The case of the day is Elfaridi v. Mercedes-Benz United States (E.D. Mo. 2018). Hend Aitoufella and Dean and Katherine Jarman brought a putative class action against Mercedes Benz USA, LLC and Daimler AG. Their claim was that a defect in Mercedes-Benz vehicles from 2003 to 2015 caused sunroofs to spontaneously shatter. Yikes! The plaintiffs served process on Daimler in Germany via the German central authority. Apparently in order to induce the central authority to execute the request for service of process, the plaintiffs’ counsel represented in writing to the central authority that the case “involves claims in which the plaintiffs do not, and will not” seek punitive damages. On this issue, Peter Bert’s 2013 post explains that service of a US complaint seeking punitive damages on a German defendant via the central authority does not violate the German defendant’s constitutional rights. On the other hand, in In re Takata (S.D. Fla. 2017), we saw that German courts nevertheless can refuse to execute such requests for service on the grounds that actions for punitive damages are not civil or commercial within the meaning of the Hague Service Convention.
The trick in today’s case is that the plaintiffs later filed an amended complaint seeking punitive damages. Daimler argued for dismissal on grounds of judicial estoppel.
The court didn’t end up having to decide the issue, as it dismissed the claims on other grounds. So we are free to ask how the issue should come out. It seems to me that the flaw in Daimler’s argument is that a German defendant has no personal right not to be served with a complaint that seeks punitive damages. I say this for two reasons. First, as we know from Volkswagen itself, there can be ways to serve foreign companies (and German companies in particular) can be served without resort to the Convention. Second, if you are asking how both Peter’s post and the German action noted in Takata can be correct, I think the answer is that German courts may indeed refuse to serve process in a punitive damages case, but it’s not because the defendant has a right against service, but because the German state is not obligated to serve process in a case that it does not consider to be civil or commercial in nature. If anyone is harmed by the supposed “bait and switch,” it seems ot me it’s the German state, not Daimler.
A few other points.
- The issue Germany raises here is in principle best dealt with as a question about German recognition and enforcement of US judgments in punitive damages cases, not a question about service (see, for example, the Blizzard Entertainment case).
- Suppose the representation had been that the complaint does not seek punitive damages, instead of that it does not and will not seek punitive damages. Then it would seem to me there would be no basis for Daimler’s argument. But there are many ways other than a “bait and switch” amendment in which new issues can come into a case. Perhaps someone intervenes. Perhaps there is a new appellate decision or a new statute that creates a reason for amendment that didn’t exist at the time of the complaint.