OPINION
I.
Plaintiffs-Appellants (the “plaintiffs”), twenty-two Argentinian residents,
II.
A.
The plaintiffs here were workers or relatives of workers at the Gonzalez-Catan plant of Mercedes-Benz Argentina (MBA), a wholly owned-subsidiary of Daimler-Chrysler AG’s predecessor-in-interest. The plaintiffs allege that MBA sought to brutally punish plant workers whom MBA viewed as union agitators, and that MBA collaborated with the Argentinian military and police forces in doing so. They also allege that MBA had knowledge that the result of this collaboration would be the kidnapping, torture, detention and murder of those workers, and that the plan was implemented, in part, in the following manner. First, MBA labeled the appellants as “subversives” and “agitators” and passed on this information to the state security forces. Second, MBA “had members of the military and police forces stationed within” the Gonzalez-Catan plant. Third, MBA opened the plant to periodic raids by those forces. Fourth, MBA hired Ruben Lavallen, the police station chief who had been behind much of the reign of terror and installed him as Chief of Security, providing legal representation to him when he was “accused of human rights abuses.” The plaintiffs further allege that MBA was pleased with the results of the raids and detentions because those actions helped to end a strike, restoring maximum production at the plant.
B.
Plaintiffs brought suit against DCAG in the District Court for the Northern District of California under the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350, and the Torture Victims Protection Act of 1991 (“TVPA”), 106 Stat. 73, note following 28 U.S.C. § 1350. After attempting to serve process at one of DCAG’s headquarters in Stuttgart, Germany,
C.
As discussed in more detail below, the District Court for the Northern District of California did not hold an evidentiary hearing when it ruled on DCAG’s motion to dismiss for lack of personal jurisdiction; therefore, the plaintiffs “need only demonstrate facts that if true would support jurisdiction over the defendant.” Doe v. Unocal Corp.,
DCAG was a German stock company,
MBUSA had a regional office in Costa Mesa, California, a Vehicle Preparation Center in Carson, California, and a Classic Center in Irving, California. Bauman I,
DCAG manufactured Mercedes-Benz motor vehicles and parts primarily at factories in Germany. MBUSA purchased Mercedes-Benz vehicles from DCAG in Germany for distribution in the United States.
Before DCAG created MBUSA, DCAG and its predecessors used two independent distributors to distribute Mercedes-Benz vehicles in the United States. From 1952 to 1957, Max Hoffman was the sole distributor of Mercedes-Benz vehicles; the relationship was terminated “[d]ue to low number of vehicle sales.” From 1958-1964, an independent subsidiary of the Studebaker-Packard Corporation was the sole distributor. That company declared bankruptcy in 1964; that same year, the predecessor-in-interest to MBUSA became the exclusive U.S. distributor of Mercedes-Benz vehicles.
The final subsidiary that is relevant to this case is the DaimlerChrysler Corporation (DCC). As the district court noted, when the Chrysler Corporation and Daimler-Benz AG merged, they both became wholly-owned subsidiaries of DCAG. Bauman I,
D.
The relationship between DCAG and MBUSA is governed by a General Distributor Agreement (“the Agreement”) which establishes extensive requirements for MBUSA as the general distributor of Mercedes-Benz cars in the U.S.
Sales Figures
According to the Agreement, DCAG and MBUSA agree every year upon a set of quantitative and qualitative objectives, that can include a “minimum or specific number of Vehicles to be sold by [MBUSA] and its Authorized Resellers to end users ... [and] a minimum or a specific market share in defined vehicle segments” in the United States.
Sales Network
DCAG has extensive oversight over MBUSA’s network of Authorized Resell
Standards
MBUSA must also comply with all Dealership Standards promulgated by DCAG. MBUSA cannot appoint an Authorized Reseller who does not agree to comply with the Dealership Standards. Moreover, DCAG has wide latitude to dictate MBUSA’s behavior. MBUSA and its Authorized Resellers “shall comply with [DCAG’s] requirements or such other manuals, guidelines or materials as may be from time to time implemented and amended or updated by [DCAG].”
