Recent Trends In International Product Liability Litigation

The United States courts collectively are becoming the "world's courthouse."

Attracted by the high quality and efficiency of U.S. courts, the increasing willingness of U.S. courts to exercise jurisdiction over international disputes, and the perception that larger damage awards and punitive damages may be available in U.S. courts, non-U.S. litigants are filing cases in U.S. courts with increasing frequency. U.S. companies named as defendants traditionally reacted to such lawsuits by filing motions to dismiss in favor of the non-U.S. courts based on the doctrine of forum non conveniens. However, changed conditions in many countries have now made such motions much more difficult or, worse, ill-advised.

Corporate litigants (particularly product manufacturers and distributors with operations in many different countries) and their lawyers need to recognize and understand the unique opportunities and challenges of international litigation in the 21st century. As such corporations navigate this changed litigation environment, they should be well versed in the many procedural challenges, and the strategies for overcoming those challenges, that could affect the ultimate outcome of the litigation. This article will focus on a few of the challenges that have gotten increasing attention by the courts in recent years: key considerations in deciding where to sue or be sued, challenges of cross-border discovery, and frequently overlooked tools for managing parallel proceedings in non-U.S. and U.S. courts.

Where to Sue or Be Sued

When a U.S.-based company finds itself defending against claims brought in the U.S. by residents of another country for events that allegedly occurred there, the company's first reaction may be (and historically often has been) to seek dismissal of the case in favor of the courts of that country, based on the doctrine of forum non conveniens. The reasons for that reaction may have included the perception that the non-U.S. legal system almost always was more attractive for a defendant than the U.S. system because the non-U.S. system often did not recognize legal theories such as collective actions or strict liability that are more common in the U.S.; did not permit large damage awards or punitive damages; did not allow wide-ranging discovery; or did not permit contingency- fee agreements with plaintiffs' counsel.

As recent experience has shown, however, litigating can be extremely difficult in a faraway court without a truly functioning judiciary; in the judicial system of an autocratic regime where transparency or independence are lacking due to rampant politicization or corruption; where the ability to conduct meaningful discovery into the non-U.S. plaintiffs' claims is limited; and/or where laws are enacted specifically to disadvantage nonresident companies. Thus, a U.S. company may prefer (as many now do, given their other options) to defend against non-U.S. claims brought in the United States, where the company will have greater assurance of having, at the very least, the benefit of due process, familiar rules and procedures, broader discovery rights, and an independent judiciary. Similar considerations must factor into a U.S.-based company's decision about where to bring suit as the plaintiff if it is presented with the option to sue a non-U.S.-based defendant in either a U.S. or non-U.S. jurisdiction.

A rigorous comparative analysis of these factors should be undertaken for each case because the legal, judicial, and political climate can and will vary dramatically from country to country, between regions or other subdivisions within a country, and even within the same country from year to year. Of course, such an analysis cannot be divorced from an independent and careful assessment of the many other factors on which any case turns—the nature of the case, the identities of the parties, the specific court and judge, the law that will apply, and so on. The key legal issues addressed in this article, including forum selection, discovery challenges, and parallel proceedings, should be assessed with these considerations in mind.

Forum Non Conveniens. Most practitioners likely are familiar with the forum non conveniens doctrine, addressed by the U.S. Supreme Court in the seminal case of Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947). Under this doctrine, a U.S. court may dismiss a case pending before it if the moving party can show that an adequate alternative forum exists and that the balance between the private interests of the parties and the public interests favors the alternative forum.1 In considering the private interests of the litigants, the courts take into account such factors as the location of documentary and other evidence, the residency of the witnesses, and the need for translators. In assessing the public interests, the courts consider such factors as the burden on local court dockets and jurors, the familiarity of the court with applicable law, and the citizenship and residency of the parties.2

Yet even if the balance of interests favors an alternative forum, U.S. courts will not dismiss a case if the alternative forum is inadequate. To determine adequacy, courts will analyze such factors as whether the proposed alternative venue has a functioning and fair court system and whether the plaintiff would have a remedy under the foreign law.3

A U.S. court may stay, rather than dismiss, the case under the forum non conveniens doctrine. A stay allows the U.S. court to retain jurisdiction while sending the case to the alternative forum to be litigated. If the alternative forum proves to be inadequate, the U.S. court can resume trial of the case.4

Practitioners should be aware of recent case law holding that a district court can dispose of an action based on forum non conveniens, even before considering subject-matter or personal jurisdiction, when considerations of convenience, fairness, and judicial economy so warrant.5 Thus, where counsel anticipates a lengthy, intensive, and expensive discovery battle on personal jurisdiction, for example, he or she should consider bringing an early motion to stay or dismiss based on forum non conveniens, even before obtaining a determination on personal jurisdiction.6

Blocking Statutes or "Discriminatory Laws" Can Prevent Parties From Seeking a Change of Forum. Some countries have attempted to prevent or discourage forum non conveniens motions brought in U.S. cases by enacting blocking statutes or other laws, sometimes referred to as "discriminatory laws," designed to render their own courts unavailable, inadequate, or simply unattractive to U.S. defendants as alternative fora. Blocking statutes are designed to deprive the non-U.S. court of jurisdiction over a dispute once a case involving that dispute has been filed in a U.S. court, thus eliminating the non-U.S. court as an alternative available forum in the event that a later forum non conveniens motion is brought. For example, a blocking statute typically provides that, if a citizen of Country X files a lawsuit in any court outside Country X, then the courts of Country X shall lose, or shall be barred from exercising, jurisdiction over that dispute forever. Without an alternative forum to hear the dispute, so the theory goes, a U.S. court cannot dismiss the suit on forum non conveniens grounds.

Ecuador enacted a blocking statute in 1998, known as Law 55, which provides that if a suit involving an Ecuadorian plaintiff is filed outside Ecuadorian territory, the national competence and jurisdiction of Ecuadorian courts shall be extinguished. Several other Latin American countries have enacted similar statutes.7 Even these blocking statutes, however, are not always successful.8

Other countries opt for "discriminatory laws" rather than blocking statutes to discourage U.S. forum non conveniens dismissals. For example, in 2001, Nicaragua enacted Special Law 364, which specifically applied to claims of sterility due to alleged exposure to the pesticide 1,2-dibromo-3-chloropropane, or "DBCP." By its terms, that law...