Concept
Daimler AG v. Bauman
General jurisdiction
Daimler AG v. Bauman
Goodyear announced that a corporation is subject to general jurisdiction only where it is at home, but the foreign subsidiaries in that case had such attenuated ties to North Carolina that the case never tested the standard against a defendant whose affiliate did sizable business in the forum. Daimler AG v. Bauman, decided in 2014, supplied the test and gave the standard the shape courts now apply. The Court named a corporation's place of incorporation and principal place of business as the paradigm all-purpose forums, held that substantial business in a state does not by itself support general jurisdiction over unrelated claims, and left an exceptional case as the only route to a home elsewhere.1
The case began in 2004, when twenty-two residents of Argentina sued DaimlerChrysler Aktiengesellschaft, called Daimler, in the Northern District of California. Daimler is a German public stock company, headquartered in Stuttgart, that manufactures Mercedes-Benz vehicles in Germany.2 The plaintiffs alleged that Daimler's Argentine subsidiary, Mercedes-Benz Argentina, collaborated with state security forces during Argentina's 1976 to 1983 “Dirty War” to kidnap, detain, torture, and kill workers at its plant, including the plaintiffs or persons closely related to them.3 None of that alleged conduct occurred in California or anywhere else in the United States, and the plaintiffs sought to hold Daimler vicariously liable for it.4
California entered the case through a different subsidiary. Mercedes-Benz USA, LLC (MBUSA), a Delaware company with its principal place of business in New Jersey, distributes Daimler-manufactured vehicles to independent dealerships throughout the United States, including California, and jurisdiction over Daimler was predicated on MBUSA's California contacts.5 Because the claims arose from events in Argentina, the plaintiffs never tried specific jurisdiction. They invoked general jurisdiction and argued that California was a place where Daimler could be sued on any claim, wherever it arose. Their counsel conceded the consequence: if a Daimler vehicle overturned in Poland and injured a Polish driver and passenger, the injured parties could sue for design defect in California.6
The Court held that California lacked general jurisdiction over Daimler. It assumed, for purposes of decision only, that MBUSA was at home in California and that MBUSA's contacts were imputable to Daimler, and it found no basis for general jurisdiction even so, because Daimler's own slim contacts with the state did not make it at home there.7 Justice Ginsburg wrote for eight Justices, the Court reversed the Ninth Circuit, and Justice Sotomayor concurred in the judgment.8
Five rules come out of the opinion. A question about a foreign company whose American distributor does sizable business in the forum asks about them in roughly this order: where the defendant is at home, whether forum business changes the answer, how the forum compares with the rest of the enterprise, whether the distributor's contacts count toward the parent, and whether any fairness balancing follows. The sections below take them in that order.
Paradigm Forums
Daimler gave the at-home standard concrete content by naming two places where a corporation is paradigmatically at home: the state where it is incorporated and the state where it has its principal place of business.9 The Court built that answer on Goodyear's analogy. For an individual, the paradigm forum is the domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.10 A corporation has no body and lives nowhere, so the analogy needed a real place to stand in for a home, and the Court chose the two places that mark where the corporation was created and where it runs its affairs. The label “domicile” imports a family life that a corporation lacks, so a precise answer names the state of incorporation or the principal place of business instead.11
Two features explain the choice. Each ordinarily indicates only one place, and each is easily ascertainable.12 The Court backed the second feature with the observation in Hertz Corp. v. Friend that simple jurisdictional rules promote predictability.13 Uniqueness keeps a corporation from being at home in a dozen states at once, which would expose it to any claim in all of them and let plaintiffs choose among forums for reasons unrelated to the dispute. Ascertainability lets a court settle the threshold question at the outset from facts the corporation controls: the state it chose for its charter and the place from which it directs its business. Together the two features guarantee plaintiffs at least one clear and certain forum in which a corporate defendant may be sued on any and all claims.14
The corporate rule differs from the individual rule in one respect. A person has one domicile at a time, so an individual's home forum is a single state. The two paradigm bases for a corporation are separate facts, and either suffices, so they can point to different states, and the corporation is then at home in both.15
A heavy flow of forum business cannot stand in for incorporation or headquarters.
