Today, by a bipartisan vote, the House Energy and Commerce Committee approved H.R. 4678, the “Foreign Manufacturers Legal Accountability Act of 2010.” a bill supported by Republicans and Democrats, to enable American consumers to hold a foreign manufacturer accountable in U.S. courts for serious defects. I first wrote about the Act on June 29 and described the benefits to consumers who find themselves the victims of bad imported drywall, toys, food products, etc., but cannot sue the foreign maker here because of lack of minimum contacts. In this post I want to summarize the reasons why Constitutional conservatives and Tea Partiers should support the Act, as follows:
(1) The Act would force foreign manufacturers to play by the same rules as American companies. Foreign manufacturers are evading the U.S. legal system and forcing us to go to their home country and try to sue the company there, a costly and time-consuming process. Why should a consumer have to travel to China to serve the drywall maker, when the company does millions of dollars of business in the U.S. and already has an agent here serving as the importer? And why should we continue to allow Chinese law apply to us when we’re injured in our own house by their drywall or toys? Under the Act, foreign manufacturers would be required to register an agent, located in the states in which the company does business, to accept service of process for civil suits. As a result, foreign manufacturers would no longer get a free pass, and would be more likely to send safer products into the U.S. Our businesses should not be forced to unfairly compete against foreign businesses that are easily skirting the law.
(2) Our companies are already often subject to jurisdiction overseas, where the injury occurs, so the Act simply closes that loophole by creating consistent jurisdictional rules. For example, a number of European countries and Japan already have an in-country jurisdictional mandate for persons injured by products manufactured in the U.S. Even China’s new tort law recognizes jurisdiction where the injury or harm occurred. Closing the international loophole would give our consumers and businesses the same rights that foreign consumers and business enjoy.
(3) In many cases, the Act will actually decrease and even relieve liability for the U.S. companies which distribute and market foreign-made goods. When a foreign manufacturer cannot be located and sued, the U.S. seller may be the only party available to defend the lawsuit filed by the injured consumer. The Act would help our businesses because liability would either be transferred to or shared with the foreign makers, and not borne solely by the U.S. partner.
(4) Our Constitution isn’t a ticket for foreign companies to come into our house, sell their defective products, and then thumb their nose at our legal system, especially if our companies are subject to their legal system. We’ve let them get away with this for too long. The best way to correct the trade loophole – the most “Constitutionally conservative” way to do it – is to let Americans injured by bad foreign products to take them into a local court and let 12 good and fair jurors decide the validity of the lawsuit, the way designed in our Constitution and in almost 800 years of American-British civil law.