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PROTECTING AMERICANS FROM UNSAFE 

FOREIGN PRODUCTS ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

ON

H.R. 5913 

MAY 1, 2008 

Serial No. 110–176 

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 

SEAN MCLAUGHLIN, Minority Chief of Staff and General 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 

MAY 1, 2008 

Page 

THE BILL 

H.R. 5913, the ‘‘Protecting Americans from Unsafe Foreign Products Act’’ ....... 2 

OPENING STATEMENTS 

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 ........................................................................................................... 6 

WITNESSES 

Mr. Ed Mierzwinksi, U.S. PIRG, Washington, DC 

Oral Testimony ..................................................................................................... 9 

Prepared Statement ............................................................................................. 12 

Mr. Richard R. Schlueter, Childers Buck and Schlueter, LLP, Atlanta, GA 

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

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

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

on behalf of the Institute for Legal Reform of the United States Chamber 

of Commerce 

Oral Testimony ..................................................................................................... 31 

Prepared Statement ............................................................................................. 33 

Mr. Ralph G. Steinhardt, The George Washington University Law School, 

Washington, DC 

Oral Testimony ..................................................................................................... 40 

Prepared Statement ............................................................................................. 42 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Responses to Post-Hearing Questions from Richard R. Schlueter, Childers 

Buck and Schlueter, LLP, Atlanta, GA .............................................................. 66 

Responses to Post-Hearing Questions from Victor Schwartz, Shook, Hardy 

and Bacon, LLP, Washington, DC, on behalf of the Institute for Legal 

Reform of the United States Chamber of Commerce ........................................ 71 

Reponses to Post-Hearing Questions from Ralph G. Steinhardt, The George 

Washington University Law School, Washington, DC ...................................... 74 

(1) 

PROTECTING AMERICANS FROM UNSAFE 

FOREIGN PRODUCTS ACT 

THURSDAY, MAY 1, 2008 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 9:42 a.m., in Room 

2141, Rayburn House Office Building, the Honorable Linda 

Sa ́nchez (Chairwoman of the Subcommittee) presiding. 

Present: Representatives Sa ́nchez, Lofgren, Watt, and Cannon. 

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

Member. 

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

Subcommittee on Commercial and Administrative Law will come to 

order. 

Without objection, the Chair will be authorized to declare a recess of the hearing. 

And I will now recognize myself for a short statement. 

I have been alarmed by the steady stream of defective foreignmanufactured products flooding our marketplace. From the millions of toys recalled because of lead paint to heparin, the tainted 

blood thinner that caused at least 81 deaths and scores of injuries, 

it has become increasingly clear that our health and welfare have 

been compromised by foreign-made products. 

I am also concerned that foreign manufacturers have gained an 

unfair advantage over U.S. manufacturers because foreign manufacturers have avoided liability for defective products in our marketplace. 

Because of the difficulties associated with serving process on and 

establishing over jurisdiction over foreign manufacturers, many 

Americans harmed by defective foreign-made products never get 

their day in court. That is why I introduced H.R. 5913, the ‘‘Protecting Americans from Unsafe Foreign Products Act.’’ 

[The bill, H.R. 5913, follows:] 

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Ms. SA ́ NCHEZ. Specifically, this legislation would allow American 

consumers harmed by foreign defective products to obtain personal 

jurisdiction over foreign manufacturers by serving foreign manufacturers with process where they reside, are found, have an agent or 

transact business. 

H.R. 5913 would also help eliminate the unfair competitive advantage enjoyed by foreign manufacturers and ensure that they 

can be held accountable in U.S. courts for injuries that consumers 

suffer as a result of defective products. 

Finally, H.R. 5913 would pressure foreign manufacturers to improve the quality and integrity of their products. When foreign 

manufacturers are held accountable under the tort system, they 

will be deterred from making dangerous products in the future. 

At one time, products exported to the United States market were 

known to meet the highest health, safety and quality standards in 

the world. Many manufacturers had two production lines: one for 

products to be sent to the U.S. and one for all others. 

As our trade has expanded and our inspections have become 

more lax, this is no longer the case. The deluge of defective products entering our markets has demonstrated that neither the Consumer Product Safety Commission nor the Food and Drug Administration have effectively done their job. 

I look forward to the day when, once again, we can be proud that 

only the highest-quality, safest products line the shelves of American stores. I support the recent congressional efforts to strengthen 

the CPSC and the FDA so they have the tools and resources they 

need to adequately protect American consumers. 

However, the approaches currently considered by the House and 

Senate do not address the barriers individual consumers face once 

they have been injured by a foreign-manufactured product. Legislation such as H.R. 5913 fills an important void of facilitating accountability of foreign manufacturers that injure consumers with 

defective products. 

I want to thank Chairman Conyers, Representatives Zoe Lofgren, 

Melvin Watt, Steve Cohen, Hank Johnson, Betty Sutton and Raul 

Grijalva for cosponsoring H.R. 5913. The legislation is also supported by U.S. PIRG, Consumers Union, Consumer Federation of 

America, Public Citizen, and the Center for Justice and Democracy. 

H.R. 5913 will aid in ensuring the safety and health of American 

consumers. I very much look forward to hearing from our witnesses. 

And, at this time, I would now like to recognize my colleague, the 

distinguished Ranking Member of the Subcommittee, Mr. Cannon, 

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’’—pretty exact figure, 

by the way, here—‘‘on a family of four’’—I think we could round 

that to about $10,000—‘‘the 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 

7 

business, 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’s instructions or warnings is no defense under current 

law. 

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 claimed 

indemnity from the manufacturer as the faulty party. 

However, this is not always successful, especially when the product is made by a foreign supplier. If a foreign supplier does not 

have a legal presence in the U.S., such as a U.S. subsidiary, a U.S. 

plant or other offices, 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 wholesaler/distributor 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, 

as the Chairman just pointed out. 

Chairman Sa ́nchez’s bill, which is the subject of the hearing 

today, attempts to solve the servicer process and personal jurisdiction problems faced by those who want redress for injuries caused 

by the products of foreign manufacturers. 

While I support the intent of the legislation, there are some troubling ambiguities in the bill. It seems that the legislation affects 

jurisdiction in cases far beyond product liability cases, including 

contract and business cases, such that the bill may even interfere 

with international treaties. 

It also seems the bill could unnecessarily expand jurisdiction 

over domestic distributors and, in potentially doing so, add even 

more burdens to America’s competitiveness. 

I would also note that Justice O’Connor, in a footnote in the 

Asahi case, suggested that, ‘‘Congress could, consistent with the 

due process clause of the fifth amendment, authorize Federal court 

personnel jurisdiction over alien defendants based on the aggregate 

of national contacts, rather than the contacts between the defendant and the State in which the Federal court sits.’’ 