Business Systems
DCAG must approve of the accounting, order, inventory control and warranty claim processing systems used by MBUSA and its Authorized Resellers. DCAG must also approve of the “electronic data storage, transmission and communication system” used by MBUSA and its Authorized Resellers. MBUSA must further observe all of DCAG’s “rules, terms and conditions” relating to the use of these business systems.
Customer Information
DCAG dictates what customer information is to' be collected by MBUSA. At DCAG’s request, MBUSA must provide customer information to DCAG including “financial reports and operating statements, Parts sales and stock reports as well as customer databases and information.”
Management Personnel
According to the Agreement, MBUSA must employ a “General Manager, a Parts Manager, a Service Manager, and a Sales Manager.” MBUSA cannot combine these positions without the “prior consent” of DCAG. These employees “shall not, without the prior consent of [DCAG], engage or participate in operating, selling or servicing, as the case may be, of any brand of vehicles other than” Mercedes-Benz vehicles, (emphasis added). DCAG must approve the replacements for any key personnel of MBUSA, and MBUSA must appoint such approved replacements within a reasonable time. MBUSA personnel must participate in training offered or organized by DCAG. It is significant also that the Chairman of DCAG, Dieter Zetsche, was simultaneously the Chairman of MBUSA. Zetsche was also the head of the Mercedes Car Group at DCAG. There is at least one other instance of an MBUSA board member also serving on DCAG’s board.
Service
DCAG sets the standards and requirements for the vehicle servicing conducted by MBUSA and its Authorized Resellers. The servicing must comply with DCAG’s Dealership Standards as well as DCAG’s “requirements and other manuals, guidelines, or materials.” MBUSA must establish, if DCAG requests, a Service Coordination Center “in conformity with the requirements of [DCAG].” Included in its responsibilities, this Service Coordination Center is to be responsible for “such other tasks as may be from time to time assigned by [DCAG].”
DCAG sets the warranty terms applicable to MBUSA. MBUSA may not provide additional warranties without the prior consent of DCAG. MBUSA must allow DCAG to access its facilities to observe the “performance or administration of warranty service.”
Vehicle Alteration
MBUSA cannot “alter or modify” any Vehicle without DCAG’s “prior approval and then only in the manner [DCAG] authorizes,” unless the vehicle has been ordered and the modification specifically requested by an end user.
Technical Publications
MBUSA and its Authorized Resellers must each maintain an “organized library of [DCAG’s] technical service publications.”
Promotion and Advertising
The Agreement requires MBUSA to “actively market” the Mercedes-Benz vehicles. The Agreement gives DCAG the discretionary power to conduct a yearly review of MBUSA’s “comprehensive advertising and marketing plan.” If DCAG exercises this right of review, MBUSA cannot pursue the advertising and marketing strategy without the approval of DCAG. MBUSA’s marketing strategy, as well as its advertising and promotional materials must be consistent with both the Dealership Standards and DCAG’s “brand representation and identification standards;” it must also comply with DCAG’s “directives, standards, and processes as may be issued by [DCAG] from time to time.” Furthermore, “[u]pon [DCAG’s] request, [MBUSA] and its Authorized Resellers shall immediately stop advertising, promotion, or other marketing activities which (in the sole opinion of [DCAG]) do not comply” with DCAG’s guidelines or standards, (emphasis added). Finally, DCAG can require MBUSA and its Authorized Resellers to participate in dealer advertising programs, associations, and parts merchandising programs.
Signage
MBUSA and its Authorized Resellers must display “appropriate signs and fascia” to identify each facility. DCAG “reserves the right to approve or disapprove of each sign’s type, design and size.” Moreover, DCAG may implement a signage program whereby DCAG “designs, acquires and arranges for the installation of pre-approved signs” at MBUSA and its Authorized Resellers’ facilities. DCAG may also force MBUSA and its Authorized Resellers to sell any signage that they own to DCAG.
