Washington — The U.S. Supreme Court will hear the lawsuit Tuesday of 22 residents of Argentina who sued German automaker Daimler in California, arguing they and their relatives were subjected to human-rights abuses in the 1970s while employed by Mercedes-Benz Argentina.
The 9-year-old lawsuit could have major ramifications for the auto industry and for multinational companies at large, and whether they could face suits around the world for conduct in other countries.
The plaintiffs say Mercedes-Benz Argentina collaborated with the Argentine government to kidnap, detain, torture or kill employees or their relatives during Argentina’s military regime of 1976 to 1983, known as the “Dirty War” that began when the military overthrew President Isabel Peron and installed a dictatorship.
Some of those suing are former employees of Mercedes-Benz who say they were victims of kidnapping, detention and torture; others are close relatives of Mercedes-Benz workers who “disappeared” and are presumed to have been murdered.
All of those suing worked or had relatives at the Mercedes’ Gonzalez-Catan plant. They charge that the company brutally punished plant workers whom the company viewed as union agitators, and that the company collaborated with the Argentinian military and police forces in doing so. They also allege that Mercedes-Benz Argentina “had knowledge that the result of this collaboration would be the kidnapping, torture, detention and murder of those workers.”
They accused the company of passing the names of “subversives” and “agitators” to the state security forces.
Daimler spokesman Han Tjan said Friday the company had hired an independent expert to review the allegations and found no evidence to support the claims.
Ninth Circuit Appeals Court Judge Stephen Reinhardt, who wrote the appellate court ruling in favor of the plaintiffs, said U.S. courts have a role to play in upholding human rights. “American federal courts, be they in California or any other state, have a strong interest in adjudicating and redressing international human rights abuses,” he wrote.
The rest of the auto industry has backed Daimler, saying that upholding the ruling would put multinational companies at risk for suits around the world.
At the time the suit was filed in California in 2004, Daimler AG was known as DaimlerChrysler, the German-American conglomerate. Daimler sold the majority of its stake in Chrysler in 2007 and completely exited in 2009. The key issue is how much legal control Daimler exerts over its Mercedes-Benz USA subsidiary, and whether Daimler can be sued based on the presence of its U.S. sales unit.
“This case has no business in a California court,” said Theodore Olson, Daimler’s lead lawyer, in a legal brief, saying the ruling would allow Daimler to be sued in California over any issue arising anywhere in the world. He said just 2.4 percent of Mercedes’ worldwide sales are in California.
The Justice Department has also sided with Daimler, saying threat of lawsuits could discourage foreign companies from doing business here.
But a lawyer for those suing, Terrence P. Collingsworth, says Daimler “has made billions of dollars through sales of its luxury cars in California.”
He wrote that reversing the decision would allow “a foreign car manufacturer to evade jurisdiction in the United States for design defect claims through the simple expedient of spinning off its American sales division into a wholly owned subsidiary.”
The two major auto trade associations — the Alliance of Automobile Manufacturers and the Association of Global Automakers — back Daimler. They call the ruling “mind-boggling.” They note that Ford Motor Co. has 161 foreign subsidiaries, and say automakers around the world could be targeted by suits if the decision stands.