The sales could still matter if the claim arose from them, because that would raise specific jurisdiction. Here the claim arises elsewhere, so general jurisdiction is the only route.
The two paradigm forums are exemplars and not an exclusive list. The Court stated that Goodyear “did not hold” that a corporation may be subject to general jurisdiction only where it is incorporated or has its principal place of business; it “simply typed those places paradigm all-purpose forums.”18 A student who writes that a corporation can be at home only in those two places therefore overstates the holding. Daimler left open an exceptional case in which a corporation's operations in another state are so substantial as to render it at home there, and BNSF Railway Co. v. Tyrrell later put the rule this way: absent exceptional circumstances, general jurisdiction exists only where the corporation is incorporated or has its principal place of business.19 The exceptional case receives its own treatment under The Exceptional Case below. Until then, treat the two paradigm forums as the safe answers and any third forum as requiring a showing far out of the ordinary.
The phrase “principal place of business” carries a trap. In Hertz the Court read it, in the diversity statute, to mean the corporation's headquarters, the nerve center from which its officers direct, control, and coordinate its activities.20 The Court has not said that the same test defines the phrase for general jurisdiction, and a reading keyed to where the corporation's activity is concentrated could point to a different state than the headquarters does. A company might run a small headquarters office in one state and a factory with twenty thousand employees in another.21 On an exam, state the Hertz test as the likely answer and flag that its application to personal jurisdiction is unsettled.
Doing Business Falls Short
The Daimler plaintiffs could not rely on the paradigm forums, because Daimler is incorporated and headquartered in Germany. They asked the Court instead to approve general jurisdiction in every state in which a corporation “engages in a substantial, continuous, and systematic course of business.”23 The proposal had obvious appeal on their facts, since MBUSA sold vehicles in California in substantial numbers, and any company that sells widely does substantial business in many states at once. The Court held the formulation “unacceptably grasping.”24 The reasoning begins with the plaintiffs' borrowed words and shows that their test revived, under a new label, the doing-business approach reviewed earlier in the chapter.
Those words come from International Shoe, where “continuous and systematic” described instances in which specific jurisdiction is appropriate: a corporation's in-state activities that are not only continuous and systematic but also “give rise to the liabilities sued on.”25 When the claim grows out of the contacts, the claim itself ties the dispute to the forum, so the contacts need only be regular enough to make it fair to hold the corporation answerable for what it did there. International Shoe spoke differently about all-purpose jurisdiction. It described continuous corporate operations “so substantial and of such a nature as to justify suit” on “causes of action arising from dealings entirely distinct from those activities.”26 A claim of that kind supplies no link to the forum, so the operations alone must justify the court's power, and the opinion demanded a degree and a kind of activity beyond regularity. The plaintiffs took a phrase that did one job in the specific-jurisdiction passage and applied it to the second, as if regular activity sufficed whether or not the claim had anything to do with it.
After Goodyear, the question is whether the corporation's “affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.” A showing that in-forum contacts are continuous and systematic in some looser sense does not answer it.27 The phrase survives in the test, but it now modifies the affiliations that make a corporation resemble a local enterprise, and it no longer names a threshold of activity that suffices alone. The Court elsewhere glossed “at home” as comparable to a domestic enterprise in that State.28 Regular activity in a state therefore shows that a corporation works there, and says nothing yet about whether it belongs there.
