Panel One: Vulnerability to Suit Amid Changing Doctrines

Welcome to the Letters Blogatory liveblog of the University of Pennsylvania Law School’s Journal of International Law’s symposium, Mass Torts Litigation in a Shrinking World! Just to let you know how this will work, I will be posting one post for each panel, and if you click on the title of the post, you will be able to see my live blog of that panel’s discussion. Please do not refresh your screen; you shouldn’t need to to see the live blog. Or so I allege. If there are technical problems, we will try to fix them as we go.

Let’s get started! The speakers on the first panel are: Lonny Hoffman of the University of Houston, Allan Stein of Rutgers, and James Brogan of DLA Piper, and the discussion will be moderated by Ryan Williams of the University of Pennsylvania.

Ted Folkman November 2, 201211:34 am

(That’s 2:15 EDT, of course).

Ted Folkman November 2, 201211:33 am

We’re finishing up the first panel now. I will not be liveblogging the next panel, which is mine. Check back in at 2:15 for panel #3!

Ted Folkman November 2, 201211:30 am

Q&A time. Vivian Curran of Pitt asked about the French blocking statute. Jim Brogan pointed out that most US courts have difficulty taking the blocking statute seriously because of the general lack of enforcement of it in France. (There is a recent counterexample).

Ted Folkman November 2, 201211:21 am

Hooray! He’s talking now about the Hague Evidence Convention. He points out that the Convention is not mandatory and that foreign parties can be subject to regular discovery under the FRCP.

Ted Folkman November 2, 201211:15 am

Why does the US company want to sue the foreign parent if the US subsidiary is good for the money? He says one of the incentives is the wish to cause distress to the foreign parent to encourage a settlement. I think this is at least partly right in light of foreign concerns about US discovery in light of their own blocking statutes, etc.

Ted Folkman November 2, 201211:12 am

Despite the concerns Stein and Hoffman raised about decreasing access to courts, Brogan says that he hasn’t seen those concerns in practice on the ground. The courts, he says, tend still to be quite liberal.

Ted Folkman November 2, 201211:09 am

He also points to “cultural and historical perspectives.” E.g., European focus on privacy versus our focus on free speech; our distinctive governmental institutions and the right to a trial by jury.

Ted Folkman November 2, 201211:07 am

(Is this a fair criticism? You may say the costs are too high, but you have to consider the benefits the system produces. I’m just saying.)

Ted Folkman November 2, 201211:06 am

Our jurisdictional law is less liberal than Canadian or European law, he says. Those courts don’t take seriously the concerns our courts have. Why? US litigation is viewed as a liability given its cost and inefficiency.

Ted Folkman November 2, 201211:04 am

Now we have Jim Brogan of DLA Piper.

Ted Folkman November 2, 201211:04 am

It seems that if the US company is a truly independent distributor instead of a subsidiary, veil piercing can’t work. But what if it’s a subsidiary? Hoffman suggests that’s the next question.

Ted Folkman November 2, 201211:02 am

Cert. watch: Hoffman points to Bauman v. DaimlerChrysler, now on cert.

DaimlerChrysler’s foreign subsidiary is accused of colluding with a foreign government’s human rights violations to prevent workers from forming a union. The plaintiffs sued DaimlerChrysler’s US subsidiary—a sister company, not a parent—arguing a veil piercing theory for jurisdictional purposes. Hoffman (rightly) says the theory most likely shouldn’t work, though the Ninth Circuit was persuaded. Let’s keep an eye on this one.

Ted Folkman November 2, 201210:59 am

(Aside: the S. Ct. may have been wrong about whether the issue was preserved …)

Ted Folkman November 2, 201210:58 am

What if the US parent company is by hypothesis subject to general jurisdiction in the forum and its subsidiary committed a tort abroad? Does the same alter ego or veil piercing idea work? In Goodyear, the answer was no. But note that in Goodyear, the court actually didn’t reach the issue of veil piercing on the theory that the issue had not been preserved.

Ted Folkman November 2, 201210:55 am

In the domestic context: what if a subsidiary is the only wrongdoer in the forum, and the parent is not present there? The law on this is all over the place. Some older cases say there can never be attribution, but the more modern doctrine looks to factors like control, a “single enterprise” test, etc. These questions are related to veil-piercing or alter ego doctrines. Courts are borrowing corporate law doctrines to make this jurisdictional arguments.

