Source: https://condonlaw.com/2014/02/daimler-ag-v-bauman-u-s-supreme-court-applies-strict-test-general-jurisdiction-foreign-corporate-defendants/
Timestamp: 2019-04-25 09:48:40+00:00

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The Daimler court allowed that a corporate defendant objecting to jurisdiction may be deemed “at home” in some other states, but the only example the Supreme Court has upheld to date is found in the 1952 decision of Perkins v. Benguet Consolidated Mining Co.7 In Perkins, the courts of Ohio were authorized to exercise general jurisdiction over a Philippine mining corporation that “carried on…a continuous and systematic supervision of the [company’s] necessarily limited wartime activities” in Ohio – the company president’s home state – during the Second World War, after Philippine mining operations ceased when Japan occupied the Philippines. Upholding general jurisdiction in a state where a defendant is based, although only temporarily, hardly expands the “paradigm forum” list.
In Daimler, the plaintiffs alleged that they or their relatives, all workers and alleged trade union activists at Mercedes Benz Argentina,8 a subsidiary of the German manufacturer Daimler, had been kidnapped, tortured, and sometimes killed by government security forces during the “Dirty War” of 1976-83. They further alleged that Mercedes Benz Argentina had collaborated with the government forces in these violations.
All of the plaintiffs resided in Argentina and all but one were citizens of Argentina. The underlying events had no connection with California, or indeed the United States. The Argentine plaintiffs nonetheless elected to sue the German parent in California.
The U.S. Supreme Court granted certiorari and reversed because, under the Goodyear standard, Daimler was not “at home” in California.
Justice Ginsburg, author of the Goodyear opinion, also wrote the majority opinion in Daimler. The Goodyear decision was unanimous, and all nine justices likewise agreed with the result in Daimler.
Prior to Daimler and Goodyear, the Supreme Court had issued only two decisions on general jurisdiction since 1945, when it overturned strict territorial requirements for jurisdiction in the seminal decision of International Shoe Co. v. Washington.17 The Court now has issued as many decisions on general jurisdiction in the past three years as it did in the sixty-six years before them. These cases mark a major restriction on existing standards and more decisions on general jurisdiction can be expected to follow.
1 Daimler AG v. Bauman, 571 U.S. __, 134 S. Ct. 746 (Jan. 14, 2014).
2 “Specific” personal jurisdiction, also known as “long-arm” jurisdiction, refers to jurisdiction over foreign defendants – “foreign” meaning a non-resident, whether residing in another state or another country – in litigation arising out of contacts with the forum state.
“Specific” jurisdiction is “unquestionably” proper “where the corporation’s in-state activity is ‘continuous and systematic’ and that activity gave rise to the episode-in-suit.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U. S. ___, 131 S. Ct. 2846, 2853 (2011), quoting International Shoe Co. v. Washington, 326 U.S. 310, 317 (1945). Occasional, even single, contacts with the forum can support “specific” jurisdiction, depending on their nature, quality, and circumstances.
The U.S. Supreme Court has addressed the scope of this second type of specific jurisdiction many times since 1945, when it first upheld “long-arm” jurisdiction in International Shoe. See, e.g., Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985); Calder v. Jones, 465 U.S. 783 (1984); Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980); Shaffer v. Heitner, 433 U.S. 186 (1977); and, McGee v. International Life Ins. Co., 355 U.S. 220 (1957).
During the same period, it addressed “general” jurisdiction only twice: in Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), which upheld it, and Helicopteros Nacionales de Colombia, S. A. v. Hall 466 U. S. 408, 415-16 (1984), which did not. See main text at note 6 and note 17 below.
3 131 S. Ct. at 2853-54. Our Client Bulletin of July 1, 2011 covered this decision. Briefly, the North Carolina Court of Appeals had upheld jurisdiction over three European tire manufacturers, all subsidiaries of a U.S. corporation licensed to do business in North Carolina, in connection with a bus accident in France that resulted in the deaths of two North Carolina boys. The North Carolina high court concluded that the subsidiaries, some of whose tires were sold in North Carolina, had “purposefully availed themselves of the protection” of North Carolina laws by “purposefully inject[ing their] product into the stream of commerce,” through their parent’s “highly organized distribution process,” without “limit[ing] the area of distribution of [their] product so as to exclude North Carolina.” The U.S. Supreme Court reversed because “stream of commerce” analysis was only relevant to specific jurisdiction cases and the subsidiaries were not “at home” in North Carolina under the general jurisdiction test. Cf. J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. ___, 131 S. Ct. 2780 (2011) (also covered in our July 2011 Client Bulletin); Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987) (plurality opinion on “stream of commerce” specific jurisdiction in product liability case).
4 See Burnham v. Superior Court, 495 U.S. 604(1990) (plurality opinion on transient jurisdiction based on service of process during defendant’s temporary presence in state); Pennoyer v. Neff, 95 U.S. 714 (1878) (adopting strict territorial approach to jurisdiction subsequently overruled in International Shoe). The defendant’s presence, however, must be voluntary. See, e.g., Wyman v. Newhouse, 93 F.2d 313 (2d Cir. 1937); Tickle v. Barton, 95 S.E.2d 427 (W. Va. 1956) (no jurisdiction over defendants who were served with process within territory of forum state but only after being induced to visit under false pretenses).
