[Congressional Record Volume 155, Number 122 (Thursday, August 6, 2009)]
[Senate]
[Pages S9006-S9009]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WHITEHOUSE (for himself, Mr. Durbin, and Mr. Sessions):
  S. 1606. A bill to require foreign manufacturers of products imported 
into the United States to establish registered agents in the United 
States who are authorized to accept service of process against such 
manufacturers, and for other purposes; to the Committee on Finance.
  Mr. WHITEHOUSE. I rise to speak in support of the Foreign 
Manufacturers Legal Accountability Act of 2009, which I am introducing 
today with the ranking member of the Judiciary Committee, Senator 
Sessions, and Senator Durbin. This bipartisan bill is an important step 
in protecting American consumers and businesses from injuries caused by 
defective products manufactured outside the United States. Those 
products hurt American consumers--they lead to serious injuries, and 
even death--and they hurt the American businesses that must deal with 
angry customers, product recalls, and unusable inventory.
  The list of recent examples of Americans injured by defective foreign 
products is shocking. Last year, a contaminated blood thinner from a 
foreign manufacturer caused severe medical reactions and contributed to 
numerous deaths. In 2006, a foreign-made, lead-tainted charm bracelet 
claimed the life of a 4-year-old. The autopsy demonstrated that the 
charm was 99 percent lead, 1,650 times more than the 0.06 percent lead 
limit specified in enforcement guidelines for children's jewelry. 
Imported food products from seafood to honey have been contaminated 
with unthinkable chemicals, including veterinary drugs banned in 
domestic production, potentially harmful antibiotics, and unapproved 
food additives. Sixty million packages of pet food contaminated with 
tainted wheat gluten have been recalled in the last two years. 
Substandard tires have failed, leading to fatalities. Most recently, 
defective drywall imported from China has been found to contain 
excessively high levels of sulfur, causing houses to smell like rotten 
eggs, corroding copper wiring, and making expensive appliances fail. 
Thousands of homes may be affected.
  At a hearing that I chaired in May, the Subcommittee on 
Administrative Oversight and the Courts explored the legal hurdles 
facing consumers who are injured by defective foreign products and by 
businesses that find that their foreign partners refuse to honor their 
contracts. These hurdles allow foreign manufacturers to continue to 
injure American businesses and consumers, and also put American 
manufacturers at a competitive disadvantage since they allow foreign 
manufacturers to offer cheaper products that do not comply with 
American safety requirements. Two major hurdles to proper 
accountability are the inability to serve

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process on the foreign manufacturer and the ability of that foreign 
manufacturer, even if served, to evade the jurisdiction of American 
courts. As the witnesses testified at the hearing, legislation that 
addresses these issues is necessary and appropriate. The Foreign 
Manufacturers Legal Accountability Act addresses both concerns.
  The first problem, the inability to serve process on a manufacturer, 
essentially means that it is difficult for an American to give a 
foreign manufacturer the documents necessary to give it the legally 
required notice that it is the subject of a lawsuit. This sounds like a 
simple step, and it should be. Unfortunately, however, it is very hard 
to serve process on foreign companies abroad. As witnesses explained at 
the hearing in May, service abroad is complicated by the Hague 
Convention on the Service Abroad of Judicial and Extra Judicial 
Documents in Civil and Commercial Matters, to which the United States 
is a signatory. Under that convention, a complaint must be translated 
into the foreign language, transmitted to the Central Authority in the 
foreign country, and then delivered according to the rules of service 
in the home country of the defendant. This can cause months and even 
years of delay, not to mention great expense for Americans.
  The Foreign Manufacturers Legal Accountability Act will allow 
Americans to overcome that procedural hurdle by serving legal papers 
inside the United States on registered agents of foreign manufacturers. 
The bill requires the heads of federal government agencies such as the 
Food and Drug Administration to pass regulations requiring that foreign 
manufacturers of products regulated by their agencies register an agent 
who will accept service of process. It allows regulators to exclude 
manufacturers who only import a minimal amount of products into the 
United States. It imposes a minimal burden on foreign manufacturers, 
since they would only have to appoint one agent to accept service of 
process for all state and federal regulatory and civil actions anywhere 
in the United States. The bill allows the manufacturer to choose any 
location for that agent with a ``substantial connection to the 
importation, distribution, or sale of the products of such foreign 
manufacturer or producer.'' This clear and straightforward system will 
allow Americans to commence their lawsuits fairly and promptly, and 
ensure that foreign manufacturers have proper and fair notice of the 
proceedings brought against them. It will not conflict with American 
obligations under the Hague convention, since that convention applies 
to service of process on foreign manufacturers in their home countries, 
not in the United States.
