Daimler AG v. Bauman, 571 U.S. 117 (2014), is a landmark United States Supreme Court case that reshaped the doctrine of general personal jurisdiction over corporations. At its core, the Court confronted whether an American court could exercise jurisdiction over a foreign company based on the activities of one of its subsidiaries in the forum state.
The decision established clear limitations, holding that general jurisdiction applies only where a corporation is “at home,” typically in its place of incorporation or principal place of business. This ruling has had a significant impact on transnational litigation and the scope of U.S. courts’ authority over foreign corporations.
Background of Daimler AG v. Bauman
Daimler Aktiengesellschaft (Daimler AG) is a German automotive company headquartered in Stuttgart, Germany. The company owns Mercedes-Benz and a wide network of subsidiaries around the world, including in the United States and Argentina.
During Argentina’s “Dirty War” in the late 1970s and early 1980s, a period of state-sponsored violence under a military dictatorship, labor disputes emerged at the Mercedes-Benz Argentina (MBA) plant in González Catán. Allegations later surfaced that Mercedes-Benz cooperated with the junta by identifying labor leaders as “subversives,” permitting military forces inside the factory, and enabling raids on workers.
During this time, twenty-two labor leaders were kidnapped, tortured, and killed. Adding to the controversy, the police chief responsible for the disappearances was later hired as Mercedes-Benz Argentina’s chief of security, and the company provided his legal defense when he faced accusations of human rights abuses.
The company’s alleged role during Argentina’s Dirty War did not come to wide public attention until two decades later, when German media outlets reported on it. DaimlerChrysler AG (as it was then called) responded by commissioning Professor Christian Tomuschat to conduct an independent investigation. His report found no wrongdoing by the company, but the findings were criticized by Amnesty International for being overly favorable to Daimler and dismissive of the allegations.
Procedural History
In 2004, survivors of the events and relatives of the victims filed suit against DaimlerChrysler AG in the United States District Court for the Northern District of California. They claimed that Daimler’s Argentinian subsidiary’s actions during the Dirty War gave rise to liability under three legal grounds: the Alien Tort Statute, the Torture Victim Protection Act, and California state tort law.
The plaintiffs attempted to establish personal jurisdiction in California through Mercedes-Benz USA (MBUSA), Daimler’s wholly owned subsidiary incorporated in Delaware and with its principal place of business in New Jersey. MBUSA distributed Daimler’s cars throughout the United States, including a substantial number in California. The plaintiffs argued that MBUSA’s activities in California should be imputed to Daimler, making Daimler subject to general jurisdiction there.
District Judge Ronald M. Whyte dismissed the suit for lack of personal jurisdiction. He ruled that under agency principles, MBUSA was not Daimler’s agent for jurisdictional purposes and that it would be unreasonable to exercise jurisdiction over Daimler in California.
The plaintiffs appealed to the Ninth Circuit. Initially, the court of appeals affirmed the district court’s dismissal in an opinion authored by Judge Dorothy Wright Nelson, with Judge Mary M. Schroeder concurring and Judge Stephen Reinhardt dissenting. Later, the plaintiffs successfully petitioned for a rehearing. The panel vacated its prior decision, and Judge Reinhardt authored a new opinion reversing the district court.
This time, the Ninth Circuit held unanimously that MBUSA could be considered Daimler’s agent and that it was reasonable for California courts to exercise jurisdiction over Daimler. Daimler petitioned for a rehearing en banc, which the Ninth Circuit denied. Judge Diarmuid O’Scannlain authored a dissent from the denial, joined by seven judges.
Following this, Daimler (by then renamed Daimler AG) petitioned the Supreme Court for certiorari. The Court granted review, and oral arguments were heard on October 15, 2013, with Deputy Solicitor General Edwin Kneedler appearing as amicus curiae in support of Daimler.
Issue
The central issue before the Supreme Court in Daimler AG v. Bauman was:
Can a United States court exercise general jurisdiction over a foreign corporation for acts occurring outside the United States based on the in-state activities of the corporation’s subsidiary?
Daimler AG v. Bauman Judgment
The Supreme Court unanimously held that general jurisdiction was improper. The Court ruled that a corporation is subject to general jurisdiction only where it is “at home,” which typically means its state of incorporation or its principal place of business. Accordingly, Daimler was not subject to general jurisdiction in California, as neither Daimler nor its subsidiary MBUSA was incorporated or headquartered there.
Opinion of the Court in Daimler AG v. Bauman
Justice Ruth Bader Ginsburg authored the majority opinion, joined by seven other justices. The Court reversed the Ninth Circuit’s decision, emphasizing the limits of due process in the exercise of personal jurisdiction.
Jurisdictional Principles
Justice Ginsburg traced the jurisprudence of personal jurisdiction from Pennoyer v. Neff (1878), which established territorial limits, to International Shoe Co. v. Washington (1945), which distinguished between specific jurisdiction (jurisdiction based on the conduct underlying the lawsuit) and general jurisdiction (jurisdiction over all claims regardless of connection to the forum). Ginsburg further cited Goodyear Dunlop Tires Operations, S.A. v. Brown (2011), where the Court clarified that general jurisdiction is appropriate only when a corporation is “essentially at home” in the forum.
Rejection of Agency Theory
The Court rejected the Ninth Circuit’s reliance on an expansive agency theory. It criticized Judge Reinhardt’s formulation as flawed, noting that it would “stack the deck” by nearly always permitting jurisdiction over a parent company based on its subsidiary’s contacts. Even if MBUSA were considered “at home” in California, imputing its activities to Daimler would still not make Daimler itself “at home” there.
International Considerations
The Court also noted that allowing jurisdiction under such broad reasoning could strain international relations by inviting U.S. courts to sit in judgment of foreign corporations for conduct that occurred abroad. The Solicitor General had warned against such expansive exercises of jurisdiction, and the Court acknowledged those concerns.
Conclusion
Through Daimler AG v. Bauman, the Supreme Court established a strict interpretation of general jurisdiction, reinforcing due process protections for corporations. By limiting general jurisdiction to the states where a corporation is “at home,” the Court curtailed expansive theories that could draw foreign corporations into U.S. courts for extraterritorial conduct. While the judgment provided clarity, it also sparked debate over its fairness and its consequences for victims seeking remedies against multinational corporations. The case remains a cornerstone precedent in the field of personal jurisdiction, guiding courts in defining the limits of judicial authority in an increasingly globalized economy.