5 See, e.g., Wiwa v. Royal Dutch Petroleum, Co., 226 F.3d 88, 96 (2d Cir. 2000); see also JetBlue Airways Corp. v. Helferich Patent Licensing, LLC, ___ F. Supp. 2d ___, 2013 WL 713929 (E.D.N.Y. 2013) (a patent case, but the jurisdictional analysis referred to leading New York cases); Frummer v. Hilton Hotels Int’l, Inc., 19 N.Y.2d 533, 536-38 (1967) (general jurisdiction allowed over a London hotel in connection with a slip and fall incident there because the hotel engaged in public relations and publicity work in New York, accepted reservations through a New York office, and maintained a bank account and telephone number in New York in order to liaise with travel agents throughout the United States).
Some courts got it right prior to Goodyear. For example, in Follette v. Clairol, Inc., 829 F. Supp. 840, 845 (W.D. La.), aff’d, 998 F.2d 1014 (5th Cir. 1993) (Table), the defendant was not subject to general jurisdiction in Texas because it did not reside there. The plaintiff resided and sustained injury in Louisiana but commenced suit after the Louisiana prescription period had expired. She therefore sued in Texas, which had a longer limitation period, and had the action transferred to Louisiana. A Magistrate Judge in Louisiana concluded that the defendant was not subject to general jurisdiction in Texas because it was not incorporated or based there and commencement of suit there was a nullity. The district court adopted the Magistrate’s recommendations and the Fifth Circuit affirmed, but without opinion.
6 State and federal law may both be relevant in determining jurisdiction. If the state has a “long-arm” statute, a court will first consider whether the statute authorizes jurisdiction in the particular case. The court will then consider whether the exercise of jurisdiction comports with due process standards under the Fourteenth Amendment to the U.S. Constitution. Many states have empowered their courts to assert jurisdiction to the limits of due process, and in these states the once prevalent two-step inquiry has merged into a single due process analysis.
7 342 U.S. 437 (1952).
8 The names of the defendant and its subsidiaries have changed over the years and indeed over the course of the litigation. For purposes of this Newsletter, we refer to the German parent as “Daimler” and the subsidiaries “Mercedes Benz Argentina” and “Mercedes Benz USA”.
9 Bauman v. DaimlerChrysler Corp., 579 F.3d 1088 (9th Cir. 2009), vacated, 603 F.3d 1141 (9th Cir. 2010).
10 Bauman v. DaimlerChrysler Corp., 644 F.3d 909, 911-12 (9th Cir. 2011), rev’d, 571 U.S. ___, 134 S. Ct. 746 (2014).
11 Under California law, corporations, even parents and subsidiaries, are considered separate persons. However, if one company – typically the subsidiary – is a “mere instrumentality” or “alter ego” of another (such as a parent), then the companies will have such a unity of interest and ownership that their purported “separateness” will be disregarded. In Daimler, the plaintiffs did not allege, and all apparently agreed they would not be able to prove, that MBUSA and Daimler were alter egos or a single (“unitary”) corporation. But, under a second test – the “agency test” – the contacts of a subsidiary may be imputed to its parent if: (1) the subsidiary performs tasks that, if it did not exist, the parent would have to perform itself; and (2) the parent controls the subsidiary’s internal affairs or daily operations. On reconsideration, the Ninth Circuit modified the second prong and found agency based on what it considered Daimler’s “substantial control” of MBUSA. The Supreme Court noted that not even the plaintiffs tried to defend this portion of the Ninth Circuit’s decision.
12 The Ninth Circuit opinion was issued on May 18 and the Goodyear decision on June 27, 2011.
13 Daimler, 134 S. Ct. at 761 n. 20.
14 Id. at 761-62, quoting Burger King v. Rudzewicz, 471 U.S. at 472.
15 Justice Sotomayor believed Germany was the proper forum for the dispute. Traditional due process analysis, in addition to requiring “minimum contacts” or systematically “doing business,” also precluded jurisdiction in a forum that is “unreasonable,” taking into consideration comity principles, convenience, and any undue burdens on the court. These factors are also considered in relation to venue – that is, the right and sometimes statutory obligation of a court that has jurisdiction over the parties and subject matter to decline to exercise jurisdiction, on condition that the defendant agree to appear in another forum. Under the “doing business” standard, courts could uphold jurisdiction under due process standards of “reasonableness” but decline to exercise jurisdiction on grounds of forum non conveniens. Under Goodyear/Daimler, such dismissals may no longer be a matter of discretion – if the defendant is not “at home,” the claims must be dismissed.
Justice Sotomayor also believed the majority went beyond the scope of d certiorari. She thought the issue before the Court was whether an indirect subsidiary’s acts could always be imputed to its parent.
16 The majority decision repeatedly linked the “at home” standard to the seminal 1945 “specific” jurisdiction case of International Shoe Co. v. Washington, 326 U.S. 310 (1945), which departed from a “strict territorial” standard that states may only assert jurisdiction over persons within the state adopted in Pennoyer v. Neff, 95 U.S. 714, 720 (1878), and in its two pre-Goodyear decisions on “general” jurisdiction, discussed in the main text at note 6 and in note 17 below.
None of these cases use the words “at home,” and most courts did not seem aware of this “bright-line” standard prior to Goodyear. (JetBlue, see note 4 above, suggests that some did not fully appreciate it even afterwards.) The “at home” standard was primarily derived from a couple of older law review articles.

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