Losing mfg, lawyers to the rescue? [gasp]

[lendaddy]

Equal playing field and all that...

American mfg. live in fear of lawsuits, our overseas friends do not. I mean seriously, what are you going to do, sue a mfg. in Chinese court?

I am sure that the importers here could be sued, but my experience is that they are usually one/two man operation simply shuffling paperwork. In other words they have shallow (relatively) pockets and therefor not big targets. Beyond that I'm sure they have some degree of insulation or we wouldn't see the pathetic products that are out there.

What if importers were required to carry obscene limit liability insurance to cover the goods they imported against personal injury suits and other BS we have to deal with?

Now I would prefer we go the other way and reform our sue happy system, but this would be a much more likely to succeed method of leveling the playing field.

For instance, you buy one of those pocket bikes through Ebay and the front tire falls off at speed. What are you going to do? Well, if it were a Harley Davidson product you'd be a rich man. But since we have no way to reach out and touch Zing Mao Tichy Mfg. in Beijing you get nothing.


Lets sick our devil dogs on em

[lendaddy]

If not by the method I tossed out there, then by another that exposes them to our effed up legal system. The products I've seen (some are good I admit) show me that they have no fear of our system.

[Icemaster]

Like toothpaste and pet foods?

[lendaddy]

Originally posted by Icemaster
Like toothpaste and pet foods?

Are not those American companies w/foreign suppliers? I imagine the US companies will get sued and the Chinese supplier will skate, yes?

[Icemaster]

Dunno. Doubt the Sino supplier will skate, they face the loss of the business which in a capitalistic model is worse than any regulatory or legal action. They'll end up spending a hell of a lot just to recover from the bad press and PR. But still, their model is far more "business friendly" (as opposed to consumer friendly) than ours and will cost them less to recover than a domestic would were they faced with the same situation.

Short answer, make the move on what you have a better shot at controlling. In this case, tort reform. Give the domestics a better shot at competing.

[Dixie]

Can't we just off-shore the lawyers?

[David]

Liability insurance sounds like a good plan. I'm sure China will call it an import tax, but it's really just the cost of doing business in the US these days.

[Dueller]

Wow...sounds like the typical law school exam that you're given 5 hours to write an answer but to sufficiently cover the topic you could research and write for weeks or months even.

There are procedures under our system of jurisprudence to "reach out and touch" a foreign defendant. There's the Hague convention, for example. Or you could sue in a domestic jurisdictuion (federal or state) and proceed under long arm or stream of commerce theories. You could try to find a defendant that has a connection with the offending foreign corporation (e.g., their domestic distributor) and name them as a necessary party and go after their assets under a joint and several liabilty theory. If you can find any asset of any type of the defendant (even if it is unrelated to the defective product) you cab try to obtain quasi in rem jurisdiction (e.g., you could tie up their assets in their ebay paypal account). in any event, any foreign country legitimately doing business in the U.S. is required to have a registered agent who you can serve with process to obtain jurisdiction.

Bottom line is that you ultimately have to be able to find a way to collect any judgment you might obtain. And this is true whether you are dealing with a domestic or foreign defendant....I've had to turn clients away because the negligent party has shield themseklves from liability with corporate or LLC veils that makes it nearly impossible to recover for an injured party...

Now do you see why we make the big bucks? LOL

[Aerkuld]

I have some experience of this with Chinese versions of US products and it is all covered by patent law. The Chinese products in question are often direct copies of the rival product so our company goes after the bigger importers and manufacturers and deal with them one at a time in court. It is a blantant breach of patent and it is enforceable if you have the time, money, and inclination.

[lendaddy]

Originally posted by Aerkuld
I have some experience of this with Chinese versions of US products and it is all covered by patent law. The Chinese products in question are often direct copies of the rival product so our company goes after the bigger importers and manufacturers and deal with them one at a time in court. It is a blantant breach of patent and it is enforceable if you have the time, money, and inclination.

That's the point though, require them to be very exposed to our system and at the very least we'll get better/safer products. At best we might regain some of our lost edge.

Make it so you don't need extra time, money or inclination.

[jyl]

IIRC, for defective products you can sue the seller, not just the mfg. So if the Chinese-made tool you bought at Home Depot is defective and you are injure, Home Depot has all the pocket you need.

[lendaddy]

Originally posted by jyl
IIRC, for defective products you can sue the seller, not just the mfg. So if the Chinese-made tool you bought at Home Depot is defective and you are injure, Home Depot has all the pocket you need.

And that's the problem. Lets say the front tire on your Harley falls off and you go down. Although I'm sure your blood sucker(...err I mean lawyer), will name the dealership as a defendant, the prize will be Harley themselves.

With Zing Mao motors, they skate. That's the difference.

[jyl]

Originally posted by Wayne at Pelican Parts
I don't think that this is necessarily true. I believe that liability flows back through the chain, unless the retailer wilfully and negligently knew of some product defect and sold the product anyways...

-Wayne

It's been >10 years since I handled a product liability case, so memory could be fuzzy or law could be changed. W/ those caveats, I think in CA the law is that for a strict product liability case based on defective product, the seller is among those liable, regardless of whether the seller was negligent or wilful. The seller typically has an indemnity claim vs the mfg, of course, but that isn't a defense for the seller. I did some quick checking just now, and still think this is the case.

[MRM]

Originally posted by Wayne at Pelican Parts
I don't think that this is necessarily true. I believe that liability flows back through the chain, unless the retailer wilfully and negligently knew of some product defect and sold the product anyways...

-Wayne

No, this is wrong. Every state has something called a pass through statute. Any wholesaler, dealer, distributor or retailer who has a defective product that "passes through" their their business has potential liability. The primary liability goes to the manufacturer. But if the manufacturer is judgment proof for any reason, the liability of the manufacturer flows through the wholesaler and retailer, even if they did nothing wrong. They end up having to pay for the defect in the product because it passed through their hands. This protects the consumer, and shifts the risk to the commercial entities who are better able to control the risk and who profited from the sale of the product.

This is dealt with pretty easily, even with off shore manufacturers. The US distributor just requires as a condition of distributing the product that the manufacturer obtains a liability policy naming the distributor as an additional insured. The insurers actually are in a better position to enforce standards on the off shore manufacturers than any government entity.

The Home Depots of the world are raising the standards of third world manufacturers by this very process. The deal is that if you want to do business in the US, the US distributor and retailer are going to demand proof that your product and process are reliable and that you have insurance to cover any defects. Ultimately it's Lowes or Home Depot or Sears that have to stand behind their product, so they have an incentive to make sure you get good products.

[Dueller]

Without trying to defend my brethern in the bar, this discussion does illustrate that plaintiffs' lawyers do occasionally serve some useful purpose. Believe it or not, not every lawyer is in it just to get rich.

[TheMentat]

Originally posted by Dueller
Without trying to defend my brethern in the bar, this discussion does illustrate that plaintiffs' lawyers do occasionally serve some useful purpose. Believe it or not, not every lawyer is in it just to get rich.

I think the useful end result is simply an inadvertent by-product of them trying to get rich in this case...

[MRM]

Originally posted by TheMentat
I think the useful end result is simply an inadvertent by-product of them trying to get rich in this case...

Isn't that the very definition of the free enterprise system? Enlightened self interest.