Federalism, forum shopping, and the foreign injury paradox.

AuthorLear, Elizabeth T.

ABSTRACT

This Article explores the contours of state regulatory power in the foreign injury context. The Supreme Court has long declined to question forum choice in domestic cases, apparently concluding that any other response would be inconsistent with our federalism. But move the injury offshore and the judicial deference to state regulatory supremacy evaporates. Federal judges subject forum choice in transnational tort actions to exacting scrutiny, routinely dismissing such claims on forum non conveniens grounds with no examination of the state interests at stake. This Article first considers whether the offshore nature of a foreign injury diminishes or even extinguishes traditional state regulatory interests in a dispute. In fact, the states retain substantial deterrence interests in such personal injury claims. From a state's perspective, it is often irrelevant whether an out-of-state injury occurs in a sister state or a foreign state. This Article then demonstrates that neither the Constitution nor customary international law supports the federal courts' use of forum non conveniens in these international diversity actions. The federal forum non conveniens doctrine should thus be abandoned as inconsistent with American federalism.

TABLE OF CONTENTS INTRODUCTION I. THE DOMESTIC FORUM SHOPPING SCENE II. FORUM SHOPPING BY FOREIGN INJURY LITIGANTS III. THE RELEVANCE OF FEDERALISM TO INTERNATIONAL FORUM CHOICE OVERSIGHT A. Substantive State Interests in Foreign Injuries B. External Limits on State Jurisdiction to Prescribe 1. Customary International Law a. State Jurisdiction to Prescribe Under the Restatement b. Applying the Restatement to Global Goods Litigation 2. The Foreign Affairs Powers 3. Due Process and Full Faith and Credit CONCLUSION INTRODUCTION

Forum shopping in the United States is a "national legal pastime." (1) It comes in various styles depending on whether the shopper is the plaintiff or the defendant. We offer horizontal forum shopping, allowing litigants to choose among the state courts or federal district courts if diversity jurisdiction exists. We offer vertical shopping, allowing eligible litigants to choose between state and federal court. Sometimes we even allow litigants to shop more than once in a single case. Consider Piper Aircraft Co. v. Reyno, (2) involving a plane crash in Scotland. The Piper plaintiffs engaged in some aggressive horizontal shopping--though the case could logically have been brought in Pennsylvania, Ohio, or even Scotland, the Piper plaintiffs settled on California state court. (3) Defendants then countered with a vertical-horizontal shopping stratagem, first removing the case to federal district court in California and then obtaining transfer "in the interest of justice" and "[f]or the convenience of parties and witnesses" to a federal court in Pennsylvania. (4) Shortly thereafter the defendants found that Pennsylvania was not so convenient after all and successfully moved to dismiss the case on forum non conveniens grounds. (5)

The judiciary is openly critical of forum shopping in general and plaintiff forum shopping in particular. (6) Like indulgent parents, however, the federal courts turn a blind eye toward horizontal forum shopping by plaintiffs in domestic disputes. (7) This tolerance encompasses not simply shopping among the various state courts, but horizontal forum shopping in federal diversity actions as well. (8)

Vertical shopping, on the other hand, provokes overt hostility from the federal bench. (9) Fueled by decades of Erie indoctrination, (10) the federal courts have set about to eliminate incentives and opportunities for successful vertical shopping by domestic litigants. (11) Erie Railroad Co. v. Tompkins (12) was itself a case about vertical forum shopping. And the cases following in Erie's wake such as Guaranty Trust Co. v. York (13) and Klaxon Co. v. Stentor Electric Manufacturing Co. (14) closed down many of the most serious vertical shopping opportunities. (15)

The domestic forum shopping system dovetails nicely with the Supreme Court's commitment to federalism. (16) If "vigorous state regulation of private law matters is the goal," (17) then such federalism values are well served in the state-to-state realm by letting the states fight it out, if you will. And because diversity jurisdiction under the prevailing Erie theory exists to replicate the state court experience (albeit with federal officials), the federalism critique explains the Court's permissive attitude toward horizontal forum shopping in federal diversity cases, as well as its hostility to vertical forum shopping in the diversity context. (18)

