Doe v. Cisco Sys., Inc.

• Decision Date: 05 September 2014
• Docket Number: Case No. 5:11–CV–02449–EJD
• Citation: 66 F.Supp.3d 1239
• Court: U.S. District Court — Northern District of California
• Parties: Doe I, Doe II, Ivy He, Doe III, Doe IV, Doe V, Doe VI, Roe VII, Charles Lee, Roe VIII, Liu Guifu, and those individuals similarly situated, Plaintiffs, v. Cisco Systems, Inc., et al., Defendants.

66 F.Supp.3d 1239

Doe I, Doe II, Ivy He, Doe III, Doe IV, Doe V, Doe VI, Roe VII, Charles Lee, Roe VIII, Liu Guifu, and those individuals similarly situated, Plaintiffs

v.Cisco Systems, Inc., et al., Defendants.

Case No. 5:11–CV–02449–EJD

United States District Court, N.D. California, San Jose Division.

Signed September 5, 2014

Terri Ellen Marsh, Brian Pierce, Jordan Samuel Berman, Human Rights Law Foundation, Washington, DC, Judith Brown Chomksy, Pro Hac, Vice, Elkins Park, PA, Kathryn Lee Boyd, Rajika Lynn Shah, Schwarcz, Rimberg, Boyd and Rader, Los Angeles, CA, for Plaintiffs.

Kathleen Marie Sullivan, Faith Elizabeth Gay, Isaac Nesser, Quinn Emanuel Urquhart And Sullivan, LLP, New York, NY, for Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

[Re: Docket Item No. 117]

EDWARD J. DAVILA, United States District Judge

Presently before the Court is Defendant Cisco Systems, Inc. (“Cisco”), John Chambers (“Chambers”), and Fredy Cheung's (“Cheung”) (collectively, “Defendants”) Motion to Dismiss Plaintiffs' Second Amended Complaint. See Docket Item No. 117.

I. BACKGROUND

Plaintiffs are U.S. and Chinese citizens and practitioners of Falun Gong, a religious practice. See Second Amended Complaint (“SAC”), Docket Item No. 113 ¶ 1. Doe I, II, III, IV, V, VI, Roe VII, Roe VIII, and Doe IX are residents of China; Ivy He is a resident of Canada; Charles Lee is a U.S. citizen; and Liu Guifu and Wang Weiyu reside in the U.S. Id. ¶¶ 8–21. All of the Plaintiffs were persecuted in China for their adherence to Falun Gong. Id. ¶ 226. The abuses they allege include false imprisonment, torture, assault, and battery. Id. ¶ 6.

Defendant Cisco is multinational corporation incorporated in California with its principal place of business in San Jose, California. Id. ¶ 22. The company manufactures routers, switches, and related hardware that comprise the basic architecture of internet networking.¹ Defendant John Chambers (“Chambers”) is a resident of California, who is and at all relevant times has been the Chief Executive Officer of Cisco. Chambers directs and supervises Cisco's operations in China, and has played an essential role in establishing Cisco's presence in China. Id. ¶ 23. Defendant Fredy Cheung, who also goes by his Chinese (Mandarin) name Zhang Sihua, directly oversaw much of Cisco's work on Public Security-related projects in China, as the Vice–President of Cisco China and in other managerial and strategic roles. Id. ¶ 24.

The essence of Plaintiffs' claims, as outlined in the Second Amended Complaint's detailed presentation of allegations, is that Defendants knew of and assisted in the facilitation of human rights abuses against Plaintiffs by Chinese actors in China. Plaintiffs allege that Defendant Cisco and its alter ego or agent, Cisco China Networking Technologies, Ltd. (“Cisco China”), aided and abetted and conspired with the Chinese Communist Party (“the Party”) and Public Security officers by providing them with substantial assistance through the creation of a customized security system, knowing and intending that they would use such assistance in the commission of human rights abuses against Falun Gong members.

Falun Gong is a religion developed in China around 1992 and has millions of adherents. Id. ¶¶ 27–28. Since the late 1990s, adherents of the religion have been subject to human rights abuses in China, especially at the hands of the Party. Id. ¶¶ 29, 37–38, 41–46. The Falun Gong religion is specifically tied to internet use—including visiting specific websites, downloading material, and disseminating that religious material in person and online. Id. ¶ 3.

Plaintiffs maintain that Cisco knowingly, purposefully and intentionally designed, implemented and helped to maintain the Golden Shield system in collaboration with the Party and Public Security officers in regions across China, under the direction and control of Defendants in San Jose. According to Plaintiffs, Cisco knew and intended that the apparatus would be utilized by Party and Public Security officers to eavesdrop, tap, and intercept the communications of Falun Gong believers; surveil, detect, monitor, and track their online communication; apprehend, interrogate, ideologically convert and in other ways torture, arbitrarily arrest, and detain them because of their religious beliefs, with the specific purpose of suppressing Falun Gong believers through the perpetration of these and other human rights abuses against them.

