FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BARBARA BAUMAN; GREGORY
GRIECO; JOSEFINA NUNEZ; GABRIELE
NUNEZ; MIRIAM NUNEZ; SILVIA
NUNEZ; EMILIO GUILLERMO PESCE;
MIRTA HAYDEE ARENAS; GRACIELA
GIGENA; GUILLERMO ALBERTO
GIGENA, NURIA GIGENA; AMELIA
No. 07-15386
SCHIAFFO; ELBA LEICHNER;
ANUNCIACION SPALTRO DE D.C. No.
BELMONTE; HECTOR RATTO; CV-04-00194-RMW
EDUARDO OLASIREGUI; RICARDO Northern District of
MARTIN HOFFMAN; EDUARDO California,
ESTIVILLE; ALFREDO MANUEL San Jose
MARTIN; JUAN JOSE MARTIN; JOSE ORDER
BARREIRO; ALEJANDRO DAER,
Plaintiffs-Appellants,
v.
DAIMLERCHRYSLER CORPORATION;
DAIMLERCHRYSLER AG,
Defendants-Appellees.
Filed November 9, 2011
Before: Mary M. Schroeder, Dorothy W. Nelson, and
Stephen Reinhardt, Circuit Judges.
Order;
Dissent by Judge O’Scannlain
20115
20116 BAUMAN v. DAIMLERCHRYSLER CORP.
ORDER
The panel has voted unanimously to deny the petition for
rehearing. Judge Schroeder and Judge Reinhardt have voted
to deny the petition for rehearing en banc, and Judge Nelson
so recommended.
A judge of the court called for a vote on the petition for
rehearing en banc. A vote was taken, and a majority of the
active judges of the court failed to vote for en banc rehearing.
Fed. R. App. P. 35(f).
The petition for rehearing and the petition for rehearing en
banc are DENIED. No further petitions for panel or en banc
rehearing will be entertained.
O’SCANNLAIN, Circuit Judge, joined by TALLMAN,
BYBEE, CALLAHAN, BEA, M. SMITH, IKUTA, and N.R.
SMITH, Circuit Judges, dissenting from the denial of rehear-
ing en banc:
Our court today extends the reach of general personal juris-
diction far beyond its breaking point. Its holding, that federal
courts have personal jurisdiction over a German corporation
for its Argentinian subsidiary’s alleged activities in Argentina
based simply on having a separate U.S.-based subsidiary, is
an affront to due process. The panel ignores the Supreme
Court’s warnings that the Due Process Clause permits “defen-
dants to structure their primary conduct with some minimum
assurance as to where that conduct will and will not render
them liable to suit.” Burger King Corp. v. Rudzewicz, 471
U.S. 462, 472 (1985) (internal quotation marks omitted). We
thus place ourselves at odds again with the dictates of the
Supreme Court, which has never approved such a broad juris-
dictional reach as in this case. Moreover, our decision today
is inconsistent with the law of at least six of our sister circuits.
BAUMAN v. DAIMLERCHRYSLER CORP. 20117
I therefore dissent from our regrettable failure to rehear this
case en banc.
I
The facts pertinent to this appeal are relatively straightfor-
ward. Twenty-two Argentinian residents brought suit in the
Northern District of California against DaimlerChrysler A.G.
(“Daimler”), a German corporation, alleging that one of its
subsidiaries, Mercedes-Benz Argentina, engaged in human
rights violations in Argentina during that country’s “Dirty
War” in the 1970s and 1980s. Bauman v. DaimlerChrysler
Corp., 644 F.3d 909, 911-12 (9th Cir. 2011). Without need for
an evidentiary hearing, the district court properly dismissed
the suit for lack of personal jurisdiction over Daimler. Id. at
913.
On appeal, the panel initially affirmed the district court.
Bauman v. DaimlerChrysler Corp., 579 F.3d 1088 (9th Cir.
