[Adam N. Steinman is Professor of Law and Michael J. Zimmer Fellow at Seton Hall Law]
Cross-posted at Civil Procedure & Federal Courts Blog
This week the Supreme Court heard
oral argument in
Daimler AG v. Bauman (covered earlier
here and
here).
Daimler resembles last Term's
Kiobel case, in that it involves claims against a foreign defendant (Daimler) for human rights and other violations committed abroad (in Argentina, during the "dirty war" of the 1970s and 1980s) under the Alien Tort Statute (ATS). But the
question for which the Court granted certiorari in
Daimler involves personal jurisdiction and is not limited to ATS cases: "whether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based solely on the fact that an indirect corporate subsidiary performs services on behalf of the defendant in the forum State."
During the argument, plaintiffs' counsel acknowledged that their ATS claims faced an "uphill struggle" in light of
Kiobel, but they are also pursuing state law and foreign law claims – for which personal jurisdiction would remain a live issue. Given the question presented, the more significant SCOTUS precursor may be the 2011
Goodyear decision, not
Kiobel. Writing for a unanimous Court, Justice Ginsburg wrote in
Goodyear that general jurisdiction over corporations is proper "when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State." She cited (1) a corporation's principal place of business and (2) its state or country of incorporation as "paradigms" for general jurisdiction; but it remains unclear what else could render a corporation "essentially at home" in a particular forum. In particular,
Goodyear acknowledged – but did not address – the argument that distinct corporate entities might be treated as a "single enterprise" for jurisdictional purposes. In
Daimler, the Ninth Circuit found that California had general jurisdiction over Daimler based on the activities its American subsidiary, Mercedes Benz USA (MBUSA).
The most common reaction to this week's oral argument has been that the Justices were
quite skeptical of the idea that Daimler was subject to general jurisdiction in California. That may be so, but several interesting issues came up during the argument, and there are still a number of different ways the Court could ultimately dispose of the case (some of them quite narrow).
One topic of discussion was whether state law or federal law governed the extent to which MBUSA's contacts could be attributed to Daimler. Under Federal Rule of Civil Procedure 4(k)(1)(A) –the basis for personal jurisdiction in this case – a California federal district court can exercise personal jurisdiction if a California state court could exercise personal jurisdiction. Thus, jurisdictional restrictions in state long-arm statutes can confine federal courts as well. California's long-arm statute, however, extends as far as the 14th Amendment allows. It would seem, then, that personal jurisdiction ultimately hinges on the federal question of whether, on these facts, the 14th Amendment permits a state court to assert general jurisdiction over a foreign parent based on the activities of its subsidiary. Questions by Justices Sotomayor and Alito suggested that this was indeed a federal issue. Justices Scalia and Breyer, however, inquired repeatedly about state law. One line of questioning by Justice Breyer suggested the view that, just as state corporations law defines when a parent company can be
liable for a subsidiary's conduct, so too would state corporations law define when a parent can be subject to
jurisdiction based on a subsidiary's activities.
Another significant issue in
Daimler is whether Daimler waived or forfeited certain arguments against personal jurisdiction.