Supreme Court: Unless They Do Business Here, You Can’t Sue Foreign Companies In The US

“It is no secret that U.S. courts are among the most favorable to plaintiffs, especially with regard to damages awards.” (Barry Alexander and Peter Colonna-Romano of Schnader)

Are the US courts the right place for foreign nationals to sue foreign companies for acts committed in foreign lands? Not according to the Supreme Court. Attorney Vivek Krishnamurthy of Foley Hoag explains:

“In Daimler AG v. Bauman, the Supreme Court unanimously rejected an attempt by twenty-two Argentinian plaintiffs to sue the German automaker in California for the alleged role of its Argentinian subsidiary in the deaths, kidnappings, torture, and wrongful detention of certain of its employees during that country’s notorious ‘Dirty War.’”

For your reference, here’s a look at what experts on JD Supra are writing about the ruling:

US Supreme Court Significantly Limits Where Foreign Companies May Be Sued in US Courts For Claims Unrelated To Their Activities In A State (Dwight Healy, Owen Pell, and John Reynolds of White & Case):

“The decision in Daimler will have a broad ripple-effect on U.S. litigation because personal jurisdiction is an essential element of every lawsuit. For example, this decision will affect where mass tort and product liability claims may be asserted, when U.S. courts should order discovery of information from a foreign party or non-parties located outside the United States, or when U.S. courts may attempt to enforce injunctions and judgments beyond the United States against foreign parties or non-parties.” Read on>>

World in US Courts Special Edition: January 2014 – New US Supreme Court Decision Limits Suits Against Non-US Corporations (Orrick):

“Notably, the Court’s decision does not limit the exercise of specific personal jurisdiction over non-US corporations. Thus, the risk to a non-US corporation of suit in the US remains when the facts relating to the claim or the injuries at issue were in the forum state. There are other defenses to the assertion to jurisdiction to such cases, but none of those were implicated by the Supreme Court’s Daimler ruling.” Read on>>

Give Me Your Tired, Your Poor, Your Huddled Masses … But Not Your Plaintiffs: Supreme Court Decision Limits General Personal Jurisdiction Over Foreign Defendants (Barry Alexander and Peter Colonna-Romano of Schnader):

“Perhaps the most interesting (and from the perspective of a foreign corporation, exciting) aspect of the Court’s decision is its imposition of what Justice Sotomayor in her concurring opinion deemed a ‘proportionality test,’ whereby the Court chose to look at Daimler’s U.S. contacts in the context of Daimler’s entire operations, as opposed to simply evaluating those U.S. contacts on their own merit.” Read on>>

Supreme Court Limits Reach of General Jurisdiction for Corporations (Clifton Brinson and Michael Mitchell of Smith Anderson):

“The Daimler opinion highlights the limits of general jurisdiction, explaining that it applies only to a corporation’s ‘home’ state. A corporation will always be at home in its state of incorporation and in the state where it has its principal place of business. It will be at home in any other state, however, only in “exceptional’ cases. In particular, a corporation is not at home in a state simply because it has continuous and systematic contacts with that state.” Read on>>

US Supreme Court Further Limits Jurisdictional Reach of the US Courts Over Foreign Torts (Lea Haber Kuck and Timothy Nelson of Skadden Arps):

“The Bauman decision follows on the heels of three of Supreme Court decisions curtailing the scope of the Alien Tort Statute (ATS), the Torture Victim Protection Act (TVPA) and the Securities and Exchange Act of 1934.1 The ramifications of Bauman, however, are much more far-reaching than these prior decisions, which involved the extraterritorial application of particular federal statutes. Because the Court in Bauman addressed the broader issue of the federal constitutional limitations on personal jurisdiction, the decision affects the reach of both the federal and state courts over foreign defendants in cases involving both common law and statutory claims.” Read on>>

Daimler AG v. Bauman: Court Again Rejects a “Sprawling View of General Jurisdiction” (Jhale Ali, Kevin Fong, Colin Kemp, and Samuel Stubbs of Pillsbury):

“[G]iven its express concern over international relations (i.e., that a finding of general jurisdiction here would expand personal jurisdiction beyond what other countries might view as appropriate) the decision in Daimler AG might make foreign corporations more willing to conduct business and invest in the United States. The Court’s decision may actually improve United States foreign relations with countries that have criticized the reach of United States courts and, thereby, help avoid retaliatory claims of jurisdiction by foreign courts.” Read on>>

Supreme Court Limits Reach Of General Jurisdiction (Charles Malaise of Baker Botts):

“While the Supreme Court’s recent plurality decisions concerning specific jurisdiction are not ideal for advising multinational corporations about the risks of various forums for litigation in the United States, the court’s decision in Bauman provides much-needed guidance to enable effective counseling.” Read on>>

Daimler AG v. Bauman: In Latest ATS Decision, the Supreme Court Limits Jurisdiction of U.S. Courts over Multinational Corporations (Vivek Krishnamurthy of Foley Hoag):

“The Supreme Court’s ruling does not change the fact that multinationals can be sued in any U.S. state in connection to claims arising from business they have conducted in a particular state, but lawsuits arising from all other situations can now only be brought in the limited number of states where the multinational can be considered to be ‘at home.’” Read on>>

Daimler AG v. Bauman: The Supreme Court Clarifies General (or “All-Purpose”) Personal Jurisdiction Over Corporations, Both Foreign and Domestic (Nicholas Buell and David Cinotti of Venable):

“Non-U.S. companies are rightly cautious about the jurisdictional reach of U.S. courts (and the jury trials, punitive damages, and extensive pre-trial discovery that are part of the U.S. system), and often seek to avoid direct contacts with the United States to limit exposure to suits here. And other countries often express concerns—rooted in sovereignty and comity—about U.S. adjudication of disputes with little or no connection to the United States. The Court’s Daimler decision shows sensitivity to both foreign companies’ need for predictability and foreign sovereigns’ complaints about expansive U.S. jurisdiction.” Read on>>

The Supreme Court Curtails General Personal Jurisdiction Over Foreign Parent Corporations: Daimler AG v. Bauman (Grant Esposito, Brian Matsui, and Jessica Palmer of Morrison & Foerster):

“Bauman is the first of two personal jurisdiction opinions expected from the Supreme Court this Term. On November 4, 2013, the Supreme Court heard argument in Walden v. Fiore, No. 12-574, which addressed what it means for a defendant to ‘expressly aim’ its conduct at a forum State, such that the forum State has specific personal jurisdiction over the defendant. In Walden, the Ninth Circuit held that there was personal jurisdiction over a non-resident DEA agent who lacked contacts with the forum State, because the DEA agent committed an intentional act—the filing of an allegedly false probable cause affidavit—expressly aimed at the forum State where plaintiffs resided.” Read on>>

Daimler AG v. Bauman: The US Supreme Court Significantly Limits Where Companies May Be Sued for Claims Unrelated to Their Activities in a State (Dwight Healy and Owen Pell of White & Case):

“Based on its clarity and that eight of nine Justices joined in the opinion, Daimler may be the most important ruling on personal jurisdiction since International Shoe. The decision will have far-reaching implications beyond defendants in US lawsuits.” Read on>>

Read more on Daimler v. Bauman at JD Supra Business Advisor>>