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.
--------------------------------------------------------------

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
