Global Forum Shopping

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Global forum shopping is a disturbing new trend in which foreign plaintiffs take advantage of the unusually expansive features of the American judicial system to file lawsuits in U.S. courts. The court system has become a magnet for foreign plaintiffs due to the U.S. legal system’s extensive pre-trial discovery processes; openness to trials by jury; and penchant for allowing punitive damages, class actions and outlandish awards.

U.S. Legal System Goes International

Foreign plaintiffs are increasingly invoking U.S. laws such as the Foreign Trade Antitrust Improvements Act, the Alien Tort Statute and product liability laws to file lawsuits in U.S. courts. These foreign plaintiffs may have limited opportunities to file lawsuits in their home jurisdictions, so they use American courts to seek money extraction from international companies that operate in their homeland.

Moreover, foreign plaintiffs are increasingly using our antitrust laws when the conflict involves entirely foreign conduct. U.S. courts interpret U.S. antitrust law broadly, agreeing to hear cases that have no greater connection to the forum than the fact that the defendant does a limited amount of business there. Given this trend, U.S. courts could soon become the forum of choice for worldwide purchasers of products to allege that businesses around the globe caused them to injury.

The plaintiffs’ bar also attempts to “export” the litigation opportunities of U.S. tort system – urging foreign countries to adopt U.S.-style litigation features in order to create new venues for highly profitable litigation. For example, there is evidence that U.S. class action plaintiffs’ firms are urging European nations to adopt class action rules, which are increasingly being considered at the E.U. and national levels. This not only opens up the possibility of filing class action lawsuits in targeted foreign nations, but also may allow cases to be filed in U.S. courts that bring in foreign class members.

Impact of Global Forum Shopping

The U.S. economy and U.S. and foreign businesses are threatened as global forum shopping creates uncertainty for companies operating in U.S. markets. Global investors will be discouraged from doing business with American firms or establishing a presence in the United States, and they may shy away from U.S.-based mergers and partnerships.

America’s foreign relations can be compromised as U.S. courts are put in the position of adjudicating foreign issues that would be more appropriately addressed in foreign courts or through international diplomacy. Not only will U.S. corporations and citizens find themselves as defendants in international legal matters in our country, but as our courts allow global forum shopping, the courts in other countries may expand their jurisdictions across the globe and further complicate venue determinations.

Inventive plaintiffs’ lawyers will continue to search for new ways to take advantage of the U.S. litigation system, since merely filing a case in the U.S. increases its settlement value.

Need for Reform

Without reform, foreign plaintiffs and their lawyers will continue to exploit U.S. courts, to the detriment of the U.S. and international business climate, foreign investment flows, and international relations.

The U.S. Supreme Court has already realized the importance of the global forum shopping issue, handing down three decisions related to this issue in 2003:

• Empagran
• Intel
• Sosa

While these decisions place some parameters on the ability of plaintiffs to sue in U.S. courts over activities occurring abroad, they leave much discretion to lower courts and tend to raise as many questions as they answer. The overall impact of these decisions has been to underscore the need for further clarity, particularly in light of the variety of new cases filed in our state and federal courts since these cases were decided.

Coalition to Curb Global Forum Shopping has launched an initiative to address global forum shopping through promoting awareness of the problem and the need for reform. The coalition’s efforts have focused on:

• providing litigation support to targeted companies
• educating opinion leaders and the judiciary
• seeking Executive Branch action to assert the associated foreign relations concerns
• seeking reforms through international organizations and agreements

Undoubtedly, global forum shopping will continue unless the business community works together to end this abuse of the U.S. legal system.

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