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ATLA Shames Congress for Protecting Negligent Foreign Corporations
from Being Held Accountable
HR 420 protects foreign corporations who sell defective or dangerous
products in the United States
(Friday, October 27, 2005) - The U.S. House of Representatives
passed H.R. 420 today, a bill that would limit where an injured consumer
can file a lawsuit and prevents some foreign corporations who sell
unsafe products from being held accountable in U.S. courts.
“It’s bad enough that Congress has passed multiple bills
this year allowing corporations to escape accountability, but to now
protect foreign corporations that injure Americans with defective
products shows to what extreme lengths they’ll go to eliminate
the right of ordinary Americans to seek justice,” said Ken Suggs,
President of the Association of Trial Lawyers of America (ATLA).
Under current law, an injured family can sue a foreign manufacturer
that makes a defective or dangerous product wherever there are sufficient
contacts between that company and the jurisdiction – such as
where the product is imported into the U.S. or where it is sold.
This bill would require a suit be brought not where there are contacts
– but where the defendant’s principal place of business
is located, even if that is overseas. In other words, the injured
American family would have to travel abroad to file a lawsuit.
An example of the bill’s effects is as follows: Suppose a corporation
based in China sells defective cribs in the State of California. If
a Kansas family buys that crib in California, takes it back to Kansas
and the defective crib collapses killing their child, that family
would likely have to go to China to file a suit, and could not sue
in either Kansas or California.
“This means more defective and dangerous products entering the
country from overseas, and no way to hold the foreign manufacturers
accountable,” said Suggs.
The special protection for foreign corporations in this bill is something
the Majority was aware of but chose not to fix. The Congressional
Research Service warned before the floor debate on this bill in October
2004 that the legislation would eliminate the ability of some injured
Americans to hold foreign manufacturers accountable for defective
products.
Congressman Jay Inslee (WA-01) spoke out forcefully during floor
debate last year about this “fatal defect” in the bill,
which could be fixed with a one-sentence amendment. This year, supporters
of the bill refused to even allow a vote on an amendment to strike
this special protection for foreign manufacturers.
In addition to the venue requirements, HR 420 forces state courts
to follow federal “Rule 11” laws for sanctioning attorneys
who file frivolous suits in cases involving interstate commerce, instead
of allowing state courts to discipline the attorneys using their own
rules. State courts would be required to conduct a lengthy pre-trial
hearing to determine whether the case affects interstate commerce,
and therefore whether Federal Rule 11 must be imposed rather than
the state equivalent, which is in many cases identical.
“The bill is unnecessary – all 50 states already have laws
that allow judges to throw out a frivolous suit and sanction the attorney
who filed it – but Congress has shown once again it places a
higher priority on protecting negligent corporations than the rights
of ordinary Americans to seek justice,” said Suggs.
# # #
As the world's largest trial bar, ATLA
promotes justice and fairness for injured persons, defends the constitutional
right to trial by jury, and strengthens the civil justice system through
education and disclosure of information critical to public health
and safety. With 60,000 members worldwide, ATLA provides lawyers with
the information and professional assistance they need to serve clients
successfully and protect the democratic values of the civil justice
system.
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