Daimler AG v. Bauman

Brief Fact Summary.

A class action suit was filed Plaintiffs against Defendant. The complaint alleged that Defendant’s Argentinian subsidiary, Mercedes-Benz Argentina, committed several human rights violations. Jurisdiction over the lawsuit was predicated on the California contacts of Mercedes-Benz USA, LLC (MBUSA), a subsidiary of Daimler incorporated in Delaware with its principal place of business in New Jersey.

Synopsis of Rule of Law.

A court can assert general jurisdiction over a corporation if the corporation’s contacts with the forum state are so continuous and systematic as to render the corporation at home in the state.

Facts.

Plaintiffs brought suit against Defendant in the United States District Court for the Northern District of California. Plaintiffs alleged that Mercedes-Benz Argentina (MBA), a Daimler’s subsidiary, collaborated with Argentinian forces to kidnap, torture, and kill MBA workers during an Argentinian war. These workers were the plaintiffs or persons closely related to the plaintiffs. Daimler was a German company. MBA’s alleged actions took part solely outside of the United States. Plaintiffs based their claims  of the district court’s jurisdiction on Daimler’s subsidiary, Mercedes-Benz USA, LLC (MBUSA), which was incorporated in Delaware and had its principal place of business in New Jersey. MBUSA distributed Daimler cars to all 50 states and had various facilities and offices in California. Defendant moved to dismiss for lack of personal jurisdiction. The lower court granted Defendant’s motion to dismiss. Plaintiff appealed. The United States Court of Appeals for the Ninth Circuit affirmed and later reversed. The United States Supreme Court granted certiorari.

Issue.

Does a state court have jurisdiction over a claim against a foreign corporation that does not conduct any form of business within the state?

Held.

No. The court held that California court cannot assert general jurisdiction over Defendant when the corporation did not have minimum contacts with the forum state.

Discussion.

A court can assert general jurisdiction over a corporation if the corporation’s contacts with the forum state are so continuous and systematic as to render the corporation at home in the state. Examples of contacts include a corporation’s place of incorporation and principal place of business. International Shoe Co. v. Washington, 326 U.S. 310 (1945), stated that such activities must be so substantial that they justify bringing suit “on causes of action arising from dealings entirely distinct from those activities.” Here, Daimler’s contacts with California were not so substantial that they justified this suit being heard there. Daimler and MBUSA were incorporated and had their principal place of business outside of California. Although MBUSA distributed cars to and maintains offices in California, MBUSA distributed cars to every state. If the court were to grant the district court general jurisdiction based on that affiliation, this suit could also theoretically be heard in every state. Thus, the affiliations of MBUSA and Daimler with California are not so continuous and systematic as to render the companies at home in California. Therefore, the court of appeals erred by granting the district court general jurisdiction over this suit and its decision was reversed.