Prices
Although the sales volume is set yearly by agreement between DCAG and MBUSA, DCAG has the authority to unilaterally set and change prices. DCAG simply must “notify” MBUSA “from time to time of the prices and charges for Contract Goods.” Even though the Agreement locks MBUSA into a precise sales amount on an annual basis, DCAG may change the prices “at any time, and make the changes effective immediately.” DCAG even has the power to force MBUSA to modify the prices that MBUSA charges to its Authorized Resellers for the vehicles MBUSA sells to those Authorized Resellers. Furthermore, MBUSA and its Authorized Resellers must comply with “any pricing policies” established by DCAG. DCAG may also change the “discounts and/or bonuses” it grants to MBUSA with one year’s notice.
MBUSA’s Authority and Ownership
MBUSA must request the approval of DCAG before it changes its management control or ownership interests, the name or form of its legal entity, or the location of its principal place of business.
MBUSA and its Authorized Resellers must maintain a “working capital level and financing capability” level that is “acceptable” to DCAG. In fact, “[a]t no time may [MBUSA’s] working capital dedicated to its operations related to the Contract Goods be less than the amount specified by [DCAG] from time to time.”
Customer Satisfaction Policies
MBUSA must participate in any “program and rating scheme with regard to customer satisfaction policies” requested by DCAG.
Other Goods
MBUSA may not manufacture motor vehicles or parts, or sell any vehicles not listed in the Agreement.
Vehicle Homologation
MBUSA must assist DCAG with vehicle distribution and vehicle homologation (the process of ensuring that vehicles comply with applicable regulations).
Sales Numbers
DCAG requires MBUSA to “make all reasonable efforts” to limit the amount of Mercedes-Benz vehicles sold by any Authorized Reseller or group of Resellers to 15% of the total sales of Mercedes-Benz vehicles in the United States.
Trademark
DCAG retains full ownership of the “Mercedes-Benz” trademark.
Related Agreements
DCAG can require MBUSA and its Authorized Resellers to execute “any agreement relating to ... any other matter related to this Agreement in the form from time to time adopted by [DCAG]” as long as those Agreements are not an “unreasonable burden” on MBUSA.
E.
On November 22, 2005, the district court issued an order “tentatively granting defendant’s motion to dismiss” for lack of personal jurisdiction. Bauman I,
The district court acknowledged that “without MBUSA or another distributor, DCAG would not be able to sell Mercedes-Benz vehicles in California.” Id. at *12. In deciding that there was no agency relationship, however, the district court relied heavily on its conclusion that “it is not clear that [DCAG] would be required to perform such functions itself to avail itself of the California, luxury-vehicle market.” Id. The district court admitted that the agency question was a “close question,” but found that MBUSA’s contacts should not be imputed to the defendant. Id.
In its tentative order, the district court also found that personal jurisdiction over DCAG would not be reasonable, although it made a number of factual findings that caused it to question the correctness of that finding. It found that DCAG had purposefully interjected itself into California by “initiating lawsuits in California courts to challenge the state’s clean air laws and to protect DCAG’s patents and other business interests.” Id. at *13. Moreover, it found that the sale of DCAG’s
On February 12, 2007, following the limited jurisdictional discovery, the district court issued its final order granting DCAG’s motion to dismiss.
III.
DCAG argued in the district court that the court did not have personal jurisdiction over DCAG or subject matter jurisdiction over plaintiffs’ claims.' The district court chose to resolve the personal jurisdiction question first. The district court’s discretionary decision to do so was proper. See Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp.,
We review a dismissal for lack of personal jurisdiction de novo. Butcher’s Union Local No. 498 v. SDC Inv., Inc.,
IV.
In evaluating the appropriateness of personal jurisdiction over a nonresident defendant, we ordinarily examine whether such jurisdiction satisfies the “requirements of the applicable state long-arm statute” and “comportfs] with federal due process.” Chan v. Society Expeditions, Inc.,
Before doing so, we note that “[t]here are two types of personal jurisdiction: general and specific.” Ziegler v. Indian River County,
We therefore turn to an examination of whether general jurisdiction over DCAG in California comports with due process; in doing so, we conduct a two-part inquiry. First, we examine whether “the defendant ha[d] the requisite contacts with the forum state to render it subject to the forum’s jurisdiction.” Unocal,
A. Requisite Contacts
In determining the requisite contacts of a defendant, we look to whether its activities in the forum are “ ‘substantial’ or ‘continuous and systematic,’ even if the cause of action is unrelated to those activities.” Sher v. Johnson,
Under the controlling law, if one of two separate tests is satisfied, we may find the necessary contacts to support the exercise of personal jurisdiction over a foreign parent company by virtue of its relationship to a subsidiary that has continual operations in the forum. The first test, not directly at issue here, is the “alter ego” test. It is predicated upon a showing of parental control over the subsidiary. The two prongs of the “alter ego” test are as follows:
(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 disregard their separate identities would result in fraud or injustice. The first prong of this test has alternately been stated as requiring a showing that the parent controls the subsidiary to such a degree as to render the latter the mere instrumentality of the former.
