Daimler AG v. Bauman

Brief Fact Summary.

Foreign plaintiffs sued foreign defendants in the United States based on acts that occurred outside of the United States. The plaintiffs based their claim on the fact that one of defendants’ subsidiaries had contacts in California that were completely unrelated to the acts complained of by the plaintiffs.

Synopsis of Rule of Law.

General jurisdiction over a corporation exists if the corporation’s connection with the forum state is “so continuous and systematic” as to make the corporation basically “at home” in that forum state.

Facts.

Plaintiffs, who are twenty-two Argentinian residents, filed suit in the United States District Court for the Northern District of California, against Daimler (Defendants), a German public stock company that manufactures Mercedes-Benz cars, alleging that their subsidiary Mercedes-Benz Argentina (MBA) worked with Argentinian security forces to “kidnap, detain, torture, and kill certain MBA workers.” Plaintiffs sued Defendants for claims under federal and state law. The district court had jurisdiction over the case based on the California contacts of another one of Defendants’ subsidiaries, Mercedes-Benz USA, LLC (MBUSA). MBUSA, incorporated in Delaware with its principal place of business in New Jersey, distributes Defendants’ cars to California. Arguing that the claims lacked personal jurisdiction, Defendants filed a motion to dismiss, which the district court granted. The United States Court of Appeals for the Ninth Circuit first affirmed the district court’s judgment; however, after granting Plaintiffs’ petition for rehearing, the Court of Appeals reversed the district court’s ruling. The United States Supreme Court granted certiorari to reconcile the issue.

Issue.

Does a court have general jurisdiction over a foreign corporation for acts described in a plaintiff’s complaint that lack a significant connection to the forum state?

Held.

No. A court does not have general jurisdiction over a foreign corporation for acts described in a plaintiff’s complaint that lack a significant connection to the forum state. A corporation must be considered “at home” in the forum state for general jurisdiction to be appropriate. For corporations to be considered “at home” in a forum state, that corporation must either be incorporated or have its principal place of business in that forum state. In this case, neither Defendant nor Defendants’ subsidiaries are considered “at home” in California because they are incorporated and have their principal places of business elsewhere. As such, the Supreme Court reversed the Ninth Circuit’s decision.

Discussion.

General jurisdiction over a corporation is different than specific jurisdiction. Specific jurisdiction exists when a corporation’s acts in a forum state actually give rise to a plaintiff’s claim; this could even be one specific act as long as that act is the basis of the plaintiff’s complaint. General jurisdiction goes one step further by making it so that the corporation’s acts in a forum state have to be “so continuous and systematic” as to make that corporation basically “at home” in that forum state. In this case, although Defendants’ cars were being distributed by MBUSA in California, Plaintiffs’ claims were completely unrelated to this. Therefore, specific and general jurisdiction did not exist in this case.