U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

38–868 PDF 2009

PROTECTING THE PLAYROOM: HOLDING FOREIGN 

MANUFACTURERS ACCOUNTABLE FOR DEFECTIVE PRODUCTS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

NOVEMBER 15, 2007 

Serial No. 110–166 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

LINDA T. SA ́ NCHEZ, California, Chairwoman 

JOHN CONYERS, JR., Michigan 

HANK JOHNSON, Georgia 

ZOE LOFGREN, California 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

STEVE COHEN, Tennessee 

CHRIS CANNON, Utah 

JIM JORDAN, Ohio 

RIC KELLER, Florida 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

NOVEMBER 15, 2007 

Page 

OPENING STATEMENT 

The Honorable Linda T. Sa ́nchez, a Representative in Congress from the 

State of California, and Chairwoman, Subcommittee on Commercial and 

Administrative Law ............................................................................................. 1 

The Honorable Chris Cannon, a Representative in Congress from the State 

of Utah, and Ranking Member, Subcommittee on Commercial and Administrative Law ........................................................................................................... 2 

WITNESSES 

Mr. Thomas L. Gowen, The Locks Law Firm, Philadelphia, PA 

Oral Testimony ..................................................................................................... 5 

Prepared Statement ............................................................................................. 8 

Mr. Victor E. Schwartz, Shook, Hardy and Bacon, LLP, Washington, DC, 

on behalf of the Institute for Legal Reform, U.S. Chamber of Commerce 

Oral Testimony ..................................................................................................... 17 

Prepared Statement ............................................................................................. 19 

Ms. Pamela Gilbert, Cuneo, Gilbert and Laduca, LLP, Washington, DC 

Oral Testimony ..................................................................................................... 23 

Prepared Statement ............................................................................................. 24 

Mr. Andrew F. Popper, American University, Washington College of Law, 

Washington, DC 

Oral Testimony ..................................................................................................... 27 

Prepared Statement ............................................................................................. 30 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Member, Subcommittee on Commercial and Administrative Law ............................................................................... 4 

Article entitled ‘‘AGs Gone Wild,’’ from The Wall Street Journal dated Tuesday, November 13, 2007, submitted by the Honorable Chris Cannon, a 

Representative in Congress from the State of Utah, and Ranking Member, 

Subcommittee on Commercial and Administrative Law .................................. 66 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Responses from Thomas L. Gowen, The Locks Law Firm, Philadelphia, PA, 

to Post-Hearing Questions from the Honorable Linda T. Sa ́nchez, a Representative in Congress from the State of California, and Chairwoman, 

Subcommittee on Commercial and Administrative Law .................................. 72 

Responses from Victor E. Schwartz, Shook, Hardy and Bacon, LLP, Washington, DC, to Post-Hearing Questions from the Honorable Linda T. 

Sa ́nchez, a Representative in Congress from the State of California, and 

Chairwoman, Subcommittee on Commercial and Administrative Law ........... 74 

Page

IV 

Responses from Pamela Gilbert, Cuneo, Gilbert and Laduca, LLP, Washington, DC, to Post-Hearing Questions from the Honorable Linda T. 

Sa ́nchez, a Representative in Congress from the State of California, and 

Chairwoman, Subcommittee on Commercial and Administrative Law ........... 77 

Responses from Andrew F. Popper, American University, Washington College 

of Law, Washington, DC, to Post-Hearing Questions from the Honorable 

Linda T. Sa ́nchez, a Representative in Congress from the State of California, and Chairwoman, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 80 

(1) 

PROTECTING THE PLAYROOM: HOLDING FOREIGN MANUFACTURERS ACCOUNTABLE FOR 

DEFECTIVE PRODUCTS 

THURSDAY, NOVEMBER 15, 2007 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 9:43 a.m., in Room 

2141, Rayburn House Office Building, the Honorable Linda 

Sa ́nchez (Chairwoman of the Subcommittee) presiding. 

Present: Representatives Sa ́nchez, Johnson, Lofgren, Cannon, 

and Franks. 

Staff present: Eric Tamarkin, Majority Counsel; Paul Taylor, Minority Counsel; and Adam Russell, Professional Staff Member. 

Ms. SA ́ NCHEZ. This hearing of the Committee on the Judiciary 

Subcommittee on Commercial and Administrative Law will now 

come to order. 

I will now recognize myself for a short statement. 

From the millions of toys recalled because of lead paint, to last 

week’s recall of Aqua Dots, a popular Chinese-made toy which converts into a dangerous date-rape drug when eaten, it has become 

increasingly clear that playrooms across the country are in danger. 

There is a growing business trend of sacrificing safety standards 

and quality for slightly cheaper imported products. 

While defective foreign-manufactured products entering into the 

U.S. is not a new phenomenon, I have been alarmed by the recent 

flow that is flooding our marketplace. Unfortunately, the Consumer 

Product Safety Commission, which is tasked with protecting consumers from harmful and dangerous products, appears to have 

done little to curb the flow of these problematic imports. In fact, 

the CPSC has actually cut its total staff by 55 percent and its 

budget by 49.4 percent since it was created in 1974. It now has 

fewer than 100 inspectors and investigators nationwide. 

Even more troubling was the recent release of records showing 

that CPSC employees have accepted a large number of trips financed by industries the commission is mandated to regulate, calling into question its independence. I look forward to hearing from 

Pam Gilbert, former executive director of the CPSC, on how the 

commission can more effectively do its job. 

2 

Given the increase of imported products that do not meet U.S. 

standards for health, safety and quality and the fact that the CPSC 

has been largely ineffective in preventing the importation of defective products, consumers are left with little protection. When consumers are harmed by foreign-made products, current law leaves 

them little recourse in receiving compensation from a foreign manufacturer. 

Consumers seeking to hold foreign manufacturers accountable 

face a number of daunting barriers. First, a consumer must establish personal jurisdiction, an increasingly difficult task given the 

uncertainty of the law. A consumer must then navigate the complex service of process requirements when serving a manufacturer 

in a foreign country. This may include translating materials into 

the language of that country. Finally, even if the consumer succeeds in having the matter heard and winning a favorable judgment, collecting compensation may be difficult as most countries 

resist enforcing U.S. judgments. 

I look forward to hearing from our witnesses on how we can ensure that foreign manufacturers are held accountable for injuries 

consumers suffer as a result of defective products. As the holiday 

season comes upon us, we must do what we can to make certain 

it is both joyful and safe. 

Accordingly, I very much look forward to today’s hearing and to 

receiving the testimony from all our witnesses. 

I will at this time now recognize my colleague, Mr. Cannon, the 

distinguished Ranking Member of the Subcommittee, for his opening remarks. 

Mr. CANNON. Thank you, Madam Chair. 

The American tort system is nothing to be proud of. As Lawrence 

McQuillan, director of business and economic studies at the Pacific 

Research Institute, recently concluded, ‘‘America’s tort system imposes a total cost on the U.S. economy of $865 billion per year. This 

constitutes an annual tort tax of $9,827 on a family of four. It is 

equivalent to the total annual output of all six New England states 

or the yearly sales of the entire U.S. restaurant industry.’’ These 

costs hurt domestic American jobs and businesses, and much of 

these costs are imposed on American wholesalers and distributors. 

In the United States, any seller of a product—not just the original manufacturer—is liable for damages caused by a defective 

product under the legal doctrine of strict tort liability. The fact that 

a wholesaler-distributor did not create the defect or did not participate in the design or production of the product or did not author 

the product instructions or warnings is no defense under current 

law. This often results in great unfairness, and efforts to aggravate 

that unfairness would simply increase the unjustified costs already 

imposed on American companies. 

Normally, a wholesaler-distributor in a U.S. product liability suit 

will bring the manufacturer of the defective product into the case 

as a defendant, if the plaintiff has not already done so, and claim 

indemnity from the manufacturer as the faulty party. However, 

this may not always be successful, especially when the product is 

made by a foreign supplier 

If the foreign supplier does not have a legal presence in the 

United States, such as a U.S. subsidiary, a U.S. plant or other ofVerDate Aug 31 2005 10:16 Jan 16, 2009 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6601 H:\WORK\COMM\111507\38868.000 HJUD1 PsN: 38868
3 

fices, or has not agreed by contract to be subject to the jurisdiction 

of the U.S. courts, the wholesaler-distributor often cannot obtain 

jurisdiction over the foreign supplier in America. The wholesalerdistributor may still claim indemnity from the foreign supplier, but 

it will have to do so in a distant, overseas court system that may 

not yield reliable compensation. 

One prime impediment American courts face when seeking to assert jurisdiction over foreign corporations is the Constitution itself, 

which cannot be amended through simple legislation. Under the 

due process clause, as interpreted by the Supreme Court, a foreign 

corporation that has its principal place of business overseas, engages in little or no economic activity inside the United States and 

does not otherwise subject itself to the jurisdiction of the United 

States cannot be subject to the jurisdiction of the various state 

courts. 

These problems for domestic distributors have been brought to 

the fore by a recent spate of problems with defective products 

whose defects may be traced to Chinese or other foreign sources. 

Tort reform advocates, such as Victor Schwartz, who is a witness 

before us today, have proposed that Congress consider requiring 

that substantial suppliers be required to post a bond or appoint an 

agent for service of process before they can enter into transactions 

in which their component parts are distributed in the U.S. Such 

proposals could help ensure that money from foreign manufacturers is available to compensate those injured by foreign component 

parts in the U.S. and also allow such foreign companies to be subject to the service of process in the United States so Americans 

courts can assert jurisdiction over them. 

Unfortunately, however, legislative proposals that have been introduced to address this issue have tended to focus on misguided 

attempts to amend the rules governing the Consumer Product Safety Commission in a way that threatens more litigation, but less actual enforcement of product safety issues. As The Wall Street Journal editorialized just last week, ‘‘Just in time for toy season, Congress is promoting new legislation to crack down on companies selling products said to be defective or dangerous. A Senate bill would 

empower all 50 State attorneys general to effectively run their own 

consumer product safety adjuncts, deciding what constitutes a safety defect and making their own judgments about appropriate remedies. 

