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TPP’s Effect on Mass Torts

— May 18, 2015
Image: Public domain
Image: Public domain


One concern that has been mentioned in numerous circles is the TPP’s effect on mass torts (class actions). My colleague wrote an insightful piece on this issue using the Alien Tort Statute. He also addressed the issue of Monsanto doing business in Vietnam, a country its Agent Orange helped decimate during the Vietnam War. As he so correctly pointed out, the TPP’s impact is hard to discern, especially given how much we still don’t know about it.

While my colleague examined the possibility of citizens of another country suing a foreign corporation, I’ve decided to look at how the TPP might impact class action suits by U.S. citizens against foreign or multi-national corporations.

As my fellow writer noted, the ISDS process of adjudicating disputes can only be initiated by one of the TPP’s “Investor-States,” a company, not an individual or a class thereof. The Nestlé issue of a Swiss corporation taking water from a drought-ridden California was one angle and Monsanto’s suing Vermont over the state’s GMO labeling law was another. In light of the limitations on initiating parties, it appears that neither of those still-important cases merits examination.

In short, there is no recourse for harmed individuals or classes under the TPP as currently written. The details of restrictions on the behavior known as “country hopping” or “forum shopping” are too hazy to determine how or even if foreign companies could remove a class action suit filed in federal court to an ISDS tribunal. That would be the smart move for the company if allowed, as the tribunals greatly favor business over consumers.

However, all is not lost. We still have the federal court system. While we, the people cannot initiate an ISDS action against a foreign company, we can still file suit against them in federal court. All that is required is the right type of jurisdiction. The Alien Tort Statute doesn’t apply here, though. The ATS grants U.S. district courts “original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” [Emphasis mine.]

What does this mean? Under the ATS, the alien must bring the action. In this case, the alien is the tortfeasor not the injured party.

Until proven otherwise, I do not believe that the TPP will have any impact on class action suits filed in the U.S. against foreign corporations. Again, it’s all about the jurisdiction. In order for a suit to proceed, the court must first have jurisdiction, the power to decide the case. There are two parts to this power: personal jurisdiction and subject matter jurisdiction.

Personal jurisdiction gives the court the power to decide the legal rights of the parties before it. In order to have personal jurisdiction over the defendant, there must be:

  1. “Presence, i.e., being served with a copy of the summons and complaint while physically present in the forum jurisdiction.  The physical presence of a defendant in the forum is a sufficient basis for acquiring jurisdiction over him, no matter how brief his stay might be.
  2. Domicile(residence) alone is a basis for exercising jurisdiction over an absent domiciliary.  A person may always be sued for all claims, regardless of where they arise, in their state of permanent residence or in the case of a corporation, the state in which it is incorporated.
  3. Consent to personal jurisdiction.  A defendant who has not been personally served in the jurisdiction can nevertheless voluntarily appear and submit himself to jurisdiction.  In such cases defendant is said to have “consented” to jurisdiction.
  4. Minimum Contacts.  Having sufficient dealings or affiliations with the forum jurisdiction which make it reasonable to require the defendant to defend a lawsuit brought in the forum state. Hence, a defendant who has never set foot in California may nevertheless be subject to valid personal jurisdiction so as to be compelled to defend a lawsuit in California provided that he has minimum contacts with the forum state such that compelling him to appear and defend in the forum does not offend traditional notions of fair play and substantial justice.”

Our hypothetical tortfeasor isn’t likely to consent to personal jurisdiction; however, presence and domicile are easily established. Minimum contacts can get tricky, but basically, if the company has a place of business, employees, pays taxes, owns property, advertises in or sends employees to the forum, it has minimum contacts.

The second prong to jurisdiction in federal court is subject-matter jurisdiction. This is much easier to determine than personal jurisdiction. The federal courts have jurisdiction over all issues arising out of federal law (called Federal Question jurisdiction). They also have jurisdiction in cases where the parties have diversity of citizenship, i.e., live in other states. Corporations have dual citizenship: the state in which they are incorporated and the state where their chief location of business (headquarters) is located. Last, there is the amount in controversy. If the amount exceeds $75k, the federal courts have jurisdiction.

In subject-matter jurisdiction, all three items must be present for the case to be heard in federal court. For a hypothetical products liability class action, say for a pharmaceutical product, the laws governing such things are federal laws as overseen by the FDA. That’s one out of three down.

Diversity of citizenship is a no-brainer. Most multi-national corporations are going to meet the diversity of citizenship requirements by virtue of being a multi-national. That’s two of three down.

The amount in controversy in most pharmaceutical product liability suits far exceeds $75k. That’s three of three down.

So, looking at the mass tort system already in place, I feel safe saying that the TPP won’t make a difference. However, there’s always the possibility of something unforeseen. That’s what keeps this exciting!


TPP: Corporate Liability, Monsanto, and the Alien Tort Statute

Civil Procedure – Personal Jurisdiction




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