In the 1990s, Chinese security and the Party proposed creating a surveillance and internal security network known as the Golden Shield and sought the assistance of Western technology companies. Id. ¶¶ 53, 55. Cisco, as one company seeking entry into the Chinese security market, met with Party leaders and set up a Cisco Public Security marketing team to ascertain and help Cisco meet Chinese security objectives. Id. ¶¶ 58–59. Plaintiffs claim that these efforts were directed from Cisco's headquarters in San Jose, California, in communication with Cisco subsidiaries in China. Id. ¶¶ 62, 64, 74. Cisco's plans for expansion in China required it to develop reciprocal-benefit relationships (“guanxi”) with influential Party leaders, public security officers, Chinese engineers, system integrators, experts, and others who could help Cisco develop a stronghold in the security technology market in China. Plaintiffs allege that these relationships in China required accumulating a high level of familiarity with, and providing extensive support to, the persecutory purpose of the Golden Shield apparatus.Id. ¶ 69. Cisco was selected to design the Golden Shield, which was complete by 2001 and became operational in almost every province in China by June 2003. Id. ¶¶ 74, 110. Plaintiffs state that the Golden Shield is not an ordinary crime control system, but differs in scale, complexity, intelligence, and technological sophistication; the designs include individual features customized and designed specifically to find, track, and suppress Falun Gong integrated with dual or multi-purpose features specifically to enable the suppression of the religious group. Id. ¶¶ 2, 81.

Plaintiffs allege that Cisco designed the Golden Shield with the primary goal of creating an online surveillance system to enable and facilitate the suppression of dissident activity in China, specifically the activity of the Falun Gong. Id. ¶ 125. Plaintiffs claim that the system could not have been designed without Cisco's knowledge of the repressive purposes of the databases. Id. ¶ 87. According to Plaintiffs, the anti-Falun Gong objectives were outlined in Cisco internal reports and files and in hundreds of reports or announcements publicly and conspicuously displayed by Communist Party agents throughout China. Id. ¶ 88. Plaintiffs allege that Cisco internal files include reports that acknowledge and pledge to satisfy anti-Falun Gong purposes of the Golden Shield, including numerous use of the term “douzheng,” which Plaintiffs explain as the Party's persecutory campaigns against internal and external enemies that use torture, and this term was also used in Cisco's marketing material. Id. ¶¶ 61, 64–65. Plaintiffs allege that Cisco's success in China stemmed from considerable involvement of the San Jose headquarters office, which orchestrated planning, preparation, marketing, design, implementation, operation and optimization phases, along with Cisco China and other agents and/or alter egos. Id. ¶¶ 126–49. Plaintiffs maintain that Defendants in San Jose deliberately entered into collaboration with the Party and Chinese security officials with knowledge of the widespread campaign to persecute the Falun Gong. Id. ¶¶ 150, 158.

To show that Defendants in San Jose had knowledge of the human rights violations against Falun Gong members in China, Plaintiffs point out that numerous Cisco shareholder resolutions identified concerns regarding potential human rights abuses arising from Cisco network technology solutions, especially in China, and Cisco's Golden Shield files include several court and prosecutorial reports identifying the “douzheng” of Falun Gong and other “hostile elements.” Id. ¶¶ 174–75. Plaintiffs point to Defendant Chambers' meetings with Jiang Zemin, former Party General Secretary and President of China, as evidence of knowledge and intent. Plaintiffs allege that according to at least one expert, the “douzheng” objective of the Golden Shield apparatus was discussed at these meetings. Id. ¶¶ 197–99, 207. Plaintiffs also maintain that at all relevant times, Defendant Cheung knew of the campaign of torture and persecution of Falun Gong practitioners in China, was in a position to influence Cisco's tortious conduct during the development of the Golden Shield, and nevertheless purposefully authorized, participated in, and ratified Cisco's participation in the Golden Shield project. Id. ¶ 219. According to one or more experts, Defendant Cheung discussed “douzheng” objectives of the Golden Shield with several high-level executives from Cisco's San Jose office and its branch office in Asia, he was aware of shareholder concerns, and either attended or directed employees who attended several technology trade shows and conferences where Cisco showed mid-level security officers how to “stop” Falun Gong.Id. ¶¶ 212, 217–18.

Plaintiffs contend that without the Golden Shield, Chinese officers would not have been able to coordinate large-scale investigations, obtain sensitive information, locate, track, apprehend, interrogate, torture and persecute Falun Gong members from anywhere in China. Id. ¶ 106. According to Plaintiffs, the Golden Shield provided the means by which all the Plaintiffs were tracked, detained, and tortured. Id. ¶ 225.

Plaintiffs filed their original Class Action Complaint on May 19, 2011. See Docket Item No. 1. An Amended Complaint (“FAC”) was filed on September 2, 2011. See Docket Item Nos. 61, 62. Defendants filed a Motion to Dismiss the FAC. On November 9, 2011 this Court...