‘‘The result could be a jigsaw system of conflicting standards 

across the country. You can see where this is going: banned-inMichigan toys being smuggled across the border into Indiana and 

so on. And without a consistent national standard, small businesses would be particularly hard hit, lacking resources to monitor 

the evolving rules nationwide, all of this happening at a time when 

the appetite for business self-policing is strong. Businesses have 

every incentive to clean up their acts, given the costly damage to 

their brand equity from news stories about tainted toys.’’ 

I look forward to hearing from all of our witnesses today, but I 

hope we can all agree on at least one thing at the outset of this 

debate, and that is that no attempt to amend the tort liability system in America should increase the burdens the current out-of-conVerDate Aug 31 2005 10:16 Jan 16, 2009 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6601 H:\WORK\COMM\111507\38868.000 HJUD1 PsN: 38868
4 

trol lawsuit industry already imposes on American jobs and businesses, especially small businesses. 

I thank you, Madam Chair, and I yield back. 

Ms. SA ́ NCHEZ. I thank the gentleman for his statement. 

Without objection, all Members will be allowed to enter their 

opening statements in the record. 

[The prepared statement of Mr. Cohen follows:] 

PREPARED STATEMENT OF THE HONORABLE STEVE COHEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TENNESSEE, AND MEMBER, SUBCOMMITTEE ON

COMMERCIAL AND ADMINISTRATIVE LAW

Last year, half of all the products that the Consumer Product Safety Commission 

recalled were made in China, and 80% of all products recalled this year were made 

in China. Among the Chinese-made products recalled were toys containing high levels of lead and tainted pet food that has lead to the serious illness or death of beloved animal companions. The recent discovery of tainted foreign-made products 

raises several concerns. One concern is whether the Consumer Product Safety Commission, the federal agency charged with protecting the American consumer from 

such tainted products, has been adequately doing its job. Another concern is whether Congress can provide for a private cause of action for any consumer that has been 

injured by a tainted product made by a foreign manufacturer. I look forward to considering the suggestions of our witnesses as to how we can protect consumers and 

hold foreign manufacturers accountable for introducing defective products into the 

American marketplace. 

Ms. SA ́ NCHEZ. And without objection, the Chair will be authorized to declare a recess of the hearing at any point. 

I am now pleased to introduce the witnesses for today’s hearing. 

Our first witness is Thomas Gowen. Mr. Gowen is special counsel 

to the Locks Law Firm. His practice is concentrated primarily in 

the areas of complex personal injury and civil litigation, and he has 

represented numerous clients in products liability, head injury, 

construction litigation, medical malpractice and automobile litigation. 

Mr. Gowen is a member of the faculty of the National College of 

Advocacy and a past chairman of the Montgomery Bar Association 

continuing legal education committee. He has published legal articles in Am Jur Trials, a Guide for Legal Assistance by the Practicing Law Institute, the Barrister, the Pennsylvania Law Journal 

Reporter and other journals. 

We welcome you, Mr. Gowen. 

Our second witness is Victor Schwartz. Mr. Schwartz chairs the 

Public Policy Group at Shook, Hardy & Bacon. He co-authors the 

nation’s leading torts casebook, ‘‘Prosser, Wade & Schwartz’s 

Torts,’’ and authors ‘‘Comparative Negligence,’’ the principal text 

on the subject. Mr. Schwartz also serves as general counsel to the 

American Tort Reform Association and co-chairs the American Legislative Exchange Council’s civil justice task force. 

Mr. Schwartz is former dean of the University of Cincinnati College of Law and currently serves on its board of visitors. During his 

academic career, he litigated cases on behalf of plaintiffs and secured the first punitive damages award of the Midwest against the 

manufacturer of a defective product. 

Welcome, Mr. Schwartz. 

Our third witness is Pamela Gilbert. Ms. Gilbert is a partner in 

Cuneo, Gilbert and LaDuca and focuses her practice on government 

5 

relations matters. She represents a wide variety of clients before 

Congress, the executive branch and regulatory agencies. 

Ms. Gilbert serviced as the executive director of the U.S. Consumer Product Safety Commission from 1995 until 2001. In that 

capacity, she was responsible for the full range of government management issues and helped persuade Congress and the Administration to increase funding to the agency by nearly 40 percent. 

Ms. Gilbert also served as consumer program director at the U.S. 

Public Interest Research Group from 1984 to 1989 where she specialized in civil justice and consumer protection issues. She worked 

for Public Citizen’s Congress Watch, one of Washington’s largest 

consumer advocacy organizations, first as legislative director and 

then as executive director. 

Welcome, Ms. Gilbert. 

Our final witness, which we are glad to see has arrived, despite 

the delays caused by the rain, is Andrew Popper who serves as a 

professor at American University Washington College of Law, in 

Washington, D.C. He teaches administrative law, government litigation, advanced administrative law and torts and directs the law 

school’s integrated curriculum project. He has served as chair of 

the administrative law section of the Federal Bar Association and 

vice chair of the ABA committee on government relations’ section 

on legal education and admission to the bar. 

Professor Popper is the author of more than 100 published articles, papers and a number of amicus curiae briefs before the United 

States Supreme Court. He has served as consumer rights advocate 

and pro bono counsel for the Consumers Union of America. Prior 

to his career in legal education, he was a Federal administrative 

antitrust prosecutor. 

I want to thank you all for your willingness to participate in today’s hearing. Without objection, your written statements will be 

placed into the record, and we are going to ask that you please 

limit your oral remarks to 5 minutes. 

You will note that we have a lighting system that starts with a 

green light when you begin your testimony. At 4 minutes, it will 

turn yellow to give you a warning that you have a minute remaining. And then when your time has expired, the light will turn red. 

If the light turns red and you are mid-sentence, we will allow you 

to finish your final thoughts before moving on to our next witness. 

After each witness has presented his or her testimony, Subcommittee Members will be permitted to ask questions subject to 

the 5-minute limit. 

With that, I would now invite Mr. Gowen to proceed with his testimony. 

TESTIMONY OF THOMAS L. GOWEN, THE LOCKS LAW FIRM, 

PHILADELPHIA, PA 

Mr. GOWEN. Thank you, Madam Chairman Sa ́nchez and Mr. 

Cannon. Good morning. 

As the Chairwoman stated, the problem that we are here today 

to discuss is finding remedies to deal with the large number of imported products that are defective and causing injury to people in 

the United States. Our Federal agencies seem not to have been 

able to keep up with this large increase in volume. The tort system, 

6 

however, can provide an important private vehicle for the policing 

of dangerous products that are injuring people in this country 

when it is not hampered by procedure rules as it presently is today. 

Presently, foreign manufacturers are able to take advantage of 

onerous service of process rules, either under the Hague Convention, if their country is a signatory, or even worse if it is not. Once 

service is achieved—and it takes months and months oftentimes to 

get service under the Hague Convention—the party comes in and 

raises the minimum contacts defenses that were set forth in Justice 

O’Connor’s opinion in the Asahi case. Discovery can be cumbersome, and collection of judgments can also be very difficult. 

One of the problems is that our commercial markets are designed 

to be national. The foreign manufacturers sell their products for 

sale in the United States and not to any particular State. The minimum contacts rules are designed for a State-based court system, 

such that tests, including whether or not a product is specifically 

designed for Pennsylvania or Maryland or Utah or California, is a 

factor to be considered, whether there is an office there, whether 

there is advertising specifically there, when, in fact, the products 

are very rarely made specifically for any given State and are made 

for sale in the United States market. 

We should not handicap our consumers by tying them to the 

minimum contacts rules of the State courts when, in fact, our commercial reality reflects that we have a national market. 

The Supreme Court in Asahi, although the plurality opinion did 

establish many of the factors that are raised in case after case 

when a foreign manufacturer is brought in, did specifically note 

that Congress could legislate to create a standard of national contacts for the standard of minimum contacts, and I would encourage 

that Congress should consider doing so because it would bring our 

justice system into line with the commercial reality of our markets. 

I have dealt over the years with multiple cases involving foreign 

manufacturers and have seen that they arise in several different 

contexts. 

The first context is when there is a brand name, such as on a 

tire. I had a case with Fate S.A.I.C.I., the largest tire manufacturer 

from Argentina. They were able to be identified and served through 

the Hague Convention, but, again, came in after many months to 

get service and raised all of the Asahi defenses claiming that they 

had only imported 8,000 tires through the Port of Baltimore which 

were then sold in Maryland where our client was injured. 

Secondly, you have products that are made for the proprietary 

names of many retailers, such as Sears, Wal-Mart, Target, and it 

is often difficult to find out even who this manufacturer is until the 

lawsuit is well underway and the information can be provided by 

the defendant retailer. It is important to have the retailer in the 

case for that reason so that that information can be provided hopefully on a timely basis so the statute does not run. 

The third context that I have seen—and this leaves aside the 

component part one which is an entirely different issue—is where 

a product is sold to a large marketer or retailer, such as the Easy 

Pull Stomach Trimmer that I attached to my testimony, where two 

million units were imported to the United States through seven different importers who could not identify the manufacturer, but they 

7 

knew that it was made in China. I think there is a solution to this 

problem. 

The first solution is for Congress to legislate that the standards 

should be consistent with the due process clause, should be a national standard of contacts rather than the artificial State standards that are presently considered by the courts. 

Secondly, I think that Congress should legislate that there be an 

import license required for all foreign manufacturers who seek to 

sell their products in our important market. The license should require the disclosure of the name and address of the manufacturer, 

the product lines and brand names that they make, appointments 

of an agent of service of process in all the States where the product 

is sold. It should require consent to jurisdiction of the U.S. courts 

by accepting the license and selling products in the United States 

market, much like we have required consent to drive on our highways. It should require insurance in the United States and should 

contain a provision that the license will be revoked if a judgment 

of the U.S. court is not satisfied. 

