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Roger Alford on 9th Circuit ATS Personal Jurisdiction Case:

Roger Alford has a post up at Opinio Juris commenting on the recent 9th Circuit opinion in Bauman v. Daimler-Chrysler AG. A 9th Circuit panel held last week in this case that the court did not have

personal jurisdiction over DaimlerChrysler Corporation AG because [corporation] did not have continuous and systematic contacts with the forum. The case of Bauman v. DaimlerChrysler AG arose out of the alleged kidnapping, detention and torture of Argentinian citizens in Argentina by Argentinian state security forces acting at the direction of Mercedes Benz Argentina. The plaintiffs sued the parent company, DaimlerChrysler AG, and the Ninth Circuit concluded that it lacked personal jurisdiction.

As Roger explains, given the facts, this conclusion is not at all surprising. More surprising, as he goes on to explain, is Judge Stephen Reinhardt's dissent, in which he argues that

promoting international human rights was a state interest that should factor into a finding of personal jurisdiction. Reinhardt first concluded that DaimlerChrysler AG had minimum contacts in the forum through its American subsidiary. He then examined whether it was reasonable to assert jurisdiction based on seven factors, including "the state's interest in adjudicating the suit."

This looks very much, Roger adds, like a forum non conveniens argument "dressed up as an assertion of personal jurisdiction." Indeed. However, a reason I was interested in reading this opinion is that much of my attention in Alien Tort Statute jurisdiction issues runs to subject matter jurisdiction and to whether the plaintiffs arguments make out bona fide Sosa violations of the law of nations, and whether the jurisidictional subject matter is met if the claimed violator is a corporation. I thus found it interesting to see a discussion of what kinds of contacts are required to reach personal jurisdiction, and then what the standard of reasonableness for the assertion of personal jurisdiction.

Update: Here's a short, interesting piece by Josh Goodman in the Harvard International Law Journal Online, proposing a way to resolve issues of aiding and abetting liability under the ATS, reaching to administrative law models. I have only read it quickly, and haven't formulated a firm view, but if you follow ATS issues, I'd say it's worth reading.

Cornellian (mail):
I like the way Reinhardt quotes Weinstein for this comment:

To any layman it would seem absurd that our courts
could not obtain jurisdiction over a billion dollar
multinational which is exploiting the critical New
York and American markets to keep its home production
going at a huge volume and profit. This perception
must have a bearing on our evaluation of
fairness. The law ignores the common sense of a situation
at the peril of becoming irrelevant as an institution.


With all due respect to Judge Reinhardt, to any layperson it would seem absurd that you could sue Mercedes-Benz in California for something it allegedly did in Argentina.
9.9.2009 2:35am
jordan 6 rings (mail) (www):
Thank you very much. I am wonderring if I can share your article in the bookmarks of society,Then more friends can talk about this problem.
9.9.2009 2:58am
David M. Nieporent (www):
Cornellian: even more absurd is that Reinhardt had so little support for his position that he had to reach out to an Eastern District of New York case as the primary basis for his opinion. I think the Jordan Shoes guy has a better legal argument.
9.9.2009 3:23am
Just Dropping By (mail):
"The bookmarks of society" is my new catch-phrase.
9.9.2009 9:12am
martinned (mail) (www):

With all due respect to Judge Reinhardt, to any layperson it would seem absurd that you could sue Mercedes-Benz in California for something it allegedly did in Argentina.

That depends on how "lay" that layperson is. Are we allowed to tell them that such a thing as the Alien Tort Statute exists without "un-laying" them? The fundamental idea that you state here is sound. There is no reason why Mercedes-Benz (or rather, the company: Daimler-Benz), cannot be sued in California, except that the court found they have insufficient ties to the forum. But that doesn't mean they can't be sued somewhere else in America for what they may or may not have done in Argentina.
9.9.2009 9:40am
Kenneth Anderson (www):
"Bookmarks of society" - I have this inchoate desire to use the expression - extensively, throw it around a lot - but I can't figure out if it's a compliment or an insult.
9.9.2009 9:41am
ruuffles (mail) (www):

With all due respect to Judge Reinhardt, to any layperson it would seem absurd that you could sue Mercedes-Benz in California for something it allegedly did in Argentina.

Federal law allows prosecution of sex acts against minors committed abroad by US citizens.
9.9.2009 10:16am
martinned (mail) (www):
O, and lest I be misunderstood, I'm a big fan of the normal "civil law" rule that people get sued in their home state, i.e. in the forum of habitual residence of the defendant. But given that US law doesn't seem to bother with such niceties, I don't see why there should be a different rule for the ATS.
9.9.2009 10:33am
George Smith:
"exploiting the critical New York and American markets" = selling cars that people want to buy. What scoundrels!
9.9.2009 10:36am
martinned (mail) (www):

"exploiting the critical New York and American markets" = selling cars that people want to buy. What scoundrels!