8 

However, the legislation before us today does not track this 

statement in the Asahi case; indeed, it contradicts that statement 

by granting jurisdiction not just to Federal courts but even when 

the State has no contacts whatsoever with the alien defendant. 

I look forward to hearing from all our witnesses today. 

And I hope we can agree on at least one thing at the outset of 

the debate, and that is that the tort liability system should not be 

changed to increase the burdens the lawsuit industry already imposes on American jobs and enterprise, especially small businesses. 

Thank you, Madam Chair, and I yield back the balance of my 

time. 

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

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

Our first witness is Ed Mierzwinski. Mr. Mierzwinski has been 

a consumer advocate in the Washington, D.C.-based Federal lobbying office of the National Association of State Public Interest Research Groups, U.S. PIRG, since 1989. State PIRGs are nonprofit, 

nonpartisan, consumer, environmental and good government 

watchdog groups, with over 500,000 members around the United 

States. 

Mr. Mierzwinski is a founding member of the Trans-Atlantic 

Consumer Dialogue and represents U.S. PIRG in the TACD’s steering committee and, from 1981 through 1988, served as executive director of Connecticut PIRG, where he helped pass the nation’s first 

new-car lemon law. 

Mr. Mierzwinski has testified before both Congress and State 

legislatures numerous times and has authored or co-authored numerous major reports on a wide range of consumer issues, including cable television rates, telecommunications reform, banking, financial services, and identity theft and product safety issues, including toy and playground safety. 

Welcome to you. 

Our second witness is Mr. Richard Schlueter. Mr. Schlueter is 

founding member of Childers, Buck and Schlueter, LLP, a law firm 

in Atlanta, Georgia. He has extensive trial and motion practice experience as a lawyer practicing in the Federal and State courts of 

Georgia. 

Mr. Schlueter currently represents victims in product liability 

and personal injury cases, as well as representing victims of investor fraud in the solicitation and sale of securities. 

Mr. Schlueter is a recipient of the Jaycees’ annual Brownfield 

Award for Leadership and has been an award-winning participant 

in pro bono projects for his representation of financially disadvantaged plaintiffs. 

I want to welcome you to our panel today. 

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

Public Policy Group at Chook, Hardy and Bacon, LLP. He is co-author of the nation’s leading torts casebook, ‘‘Prosser, Wade and 

Schwartz’s Tort,’’ and also wrote ‘‘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. 

9 

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 in the Midwest against the 

manufacturer of a defective product. 

Welcome to our panel. 

Our final witness is Ralph Steinhardt. Professor Steinhardt specializes in international law, conflict of laws, international business 

transactions, international civil litigation, and property law. He is 

co-director of the Oxford-G.W. Program in International Human 

Rights Law at St. Catherine’s College, Oxford. 

His current research and advocacy concerns the human rights 

obligations of multinational corporations. He now serves as the 

only U.S. citizen on the expert legal panel on that subject under 

the auspices of the International Commission of Jurists. 

Professor Steinhardt has served as legal counsel to several foreign governments in both commercial and intergovernmental matters, including border disputes and economic relations, and pioneered the application of international human rights law in U.S. 

courts. 

I want to thank you all for your willingness to participate in today’s hearing. We are very interested in hearing what you have to 

say. 

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. At 4 minutes, the light will turn yellow, warning you 

that you have a minute to finish your testimony. And when your 

time has expired, you will receive a red light. If you are caught 

mid-sentence or mid-thought, we will of course allow you to finish 

your final thought before moving on to our next witness. 

After each witness has presented his testimony, Subcommittee 

Members will be permitted to ask questions, subject to the 5- 

minute limit. 

With all the ground rules having been stated, I am going to invite Mr. Mierzwinski to please proceed with his testimony. 

TESTIMONY OF ED MIERZWINKSI, U.S. PIRG, WASHINGTON, DC 

Mr. MIERZWINSKI. Thank you, Madam Chair and Representative 

Cannon, Members of the Committee. My name is Ed Mierzwinski, 

and on behalf of the U.S. Public Interest Research Group, the Consumer Federation of America, Consumers Union, and Public Citizen, we are pleased to support your legislation, the ‘‘Protecting 

Americans from Unsafe Foreign Products Act.’’ 

We are organizations that have long supported a strong legal 

system that allows citizens access to justice. We have supported 

strong product safety laws. And we have supported a strong CPSC 

and a strong Food and Drug Administration. 

As you indicated in your opening remarks, Madam Chair, this 

has been the year of the recall. There have been recalls of over 40 

million children’s products and toys. There have been recalls of 

tainted blood thinner, heparin; the unsafe tires; the tainted toothpaste; and the pet food that killed or sickened hundreds, if not 

10 

thousands, of cats and dogs. So it has been a very bad year for the 

American people, in terms of foreign products that have harmed 

them. 

Over the last 22 years, our organization has released a report on 

dangerous toys that has resulted in over 130 recalls by the CPSC. 

Just to point to an example of the kinds of dangerous products that 

are being placed into children’s arms, I brought a few with me that 

have been recalled, just to show you. 

The most common kinds of recalls historically had been small 

parts that are banned for sale to children under 3 that fit in this 

choke test tube. But lately we have been finding painted toys with 

excessive levels of lead. 

We are also finding jewelry—millions of units of small pieces of 

jewelry have been recalled. One little boy died, that is known of, 

from swallowing a piece of jewelry that was 99 percent lead. These 

little zipper pulls are 65 percent lead. 

A lot of the recent recalls, particularly of the Mattel toys, have 

not actually been lead paint. They have been of a new hazard: tiny, 

powerful, rare-earth magnets. When we found these little panda 

bears, the little magnets had fallen out and were actually in the 

package. And just an example of how powerful they are, I have one 

on either side of my finger. 

One little boy, Kenny Sweet, swallowed several of these. They 

caused an intestinal blockage, and he died. At least 25 other children have been sent to emergency surgery due to swallowing these 

tiny magnets. 

What do all these toys have in common? They come from China. 

The Congress, as you noted, is very close to appointing conferees 

to finish action on legislation to improve the power and authority 

and resources of the Consumer Product Safety Commission to protect us. It protects us from imported toys in a number of ways. It 

increases its budget dramatically. And it gives it a lot more authority to go after wrongdoers. 

But strong Federal resources and a strong Federal agency is only 

one of three pillars of a strong civil justice system. The second pillar is you should also have the right of State attorneys general to 

enforce both State and Federal laws, to use their traditional police 

powers to protect the public. The legislation before Congress, at 

least on the CPSC, will go somewhat toward improving attorney 

general power to protect the public. 