Daimler's own facts show why the narrowing was necessary. If Daimler's California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other state in which MBUSA's sales are sizable. Such exorbitant exercises of all-purpose jurisdiction would scarcely permit defendants “to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.”29 Substantial sales are the ordinary condition of any large company, so a test keyed to them makes the company answerable on every claim in many states at once. That multiplication gives a plaintiff a choice among forums with no connection to the dispute, which creates an incentive to forum shop,30 and it leaves the defendant unable to predict where a claim may be brought. The Court added that reading “at home” to mean substantial activity would make the phrase synonymous with the doing-business tests framed before specific jurisdiction evolved in the United States.31
Two older decisions that Perkins cited, Barrow S.S. Co. v. Kane and Tauza v. Susquehanna Coal Co., upheld general jurisdiction based on a local office, which signaled that the corporation was doing business in the forum. The Court observed that both came from the era of territorial thinking and that Perkins's unadorned citations to them should not attract heavy reliance today.32 Daimler thus rejected doing-business jurisdiction as the measure of an all-purpose forum.33
A retailer such as Wal-Mart illustrates the effect. Its substantial retail presence gave it continuous and systematic contacts in many states, which is exactly why the old test would have reached it there. Daimler's test asks instead whether the state is its home, and dozens of stores do not make it so unless the state is also its place of incorporation or principal place of business.34 Large companies are therefore subject to general jurisdiction on unrelated claims in far fewer states than under the old test.35 In the state where the retailer is incorporated or headquartered, the result runs the other way: a claim that arose elsewhere may be heard there, because the company is at home, whatever the size of its operations in other states.36
The stores are not worthless to the analysis, since they still matter to claims that grow out of them. Had the truck struck the Nevada citizen on a Nevada road while delivering to one of those stores, the claim would at least have raised specific jurisdiction, resting on the same stores. The Court marked the boundary in a footnote: “It is one thing to hold a corporation answerable for operations in the forum State, . . . quite another to expose it to suit on claims having no connection whatever to the forum State.”38 Daimler closes only the all-purpose route, and substantial in-state business remains a basis for specific jurisdiction over the claims it generates.
An exam stem that recites a corporation's stores, employees, and sales in the forum invites a tally of contacts, and the tally answers the wrong question. Ask first whether the claim arises out of or relates to those contacts, which is a specific-jurisdiction inquiry. If it does not, ask whether the forum is the corporation's place of incorporation or principal place of business, or an exceptional case of the kind treated later in this chapter. BNSF later confirmed that a corporation is not subject to general jurisdiction in a state merely because it does substantial business there.39 The next section takes up Daimler's further point that the appraisal covers a corporation's activities in their entirety, nationwide and worldwide.40
Worldwide Appraisal of Activities
Daimler AG v. Bauman added that the at-home inquiry must be judged against everything else the corporation does. In a footnote answering the concurrence, the Court said that general jurisdiction “calls for an appraisal of a corporation's activities in their entirety, nationwide and worldwide,” and that “[a] corporation that operates in many places can scarcely be deemed at home in all of them.”42 The instruction sends a court outside the forum. The judge cannot stop once the defendant's in-state contacts look sizable; the judge sets those contacts beside the rest of the enterprise and asks whether the forum is a place where the corporation belongs or one of many places where it merely works. The comparison follows from what “at home” means, because a home is the place where an enterprise is centered, and no single state's share of a sprawling business can settle that.
Daimler's facts show the comparison at work. The plaintiffs rested jurisdiction on the California activities of MBUSA, which sold Daimler-made vehicles to dealerships across the country, so the Court first took two points in their favor: it assumed that MBUSA was at home in California and that MBUSA's contacts could be imputed to Daimler.43 Even so, “Daimler's slim contacts with the State hardly render it at home there.”44 The word “slim” is comparative. Daimler makes its vehicles in Germany and sells them worldwide, so California is one market among very many, and the enterprise is centered elsewhere. The Court drew the consequence directly: if Daimler's California activities sufficed, “the same global reach would presumably be available in every other State in which MBUSA's sales are sizable.”45 Because the distributor serves every state, a rule that counted only local activity would make Daimler at home in each state where its sales are sizable, and each would be free to hear claims from anywhere in the world, including a suit rooted in events in Argentina.