Unocal,
The agency test is satisfied by a showing that the subsidiary functions as the parent corporation’s representative in that it performs services that are sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation’s own officials would undertake to perform substantially similar services.
Id. at 928 (quoting Chan,
Application of the Agency Test
1. Sufficient Importance
Our agency test for personal jurisdiction over a foreign corporation on the basis of its subsidiary’s operations has its origins in case law from the Second Circuit. See Wells Fargo & Co. v. Wells Fargo Exp. Co.,
Our starting point for the sufficient importance prong is that a subsidiary acts as an agent if the parent would undertake to perform the services itself if it had no representative at all to perform them. Unocal,
Selling Mercedes-Benz vehicles is a critical aspect of DCAG’s business operations; DCAG’s charter defines its goals as the “development, manufacture, and sales of products.” (emphasis added). When this suit was filed, the United States market accounted for 19% of the sales of Mercedes-Benz vehicles worldwide, and MBUSA’s sales in California alone accounted for 2.4% of DCAG’s total worldwide sales. DCAG simply could not afford to be without a U.S. distribution system.
The services that MBUSA currently performs are sufficiently important to DCAG that they would almost certainly be performed by other means if MBUSA did not exist, whether by DCAG performing those services itself or by DCAG entering into an agreement with a new subsidiary or a non-subsidiary national distributor for the performance of those services. As we held in Wells Fargo, “it is clear that whether the alleged general agent was a subsidiary of the principal or independently owned is irrelevant.”
Therefore, the plaintiffs have established the importance to DCAG of the services performed by MBUSA and met the sufficiently important test, because even if DCAG were to replace MBUSA with an independent entity, that entity would still be considered a representative for purposes of that test.
2. Control
We turn now to an examination of the element of control. As we have stated, supra, the principal focus of our agency test for purposes of personal jurisdiction is the importance of the services provided to the parent corporation. In Unocal, we conducted a thorough analysis of a potential agency relationship and based our decision solely on the failure to meet the sufficient importance test. Id. at 928-31. We then added that control alone was insufficient to overcome that failure.
Control nevertheless plays a role in determining whether personal jurisdiction is established because control is a traditional element of agency under common law principles. DCAG contends that a right to control is not sufficient, and that the parent must actually exercise control over the operations of its subsidiary on a day-to-day basis in order to meet the agency test. This argument is in error because it conflates the agency and alter ego tests. We have previously explained that these two tests are distinct and involve considerations of distinct factors. Wells Fargo,
*923 A principal’s right to control the agent is a constant across relationships of agency, but the content or specific meaning of the right varies. Thus, a person may be an agent although the principal lacks the right to control the full range of the agent’s activities, how the agent uses time, or the agent’s exercise of professional judgment. A principal’s failure to exercise the right of control does not eliminate it, nor is it eliminated by physical distance between the agent and principal....
§ 1.01 cmt. c. (emphasis added).