But the third pillar of consumer protection is access to justice. 

Consumers need a system where they can bring private actions to 

help recover damages and compensation when they are harmed or 

injured by a product. That activity in the pursuit of justice also of 

course deters other companies from designing and making unsafe 

products. 

Your legislation, which makes it easier for private plaintiffs to go 

after foreign manufacturers, as the learned practitioners will discuss in greater detail, is an important part of that solution. I would 

also note that, importantly, while it balances the justice system by 

making it easier to give liability to foreign manufacturers, it 

doesn’t take away liability from U.S. companies. 

Big, powerful U.S. companies may not simply be sitting at the 

end of the supply chain. The biggest ones, like Wal-Mart and 

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Mattel, actually do own the entire supply chain, all the way from 

China to America, in many cases. 

In addition, even if they don’t, they have tremendous market 

power. So they should be held liable. And, importantly, your legislation would allow that. If a company with tremendous market 

power were to want to buy dangerous toys, that would be bad for 

American children. 

But as long as we are simply strengthening the ability to go after 

the foreign manufacturers, consumer groups think your bill is a 

great idea. 

Thank you very much. 

[The prepared statement of Mr. Mierzwinski follows:] 

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PREPARED STATEMENT OF EDMUND MIERZWINSKI


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

At this time, I would like Mr. Schlueter to begin his testimony. 

TESTIMONY OF RICHARD R. SCHLUETER, CHILDERS BUCK 

AND SCHLUETER, LLP, ATLANTA, GA 

Mr. SCHLUETER. Thank you, Chairwoman Sa ́nchez and Members 

of the Subcommittee. Thank you for the opportunity to discuss the 

many difficulties associated with holding foreign manufacturers accountable in cases involving defective and dangerous imported 

products. 

My name is Richard Schlueter. I am a partner with the law firm 

of Childers, Buck and Schlueter in Atlanta, Georgia. I have come 

here today to share with you my client’s experience when she 

sought justice for the death of her 13-year-old daughter and only 

child. 

A defective foreign-manufactured product was responsible for 

Lauren’s death that occurred when she was seeking to meet her 

friends at the bus stop. The product was a Chinese-made electric 

scooter that was imported through the Port of Long Beach, California, distributed and branded by a California corporation, and 

sold by a retailer in Gainesville, Georgia, at a flea market. 

The defectively designed scooter, though marketed for children, 

was not a toy and was incapable of stopping a rider after a short 

time of operation. The product should have been required to meet 

Federal motor vehicle safety standards and declared as such at customs. Proper inspection should have resulted in the detention of 

this illegal product at the port. 

Foreign corporations have learned to send nonconforming products that do not meet either certain safety standards or meet compliance regulations through specific ports. 

We knew a case against the Chinese manufacturer would be difficult. Under Georgia law, as in many other States in the United 

States, a distributor or end retailer does not have liability for design defects or defects in the manufacturing process. 

Our first hurdle was trying to locate the name of the Chinese 

manufacturer, since the scooter revealed no identifying information, either by serial number or name. 

Once we uncovered the manufacturer’s name, we realized that 

the company had no registered agent or office in the United States, 

even though the Chinese company claimed on its Web site that, 

every year, it exported $120 million in goods, including a wide 

array of toys and vehicles, to U.S. retailers, including Wal-Mart. 

After an unsuccessful attempt to get the Chinese company to acknowledge service, we performed service pursuant to the Hague 

Convention. This is a costly and complicated process for a variety 

of reasons. China is a community nation, ruled by a totalitarian 

government. An American litigant has no option but to turn service 

papers over to the Ministry of Justice, hope for the best, and wait. 

We translated the complaint, forwarded them to the Ministry of 

Justice, and waited 3 months for the central authority to serve a 

registered agent. Service was performed on the wrong individual, 

and this was later raised as a defense by the defendant Chinese 

company. 

18 

After initial service of process, contact was made. The Chinese 

company sent a letter stating that they were reserving the right to 

‘‘ignore the charges’’ against them. 

We obtained a default judgment against the Chinese company 

when the company did not retain a lawyer and file and answer. We 

knew the judgment would likely never be collected, because China 

does not recognize the validity of U.S. judgments. 

We did not hear from the Chinese company again until we received notice that the company was appealing the judgment. The 

company appealed the judgment, premised largely on lack of proper 

service and personal jurisdiction, claiming lack of contacts due to 

title of the goods that it sold and imported in the country passing 

at the port in Shanghai. 

In an effort to prove the Chinese company had minimum contacts to Georgia, we retained the services of a well-respected civil 

procedure professor from the University of Georgia School of Law, 

as well as two additional Georgia lawyers. 

We further hired law firms in Florida, Texas, California and New 

York to assist in out attempts to locate assets, establish contacts, 

and assist in comity issues of domestication, and retained experts 

in the fields of service of process under the Hague, as well as experts in U.S. customs. 

To remove any further argument of service, we attempted service 

yet again under the Hague, which took 8 months. This was required, despite knowing in advance that the company representatives would be at a Las Vegas trade show and that the company 

designated a shell Florida corporation for service of process requirements related to EPA and California Air Resource Board requirements. 

Meanwhile, we were also concerned that the Chinese company 

would try to avoid the judgment by fraudulently concealing and 

transferring any assets that it had out of the country. We later 

learned that such a transfer did occur in a multi-million-dollar wire 

transaction to Hong Kong within days of taking a deposition of a 

customer of the Chinese company. 

As a new Chinese company was now involved, adding it to the 

litigation would have required service under the Hague Convention, with the additional costs and associated delay. 

I have relayed the aforementioned mainly to summarize my recent experience on how foreign manufacturers who enthusiastically 

seek to enter the U.S. market do not have the same accountability 

as domestic manufacturers. In China, United States consumer protection laws can be ignored. 

Lately, we have seen this in the news with an array of products 

being imported, most prominently highlighted from China being 

medicine, food and toys. It is respectfully submitted that this Committee should look long and hard to the growing trend in problems 

associated with foreign-manufactured goods and items reaching our 

ports with a little oversight, protection or inspection of the containers they arrive in. 

House Bill 5913 would allow a plaintiff to have additional avenues to expedite or ensure service of process for foreign manufacturers. This will at least give the consumer a chance to seek accountability when they have been harmed by a defective product. 

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For these reasons, I strongly support House Bill 5913, the ‘‘Protecting Americans from Unsafe Foreign Products Act.’’ 

Thank you. 

[The prepared statement of Mr. Schlueter follows:] 

PREPARED STATEMENT OF RICHARD R. SCHLUETER


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

Mr. Schwartz? 

