US Supreme Court Renders Two More Rulings that Will Stimulate Global Networking Among Members of the
The US Supreme Court issued two end of term opinions which in the long-term ultimately will stimulate the global expansion of the plaintiff’s bar. In the short-term, the result ultimately may hurt US businesses by allowing overseas competitors to dump defective products into the US with less fear of being sued. The opinions address issues regarding when a non-US company is subject to suit in the US for injuries caused by allegedly defective products. This prior post collected links to the oral arguments for both cases.
In one case, the injuries occurred outside the US, but the parents of the injured child brought suit in the US. In the second case, the injuries were suffered in New Jersey. The opinion was unanimous in the overseas injury case, but a fractured plurality opinion was issued for the case arising from injuries in New Jersey. Both opinions held that suit in the US was not proper. A detailed summary from ReedSmith is here.
These cases are notable as the Court tries to define jurisdictional principles in an increasingly small world with increasing globalization. Of special note, the result reached conflicts with the expressed hopes of both the US Chamber of Commerce and the US plaintiff’s bar. Really? Yes. As described in this prior post, both asked Congress to make it easier to sue overseas companies in the US. The plaintiff’s bar of course wants more targets, and the US Chamber of Commerce wants a "level playing field" in terms of exposure to product liability risks.
Lessons from the rulings ? For US importers of products made overseas, it’s time to look carefully at the contracts and think about litigation and insurance possibilities. For example, if the injured person sues only the US importer, can the US importer bring in that case a contribution claim against the manufacturer, or is doing so blocked by an arbitration clause or a forum clause. Does the US entity have explicit rights to indemnification from the manufacturer? Does it have insurance coverage?
For the plaintiff’s bar, this is simply the latest in a series of cases that force the US plaintiff’s bar to look outwards towards partnering with lawyers overseas. Such partnerships seem inevitable to reach the deep pockets. The plaintiff’s bar also will have to think harder about when and how discovery can be obtained. For example, do these opinions protect an overseas manufacturer from a subpoena for documents or deposition testimony in an underlying case filed in the US? If not, one may see a pattern of discovery-intensive US suits against "middlemen," followed by suits overseas against the manufacturer.
Overall the lesson seems to be that domestic lawyers for manufacturers must increasingly think critically about international issues, and how to deal with litigation realities.