International car manufacturer DaimlerChrysler has factories around the world, including a Mercedez-Benz subsidiary in Argentina. During the Argentine “dirty war,” the company is alleged to have acted in cahoots with the Argentine military in arresting and detaining workers, some of whom disappeared.
Aiming to hold DaimlerChrysler accountable for its exploitation abroad, plaintiffs sued DaimlerChrysler in the United States under a 200-year-old statute intended to allow lawsuits in U.S. courts for gross human rights abuses occurring anywere. By the time they got to the U.S. Supreme Court, another case last term had already obliterated the ability to hold corporations accountable for torture abroad under that law.
So in the high court’s decision rejecting the plaintiffs’ claim Tuesday, the justices spent very little time dealing with the relevance of the Alien Tort Statute and the more recent Torture Victims’ Protection Act, holding only that recent rulings rendered plaintiffs’ claims under those two human rights statutes “infirm.” Last term’s ruling on that subject, Kiobel v. Royal Dutch Petroleum, had been decided by a divided 5-4 court, with Chief Justice John Roberts concluding that the United States is not, after all, “a uniquely hospitable forum for the enforcement of international norms.”
With that recent precedent behind them, all nine justices agreed this time around that plaintiffs could not establish jurisdiction to sue Daimler in California based on the company’s subsidiary in that state for “injuries allegedly caused by conduct of MB Argentina outside the United States.” That conclusion, while unfortunate for those who worry corporations profiting in the United States will skirt liability by doing their dirty work elsewhere, is not so controversial.
But here’s where it gets interesting. Eight of those justices signed onto a reasoning supporting that conclusion that Justice Sonia Sotomayor warns in a concurrence renders some corporations too big to sue:
In recent years, Americans have grown accustomed to the concept of multinational corporations that are supposedly “too big to fail”; today the Court deems Daimler “too big for general jurisdiction.”
The Court’s conclusion is wrong as a matter of both process and substance. As to process, the Court decides this case on a ground that was neither argued nor passed on below, and that Daimler raised for the first time in a footnote to its brief. As to substance, the Court’s focus on Daimler’s operations outside of California ignores the lodestar of our personal jurisdiction jurisprudence: A State may subject a defendant to the burden of suit if the defendant has sufficiently taken advantage of the State’s laws and protections through its contacts in the State; whether the defendant has contacts elsewhere is immaterial.
Jurisdiction is a fundamental threshold concept in any litigation, establishing whether a particular case belongs in a particular court. For a corporation to be a party to a lawsuit in a given court, it must have a sufficient presence, or “contacts,” in that state, and meet several other factors. In this case, Sotomayor concludes that it is these other factors that counsel against suing Daimler in the United States, namely, that California jurisdiction is “unreasonable” given that the lawsuit is against a foreign corporation for foreign conduct by foreign plaintiffs, and that other forums are available.
But rather than leave it at that, Sotomayor laments, the court set a new standard for what constitutes sufficient corporate presence in a state that inherently favors those corporations with a major presence in lots of states. The reasoning goes like this: To determine whether you can sue a corporation in a court, look not just to the extent of that corporation’s presence in that state, but also how large it is relative to its presence in the rest of the world. If, viewed in that lens, the corporation’s presence is not really so significant after all, you can’t sue them there. The majority reasons that, “If Daimler’s California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other State in which MBUSA’s sales are sizable.” The majority calls this “exorbitant.” But Sotomayor calls it justice — an “inevitable consequence of the rule of due process we set forth nearly 70 years ago,” the dramatic growth of mega-corporations notwithstanding.
This is one of countless rulings under the Roberts Court to insulate mega-corporations from liability. And it’s not the first in which the sheer size of the corporation — and the magnitude of the alleged harm against it — weighed against holding that corporation accountable. But unlike many of the others, including last year’s precursor to today’s opinion, this ruling was not a divided 5-4 ruling. Instead, Justice Ruth Bader Ginsburg wrote the majority opinion for eight of the nine justices. Perhaps this is because the majority viewed this case, unlike Sotomayor, as simply an adaptation of civil procedure law to accommodate the times. But time will tell how broadly courts interpret this development in favor of corporate immunity.