Suing A Foreign Company

If your thinking about suing a foreign company the first thing that must happen is an analysis under the legal doctrine of forum non conveniens. This rule states that a U.S. court can refuse to take jurisdiction over a matter where there’s another more appropriate court for the parties to resolve their dispute. The better court may be in another state or in another country, or it may be a different court in the same jurisdiction. A US court is more likely to grant a motion to have a case removed to another court if doing so would not hinder the ability of the plaintiff to receive justice, but also so that the defendant is not put at a disadvantage. The defendant has the burden of proving that the new proposed forum is fair and that it still provides a potential remedy for the defendant.  When people attempt to sue a foreign company, they believe if they cannot bring that company to a U.S. court that they are out of reprieve. Not true. in a number of cases involving Chinese companies, the foreign plaintiff who could not bring the defendants into a U.S. court because of the lack of jurisdiction U.S. courts had on the foreign company, they were able to get justice in China. Some examples include

  • Under Armour vs Uncle Martian ($300K for Under Armour)
  • New Balance vs. New Boom ($1.5 million for New Balance)

Nevertheless, The Court’s decision in Daimler AG v. Bauman held that a US court could not use personal jurisdiction. Personal jurisdiction for those of you who are unaware, is where a court asserts its authority over a defendant on claims unrelated to the defendant’s activities in the forum in which the court governs. So, a court could exercise personal jurisdiction over a foreign corporation based on something as small as the contacts the foreign corporation’s subsidiary has with the state. However, the corporation’s relations to the State must be continuous and systematic as to render it essentially at home in the forum State. Just because a company does substantial business in a state does not mean its ties are substantial and continuous enough for them to be considered at home in the state. Which means the court cannot exercise its jurisdiction over them.

Many plaintiffs have argued when suing a foreign company, and wanting the lawsuit to happen in the U.S. that if the court does not assert their jurisdiction over a defendant that the court where the defendant will want to try the case is subject to such things as bribes, undue delays, hiding what would otherwise be discoverable information, or unfairness. It is not that easy to convince a court however. A defendant still has must prove if they want the case dismissed for lack of jurisdiction or if they request a transfer that they are doing so because the other court may be more convenient or the best court to hear both sides (this often occurs in class actions).

For instance. If you were suing a foreign company that did not have its principal place of business in the United States, that company would not be subject to the jurisdiction of a U.S. court unless, as we mentioned earlier it submitted to the court’s jurisdiction or it had continuous and substantial relation to the jurisdiction where the company would be considered at home.  Submitting to a court’s jurisdiction could include but is not limited to a foreign company:

  • Selling products/services in another country
  • Have a place of business or address in another country
  • Availing themselves to the rules and laws of another country
  • Having a parent or subsidiary in another country

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