Bao Ge v. Li Peng, 98CV1986 (TFH).

• Decision Date: 28 August 2000
• Docket Number: No. 98CV1986 (TFH).,98CV1986 (TFH).
• Parties: BAO GE, et al., Plaintiffs, v. LI PENG, et al., Defendants.
• Court: U.S. District Court — District of Columbia

201 F.Supp.2d 14

BAO GE, et al., Plaintiffs, v. LI PENG, et al., Defendants.

No. 98CV1986 (TFH).

United States District Court, District of Columbia.

August 28, 2000.

Order Denying Reconsideration, November 15, 2000.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

John David Hemenway, Hemenway & Associates, Washington, DC, for plaintiffs.

Mark Fox Evens, Thelen, Reid & Priest, LLP, Washington, DC, for Bank of China, defendant.

Wallace Albert Christensen, I, Ross, Dixon & Bell, LLP, Washington, DC, for Adidas America, Stevens Wynne, defendants.

MEMORANDUM OPINION

THOMAS F. HOGAN, District Judge.

This case is a proposed class action lawsuit against the Chinese Politburo, Politburo Chairman Li Peng, the Bank of China (in New York), and various corporate branches of Adidas. The plaintiffs are four citizens of China who claim to be current or former inmates of the "Shanghai Number 1 Reeducation Through Coerced Labor" prison camps. Defendants Bank of China and Adidas have moved to dismiss this action for lack of subject matter jurisdiction. Based upon the pleadings and the oral argument held on July 20, 2000, defendants' motions will be granted.

I. BACKGROUND

This action concerns various human rights abuses allegedly perpetrated by the Chinese government. Plaintiffs, who are Chinese citizens, allege that the Chinese government imprisoned them without due process of law and forced them to engage in prison labor, which included the sewing of soccer balls. The first amended complaint names four Chinese citizens as potential class representatives for this suit: Bao Ge and Zhang Xianglang, both now living in the United States; Yang Qinheng, now in "involuntary servitude" in China; John Doe I, a human rights activist in Shanghai, China; and John Doe II, a worker in Fuzhou, Fujian Province, China. Plaintiffs seek to represent a class of between 2,000 and 200,000 other Chinese citizens who have been imprisoned in Chinese labor camps and allegedly forced to make Adidas soccer balls. The time period for the potential class is presumably between December 1995 through June 1997, which is when Bao Ge was detained in the Shanghai camp and allegedly required to make soccer balls. The defendants are the Politburo of the Central Committee of the Communist Party of China in Beijing and Politburo Chairman Li Peng (collectively, "the Chinese government defendants"); the Bank of China ("the Bank"), a commercial Chinese bank owned by the Chinese government; Adidas America, Adidas AG, Adidas New York, "any and all unnamed Adidas subsidiaries," and Steve Wynn, an agent for Adidas (collectively, "Adidas").

According to the first amended complaint,¹ plaintiffs were incarcerated in "Reeducation Through Coerced Labor" camps by authorities of the Communist Party of China. (First Am.Compl., ¶ 9). Plaintiff Yang Qinheng allegedly was incarcerated for his involvement in China's free labor movement. (First Am.Compl., ¶ 23). The first amended complaint does not state any specific reason for the incarceration of the other plaintiffs, but asserts that all plaintiffs "got there by displeasing and attracting the attention of CCP functionaries" (Id.) Although plaintiffs claim they did not receive "due process as we know it in the West," their sentences were imposed by means of an administrative decision issued by "both the public security bureaus and the Labor Reeducation Administration Committee," and implemented under the auspices of China's Labor Reform Administration and the Department of Justice. (First Am.Compl., ¶ 83). The first amended complaint further alleges that the plaintiffs "were compelled by the physical force of their jailers to sew Adidas soccer balls in sweat shops as forced laborers" (First Am.Compl., ¶ 9). While confined in the prison, plaintiffs "were coerced into waxing, stitching, sewing and making `Adidas' soccer balls 14-18 hours a day under inhumane conditions. [Plaintiffs were subjected to] [b]eatings with belts, tortures of various horrifying kinds, exposure of their bodies to mosquito bites and needle wounds, high voltage electrical prod shocks and other inhumane treatments such as malnutrition, no medical attention and lack of sleep." (First Am.Compl., ¶ 16).

In respect to Adidas, the first amended complaint alleges that a business relationship existed between Adidas and the Chinese government. The first amended complaint refers to this relationship variously as a "joint venture," a "partnership," or as a "licensing arrangement." The only factual allegation connecting Adidas to the forced labor camps is that while incarcerated some of the plaintiffs stitched soccer balls bearing the Adidas logo. (First Am. Compl., ¶ 16). From this fact, plaintiffs conclude that there "must have [been] either joint venture agreements or licensing agreements" between Adidas and the Chinese government (First Am.Compl., ¶ 95); that Adidas knew that soccer balls were being stitched by prison inmates; that Adidas knew or should have known that the prisoners were incarcerated without due process of law; and that Adidas knew or should have known that its alleged conduct would "prolong the life of the system of oppression and terror inflicted intentionally over Mainland China and that ... its actions were the direct and proximate cause of resistance to even moderate changes in Communist China, thus prolonging the life of despotism that is contrary to the laws of nations in the twentieth century." (First Am.Compl., ¶ 123).