As we recently held, “[t]o form an agency relationship, both the principal and the agent must manifest assent to the principal’s right to control the agent.” United States v. Bonds,
Even at common law, agents may exercise a considerable amount of discretion in performing their functions. See Restatement (Third) of Agency § 2.01, cmt. d (2006). A principal has control when it “has the right to give interim instructions or directions to the agent once them relationship is established.” § 1.01 cmt. f (emphasis added). Indeed, the principal need not exercise control at all in order to preserve an agency relationship; the relevant inquiry, rather, is whether the principal has the right to control. See, e.g., Bonds,
The Second Circuit’s test does not require that “the defendant exercise[ ] direct control over its putative agent.” Wiwa,
We must remember that we are considering the contours of the test for agency to be applied in the context of personal jurisdiction. We are not examining the rules governing the test for vicarious liability, or for holding DCAG financially liable for the actions of MBUSA. Moreover, when we consider control here, it is as part of a test that primarily considers whether the services are of “sufficient importance.” See Unocal,
3. DCAG’s Right to Control
The degree of control that DCAG exercises over MBUSA is more than sufficient for the purpose of establishing personal jurisdiction. To repeat, we must take plaintiffs’ alleged facts as true, because plaintiffs need make only a prima facie showing of personal jurisdiction here.
DCAG contends that the General Distributor’s Agreement is evidence of an “arms-length” relationship with MBUSA. We do not read the agreement as DCAG appears to. DCAG has the right to control nearly all aspects of MBUSA’s operations including: the number of vehicles that MBUSA must sell; the approval of MBUSA’s Authorized Resellers, as well as the location of each retail sales outlet, showroom and service facility; the dealership standards that MBUSA must comply with; the business systems that MBUSA uses; the type of customer information that MBUSA must collect; which management personnel are appointed to run MBUSA; which management personnel positions shall exist at MBUSA; the standards and requirements MBUSA must meet for vehicle servicing; whether MBUSA is required to establish a Service Coordination Center, and if so, what tasks that Center will perform; the warranty terms applicable to MBUSA’s customers; whether MBUSA can alter or modify any vehicle; what technical service publications MBUSA shall have in its library; the content and scope of MBUSA’s advertising and marketing strategy; the type, design and size of MBUSA’s signs; the prices that MBUSA must pay to DCAG; the prices that MBUSA may charge to its Authorized Resellers; the working capital level and financing capability level that MBUSA must maintain; what other goods MBUSA may sell or manufacture; whether MBUSA must assist in vehicle homologation; and the sales numbers of various Authorized Resellers. If that exhaustive list were not enough, DCAG also has the right to require MBUSA to execute “any agreement relating to ... any other matter related to this Agreement in the form from time to time adopted by [DCAG]” as long as those new Agreements are not an “unreasonable burden” on MBUSA. (emphasis added). MBUSA must comply with all of DCAG’s current requirements and all future requirements that may be set forth in any future document promulgated by DCAG. DCAG also receives notice about nearly all of MBUSA’s actions, including personnel changes, customer information, and marketing strategy.
Because MBUSA’s services were sufficiently important to DCAG and because DCAG had the right to substantially control MBUSA’s activities, we conclude that MBUSA was DCAG’s agent for general jurisdictional purposes.
B. Reasonableness
Because we hold that there is ample evidence of an agency relationship between DCAG and MBUSA, and, thus, that MBUSA’s contacts with California may be imputed to DCAG, we now must turn to the second part of our test: whether the assertion of jurisdiction is “reasonable.” See Unocal,
Once plaintiffs have made the requisite showing of minimum contacts in the forum state, “[t]he burden ... shifts to the defendant to present a compelling case that jurisdiction would be unreasonable.” Sinatra v. Nat'l Enquirer, Inc.,
*925 the extent of purposeful interjection; the burden on the defendant; the extent of conflict with sovereignty of the defendant’s state; the forum state’s interest in adjudicating the suit; the most efficient judicial resolution of the dispute; the convenience and effectiveness of relief for the plaintiff; and the existence of an alternative forum.
