Products liability litigation since the passage of NAFTA and the unintended consequences.

• Author: Robertson, Catherine

1. INTRODUCTION II. THE DEVELOPMENT AND SUCCESS OF THE NORTH AMERICAN FREE TRADE AGREEMENT III. FORUM NON CONVENIENS: DEVELOPMENT AND APPLICATION IN THE UNITED STATES IV. THE RELATIONSHIP BETWEEN DAMAGES AND FORUM NON CONVENIENS A. Products Liability and Damages in the United States B. Products Liability and Damages in Mexico C. Why Plaintiffs from Mexico Find the United States Attractive D. Defendants, Forum Non Coveniens, and Damages V. AMERICAN DEFENDANT'S USE OF FORUM NON CONVENIENS TO AVOID OR REDUCE THEIR LIABILITY AND ITS CONSEQUENCES FOR AMERICA VI. POSSIBLE SOLUTION VII. CONCLUSION I. INTRODUCTION

   Imagine it is a typical Saturday afternoon. You and your child have planned to escape the sticky heat of Houston by taking refuge at the neighborhood pool. Imagine that while en route to the pool you are involved in a minor car accident that causes the car's airbags to deploy. Imagine that your child is tragically killed as a result of the car being equipped with a defective airbag, and imagine you bring a successful suit against the manufacturer of the airbag. It would not be a stretch to imagine that the judgment against the manufacturer would be several thousand dollars. (1)

   Now imagine that you and your child are not U.S. citizens and you are not in Houston, Texas, but rather you and your child are citizens of Mexico in Mexico City seeking to escape the same heat, driving the same car, with the same defective air bag to a nearby lake. Imagine you also get into a minor car accident and the same defective airbag kills your child. Imagine you too bring a successful suit against the same manufacturer, but the maximum award for the loss of your child's life is $2500 as opposed to the several hundreds of thousands of dollars an American citizen would receive. (2)

   While it may seem unfathomable to American citizens that a manufacturer would only be liable for $2500 for such an accident, it is a hard reality for Mexican citizens. (3)

   Since the birth and passage of the North American Free Trade Agreement (NAFTA), there has been an expansion of trade within the borders of North America. (4) Indeed, NAFTA's removal of the many trade barriers that plagued the signatory nations has proven to be beneficial for the U.S. economy, (5) but it has also created what should have been a foreseeable problem. (6) The increased flow of goods between the United States and Mexico has coincided with increased products liability litigation. (7) In fact, "product's liability is today recognized as having important international dimensions, for there literally are not physical boundaries that a given consumer product may not cross during the course of its manufacture, marketing, distribution and ultimate use by the consumer." (8)

   In particular, Mexican plaintiffs who suffer injuries from defective American-made products desire to have their disputes against the American manufacturers of these products settled in the United States, while the American manufacturers aggressively fight to keep these disputes out of the United States. (9)

   Mexican plaintiffs, who have knocked on the door of the American judicial system to have their claims heard, have traditionally been sent home by American defendants' use of forum non conveniens. (10) Unfortunately, the application of this doctrine has undermined the United States' deterrence interest in these cases. (11)

   Part II of this Comment will briefly discuss the development of NAFTA and highlight how it has increased trade among the signatory nations.

   Part III of this Comment will trace the development of the doctrine of forum non conveniens and discuss how it has been implemented as a blockade for foreign plaintiffs trying to gain access to the American judicial system.

   Part IV of this Comment will examine the damages available in the United States and Mexico. It will argue that the significantly higher damage awards available in the United States and not available in Mexico are a primary reason why Mexican plaintiffs seek to have their claims heard in the United States. It will also argue that it is this disparity in damages that motivates American manufacturers to vigorously try to keep these claims out through the use of forum non conveniens.

   Part V of this Comment will argue that the use of forum non conveniens to prevent Mexican plaintiffs from gaining access to U.S. courts is imprudent because it effectively eliminates the United States' deterrence interest in these cases.

   Part VI of this Comment will argue that a possible solution is the creation of a side agreement, similar to the North American Agreement on Environmental Cooperation (NAAEC), made between the signatory nations of NAFTA that would place a cap on the damages that are available in the three nations.

