Activists Might Sue Cisco -- and Others -- Into New China Strategies
Cisco (CSC) is in the crosshairs of several lawsuits filed in the U.S. Not from angry investors or business partners, but human rights activists. Some of them in China.
The Alien Tort Claims Act, which dates to 1789, has potentially opened the door for activists both in the U.S. and overseas to enforce international law on U.S.-based corporations through domestic courts -- which means institutions that have direct jurisdiction over the companies. If the strategy remains in force through potential challenges, companies could face not only legal sanctions, but attending ugly publicity. That could force executives into thorny political considerations when doing business overseas.
We've been here before
Seeing Chinese dissidents and human rights organizations bring pressure on U.S. corporations is relatively new. In 2007, there was evidence that Yahoo (YHOO) cooperated in the political persecution of two journalists in China. A House hearing called management a group of moral pygmies. Shortly after, Yahoo settled the lawsuit that a human rights organization had brought in the U.S. on behalf of the journalists.
Early this year, 36 Chinese environmental activist groups tried to shame Apple (AAPL) over how it responded to criticism about pollution and occupational health hazards at factories where it outsourced manufacturing.
Alien torts a pain of sorts
Although the Alien Torts Claims Act was likely intended to combat piracy and protect diplomats, the wording appears to give activists a powerful weapon:
The district courts 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.Cisco is currently a target because lawyers claim to have evidence that directly shows management's awareness of how China would use its technology. Here's an example:
Terri Marsh, a lawyer for the Human Rights Law Foundation, told Reuters that its new evidence includes a PowerPoint presentation from Cisco that describes a specific line of products "as the only product on the market capable of recognizing over 90 percent of Falun Gong pictures.""This directly implies that Cisco was involved in the final step of the customization -- configuring its product to recognize and inspect for Falun Gong information," Marsh said in emailed comments.Discovery in the U.S. court system is a powerful tool, which is one big reason activists want to bring cases here. Not only is there the potential legal framework to allow them to file a suit in the first place, but they can force corporations to turn over material that then supports their charges.
Apolitical is no longer an option
In the past, companies have been willing to avoid tough questions to keep business in countries that they argued were too important to growth, China being a primary example. That has been true in particular for high tech, where the prospect of selling software, hardware, and services to largely untapped markets -- as well as using outsourced factories -- has tempted executives.
But if complicity opens the companies to scrutiny (because the sums involved will likely always be trifling to them), it could have significant impact on their public reputations, customer responses, and stock prices. The eventual cost could become too great for some of these companies to continue their current strategies -- which, after all, is why the activists are bringing the suits in the first place.
Related:
- Chinese Environmental Activists Dump on Apple
- Microsoft's Chinese Labor Scandal: There's More Trouble Ahead for the Rest of High Tech
- Apple, Dell, and HP: Shocked, Shocked at Foxconn Suicides
- Apple's Asian Labor Report Card: Problems Continue (and Are Hard to Solve)
- High-Tech Sweat Shops: Is Apple the Next Nike?
Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
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