Finally, the information—— 

Ms. SA ́ NCHEZ. Mr. Gowen? 

Mr. GOWEN [continuing]. Should be placed on a searchable Web 

site. 

[The prepared statement of Mr. Gowen follows:] 

8 

PREPARED STATEMENT OF THOMAS L. GOWEN


TLG-1.eps
9 


TLG-2.eps
10 


TLG-3.eps
11 


TLG-4.eps
12 


TLG-5.eps
13 


TLG-6.eps
14 


TLG-7.eps
15 


TLG-8.eps
16 


TLG-9.eps
17 

Ms. SA ́ NCHEZ. Thank you very much. I was just about to say that 

your time had expired, but you summarized nicely. Thank you for 

your testimony. 

At this time, I will invite Mr. Schwartz to begin his testimony. 

TESTIMONY OF VICTOR E. SCHWARTZ, SHOOK, HARDY AND 

BACON, LLP, WASHINGTON, DC, ON BEHALF OF THE INSTITUTE FOR LEGAL REFORM, U.S. CHAMBER OF COMMERCE 

Mr. SCHWARTZ. Thank you, Madam Chairwoman and Ranking 

Member Cannon. 

This morning, I am testifying on behalf of the Institute for Legal 

Reform of the Chamber of Commerce of the United States, but the 

views are my own, and I think that is why I was invited here. And 

I am just going to discuss three topics briefly. 

The first, which Mr. Gowen referred to, is the problem of products coming into the United States that may be defective and a 

consumer who has a claim cannot reach that party. This is unfair 

in more than one way. We have a tort tax on every product sold 

in the United States. In some instances, it is very substantial, 

maybe as much as 10 percent. 

So, if a company is able to come into the United States and not 

be subject to liability, it has an advantage of setting price that is 

simply unfair competition. It is coming into a marketplace without 

the same cost burdens, and that is not right. 

More severe is the fact that somebody may be seriously injured 

by one of these products and, as Mr. Gowen has suggested, there 

is no remedy to reach the manufacturers. 

I have read the Asahi case. I think there is room in that case 

for this body and this Committee to look at alternatives as to ways 

to impose a fair tort system on people who sell substantial amounts 

of products here. We are talking about toys where somebody puts 

the lead in the paint or puts a poison wrapping around a bead. 

These are very serious things, and to allow such parties to totally 

escape our system is wrong. 

Asahi was a plurality opinion. Footnote 5 in the opinion which 

Mr. Gowen referred to provides a good menu for Congress to look 

at it. This is not fair. 

I am going to very briefly talk about the tort system a little bit 

and what Congress has done because some have suggested that 

some way to cure this is to expand liability for defendants. That, 

I think, is a very poor idea. When Congress has stepped into address liability reform, it has limited liability and had remarkable 

success. 

In 1994, Congress enacted the General Aviation Recovery Act. 

That saved an industry. Mr. Glickman was very instrumental in 

that—Democratic member—and it was signed by the President; it 

was an 18-year statute of repose. I sat in a similar room and was 

told if it was enacted, planes would be falling out of the sky. I was 

told that safety equipment would not be put on aircraft. Now we 

know—it is a little bit later—that the products that are sold by the 

General Aviation products—are safe. Twenty-three thousand new 

jobs were created. Safety equipment is on those planes that was 

never there before. 

18 

This Congress also worked on the Biomaterials Access Assurance 

Act—that was Mr. Lieberman and Republicans, too—bipartisan 

legislation limiting liability of people who supplied raw materials 

to medical devices. People who made the medical devices could not 

get the raw materials, so a limit was placed. We were told that this 

would create mayhem, that people who made the raw materials 

would just take largesse and not be concerned with safety. That 

has not happened. What has happened is the medical device manufacturers can get the raw materials. 

Very recently, this body enacted the Class Action Fairness Act. 

That was needed because some personal injury lawyers were manipulating the system and bringing interstate commerce cases into 

local State courts that were friendly to plaintiffs. That also has 

worked. It has not brought about the serious harm to consumers 

that was predicted. At the State level, reforms have also helped reduce the cost of medical liability insurance and gained access to 

medicine. 

So the idea that somehow civil justice reform does not work is 

belied by the facts. 

And, finally, I would like to address the Consumer Product Safety Commission. Pam and I know each other a long time, and she 

knows—and it is true—I have always been supportive of the commission, even before it existed. I wrote a paper when I was a law 

professor that said tort law comes in too late, that we need a strong 

agency to protect people before they are injured, and I think it is 

right that the agency be reauthorized and there should be a focus 

on the powers of the agency to catch defective products at the border, and they should have adequate personnel and adequate funding to reach that goal. 

Unfortunately—and, Madam Chairwoman, you have seen it and 

Mr. Cannon has seen it—a good legislation gets waylaid by things 

that people put in there that have nothing to do with the goal, and 

in the sense—— 

Ms. SA ́ NCHEZ. That never happens in Congress. Never. 

Mr. SCHWARTZ. Well, no, maybe not under your watch, but I have 

seen it happen here or there. And that has happened with this bill 

in some quarters. 

For example, authorizing 51 State attorney generals on their own 

to decide how to enforce the CPSC. I was told, ‘‘Well, do not worry 

about this, Victor, because the CPSC can intervene and help bring 

about uniform policy.’’ Well, if they do not have enough people to 

do their job, I think setting them up as sort of monitors for State 

attorney generals is not a good idea. The CPSC should focus on its 

purpose. 

And I thank you for the time to speak this morning. 

[The prepared statement of Mr. Schwartz follows:] 

19 

PREPARED STATEMENT OF VICTOR E. SCHWARTZ


VES-2.eps
20 


VES-3.eps
21 


VES-4.eps
22 


VES-5.eps
23 

Ms. SA ́ NCHEZ. Thank very much for your testimony. 

Ms. Gilbert? 

TESTIMONY OF PAMELA GILBERT, CUNEO, 

GILBERT AND LADUCA, LLP, WASHINGTON, DC 

Ms. GILBERT. Thank you very much, Chairwoman Sa ́nchez, 

Ranking Member Cannon. 

I am Pamela Gilbert. I am a law partner in the law firm of 

Cuneo, Gilbert & LaDuca. I have been asked to testify today, however, to share with you some of the insights that I learned when 

I was executive director of the Consumer Product Safety Commission from the very end of 1995 through mid-May 2001. I am testifying on my own behalf, and all of my opinions are solely my own. 

As the Chairwoman mentioned in the beginning of the hearing, 

the summer of 2007 might well be remembered as the summer of 

toy recalls. At one point, it seemed that every day brought new reports of dangers posed by another well-loved toy that could be lurking in our children’s playrooms. The list included Thomas and 

Friends trains with unsafe levels of lead, Easy-Bake Ovens that 

could entrap and burn children, Polly Pocket dolls with magnets 

that could also seriously injure children if swallowed, and Barbie 

doll accessories—Barbies, of all things—with high levels of lead. 

And this left parents across the country wondering if any toy they 

buy will be safe for their children. 

Adding to the public’s concern is the fact that just about all of 

the recalled toys were manufactured in China, and, in fact, according to the Toy Industry Association, toys made in China make up 

70 to 80 percent of all the toys sold in the U.S. Some industry analysts say that only about 10 percent of the toys sold in the USA 

are actually made in the USA. 

So the question of whether we can hold these foreign manufacturers accountable for harms caused by the toys is not merely an 

interesting academic exercise. It actually is the heart of the issue. 

Accountability is the key to making sure that we provide in this 

country the right incentives for manufacturers and other companies in the stream of commerce to make and sell safer products. Accountability is also the key to ensuring that people who are injured 

by dangerous products can be compensated and that dangerous 

products can be removed from the market quickly. 

With such a large percentage of the toys we buy for our children 

being manufactured abroad, it is incumbent upon us to ensure that 

our system of accountability includes foreign manufacturers, but 

where that is not possible, that it also includes others in the 

stream of commerce to make sure they can be held responsible. 

Under section 15 of the Consumer Product Safety Act, companies 

are required to make reports of hazardous products to the commission. Section 15 gives the CPSC authority over manufacturers who 

are defined to be also importers, distributors and retailers who discover that one of the products they sell does not comply with Consumer Product Safety rules or are otherwise dangerous. Section 15 

also authorizes the commission to order a manufacturer, importer, 

distributor or retailer to inform the public of the dangers in their 

products and to remove those products from the marketplace and 

from people’s homes. 

24 

And so, for purposes of our discussion today, what is critical 

about the scheme that is adopted by this section 15 is that manufacturers, importers, distributors and retailers are all equally responsible for notifying the public and the commission of hazards 

and conducting a recall, if they are selling a dangerous product. 

The Aqua Dots recall that has already been mentioned today is 

a really good example of this, because what happened is these 

beads were supposed to be covered with a safe chemical. Now what 

happens is you put the beads in water and then they make an art 

product, an art and craft. The beads were, in fact, covered with a 

toxic chemical that, when ingested, acted like the date-rape drug 

GHB, of all things, and a couple of infants actually went to the hospital, were in a coma, hospitalized for a number of days after ingesting many of these beads, and it turns out that the Chinese 

company or Chinese manufacturer substituted the unsafe chemical 

for the safe glue. 

What is interesting about Aqua Dots is that the chain of ownership of Aqua Dots, until it reached U.S. stores, was all foreign. The 

manufacturer was an Australian company. The distributor is a 

company in Canada. And, of course, the products were actually 

physically manufactured in China. Now the Canadian distributor is 

the one that voluntarily did the recall with CPSC. 

However, many times, companies are not as cooperative with the 

Consumer Product Safety Commission, and, in that case, when you 

are dealing with a foreign distributor, it makes it very difficult, if 

not impossible in some cases, for the CPSC to order a recall of that 

foreign company, and so what you have is the CPSC, as a last resort, can go after the retailer to make sure the retailer conducts 

the recall. 

