9th Circuit to Rehear Human-Rights Case

(CN) - A 9th Circuit panel agreed to rehear a case involving Mercedes Benz workers in Argentina who say they were kidnapped, jailed or tortured by the country's military regime in the 1970s after the company handed them over to government security forces.

The court asked the parties for further briefing on whether the luxury car maker can be sued in the United States for the alleged human rights violations.

The San Francisco-based panel ordered 23 workers and their former employer, German auto maker DaimlerChrysler Corp., an affiliate of Mercedes Benz, to submit briefs addressing the court's jurisdiction over the case.

The workers claimed that during the Dirty War, which ravaged the country during the late 1970s and 1980s, Argentina's military regime exploited its relationship with the heads of Mercedes Benz Argentina, who had the workers turned over to government security forces for being "subversive." The workers claimed they were kidnapped, jailed or tortured.

In its decision to rehear the case, the panel asked the parties to answer two questions in their briefs:

"Is 'control' an element of this court's agency test for personal jurisdiction? If so, how much control is required? If our precedent is unclear, how much control should be required?"

And second: "If the panel concludes that an agency relationship exists, would an exercise of general jurisdiction over defendants be reasonable in this case?"

The court vacated its September 2009 decision to dismiss the lawsuit for lack of jurisdiction. The court had ruled that Mercedes Benz, which sells and markets cars for DaimlerChrysler, was not an agent of the company and could not be sued in the United States.

The previous panel ruled 2-1 that a parent company must exercise "pervasive control" over its subsidiary to be considered an agent, and that DaimlerChrysler had no say in where its products ended up in the United States.

It further ruled that because DaimlerChrysler could have easily replaced its U.S. subsidiary at anytime with an independent distributor, no agency relationship existed.

The arguments for jurisdiction will be reheard the week of June 21, 2010 in Pasadena by a three-judge panel.

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