The Court's reaction to international forum shopping, however, defies the federalism paradigm. It seems that the Court is a fair weather federalist, abandoning its deference to the states at the drop of a foreign hat. As the federal forum non conveniens cases demonstrate, the federal courts subject horizontal shopping by diversity plaintiffs in transnational actions to intense oversight. (19) On the other hand, they tolerate, perhaps even encourage, substantial and predictable vertical forum shopping by defendants who clearly prefer the federal to the state courts in foreign injury disputes. (20)

This Article explores the relevance of American federalism to the federal supervision of transnational forum shopping. (21) The discussion focuses on the most controversial category of international cases: claims by foreign plaintiffs against American corporate defendants arising from personal injuries sustained abroad. These disputes, which typically involve global goods, (22) fall into two categories: classic, encompassing products like Ford Explorers or Mattel toys, and pharmaceutical.

Part I of this Article describes the American forum shopping scene and the federalism values that animate the Supreme Court's approach to forum choice in disputes arising from domestic injuries. Part II details the federal courts' sharply different response to forum shopping by foreign injury litigants. In contrast to the pro-plaintiff forum shopping system available in domestic cases, the federal forum non conveniens decisions reveal a distinctly pro-defendant, anti-forum shopping bent. (23) From a federalism perspective, the divergent approach suggests that the federal courts either perceive no federalism interest in foreign injury claims or detect a superior federal interest at work. (24)

Part III explores these hypotheses in the context of state jurisdiction to prescribe. Variously described as "legislative," "prescriptive," or "regulatory" jurisdiction, jurisdiction to prescribe refers to the power of a sovereign to apply its substantive law to a particular event. An American state's desire to apply its own substantive law to a foreign injury dispute should represent the clearest indication of regulatory interest in a case. (25) Yet only the Tenth Circuit immunizes actions to which a domestic state's law applies from forum non conveniens scrutiny. (26) In fact, the Supreme Court in Piper upheld a forum non conveniens dismissal in the face of the lower court's finding that Pennsylvania and Ohio law governed the dispute. (27) The Piper Court wholly ignored the states' interests in the case, repeatedly referring to the national interest at stake. (28)

Part III first considers whether the international character of overseas accidents extinguishes a state's traditional regulatory interest in these personal injury actions. This section concludes that a state's interest in a foreign injury dispute does not differ meaningfully from its interest in a domestic claim arising from an out-of-state injury. With respect to global goods, the states have substantial deterrence interests in out-of-state accidents, especially when a product is widely used by domestic consumers.

Part III then examines whether the Constitution or customary international law limits the states' traditional regulatory power in the foreign injury realm or divests states of such power entirely. This discussion finds that customary international law, the federal foreign affairs powers, and the Due Process and Full Faith and Credit Clauses impose no material restrictions on state jurisdiction to prescribe in transnational torts cases.

This Article concludes that federal court oversight of international forum shopping is inconsistent with the central goals of American federalism. The federal judiciary has failed to recognize that the global nature of the twenty-first century economy magnifies rather than diminishes the states' interests in extraterritorial injuries. From the states' perspective, it is often irrelevant whether an out-of-state injury occurs in a sister state or a foreign state. States retain significant regulatory interests in foreign injury litigation. And although the Constitution and customary international law divest the states of prescriptive authority over a small subset of such claims, that fact alone hardly authorizes the federal judiciary to curtail state regulatory efforts in the foreign injury realm.

  1. THE DOMESTIC FORUM SHOPPING SCENE

    The Supreme Court's personal jurisdiction, choice-of-law, and interstate preclusion decisions provide plaintiffs with extensive state-to-state forum shopping opportunities. International Shoe Co. v. Washington, (29) later decisions such as Burger King Corp. v. Rudzewicz, (30) and especially the advent of general jurisdiction, (31) empower plaintiffs to sue corporate defendants in many different states. Similarly, Supreme Court case law in the choice-of-law realm explicitly recognizes that more than one sovereign may constitutionally apply its own law to a multistate dispute. (32) The "modest restrictions" found in the Due Process and the Full Faith and Credit Clauses require only that a state seeking to apply forum law "have a significant contact or significant aggregation of contacts [with the dispute], creating state...

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