U.S. Supreme Court Narrows The Scope of General Personal Jurisdiction

| Jan 15, 2014 | Firm News

The United States Supreme Court has clarified its jurisprudence on general personal jurisdiction and held that a German manufacturer of luxury automobiles cannot be sued in California based on either its contacts with California or its American subsidiary’s contacts for torts allegedly committed in Argentina against Argentinian citizens. The Court elaborated upon its opinion in Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846 (2011), with respect to when a defendant is sufficiently “at home” in a jurisdiction that it may be subject to general personal jurisdiction. The Court rejected an argument that the Alien Tort Statute provided personal jurisdiction over the manufacturer.

Plaintiffs sued Daimler in federal district court in California alleging that Daimler’s Argentinian subsidiary had cooperated with Argentina’s government in kidnapping, detaining, torturing and killing plaintiffs and their relatives from 1976 to 1983. Plaintiffs asserted claims under the Alien Tort Statute and the Torture Victim Protection Act. Plaintiffs argued there was personal jurisdiction over Daimler through the jurisdictional contacts of its American subsidiary. The General Distributor Agreement between Daimler and the subsidiary states the subsidiary is an independent contractor and is not the agent of Daimler. The subsidiary’s sales in California constitute 2.4 percent of Daimler’s worldwide sales. California law permits the exercise of personal jurisdiction to the full extent allowed by federal due process. The Ninth Circuit held that federal due process permitted the exercise of personal jurisdiction on the theory that the subsidiary was the agent of Daimler and because the Alien Tort Statute provided personal jurisdiction.

The Supreme Court reviewed its jurisprudence on personal jurisdiction and further explained its holding in Goodyear v. Brown. It rejected the Ninth Circuit’s “agency” theory that foreign corporations could be subject to general jurisdiction whenever they have a subsidiary that does business in a state. With respect to Goodyear, the Court said the inquiry is “not whether a foreign corporation’s in-forum contacts can be said to be in some sense ‘continuous and systematic’… [but] whether that corporation’s ‘affiliations with the State are so continuous and systematic as to render [it] essentially at home in the forum state.'”

The Court said that neither Daimler nor its subsidiary is incorporated in California nor do they have their principal places of business there. The Court said that even if the subsidiary’s contacts with California were attributed to Daimler, it was still not sufficient to render Daimler subject to general jurisdiction in California.

Finally, the Court said that the Alien Tort Statute and the Torture Victim Protection Act did not extend the scope of personal jurisdiction.

The Court reversed the Ninth Circuit.

Daimler AG v. Bauman, No. 11-965, 2014 WL 113486 (U.S. Jan. 14, 2014)

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