Wednesday, January 15, 2014
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Supreme Court: No U.S. Suit Over Argentine Rights Violations
By KENNETH OFGANG, Staff Writer
A court in the United States may not entertain a suit between foreign litigants over events occurring entirely outside the United States, solely because the defendant does some business in the forum state, the U.S. Supreme Court ruled yesterday.
Neither the existence of a U.S.-based subsidiary, nor the fact that the foreign defendant does business in the forum state, is a sufficient contact to satisfy the constitutional prerequisites of long-arm jurisdiction, the court said.
The justices unanimously reversed a Ninth U.S. Circuit Court of Appeals ruling that would have allowed German-based Daimler AG, formerly DaimlerChrysler Corporation, to be sued in California.
The Due Process Clause will not allow the automaker to be sued here for human rights violations that its Argentinean subsidiary may have participated in when the country was ruled by a military junta in the 1970s and 1980s, the court held.
Justice Ruth Bader Ginsburg authored the opinion of the court, which was joined by all of the justices except Sonia Sotomayor, who concurred separately.
The ruling mandates dismissal of a suit by 23 citizens and residents of Argentina who claim they, or members of their families, were kidnapped, detained, or tortured by security forces directed by Mercedes-Benz Argentina. They claimed that Mercedes-Benz Argentina had a close relationship with the regime, which worked with the company in targeting those believed to be working with leftist trade unions during the “Dirty War.”
Alien Tort Claims Act
The suit was filed in the Northern District of California under the Alien Tort Claims Act, which allows an action in federal court “by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” It also charged violations of Torture Victims Protection Act and asserted claims for wrongful death and intentional infliction of emotional distress under California and Argentine law.
Named as defendant was DaimlerChrysler AG, the German-based parent of Mercedes-Benz Argentina.
In dismissing, U.S. District Judge Ronald Whyte rejected the plaintiffs’ claim that jurisdiction exists in this state based on an agency relationship between the German company and Mercedes-Benz USA, which has offices and does business in California.
The Ninth Circuit, in a 2-1 decision, initially affirmed the lower court, but reversed on rehearing, in an opinion by Judge Stephen Reinhardt. The court denied rehearing en banc, over the dissent of eight judges.
Ginsburg, however, said the Ninth Circuit was wrong to hold that the U.S. subsidiary, Mercedes-Benz USA, provided services that were so “important” to the parent company as to expose Daimler to general jurisdiction in U.S. courts.
“Even if we were to assume that MBUSA is at home in California, and further to assume MBUSA’s contacts are imputable to Daimler, there would still be no basis to subject Daimler to general jurisdiction in California, for Daimler’s slim contacts with the State hardly render it at home there,” the justice wrote.
Violate Principle
Under the Ninth Circuit’s holding, Ginsburg suggested, a foreign company like Daimler would be subject to general jurisdiction in any state where it had significant sales. This, she said, would violate the principle that a company may structure its business in such a way to avoid the possibility of being sued in a hostile forum.
This is particularly true, she said, where transnational business is involved.
“The Ninth Circuit…paid little heed to the risks to international comity its expansive view of general jurisdiction posed,” Ginsburg wrote. “Other nations do not share the uninhibited approach to personal jurisdiction advanced by the Court of Appeals in this case.”
She noted that in the European Union, a corporation may only be sued in the country where it has its primary headquarters, or in another nation where it does business if the suit arises out of those operations.
“Considerations of international rapport” are important, the justice elaborated, because foreign countries may be hesitant to enforce judgments of American courts if the defendants in those cases have been subjected to U.S. jurisdiction under expansive theories that those countries would not recognize.
Sotomayor Concurrence
Sotomayor, in her concurrence, agreed that Daimler could not be sued here because it would be unreasonable to exercise jurisdiction under the “unique circumstances” of the case, since the plaintiffs failed to show that they could not litigate in Germany, which had a far greater interest in the outcome than California.
But her colleagues’ view of general jurisdiction was too limiting, she argued.
In the majority’s view, she explained, Daimler cannot generally be sued in the United States because its operations here are too small in comparison with the rest of its business.
“In recent years, Americans have grown accustomed to the concept of multinational corporations that are supposedly “too big to fail”; today the Court deems Daimler ‘too big for general jurisdiction,’” she wrote.
Ginsburg replied in a footnote:
“Remarkably, JUSTICE SOTOMAYOR treats specific jurisdiction as though it were barely there. Given the many decades in which specific jurisdiction has flourished, it would be hard to conjure up an example of the ‘deep injustice’ JUSTICE SOTOMAYOR predicts as a consequence of our holding that California is not an all-purpose forum for suits against Daimler.”
The case is Daimler AG v. Bauman, 11–965.
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