The suit was brought on appeal by Daimler AG after a California court ruled it could be sued over human rights abuses during the so-called "Dirty War" in Argentina 30 years ago.
In a decision written by Justice Ruth Bader Ginsberg, the court said the German-based automaker's connections to California were not enough to sue there for abuses allegedly committed by a subsidiary in the 1970s in Argentina.
The plaintiffs, workers and their relatives who worked at a Mercedes-Benz plant in Argentina, were suing over the company allegedly punishing workers who managers saw as union agitators.
"Exercises of personal jurisdiction of such breadth... are barred by due process constraints," Ginsburg said. Under the plaintiffs' argument, she said, "if a Mercedes-Benz vehicle overturned in Saudi Arabia injuring a driver and passengers from Norway, the injured persons could maintain a design defect suit in California."
The case, Daimler AG vs. Bauman, is the second case dealing with multinational companies being sued in U.S. courts. In Kiobel vs. Royal Dutch Shell in April, the Supreme Court found a New York court could not hear claims from 12 Nigerians for a crackdown on workers in Nigeria.