Argentina Human-Rights Abuse Case Dismissed

(CN) - The 9th Circuit said it lacked jurisdiction to consider claims that former Mercedes Benz workers in Argentina were kidnapped, jailed or tortured during the 1970s military regime after the company turned them over to government security forces.

Twenty-three former workers and their family members accused German automaker DaimlerChrysler Corp. of human rights violations during the Dirty War that ravaged the country from 1976 to 1983. The military regime exploited its close relationship with the heads of Mercedes Benz Argentina to target workers who were viewed as subversive, the ruling states.

But the San Francisco-based appeals court ruled that Mercedes Benz, which markets and sells cars for the company, was not an agent of DaimlerChrysler, and therefore could not be sued in the United States.

To be considered an agent, the three-judge panel explained, a parent company must exert pervasive control over its subsidiary, and DaimlerChrysler has no say in where its product ends up in the United States. Also, DaimlerChrysler could easily replace the U.S. subsidiary with an independent distributor, which negates the agency relationship, the ruling states.

On a 2-1 vote, the panel upheld the district court's dismissal of the case. Both courts viewed Germany or Argentina as a better forum.

In a dissenting opinion, Judge Reinhardt said the majority made the test for an agency relationship too stringent. The ruling will "shield foreign corporations from actions in American courts," Reinhardt wrote. A test for agency should not require that a parent company exert control over a subsidiary, but should show that the principal can exert control, Reinhardt said.

The judge expressed concern that the majority's definition of an agency relationship will let foreign corporations dodge human rights abuse cases through "creative corporate structuring."

Human rights abuse cases arising from the military regime have a two-year statute of limitations if filed in Argentina and may face similar time restrictions in Germany.

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