And I would argue that in this world of the global economy that 

we have, that that is a very, very critical piece of the puzzle, and 

when the Consumer Product Safety Commission cannot reach the 

others in the stream of commerce that are foreign companies, 

whether it is the manufacturer or the importer or the distributor, 

that the buck stops where the retailer is and that the retailers 

need to take equal responsibility for getting these products out of 

people’s homes and for informing the public of the dangers. 

So I will stop there and take your questions. 

Thank you. 

[The prepared statement of Ms. Gilbert follows:] 

PREPARED STATEMENT OF PAMELA GILBERT

Good morning Chairwoman Sanchez, Ranking Member Cannon and members of 

the Subcommittee. I am Pamela Gilbert and I am a partner in the law firm of 

Cuneo Gilbert & LaDuca. I have been asked to testify today to share with you insights I gained as executive director of the U.S. Consumer Product Safety Commission from 1996 through May, 2001. I am testifying on my own behalf and all the 

opinions expressed are my own. 

Thank you for giving me the opportunity to testify on the critically important 

issue of accountability for dangerous products that are sold in the U.S. but produced 

by foreign manufacturers. 

The summer of 2007 might well be remembered as the summer of the toy recalls. 

At one point, it seemed every day brought new reports of dangers posed by another 

well-loved toy that could be lurking in our children’s playrooms—Thomas and 

Friends trains with unsafe levels of lead; Easy-Bake Ovens that could entrap and 

burn children; Polly Pocket dolls with magnets that were dangerous if swallowed 

25 

1 Consumer Product Safety Act, 15 U.S.C. 2064, section 15. 

or aspirated; and Barbie doll accessories with high levels of lead. This left parents 

wondering if any toy they buy will be safe for their children. 

Adding to the public’s concern is the fact that just about all of the recalled toys 

were manufactured in China. In fact, according to the Toy Industry Association, toys 

made in China make up 70 to 80 percent of the toys sold in the U.S. Some industry 

analysts estimate that only about 10 percent of toys sold here are actually made 

in the U.S.A. 

The question of whether we can hold these foreign manufacturers accountable for 

harms caused by their toys is not merely an interesting academic exercise. It is really the heart of the issue. Accountability is the key to making sure that we are providing the right incentives for manufacturers and others in the stream of commerce 

to make and sell safer products. Accountability is also the key to ensuring that people who are injured by dangerous products can be compensated and that dangerous 

products can be removed from the market quickly. With such a large percentage of 

the toys we buy for our children being manufactured abroad, it is incumbent upon 

us to ensure that our system of accountability includes foreign manufacturers, and 

where that is not possible, to ensure that others in the stream of commerce can be 

held responsible. 

It is not my role here today to discuss the difficulties, under current product liability law, of holding foreign manufacturers accountable to injured people in the 

U.S. There are other, more qualified witnesses to discuss those issues. I am here 

to explain some of the obstacles faced by the Consumer Product Safety Commission 

when the agency tries to conduct a recall of a product that was manufactured in 

China or in another foreign country. I would note, however, that most of the obstacles that injured individuals face in the product liability system—obtaining jurisdiction, conducting discovery, and enforcing judgments—also make it very difficult for 

the CPSC to carry out a product recall with a foreign firm. 

The Consumer Product Safety Commission is charged with protecting the public 

from hazards associated with at least 15,000 different consumer products, ranging 

from toys to home appliances to all-terrain vehicles. CPSC’s mission, as set forth 

in the Consumer Product Safety Act, is to ‘‘protect the public against unreasonable 

risks of injury associated with consumer products.’’ CPSC’s statutes give the Commission the authority to set safety standards and work with industry on voluntary 

standards, collect death and injury data, educate the public about product hazards, 

and ban and recall dangerous products. 

My testimony will focus on the authority of the CPSC over firms that sell defective or dangerous products. As I am sure the subcommittee is aware, over the years, 

CPSC’s budget has shrunk, impairing its ability to effectively carry out its mission. 

Furthermore, the Commission recently has come under fire for poor leadership and 

management. I do not intend, however, to address CPSC’s current difficulties in my 

testimony, unless I am asked by a member of the subcommittee. 

Section 15 of the Consumer Product Safety Act 1 requires companies to make reports of hazardous products to the Commission and sets forth the procedures for 

conducting a recall of such products. Under section 15, manufacturers (defined as 

a manufacturer or importer), distributors and retailers who discover that one of the 

products they sell does not comply with a consumer product safety rule, contains 

a defect which creates a substantial risk of injury to the public, or creates an unreasonable risk of serious injury or death, must immediately inform the Commission. 

In addition, section 15 authorizes the Commission to order the manufacturer, distributor or retailer to notify the public of the product hazard and to conduct an appropriate corrective action to remove the hazard from the marketplace and from 

people’s homes. The statute allows the manufacturer, distributor or retailer to elect 

to repair or replace the product, or offer refunds to the public less an allowance for 

use for products more than one year old. These corrective action plans are commonly 

referred to as product recalls. 

For purposes of our discussion today, what is critical about the scheme adopted 

by section 15 is that manufacturers—including importers—distributors and retailers 

are equally responsible for notifying the Commission and the public and conducting 

a recall when they sell a dangerous product. To illustrate why this is so important, 

and how it may play out in practice, I am going to use a recent recall as a case 

study. 

Last week, more than four million sets of a children’s art product containing 

beads called Aqua Dots were recalled in cooperation with the CPSC. According to 

the Commission’s press release, the sets were recalled because the coating on the 

beads that causes the beads to stick together when water is added contains a chemVerDate Aug 31 2005 10:16 Jan 16, 2009 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 H:\WORK\COMM\111507\38868.000 HJUD1 PsN: 38868
26 

ical that turns toxic when many are ingested. Children who swallow the beads can 

become comatose, develop respiratory depression or have seizures. 

Before the recall, the Commission had two reports of serious injuries from children swallowing the Aqua Dot beads. A 20-month-old became dizzy and vomited 

several times before slipping into a comatose state and being hospitalized after 

swallowing several dozen beads. A second child who swallowed the beads also vomited and slipped into a coma and was hospitalized for five days before recovering. 

According to news reports, the beads contained an adhesive solvent called ‘‘1,4 butylene glycol,’’ which can simulate the so-called date-rape drug gamma hydroxyl butyrate or GHB when ingested, causing seizures, coma or death. According to the 

toy’s manufacturer, the problem had been traced to a Chinese factory under contract 

that substituted a toxic chemical for a safe glue during manufacturing. 

This is not the first time we have heard of a Chinese factory substituting a harmful chemical for a safe one. In many of the toy recalls involving unsafe levels of lead, 

a Chinese factory reportedly bought and used leaded paint, against the specifications of the U.S. manufacturer contracting with the Chinese. The question on most 

peoples’ minds is who is responsible when this happens, and how can we ensure 

that these harmful practices stop? 

In the Aqua Dot case, the chain of ownership was as follows: The manufacturer, 

Moose Enterprise, is a Melbourne, Australia company. Moose Enterprise produced 

the product in Chinese factories. The North American distributor of Aqua Dots is 

Spin Master, a company based in Toronto, Canada. All of this means that, until the 

toys reached stores in the U.S., they were owned and controlled by foreign firms. 

This type of scenario is becoming increasingly common with toys and other products 

that are sold here. 

In the Aqua Dots case, Spin Master worked cooperatively with the CPSC to conduct the recall. The company set up a website and an 800 number for consumers 

to use to get a replacement toy for their children. As far as I know, the recall is 

running smoothly. 

If Spin Master did not willingly cooperate with the CPSC, however, this recall 

could not have happened as quickly or as comprehensively. When companies refuse 

to cooperate with CPSC on a product recall, the agency can order the company to 

conduct a recall if it proves after a hearing in accordance with the Administrative 

Procedures Act that the product is defective and creates a substantial product hazard or that it violates the law. The Commission can also go to federal court and seek 

an injunction to stop the product from being sold while the hearing is pending. To 

take these steps, however, CPSC must have personal jurisdiction over the company. 

In practice, CPSC will rarely pursue an order for a recall against a recalcitrant foreign firm because of the difficulties of succeeding. CPSC has a very limited budget. 

It will only proceed against a firm if there is a good likelihood of success. When a 

company is not cooperating, and has limited assets or presence in the U.S., the 

Commission will try to find another way to accomplish the recall. 

Even back in 1973, when the Consumer Product Safety Act was enacted, Congress 

recognized that there would be situations in which the only U.S. company involved 

in selling a product in the U.S. would be the retailer. Therefore, as I mentioned in 

the beginning of my testimony, under section 15 of the CPSA, retailers are equally 

responsible for notifying the CPSC when a dangerous product may pose a risk to 

the public, and for implementing measures to remove the product from the marketplace and from people’s homes. 

As our economy is increasingly global, and goods and services seemingly have no 

national boundaries, it is a lynchpin of our product safety system that retailers remain responsible for ensuring a safe marketplace. 

In general, CPSC calls on retailers to implement a recall only as a last resort. 

Usually, a product has only one manufacturer and one distributor, but many retailers. To carry out an effective and comprehensive recall through retailers requires 

agreements with a number of companies. In addition, depending on how broadly the 

product was distributed, it may be impossible to include in the recall every retailer 

that sold the product. This is, therefore, not usually the most efficient or effective 

method of carrying out a recall. But it is critical, for the reasons already discussed, 

that this option be available to the commission. 

In the years since the Consumer Product Safety Act was enacted, the consumer 

product industry in the U.S. has changed significantly. It used to be that retailers 

were considered to be ‘‘mom and pop’’ stores, selling products produced by much 

larger companies. Think of Barbie dolls, manufactured by Mattel, being sold at local 

‘‘five and dimes’’ in every community in the country. With the advent of the ‘‘big 

box stores,’’ that scenario has changed substantially. 