TESTIMONY OF VICTOR E. SCHWARTZ, SHOOK, HARDY AND 

BACON, LLP, WASHINGTON, DC, ON BEHALF OF THE INSTITUTE FOR LEGAL REFORM OF THE UNITED STATES CHAMBER OF COMMERCE 

Mr. SCHWARTZ. Thank you, Madam Chair and Ranking Member 

Cannon, for inviting me here today. 

I guess we have all had this happen where there is a personal 

matter and a business matter conflict. But I was so impressed with 

the fact that you followed up on the hearing from last November, 

developed legislation. Often, what I see is there is a hearing and 

then nothing happens, and everybody has wasted his or her time. 

But a friend of mine is undergoing medical care at Sloan-Kettering, 

and I am going to have to leave a little bit early to be able to be 

with her. 

Ms. SA ́ NCHEZ. Absolutely. Not a problem whatsoever. And, Mr. 

Schwartz, we would do our utmost on this Subcommittee never to 

waste your time. 

Mr. SCHWARTZ. All right. Thank you. And I hope that doesn’t 

count against my time. Shows I still know what I am doing here. 

I have the privilege to testify on behalf of the Institute for Legal 

Reform of the U.S. Chamber. But, as is always true when I am up 

here, the views I state are my own and based on the experience 

that you were so gracious to outline. 

You are right on a very, very key problem, and that is that some 

foreign manufacturers are able to escape our tort system. And if 

you just to give you an example, about 18 percent of the price of 

a ladder is liability. Now, if you had a foreign manufacturer that 

didn’t have to pay that tort tax and an American manufacturer 

who did, it is really unfair competition. And to even the playing 

field, we need legislation so that that foreign manufacturer, in appropriate circumstances, can be subject to liability. 

And H.R. 5913 is directed at that very basic problem. But designing legislation in this area, as you know and your staff knows, is 

not easy. The Supreme Court decision stands in the way, Asahi. It 

is not easy, it is a plurality opinion. You have to make a chart to 

figure out what the court held. 

And the case is often misstated. And this is important in drafting 

this legislation. It is often stated as if it were a product liability 

case. It was not. It was a dispute between two foreign companies 

who wanted to use a California court to resolve their dispute. The 

plaintiff was not a person injured in California. 

And for that reason, I think there may be more latitude to designing legislation to reach a foreign company when a person lives 

here, has been injured here, and is suing a foreign manufacturer. 

And in that opinion, Justice O’Connor, it was almost like, ‘‘I am 

going to give you a little hint,’’ it gives you a little hint as to where 

you might have a green light to develop legislation. 

And, in effect, what she said was that a Federal court could obtain jurisdiction over a foreign manufacturer where a State court 

might not. Because a State court is confined to contacts that occur 

within that State, not the whole United States. And a Federal 

32 

court can look at the contacts that the company might have with 

the whole United States, which gives you more authority, more 

power to develop legislation. 

The purpose is good. There is a guideline there. I have some concerns, and I will mention them very, very briefly. 

The scope of the legislation, it does seem to me, goes beyond 

what the principal concern is, which is a product injuring somebody. My written testimony speaks for itself. Rather than parrot it 

here, but I spell out words that are used here that make the bill 

broader than it really should be to meet constitutional and practical concerns that people have. It should focus on product liability. 

There are some constitutional problems with the bill, at least as 

I read Asahi. Asahi seems to confine the situations for jurisdiction 

to when manufacturers have purposely directed the sale of their 

products toward the United States, not merely whether they knew 

or reasonably should have known that the product is used here. 

If the language is too broad, virtually any contact, even a phone 

call, could create jurisdiction. But I think this is a correctable 

thing. It is not as if major changes need to be made. 

Second, the bill places jurisdiction in both State and Federal 

courts, and Justice O’Connor was very clear, and I think when we 

are dealing with an issue of this magnitude it is clear, that jurisdiction should be solely in Federal courts, not State courts. 

And then finally, and this is just my own thing, I remembered 

this case from law school called Erie v. Tompkins. It was really a 

tort case, but it said that Federal courts sitting in States where 

cases arise under State law have to follow State law. And that was 

followed up by a case called Klaxon, which said that this includes 

choice-of-law law. 

So I would just commend members and staff to take a look at 

that issue so you don’t inadvertently create unconstitutionality. 

And there is a section dealing with choice of law, but it may be unconstitutional. It is just something to look at very carefully, because the Klaxon bell went off when I read that. 

The State court openness can create litigation tourism—that is 

just my words—where people go around—and when I did plaintiff’s 

lawyer work, I did the same thing. I would look for a court that 

would be helpful to my client. But we don’t want that to permeate 

this bill. By having cases in Federal court, one is better off. 

There may be an effect here on domestic defendants. And there 

may be expansion of either jurisdiction or even substance that affects them. And I think the basic way to ensure, Mr. Cannon, that 

that doesn’t happen is to put language in the bill that clarifies that 

nothing in the act should be construed to affect personal jurisdiction, choice of law, or liability of any entity that is not a citizen of 

subject of a foreign state. 

So, to sum up, we don’t want to further overheat the tort system, 

but language that would strengthen the extent of contacts necessary to establish personal jurisdiction would be helpful. Applying 

jurisdiction based on national contacts only in Federal court. Take 

a look at the Erie v. Tompkins problem. And include a rule of construction that clarifies that this bill only affects foreign manufacturers. 

33 

And I thank you for your patience and for giving me a little extra 

time here. 

[The prepared statement of Mr. Schwartz follows:] 

PREPARED STATEMENT OF VICTOR E. SCHWARTZ


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Ms. SA ́ NCHEZ. Not at all. Always a pleasure to have you. And at 

any point, if you need to leave, you are excused. And we want to 

thank you again. 

Mr. SCHWARTZ. Thank you. 

Ms. SA ́ NCHEZ. At this time, I would invite Professor Steinhardt 

to give his testimony. 

TESTIMONY OF RALPH G. STEINHARDT, THE GEORGE 

WASHINGTON UNIVERSITY LAW SCHOOL, WASHINGTON, DC 

Mr. STEINHARDT. Chairwoman Sa ́nchez, Ranking Member Cannon, Members of the Subcommittee, I am very grateful for the opportunity to testify this morning. 

In my view, H.R. 5913 is a crucial first step in clarifying the 

power of U.S. courts to reach foreign manufacturers that introduce 

dangerous or defective goods into the international stream of commerce which then cause injury in the United States. 

