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Foreign Companies – Are They Getting Off Scott-Free for Shipping Defective Products to the U.S.?

Here at the Gilmore Law Firm, we handle many cases in which a defective product has injured one of our clients.  The cases run the gamut of products – from industrial machines, consumer products, automobiles, and even heavy trucks or other mobile machinery.

As you know, it’s a big economic world nowadays, and seems to be getting bigger every day.  Products are manufactured all over the world and shipped to the United States for sale.  Many of those products cause harm in the United States.  According to a recent review of data collected by the Consumer Product Safety Commission, approximately 85% of recalls of products involve products made in a foreign country.

As a consumer or user of these products, you would think the remedy would be simple – just sue them in court here in the United States.  After all, they shipped a product to the United States, right?  In words that have now become iconic in college football parlance, “Not so fast my friend.”

In two recent United States Supreme Court decisions,  the Court held that two companies which manufactured products outside the United States could not be sued in the United States, even though they shipped their products to the U.S. for sale.  The Court held that the foreign companies lacked sufficient “contacts” with U.S. and/or the specific state in which the action was brought, for the court to exercise what is known as “jurisdiction” over the companies.  In one of the cases, Justice Ginsburg, disagreeing with the Court’s decision, framed the issue as follows:

A foreign industrialist seeks to develop a market in the United States for machines it manufactures. It hopes to derive substantial revenue from sales it makes to United States purchasers. Where in the United States buyers reside does not matter to this manufacturer. Its goal is simply to sell as much as it can, wherever it can. It excludes no region or State from the market it wishes to reach. But, all things considered, it prefers to avoid products liability litigation in the United States. To that end, it engages a U. S. distributor to ship its machines stateside. Has it succeeded in escaping personal jurisdiction in a State where one of its products is sold and causes injury or even death to a local user?

Justice Ginsburg and two other justices thought the answer ought to be a resounding “no.”  I agree.  It simply make no sense to deny people the right to bring an action in the U.S. against a foreign company when that company ships a defective product that causes harm to this country .  Does the Court honestly believe that our fellow citizens can get justice in Chinese courts?  Really?

Most legal commentators believe that the Court hasn’t issued its last ruling on this issue, so I suppose there is still hope that common sense will prevail.

Edwin Lamberth

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