Now we have Wal-Mart, the largest retailer in the world, which sells over 20 percent of the toys in the U.S. According to experts, the top five retailers control almost 

27 

60 percent of the U.S. toy market. In this environment, you can conduct a product 

recall of a substantial percent of the market with just a handful of companies. 

In addition, these large retailers have greater abilities to influence the quality 

and safety of products than ever before. Therefore, it makes sense to put greater 

responsibility on these mega-retailers for ensuring the safety of the products we 

buy. For example, many, if not most, of these large retailers have contracts with 

testing facilities to test the products they sell. In some instances, they have their 

own testing facilities. They should bear responsibility for ensuring that the products 

they sell meet consumer product safety standards, both voluntary and mandatory. 

Large retail chains also have increasing market power, which they can use to 

make sure the products they sell are safe and high-quality. If Wal-Mart, for example, stops selling a certain manufacturer’s products because the manufacturer does 

not have sufficient quality controls in place, the chances are excellent that the manufacturer will improve its practices rather than lose Wal-Mart as a customer. 

Furthermore, some retailers are increasingly ‘‘cutting out the middle man.’’ That 

is, they contract with factories in China to manufacture products and ship them directly to the retailer’s distribution center for delivery to the store. In those cases, 

the retailer is the importer. For purposes of the Consumer Product Safety Act, that 

means the retailer is also the manufacturer. In those cases, there is no reason the 

retailer should not bear all the responsibility to ensure the safety of the product. 

Times have changed. Our economy is global. It is getting increasingly difficult to 

ensure the safety of the products on store shelves and in consumers’ homes. The 

responsibility for safety must be shared, or there will be gaps in protection. Manufacturers, importers, distributors, and retailers all must work together to restore the 

faith of the public in the safety of the marketplace. 

Certainly, there is room for strengthening our laws so that foreign manufacturers 

can be held accountable through the U.S. legal and regulatory systems. But I would 

argue that the barriers to effectively holding foreign firms accountable in the U.S. 

are always going to be steep, because of distance, language and sovereignty problems. The only way that we can have effective accountability in our global marketplace is for all firms in the stream of commerce to be responsible for the safety of 

the products they sell and profit from. Regulation must work that way. Liability 

must also. 

Thank you for the opportunity to testify today. I look forward to answering your 

questions. 

Ms. SA ́ NCHEZ. All right. We appreciate your testimony. Thank 

you so much. 

And last, but not least, Professor Popper? 

We are not super strict with the time limits. So we have given 

everybody a little bit of leeway. 

TESTIMONY OF ANDREW F. POPPER, AMERICAN UNIVERSITY, 

WASHINGTON COLLEGE OF LAW, WASHINGTON, DC 

Mr. POPPER. Chairwoman Sa ́nchez, Ranking Member Cannon, 

thank you very much for inviting me. I apologize for my delay in 

getting here. There were tort reformers in the hall, and they 

blocked me. 

It strikes me as nearly miraculous that the four of us are in 

agreement on the basic measure that needs to be taken. I think we 

should pause and enjoy the moment because that does not happen 

very often in the product liability area. 

Ms. SA ́ NCHEZ. Should we order a moment of silence to absorb 

that? [Laughter.] 

Mr. POPPER. I would be happy with a croissant, but silence is 

fine. 

And out of respect to Professor Schwartz, I want to note that I 

have used his fantastic book for as long as I have been teaching, 

and there is just nothing like it, and I thought I would put that 

on the record. 

Ms. SA ́ NCHEZ. So noted. 

28 

Mr. POPPER. Onto my testimony. Of course foreign manufacturers and their domestic counterparts should be liable for the harms 

they cause when sellers place millions of toys in the stream of commerce with toxic levels of lead and deadly drugs and cribs that can 

strangle children. Of course they have to be accountable. It is not 

really much of a question. 

I want to first talk a little bit about something on which Victor 

and I disagree. Why has this happened? Year after year, tort reformers have come to this capital and to state houses demanding 

relief from the accountability the law required. 

They asked for abolition of strict liability. They asked you to relieve retailers and distributors and component parts manufacturers 

of liability. They sought to cap noneconomic losses. They sought to 

ratchet up standards for evidence. They sought to abolish joint and 

several liability, abolish the punitive damages and, ultimately, by 

indirection, neuter the Consumer Product Safety Commission. 

With singular determination, they sought to dismantle a system 

that had generated a tough market-based force that compelled the 

production of safe products. State legislatures and occasionally congressional Committees gave in to these requests, congratulating 

themselves on how they were leveling the playing field. In the feeding frenzy that resulted, known as tort reform, vital market pressures, corrective justice forces, were diluted. 

Stripped of the strong civil justice incentives, free from coherent 

regulation, foreign manufacturers and their domestic distributors 

put our children at risk. They went with dangerous products, shiny 

and cute, but deadly. With the ability to calculate with precision 

downstream liability, with many States abolishing joint and several 

liability, strict liability and on and on, what else would you expect? 

Against this bleak backdrop, what next? 

Well, I am done with the negative part. I think there is a lot that 

you can do. The good news is that the backbone of the tort system, 

negligence law, has survived the onslaught. The State court doors 

are open, and they are open for domestic distributors and foreign 

manufacturers who produce the goods that bring us to the hearing 

today. Foreign manufacturers are subject to the jurisdiction of domestic courts if there are constitutionally sufficient minimum contacts in the forum State and if the proceeding comports with our 

notion of fairness, justice and fair play. 

While Asahi requires us to take into account the unique burdens 

placed on one who must defend oneself in court, if you reap the distributional benefits of a product in the network, Asahi also says 

you should not be able to escape the jurisdiction of the courts. Too 

often, that is exactly what happens. 

The minimum contacts puzzle is not complicated. The more a foreign manufacturer has domestic facilities, bank accounts, property, 

pays taxes, has employees, agents, advertisers, communicates with 

consumers, the less minimum the contacts become. 

The problem is that the courts have interpreted both the plurality and Brennan’s opinion in different ways. As the Eighth Circuit has said repeatedly, there is no one single interpretation, and 

that is possibly where you can step in and where this gets interesting. I am not sure, constitutionally, that you can change a Supreme Court decision that declares a Due Process minimum reVerDate Aug 31 2005 10:16 Jan 16, 2009 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 H:\WORK\COMM\111507\38868.000 HJUD1 PsN: 38868
29 

quirement by legislation declaring that Justice Brennan was correct. I do think that the Supreme Court opinion left it wide open 

for you to adopt a national effects test to secure personal jurisdiction, discussed by all members of this panel today. 

I also think that you can adopt a bond requirement. I can see no 

overt impediment to prevent you from creating, as a condition of 

importation to that foreign importers post a bond when they bring 

products into the United States. By the same token, I think that 

you can require foreign importers to consent to jurisdiction. 

Party autonomy has been the heart of our conflict of laws system 

and in other systems as well. What is wrong with signing a statement that says: ‘‘We consent to the jurisdiction of any State in 

which our products are sold.’’ Once a party actively consents, I 

think the matter gets far easier. 

It does not mean, however, that once you have jurisdiction over 

foreign manufacturers that these cases are going to be easy. Discovery is difficult when you are dealing with foreign manufacturers. Blocking statutes, as I mentioned in my testimony, are a problem. The Hague Convention is an expensive and unreliable solution 

in terms of service of process, and the United States, to be perfectly 

frank, has not exactly done things that would allow it to lay claim 

to comity and support of foreign courts when it tries to enforce its 

own judgments. 

Let’s face it. When you are looking at dangerous product recalls 

on the order of 30 million and upward, it is time to think boldly 

about how things can be turned around. No more so-called reforms 

that cut down consumers at the knees. It is time at last to facilitate 

justice, not to impede it. 

Thank you very much for the opportunity to testify today. 

[The prepared statement of Mr. Popper follows:] 

30 

PREPARED STATEMENT OF ANDREW F. POPPER


AFP-1.eps
31 


AFP-2.eps
32 


AFP-3.eps
33 


AFP-4.eps
34 


AFP-5.eps
35 


AFP-6.eps
36 


AFP-7.eps
37 


AFP-8.eps
38 


AFP-9.eps
39 


AFP-10.eps
40 


AFP-11.eps
41 


AFP-12.eps
42 


AFP-13.eps
43 


AFP-14.eps
44 


AFP-15.eps
45 


AFP-16.eps
46 


AFP-17.eps
47 


AFP-18.eps
48 


AFP-19.eps
49 


AFP-20.eps
50 


AFP-21.eps
51 


AFP-22.eps
52 


AFP-23.eps
53 


AFP-24.eps
54 


AFP-25.eps
55 


AFP-26.eps
56 


AFP-27.eps
57 

Mr. JOHNSON. [Presiding.] We will now begin the questioning, 

and I will begin by recognizing myself. 

Professor Popper, in your written testimony, you suggest that 

Congress require foreign manufacturers of consumer goods to consent to the jurisdiction of any domestic State court in which their 

products are sold as a condition of importation. Please explain further how this could be accomplished. 

Mr. POPPER. When you are presented with a problem of this 

magnitude, you have an opportunity initially to be creative and 

thereafter to think in detail. I have to tell you, I am still in the 

creative stage, and I think that we all are. There are problems with 

NAFTA any time you impose any kind of obstacle to importation 

and there are issues that come under our customs laws, and there 

are enforcement problems since this is primarily in the domain of 

the executive. 

All that said, let me give you a simple analogy. When you buy 

insurance, in your insurance policy, you consent to the laws of a 

particular State and you consent to be part of compulsory arbitration. We argue about that, whether that is a good idea for consumers or not, but we have done it for years. I do not see anything 

different about doing this with a foreign importer. When you come 

in, it is part of the customs statement you sign, ‘‘I consent to the 

jurisdiction of any State in which my products are sold.’’ 