For the reasons laid out in my written statement, I believe that 

the legislation removes some of the antiquated legal obstacles to 

foreign manufacturers’ liability in U.S. courts by assuring that 

these foreign manufacturers are within the personal jurisdiction of 

the U.S. courts. 

But the second step, and it is also crucial, has to be taken by the 

courts as they interpret and apply this legislation. If the courts resolve certain constitutional and international issues the way I 

think they should and will, then I believe the legislation will both 

protect consumers in the United States and benefit U.S. businesses 

by leveling the competitive playing field along the lines that Ranking Member Cannon mentioned in his opening statement. 

In reviewing the testimony before this Subcommittee’s oversight 

hearing in November, I was struck that so diverse a group of expert witnesses could reach so fundamental a consensus, namely—— 

Ms. SA ́ NCHEZ. Professor Steinhardt, we were struck by that as 

well. That rarely happens. 

Mr. STEINHARDT. There may have been disagreement, I suppose, 

about exactly how they will be held accountable, but the idea that 

they should is a post-partisan conclusion. 

I, frankly, am concerned that a discussion of the jurisdictional 

and logistical obstacles to accountability in U.S. courts will be very 

technical. It will remind many lawyers of what they hated about 

the first year of law school. But press on we must. 

The essence is this is a national problem; it deserves a national 

solution. Congress has all the constitutional authority it needs 

under article I to adopt this legislation. 

But I do try to identify the issues most likely to arise in lawsuits 

under the legislation, emphasizing certain constitutional and international issues. 

The easy case is that you have this authority to adopt the legislation. The harder case is that, under the Supreme Court’s decision 

in International Shoe and its progeny, it is the courts that will determine in any given case whether due process is satisfied. Congress cannot, I think, legislate a one-size-fits-all answer to the individualized due process inquiry that is at the heart of personal jurisdiction cases. 

41 

The power of H.R. 5913, as far as I am concerned, is that it helps 

the courts tailor the due process inquiry to the commercial realities 

of contemporary business. And it does that by focusing on basic 

fairness in a globalized economy rather than on the historic and 

now commercially irrelevant concerns with State boundaries. 

I also think the legislation helps because it puts the thumb on 

the scale of when courts are trying to balance the public and private interests that, under Woodson and Asahi, go into determining 

whether the exercise of jurisdiction in any particular case is reasonable or not. 

With great respect, I think I have a different take on the Asahi 

case than the one Mr. Schwartz just suggested. I actually think it 

poses no obstacle in principle to litigation under 5913, because in 

that case the injured U.S. consumer was no longer a party to the 

case by the time it reached the Supreme Court, nor was there any 

legislation in that case that established the public interest in having these kinds of cases go forward. 

Both of those distinctions, it seems to me, affect the due process 

balancing of public and private factors that is at the heart of due 

process, and both are affected by this legislation. 

I also think that the nationwide service of process provision is 

constitutional on its face, there being similar provisions in other 

legislation. I think you could anticipate an as-applied challenge on 

any particular facts. 

If I may turn very briefly to the international issues, it is certainly true, as Ranking Member Cannon suggested in his opening 

statement, that treaties of the United States are relevant to this 

concern. In my written testimony, I suggest not only the Hague 

Service Convention but also the Hague Evidence Convention will 

be crucial at the discovery process in any litigation that goes forward. 

Focusing on the Hague Service Convention, I, too, have come up 

against those difficulties. But this may be an area where Congress 

can’t simply legislate its way out of the box. Implicit repeals of 

treaties are not allowed, under U.S. law. U.S. courts will try to interpret the legislation and the treaty consistently with one another, 

unless there is an explicit override, which is not present in the current legislation. 

Let’s also remember the law of unintended consequences and the 

law of reciprocity. I respectfully urge Congress to calibrate the 

service measures of H.R. 5913 in light of the reality that whatever 

we require will be required of us, under the Convention. 

I see my time has expired. Thank you, Chairman. 

[The prepared statement of Mr. Steinhardt follows:] 

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PREPARED STATEMENT OF RALPH G. STEINHARDT


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Ms. SA ́ NCHEZ. Thank you very much. We appreciate all of your 

testimony. 

We are now going to begin the questioning. And I will begin by 

recognizing myself first for 5 minutes of questions. 

Mr. Mierzwinski, a goal of H.R. 5913 is to pressure foreign manufacturers to improve the quality and integrity of their products. 

When foreign manufacturers are held accountable under the tort 

system, it is argued that they will be deterred from making dangerous products in the future. 

Do you believe that holding a foreign manufacturer accountable 

would give the manufacturer the financial incentive to produce 

safer products? 

Mr. MIERZWINSKI. Absolutely, Madam Chair. And that is one of 

the reasons our organization, all the consumer groups, support 

your legislation. 

It is partly necessary that we improve the tort system so that 

consumers can recover damages for the harms caused to them, but 

it is also just as important to deter other companies from becoming 

wrongdoers. And they will look at your legislation, and it will force 

them to do a better job. 

Ms. SA ́ NCHEZ. With respect to the case of the heparin, which is 

a blood thinner, and there were several people, sort of, in the manufacturing process, but ultimately it was traced back to a Chinese 

company. 

Do you believe—and I think you mentioned this, but I would like 

you to flesh it out a little more—that everyone in the chain of commerce should be held liable for the deaths and injuries sustained 

as a result of that tainted drug? 

Mr. MIERZWINSKI. Well, in our testimony—which is primarily 

based on the Consumer Product Safety Act, not the Food and Drug 

Act, but the provision and the concept I believe is the same. Everyone in the supply chain should be held accountable when they 

break the law. That is the best way to preserve access to justice. 

The big problem that you have in not holding the companies, if 

you will, at this end of the supply chain accountable is that then 

they won’t have an incentive to demand that their foreign suppliers 

have safe products. You want this big company that is buying the 

product in America to tell the foreign company that the foreign 

company better adhere to U.S. law. And if the big company doesn’t 

have accountability and liability, it won’t do it. 

So we agree that the entire supply chain should be held liable. 

And the important new step in your bill is it makes it easier to 

hold that foreign supplier liable. 

Ms. SA ́ NCHEZ. Mr. Schlueter, in your written testimony, you recount the complexity of serving process on the Chinese company 

that was responsible for manufacturing the defective scooter that 

caused the death of the 13-year-old girl. 

If legislation such as H.R. 5913 were enacted prior to the incident, how do you think that that would have affected your case and 

the way that it was litigated? 

Mr. SCHLUETER. Well, it certainly would have changed and made 

the ability to get service of process on the Chinese defendant a lot 

easier. 

