“Over the past decade, the United States Supreme Court has issued a number of key decisions limiting personal jurisdiction over corporations in state courts under the Due Process Clause of the United States Constitution,” Goldberg Segalla’s David E. Rutkowski, an associate in the Toxic Tort Practice Group, writes in the American Bar Association’s (ABA) Toxic Tort and Environmental Law Committee Newsletter. These jurisdictional restrictions affect different parties in the litigation spectrum in different ways, he explains: Plaintiffs will struggle to file claims against non-resident or “foreign” corporations; foreign manufacturers in the food industry will particularly benefit from these jurisdictional protections; while domestic distributors “may become increasingly exposed to defend an allegedly defective product manufactured by that same protected foreign corporation.”
David points to trends toward growth, globalization, and specialization in manufacturing, particularly in the food manufacturing industry. “[F]oreign, and often specialized, food manufacturers” — now reaching more consumers spread across greater distances than ever before — “will either distribute their products through subsidiaries or independent distribution networks.” David writes. “If a claim arises from an allegedly defective food product, it is this foreign manufacturer-domestic distributor dynamic that is directly impacted by the recent personal jurisdiction decisions.”
In his article, David examines issues of personal, general, and specific jurisdiction and analyzes how some of the Supreme Court decisions have affected this “manufacturer-domestic distributor” dynamic.
“[M]ost food-borne illness claims are, at their core, product liability claims. In these types of cases, plaintiffs will name as defendants any and all companies involved in the production [and distribution] of an allegedly defective food product,” David writes. Following the Supreme Court decisions David analyzes, “as plaintiffs lose the ability to file suit against the large food manufactures, they now key in on the distributor as the target defendant in food-borne illness claims. To make matters worse,” he explains, “the distributors often lack the knowledge and resources as to the appropriate defenses in high value product liability claims relating to products [they] may know little about.”
As such, “it becomes a necessity for the domestic distributor to understand the jurisdictional risks that are on the horizon and take any and all preventive measures when contracting with foreign manufacturers to distribute its food products,” David concludes. “The easiest way for the distributor to avoid these risks is through the contractual protections agreed upon before the business relationship is formed or potential litigation arises.”