I recognize, sir, that there are complexities to this, but I think 

as a starting point, if the States find, as they do, and the Federal 

courts affirm, that minimum contacts is a significant problem, a 

statement that says by the foreign manufacturer, ‘‘We consent to 

the jurisdiction in which our products are sold,’’ would go a long 

way to solving that. 

Mr. JOHNSON. Thank you, sir. 

In your written testimony, you also recommend that Congress require foreign manufacturers to post a bond in the event goods they 

produce prove to be defective, and dangerous. How would that be 

accomplished? 

Mr. POPPER. The same set of considerations would apply here. I 

think there is a NAFTA problem. I think you have executive enforcement problems. This is Customs, Treasury. And just to be 

clear, it would not be that they post a bond in the event their goods 

are defective, it would be that they post a bond as a condition of 

importation. If it turns out that their goods are defective, then at 

least an injured consumer has some recourse through the bond, assuming that they have difficulty securing minimum contacts or assuming they cannot secure relief from the foreign manufacturer’s 

distributor. 

Let me be clear about something. A domestic distributor or retailer of a foreign entity is responsible under any construction of 

the law that I know if that foreign product fails and if that foreign 

entity is unavailable for suit. So there is that recourse that is out 

there. We have not talked about that. It is not really part of the 

charge of this hearing, but I would not want that lost today. 

Mr. JOHNSON. All right. Thank you. 

Ms. Gilbert, do you think that foreign manufacturers would comply with safe product standards if they were held accountable in 

U.S. courts? 

58 

Ms. GILBERT. Yes. I think that that would go a long way toward 

helping the accountability problem that we have now. Now we have 

these foreign manufacturers or these foreign factories that really 

get away scot-free when these problems arise in the U.S. The U.S. 

companies are the ones that are conducting the recalls. 

For the most part, the U.S. companies are the ones that are on 

the hook if they are sued in a liability lawsuit so that, if you were 

to have a longer arm reach out to the foreign manufacturers and 

the foreign factories that are causing some of these problems, then 

I think that the incentives would be the right incentives, and then 

you would ultimately get safer products and better accountability 

Mr. JOHNSON. Thank you, ma’am. 

Mr. Schwartz, H.R. 989, the Innocent Sellers Fairness Act, would 

completely immunize sellers from liability except under limited circumstances. In light of the facts that consumers currently have a 

difficult time holding foreign manufacturers accountable, do you 

support this legislative approach? 

Mr. SCHWARTZ. I support a legislative approach that would say 

that a seller or distributor should not be subject to what is called 

strict liability, unless the manufacturer is unavailable for suit. You 

know, I have been supportive of that approach. It is the law in 16 

States. It has worked very well. There has been no problem. So it 

just gets the innocent seller out of court in situations when the 

manufacturer is available for suit and there is jurisdiction over the 

manufacturer. 

So my answer to the question is if that bill reflects that approach—I do not have that bill in front of me—I have always been 

supportive of it. 

Mr. JOHNSON. Thank you, Mr. Schwartz. 

My time has expired. I now recognize the Ranking Member of the 

Subcommittee, Mr. Cannon, for 5 minutes. 

Mr. CANNON. Thank you. 

Ms. Gilbert, on October 30, a political newspaper noted that 75 

percent of contributions that come from lawyers and their lobbyists 

go to Democrats, and in October of 2004, in an article in The Nation magazine, you noted that ‘‘tort reform would help de-fund the 

Democratic Party.’’ Can you please describe the connection between 

a system that allows more lawsuits and more money going to candidates for the Democratic Party? 

Ms. GILBERT. I got everything up until your question. I am sorry. 

What was the question? 

Mr. CANNON. Can you describe the connection between a system 

that allows more lawsuits and increased funding for the Democratic Party? 

Ms. GILBERT. Not very well. It is not my area of expertise. I do 

not recall that Nation article. 

Mr. CANNON. Let’s go back to the—— 

Ms. GILBERT. It was a long time ago. Did you say it was 1994? 

Mr. CANNON. No, 2004. 

Ms. GILBERT. Oh, 2004. I do not recall the article or what the 

context was, so I cannot really speak to that, and, again, I am not 

here to be an expert on the funding of either the Democratic Party 

or the Republican Party. 

Mr. CANNON. Do you think there is—— 

59 

Ms. GILBERT. I am personally a very, very strong believer in a 

strong civil justice system that places responsibility where it belongs when there are injuries from unsafe products or other unsafe 

activities. 

Mr. CANNON. Regardless, 2004 is a long time ago, and who 

knows when the discussion happened, if it was an accurate quote, 

but do you think that there is a relationship between tort reforms 

or the availability of tort actions for lawyers and contributions for 

Democrats? 

Ms. GILBERT. I do not know. I do not know. Again, it is—— 

Mr. CANNON. I know. 

Ms. GILBERT. It is not my area of—— 

Mr. CANNON. I know. I think everybody knows. 

Ms. GILBERT [continuing]. Expertise, and it is not why I am here. 

Mr. CANNON. The fact is this is a Republic-Democrat issue in 

part because the Republicans want a system that works and makes 

sense, and the Democrats want to empower lawyers to make money 

and suck that out of the system. 

I see Mr. Popper is furiously making a note, and I suspect you 

would like to respond to that, Mr. Popper. 

Mr. POPPER. I—— 

Mr. CANNON. You do not need to. I thought you were anxiously 

engaged there. 

Mr. POPPER. I was just noting what I needed to do after the hearing. 

Mr. CANNON. You leave academia—— 

Mr. POPPER. Pick up the laundry. Go to the cleaner’s. 

Mr. CANNON. No, we do not mean to be mean. Let me just 

say—— 

Mr. POPPER. I am happy to respond just—— 

Mr. CANNON. I will just use some time, but let me just say I am 

not anti-tort. I mean, I have lots of friends that are lawyers that 

bring about justice for people in small cases, in certain cases. It is 

just that there has to be a balance, and I think that there is clearly 

an imbalance both in the contributions and in the incentives that 

the different parties have, and I would love to hear what you have 

to say about that. 

Mr. POPPER. Too often tort reform is characterized as an issue 

between the Democratic Party and the Republican Party. I think 

while sometimes it seems that way on different votes, it really is 

not. 

The States’ rights issue that is at the heart of tort reform is very 

much an issue of the Republican Party. I think there are many, 

many people in the Republican Party who have trouble with Congress trying to impose standards on the States. 

I think there are many people in the Democratic Party—Senators 

Dodd and Lieberman, proposed legislation that would have declared the tort system compensatory some years ago. As a consumer advocate, I thought was horrendous. 

So I do not think it is quite that clear as a Democrat-Republican 

matter. I would just as a final comment regarding contributions of 

lawyers to campaigns. I think Ms. Gilbert is right. That is almost 

impossible to isolate. People give to campaigns for all kinds of difVerDate Aug 31 2005 10:16 Jan 16, 2009 Jkt 000000 PO 00000 Frm 00063 Fmt 6633 Sfmt 6601 H:\WORK\COMM\111507\38868.000 HJUD1 PsN: 38868
60 

ferent reasons. If I ran the zoo, campaigns would be publicly financed, and we would not be talking about this. 

Mr. CANNON. Thank you. That was a very thoughtful comment. 

I appreciate it. 

If I had my way, people could contribute anything they wanted, 

and we would have disclosure of everything, and I think that would 

clean up the cesspool much better than any other system would, 

but we are not likely to have that, and that makes it sort of a zoo, 

I agree, and it is sometimes hard to have direct connections in 

these things because you make good points about States’ rights and 

that sort of thing, and I am personally deeply troubled about some 

of the aspects of tort reform that go to the prerogatives of States. 

Mr. Schwartz, I suspect you could further enlighten us on the 

issue—— 

Mr. SCHWARTZ. Well, not on—— 

Mr. CANNON [continuing]. Or on anything else that you would 

like to respond to that other people have said on the panel thus far. 

Mr. SCHWARTZ. Well, thank you. Since Professor Popper has graciously said he is a customer of my casebook, I have to tread lightly 

on criticizing anything he said. [Laughter.] 

But I do not believe and it is really speculation that the people 

in China who put lead in paint that would hurt children were 

thinking about tort reform in the American system. They may have 

thought that they are immune from the reach of our system of tort 

law, and that is not good. As I said, there is a tort tax on products. 

There is no reason for someone who is supplying a substantial 

number of products to this country to be immunized from our system, and I think it is good that this body is considering ways to 

address that. 

Professor Popper talked about bonding. I think any remedy 

should be isolated to the problem, not everybody who sends imports, but those who are not really available for suit under the current system, and there is flexibility in these decisions to try to address that particular problem. 

You have large importers that can be sued here and have been 

sued here. That is not the problem. It is those who send a substantial amount of products into the United States and are immune 

from our tort system, and that is, I think, what this body should 

look at. 

Mr. CANNON. Thank you. 

Mr. JOHNSON. The gentleman’s time has expired. 

We will now proceed with questions from the gentlewoman from 

California, Ms. Lofgren. 

Ms. LOFGREN. Thank you very much. 

And I am glad that this hearing is being held today. This is, I 

think, an enormously important issue. 

Recently, I was in a department store, and I walked past the toy 

aisle, and I saw all of these toys, and I thought I am so glad that 

my youngest is 22, and that I do not have to worry about buying 

one of these things and whether there is lead on it and whether 

it is going to poison my kid. And when you take a look at parents 

all over the country thinking about, with Christmas coming up, 

whether they are going to injure their children by their Christmas 

gifts, it is just a horrendous situation. 

61 

And, you know, I have always supported internationalism, and I 

have been supportive of trade issues. It just has to be noted that 

most of these defective products seem to be coming from China, 

and, you know, how are we going to hold them accountable? That 

is what really this is about. 

The Ranking Member and I worked together on many things. I 

like him. He knows that. And there are things that we agree on. 

