Supreme Court to Review Bauman v. DaimlerChrysler

About the same time (April 2013) that the US Supreme Court released its opinion in Kiobel v. Royal Dutch Petroleum, the Court also granted review of a Ninth Circuit case, Bauman v. DaimlerChrysler. Just ahead of the July 4th weekend, the Obama administration submitted what John Bellinger, in a lucid post over at Lawfare, describes as a “remarkably strong” amicus brief urging the Court to

reverse the Ninth Circuit’s decision in Bauman v. DaimlerChrysler.  The Justice Department argued that the Ninth Circuit’s 2011 decision finding personal jurisdiction in California over Daimler AG, a German company, for the actions of a subsidiary in Argentina, was “seriously flawed” and contrary to the Supreme Court’s subsequent 2011 decision in Goodyear.  The brief faults the Ninth Circuit for trying to hold a foreign corporation with few contacts to California to “answer in that State for any claim against it, arising anytime, anywhere in the world.”

The background to Bauman v. DaimlerChrysler, Bellinger explains, is that in May 2011 a Ninth Circuit panel

held that that Daimler AG, a German parent company with no operations or employees in the United States, could be sued under the Alien Tort Statute and the Torture Victim Protection Act  (as well as common law and state law) by a group of Argentine nationals for human rights abuses allegedly committed by an Argentine subsidiary in collaborating with the Argentine government during the “Dirty War” in the 1970s, solely on the basis that a different U.S. subsidiary now distributes Mercedes Benz vehicles in the United States.  Applying an agency theory, the panel concluded that Daimler AG had sufficient contacts with the state of California by virtue of the actions of its subsidiary Mercedes Benz USA to give California personal jurisdiction over the German parent , even though Mercedes Benz USA had no involvement with the alleged facts in Argentina.

I agree with Bellinger that the likelihood, following Kiobel, is that the Court is moving to restrain jurisdictional assertions by Federal courts, and is pushing back toward stricter grounding in the traditional bases of jurisdiction by national courts.  My own larger, political view is that this is connected to a perception that although broad assertions of US jurisdiction through such vehicles as the Alien Tort Statute over foreign parties for acts on foreign territory can certainly be framed as enforcing universal international law through national courts, it is better understood as assertions of something quite different – what I’ve sometimes called the “law of the hegemon.”  That is an increasingly contested position as a matter of international politics spilling over into international law, and between the rise of new great powers and the Obama administration’s political embrace of decline, it seems to me unsurprising that the Obama administration would embrace a more traditional, much more restrictive understanding of jurisdiction.

But it also seems the Court is also generally on board with this pull-back.  As Bellinger says, many observers (me included) believe that

the Court would not have accepted the case unless it plans to reverse the Ninth Circuit.  Conservative justices are loathe to miss an opportunity to try to curb the Ninth Circuit’s consistent efforts to be a world court, and the more liberal justices may have wanted to demonstrate (as Justice Breyer argued in his concurrence in Kiobel) that the extraterritorial reach of the Alien Tort Statute can be limited by other jurisdictional restrictions.

I agree.  Despite the obvious clash of approaches between the Roberts majority and the Breyer minority in Kiobel, they do have an important common ground – an intention to limit extraterritorial jurisdiction through a stricter application of the traditional bases of jurisdiction.

The DaimlerChrysler case gives Justice Breyer an opportunity to put sharper teeth, if that’s his inclination, into the third alternative test for finding jurisdiction that he proposed in Kiobel – an interest of the United States, including its interest in not harboring persons or assets of the “common enemies of mankind.”  Over at Volokh (in a lengthy post that I haven’t cross posted here because it’s mostly background on the ATS that would not interest OJ readers), I suggest that this reproduces the same basic problem as the Sosa test for restricting causes of action: the test is impeccable in theory, but unhelpful in practice.  Why?

On either Sosa’s restrictive test (norms of same content and specificity as would have obtained in 1789) or Breyer’s new test (US interests, including not shielding the persons or assets of common enemies of mankind), the problem lies in how – or whether – such formulations prevent a lower court from applying them in ever broader ways.  The Ninth Circuit has lived happily with the Sosa limits for a decade; it simply views so many, many things as being as well established today as the equivalent 1789 norms.  It is very hard for me to see that the same thing won’t happen with Breyer’s formulation of US interests.  But potentially the DaimlerChrysler case gives him an opportunity to do so.  And it’s not, by the way, that I think the Roberts’ way of reining things in is perfect, either – the presumption against extraterritoriality is finally merely a presumption, and the Ninth Circuit would presumably have not much greater trouble batting it away than it would dealing with the Breyer restriction.  It’s telling that the Roberts’ opinion feels obliged, after stating that the presumption against extraterritoriality applies to the ATS, to conclude by adding that mere corporate presence is not enough to turn something extraterritorial into something territorial (which tees up DaimlerChrysler as well).

There are many questions left open regarding the involvement of US courts extraterritorially.  One is structural: Kiobel has the effect of favoring economic activity abroad by foreign corporations and disfavoring US corporations.  Of course US corporations should have to respond somewhere – the problem is that it is a very uneven playing field, and Kiobel has made it more uneven, rather than less.  I assume this will arise quite quickly in some case in which a US corporation continues to assert in court the proposition that Kiobel did not finally address – corporate liability and aiding and abetting liability.  I don’t see how the Court will avoid finally having to address this.  In addition, there is the consideration that OJ’s Kiobel discussions have raised several times – a shift in these claims from Federal to state court.  The twists and turns of extraterritoriality are not over. (I’m writing on Kiobel for the Cato Supreme Court Law Review, so these issues have been on my mind; I haven’t settled completely on how I see Kiobel, however, so the remarks above are … bloggish explorations, not final views.)