Defective and dangerous products cause thousands of injuries in the U.S. annually. Product liability laws define the parameters concerning who may be held responsible when a dangerous or defective product causes injury to a person.
Parties that may be held potentially liable include product designers, manufacturers and distributors – anyone in the chain of distribution.
But what if one of these responsible entities is based outside the U.S.? After all, a great many of the products we use are produced outside our borders.
The Foreign Sovereign Immunities Act gives U.S. courts (state and federal) jurisdiction over foreign entities, but only under certain circumstances. The law gives immunity to foreign states – but there are exceptions. One of those pertinent to product liability lawsuits is the “commercial activity” exception. The statute holds that foreign states aren’t immune from U.S. jurisdiction when the action that forms the basis of the lawsuit is based on commercial activity that is carried on in the U.S. by the foreign state or its agent.
Recently, the U.S. Court of Appeals for the Sixth Circuit was asked to decide whether this commercial activity exception would apply even if the foreign state had minimum contacts in the U.S. The court ruled in Rote v. Zel Custom Mfg., LLC that the exception does apply because regardless of this fact, the design or manufacture of a product in an of itself is considered “commercial activity,” and such action by a foreign state has a direct effect here.
According to court records, plaintiff in Rote suffered injury to his right hand as he was loading a rifle at a private residence in Ohio. The round reportedly exploded on him unexpectedly.
The allegedly defective round of ammunition was manufactured by Dirección General Fabricaciones Militares, an arms manufacturer owned by the government of Argentina.
Plaintiff filed a product liability and negligence lawsuit against a number of defendants, including the Argentinian ammunition maker. He alleged DGFM designed, manufactured and sold or otherwise introduced into the stream of commerce this ammunition, which was made with a “protruding primer,” without notifying consumers of this potentially dangerous feature.
Defendant moved to dismiss the complaint for lack of subject matter jurisdiction, arguing that as an instrumentality of Argentina, it was immune from liability under the Foreign Sovereign Immunities Act.
The district court denied this motion, finding that the design and manufacture of ammunition qualifies as “commercial activity,” which is excepted under the act. Further, the court noted the actions of DGFM had a direct effect in the U.S.
In its review, the Sixth Circuit Court of Appeal noted the statute defines “commercial activity” as:
“A regular course of commercial conduct or a particular transaction or act.”
The court was asked to decide whether:
- Design and manufacture of a product are considered commercial activity under the act.
- A court must find a foreign state has a minimum number of contacts in the U.S. before it can find the state’s action had a direct effect.
The court answered “yes” to the first question and “no” to the second.
The court noted this was not a semantic ploy by the plaintiff to recast the official activity of a government as being commercial in nature when in fact it was not. Design and manufacture of products intended for sale is undoubtedly an element of commercial activity.
Therefore, the claim against the product manufacturer may continue.
Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
Rote v. Zel Custom Mfg., LLC , March 7, 2016, U.S. Court of Appeals for the Sixth Circuit
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