Personal jurisdiction sounds like one of those dry legal terms that only people in suits care about. But honestly, Daimler AG v. Bauman is basically the reason a global corporation can’t be dragged into a random court in California for something that happened halfway across the world. It changed the game for international business and human rights litigation.
The case landed at the U.S. Supreme Court in 2014. It wasn't just some technicality. It was about whether a German company could be sued in America for atrocities allegedly committed in Argentina.
What actually happened in Argentina?
The backstory is heavy. We're talking about the "Dirty War" in Argentina, a period from 1976 to 1983 marked by state-sponsored terror. The plaintiffs were 22 residents of Argentina. They claimed that Mercedes-Benz Argentina—a subsidiary of what was then DaimlerChrysler—collaborated with military and police forces.
The allegations were grim: kidnapping, torture, and the "disappearance" of workers at the Gonzalez-Catan plant. The victims were supposedly targeted because they were seen as union agitators. The plaintiffs argued that the company benefited from this brutality because it ended strikes and kept production high.
So, why sue in California?
Because Daimler had a subsidiary there called Mercedes-Benz USA (MBUSA). Even though MBUSA was incorporated in Delaware and headquartered in New Jersey, it had multiple facilities in California and sold a ton of cars there. The plaintiffs figured that was enough of a "hook" to get a U.S. court to hear the case.
The "At Home" Test
The Ninth Circuit Court of Appeals initially thought the plaintiffs had a point. They used an "agency" theory, basically saying that since MBUSA was so important to Daimler, MBUSA's contacts in California should count as Daimler's contacts.
The Supreme Court hated that.
Writing for a 9-0 majority (though Justice Sotomayor had her own separate reasoning), Justice Ruth Bader Ginsburg basically told the lower courts they were being way too "exorbitant." She introduced—or rather, solidified—the "at home" test.
For a court to have general jurisdiction over a company (meaning they can be sued there for anything, even stuff that didn't happen in that state), the company has to be "essentially at home" there.
Where is a corporation "at home"?
- The state where it is incorporated.
- The state where it has its principal place of business (its headquarters).
Daimler was a German company. Its HQ was in Germany. It was incorporated in Germany. Even if you counted all of MBUSA's California sales, it only accounted for about 2.4% of Daimler's worldwide sales. Ginsburg pointed out that if 2.4% of sales made you "at home," then big companies would be "at home" in every single state.
That would be chaos. Predictability would vanish.
Why this matters for business today
Before this ruling, there was a real fear among multinational corporations that they could be sued in any U.S. state where they did a decent amount of business. It was a "sue-where-you-can" free-for-all.
Daimler AG v. Bauman put a stop to that. It created a "bright-line rule." If you want to sue a company for something that happened in France, you better sue them in a state where they are actually headquartered or incorporated. Otherwise, you have to prove specific jurisdiction, which means the lawsuit has to actually stem from the company's specific activities in that state.
Since the Argentina events had zero connection to California, and Daimler wasn't "at home" there, the case was tossed.
The Sotomayor Critique
It's worth noting that Justice Sotomayor wasn't totally on board with the majority's logic, even though she agreed with the result. She thought the "at home" test was too restrictive. She argued it gave a "get out of jail free" card to massive multinationals.
In her view, a small company with one office in California could be sued there, but a massive global giant with thousands of employees in California might escape jurisdiction just because they have even more employees elsewhere. She called it a "too big to be sued" rule.
But her view didn't win the day. The "at home" standard is the law of the land now.
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Actionable Insights for Legal and Business Strategy
If you're managing a business or dealing with cross-border disputes, here is what you need to keep in mind following the precedent set by this case:
- Audit Your "Home" States: Know exactly where your parent company and subsidiaries are incorporated and headquartered. These are your primary zones of legal exposure for general jurisdiction.
- Don't Rely on Sales Volume Alone: Just because you sell millions of dollars of product in a state doesn't mean you can be sued there for unrelated global issues. The "at home" test is about where your "nerve center" is, not just where your customers are.
- Specific Jurisdiction is Still a Risk: Even if you aren't "at home" in a state, you can still be sued there if the specific injury occurred there. If a car's brakes fail in San Diego, Daimler can still be sued in California for that specific accident.
- Registration Statutes Matter: Since 2014, some states have tried to get around this by saying that if a company registers to do business in the state, they are "consenting" to jurisdiction. Keep an eye on cases like Mallory v. Norfolk Southern Railway Co. (2023), which added a new wrinkle to this "consent by registration" debate.
The days of using California or New York as a "World Court" for events happening in South America or Europe are largely over. Daimler AG v. Bauman made sure that for a company to be hauled into court, it actually has to be "at home" there.