Daimler Ducks Suit in California Over Dirty War

     WASHINGTON (CN) – Ownership of the Mercedes-Benz USA subsidiary does not open Daimler to liability in California over Argentina’s Dirty War, the Supreme Court ruled Tuesday.
     The 22 plaintiffs were workers, or are relatives of workers, at the Gonzalez-Catan plant operated by Mercedes-Benz Argentina during the seven-year Dirty War that erupted after President Isabel Peron was overthrown in a 1976 military coup.
     They claim that Germany-based DaimlerChrysler, known as Daimler AG after it sold off Chrysler Group in 2007, collaborated with state security forces to kidnap, detain, torture and murder employees.
     Mercedes-Benz allegedly labeled the workers as subversives, passed the information to the military dictatorship and opened its plant to periodic raids by state security forces.
     The company also hired the brutal police station chief, Ruben Lavallen, to act as Mercedes-Benz’s security chief, and gave him legal representation when he was “accused of human rights abuses,” according to the workers’ complaint.
     Relying on military power let Mercedes-Benz quell a strike and restore maximum production to the plant, the workers said.
     Though a federal judge dismissed the complaint for lack of jurisdiction, the 9th Circuit decided in May 2011 that Daimler is subject to personal jurisdiction in California because of its Mercedes-Benz USA subsidiary.
     The Delaware-based arm of Mercedes-Benz is the single largest supplier of luxury vehicles to the California market, and has three offices and centers throughout California. Its sales in the Golden State alone accounted for 2.4 percent of DaimlerChrysler’s total worldwide sales at the time the lawsuit was filed.
     After taking up Daimler’s appeal this past April, the mostly unanimous Supreme Court reversed Tuesday.
     Turning the plaintiffs’ own analogy against them, the justices highlighted how the proffered jurisdictional theory would support a design-defect suit in California “if a Daimler-manufactured vehicle overturned in Poland, injuring a Polish driver and passen­ger.”
     “Exercises of personal jurisdiction so exorbitant, we hold, are barred by due process constraints on the assertion of adjudicatory authority,” Justice Ruth Bader Ginsburg wrote for the court.
     The ruling turns on 2011 precedent that the court reached with Goodyear Dunlop Tires Operations SA v. Brown. That decision barred North Carolina couples whose 13-year-old sons were killed in a bus accident in France from suing Goodyear’s foreign subsidiaries.
     “In­structed by Goodyear, we conclude Daimler is not ‘at home’ in California, and cannot be sued there for injuries plaintiffs attribute to MB Argentina’s conduct in Argentina,” Ginsburg wrote.
     The 9th Circuit’s “uninhibited approach to personal jurisdiction” also throws international comity to the wind, according to the ruling.
     “Considerations of interna­tional rapport thus reinforce our determination that sub­jecting Daimler to the general jurisdiction of courts in California would not accord with the ‘fair play and sub­stantial justice’ due process demands,” Ginsburg wrote.
     Unlike her fellow colleagues, Justice Sonia Sotomayor concurred only in judgment because she found that the court took the wrong path to its result.
     “The court can and should decide this case on the far simpler ground that, no matter how extensive Daimler’s contacts with California, that state’s exercise of jurisdiction would be unreasonable given that the case involves foreign plaintiffs suing a foreign defendant based on foreign conduct, and given that a more appropriate forum is available,” Sotomayor wrote.

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