Congress Seeks To Pass Legislation Easing Restraints on Suits Against Foreign Manufacturers

The U.S. Congress has been working on several versions of legislation which would make it more difficult for foreign manufacturers to avoid suit in the United States. Various committees have held hearings, and several bills have been introduced. The titles of the hearings and legislation are illustrative of where Congress might be going - Protecting the Playroom: Holding Foreign Manufacturers Accountable For Defective Products; Protecting Americans From Unsafe Products Act; Leveling the Playing Field and Protecting Americans- which all suggest a less than subtle bias against foreign companies and in favor of U.S. would-be plaintiffs.

The interest in such legislation stems from a multitude of tragic stories involving products imported into the U.S. A number of hearings were held showcasing several of these stories.

Witnesses at the hearings recounted experiences which included injuries received by a mechanic whose arm shattered when an Argentina manufactured tire exploded and the tearful description of the mother of a 13 year old girl who died while riding a Chinese manufactured electric scooter. These stories have led to growing support in Congress to find a way to hold foreign manufacturers accountable by requiring them to consent to personal jurisdiction as a condition to their goods being imported into the United States.

The Senate bill (S. 1606), known as the Foreign Manufacturers Legal Accountability Act, provides in particular that foreign manufacturers of certain goods establish a registered agent in the U.S. to accept service of process for the purpose of all civil and regulatory actions in state and federal courts (including actions that may be unrelated to the goods whose importation triggers the requirement). Once the foreign manufacturer registers an agent, the foreign manufacturer submits to the personal jurisdiction of the state or federal court of the state in which the registered agent is located.

Such a requirement would raise a number of significant legal and policy questions, including:

• The Senate bill assumes that a manufacturer or retailer knows that its goods are being imported into the United States. This ignores the realities of modern global commerce, which may entail several stages of production in multiple countries before a good finally is imported into the United States.
• A good imported into the United States may contain numerous components manufactured in different locations around the world. Requiring that the manufacturer of each component appoint a registered agent in the United States could create severe administrative problems.
• The requirement could be inconsistent with U.S. obligations under the World Trade Organization Agreement, including the obligation not to accord less favorable treatment to imported goods than to domestically manufactured goods.
• It requires a manufacturer or producer of a covered product to designate an agent for service of process in connection with "any civil or regulatory proceeding," even proceedings having nothing to do with the product introduced into U.S. commerce.

The bill has been referred to the Senate Finance Committee.

If you would like to know more about the pending legislation, please contact those listed below or your regular Crowell & Moring contact.