On January 14, 2014, the U.S. Supreme Court ruled in Daimler AG v. Bauman, 571 U.S. ___, ___ (2014) (slip op., at 3), that non-resident plaintiffs could not sue a foreign corporation in California for alleged injuries stemming wholly from out-of-state conduct because the corporation could not fairly be regarded as “at home” in California.

In Bauman, twenty-two Argentine residents had sued DaimlerChrysler Aktiengesellschaft (Daimler AG) in 2004 in the United States District Court for the Northern District of California alleging violations of the Alien Tort Claims Act and California state law. Plaintiffs claimed that an Argentinian subsidiary of Daimler AG collaborated with state security forces against its workers, including Plaintiffs and their relatives, during Argentina’s 1976-1983 “Dirty War.” Plaintiffs claimed the California court had “general” personal jurisdiction over Daimler AG based on the California contacts of Daimler AG’s subsidiary, Mercedes-Benz USA, LLC (MBUSA). Although MBUSA was incorporated in Delaware and had its principal place of business in New Jersey, it sold Daimler AG products throughout the United States, including California. A Ninth Circuit Panel agreed with Plaintiffs, reversing the District Court ruling and holding that general jurisdiction was appropriate.

The Supreme Court unanimously reversed the Ninth Circuit Panel’s decision. Keeping with the narrow view of general jurisdiction it had established in prior decisions, the Supreme Court rejected the Ninth Circuit’s “agency” rationale allowing jurisdiction over Daimler AG based on its subsidiary’s contacts with California. Further, the Court held that even if it were to impute MBUSA’s contacts to Daimler AG, there still would be no basis for general jurisdiction over Daimler AG in California. In reaching this result, the Court explained that the relevant inquiry is “whether that corporation’s ‘affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.’” Id. at 20 (emphasis added). In all but the most exceptional cases, the Court explained, this “home” state would be only two places: a corporation’s principal place of business and its state of incorporation. Id. at 18-19.

Bauman should present a significant challenge to non-resident plaintiffs who attempt to establish general jurisdiction over a corporation in any state except those where the corporate defendant is incorporated or has its principal place of business. In light of Bauman, the days of plaintiffs creating sprawling, nationwide centers of product liability litigation in state courts may be numbered.