2009), vacated, 603 F.3d 1141 (9th Cir. 2010). Then — after
granting rehearing and without additional oral argument —
the panel inexplicably changed its mind and reversed the dis-
trict court, holding that Daimler was indeed subject to general
jurisdiction in California based solely “through the contacts of
its subsidiary Mercedes-Benz USA.” Bauman, 644 F.3d at
912. In so holding, the panel drastically expands the reach of
personal jurisdiction beyond all constitutional bounds.
No one disputes that Daimler itself lacks sufficient contacts
with California to render it subject to general personal juris-
diction there. Nor does anyone dispute that Daimler’s U.S.-
based subsidiary, Mercedes-Benz USA, does have sufficient
contacts with California to render it subject to general per-
sonal jurisdiction. See Bauman, 644 F.3d at 920 n.11. But
Mercedes-Benz USA was not joined as a party to this lawsuit.
The only question, then, is whether Mercedes-Benz USA’s
mere existence in California renders Daimler subject to gen-
20118 BAUMAN v. DAIMLERCHRYSLER CORP.
eral personal jurisdiction for matters arising in Argentina
without violating the Due Process Clause. See id. at 920.
II
As the Supreme Court recently reaffirmed, for a foreign
corporation to be subject to general jurisdiction, its contacts
with the forum state must be “so continuous and systematic
as to render [it] essentially at home in the forum State.” Good-
year Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct.
2846, 2851 (2011). Our court today undermines this stringent
standard by inventing a new test for general personal jurisdic-
tion that gives Daimler no “minimum assurance as to where
. . . conduct will and will not render [it] liable to suit.” Burger
King Corp., 471 U.S. at 472 (internal quotation marks omitted).1
A
Under our case law, there are two separate tests for deter-
mining whether a subsidiary’s contacts can be imputed to a
parent corporation for purposes of general jurisdiction. Doe v.
Unocal Corp., 248 F.3d 915, 926 (9th Cir. 2001). One test,
the alter ego test, requires a showing “(1) that there is such
unity of interest and ownership that the separate personalities
[of the two entities] no longer exist and (2) that failure to dis-
regard [their separate identities] would result in fraud or injus-
1
The reasoning in Goodyear is directly applicable here. Goodyear asked
the question: “Are foreign subsidiaries of a United States parent corpora-
tion amenable to suit in state court on claims unrelated to any activity of
the subsidiaries in the forum State?” Goodyear, 131 S. Ct. at 2850. The
Court answered that question with a resounding, and unanimous, “no.”
Said otherwise, an affiliate of a United States corporation is not subject to
suit in a state where the affiliate itself took no action. By contrast, Bauman
holds that an affiliate (in this case a foreign parent of a United States sub-
sidiary) is amenable to suit in state court on claims unrelated to any activ-
ity of that affiliate in the forum State. This is exactly what Goodyear says
we must not do; and as the Supreme Court explains, such an exercise of
the state’s coercive power is incompatible with the Due Process Clause.
See id. at 2850-51.
BAUMAN v. DAIMLERCHRYSLER CORP. 20119
tice.” Id. (internal quotation marks omitted). The panel
correctly concludes that this test is not at issue here because
there is no reasonable argument that Daimler controls
Mercedes-Benz USA “to such a degree as to render the latter
the mere instrumentality of the former.” Id. (internal quotation
marks omitted); see Bauman, 644 F.3d at 920.
Yet the panel finds general jurisdiction over Daimler here
by reformulating our other test, the agency test. See id. at 931.
