Justices Cool to 'Dirty War' Claims Against Daimler

, The Litigation Daily


Marcia Coyle is chief Washington correspondent for The National Law Journal, an American Lawyer affiliate.

An attempt to hold Daimler A.G. liable in U.S. courts for alleged human rights violations in Argentina 30 years ago encountered across-the-bench skepticism in the U.S. Supreme Court on Tuesday.

In DaimlerChrysler AG v. Bauman, a number of justices indicated that the U.S. Court of Appeals for the Ninth Circuit was wrong when it held that California state courts could assert so-called general personal jurisdiction over the German corporation in litigation by foreign plaintiffs for alleged violations that occurred in a foreign country.

The case has drawn an outpouring of amicus briefs by the business community and conservative legal groups that fear that if jurisdiction exists over Daimler, foreign corporations could be subject to the jurisdiction of American courts based on their alleged conduct anywhere in the world and no matter how old. Human rights and civil rights groups filed briefs supporting the Ninth Circuit decision.

The Ninth Circuit, in a 2-1 panel ruling, had held that jurisdiction over Daimler was not unreasonable and did not violate due process because the corporation had purposefully and extensively availed itself of the California market through its distributor, Mercedes-Benz USA. Daimler, it said, retained the right to control nearly every aspect of its distributor’s operation.

Representing Daimler, Thomas Dupree of Gibson, Dunn & Crutcher told the justices that Daimler is a German corporation based in Stuttgart with only 2 percent of sales from Mercedes-Benz USA. On those facts, he added, "This is a case involving Argentine plaintiffs suing a German corporation based on events that allegedly occurred in Argentina more than 30 years ago. This case has no connection to the United States and it has no business in a California courtroom."

He urged the justices to apply a "clean, workable" rule for general jurisdiction, one drawn from their 2011 decision in Goodyear Dunlop Tires v. Brown: "Namely, that a corporation cannot be at home outside of the areas where it maintains its principal place of business or is incorporated—that it can't be subject to general jurisdiction anywhere else."

However, Kevin Russell of Goldstein & Russell, counsel to former employees or survivors of deceased employees who "disappeared" during Argentina's "Dirty War," stressed that California's jurisdiction statute—one of the broadest in the country—holds that courts could exercise personal jurisdiction to the furthest extent permitted by the Constitution.

"Here the question is: if Petitioner would have been subject to general jurisdiction in California had it conducted the same operations through a subdivision in the case, does the due process clause give it a constitutional right to avoid that jurisdiction simply by conducting those same operations through a wholly-owned subsidiary?" he said.

Justice Stephen Breyer countered, "You're seeing it through the lens of jurisdiction. I'm not. I'm seeing it through the lens of corporate law. Five shareholders get together from outside California and they set up a corporation in California. Why? To insulate themselves from liability, particularly lawsuits. Now, instead of those five shareholders, everything is the same, but now it's a German corporation and suddenly they can't insulate themselves from the lawsuits in California. I think it unlikely that California would have such a corporate law, whether it goes by the name of jurisdiction or some other name."

The original lawsuit was filed in 2004 by 22 Argentine residents who raised federal claims under the Alien Tort Statute and the Torture Victim Protection Act. They also made claims for wrongful death and intentional infliction of emotional distress under California and Argentine law. The federal claims are no longer in the case.

The "dirty war" in Argentina occurred during the 1970s and 1980s under the country's military dictatorship. Hundreds of Argentinians disappeared or were kidnapped, tortured and killed. The 2004 lawsuit contends that a wholly owned subsidiary of Daimler—Mercedes-Benz Argentina—cooperated with state security forces by identifying plant workers as subversives during police raids. It later hired as its own security chief the police chief who led the raids and provided him with legal counsel when he was accused of human rights violations.

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