But I think when it comes to so-called tort reform, for 12 years, the 

Republican majority pursued efforts so that people would not be 

held accountable for hurting people who were innocent, and now 

there is a new approach here, which is how do we hold people accountable? 

And part of that is using the court system, the system of civil 

justice, where people have to be held accountable for what they do, 

and when it comes to foreign entities who are wrongdoers, no one 

should want to defend misconduct on the part of toy manufacturers 

who are either reckless or—who knows what the motivation is— 

that would harm American children. And noting we had a hearing 

a couple of weeks ago on a different subject on the IP Subcommittee where the Customs Department admitted that when it 

comes to penalties for careless dumping and other misconduct, they 

collect less than 1 percent of assessed penalties. So that whole system is not functioning well. 

The Consumer Product Safety Commission is not up to task. We 

have called for, you know, a complete re-haul of that whole system, 

but here is my question, I guess maybe to the professor or whoever 

else could answer it, given the fact that most of what is being imported into the United States is not even inspected, the Customs 

Bureau is not actually efficiently even collecting the fines, it is not 

clear—— 

How would we actually administratively get these importers to 

consent to jurisdiction? And is there a role in terms of treaties? Do 

you think it would be constitutionally permissible for, for example, 

the government of China to consent to jurisdiction on its manufacturers and citizens because it is really in their long-term interest 

not for this to happen? I mean, nobody is going to buy a toy made 

in China if this continues. Do you have an opinion on those questions? Any of you? 

Mr. POPPER. On the question of consent to jurisdiction, there is 

the individual party choice that a foreign manufacturer can make, 

and then there are choices that a country can make to declare that 

foreign manufacturers are subject to the jurisdiction of the courts 

of the United States. Constitutionally, I do not think that there is 

any prohibition on a foreign government doing that. 

I mentioned in my statement, however, that this requires real cooperation and agreement from the executive because when you are 

talking about how the customs system functions in the United 

States, I do not know that that is something that you can legislate 

into efficiency. If—— 

Ms. LOFGREN. Well, certainly, we cannot, and I have a lot of respect for the line officers trying to do a very tough job, but it is 

administratively a complete mess, and I do not have any hope that 

under the current Administration that is going to improve despite 

the very, you know, diligent efforts of the officers on the line. 

62 

Mr. POPPER. This is the one thing that you can have an effect 

on: is resources, which really gets, I think, all of us back to thinking about the CPSC. My alma mater law school and the law school 

in which I currently work, in both institutions, our budget is larger 

than the budget of the CPSC, which is just appalling. 

Ms. LOFGREN. Right. Well, I think, you know, it is appalling, but 

if the manufacturers or the government of China know that they 

are going to face civilian courts in the United States—and it is not 

about lawyers. It is about parents and their children who have a 

right to be heard, to have their day in court and to hold somebody 

accountable, you know, even the fact that the government is dysfunctional at this point—that element could help save the day for 

American families. 

Mr. POPPER. I would agree with that. 

Ms. LOFGREN. My time is expired. 

Mr. Chairman, I thank you. 

Mr. JOHNSON. Thank you, Madam. 

We will now turn to Congressman Franks from Arizona for 5 

minutes. 

Mr. FRANKS. Well, thank you, Mr. Chairman. You are doing a 

good job. 

Mr. JOHNSON. Thank you, sir. Your check is in the mail, sir. 

[Laughter.] 

And you can have an extra 5 minutes. 

Mr. FRANKS. Mr. Chairman, I guess, you know, some of these esoteric areas of law escape a lot of us, but the one thing that is 

paramount in our minds is doing everything we can to protect the 

children of this country and, for that matter, in every country, and 

you folks have insight into the mechanics and the process of how 

these toys are not only manufactured, but how they get here and 

under what auspices, what the protections are, whether it be the 

Port Authority or legal remedy might be available. 

So I want to ask each of you kind of a straightforward question. 

Let me first say that Ms. Lofgren said, you know, no one will want 

to buy toys from China if this continues. Now I am not sure that 

that is such a bad idea. Maybe the market itself, if properly informed, would have an economic impact that would mitigate this 

quite a lot. 

But without trying to color your perspective, I would like to have 

each person, starting over here with you, Mr. Gowen, if it is all 

right, to just go down the panel and tell me what you think would 

be the one thing if you were running the zoo that you would do to 

solve this problem. What is the one most important single thing? 

You know, in Congress, we actually try, but sometimes it is hard 

to stay focused on something that would really make a difference, 

and we shoot in a lot of directions and we do not hit anything of 

consequence. 

So tell me, if you were emperor of the world, what is the one 

thing you would do to protect children in this country from dangerous or faulty toys from other countries or, for that matter, this 

one? 

Mr. Gowen? 

Mr. GOWEN. Thank you, Mr. Franks. 

63 

I would require all who are importing products into the United 

States or exporting to the United States to have an import license 

into the United States that would require them to consent to the 

jurisdiction of the courts, to have insurance in this country and to 

have that license subject to revocation if the judgment of an American court is not paid, as well as having an agent for service of 

process here in this country, to put them on an equal footing with 

American companies and to give American consumers a reasonable 

remedy in the event that they are injured. 

Mr. POPPER. Madam Chairman, that almost sounds reasonable to 

me. 

Ms. SA ́ NCHEZ. [Presiding.] I am glad we agree on something. 

Mr. FRANKS. Mr. Schwartz? 

Mr. SCHWARTZ. I would pinpoint responsibility on suppliers of 

products from foreign countries who are currently on an unequal 

playing field in our tort system. All of our companies here are subject to it, including those who send goods here and have substantial 

business, but there are ways to address and pinpoint that responsibility on those companies. 

The tort system, when it is fair, can have a deterrent value, and, 

right now, they escape that deterrent value, and that would be a 

good policeman since we cannot have the borders staffed with policemen to catch these goods. 

Mr. FRANKS. Thank you, Mr. Schwartz. 

Ms. Gilbert? 

Ms. GILBERT. I am going to try to cheat and give you two things. 

My second choice would be the import license and the scheme 

that Mr. Gowen just laid out. 

I would have to say as my first choice, being a devotee of the 

Consumer Product Safety Commission, I would triple the budget of 

the agency and the size of the agency to address this problem. 

Mr. FRANKS. Thank you. 

Mr. Popper? I am sorry. 

Mr. POPPER. I think those are all good suggestions. If you could 

put together a simple piece of legislation that incorporated all 

three, I would certainly be excited about it. In addition to an import license and focus on the CPSC, I think that the Supreme 

Court has invited you to declare that minimum contacts can be satisfied with a nationwide-effect tes. I think that is actually fairly 

easy to do and, arguably would resolve some of the problems that 

Asahi created. 

Mr. FRANKS. Well, thank you, Mr. Popper. That is all of the 

above. 

Mr. POPPER. That is all of the above. 

Mr. FRANKS. And I appreciate that. 

Mr. Gowen, thank you for starting out with a crisp—I am going 

to vote for Mr. Gowen if that is okay with the rest of you, but I 

think all of you had good suggestions here. 

And I yield back, Mr. Chairman. Thank you. Or Madam Chair. 

I am sorry. We had a little switch here. 

Ms. SA ́ NCHEZ. Thank you. We pulled the switcheroo on you, so 

it is understandable. 

64 

And I want to apologize to our witnesses. I dashed out because 

I had a concurrent markup in the Ed and Labor Committee and 

I was required to vote there. 

I understand Mr. Johnson did a very good job chairing the Committee, although when the Chairwoman leaves, the Committee goes 

to hell and he wants to give away an additional 5 minutes for questioning to each panel member. 

I am going to take my round of questions. 

Mr. CANNON. The minority would not object if the Chair took her 

5 minutes and we did not go to a second round, by the way. 

Ms. SA ́ NCHEZ. Thank you. We will see if there is substantial interest in the second round of questions, but I am going to do my 

first 5 minutes. 

Mr. Gowen, in your written testimony, you note that Justice Sandra Day O’Connor’s opinion in Asahi suggested that Congress could 

authorize Federal court personal jurisdiction over alien defendants 

based on the aggregate of national contacts rather than on the contacts between defendant and the State where the Federal court 

sits. If that were enacted, how would this proposal impact the ability of injured consumers to hold manufacturers accountable? 

Mr. GOWEN. Well, presently, when foreign manufacturers filed 

their motions to dismiss, which usually comes shortly after service 

is achieved, they raise the factors that Justice O’Connor suggested 

as possibilities for looking at the additional factors beyond placement into the stream of commerce. 

One of those is: Was the product made specifically for California 

or Pennsylvania or New Jersey? And I think we know that very 

few products are really made specifically for any State. They are 

made for our national market. 

Secondly, they look at things like: Do they have an office there? 

Do they advertise specifically in that State? Frequently, they work 

through an intermediary, such as an ad agency or an importer. So, 

if we were able to look at a national standard of minimum contacts 

instead of saying there were 8,000 tires sold in Maryland and suppose 500 of those had been taken to Delaware where the injury occurred, would that have been enough? 

This company that we had the case with there had millions of 

tires that were sold into the United States as a whole, and I think 

that it would make the process of establishing minimum contacts 

much easier? 

Ms. SA ́ NCHEZ. Okay. Mr. Schwartz, sort of along the same line, 

Justice O’Connor in her opinion suggested that we could potentially 

use the aggregate of national contacts, and I thought I heard you 

use the term ‘‘substantial business,’’ and I think I heard Professor 

Popper use the word ‘‘nationwide effect,’’ and I am sort of wondering if they all are fairly similar or if there are distinctions between any of those standards that we could potentially use. 

Mr. SCHWARTZ. Well, I think that you have two measures there. 

Having a national measure is a sound idea that is put in Footnote 

5 of the opinion. But if it was just a mere sprinkling of sales and 

not substantial as a whole, that might not satisfy the Constitution. 

So I think both elements would be required. 

