In a decision that could prove a great boost or multinational companies facing lawsuits alleging misconduct abroad, the US Supreme Court ruled that Daimler AG cannot be sued in California over human rights allegations in Argentina.
On a unanimous vote, the court said that Daimler’s connections with California were not sufficient for it to face a lawsuit there. The court reversed a May 2011 San Francisco-based 9th US Circuit Court of Appeals ruling in favor of human rights plaintiffs.
The German-based automaker faced allegations that a subsidiary violated the human rights of workers at a plant in Argentina in the 1970s.
The legal question was whether a U.S. court has the authority to hear a case against a foreign corporation “solely on the fact that an indirect corporate subsidiary performs services on behalf of the defendant” in the state where the lawsuit was filed, which in this instance was California.
Workers or relatives of workers at an Argentina-based plant operated by Mercedes-Benz, a wholly owned subsidiary of Daimler, sued over the alleged conduct. They said the company punished plant workers viewed by managers as union agitators and worked alongside Argentina’s military and police forces.
Daimler is headquartered in Stuttgart, while its Mercedes-Benz USA LLC subsidiary is incorporated in Delaware and does most of its business in New Jersey.