The rule the Court declined to adopt explains the comparison. A test that looked only at in-forum activity would make every large corporation at home in each state where its operations are sizable. That outcome would defeat the predictability the Court prized, because a corporation cannot structure its conduct with minimum assurance if the answer turns on how a court rates its sales in fifty states.46 It would invite plaintiffs to pick among the qualifying states for reasons unrelated to the dispute.47 And it would make “at home” synonymous with the doing-business tests that Goodyear and Daimler set aside.48 The Court added that nothing in International Shoe and its progeny suggests that “a particular quantum of local activity” should give a state authority over a “far larger quantum of . . . activity” having no connection to any in-state activity.49 The Argentine claims arose from conduct with no connection to anything in California, and a distributor's California sales do not supply that connection.
The same appraisal also confirms a forum that really is the corporation's home, and there the comparison costs the plaintiff nothing.
In Oregon the appraisal ends where the paradigm forums already pointed.51 In Washington it sets regular deliveries against an enterprise whose center lies elsewhere. Because the paradigm forums are the places where an enterprise is ordinarily centered, the whole-enterprise comparison usually repeats the answer those forums give, and it does independent work when a plaintiff proposes a third forum, as the Daimler plaintiffs did. Commentators call the idea proportionality, since heavy activity elsewhere weighs against a forum's claim to be home.52 The label describes the direction of the reasoning and supplies no formula, because the opinion identifies no ratio or percentage of activity at which a forum becomes home.
Not every Justice accepted the comparison. Justice Sotomayor concurred only in the judgment, reasoning that general jurisdiction over Daimler in California would be unreasonable in the unique circumstances of the case.53 She also objected to the way the majority measured Daimler's contacts, writing that in every case applying the International Shoe test the Court had “focused solely on the magnitude of the defendant's in-state contacts, not the relative magnitude of those contacts in comparison to the defendant's contacts with other States.”54 On her description, the difficulty with the majority's rationale “is not that Daimler's contacts with California are too few, but that its contacts with other forums are too many.”55 The majority answered in the footnote that supplies the worldwide appraisal: the inquiry does not focus solely on the magnitude of the defendant's in-state contacts.56 The two opinions disagree about what all-purpose jurisdiction tracks. For the concurrence it tracks how much the defendant does in the state. For the majority it tracks whether the state is the corporation's home, and a corporation cannot have too many homes.57 The majority's view is the law, and a strong answer applies it while recognizing that the concurrence marks the live objection.
Daimler also grounded the worldwide view in international relations. The Court observed that other nations do not share the expansive approach of the Ninth Circuit: in the European Union, for example, a corporation may generally be sued where it is domiciled, a term that refers to its statutory seat, central administration, or principal place of business, and a dispute arising from a branch's operations may be brought where the branch sits.58 The Solicitor General reported that foreign governments' objections to expansive views of general jurisdiction had impeded negotiations of international agreements on the reciprocal recognition and enforcement of judgments.59 A state court that claims all-purpose power over a foreign company on the strength of a distributor's sales collides with the domicile-based approach other legal systems use. The Court treated these considerations of international rapport as reinforcement for its conclusion that general jurisdiction over Daimler in California would offend due process, and the holding itself rests on the at-home analysis.60
An exam stem that recites a corporation's in-forum sales, stores, or dealerships should prompt a question the stem often leaves unanswered: where is the rest of the enterprise? Where the forum is neither the state of incorporation nor the principal place of business, the answer usually shows the forum as one market among many, and general jurisdiction fails unless the facts approach the exceptional case taught later in this chapter. Do not convert the comparison into a percentage test. The Court did not say how extensive in-state contacts must be, and an answer that announces a cutoff such as a fixed share of sales invents law. The assumptions about MBUSA were made only for the sake of argument, so the footnote leaves open whether a subsidiary's contacts count toward its parent, the question the next section takes up.
Parents and Subsidiaries
A corporation and its subsidiary are separate legal entities, and the at-home question is put to each defendant separately. Daimler applied that principle to a German parent whose American distributor did substantial business in California, and it held the parent not subject to general jurisdiction there even after assumptions favorable to the plaintiffs.62 The decision pairs with Goodyear, which involved the opposite relationship. Goodyear holds that foreign subsidiaries of a U.S. corporation are not subject to a state's general jurisdiction merely because their parent is; Daimler holds that a foreign parent is not subject to it merely because its subsidiary is.63
The reason is the same in both directions. General jurisdiction operates without any tie between the claim and the forum, so its only justification is the defendant's own relationship with the state, and a corporate group contains several defendants, each with its own place of incorporation and its own headquarters. If forum contacts passed from one member of the group to another merely because they are affiliated, every company with an in-state subsidiary, dealer, or distributor would answer in that state on any claim from anywhere, and the predictability that justified the at-home test would disappear.
