Chinese Workers/US Torts -- Did I Really Say That?

Pulitzer winning reporter Loretta Tofani has written an article on Chinese factory workers suing US companies for injuries sustained in China. The article is entitled "US Bosses Sued: Victory could be big for Chinese laborers." Call it the legal follow-up to Ms. Tofani's superb seven-part series on the health and safety issues Chinese laborers face in producing goods for American companies.

The article begins by discussing a $3.2 million California (where else?) jury award against Dole Food Co. for using a pesticide that caused sterility in six Nicaraguan workers, working in Nicaragua. The jury will soon be awarding punitive damages as well. "The case marked one of the first times in the past 20 years that foreign workers outside of the maritime industry gained access to U.S. courts to sue a U.S. company that employed them, lawyers said. While U.S. judges agreed in past cases that workers had jurisdiction, they ruled it would be more convenient for the lawsuit to be tried in the workers' home countries."

Miami lawyer Ross Toyne (with whom my law firm is currently working on an international class action lawsuit against Holland America) describes this as "the start of corporate America having to pay for their exportation of jobs overseas and their disregard for overseas workers' health and safety." Brown University professor, David Egilman, sees this decision as "massive" and he sees it as showing "that not only profits and exploitation will be globalized, but health and safety protections, too."

The article then says "the victory could have special significance for Chinese workers, who manufactured nearly $300 billion in goods for the U.S. last year, said lawyer Dan Harris of the Seattle firm Harris and Moure." The article then quotes me as saying "Chinese law firms are gathering up plaintiffs now, looking up American products that cause harm." Yes, but, we need to be clear here that I was talking about Chinese lawyers looking for Chinese plaintiffs to sue American companies in the United States for injuries that befell Chinese consumers, not Chinese laborers. The article does not misquote me, but since I am not aware of any Chinese lawyers looking for Chinese laborers as plaintiffs, I feel the need to emphasize the distinction.

The article then quotes me expounding on American company tort liability for Chinese worker injuries:

In this era of globalization, the precise role of a U.S. business overseas determines the company's legal liability, Harris and other lawyers said. U.S. businesses that own factories or have "joint ventures" in factories overseas are potentially the most liable. Businesses that provide design specifications of a product or products also can be liable because they have participated in the manufacturing process, Harris said.

Again, I feel a need to clarify. I do not know the extent of liability American companies might face for injuries to Chinese workers because there is virtually no case law on this. When I was talking about this with Ms. Tofani, I was merely expressing my own thoughts on how U.S. courts might rule; I was not expressing my views on existing law, of which there is almost none. What I was saying was that the more connection the US company has to product manufacturing in China, the more liability risk it incurs for worker injury. It is a continuum thing and at this point, nobody really knows where on the continuum liability might lie, if anywhere. From least to most risk, the continuum probably looks something like this:

1. US company makes one time product purchase from Chinese manufacturer.
2. US company makes regular purchases from Chinese manufacturer.
3. US company designs product for Chinese manufacturer and buys it from Chinese manufacturer.
4. US company designs product for Chinese manufacturer and specifies how Chinese manufacturer is to manufacture product.

As of now, I am not aware of a single lawsuit (other than the Dole case, of which I have not read any of the court's rulings) dealing with any of the above. In talking with Ms. Tofani, I was expressing my view of the legal principles involved, not my view on existing law.

I am then quoted as saying that "If I'm a Chinese factory and 300 of my Chinese workers sue me for what went wrong, I'd sue the U.S. company or the workers could sue the U.S. company." This statement was based on the continuum I set out above. If I am a Chinese company with 300 employees and my workers sue me, I am certainly not going to sue a US company that has done nothing more than buy 5,000 pens from me. But I might think about suing if that US company told me to use a particular chemical in making the pens that the US company stopped using in the US twenty years ago because of worker deaths.

That last set of facts appears to describe the Dole case:

In the current Los Angeles Superior Court case, the workers toiled on banana plantations for Dole during the 1970s when Dole used the pesticide DBCP even though the company knew it caused sterility in both animals and humans. The pesticide stops microscopic "worms" from eating the roots of the banana plants, allowing for larger crop yields.
The Dow Chemical Co. of Midland, Mich., manufactured the pesticide, but stopped in 1977, when three dozen workers in a California plant that processed it were diagnosed as sterile. During that year Dole threatened to sue Dow for breach of contract if Dow did not continue to supply Dole with DBCP, according to court testimony. Dole continued to use thee pesticide in its foreign divisions without warning workers or providing protective gear.

The Dole case does appear to be setting major precedent:

In the past, when U.S. judges refused to hear such cases, corporations in effect won those cases, said Susanna Bohme, a Brown University doctoral candidate who wrote her dissertation on the case. "By slipping between national justice systems, corporations are often able to escape judgment altogether," Bohme wrote in her dissertation. "This mobility allows trans-national corporations insulation from the state's mechanisms of accountability."
Thousands of workers from Costa Rica, Honduras, Guatemala and Panama have filed four other lawsuits in Los Angeles.

But it is too early to know for sure.

For more on this, check out our previous post, entitled, "Chinese Factories. Chinese Workers. Chinese Deaths. U.S. Tort Liability?" and be sure to read the comments.