65 

Ms. SA ́ NCHEZ. Okay. And do you have—since you are an author 

of a torts book—an idea of what criteria might be used to establish 

substantial? 

Mr. SCHWARTZ. Well, I have learned from my work not to draft 

when one is sitting here—— 

Ms. SA ́ NCHEZ. We will allow you some—— 

Mr. SCHWARTZ [continuing]. But I certainly would be pleased to 

follow up with this, Chairwoman, on that issue. 

Ms. SA ́ NCHEZ. Sure. I appreciate that. 

Ms. Gilbert, as you referenced in your written testimony, the 

Consumer Product Safety Commission has come under fire for poor 

leadership and management, and it is recently reported that CPSC 

employees have accepted a large number of trips financed by industries that the CPSC are mandated to regulate, which sort of sounds 

a little icky, to use sort of a nongovernmental term. What steps do 

you think that the CPSC should take in order to overcome those 

recent problems and to restore the independence of the commission? 

Ms. GILBERT. Well, as I mentioned before, the Consumer Product 

Safety Commission needs an infusion of cash, frankly. I mean, it 

has been underfunded for decades now, and when I was there, I 

used to say that the Pentagon spent CPSC’s annual budget every 

hour and a half, and I think that that must be a much shorter period of time now since the Pentagon has gotten bigger and CPSC 

has gotten smaller. So I am not arguing that CPSC should be as 

big as the Pentagon, but maybe it should be a little bit larger than 

45 minutes worth of the Pentagon to keep American families and 

children safe. So, to me, that is the most important. 

And then, secondly, the current leadership of CPSC is, frankly, 

quite sad, and it has saddened those of us who worked there, and 

many of the staff who were quite expert and committed and devoted to that agency who have left out of frustration, and there are 

many of them, and so we really do need new leadership at the commission. 

It appears from what has come out in the press—as you mentioned, the trips—that the current chair and her predecessor really 

abuse the privilege. I will admit that when I was at CPSC, I did 

approve some industry-funded travel, mostly for staff, for the technical or legal compliance staff of the agency for product safety 

work, for specific product safety work that we did not have the 

budget for, but we did not have chairs and commissioners flying 

around to this resort and that golfing, you know, excursion on the 

dime of the industry, and that really does need to stop. 

Ms. SA ́ NCHEZ. Thank you. 

My time has expired, but I will beg the indulgence of my Ranking Member. I think we can finish up without going to a second 

round of questions if I could have 2 additional minutes. 

Mr. CANNON. I would be happy. 

May I just ask unanimous consent to submit for the record an 

article in The Wall Street Journal that was printed on Tuesday, 

November 13 called AGs Gone Wild? 

Ms. SA ́ NCHEZ. Without objection. 

[The information referred to follows:] 

66 


2.eps
67 

Ms. SA ́ NCHEZ. I have one last question, and I understand this 

question has been asked of another witness, but I am interested in 

getting Professor Popper’s perspective on this. 

Somebody asked about the H.R. 989, the Innocent Sellers Fairness Act, which would completely immunize sellers from liability, 

except under very limited circumstances, and in light of the fact 

that consumers already have a difficult time holding foreign manufacturers accountable, do you think that this is a smart legislative 

approach to the problem? 

Mr. POPPER. I think the initial smart answer would be Victor’s, 

which is without the legislation in front of me, I am hesitant to 

comment. But on the general proposition of relieving retailer sellers of responsibility, I think it is a terrible idea. 

It has been an argument for a long time, and you can understand 

why. Most sellers—retailers in particular—do not design goods, 

they do not place the warnings, the labels on the goods, and so 

therefore to tie them into broad-based stream-of-commerce liability 

might seem, at a certain level unfair. 

Anticipating that argument, I would say sellers have an enormous influence on design. If a seller communicates with a manufacturer that the product is not satisfactory, the product will not 

be sold and the design will change. Further sellers have an affirmative duty to warn, and they are vital to the stream of commerce, 

they make a profit from the products they sell, and they have the 

capacity to spread loss. They need to take responsibility for the 

products they sell. If there is some kind of global wash that eliminated the liability of retail sellers, I think that would be a very bad 

idea. 

And, again, it is like a lot of tort reform. It is not that I am right 

or Victor is wrong. They are two different points of view. If I am 

a small seller, and I am getting products from abroad, and I hear 

that they are great products, and I put them on the shelf, and I 

sell them, and I had nothing to do with the design or labeling of 

them, and then, suddenly, I am tied up in a lawsuit, of course, I 

am going to feel it is unjust. But in the grand scheme of things, 

we make tradeoffs, and by legislation, to give that wash to the 

whole of the selling community strikes me as bad legislation. 

But, again, I do not have the language of that bill in front of me. 

I would assume that you have characterized it correctly, and on 

that assumption, I would say it is a bad idea. 

Ms. SA ́ NCHEZ. Great. Thank you so much. 

Mr. SCHWARTZ. Madam Chairman? 

Ms. SA ́ NCHEZ. Yes? 

Mr. SCHWARTZ. You were at another Committee when I was 

asked that question, so I will just very briefly mention my answer. 

Ms. SA ́ NCHEZ. Certainly. 

Mr. SCHWARTZ. Most of the bills that have taken the product seller issue on work like this. It relieves the product seller of strict liability. So, if they are selling a steam-and-dry iron and something 

is wrong with it and it is in a box and they do not know about it, 

they are not subject to liability. In the laws that have been enacted 

in the 16 States, it has worked well—not one of them has been repealed. No one has tried to repeal them. They have been law for 

68 

20, 25 years—they are subject to liability if the manufacturer cannot be reached by judicial process. 

So, in the problem that we are talking about today, if the foreign 

manufacturer could not be reached, the retailer or wholesaler 

would be subject to liability. But it does cut legal costs. You are not 

bringing them in in every single case. 

And what sometimes happens is that a plaintiff’s lawyer, a good 

one, who wants to sue a manufacturer but wants to be in a State 

court, will name the retailer, not for the purposes of suing them at 

all, but just to get jurisdiction into a State court because then—I 

may be getting too legal here—the plaintiff and defendant are from 

the same State, and the Federal court cannot take jurisdiction. So 

that is the reason for that particular reform. 

I would want to review the bill and then have an opportunity to 

give you my views in writing about it. 

Ms. SA ́ NCHEZ. Sure. I do not want to mischaracterize your testimony, but you agree that if somebody is in that chain of commerce 

and we do not have the ability to reach the manufacturer, that 

they do bear some responsibility and should be subject to—— 

Mr. SCHWARTZ. If you do not strand the complainant. 

Ms. SA ́ NCHEZ. The consumer. The complainant. 

Mr. SCHWARTZ. But product seller reform legislation has worked, 

and also—— 

Ms. SA ́ NCHEZ. Would you—— 

Mr. SCHWARTZ [continuing]. A lot of other civil justice reforms 

that have been supported by Mr. Cannon have worked. So—— 

Ms. SA ́ NCHEZ. But you would also agree, though, that in this instance—and I think I have heard it in different ways from everybody here—there is a general sense that, A, it is unfair, B, it is unsafe for us not to be able to reach the manufacturers who are the 

starting point in this process—— 

Mr. SCHWARTZ. Absolutely. I think that to have people who are 

making a substantial profit from dollars spent in this country to be 

immune from our tort system is unsound public policy. 

Ms. SA ́ NCHEZ. Thank you very much. 

And would everybody agree, if I could just get a verbal on-therecord answer? 

Mr. Gowen? 

Mr. GOWEN. Yes, I would certainly agree. 

Ms. SA ́ NCHEZ. Ms. Gilbert? 

Ms. GILBERT. Yes, I agree. 

Ms. SA ́ NCHEZ. Professor Popper? 

Mr. POPPER. I agree as well. 

Ms. SA ́ NCHEZ. We are all in agreement. 

Mr. CANNON. May I add my voice to this? 

Ms. SA ́ NCHEZ. Mr. Cannon? Sure. Feel free. 

Well, that wraps up pretty much the hearing for today. Again, 

I want to thank all of the witnesses for their testimony. 

Without objection, Members will have 5 legislative days to submit any additional written questions which we will forward to the 

witnesses and ask that you answer as timely as possible so that we 

can also include those in the record. 

Without objection, the record will remain open for 5 legislative 

days for the submission of any additional materials. 

69 

Again, I want to thank everybody for their time and their patience, and this hearing on the Subcommittee on Commercial and 

Administrative Law is adjourned. 

[Whereupon, at 10:4 a.m., the Subcommittee was adjourned.] 

(71) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

72 

RESPONSES FROM THOMAS L. GOWEN, THE LOCKS LAW FIRM, PHILADELPHIA, PA, TO

POST-HEARING QUESTIONS FROM THE HONORABLE LINDA T. SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIRWOMAN, 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW


3-1.eps
73 

f 


3-2.eps
74 

RESPONSES FROM VICTOR E. SCHWARTZ, SHOOK, HARDY AND BACON, LLP, WASHINGTON, DC, TO POST-HEARING QUESTIONS FROM THE HONORABLE LINDA T. 

SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND

CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW


4-1.eps
75 


4-2.eps
76 

f 


4-3.eps
77 

RESPONSES FROM PAMELA GILBERT, CUNEO, GILBERT AND LADUCA, LLP, WASHINGTON, DC, TO POST-HEARING QUESTIONS FROM THE HONORABLE LINDA T. 

SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND

CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW


5-1.eps
78 


5-2.eps
79 

f 


5-3.eps
80 

RESPONSES FROM ANDREW F. POPPER, AMERICAN UNIVERSITY, WASHINGTON COLLEGE OF LAW, WASHINGTON, DC, TO POST-HEARING QUESTIONS FROM THE HONORABLE LINDA T. SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF

CALIFORNIA, AND CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW


6-1.eps
81 


6-2.eps
82 


6-3.eps
83 


6-4.eps
84 


6-5.eps
85 


6-6.eps
86 

Æ 


6-7.eps