Sinatra,
1. The Extent of Purposeful Interjection
DCAG has purposefully and extensively interjected itself into the California market through MBUSA. The district court found that DCAG had purposely availed itself of the California market, primarily through its design of cars to meet California’s air quality standards, its manufacture of a fuel cell for the California Fuel Cell Partnership, and the fact that DCAG built a prototype fuel cell vehicle specifically for the United Parcel Service (“UPS”) to use in California. Bauman I,
The district court also found it relevant that DCAG has retained permanent counsel in California and is listed on the Pacific Stock Exchange located in San Francisco. Bauman I,
The first factor, therefore, weighs heavily in favor of “reasonableness,” as a corporation that “has continuously and deliberately exploited the [California] market ... must reasonably anticipate being haled into court there____” Keeton v. Hustler Magazine, Inc.,
2. The Burden on the Defendant
The burden on the defendant, a large international corporation, to litigate the case in California is not so weighty as to preclude jurisdiction — particularly since “modern advances in communications and transportation have significantly reduced the burden of litigating in another country.” Sinatra,
Here, the burden on the defendant of producing records and witnesses in California, when the events in question took place in Argentina, would be no greater than if the case were instead litigated in Germany. Moreover, DCAG’s official language is English, so it will not be disadvantaged in that respect by litigating in the forum selected by the plaintiffs.
This factor weighs slightly in DCAG’s favor, because there is some burden in having to litigate in. a foreign country. It is not, however, a particularly significant factor, in part because the burden for an international corporation is ordinarily slight, and in part because “the Supreme Court has preferred non-jurisdictional methods of lessening the inconvenience faced by defendants.” Sinatra,
3. The Extent of Conflict with Sovereignty of the Defendant’s State
Third, we have held that the extent of the conflict with the sovereignty of the defendant’s state “is not dispositive because, if given controlling weight, it would always prevent suit against a foreign national in a United States court.” Id. (quoting Gates Learjet Corp. v. Jensen,
Although German courts have expressed some concern that this suit may impinge upon German sovereignty, we do not agree. In applying this factor, we examine “the presence or absence of connections to the United States in general, not just to the forum state.” Core-Vent Corp. v. Nobel Indus. AB,
DCAG has “manifested an intent to serve and to benefit from the United States market.” Sinatra,
4. The Forum State’s Interest in Adjudicating the Suit
Fourth, although the events at issue did not take place in California and although the plaintiffs are not California residents, the forum state does have a significant interest in adjudicating the suit. California partakes in “the shared interest of the several States in furthering fundamental substantive social policies.” World-Wide Volkswagen Corp. v. Woodson,
The new formulations of the Torture Victim Protection Act convey the message that torture committed under color of law of a foreign nation in violation of international law is our business, as such conduct not only violates the standards of international law but also as a consequence violates our domestic law. In the legislative history of the TVPA, Congress noted that universal condemnation of human rights abuses provide[s] scant comfort to the numerous victims of gross violations if they are without a forum to remedy the wrong. This passage supports plaintiffs’ contention that in passing the Torture Victim Prevention Act, Congress has expressed a policy of U.S. law favoring the adjudication of such suits in U.S. courts.
Wiwa v. Royal Dutch Petroleum Company,
We agree and have previously cited Wiwa with approval for this exact point. Sarei v. Rio Tinto,
5. The Most Efficient Judicial Resolution of the Dispute
The fifth factor, which examines which forum is most efficient, “involves a comparison of alternative forums.” Amoco
6 & 7. The Convenience and Effectiveness of Relief for the Plaintiff; and the Existence of an Alternative Forum
We have traditionally evaluated the sixth and seventh factors together. See Core-Vent,
The plaintiffs’ arguments that Argentina would not be a fully adequate forum — if it is a forum at all — are persuasive, at this stage of the litigation. A recent Supreme Court case in Argentina has held that human rights civil cases arising out of the Dirty War are subject to a two-year and three-month statute of limitations. See Corte Supreme de Justicia de la Nacion [CSJN] [National Supreme Court of Justice], 30/10/2007, “Larrabeiti Yanez, Anatole Alejandro y otro c/Estado Nacional/proceso de concocimiento,” La Ley [L.L.] (2008-F-23) (Arg.).
As to Germany, there is conflicting expert testimony about whether equitable tolling, or an equivalent within the German legal system, would allow the suit to proceed. The answer is not clear; indeed, the district court concluded that “it appears that plaintiffs’ claims, which are based on events that occurred in 1976 and 1977, would not necessarily be time-barred.” Bauman II,
Furthermore, in Harris Rutsky, we considered the defendant’s amenability to service of process in the alleged alternative forum in deciding whether that forum was truly an alternative. Harris Rutsky,
Even if Argentina and Germany were, as DCAG argues, both adequate fora for redressing any alleged wrongs, the availability of an alternative forum is not the deciding factor in the personal jurisdiction analysis.
