The WSJ law blog has a post today, entitled, Made in China, Sued in the U.S.A., on the spate of lawsuits against U.S. distributors of defective Chinese products. The post points out how US plaintiffs are suing these distributers/importers of Chinese manufactured products and how they will keep suing U.S. distributors/importers and not the Chinese manufacturers:
A spate of tainted Chinese products — from shrimp to toys to toothpaste — have made their way on to U.S. shores. And as surely as night follow day, lawyers here are filing lawsuits against the U.S. companies that distribute them. The cases might prove to be a new lucrative product line for the products-liability plaintiffs bar, reports Business Week. At the very least, they”ll provide good fodder for final exams in first-year torts.
The post then discusses how Foreign Tire Sales, a New Jersey tire distributor, is a defendant in a wrongful death lawsuit involving tires made by Chinese company, Hangzhou Zhongce Rubber and how Del Monte, “which sold pet food made with tainted Chinese ingredients” is also being sued.
The WSJ post is based on a Business Week article that nicely lays out the new reality for U.S. distributors of Chinese product:
Meanwhile, the Washington (D.C.) firm of Cohen, Milstein, Hausfeld & Toll is weighing litigation against Western distributors of Chinese-made counterfeit glycerin that found its way into cold medicine, killing hundreds of children in Panama and elsewhere. “Do people along the chain have responsibility for knowing where key ingredients are coming from? The answer you’re going to find in an era of globalization is ‘Yes,” says Cohen Milstein’s Michael Hausfeld.
Despite a wave of business-friendly legal reforms in recent years, companies can be held liable in most states in the U.S. even if they unwittingly sell a dangerous product. “All you have to show is that the product was defective,” says William Ruskin, a defense litigator with Epstein, Becker & Green in New York. “It’s no defense to say, ‘We didn’t know.'” Under product-liability law, one company often can be held 100% liable for all damages awarded to all consumers, regardless of its market share or the amount of tainted product it might have sold.
Don’t expect plaintiffs’ lawyers to make their way to China. They aren’t likely to bother with small, far-flung producers that can’t afford to pay big judgments
Someone left a comment to the WSJ post saying distributors cannot be found liable in Texas unless they changed or altered the product:
You are wrong on the law. In at least one state, Texas, distributors are not liable for the defective product if they did not change or alter the product. The consumer loses thanks to our Republican representatives. Please call your state representative to thank them for protecting you and your family.
I suspect this comment is accurate not just with respect to Texas but to certain other states as well, but only to the extent it is speaking of a distributor’s strict liability, under which there is liability for defective product whether negligent or not. But even in Texas, a distributor of Chinese product can be found liable for negligently choosing a particular Chinese manufacturer or liable for negligently failing to test a product or liable for negligently failing to recall a product. In addition to potential liability for negligence, I also believe many U.S. companies that think of themselves as “just” distributors or importers are, for purposes of their state’s strict liability laws, actually manufacturers and thus, even in states like Texas, strictly liable for their product.
If you are an American company telling a Chinese company exactly how to manufacture a product with your name on it, are you not also a manufacturer? And how do you see an American jury ruling on this issue when faced with a paralyzed 12 year old and no other company available to pay?
All I can say is that our China lawyers and our international litigators are increasingly working with insurance companies and distributers and importers and even retailers who have been sued because the Chinese manufacturer is just too difficult to reach. We are being retained by these companies to advice on (among other things) what, if anything, they can do to bring the Chinese manufacturer into the already pending U.S. lawsuit.
I suggest companies involved in bringing Chinese product into North America or Europe (or anywhere else for that matter) read our previous post, entitled, How To Protect Your Company From Bad Chinese Product.