As interpreted by the Bauman panel, the agency test requires
two showings: First, the subsidiary’s services must be “suffi-
ciently important to [the parent] that they would almost cer-
tainly be performed by other means if [the subsidiary] did not
exist, whether by [the parent] performing those services itself
or by [the parent] entering into an agreement with a new sub-
sidiary or a non-subsidiary national distributor for the perfor-
mance of those services.” Id. at 922.2 Second, it must be
shown that the parent has “the right to substantially control”
the subsidiary’s activities. Id. at 924.3 In redefining the agency
2
The panel’s newly reformed test is not even an accurate characteriza-
tion of our precedents. As we clearly stated in Chan v. Society Expedi-
tions, Inc., 39 F.3d 1398 (9th Cir. 1994), the relevant inquiry under the
first part of the agency test is whether “the subsidiary was either estab-
lished for, or is engaged in, activities that, but for the existence of the sub-
sidiary, the parent would have to undertake itself,” id. at 1405 n.9
(emphasis added); see also Harris Rutsky & Co. Ins. Servs. v. Clements
Ltd., 328 F.3d 1122, 1135 (9th Cir. 2003); Doe, 248 F.3d at 928-29.
Surely, in the absence of its subsidiary, Daimler would not undertake
Mercedes-Benz USA’s activities itself. Rather, Daimler could easily do
what it has done in the past and, for example, hire some other entity to
handle U.S. operations. See Bauman, 644 F.3d at 914 (discussing Daim-
ler’s history of “independent distributors to distribute Mercedes-Benz
vehicles in the United States”).
3
The panel also errs in interpreting the second part of the agency test,
which requires a high degree of control of the subsidiary by the parent,
essentially reaching the level of actual day-to-day control. See Doe at 926
(“An . . . agency relationship is typified by parental control of the subsid-
iary’s internal affairs or daily operations.”); see also Harris Rutsky & Co.
Ins. Servs., 328 F.3d at 1135; Kramer Motors, Inc. v. British Leyland, Inc.,
20120 BAUMAN v. DAIMLERCHRYSLER CORP.
test, the panel drastically expands our test for personal juris-
diction and ignores the bedrock concerns of fundamental fair-
ness that underpin Supreme Court due process jurisprudence.
B
The panel’s interpretation of the agency test is far too
expansive and threatens to make innumerable foreign corpo-
rations unconstitutionally subject to general personal jurisdic-
tion in our courts. Indeed, it is difficult to see what limits
there are on the panel’s formulation. Anything a corporation
does through an independent contractor, subsidiary, or distrib-
utor is presumably something that the corporation would do
“by other means” if the independent contractor, subsidiary, or
distributor did not exist. Bauman, 644 F.3d at 922.
Such a result surely cannot be squared with the Supreme
Court’s repeated admonitions that due process must 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.” Burger King Corp., 471 U.S. at
472 (quoting World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 297 (1980)) (internal quotation mark omitted).
While the panel seems to be treating personal jurisdiction
lightly — perhaps even as a mere technicality — we must not
forget that limits on personal jurisdiction have constitutional
underpinnings. See Brown, 131 S. Ct. at 2853 (“The Due Pro-
cess Clause of the Fourteenth Amendment sets the outer
628 F.2d 1175, 1177 (9th Cir. 1980). As the panel originally held, Daimler
did not exercise “pervasive and continual control” over Mercedes-Benz
USA. Bauman, 579 F.3d at 1096. That determination was correct. Far
from having its day-to-day actions dictated from Germany, Mercedes-
Benz USA has considerable autonomy to act within the terms of a General
Distributor Agreement. Bauman, 644 F.3d at 914. Mercedes-Benz USA
negotiates its own seller’s agreements, id. at 915, and even “ha[s] the
power to independently decide against buying” certain types of Daimler’s
vehicles, Bauman, 579 F.3d at 1096.
BAUMAN v. DAIMLERCHRYSLER CORP. 20121
boundaries of a state tribunal’s authority to proceed against a
defendant.”).
Moreover, our court now seemingly rejects respect for cor-
porate separateness, a well-established “principle of corporate
law deeply ingrained in our economic and legal systems.”
United States v. Bestfoods, 524 U.S. 51, 61 (1998) (internal
quotation marks omitted). It is “[a] basic tenet of American
corporate law . . . that the corporation and its shareholders are
distinct entities,” over which jurisdiction must be individually
established. Dole Food Co. v. Patrickson, 538 U.S. 468, 474
(2003). “Where two corporations are in fact separate” — as
they irrefutably are here — “permitting the activities of the
subsidiary to be used as a basis for personal jurisdiction over
the parent violates this principle and thus due process.” Cent.
