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High court justices question rights case against Daimler AG

By Lawrence Hurley

WASHINGTON (Reuters) - A majority of Supreme Court justices raised doubts on Tuesday over whether Daimler AG can be sued in federal court for allegations that a subsidiary violated the human rights of workers at a plant in Argentina in the 1970s.

During an hour-long oral argument, several justices on both sides of the court's ideological divide voiced concerns about how the San Francisco-based 9th U.S. Circuit Court of Appeals handled the case when it ruled in favor of human rights plaintiffs, raising the possibility of the case ultimately being sent back to that court for further review

The argument focused on complex legal questions about when federal courts have jurisdiction over certain types of cases.

Workers or relatives of workers at an Argentina-based plant operated by Mercedes-Benz, a wholly owned subsidiary of Daimler, sued over the alleged conduct. They said the company had punished plant workers viewed by managers as union agitators and that it had worked alongside the Argentinian military and police forces.

Justice Sonia Sotomayor, appointed by Democratic President Barack Obama, summed up the one-way nature of the argument when she debated the possible outcomes with Daimler's lawyer, Thomas Dupree.

"Do you care how you win?" she said.

Dupree, who has the support of the Obama administration, said he did because of the potential impact a ruling could have on other cases.

Another Obama appointee, Justice Elena Kagan, was equally hostile toward the appeals court's conclusion when summarizing how the case was handled.

"All of that has got to be wrong," she said.

Justice Stephen Breyer, who was appointed by Democratic President Bill Clinton, was also critical of the appeals court, saying it appeared to have "seriously misstated the law" in California.

Breyer's comments echoed those made by Justice Antonin Scalia, an appointee of Republican President Ronald Reagan.

Kevin Russell, the attorney representing the plaintiffs, said some of the problems the justices raised were caused by Daimler failing to make certain arguments in the lower courts. He said the court could simply dismiss the case, which would leave the 9th Circuit ruling intact, if it had trouble deciding what to do.

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The Daimler case is the second time in the last year that the court has considered how and under what circumstances multinational companies can be sued in U.S. courts for alleged human rights violations.

In the first case, the court held in Kiobel v. Royal Dutch Shell in April that a federal court in New York could not hear claims made by 12 Nigerians who accused Anglo-Dutch oil company Royal Dutch Shell Plc of complicity in a crackdown on protesters in Nigeria from 1992 to 1995.

The legal question in the Daimler case is different from that in the Shell case, which focused on an obscure federal law called the Alien Tort Statute.

The Daimler case concerns whether a U.S. court has the authority to hear a case against a foreign corporation "solely on the fact that an indirect corporate subsidiary performs services on behalf of the defendant" in the state where the lawsuit was filed, which in this instance was California.

A decision in the Daimler case is expected by the end of June.

The case is Daimler AG v. Bauman, U.S. Supreme Court, No. 11-965.

(Reporting by Lawrence Hurley; Editing by Howard Goller, Christopher Wilson and Cynthia Osterman)

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