Ted Folkman November 2, 201210:52 am

Great example. A is in Ohio and goes to Oregon to plant a bomb that explodes. Obviously A is subject to personal jurisdiction in Oregon for the tort. What if A makes an agreement with B, who then goes to plant the bomb in Oregon? There’s an agency argument that says B’s acts should be attributed to A for jurisdictional purposes. This kind of argument is unavoidable in the corporate contexts, since corporations always and exclusively act through their agents.

Ted Folkman November 2, 201210:49 am

How do plaintiffs fight back against the closing of the doors of our courts? They look to ‘attributed contacts’, e.g., trying to find subsidiaries or affiliates whose contacts with the forum can be attributed to the target.

Ted Folkman November 2, 201210:48 am

He starts with a paean to the outstanding procedural scholars at Penn.

Ted Folkman November 2, 201210:47 am

Now Lonny Hoffman is starting his remarks.

Ted Folkman November 2, 201210:47 am

Stein points to the expansion of the use of forum non conveniens and the greater number of dismissals. “It’s almost impossible for a foreign plaintiff not to be ‘forum non’ed’ out of the US courts.” Is that a little strong? It would be good to look at the statistics on this. Stein points out that it’s only foreign plaintiffs who get their cases dismissed, not American plaintiffs.

Ted Folkman November 2, 201210:44 am

Stein makes an interesting observation about web-based “presence” in a jurisdiction. If Goodyear turns out to be the wave of the future, even really interactive and generally available websites almost certainly won’t be enough for general jurisdiction.

Ted Folkman November 2, 201210:43 am

What about general jurisdiction? Goodyear Tire v. Brown is revolutionary, Stein claims. Goodyear should have been an easy case. There seemed to be systematic and continuous contact with the forum, but Justice Ginsburg made the point that “stream of commerce” cannot create general jurisdiction. To be subject to general jurisdiction, the defendant has, in essence, to be sued “at home.”

Ted Folkman November 2, 201210:39 am

What about personal jurisdiction?

In both specific and general jurisdiction cases, we’ve seen a big cut-back. In specific jurisdiction cases, defendants have been able to insulate themselves from liability by the use of intermediaries. The most recent case on these lines is the recent McIntyre v. Nicastro case, where a Scottish manufacturer sets up a US intermediary to import the machines into the US and sell to US customers. The company was effective in isolating the parent from liability. This is a big change from the prior “stream of commerce” analysis.

Ted Folkman November 2, 201210:36 am

It’s interesting to add all these items up to think about their cumulative effect. Is Lord Denning’s observation about foreign litigants being drawn to our courts like moths to a flame still sound?

Ted Folkman November 2, 201210:35 am

6. Heightened Daubert scrutiny of scientific evidence.

Ted Folkman November 2, 201210:34 am

2. Less judicial review of arbitral decisions.

3. Limitations on punitive damages, including constitutional limitations on the amount in relation to the compensatory damage amount.

4. Increased use of summary judgment.

5. Federalization of class actions.

Ted Folkman November 2, 201210:33 am

The US has systematically decreased its role in international litigation for 30 years by becoming much less plaintiff-friendly, he says. Why and how?

1. Iqbal/Twombly. For non-US readers, these are the recent cases that heightened the old notice pleading standard and imposed a somewhat difficult to understand “plausibility” requirement. The net effect is to make it difficult to plead claims.

Ted Folkman November 2, 201210:31 am

We are starting with Professor Alan Stein of Rutgers, who is going to summarize the role of US courts in transnational tort litigation, if such a thing is possible.

Ted Folkman November 2, 201210:27 am

The first panel is getting set up now!

Ted Folkman November 2, 201210:26 am

On Argentina’s debt crisis and the recent Second Circuit case I covered a few days ago, Restrepo speculated that the Argentina’s cases will not have much spillover effect for other Latin American sovereigns considering selling debt in the US market, because those countries (Brazil, Peru, Mexico, etc.) would be unlikely to take the kind of actions Argentina has taken that have gotten it into so much trouble with the markets.

Ted Folkman November 2, 201210:22 am

He has some interesting remarks on the Ecuador ATPA issues I’ve written about. He speculates that Ecuador is going to lose its preferences eventually, but not because of the Lago Agrio case, but because in light of the new free trade agreement with Colombia, which was always the driver of the ATPA program, the will to continue the problem in Washington is probably pretty low because of other issues (e.g., curtailed counter-narcotics cooperation, expulsion of our ambassador, etc.).

Ted Folkman November 2, 201210:20 am

We are just finishing up the Q&A with the keynote speaker, Daniel Restrepo, a former government official responsible for US trade policy in Latin America.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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