In respect to the Bank of China, plaintiffs allege that because China's 1980 Interim Foreign Exchange Regulations recognized the Bank's exclusive role in foreign exchange transactions in China, the Bank necessarily must have been involved in the soccer ball project from 1995 through 1997.² (First Am Compl., ¶¶ 36-50). Plaintiffs assert that the Bank's involvement in the project had a direct effect in the United States in the form of low-cost soccer balls flowing into the stream of United States commerce. (First Am.Compl., ¶¶ 28, 43-46, 50).

Count I of the first amended complaint is under the Alien Tort Claims Act, 28 U.S.C. § 1350 ("ATCA"). Count II involves a claim for civil conspiracy to violate ATCA. Count III argues a theory of joint venture liability between Adidas and the Chinese Politburo. Count IV argues that Adidas is liable under a theory of implied partnership liability. Count V asserts a claim for negligence and recklessness. Count VI is a claim for unjust enrichment.

Both Adidas and the Bank of China have moved to dismiss the first amended complaint for, inter alia, a lack of subject matter jurisdiction.³ Those motions have been fully briefed, and are considered below.

II. DISCUSSION

A. Standard of Review

In considering a motion to dismiss for lack of subject matter jurisdiction, the Court accepts as true all material factual allegations in the complaint. Hohri v. United States, 782 F.2d 227, 241 (D.C.Cir. 1986). The nonmoving party is entitled to all reasonable inferences that can be drawn in her favor. Artis v. Greenspan, 158 F.3d 1301, 1306 (D.C.Cir.1998). Additionally, a court may consider such materials outside the pleadings as it deems appropriate to resolve the question whether it has jurisdiction to hear the case. See, e.g., Herbert v. National Academy of Sciences, 974 F.2d 192, 197 (D.C.Cir.1992); Haase v. Sessions, 835 F.2d 902, 906 (D.C.Cir.1987); Borg-Warner Protective Services Corporation v. EEOC, 81 F.Supp.2d 20, 23 (D.D.C.2000).

The first amended complaint in this case contains numerous, sweeping allegations concerning the Chinese government, the Bank of China and Adidas. It therefore bears emphasizing that the Court must consider as true only the "well-pleaded facts" set forth in the first amended complaint. Cicippio v. Islamic Republic of Iran, 30 F.3d 164, 165 n. 2 (D.C.Cir.1994).

B. Adidas' Motion to Dismiss

Plaintiffs seek to establish federal jurisdiction over Adidas pursuant to three provisions: (1) the Alien Tort Claims Act (ATCA), 28 U.S.C. § 1350; (2) the Torture Victim Protection Act, 28 U.S.C. § 1350, note; and (3) the supplemental jurisdiction statute, 28 U.S.C. § 1367. Each alleged basis of subject matter jurisdiction is considered below.

1. ATCA

The ATCA, enacted as part of the Judiciary Act of 1789, provides:

The district court 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 ATCA confers federal subject matter jurisdiction when three conditions are satisfied: (1) the plaintiff is an alien; (2) the claim is for a tort; and (3) the tort is committed in violation of the law of nations or a treaty of the United States. See Doe I v. Islamic Salvation Front, 993 F.Supp. 3, 7 (D.D.C.1998) (citing Kadic v. Karadzic, 70 F.3d 232, 238 (2d Cir.1995)). In this case, only the third prerequisite of ATCA jurisdiction is in dispute.⁴ If the well-pleaded factual allegations contained in the complaint are sufficient to support a violation of the law of nations by Adidas, then subject matter jurisdiction is proper.

The law of nations "`may be ascertained by consulting the works of jurists, writing professedly on public law; or by the general usage and practice of nations; or by judicial decisions recognizing and enforcing that law.'" Iwanowa v. Ford Motor Company, 67 F.Supp.2d 424, 439 (D.N.J.1999) (quoting United States v. Smith, 5 Wheat. 153, 18 U.S. 153, 160-61, 5 L.Ed. 57 (1820)); see also Oppenheim's International Law, § 1 at 4 (defining the law of nations as "the body of rules which are legally binding on states in their intercourse with each other."). A rule of customary international law exists when there is "a general and consistent practice of states followed by them from a sense of legal obligation." Restatement (Third) of the Foreign Relations Law of the United States § 102; Tel-Oren v. Libyan Arab Republic, 726 F.2d 774, 778...