DaimlerChrysler AG v. Bauman - Oral Argument - October 15, 2013

DaimlerChrysler AG v. Bauman

Media for DaimlerChrysler AG v. Bauman

Audio Transcription for Opinion Announcement - January 14, 2014 in DaimlerChrysler AG v. Bauman

Audio Transcription for Oral Argument - October 15, 2013 in DaimlerChrysler AG v. Bauman

John G. Roberts, Jr.:

We'll hear argument first this morning in Case 11-965, Daimler AG v. Bauman.

Mr. Dupree.

Thomas H. Dupree Jr.:

Mr. Chief Justice, and may it please the Court:

The Ninth Circuit held that Daimler, a foreign corporation, is subject to general jurisdiction in California and thus may be sued in California on any claim arising anywhere in the world.

The Ninth Circuit reached this conclusion by attributing to Daimler the California contacts of a Daimler subsidiary, Mercedes Benz USA, a separate corporation that respects all corporate formalities and that is not Daimler's alter ego.

The Ninth Circuit's approach violates due process.

Antonin Scalia:

Do we have to reach that question?

I mean, I guess the Ninth Circuit must have been interpreting the long-arm statute of California, right?

Thomas H. Dupree Jr.:

That's correct, Justice Scalia.

Antonin Scalia:

Now, are there -- were there California cases that disregarded the -- the corporate forum?

Thomas H. Dupree Jr.:

California respects the corporate forum.

The Ninth Circuit applied what appears to be a Federal common law of agency that the Ninth Circuit admittedly developed solely for purposes of the jurisdictional inquiry.

Antonin Scalia:

But the jurisdictional inquiry is conducted on the basis of the California statute, isn't it?

Thomas H. Dupree Jr.:

It is, but at the same time, the California statute extends to the limit of due process.

And so what the Ninth Circuit did was it construed what the permissible outer bounds of the due process clause was in this context.

Antonin Scalia:

I see.

It's -- it's California's reference to the outer bounds of jurisdiction that causes -- causes this to be a constitutional case?

Thomas H. Dupree Jr.:

That's correct, Justice Scalia.

John G. Roberts, Jr.:

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?

Thomas H. Dupree Jr.:

Well, Mr. Chief Justice, there may be a constitutional limit; certainly to the extent that, say, California adopted a rule that said for purposes of some sort of liability, we are going to disregard the corporate forum, I think that could pose due process concerns to the extent that it is purporting to override, say, the corporate law of Delaware.

John G. Roberts, Jr.:

Well, even on a prospective basis, your brief talks about notice and fairness and predictability; but if California said going forward, this is the rule that we're going to apply, is there any constitutional problem with that?

Thomas H. Dupree Jr.:

I -- I still think there would be, Mr. Chief Justice.

In other words, I take Your Honor's point about fair notice, if California said going forward this is the rule we're going to apply.

But at the same time, I'm not quite sure what in the Constitution would empower, say, California to essentially override, say, Delaware's corporate law and say for our State purposes, we're essentially going to rewrite the corporate DNA of a corporation that's chartered in Delaware in order to--

Sonia Sotomayor:

We permitted that in Container Corp.--

Thomas H. Dupree Jr.:

--I beg your pardon, Your Honor?

Sonia Sotomayor:

--We permitted that in Container Corp. We permitted California law to tax the parent California corporation for the earnings of all its foreign subsidiaries.

And we said the due process clause wasn't offended by that.

Thomas H. Dupree Jr.:

Well, Justice Sotomayor, typically this Court has applied a less rigorous due process standard in the tax cases than it has in the personal jurisdiction cases.

If one were to look at, say, Goodyear or McIntyre, of any of this Court's more recent jurisdictional decisions, it typically takes a much more rigorous view of the due process clause's limits on a sovereign's ability to adjudicate matters that arise outside the forum than it has in the tax context.