January 14, 2014

Supreme Court Decides Daimler AG v. Bauman

On January 14, 2014, the Supreme Court decided Daimler AG v. Bauman, No. 11-965, holding that the Due Process Clause of the Fourteenth Amendment precludes a California district court from exercising personal jurisdiction over Daimler AG for injuries allegedly caused by conduct of an Argentinian subsidiary that occurred entirely outside the United States.

Twenty-two residents of Argentina filed suit in district court in California against Daimler, a German public stock company, asserting that Daimler was vicariously liable under the Alien Tort Statute and the Torture Victim Protection Act of 1991, as well as under California and Argentina law, for actions that allegedly occurred in Argentina by Mercedes-Benz Argentina, an Argentinian subsidiary of Daimler. Personal jurisdiction over Daimler was predicat­ed on the contacts in California of Mercedes-Benz USA, LLC, a separate Delaware-incorporated Daimler subsidiary with principal place of business in New Jersey. Daimler moved to dismiss for want of personal jurisdiction, and the district court granted the motion. The Ninth Circuit reversed, holding that the California Mercedes subsidiary fell within California's all-purpose jurisdiction and was Daimler's agent, making Daimler subject to suit in California for actions not related to Daimler's contacts with California.

The Supreme Court reversed, referencing Goodyear Dunlop Tires Operations, S. A. v. Brown, 131 S.Ct. 2846 (2011), in which the Court "addressed the distinction between general or all-purpose jurisdiction and specific or conduct ­linked jurisdiction." As to the general jurisdiction, the Supreme Court held "that a court may assert jurisdiction over a foreign corporation ‘to hear any and all claims against [it]' only when the corporation's affiliations with the State in which suit is brought are so constant and pervasive ‘as to render [it] essentially at home in the forum State."

Noting that the Ninth Circuit based its jurisdictional finding on its observation that Mercedes' services were "important" to Daimler, the Supreme Court rejected the Ninth Circuit's formulation because it would always lead to a "pro-jurisdiction answer." The Supreme Court found that the Ninth Circuit's agency-based finding of personal jurisdiction over Daimler "appears to subject foreign corporations to general jurisdiction whenever they have an in-state sub­sidiary or affiliate, an outcome that would sweep beyond even the ‘sprawling view of general jurisdiction' [the Supreme Court] re­jected in Goodyear."

The Court reasoned that the paradigmatic forums for general jurisdiction of a corporation are the corpora­tion's place of incorporation and principal place of business, but noted that they were not necessarily the only forums of personal jurisdiction. It found that "the inquiry under Goodyear is not whether a foreign corpora­tion's in-forum contacts can be said to be in some sense ‘continuous and systematic,' it is whether that corpora­tion's ‘affiliations with the State are so ‘continuous and systematic' as to render [it] essentially at home in the forum State.'"

Because neither Daimler nor Mercedes is incorporated or has a principal place of business in California, and because "[i]f Daimler's California activities suf­ficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other State in which [Mercedes'] sales are sizable[,]" the Court held that Daimler is not "at home" in California and cannot be sued there for injuries plaintiffs attribute to Daimler's Argentinian subsidiary's conduct in Argentina.

Justice Ginsburg delivered the opinion of the Court, in which Chief Justice Roberts and Justices Scalia, Kennedy, Thomas, Breyer, Alito, and Kagan joined. Justice Sotomayer filed a concurring opinion.

Download Opinion of the Court

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