A study by The American Association for Justice shows that eighty-three percent (83%) of the recalls announced by The Consumer Product Safety Commission (CPSC) in 2009 were from foreign manufacturers. The results for 2008 were similar. What happens when one of these defective foreign-made products injures someone?
The recent litigation concerning defective Chinese drywall highlights the problems with holding foreign manufacturers accountable for the injuries their products inflict upon the public. Millions of tons of defective Chinese drywall were imported into the United States for use in the construction of homes. After these homes were built, owners began complaining that the drywall emitted corrosive and irritating fumes. In November 2009 the CPSC issued a press statement, after studying the issue, finding "a strong association between homes with the problem drywall and the levels of hydrogen sulfide in those homes and corrosion of metals in those homes." The defective drywall was emitting hydrogen sulfide gas which not only created an irritating smell, but also, caused parts of the home to corrode. The CPSC is continuing to study the health issues which may also be associated with the defective drywall.
Last week, a Federal Judge in Louisiana assessed $2.6 million in damages against a Chinese state-owned manufacturer of this defective drywall on behalf of seven Virginia families. These damages relate only to the costs necessary to remediate the problem and fix the damaged homes of these plaintiffs, not the potential health risks. Many other damaged homeowners have also filed claims which remain pending.
The problem arises in the enforcement of the Court's judgment. Will the foreign manufacturer truly be held accountable or is this a judgment that will never be collected? The Wall Street Journal published a great article discussing the case and its history. In this litigation, the Chinese manufacturer never even answered the lawsuit. While the Court's ruling on the initial drywall claim is a positive step, it remains unclear as to whether the foreign drywall manufacturer that caused this harm will ultimately pay for the damages it created.
Foreign manufacturers are often able to avoid their liability because of difficulties obtaining legal service of the claim on the company in its home country, issues related to whether the U.S. Court has jurisdiction over the manufacturer, and then problems collecting any eventual judgment. It is important to remember that the damages caused by a defective product will be borne by someone. If the foreign manufacturer avoids its responsibility, then the innocent consumer, our government, or a domestic company that distributed the product, will ultimately (and unfortunately) bear the loss.
In February, several members of the U.S. House of Representatives introduced legislation that would make it easier to hold foreign manufacturers accountable for their defective products. The American Association for Justice issued a press release detailing some of the problems under current law as well as solutions presented by the proposed legislation. Among other things, the proposed legislation would require foreign corporations to have an "agent" in the United States to accept service of process for civil and regulatory claims. It would also require the manufacturer to consent to jurisdiction in our courts. This is much needed legislation that will hopefully protect consumers in the future.