Overall Evaluation of the Factors
The question before us is ultimately whether exercising personal jurisdiction over DCAG comports with fair play and
While it is true that certain factors normally used to assess the reasonableness of subjection to jurisdiction do favor the defendants (they are foreign corporations that face something of a burden if they litigate here, and the events in question did not occur in New York), litigation in New York City would not represent any great inconvenience to the defendants. The defendants control a vast, wealthy, and far-flung business empire which operates in most parts of the globe. They have a physical presence in the forum state [through their agent], have access to enormous resources, face little or no language barrier, have litigated in this country on previous occasions, have a four-decade long relationship with one of the nation’s leading law firms, and are the parent companies of one of America’s largest corporations, which has a very significant presence in New York. New York City, furthermore, where the trial would be held, is a major world capital which offers central location, easy access, and extensive facilities of all kinds. We conclude that the inconvenience to the defendants involved in litigating in New York City would not be great and that nothing in the Due Process Clause precludes New York from exercising jurisdiction over the defendants.
Wiwa,
Many or all of those considerations apply with equal force in this case. For much the same reasons, we conclude that it is reasonable to exercise jurisdiction over DCAG in California, a state that has itself become a major hub for world commerce and attracts business not only from all over Europe, but from all over Asia as well.
In Hams Rutsky, we found that jurisdiction was reasonable even though there was an “obvious alternative forum” and the balance of the seven factors was essentially a wash, “since some of the reasonableness factors weigh in favor of [the defendant], but others weigh against it.”
In light of DCAG’s pervasive contacts with the forum state through MBUSA, including the extensive business operations of that subsidiary, the interest of California in adjudicating important questions of human rights, our substantial doubt as to the adequacy of Argentina as an alternative forum, and the various issues discussed above with respect to Germany, we hold that DCAG “has not met its burden of presenting a compelling case that the exercise of jurisdiction would not comport with fair play and substantial justice.” See id. (emphasis added).
At the time this suit was filed, MBUSA’s business was sufficiently important to DCAG that without MBUSA or another representative, DCAG would have performed those services itself. Moreover, DCAG had the right to control to one extent or another nearly every aspect of MBUSA’s business. Therefore, we conclude that, at least for the limited purpose of determining general jurisdiction, MBUSA was DCAG’s agent.
The Supreme Court “long ago rejected the notion that personal jurisdiction might turn on ‘mechanical’ tests” that fail to take account of reality. Burger King,
The numbers bear out our perception. At the time that this suit was filed, MBUSA’s sales in California alone accounted for 2.4% of DCAG’s total worldwide sales. Moreover, when considering burdens on the defendant and the issue of state sovereignty, we cannot overlook the fact that when this suit was filed, nearly 50% of DCAG’s overall revenue came from the United States, and that in order to make this income, DCAG created a wholly-owned subsidiary, MBUSA, to sell Mercedes-Benz vehicles in the United States.
Our test for personal jurisdiction must take these realities into account in determining whether it is reasonable to subject a parent company to the jurisdiction of the courts of this nation on the basis of the acts of its agent. After applying this test, we have no doubt that DCAG is subject to personal jurisdiction in California, and that the exercise of such jurisdiction is not only reasonable, but fair and just. Therefore we reverse and remand for further proceedings consistent with this opinion.
REVERSED and REMANDED.
Notes
. One of the plaintiffs is a resident of Argentina, but a citizen of Chile; the other twenty-one are Argentinian citizens and residents.
. MBA was actually the subsidiary of DCAG’s predecessor-in-interest, but neither party contends that there is any relevance to this distinction.
