Taxation and State Taxation -- 2002
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DaimlerChrysler AG v. Olson
(U.S. Supreme Court)
State jurisdiction over out-of-state company
The NAM filed an amicus brief 2/1/02 opposing a Texas Court of Appeals ruling that a Texas court has "general jurisdiction" over a German company. At issue is whether nonresident defendants can be sued in a state where they conduct no activities. The NAM's brief raises an additional concern that the Texas court used an "alter ego" analysis that treats a parent corporation as if it had the same activities in Texas as did its subsidiary. By disregarding basic principles of corporate law, the Texas decision sets a dangerous precedent that threatens to make every corporate parent subject to jurisdiction wherever any company it owns has minimal business activities. Texas also improperly justified its jurisdictional reach by focusing on the company's web site (with a "contact us" email feature) and its use of a federal court in Texas to enforce its trademark rights. The Supreme Court declined to hear this appeal on 5/20/02.
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