foreign corporation

DaimlerChrysler AG v. Bauman

Issues

Does a federal court have jurisdiction over a foreign corporation not incorporated in the forum state solely because the corporation’s indirect corporate subsidiary performs services for the corporation in the forum state?

During the Argentine “Dirty War” of the 1970s, between 10,000 to 30,000 left-wing sympathizers disappeared. In 2004, Bauman and twenty-two Argentine citizens or residents sued DaimlerChrysler AG (“DCAG”) for violations under the Alien Tort Claims Act, claiming that DCAG’s subsidiary in Argentina ordered state security forces to rid its plant of left-wing sympathizers. DaimlerChrysler is a German company that does not manufacture or sell products in the US, but owns a subsidiary, Mercedes Benz, that sells DCAG products in the US. Bauman sued in the Northern District of California, claiming that the court had general personal jurisdiction over DCAG via Mercedes Benz USA’s contacts with California. The Ninth Circuit held that DCAG is subject to general personal jurisdiction in California because it has an indirect subsidiary that distributes DCAG-manufactured vehicles in California. Thus, the court concluded that DCAG could be sued in California for the company’s alleged human rights violations committed by an Argentine subsidiary against Argentine residents. DCAG claims that neither an alter ego theory nor agency theory establish the necessary minimum contacts to extend personal jurisdiction over DCAG. Bauman argues that the Ninth Circuit properly found general personal jurisdiction because agency theory establishes DCAG’s necessary minimum contacts with California. The Supreme Court’s decision will determine the boundaries of general personal jurisdiction—specifically, whether an indirect corporate subsidiary’s contacts with a forum state can be imputed to the parent company to confer personal jurisdiction over the parent company.

Questions as Framed for the Court by the Parties

Whether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based solely on the fact that an indirect corporate subsidiary performs services on behalf of the corporation in the forum state. 

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Facts

In March 1976, a right-wing military group organized a coup d’etat to overthrew Argentine President Isabel Peron.See Encyclopedia Britannica “Dirty War.” Soon after, this military dictatorship targeted suspected left-wing political opponents, leading to a seven-year period common

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Goodyear Dunlop Tires Operations v. Brown

Issues

Whether a court can acquire general personal jurisdiction to hear any claim against a foreign company when the company’s only connection with the forum state is the distribution of products by other entities of the parent corporation.

 
Appealed from: North Carolina Court of Appeals (Aug. 18, 2009)​Two North Carolina teenagers were killed in France when a tire, manufactured by Goodyear Luxembourg, malfunctioned and caused an accident. Their estates sued the foreign manufacturers of the defective tire for negligence in a North Carolina state court, and the state court found that it had general jurisdiction over the defendants and could hear the case. Goodyear Luxembourg argues that North Carolina does not have general jurisdiction because the company has no presence in or direct business with North Carolina. The teenagers' estates argue that the court properly found jurisdiction because Goodyear Luxembourg is part of the larger and highly integrated Goodyear enterprise, which does have significant contact with North Carolina. The Supreme Court’s  decision in this case  will determine the ease with which plaintiffs may sue foreign manufacturers in state court, and could potentially affect commercial relations between the United States and other nations.

Questions as Framed for the Court by the Parties

Whether a foreign corporation is subject to  general  personal jurisdiction, on causes of action not arising out of or related to any contacts between it and the forum state, merely because other entities distribute in the forum state products placed in the stream of commerce by the defendant.

On April 18, 2004, Matthew Helms and Julian Brown died as a result of a bus accident near Paris, France. See Brown v. Meter, 681 S.E.2d 382, 384 (N.C. Ct. App.

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· Washington Legal Foundation: Court Urged to Reject Expansion of Jurisdiction over Foreign Companies (Goodyear Luxembourg Tires, S.A. v. Brown) (Nov. 19, 2010)
 
· Nixon Peabody, Raymond L. Mariani: U.S. Supreme Court to Revisit Personal Jurisdiction over Foreign Manufacturers (Nov. 16, 2010).
 
The Supreme Court will hear this case in tandem with J. McIntyre Machinery, LTD v. Nicastro, which concerns state personal jurisdiction over a foreign manufacturer which generally targets the U.S. market but has no physical presence in the United States and uses an independent company as its exclusive distributor within the United States.
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Moore v. United States

Issues

Can Congress pass a statute under the Sixteenth Amendment taxing income that is not yet realized by the taxpayer without apportioning the tax among the states in proportion to their populations?

This case asks the Supreme Court to determine whether a taxpayer must realize income under the Sixteenth Amendment before the federal government can tax it without apportionment among the states. In 2017, as part of the Tax Cuts and Jobs Act, Congress enacted a new, one-time Mandatory Repatriation Tax on taxpayers based on their ownership stake in a controlled foreign corporation. The tax applied retroactively on all income earned by the corporation after 1986, regardless of whether the corporation distributed its earnings to its shareholders. Charles and Kathleen Moore argue that the Mandatory Repatriation Tax, which they were forced to pay, is unconstitutional because the Sixteenth Amendment imposes a realization requirement on income for the federal government to tax it without apportionment. The United States contends that no such realization requirement exists, and that Congress has long taxed individuals based on their share of undistributed corporate earnings without constitutional challenge. The outcome of this case has important ramifications for Congress’s power to impose income taxes and on the complexity and certainty of tax planning.

Questions as Framed for the Court by the Parties

Whether the 16th Amendment authorizes Congress to tax unrealized sums without apportionment among the states.

In 2005, Petitioners Charles and Kathleen Moore bought an 11% stake in KisanKraft, a Controlled Foreign Corporation (“CFC”) based in India. Moore v. United States at 4–5. A CFC is a corporation in which U.S. persons possess more than 50% ownership or voting rights. Id. at 5. KisanKraft made profits every year but never distributed any of those profits to its shareholders.

Acknowledgments

The authors would like to thank Professor Robert A. Green for his insights into this case.

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