57 

But, you know, there is one step that goes beyond the issue of 

service of process. This bill effectively assists and helps with getting jurisdiction within the United States of the defendant. It 

doesn’t help with, you know, the results that you get by getting a 

judgment against the Chinese manufacturer. 

But it would have additionally assisted, and that is what I tried 

to put in my written statement, to try to explain what was taking 

place and going on. After the defendant received notice that it had 

the judgment against it, it initially ignored the judgment until discovery was sent to its customers that were receiving the goods that 

were coming into the United States. 

What typically happens—and I have learned this in speaking to 

other government folks and in speaking to experts in the area of 

imports—that the defendant can change the way that it operates 

and does business. 

And by morphing itself into another entity or being involved in 

a fraudulent conveyance, which was one issue that happened here, 

having a bill where you could effectively have some control over activities more easily in the United States by serving those other entities than going back through The Hague again and again every 

time they change it. 

Because the stream of commerce, the way that they operate, in 

speaking particularly with this one manufacturer and taking depositions, from the point of order from a particular company they can 

have a container to you within 3 to 5 weeks. It may take, as it did 

in the last service in The Hague, 8 months to simply get notice. 

So it would be very helpful and very instrumental to assist in 

that regard. 

Ms. SA ́ NCHEZ. Thank you. 

Mr. Schwartz, in your written testimony, you talk about the disparity between those foreign manufacturers who escape accountability and the domestic manufacturers who do not. 

If this Subcommittee were to implement the changes to H.R. 

5913 that you suggest, would that begin to remove that disparity 

between foreign manufacturers and domestic manufacturers? 

Mr. SCHWARTZ. I think the bill as a whole would, because, to the 

extent we can put at least the threat of our tort system on anyone 

who is sending a defective or dangerous product to the United 

States, they are going to have to have some type of insurance. 

Right now, some of them can operate with a blank check. They 

can go uninsured, because they have realized they will never, never 

be subject to liability here. 

So I think at least one step in that direction is good, for the point 

of view, at least, of deterrence and also that they would have to go 

out and buy insurance and have the same tort tax as we do. 

Ms. SA ́ NCHEZ. Thank you. 

My time has expired. At this time, I will recognize Mr. Cannon 

for 5 minutes of questions. 

Mr. CANNON. Thank you, Madam Chairman. 

You know, sometimes it is offensive when a group of people are 

standing around laughing, and I want to apologize. But Mr. 

Steinhardt made the point that this is not exactly the most interesting stuff on earth. We have some brilliant staff on both sides of 

the aisle here who are standing around talking about how cool it 

58 

is, after having been first-year law students a long time ago, to actually be dealing with this area of the law, which actually was intriguing to me then and intriguing apparently to all of us. And one 

wonders about people who find intrigue in the procedure of the 

Hague Convention. 

But we appreciate your being here and your expertise and your 

insights into this. This is not a partisan issue, from my point of 

view. It is really an issue of how we proceed and make it work in 

a way that actually is effective. 

And, by the way, your testimony has been very enlightening. I 

think that we now have some work to do here on the Committee 

to help make adjustments that work. 

Let me just clarify, Mr. Schwartz and others of you who might 

have an opinion on this. You talked, Mr. Schwartz, about Asahi 

and the national contacts versus the State contacts and the difference between the national contacts justifying Federal jurisdiction as opposed to State jurisdiction. 

Would you mind talking a little bit more about that? And then, 

if others have views on that, I would appreciate that as well. 

Mr. SCHWARTZ. Well, a State court can consider contacts within 

its borders but not beyond, at least the way the texts and cases say 

they can. So you could have a product that is in Oregon. Maybe 

there was virtually no contact with Oregon. Somebody is injured 

there. They go into an Oregon court, the case is going to be dismissed against that foreign manufacturer. 

A Federal court can assemble contacts throughout the United 

States and is a better forum, from all points of view, to resolve an 

issue of this type. If you open it up to State courts, I think it creates a problem of potential unconstitutionality of the statute, and 

also it impedes its practical work in our judicial system. 

Mr. CANNON. Mr. Steinhardt, Professor Steinhardt, do you agree 

with that? 

Mr. STEINHARDT. I do. I guess I would add two quick constitutional points. 

One is the difference between Federal and State courts is crucial, 

as your question suggests. I don’t know of any previous effort by 

the Congress to determine the means or the sufficiency of process 

in State courts. It is arguable, I suppose, that the foreign commerce 

powers and the supremacy clause would give Congress the ability 

to determine the means and sufficiency of service for State courts, 

but I doubt it. 

And so I have no doubt that it is constitutional with respect to 

the Federal courts and the ability to aggregate, for the reasons Mr. 

Schwartz suggested, all national contacts. But I am dubious that 

Congress can do that with respect to the State courts. 

The second point I would make is that the legitimacy of aggregation can depend in part on what the basis for subject matter jurisdiction is. That is, the courts are much more likely to aggregate national contacts when the basis for subject matter jurisdiction is a 

Federal question. 

So there is some controlling Federal question, and it would make 

sense, where the relevant jurisdiction there is the nation as a 

whole, to aggregate all the national contacts. The courts are much 

less likely to aggregate when it is based on diversity jurisdiction, 

59 

where, for the reasons Mr. Schwartz suggested, they look to the 

States. 

The key point of 5913, it seems to me, is that it begins the process of breaking away from these historic concerns with State 

boundaries that don’t matter at all to the foreign manufacturers. 

Mr. CANNON. Mr. Mierzwinski and then Mr. Schlueter? 

Mr. MIERZWINSKI. I don’t have any comments, sir. 

Mr. CANNON. Do you guys actually care—do you want us to do 

something so that State courts have jurisdiction? Or are you indifferent as to whether it is State or Federal courts? 

Mr. MIERZWINSKI. I think the consumer groups would prefer the 

broadest possible opportunities for private plaintiffs to protect 

themselves. We would be happy to get back to you with greater details on it. 

Mr. CANNON. Thank you. But you don’t really particularly disagree, I think, with what the professors have said? 

Mr. MIERZWINSKI. Not right now, no. 

Mr. CANNON. Great. Well, we would appreciate some feedback on 

that, then. 

And, Mr. Schlueter, do you have anything you would like to say? 

Mr. SCHLUETER. Yes, Congressman Cannon. I leave the subject, 

regarding the constitutionality, to smarter minds than mine. 

But in regards to what the bill would effectively do, would be 

something that would be helpful, because, as in this particular case 

that I have in my written testimony, you had the defendant that, 

after being notified in regards to its judgment and efforts going in 

that direction, making the claim that it did not have any contacts 

in the United States by simply adopting the philosophy and seeking to get a ruling from the courts by saying that essentially, because the transfer of the goods took place in the port of Shanghai, 

that they did not have contacts with the United States, in the 

sense that their goods were not their goods, they belonged to someone else. 