States, Se. & Sw. Areas Pension Fund v. Reimer Express
World Corp., 230 F.3d 934, 944 (7th Cir. 2000); cf. J. McIn-
tyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780, 2797 (2011)
(Ginsburg, J., dissenting) (“A few points on which there
should be no genuine debate bear statement at the outset. . . .
[A]ll agree, [the parent company] surely is not subject to gen-
eral (all-purpose) jurisdiction in New Jersey courts, for that
foreign-country corporation is hardly ‘at home’ in New Jer-
sey.”).
III
The problems with today’s decision don’t end there. The
panel’s holding perpetuates a split with at least six of our sis-
ter circuits, which do not even recognize the existence of the
agency test. Moreover, our holding today is an affront to
international comity and threatens the ability of the Executive
Branch to execute its foreign affairs duties.
A
Not only does the panel’s interpretation of the agency test
fly in the face of due process, but the mere existence of the
20122 BAUMAN v. DAIMLERCHRYSLER CORP.
agency test is also contrary to the law of at least six of our sis-
ter circuits.4 Some circuits, for example, use only the alter ego
test. See Epps v. Stewart Info. Servs. Corp., 327 F.3d 642,
648-49 (8th Cir. 2003) (“[P]ersonal jurisdiction can be based
on the activities of the nonresident corporation’s in-state sub-
sidiary, but only if the parent so controlled and dominated the
affairs of the subsidiary that the latter’s corporate existence
was disregarded so as to cause the residential corporation to
act as the nonresidential corporate defendant’s alter ego.”);
Dalton v. R&W Marine, Inc., 897 F.2d 1359, 1363 (5th Cir.
1990) (“Although the mere existence of a parent-subsidiary
relationship will not support the assertion of jurisdiction over
a foreign parent, there may be instances in which the parent
so dominates the subsidiary that they do not in reality consti-
tute separate and distinct corporate entities.” (internal quota-
tion marks omitted)); see also Estate of Thomson v. Toyota
Motor Corp. Worldwide, 545 F.3d 357, 362-63 (6th Cir.
4
It is also inconsistent with the Supreme Court’s early decision in Can-
non Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333 (1925) (Brandeis, J.).
There, the Court held that general personal jurisdiction may not be
imposed on a foreign corporation merely because of the corporation’s
ownership of a subsidiary present in the forum state. Id. at 337; see also
id. (“The corporate separation, though perhaps merely formal, was real. It
was not pure fiction.”). Though decided before the International Shoe line
of cases, Cannon Mfg. Co. has never been overruled. See generally Int’l
Shoe Co. v. Washington, 326 U.S. 310 (1945).
Moreover, as the panel’s flip-flop in this case clearly demonstrates, the
agency test is far too manipulable to satisfy the requirements of due pro-
cess. See Hertz Corp. v. Friend, 130 S. Ct. 1181, 1193 (2010) (“Simple
jurisdictional rules also promote greater predictability. Predictability is
valuable to corporations making business and investment decisions.”).
Judges are not well equipped to make assessments about what a foreign
corporation might do in unforseen, hypothetical scenarios, especially in
the early stages of litigation. See Bauman, 644 F.3d at 920 (noting that the
subsidiary’s services must be “sufficiently important to [the parent] that
they would almost certainly be performed by other means if [the subsid-
iary] did not exist, whether by [the parent] performing those services itself
or by [the parent] entering into an agreement with a new subsidiary or a
non-subsidiary national distributor for the performance of those services”).
BAUMAN v. DAIMLERCHRYSLER CORP. 20123
2008). Other circuits similarly describe their test as analogous
to the corporate law doctrine of piercing the corporate veil.
