Tony Mauro is Supreme Court correspondent for The National Law Journal, an American Lawyer affiliate.
The U.S. Supreme Court on Monday signaled it is not done dealing with the question of using U.S. courts as a forum for resolving disputes with multinational corporations over their role in overseas human rights abuses.
Without comment, and less than a week after issuing Kiobel v. Royal Dutch Petroleum, the court granted review in DaimlerChrysler A.G. v. Bauman, which asks whether federal courts can exert personal jurisdiction over the German car company because it has an indirect subsidiary that sells its products in America. The suit was brought under the Alien Tort Statute by Mercedes-Benz employees in Argentina who claim the company helped the country’s military dictatorship "disappear" dissidents in the 1970s and 1980s.
Also on Monday, the court sent a similar case, Rio Tinto PLC v. Saret, back to the U.S. Court of Appeals for the 9th Circuit for further consideration in light of Kiobel. In so doing, the high court vacated a ruling that went against the mining company.
In the April 17 ruling in Kiobel, which also involved the Alien Tort Statute, the Supreme Court invoked the presumption against the extraterritorial application of federal laws to end litigation brought by Nigerian nationals in U.S. courts against foreign-based oil companies.
Chief Justice John Roberts Jr., writing for the court in Kiobel, said "it would reach too far to say that mere corporate presence [in the United States] suffices" to bring suits in U.S. courts. "Even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application," Roberts wrote.
Those words from Kiobel will form the backdrop for the new case involving Daimler Chrysler, now known as Daimler A.G., though the specific issue in Daimler is whether the German car maker is subject to "personal jurisdiction" in California because of its subsidiary Mercedes-Benz USA. Plaintiffs assert that Daimler "makes billions of dollars every year selling its luxury cars in California," where the suit was filed in 2004. "Rather than sell those cars through a division of its company, petitioner created a wholly owned subsidiary that operated in materially the same way as a subdivision would," states the plaintiffs’ brief, authored by Terrence Collingsworth of Conrad & Scherer’s Washington office.
Collingsworth also said in the brief that, no matter how Kiobel was decided, jurisdiction of U.S. courts over Daimler was clear, if for no other reason than Daimler’s clear presence and headquarters in Michigan when the suit was filed.
After first ruling for Daimler, the 9th circuit reversed itself in 2011, deciding instead that Daimler did fall under the general personal jurisdiction of California because the subsidiary is so important to the company and was substantially under the control of the parent company.
In asking the Supreme Court to overrule the 9th Circuit decision, Daimler’s lawyer, Theodore Olson of Gibson, Dunn & Crutcher, asserted that the appeals court ruling "vastly expands" personal jurisdiction over foreign corporations, "based solely on the forum-state contacts of a corporate subsidiary." The decision violates "fundamental fairness" and "jeopardizes the United States’ international relations."
The Chamber of Commerce also urged the Supreme Court to hear Daimler’s appeal, invoking the due process clause and the classic 1945 decision in International Shoe Co. v. Washington as limitations on assertions of personal jurisdiction over out-of-state defendants. "Sweeping assertions of jurisdiction such as those countenanced by [the 9th Circuit] discourage foreign direct investment in the United States," the brief asserts. "They also place the United States as odds with the rest of the world." University of Georgia School of Law professor Peter (Bo) Rutledge authored the chamber brief.