we
assume that the Bank and Chinese police are distinct entities.
6
The only inchoate conspiracy crimes recognized under customary international law
are (1) conspiracy to commit genocide and (2) common plan to wage aggressive war. See
8
Notwithstanding Liu’s assertions that the Chinese government exercised a “high
degree of control” over the Bank and “shared the goal of silencing Liu,” Appellant’s Br. 39,
the amended complaint fails plausibly to allege that the Bank acted with the purpose that Liu
be subjected to torture, cruel treatment, or prolonged arbitrary detention by the police. At
most, the amended complaint alleges that the Bank falsified evidence and induced the police
to arrest Liu in retaliation for his release of the audit, knowing that the police would subject
him to mistreatment. See, e.g., Am. Compl. ¶ 13 (“Despite this knowledge of certain
mistreatment, the Bank proceeded in having [Liu] arrested on false charges for the purpose
of preventing him from exposing illegal activities at the Bank.” (emphasis added)); see also
id. (“[T]he Bank knew or was substantially certain that by contacting the police that [Liu]
would be tortured and otherwise subjected to cruel and degrading treatment.” (emphasis
added)). Although “intent must often be demonstrated by the circumstances,” Presbyterian
Church of Sudan v. Talisman Energy, Inc., 582 F.3d at 264, Liu’s allegations do not support
a reasonable inference that the Bank acted with the purpose to advance violations of
customary international law, see id. at 263 (holding “complicity” in human rights violations
insufficient absent evidence that defendant “acted with the purpose to assist the
Government’s violations”). Liu’s reliance on Chowdhury v. Worldtel Bangladesh Holding
Ltd., No. 08 Civ. 1659 (E.D.N.Y. Sept. 16, 2009), is misplaced. There, a district court
Presbyterian Church of Sudan v. Talisman Energy, Inc., 582 F.3d at 260 (citing Hamdan v.
Rumsfeld, 548 U.S. 557, 610 (2006)). Assuming, without deciding, that Liu might assert a
claim under the ATS for conspiracy as a completed offense, or its analog under international
law, joint criminal enterprise, see id., we conclude that the complaint fails to state such a
claim against the Bank.
9
refused to disturb a jury verdict finding a defendant liable for torture inflicted by police
where trial evidence showed not only that defendant “contacted the [police] for the express
purpose of having it take action against plaintiff,” “attended the torture,” and “said he could
stop the torture” if plaintiff met his demands, but that the “torturers made it clear they were
acting at the behest of defendant.” Mem. Decision & Order at 1, ECF No. 52, Chowdhury
v. Worldtel Bangladesh Holding Ltd., No. 08 Civ. 1659 (E.D.N.Y. Sept. 16, 2009). Liu’s
allegations demonstrate no comparable conduct manifesting the Bank’s purpose to subject
him to the alleged human rights violations.
The aiding and abetting claim fails for the independent reason that allegations that the
Bank contacted the police and provided false evidence to induce Liu’s arrest do not constitute
“substantial assistance” to the police in perpetrating the alleged torture, cruel treatment, or
prolonged arbitrary detention. In urging otherwise, Liu submits that the false evidence
provided by the Bank “created a veneer of legitimacy to justify the police’s arrest and
detention of Liu” and that the Bank’s purported communication with the police about the
audit constituted “encouragement and support for the violent acts that otherwise would never
have occurred.” Appellant’s Br. 47. To the extent Liu argues that “but for” causation or
allegations of “encouragement and support” suffice, such an argument is foreclosed by the
requirement that, to be actionable, assistance must be both “practical” and have “a substantial
effect on the perpetration of the crime,” which is not this case. Presbyterian Church of Sudan
v. Talisman Energy, Inc., 582 F.3d at 258; cf. Bloor v. Carro, Spanbock, Londin, Rodman
& Fass, 754 F.2d 57, 62-63 (2d Cir. 1985) (holding in securities fraud context that
10
“[a]llegations of a ‘but for’ causal relationship are insufficient” to establish substantial
assistance).
Liu’s reliance on In re South African Apartheid Litigation, 617 F. Supp. 2d. 228
(S.D.N.Y. 2009), a pre-Talisman case, is unavailing. In that case, plaintiffs alleged that
certain defendants “provided information about anti-apartheid activists to the South African
Security Forces, facilitated arrests, provided information to be used by interrogators, and
even participated in interrogations” as part of a systematic campaign to identify and torture
anti-apartheid leaders. Id. at 264. Even assuming such allegations would qualify as
“substantial assistance” under Talisman, they are qualitatively different from the alleged
support in this case: that the Bank contacted the police and provided false evidence.
Similarly, Liu’s reliance on two cases in which plaintiffs alleged that a foreign bank
knowingly sustained a suicide bombing campaign by (1) maintaining accounts for terrorist
organizations and (2) administering the provision of financial benefits to families of bombers,
see Lev v. Arab Bank, PLC, No. 08 Civ. 3251, 2010 WL 623636 (E.D.N.Y. Jan. 29, 2010);
Almog v. Arab Bank, PLC, 417 F. Supp. 2d 257 (E.D.N.Y. 2002), only serves to highlight
the shortcomings of Liu’s thin allegations of assistance here.
Because we conclude that Liu fails to state a claim against the Bank for the alleged
violations of customary international law under either a direct or accessorial theory of
liability, we do not address the Bank’s arguments (1) that the claims are time-barred; (2) that
cruel treatment and prolonged arbitrary detention are not actionable under the ATS; or (3)
that a TVPA claim may only be brought against a natural person, not a corporation.
11
3. Conclusion
We have considered Liu’s remaining arguments and conclude that they are without
merit. For the foregoing reasons, the district court’s judgment is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
12