Goodyear illustrates the subsidiary side of the rule. The plaintiffs sued three foreign subsidiaries of Goodyear USA in North Carolina, where Goodyear USA did business, but the subsidiaries were in no sense at home there, and their attenuated connections to the state fell far short of what general jurisdiction demands.64 The plaintiffs tried to close the gap with a “single enterprise” theory that would have consolidated the subsidiaries' ties with those of Goodyear USA and other Goodyear entities, in effect piercing the corporate veils for jurisdictional purposes.65 The Court held the theory forfeited, because the plaintiffs had urged it neither below nor in their brief opposing certiorari, and it did not address it.66 Goodyear therefore decided that the subsidiaries' own thin ties did not make them at home, and it left open whether consolidating related entities' contacts could ever be justified.
Daimler ran the other way. The plaintiffs never tried to fit the case into specific jurisdiction, and they did not challenge on appeal the district court's holding that Daimler's own California contacts were too sporadic to justify general jurisdiction. Their case depended on the contacts of MBUSA, which the Ninth Circuit imputed to Daimler on an agency theory; the plaintiffs never maintained that MBUSA was Daimler's alter ego.67 MBUSA is incorporated in Delaware and has its principal place of business in New Jersey, although it maintains multiple California facilities, so its own California home was far from obvious.68
The Ninth Circuit's agency determination rested primarily on its observation that MBUSA's services were “important” to Daimler, as gauged by Daimler's hypothetical readiness to perform those services itself if MBUSA did not exist.69 The Supreme Court held that the analysis could not be sustained. If importance in that sense justified attribution, foreign corporations would be amenable to suit on any or all claims wherever they have an in-state subsidiary or affiliate, an outcome that would sweep beyond even the “sprawling view of general jurisdiction” rejected in Goodyear.70
An importance test returns the same answer in every case. A manufacturer that distributes through an affiliate in a state does so because it wants its goods sold there, so it would nearly always have to do the work itself, or abandon the market, if the affiliate disappeared. The test therefore says yes whenever a subsidiary does useful forum work, and the more useful the subsidiary, the stronger the claim to reach the parent, without ever asking where the parent itself is at home. The Ninth Circuit's second prong, whether the parent has the right to substantially control the subsidiary, did no better. The court found control in a distributor agreement that expressly disavowed any agency relationship, and the Supreme Court said the control inquiry hardly curtails the overbreadth of the agency holding.71 The plaintiffs themselves declined to defend the importance gloss.72
The Court did not stop at rejecting the Ninth Circuit's test. Daimler had failed to object below to the plaintiffs' assertion that California courts could exercise all-purpose jurisdiction over MBUSA, so the Court assumed, for purposes of the decision only, that MBUSA qualifies as at home in California.73 It then assumed that MBUSA's contacts were imputable to Daimler, and it held that there would still be no basis for general jurisdiction over Daimler there, because Daimler's own affiliations with the state did not make it at home.74 Attribution is thus only the first step. Granting the plaintiffs every contact of the subsidiary still leaves the question put to the parent itself: whether its affiliations with the forum, appraised against its activities worldwide, make it comparable to a local enterprise. For a German manufacturer that sells vehicles around the world, California was one market among many, and the contrary rule would give the same global reach in every state where MBUSA's sales are sizable.75
The Court left several questions open, and an answer that treats them as decided overstates the holding. It did not hold that agency can never support general jurisdiction; it said only that, whatever role agency might play, the Ninth Circuit's analysis could not be sustained.76 It did not decide whether MBUSA is in fact at home in California, because it assumed the point. It also assumed attribution without deciding when a subsidiary's contacts may be attributed to a parent, a question on which lower courts divide, some limiting attribution to entities that are not genuinely distinct and the Ninth Circuit applying a looser agency standard.77 The same care applies to veil piercing. No one argued alter ego in Daimler and the single-enterprise theory was forfeited in Goodyear, so neither decision rules on whether treating a parent and subsidiary as one entity could ground general jurisdiction. Ownership alone does not carry forum contacts from one entity to the other, and interlocking ownership matters, if at all, as added weight on a showing of actual agency activity.78
Each entity's own home controls when it is the one sued. MBUSA, a Delaware company with its principal place of business in New Jersey, is the kind of defendant that New Jersey's courts could reach on any claim, because a company is typically at home where it has its principal place of business or its place of incorporation, and that conclusion needs no attribution from Daimler or anyone else.79 The distributor that could not carry Daimler's home to California is itself at home in the state of its own headquarters.