They must be Marxists! Or at least the most be those Marxists who don't know they're Marxists. In fact, I can prove it: Look at how many "employee representatives" they have on their supervisory board!
9.9.2009 10:40am
ohwilleke:
The holding that there is no personal jurisdiction over Daimler-Chrysler AG is absurd.

It may be the right result. The party at fault is Mercedes Benz Argentina, and it is not obvious that a parent company should have liablity for the acts of its subsidiary in this case. Forum non conveniens also makes sense.

But, Daimler-Chrysler AG clearly has "continuous and systematic contacts" with California. From the opinion where not otherwise noted:

[The U.S. operations are a] wholly-owned subsidiary of the DaimerChrysler North America Holding Corporation, a holding company, which, in turn, is a subsidiary of" [Daimler-Chrysler AG. The U.S. company (MBUSA)] has two offices in California, and it is undisputed that MBUSA is subject to general jurisdiction in the state. . . . MBUSA is responsible for the marketing and distribution of the vehicles in California, in addition to providing service and sales support. DCAG sells its vehicles, manufactured in Germany, to MBUSA in Germany, where title passes. . . . The DCAG-MBUSA relationship is governed by a General Distributor Agreement ("the Agreement"). . . .

In Unocal, we described our agency doctrine, by which
the contacts of a subsidiary may be imputed to the parent. 248 F.3d at 928-31. "To satisfy the agency test, the plaintiff must make a prima facie showing that the subsidiary represents the parent corporation by performing services 'sufficiently important to the [parent] corporation that if it did not have a representative to perform them, the [parent] . . . would undertake to perform substantially similar services.' " Harris Rutsky &Co. Ins. Servs., Inc. v. Bell &Clements Ltd., 328 F.3d 1122, 1135 (9th Cir. 2003) (quoting Chan, 39 F.3d at 1405). The "test permits the imputation of contacts where the subsidiary was 'either established for, or is engaged in, activities that, but for the existence of the subsidiary, the parent would have to undertake itself.' " Id. (internal quotations omitted)."


Daimler-Chrysler AG doesn't just have a U.S. subsidiary, it has a U.S. subsidiary with whom it has not only an investor relationship but a dealership arrangement. It routinely sends its agents to the United States and California to do business with the subsidiary, I suspect. As the dissent notes: "DCAG, for instance, has earned 45% of its annual revenue from its sales in the United States. 2.4% of its total sales in 2004 were in California." Further:

• MBUSA must comply with all DCAG "directives,
standards and processes," in its promotion
and advertising, which include directives regarding
type, design, and size of the signs used by
MBUSA.
• MBUSA must submit, at least three months prior
to the commencement of each Sales Period, its
comprehensive advertising and marketing plan
for DCAG's review and approval.
• MBUSA must keep DCAG informed of all marketing,
advertising, and promotional activities it
implements as well as the results of such activities.
• DCAG owns 100% of the capital stock of
MBUSA.
• DCAG retains full ownership of "Mercedes-
Benz" trademark.
• MBUSA is required to use the DCAG financial
system and maintain records and operating
reports based on the standards set forth by
DCAG.
• MBUSA must receive approval from DCAG
before entering into an agreement with any "Authorized
Reseller," and after agreement, must
approve the location of "each retail sales outlet,
showroom and service facility." "DCAG may, in
its sole discretion, reject any such proposed
appointment."
• MBUSA must obtain approval from DCAG to
replace key personnel (including the CEO).
• DCAG provides the warranty terms for vehicles
to consumers.
• MBUSA cannot make alterations to the cars
without prior approval, other than alterations
ordered by specific customers in connection with
vehicles purchased by those customers.
• MBUSA can use only DCAG-supplied parts
when repairing or maintaining its own vehicles.
• DCAG can compel MBUSA to engage in dealer
advertising programs and parts merchandising
programs.
• MBUSA must keep DCAG updated on all promotional
materials it uses. MBUSA must adhere
to the details of signage and marketing specifications
as set out by DCAG, including the type,
design, and size of MBUSA's and Authorized
Resalers' signage.
• DCAG employees hold senior decision-making
positions within the MBUSA Board of Directors.
• MBUSA must collect customer data and furnish
periodic reports, upon request from DCAG.
• MBUSA works closely with DCAG to ensure
regulatory compliance regarding manufacturing,
sales, and legal requirements.


The case is a strong one for an en banc or SCOTUS reversal. The impact may be harmless in this case, but the doctrine it makes on general jurisdiction is very bad.
9.9.2009 9:25pm

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