Daimler AG v. Bauman

Supreme Court of the United States
571 U. S. ____ (2014) (2014)

ELI5:

Rule of Law:

For a court to exercise general personal jurisdiction over a foreign corporation, the corporation's affiliations with the forum state must be so continuous and systematic as to render it 'essentially at home' there, a standard not met by merely having a subsidiary that conducts substantial business in the state.

Facts:

Daimler AG is a German public stock company headquartered in Stuttgart, Germany.
During Argentina's 'Dirty War' from 1976-1983, Daimler's Argentinian subsidiary, Mercedes-Benz Argentina (MB Argentina), allegedly collaborated with state security forces.
This collaboration allegedly resulted in the kidnapping, torture, and killing of certain MB Argentina workers, who are the plaintiffs or relatives of the plaintiffs in this case.
All of the alleged wrongful acts occurred entirely in Argentina.
Daimler has an indirect U.S. subsidiary, Mercedes-Benz USA (MBUSA), which is incorporated in Delaware with its principal place of business in New Jersey.
MBUSA distributes Daimler-manufactured vehicles throughout the United States, including in California, where it has several facilities.
MBUSA's sales in California account for 2.4% of Daimler's total worldwide sales.
The plaintiffs are residents of Argentina, and the defendant, Daimler, is a German company.

Procedural Posture:

Twenty-two Argentinian residents filed a complaint against Daimler AG in the U.S. District Court for the Northern District of California.
Daimler filed a motion to dismiss the action for want of personal jurisdiction.
The District Court, a trial court, granted Daimler's motion to dismiss.
The plaintiffs appealed the dismissal to the U.S. Court of Appeals for the Ninth Circuit, the intermediate federal appellate court.
A three-judge panel of the Ninth Circuit initially affirmed the District Court's decision.
Upon granting the plaintiffs' petition for rehearing, the same panel withdrew its initial opinion and issued a new one reversing the District Court's dismissal, finding jurisdiction was proper.
The Ninth Circuit denied Daimler's subsequent petition for rehearing en banc.
The U.S. Supreme Court granted Daimler's petition for a writ of certiorari.

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Issue:

Does the Due Process Clause of the Fourteenth Amendment permit a state court to exercise general personal jurisdiction over a foreign corporation based on the contacts of its in-state subsidiary, when the corporation's own affiliations with the state are not so continuous and systematic as to render it 'at home' there?

Opinions:

Majority - Justice Ginsburg

No. The Due Process Clause precludes exercising general personal jurisdiction over Daimler in California because its affiliations with the state are not so continuous and systematic as to render it 'at home' there. The Court distinguished between specific jurisdiction, which arises from the defendant's contacts with the forum that are related to the lawsuit, and general (or 'all-purpose') jurisdiction, which allows a defendant to be sued on any claim, regardless of where it arose. Citing Goodyear Dunlop Tires Operations, S.A. v. Brown, the Court held that general jurisdiction is only appropriate where a corporation's affiliations are so constant and pervasive as to render it 'essentially at home' in the forum. The paradigm forums for a corporation to be 'at home' are its place of incorporation and its principal place of business. Merely having an in-state subsidiary that conducts substantial business is insufficient to subject the foreign parent corporation to general jurisdiction. The Court rejected the Ninth Circuit's broad agency theory and concluded that even if MBUSA's contacts were imputed to Daimler, Daimler's connections to California are not substantial enough to make a German company 'at home' in California, especially when viewed in the context of its global operations. Such an 'exorbitant' exercise of jurisdiction would also raise concerns of international comity.

Concurring - Justice Sotomayor

No. While agreeing that California courts cannot exercise jurisdiction over Daimler, the case should have been decided on narrower grounds. The majority opinion departs from established precedent by creating a new 'proportionality' test that compares a defendant's in-state contacts to its global contacts, which will unfairly shield large multinational corporations from general jurisdiction. Instead, the Court should have resolved the case using the 'reasonableness' prong of the personal jurisdiction analysis from Asahi Metal Industry Co. v. Superior Court of Cal., Solano Cty. It is unreasonable for a California court to hear a case involving foreign plaintiffs, a foreign defendant, and conduct that occurred entirely in a foreign country, particularly when more appropriate forums like Germany or Argentina are available. The majority's new 'at home' analysis is a significant change to jurisdictional law that was not properly briefed or argued by the parties.

Analysis:

This case significantly narrowed the scope of general personal jurisdiction over corporations in the United States. By cementing the 'essentially at home' standard from Goodyear, the Court effectively rejected older 'doing business' tests that allowed for jurisdiction based on a company's substantial but unrelated in-state commercial activity. The decision limits general jurisdiction for most corporations to their state of incorporation and principal place of business, making it much more difficult for plaintiffs to sue multinational corporations in U.S. courts for conduct that occurred entirely abroad. This has had a profound impact on transnational litigation, particularly in human rights and mass tort cases where plaintiffs often seek a U.S. forum.

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