. The Dirty War in Argentina began in 1976 when the military overthrew the government
. A German trial court authorized the service, but a German appellate court stayed the service so it could determine whether the service of process would infringe on Germany's sovereignty. See Bauman v. DaimlerChrysler AG (Bauman I), No. C-04-00194 RMW,
. Although the defendants objected to these two documents as unauthenticated hearsay, the district court dismissed the objection, finding that it was appropriate to consider them at least for the purposes of determining personal jurisdiction. Bauman I,
. Under the plaintiff-friendly standard at this stage of the litigation, it appears that DCAG had dual operational headquarters in Stuttgart, Germany and Auburn Hills, Michigan. DCAG vigorously disputes this. Another federal court has also found that DCAG has dual headquarters in Germany and in Michigan. Tracinda Corp. v. Daimlerchrysler AG,
. In 2007, DCAG was restructured when it sold its majority interest in the Chrysler Car Group. This is irrelevant for purposes of this case, primarily because DCAG’s relation to MBUSA was not affected by the restructuring (except that DCAG is now known as Daimler-Benz AG). In addition, general jurisdiction is
. Many of the provisions in the Agreement also apply to MBUSA's Authorized Resellers. Because this case focuses on the relationship between DCAG and MBUSA, we will primarily discuss the provisions as they apply to MBUSA, although in some instances, for clarity’s sake, we will discuss the provisions as they apply to MBUSA and its Authorized Resellers.
. The district court did not consider plaintiffs’ argument, raised for the first time after the district court’s tentative order, that there was nationwide personal jurisdiction over DCAG under Federal Rule of Civil Procedure 4(k)(2). Bauman II, 2007 WL 486389, at *6. It also did not consider plaintiffs’ argument that if the court found no personal jurisdiction in California, it should transfer the action to the federal district court in Eastern Michigan pursuant to 28 U.S.C. § 1406. Id. Because we find that plaintiffs have made a prima facie showing of personal jurisdiction over DCAG, it is unnecessary for us to consider those arguments or to decide whether, as DCAG contends, plaintiffs have waived those arguments by failing to raise them at an earlier stage in the district court proceedings.
. The district court included a cursory mention of exhaustion requirements under the TVPA in its reasonableness analysis. Bauman II,
. Both parties agree that courts in California have general jurisdiction over MBUSA.
. The cases that might be read to require a more stringent showing of control do so only when describing both the agency and alter
. Admittedly, there is a lack of clarity and consistency in the previous articulations of the “sufficient importance” test. Some language in our Unocal opinion would appear to require that without the particular subsidiary's services, the parent company would have to undertake the agent's activities itself, perhaps through the use of its own personnel. See Unocal,
. As discussed above, the alter ego test requires a showing that the "parent controls the subsidiary 'to such a degree as to render the
. The mere "capacity” to control is not sufficient to establish agency, absent some indication of an agreement that the principal has the right to control the agent. Bonds,
. A letter from DCAG Chairman Jurgen Schrempp in a DCAG publication, under the headline “Our Presence in North America,” said that DCAG had 125,000 employees in the United States, Canada, and Mexico, (emphasis added). The same publication said that
. DCAG points to a news article about another Argentinian Supreme Court case involving the prosecution of a government official for acts committed during the Dirty War; the article says that "[t]he statute of limitations is not applied to these crimes.” Martinez de Hoz Pardon Quashed By Supreme Court, Buenos Aires Herald (Apr. 28, 2010) (emphasis added). There is no indication, however, that the law regarding civil cases has changed, and therefore this article, even were we to consider it, is of no significance. In fact, the Yanez case cited above recognized that crimes against humanity "have no statute of limitations in the penal sphere " but rejected an argument that an "action to claim compensation has no statute of limitations.” (emphasis added). Rather, the Court found that the two year and three-month statute of limitations from the age of majority applied to claims for compensation.
. Even if it were possible to bring suit in Argentina, which appears unlikely in light of Yanez, we cannot say that either "efficient judicial resolution of the dispute” or the "convenience and effectiveness of relief for the
. In fact, we have noted that "[wjhether another reasonable forum exists becomes an issue only when the forum state is shown to be unreasonable.” Sinatra,
. To the minimal extent that the opinion contains information received under seal by the district court, the seal is lifted. To the extent that any other information was received under seal, and has not previously been made public, the stipulated protective order shall remain in effect.
. This opinion replaces the opinion filed on August 28, 2009 and withdrawn on May 6, 2010.