The U.S. Supreme Court will decide a contentious case with deep roots in Daimler AG’s dark World War II history – and contentious activities decades later and half a world away.
The case involves the conducts of Daimler employees working in Argentina in the 1970s during a period when the country was ruled by a brutal military dictatorship. The plaintiffs in the lawsuit allege Daimler employees facilitated the “disappearance” of some of their employees and the torture of others.
The charges have haunted Daimler for nearly four decades but a favorable ruling, while it might not exonerate the company, would put limits on its liability for the conduct of a handful of employees in Argentina at a time when thousands of junta opponents vanished and likely were murdered.
By taking up the case, U.S. Supreme Court will consider giving companies new protection from human-rights suits. The German automaker is being sued under the Alien Tort Statute, a law the Supreme Court recently narrowed the scope of –which was considered a victory for corporate interests looking to limit their potential liability in cases involving violations of human rights.
The Daimler appeal doesn’t directly concern that law but instead contends that the company lacks sufficient ties to California to give courts there the authority to hear the case despite its extensive dealer network in the state, which is the single largest market in the US for Mercedes-Benz passenger cars.
Daimler has argued the courts in California lack “personal jurisdiction” over the company. Under that legal concept, a defendant doesn’t have to face lawsuits in a state unless it has a certain minimum level of contacts with the jurisdiction. The U.S. Chamber of Commerce is supporting Daimler’s appeal.
Daimler’s Argentine Mercedes-Benz unit is accused of collaborating with state security forces during the so-called Dirty War from 1976 to 1983. The company allegedly identified workers seen as union agitators, knowing security forces would then kidnap, torture and in some cases kill the people. Daimler has long denied the allegations, which have also been the subject of lawsuits filed in Europe.
Daimler officials denied the allegations once again during the company’s annual shareholders in Berlin earlier this month. It has been a sore topic for company which openly collaborated with the Nazis before and during World War II.
Nonetheless, a San Francisco-based federal appeals court said the suit could go forward in a federal court in San Jose, California.
The U.S. Supreme Court will hear arguments on the Daimler case during its 2013-14 term, which starts in October and runs through the following June.
The 1789 Alien Tort Statute, which is at issue in the case, has been a favorite tool of human-rights advocates seeking to hold companies responsible for overseas atrocities. The law lay dormant for almost two centuries before being revived in the 1970s as a means of pressing lawsuits.
Last week’s Supreme Court ruling threw out a suit accusing two foreign-based units of Royal Dutch Shell Plc of facilitating torture and executions in Nigeria. The majority said the Alien Tort Statute generally doesn’t apply to conduct beyond U.S. borders.
The justices said Monday they will review a federal appeals court ruling that allowed a lawsuit filed by 22 Argentines in California to proceed. The Argentines claim they were victims of human rights abuses while working for Mercedes-Benz Argentina.