  The second hurdle, the inability to establish personal jurisdiction 
over foreign manufacturers, can end a lawsuit against a foreign 
manufacturer before it even begins. Think about how unfair this is. A 
foreign manufacturer sells its defective products in the United States, 
injures American consumers and businesses, and then argues that it is 
not subject to the courts in the state where the American was injured--
in legal parlance, that the courts do not have personal jurisdiction 
over it. As witnesses explained at the hearing, foreign manufacturers 
raise this technical legal defense to avoid liability even when serious 
injuries or even death have been caused by their products--their 
defective tires, fireworks, exercise equipment, bikes, and toys.
  The Foreign Manufacturers Legal Accountability Act will enable 
injured Americans to surmount this hurdle. It will make clear to 
foreign manufacturers that by importing their products into the United 
States and by registering an agent in the United States, they are 
consenting to the jurisdiction of the courts in the state where their 
agent is located. By consenting to jurisdiction, the manufacturers will 
avert unnecessary and expensive legislation about technical legal 
issues and allow courts to settle the merits of disputes. This approach 
is fair to foreign manufacturers since all American manufacturers are 
subject to the jurisdiction of the courts of at least one state. This 
bill therefore complies with the trade principle that we should not 
subject foreign manufacturers to burdens not already imposed on 
domestic manufacturers.
  Indeed, the Foreign Manufacturers Legal Accountability Act is 
ultimately about fairness. We all know American manufacturers comply 
with regulations that ensure the safety of American consumers and 
businesses. When they fail to do so, they must answer to regulators and 
are held accountable through the American tort system. Unfortunately, 
however, foreign manufacturers are not being held to the same 
standards--injuring American consumers and businesses, and putting 
American manufacturers at a competitive disadvantage. We must level the 
playing field for all manufacturers and provide justice for American 
consumers and businesses. The Foreign Manufacturers Legal 
Accountability Act will allow us to make a major step in that 
direction. It covers major product categories including consumer goods, 
drugs, cosmetics, and chemicals, and it requires relevant agencies to 
study workable approaches to ensure that foreign food producers also 
are brought within the ambit of the American legal system.
  Protecting Americans and holding foreign manufacturers accountable 
when their products harm American consumers and businesses is a 
bipartisan issue. Everyone agrees that we should do what we can to keep 
Americans safe from defective products. So too, I think, do we all 
agree that American companies should not be at a competitive 
disadvantage to their foreign counterparts. The Foreign Manufacturers 
Legal Accountability Act builds on those fundamental agreements. I am 
grateful to my colleagues Senator Sessions and Senator Durbin for their 
hard work on this bill and look forward to working with my colleagues 
on both sides of the aisle to see it passed into law.
  Mr. SESSIONS. Mr. President, Senator Whitehouse's legislation would 
help American consumers bring civil claims against foreign 
manufacturers who produce faulty goods and send them into the U.S. 
market. Currently, it is nearly impossible for harmed American 
consumers to bring a tort action against foreign manufacturers of 
products that are flawed or even dangerous. Foreign manufacturers are 
often difficult to identify or locate and even if found, the process of 
seeking damages against them is extremely costly and burdensome. 
Without the threat of litigation, foreign manufacturers have little to 
no accountability to their American consumers, resulting in lower 
quality and often defective products. Furthermore, American companies 
who unknowingly buy shoddy products from foreign manufacturers and then 
resell them to consumers become the sole defendant in tort cases filed 
against them when foreign defendants cannot be located. According to 
the Consumer Product Safety Commission, Chinese manufacturers were 
responsible for 69 percent of all product recalls in 2007 and 53 
percent in 2008. These numbers demonstrate the need for Congress to 
take action to protect American consumers. Senator Whitehouse's 
proposal is a positive step in the right direction.
  I have witnessed the effects of this problem firsthand in my State. 
Mr. Chuck Stefan from Alabama testified before the Subcommittee on 
Administrative Oversight and the Courts, which Senator Whitehouse 
chairs and I serve as ranking member, about the hardships his business 
has faced in seeking damages against a foreign manufacturer. Mr. Stefan 
is a Senior Executive Vice President at the The Mitchell Company, a 
homebuilder in Alabama, Florida, and Mississippi. Forty-five of the 
houses he built have been identified as containing a defective type of 
Chinese sheetrock, which produces corrosive gases. These gases are not 
merely unpleasant. They damage the copper found in piping and wiring 
systems. When the problem was first discovered, The Mitchell Company 
could not even determine who manufactured the drywall as it was only 
stamped ``made in China.'' When the manufacturing parties were finally 
identified as both Chinese and German-based, it was a substantial and 
costly burden to serve them properly even though the companies had 
extensive operations in the United States. Mr. Stefan emphasized the 
fact that when foreign manufacturers cannot be held accountable, it 
hurts his company's bottom line and harms U.S. consumers.

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  Stores such as Mr. Stefan's are becoming all too common and it is 
incumbent upon Congress to work towards ameliorating the burdens that 
U.S. businesses and consumers face when seeking damages against foreign 
manufacturers. This issue is one that affects consumers nationwide. I 
am grateful to Senator Whitehouse for taking the initiative to ensure 
that Congress does its part in solving this problem.
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