US Supreme Court Significantly Limits Where Foreign Companies May Be Sued in US Courts For Claims Unrelated To Their Activities In A State

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The United States Supreme Court earlier this month issued a major ruling that will significantly limit where corporations may be sued for claims that do not relate to business they may do in a particular place in the U.S. In Daimler A.G. v. Bauman, the Court ruled unanimously that DaimlerChrysler AG (“Daimler”) in Germany could not be sued in the California federal court based on the continuous and substantial business activities of its U.S. subsidiary, Mercedes-Benz USA, LLC (“MBUSA”), where the claims at issue were for human rights violations allegedly committed by Daimler’s Argentine subsidiary (“MB-Argentina”) in Argentina decades ago.

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. At its most basic, Daimler suggests that the mere fact that a company is licensed to do business or operates a branch in the U.S. will no longer provide a basis for it to be sued there on claims that have nothing to do with the company’s actual activities in that State.

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