See IDS Life Ins. Co. v. SunAmerica Life Ins. Co., 136 F.3d
537, 540 (7th Cir. 1998) (Posner, C.J.); Mylan Labs., Inc. v.
Akzo, N.V., 2 F.3d 56, 62-63 (4th Cir. 1993). Yet another cir-
cuit uses words like “agency” while clearly applying some-
thing more like the alter ego test. See Consol. Dev. Corp. v.
Sherritt, Inc., 216 F.3d 1286, 1293-94 (11th Cir. 2000) (“For
[plaintiffs] to persuade us that the district court had general
personal jurisdiction over [the nonresident defendant] because
of [its subsidiary’s] activities in the United States, it would
have to show that [the subsidiary’s] corporate existence was
simply a formality, and that it was merely [the parent’s]
agent.”).
Whatever the precise name of the test, it is clear that the
exercise of jurisdiction found to be proper here would be
improper in many other circuits. Given that corporations must
be able “to structure their primary conduct with some mini-
mum assurance as to where that conduct will and will not ren-
der them liable to suit,” Burger King Corp., 471 U.S. at 472,
this case presents a question of substantial importance where
a uniform rule is desirable, cf. Michelin Tire Corp. v. Wages,
423 U.S. 276, 285 (1976) (“[T]he Federal Government must
speak with one voice when regulating commercial relations
with foreign governments.”).
B
Finally, the panel’s decision may also have unpredictable
effects on foreign policy and international comity. In many
European countries, for example, jurisdiction by imputation is
discouraged. Council Regulation 44/2001, 2001 O.J. (L 012)
1 (EC). Nonetheless, several countries have enacted “retalia-
tory jurisdictional laws.” Gary B. Born, Reflections on Judi-
cial Jurisdiction in International Cases, 17 Ga. J. Int’l &
Comp. L. 1, 15 (1987) (“These provisions empower national
courts to exercise jurisdiction over foreign persons in circum-
20124 BAUMAN v. DAIMLERCHRYSLER CORP.
stances where the courts of the foreigner’s home state would
have asserted jurisdiction.”). For example, as a result of our
court’s holding today, an Italian court might be able to assert
jurisdiction over a United States parent corporation based on
that court’s jurisdiction over a wholly owned Italian subsid-
iary.
Indeed, as the Solicitor General has noted, “foreign govern-
ments’ objections to our state courts’ expansive views of gen-
eral personal jurisdiction have in the past impeded
negotiations of international agreements on the reciprocal rec-
ognition and enforcement of judgments.” Brief for the United
States as Amicus Curiae Supporting Petitioners at 33, Brown,
131 S. Ct. 2846; see also id. at 12 (“[E]xcessive assertion of
general jurisdiction potentially threatens particular harm to
the United States’ foreign trade and diplomatic interests.”).
Naturally, in the past, the Supreme Court has taken such
issues to heart. See, e.g., Asahi Metal Indus. Co. v. Superior
Court, 480 U.S. 102, 115 (1987) (urging courts “to consider
the procedural and substantive policies of other nations whose
interests are affected by the assertion of jurisdiction by [state]
court[s]”); see also id. (“Great care and reserve should be
exercised when extending our notions of personal jurisdiction
into the international field.” (internal quotation marks omit-
ted)). Yet the panel brushed aside these concerns, which
deserve full consideration.
IV
In sum, Daimler is hardly “at home” in California when
sued only for its Argentinian subsidiary’s activities in Argen-
tina. Brown, 131 S. Ct. at 2851. Our court’s holding repre-
sents a breathtaking expansion of general personal
jurisdiction, which is unwarranted in light of Supreme Court
precedent, the precedent of our sister circuits, and our own
precedents. Moreover, today’s decision presents a gratuitous
threat to our nation’s economy, foreign relations, and interna-
tional comity.
BAUMAN v. DAIMLERCHRYSLER CORP. 20125
I respectfully dissent; our court should have granted the
petition for rehearing en banc.