Mr. CANNON. I see that my time is expired, but could I ask one 

clarifying question here? 

Ms. SA ́ NCHEZ. Certainly. 

Mr. CANNON. What I am really wondering is, do you, as a practicing lawyer, care about whether you have the ability to go into 

State courts, or do you mind if this bill is limited to Federal courts 

based upon some sort of national set of contacts? 

Mr. SCHLUETER. Well, obviously, the issue of choice between 

State courts and Federal courts is an issue that I think is generally 

relegated to, I guess, the separation of powers between Federal and 

States. But, generally speaking, we pursue claims both in Federal 

and State courts and look at it on a case-by-case basis of where a 

jurisdiction would be. 

Mr. CANNON. Madam Chair, I see my time is expired. 

Let me just say that, if you have further comments on that—it 

seems to me that we are, sort of, falling into saying that national 

contacts in Federal courts, which would preclude State court jurisdiction in these matters. And to the degree that you and your associates have comments on that, I think we would appreciate that, 

both from you and Mr. Mierzwinski. 

And, with that, I yield back, Madam Chair. 

60 

Ms. SA ́ NCHEZ. I thank the gentleman. 

At this time, I would recognize Ms. Lofgren for 5 minutes of 

questions. 

Ms. LOFGREN. Thank you, Madam Chair. 

And thanks to the witnesses. 

I think, you know, this is a very important issue. I am happy to 

be a cosponsor of the bill. But the introduction of the bill is just 

the beginning of the legislative process. And this hearing and the 

expertise shared with us is an important element to refining the 

bill to make sure that it actually is constitutional. 

And, for the professors, I think your comments relative to the 

State court jurisdiction issue are extremely pertinent and important. Much as I would like to have the ability to go to State court, 

if we pass a law that doesn’t meet constitutional requirements, we 

haven’t accomplished much. So I appreciate that. 

Listening, Mr. Schlueter, to your testimony—it was a very tragic 

situation that you described there. And it just sounds to me that 

China was really not complying with the Hague Convention. 

Do you believe that the Chinese government really was attempting to avoid their obligations under the Hague Treaty? 

Mr. SCHLUETER. Well, my understanding of the Hague Convention is that that is a process, and not every foreign state subscribes 

to every term within the Hague Convention. 

My issue with regards to the process of the Hague is not commenting upon whether or not the central authority complied with 

the Hague, because there was service that was done, albeit perhaps 

improper—or, at least, you would have a State court judge in Georgia that would be making an interpretation as to whether or not 

that was proper service. But under the Hague, it defers to the foreign state to make a decision whether or not this service that took 

place on a security guard was effective service in China. 

That issue had not yet been decided. We have to go through the 

process again, which took a substantial amount of time. It would 

seem that it wouldn’t take 8 months to get service—— 

Ms. LOFGREN. Yes, it would. 

Mr. SCHLUETER [continuing]. Under the Hague. But I have come 

to learn that it does take a substantial amount of time to get compliance. Whether or not there are any shenanigans that go on in 

regards to the country in trying to hinder efforts in getting service 

I don’t know. But, still, there is not reciprocity. The Hague, since 

the subscription of China with the Hague would not allow the enforcement of the judgment, even though we get a judgment in the 

United States, with China. 

Ms. LOFGREN. You know, I very much want to accomplish some 

progress in this area. I think it is important for consumers. I am 

concerned, however, that what we have may not meet our requirements under the Hague Convention. 

And I am wondering, Professors, if you have any thoughts on is 

there anything we could do, if you share that concern, that would 

provide any remedies for that. 

Mr. SCHWARTZ. Professor Steinhardt is really the expert on that, 

so I will defer to him. 

Mr. STEINHARDT. Always a dangerous introduction. [Laughter.] 

61 

I have run up against the difficulties in the Hague Service Convention; I have criticized it in print. It is an improvement over the 

law of the jungle that we had before. 

It is complicated because every major trading partner of the 

United States is a party, including Canada, China, Japan, Korea, 

Mexico, the United Kingdom and most members of the E.U. And 

they will not go away quietly if any piece of legislation is construed 

as an effort to render it irrelevant. 

In the Shlunk case—I am not making that name up, S-H-L-UN-K, the Shlunk case—the Supreme Court, again per Justice 

O’Connor, said this: ‘‘Where service on a domestic agent is valid 

and complete under both State law and the due process clause our 

inquiry ends and the Convention has no further implication.’’ 

In that case, there was an attempt to sue a foreign manufacturer 

on the basis of a U.S. subsidiary. Under State law, the U.S. subsidiary was a mandatory agent for the receipt of process. So serving the subsidiary was dandy under State law, forgetting the foreign manufacturer. 

If we just put the word ‘‘Federal’’ instead of the word ‘‘State’’ law 

there, then it looks as though Shlunk would allow you to comply 

with Federal law. And a Federal law says you are complete with 

your service as soon as you have accomplished it domestically, and 

after that the Convention drops away. You could take that hint and 

try to drive a truck through it, but the real-world consequences, I 

think, are profound. 

I ask my students often, did the Hague Service Convention survive being Shlunked? And there is a sense in which if you use the 

expedient of local law to circumvent the treaty, every other treaty 

partner will be lined up around the block with the State Department either holding the United States in violation of the Convention or saying, ‘‘Me, too.’’ 

And that is where the rule of reciprocity comes in, because if we 

are fed up with the idea that we have to translate our process into 

a foreign language because of the Hague Service Convention, we 

give up the right to insist that their legal papers be translated into 

English too. 

Ms. LOFGREN. I see the problem you have outlined. I see my time 

is up. But we have a situation that we have faced here, for example, in China, where, you know, you can’t get justice for somebody 

who has been wrongfully harmed. 

Mr. STEINHARDT. If I may, one possibility is to view this as a 

form of unfair competition and as a violation of World Trade Organization rules—— 

Ms. LOFGREN. That is interesting. 

Mr. STEINHARDT [continuing]. Which is not something I pursued 

in my written statement, but I think it is not unreasonable, for the 

reasons Dean Schwartz suggested a second ago, it is not unreasonable to view their impunity as an unfair form of trade. So that the 

answer lies not in the Hague Service Convention, which, as I 

say—— 

Ms. LOFGREN. That is very interesting. 

Mr. STEINHARDT [continuing]. Is just a matter of process; it lies 

in the WTO. 

Ms. LOFGREN. My time is expired. 

62 

Thank you, Madam Chair. 

Ms. SA ́ NCHEZ. Thank you, Ms. Lofgren. 

