Daimler AG v. Bauman

Brief Fact Summary.

Argentinian plaintiffs bring suit in a California court against a German company, based on the premise that the German company is subject to general jurisdiction in California because that’s where one of its subsidiaries is headquartered.

Synopsis of Rule of Law.

A court can exercise general jurisdiction over a corporation if the corporation’s connections to the forum state are so continuous and systematic as to render the corporation “at home” in the forum state.

Facts.

Plaintiff alleges that Defendant Daimler AG’s subsidiary, Mercedes-Benz Argentina, colluded with security forces during the Argentinian civil war to kidnap, torture, and kill Mercedes-Benz Argentina personnel. MBUSA, also a Daimler AG subsidiary, was incorporated in New Jersey, imported cars from Germany, and sold them nationwide, including California. MBUSA also had a headquarters in California. Plaintiffs only sued Defendant Daimler AG but claimed that MBUSA acted as Daimler AG’s agent. Plaintiffs also argued that MBUSA was subject to general jurisdiction in California since it was headquartered there and therefore California could exercise jurisdiction over Daimler for the events that occurred during the war in Argentina.

Issue.

Does due process allow an American court to exercise general jurisdiction over a foreign defendant in the absence of any American connection to the defendant, plaintiffs, or events in question?

Held.

No, an American court cannot exercise general jurisdiction over a foreign defendant unless that defendant has such continuous and systematic contacts with the forum state that the defendant can be considered “at home” in that forum state. Judgement of the Court of Appeals reversed.

Concurrence.

Justice Justice Sotomayor

Agreed with the outcome but did not like the majority’s analysis. Believes the “at home” rule is too restrictive. She would have held California’s exercise of general jurisdiction unreasonable because the Plaintiffs could have sued Daimler in Germany.

Discussion.

1. Under International Shoe courts may consider litigation against foreign defendants that have enough minimum contacts with the forum state that the exercise of jurisdiction does not “offend traditional notions of fair play and substantial justice”.
2. Cases since International Shoe have fallen into two categories: (1) general jurisdiction and (2) specific jurisdiction
3. General jurisdiction is proper if a defendant engages in continuous systematic activity in  the forum state.
4. When general jurisdiction is proper, a court can consider any matter against the defendant arising out of any of its business within or outside the state.
5. Specific jurisdiction is proper if a defendant purposefully exercises the privilege of doing business within the forum state, thereby invoking the benefits and protections of the forum state’s laws.
6. Specific jurisdiction however limits a court to consider only lawsuits arising out of the defendant’s business within the forum state.
7. In Goodyear Dunlop the court held that a foreign subsidiary of an American parent corporation is not open to suit in American courts for claims not arising out of the subsidiary’s activities within the forum state.
8. Court assumed MBUSA was subject to general jurisdiction in California.
9. However, MBUSA was not a defendant in the case and the contract between MBUSA and Daimler stated that MBUSA was not Daimler’s agent.
10. Therefore MBUSA’s American contacts could not be attributed to Daimler.
11. If the court allowed California to exercise jurisdiction over Damiler, then it would open Daimler up to suit in any state for events occurring anywhere in the world. This would erode the due process protections in International Shoe.