2. THE DEVELOPMENT AND SUCCESS OF THE NORTH AMERICAN FREE TRADE AGREEMENT

   Before the creation of NAFTA, Canada and the United States had established a trade agreement known as the U.S.-Canada Free Trade Agreement (CFTA). (12) Using CFTA as a model, the United States began discussions with Mexico seeking to create a similar type of agreement between itself and Mexico. (13) Soon thereafter, Canada joined the discussion and the negotiations between the three countries culminated in the creation of NAFTA on January 1, 1994. (14)

   NAFTA is a cooperative economic intergovernmental organization (15) intended to promote the flow of goods across the signatory nation's borders. (16) Indeed, NAFTA's preamble states: "The government of Canada, the Government of the United Mexican States and the Government of the United States of America are resolved to .[dagger].[dagger]. create an expanded and secure market for the goods and services produced in their territories." (17) Furthermore, one of the primary objectives listed in the agreement is the elimination of trade barriers and the facilitation of cross border movement of goods and services. (18)

   NAFTA has succeeded in its goal of increasing trade among the signatory nations. (19) The United States, Canada, and Mexico represent the world's largest free trade area, linking 450 million people together and producing $17 trillion in goods and services. (20)

   Looking at the numbers alone, NAFTA's success becomes quite evident. (21) Canada and Mexico were the United States' top two purchasers of goods as well as the top two suppliers of goods in 2009. (22) In fact, trade between the United States and Canada represents the largest flow of income, goods, and services in the world, with an average value of $1.2 billion per day. (23)

   Although Canada represents the United States' number one trade partner, Mexico is not far behind. (24) Mexico has secured the position of being the United States' second largest trade partner since the implementation of NAFTA. (25) For example, in 2002 the trade between Mexico and the United States was valued at $232 billion annually, representing a 225% increase in trade since the enactment of NAFTA. (26) In fact, in 2009 it was estimated that the United States imported roughly $438 billion worth of goods and services from Canada and Mexico and exported $397 billion worth of goods and services to Mexico and Canada. (27)

   Trade has not only increased between the United States and both Canada and Mexico; it has also increased between Canada and Mexico as well. (28) After the passage of NAFTA, trade between these countries more than doubled, being worth $6.5 billion initially and worth $15 billion subsequently. (29) In fact, Mexico has become Canada's fourth most valuable export market and Canada has become Mexico's second. (30)

   It is quite clear that NAFTA has achieved its goal of increasing trade and the flow of goods between the signatory nations. (31) However, this flow of goods has also resulted in increased products liability litigation between American manufacturers and foreign plaintiffs. (32)

3. FORUM NON CONVENIENS: DEVELOPMENT AND APPLICATION IN THE UNITED STATES

   Forum non conveniens allows a court, despite being an appropriate forum, to divest itself of jurisdiction for the convenience of the litigants if the action could have originally been brought in another forum. (33)

   The Supreme Court in Gulf Oil v. Gilbert outlined the factors that must be considered when a court is determining whether to dismiss a case on forum non conveniens grounds. (34) The Court in Gulf noted that when determining whether to dismiss a case it presumes that there are at least two forums in which the defendant is amenable to process. (35) The Court held that both the private and public interests at stake in all litigation must be considered when deciding between two proper forums. (36)

   The private interest factors that may be considered include the following: (a) the relative ease of access to the various sources of proof, (b) the availability of compulsory process for attendance of unwilling witnesses, (c) the possibility of viewing the premises involved in the dispute if appropriate, (d) the enforceability of a judgment if one is obtained, and (e) the advantages and obstacles to a fair trial. (37)

   The Court stated that the public interests factors that may be considered include the following: (a) the administrative difficulties and or burdens on a forum due to congested dockets, (b) the burden of jury service in a forum that has no "relation to the litigation," (c) the desirability to have cases tried in forums that "touch the affairs of many persons," and finally (d) the appropriateness of trying a case that has local interest in the local forum, or having a diversity case tried in a forum that would present the least choice of law problems. (38)

   The Supreme Court further rationalized that it would give deference to the plaintiffs choice of forum, unless the balance of the public and private interest factors weighed strongly in favor of the defendant. (39)

   While the doctrine of forum non conveniens is designed to ensure disputes are heard in the most convenient forum, (40)...