Corporate relationships are not irrelevant to jurisdiction, but their work lies in specific jurisdiction. A corporation can act only through agents, so it can purposefully avail itself of a forum by directing its agents or distributors to take action there, and agency may therefore be relevant to specific jurisdiction.80 The Court added that it does not inevitably follow that similar reasoning applies to general jurisdiction, which asks a different question about the defendant.81
Because the same sorting recurs in every parent-and-subsidiary problem, run it as a fixed sequence in which attribution comes late and does little work.
No Reasonableness Inquiry
A corporation that is genuinely at home in the forum faces no second round of fairness review, and the Court said so in a footnote answering Justice Sotomayor's concurrence. The multipronged reasonableness check articulated in Asahi Metal Industry Co. v. Superior Court was never a free-floating test; it was meant for cases in which specific jurisdiction is at issue.84 Under that structure, a court first determines whether the connection between the forum and the episode in suit could justify specific jurisdiction. Only then, in a second step, does it consider several additional factors to assess the reasonableness of entertaining the case.85 The Court drew the consequence for general jurisdiction: when a corporation is genuinely at home in the forum state, any second-step inquiry would be superfluous.86 Courts had disagreed about whether general jurisdiction requires the reasonableness factors until that footnote supplied the answer.87
The second step exists because specific jurisdiction rests on contacts tied to a claim, and those contacts can be thin. The factors work as a backstop that asks whether hearing this particular case is fair. The Court listed them as the burden on the defendant, the interests of the forum state, the plaintiff's interest in obtaining relief, the interstate judicial system's interest in efficient resolution, the shared interest of the several states in furthering fundamental substantive social policies, and, in the international context, the policies of other nations whose interests are affected.88 A defendant that is at home leaves no gap for the backstop to fill. Its tie to the forum is the kind that general jurisdiction treats as sufficient on its own, and the burden of defending where it is already centered is slight, so a balancing step would revisit a question the at-home finding has already answered. The practical cost points the same way. The Court found it hard to see why much discovery would be needed to determine where a corporation is at home, while importing the reasonableness check would compound the jurisdictional inquiry.89
Justice Sotomayor would have reached the same result by a different route. She would not have held that Daimler fell outside the at-home category, and would instead have held that general jurisdiction over Daimler would be unreasonable in the unique circumstances of the case.90 The majority called that approach a resolution fit for “this day and case only” and declined to import the reasonableness check into the general jurisdiction determination.91 A case-by-case fairness balance laid over the at-home test would make outcomes turn on weighing, which is the unpredictability that placing general jurisdiction at a corporation's home was designed to remove.
An exam stem that pairs an at-home defendant with a convenience complaint tests whether you apply the reasonableness step to the wrong kind of jurisdiction. The step still exists, but it belongs to specific jurisdiction. If a court finds that a defendant's forum contacts relate to the claim, the case rests on claim-linked contacts and not on the defendant being at home, so the court goes on to the Asahi factors and asks whether exercising jurisdiction is reasonable on the facts.93 General jurisdiction has no such second stage, and the analysis ends once the court answers whether the defendant is at home.