House Bill Would Give US Consumers Someone to Sue Abroad

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Many people recall the furor last year over Chinese drywall, which tended to emit sulfurous gasses and in turn caused corrosion and health problems. But what many people don’t know is the frustration U.S. consumers experienced when they attempted to bring the manufacturers of the drywall to justice, because the manufacturers were overseas companies that did not have U.S. offices.

That may change soon, thanks to the Foreign Manufacturers Legal Accountability Act, pending in the House of Representatives. In essence, the bill gives U.S. consumers someone to sue. It requires companies whose products are imported into the U.S. to have a designated agent for service of process – in other words, someone here in the U.S. that can be served with papers for a lawsuit.

Additionally, by designating an agent, these foreign companies consent to the jurisdiction of the courts of the state in which their agent is located. To enforce its provisions, the bill would prohibit anyone from importing goods from a foreign company that did not have a U.S. agent.

The bill would cover any products that would fall under the jurisdiction of three federal agencies: the Consumer Product Safety Commission (such as children’s toys), the Food and Drug Administration (such as prescription drugs and medical devices), and the Environmental Protection Agency (such as pesticides). In late June the bill was approved by the Subcommittee on Commerce, Trade and Consumer Protection, and has bipartisan support.

Supporters of the bill, which have included U.S. consumer groups like the publishers of Consumer Reports, say that the bill will help both U.S. manufacturers (by leveling the playing field) and U.S. importers (who were often the only party that could be sued if products were faulty, even though they may not have been directly responsible for the problem).

But legal experts point out that even if a foreign company may be successfully sued in a U.S. court, there’s no guarantee that the court’s judgment will be enforced in their home country. Also, some foreign companies may elect to avoid the requirements and simply not enter the U.S. market at all, potentially increasing consumer costs and limiting choice. Other countries may also pass similar laws, which would add greater complexity to the export efforts of U.S. manufacturers.