At this time, I would recognize Mr. Watt for 5 minutes of questions. 

Mr. WATT. Thank you, Madam Chair. 

And let me do two things preliminarily: apologize to the first two 

witnesses for missing your testimony because of another commitment; and applaud the selection of the witnesses by our Chair and 

the staff. This is a fascinating issue. But, as the second witness can 

attest, it is about people and the impact on people, ultimately, so 

we shouldn’t lose sight of that. 

Mr. Cannon said that he was intrigued in law school by Erie v. 

Tompkins. I was just confused by it. And I thought I would never 

see a day when I would come back to it voluntarily, but here we 

are. [Laughter.] 

There are two issues that I want to deal with. One is the substantive law issue. Erie v. Tompkins deals with: Cases arising 

under the State substantive law must apply the law of the State 

in which the Federal court sits. 

Let’s deal with the substantive law issue first. Is there a body 

of Federal law in a sufficient number of these areas where we 

wouldn’t have to deal directly with the question of application of 

State law? 

I mean, what is the body of Federal law, and should we be looking at the possibility of extending that Federal law, not as a preemptive set of standards, but as something that people could get 

into on the substantive law issue to get around this and then, if 

there were sufficient State contact, apply the law of that State and 

Federal law? 

What is the status of the Federal law in this area? 

Mr. SCHWARTZ. Well, I want to hear the views of others, but— 

it has been said many times there is no Federal common law when 

a case arises under State law. And my first job was as a law clerk, 

and when we had a case arising under State law, Judge Metzner 

looked to the law of New York, which is where his court was located, to determine what the rules were. And that included conflicts of laws, and that is why I think it is important to look at that 

particular issue. 

What has confused scholars, sir, is whether or not Erie—I hate 

to bring it up—and Klaxon, its daughter, were constitutionally 

based. Sometimes the Supreme Court operates under the Constitution of the United States, and other times it is operating as a Federal supervisory role. And people who are a lot brighter than I am 

have studied this for years, and they come away like three rabbis 

reading part of the Torah: They have all different opinions. 

So to be safer than sorry, I would say, unless there is really an 

absolute need, that everybody says we must have a choice-of-law 

provision in here, I would probably not do that, because it is more 

likely to lead to problems than it is to solve problems. So there is 

no body of Federal law that I know that can cross over Erie. 

Mr. STEINHARDT. If I could just be one of the three rabbis—— 

Mr. WATT. Let me just flesh that out a little bit, because you are 

saying we don’t have—obviously won’t have any Federal common 

law, but we have Federal statutory law. And that wouldn’t be suffiVerDate Aug 31 2005 11:48 Feb 02, 2009 Jkt 000000 PO 00000 Frm 00066 Fmt 6633 Sfmt 6601 H:\WORK\COMM\110\050108\42119.000 HJUD1 PsN: 42119
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cient in this context? Or is there no Federal statutory law that— 

I mean, we are trying to federalize tort liability standards. Why 

couldn’t we federalize—is there no Federal tort law, statutory law? 

Mr. SCHWARTZ. Okay. Now I have got your question, Mr. Watt. 

Mr. WATT. Okay. All right. 

Mr. SCHWARTZ. You can, under the commerce clause—and actually this body has done this in the General Aviation Recovery Act 

of 1994—have a rule of law that applies in both Federal and State 

courts when there is a basis in interstate commerce for that law. 

And I want to think further about that particular aspect that you 

have brought up and report back to the Committee on that. 

Mr. WATT. Professor, my time is up and I didn’t get to my second 

question, but this one is fascinating enough. I guess if we had the 

substantive issue taken care of, we can deal with the service issues, 

the process issues. That would be—I mean, it might take 3 years 

to get service of process, but at least we are dealing with the substantive law now. 

Could I just hear your response to the first question? 

Mr. STEINHARDT. Sure. Thank you, Mr. Watt. 

I think as Mr. Mierzwinski indicated in his testimony, there are 

certain Federal standards that I think distinguish this case from 

the Erie case. Sadly, it is part of my job description to teach Erie 

and the Klaxon decision. And I guess, in my view, the choice-of-law 

provision in the bill is not an unconstitutional modification of the 

rule in Erie and Klaxon. And my written statement, pages 9 and 

10, tries to lay that out. 

Now, maybe I am just one of the three rabbis trying to interpret 

this. But I think Erie, at its heart, reflects the fact that Congress 

had no power over the issue substantively in Erie. And so of course 

the Federal courts were supposed to apply the State law. 

At the heart of the Erie litigation were these constitutional limitations on the Federal Government’s legislative power. But you 

have the legislative power, with respect to 5913, because it is in 

foreign commerce and, as modified, deals with the jurisdiction of 

the Federal court. 

It seems to me that that fundamentally distinguishes cases 

under 5913 from Klaxon. So long as you have the constitutional authority and, as Mr. Mierzwinski suggests, there is Federal law 

dealing with product safety, then I think Erie and Klaxon is actually quite distinguishable. 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. 

Mr. WATT. Thank you, Madam Chair. 

Ms. SA ́ NCHEZ. We will allow Members to submit written questions as well. We have many more questions, but we want to make 

sure we speed you on your way to whatever other commitments 

you have. 

I want to thank all of the witnesses for their testimony today. 

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 promptly as you can so that 

they can be made a part of the record. 

Without objection, the record will remain open for 5 legislative 

days for the submission of any additional materials. 

64 

Again, I want to thank all of our witnesses for their time and 

their testimony. 

And this hearing of the Subcommittee on Commercial and Administrative Law is adjourned. 

[Whereupon, at 10:44 a.m., the Subcommittee was adjourned.] 

(65) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

66 

RESPONSES TO POST-HEARING QUESTIONS FROM RICHARD R. SCHLUETER, CHILDERS

BUCK AND SCHLUETER, LLP, ATLANTA, GA 


A-1.eps
67 


A-2.eps
68 


A-3.eps
69 


A-4.eps
70 

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A-5.eps
71 

RESPONSES TO POST-HEARING QUESTIONS FROM VICTOR SCHWARTZ, SHOOK, HARDY

AND BACON, LLP, WASHINGTON, DC, ON BEHALF OF THE INSTITUTE FOR LEGAL REFORM OF THE UNITED STATES CHAMBER OF COMMERCE


B-1.eps
72 


B-2.eps
73 

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B-3.eps
74 

REPONSES TO POST-HEARING QUESTIONS FROM RALPH G. STEINHARDT, THE GEORGE

WASHINGTON UNIVERSITY LAW SCHOOL, WASHINGTON, DC 


C-1.eps
75 

Æ 


C-2.eps