Supreme Court extends protections for multinational companies

The Supreme Court on Tuesday extended protection for foreign companies from lawsuits in the United States over conduct that took place in other countries.

The justices threw out a case from California that sought damages from Germany-based Daimler AG for its alleged complicity in atrocities committed in Argentina’s “dirty war” against leftists from 1976 to 1983.

The company manufactures Mercedes-Benz automobiles and has a subsidiary, Mercedes-Benz USA, that does business in California and other states. The U.S. Court of Appeals for the 9th Circuit said the large number of Mercedes vehicles sold in California provided enough of a link for the lawsuit to go forward.

But Justice Ruth Bader Ginsburg, writing for the court, said those connections were too tenuous to mean the company could be sued in California over allegations that actions by employees in Argentina aided state security forces in killings, kidnappings and torture.

The company has called those allegations “groundless.”

Ginsburg said that under the arguments of the plaintiffs — Argentines who say they or their relatives were harmed in the dirty war — California is a “place where Daimler may be sued on any and all claims against it, wherever in the world the claims may arise.” Such a view is “so exorbitant” that due process is violated, she said.

The decision is one in a series of rulings in recent years in which the justices have restricted the role of U.S. courts in hearing legal disputes involving foreign companies over human rights violations or product liability when the alleged problems occurred overseas.

The case revealed a split among some of the judiciary’s leading liberals. Ginsburg mentioned Circuit Judge Stephen Reinhardt, who wrote the appeals court decision, in criticizing the appeals court for reversing a district judge’s decision dismissing the suit, which was filed in 2004.

“The Ninth Circuit . . . paid little heed to the risks to international comity its expansive view of general jurisdiction posed,” Ginsburg wrote. “Other nations do not share the uninhibited approach” of the appeals court, she said.

And there was a split among the liberals on the Supreme Court. Justice Sonia Sotomayor joined the rest of her colleagues in agreeing that the case against Daimler should be dismissed. But she criticized Ginsburg’s opinion as going too far and creating a “new rule of constitutional law that is unmoored from decades of precedent.”

She said there were more narrow ways to rule against the plaintiffs that would not have been so protective of the foreign corporations in future cases.

“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,’ ” Sotomayor wrote.

The case is Daimler AG v. Bauman.

In a second case in which Sotomayor wrote the opinion, the court ruled that Mississippi’s attorney general may keep a consumer-protection case he filed against makers of liquid-crystal displays in state court rather than federal court.

The 2005 Class Action Fairness Act allows large suits involving many plaintiffs to be moved from state courts, deemed more hospitable to plaintiffs, to federal courts, where companies are thought to have the edge.

One of the determining factors in moving the case is whether there are more than 100 named plaintiffs. But the court determined that although Mississippi is filing the suit on behalf of its citizens, it is the only named plaintiff and, thus, the case is not a “mass action” under the terms of the law.

The ruling in Mississippi ex rel. Hood v. AU Optronics Corp. was unanimous.

Robert Barnes has been a Washington Post reporter and editor since 1987. He has covered the Supreme Court since November 2006.
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