WASHINGTON — The Supreme Court decided Tuesday not to allow a lawsuit to move forward in California that accuses a foreign company of committing atrocities on foreign soil. The decision could make it harder for foreign victims of foreign crime to seek justice in American courts.
The high court on Tuesday used a unanimous judgment to refuse to allow survivors and victims of Argentina's "dirty war" to sue in California the former DaimlerChrysler Corp. of Stuttgart, Germany, for alleged abuses in Argentina.
Victims who say they were kidnapped and tortured by the Argentine government in the late 1970s and relatives of those who disappeared sued in state court, alleging Mercedes-Benz was complicit in the killing, torture or kidnapping by the military of unionized auto workers.
In the 1970s and 1980s, thousands were killed, kidnapped or "disappeared," including trade unionists, left-wing political activists, journalists and intellectuals in Argentina in what has become known as the dirty war. The suit says "the kidnapping, detention and torture of these plaintiffs were carried out by state security forces acting under the direction of and with material assistance" from the Mercedes-Benz plant in Gonzalez-Catan, near Buenos Aires.
The lawsuit said that Daimler could be sued over the alleged Argentina abuses in California since its subsidiary, Mercedes-Benz USA, sold cars in that state. A federal judge threw that lawsuit out, but the 9th U.S. Circuit Court of Appeals reversed and said it could move forward.
The company, now known as Daimler, has argued that since it is a German corporation, it should not be able to be sued in a state court by foreign nationals for actions a subsidiary allegedly took in a foreign country.
Justice Ruth Bader Ginsburg, who wrote the decision, agreed. Neither Daimler or Mercedes-Benz USA is incorporated in California or has its principal place of business in that state, she said. "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 said.
If the court had accepted the victims' reasoning, Ginsburg said, "if a Mercedes-Benz vehicle overturned in Saudi Arabia injuring a driver and passengers from Norway, the injured persons could maintain a design defect suit in California."
But the decision doesn't mean that foreign companies can never be sued for foreign crimes in the United States.
Ginsburg said that there could be an "exceptional case (where) a corporation's operations in a forum other than its formal place of incorporation or principal place of business may be so substantial and of such a nature as to render the corporation at home in that state. But this case presents no occasion to explore that question, because Daimler's activities in California plainly do not approach that level."
Justice Sonia Sotomayor disagreed with how the court came to that decision but agreed with the final result. "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," she said.
The justices also unanimously allowed Mississippi to pursue claims of price-fixing against a manufacturer of LCD screens in state court, saying a federal law aimed at moving class-action cases from consumer-friendly state courts to business-friendly federal courts does not apply to the state's lawsuit.