Washington —The Supreme Court took up the case Tuesday of whether 22 residents of Argentina can sue Daimler AG in the United States over the automaker’s alleged human rights abuses of its workers during Argentina’s so-called “Dirty War” in the 1970s.
The 9-year-old case has broad implications for automakers around the world. The Justice Department and major automakers have asked the Supreme Court to throw out the case.
“So if a Mercedes-Benz vehicle overturned in Poland and injured the Polish driver and passenger, suit for the design defect could be brought in California?” Justice Ruth Bader Ginsburg asked during Tuesday’s oral arguments.
Kevin Russell, a lawyer for those suing, said, “That’s right. And if you think that the answer to that is wrong, it’s because of the argument that Daimler did not preserve.”
Daimler denies it mistreated its workers in Argentina.
Those suing 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 1976-83, which began when the military overthrew President Isabel Peron and installed a dictatorship.
The key issue is whether Mercedes-Benz USA, a wholly owned subsidiary of Daimler, can be liable for the acts of its parent company around the world. “So you could have an agency for one purpose, selling cars in California, but totally unrelated to torturing people in Argentina?” Ginsburg asked.
“This is a case involving Argentine plaintiffs suing a German corporation based on events that allegedly occurred in Argentina more than 30 years ago,” said Daimler lawyer Thomas Dupree. “This case has no connection to the United States, and it has no business in a California courtroom.”
Justice Elena Kagan asked if Daimler did enough business to justify being subjected to general jurisdiction in California, when just 2.4 percent of its worldwide sales were sales in the Golden State.
Russell responded that Daimler’s smaller competitor, Tesla Motors Inc., faces the same jurisdiction. “Nobody ever argued that MBUSA didn’t do enough business in California, and in fact it’s done billions of dollars of business there and it’s enjoyed the benefits of being in the state, of doing business in the state, to a far greater degree than many of its competitors, say Tesla, which is subject to general jurisdiction for suits for anything that it does anywhere in the world,” Russell said.
Justice Samuel Alito asked what if Daimler’s sales were just 1.4 percent in California — and questioned how the Supreme Court would draw a line determining what amount of sales constitutes enough to merit facing similar lawsuits.
Chief Justice John Roberts asked if states could make it clear that companies are liable for acts of their wholly owned units. “There’s nothing in the Constitution, is there, that would prohibit a state from adopting a rule that a parent is responsible for any acts of a wholly owned subsidiary?” Roberts asked.
Ginsburg asked if Daimler would be liable in other cases. “Suppose — but suppose we had a case of an accident on a California highway injuring California people, and they sued charging that the Mercedes-Benz was defectively manufactured. Would there be jurisdiction over both the parent and the sub in that situation?”
Dupree said in that case Daimler could face liability.