Results tagged “long-arm statutes” from PlanetGreen.org

Say No to Jurisdictional Limbo

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The proposed Trans-Pacific Partnership trade deal would authorize outsourcing to Asia on an unprecedented scale. Widespread job loss and tax evasion would obviously result - however, an unforeseen consequence might also be the loss of U.S. jurisdiction over the wrongdoing of foreign corporations.

This side effect of international commerce is far from coincidental. Rather, for both the alien manufacturers contracting to supply goods to this country and the domestic distributors of the imports, it has long been the perfect arrangement to insure that neither has to pay the cost of any negligence that may have occurred in the construction of the product.

The problem began, on its current scale, in 1987, with the Supreme Court's decision in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987). This case involved a motorcycle accident attributable to defects in the vehicle's rear tire, which injured Gary Zurcher and killed his wife Ruth. The maker of the tire tube, Asahi, did not even bother to dispute the facts in a products liability suit brought the next year. Rather, it claimed that California courts could not exercise jurisdiction over it because its base of business was Taiwan and it had no contacts with California. Shockingly, the Court agreed with this claim, reversing the lower courts even over the objection of local businesses who felt that their decision to remain in this country had gone unrewarded.

If the facts of this case inspire a strange sense of deja vu, that might be because similar injustices continue to occur on an everyday basis throughout this country. Currently, the Japanese-based company Takata is attempting to escape liability for its lethal airbags under similar logic. In our recent memory, airplane owners and operators have shirked responsibility for preventable crashes, fabricators of foodstuffs, cosmetics, and medicines have marketed toxins with impunity, and factories selling their wares here have pointedly refused to comply with the most basic of our regulations. Far from the safeguard of "fair play and substantial justice" the Asahi decision claimed itself to be, it has caused our international economy to deteriorate into a lawless, deceitful exchange of tainted or dangerous goods.

However, we are far from helpless in the face of this judicial anarchy. Many states have adopted comprehensive "long-arm" statutes which locally overrule Asahi and similar decisions, restoring some sense of accountability to their commercial law. Massachusetts extends its reach to any company or individual who "derives substantial revenue from goods used or consumed or services rendered, in this commonwealth." New York takes it even further, not even requiring that the "substantial revenue" come from within the state as long as it originates from "interstate or international commerce" of any sort. The U.S. law, though, is not nearly so comprehensive, largely restricting federal jurisdiction to situations either of waiver or "in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere." 28 U.S.C. §1605. This will offer almost no protection against defects in the millions of imports that will flood our market if the TPP indeed goes into effect.

I recall that Justice Cardozo once said that "it is possible to use almost anything in a way that will make it dangerous if defective" - and clearly such faulty global policy will indeed be highly hazardous. Therefore, instead of opening the door even further to a practice already costing millions in unpaid damages and an inestimable amount of distress, injury and grief, maybe our government should focus on repairing the laws already in place.

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