Globalization and Trade-offs

“America's product liability attorneys have begun rolling out the lawsuits as stories about unsafe and counterfeit imports from China continue to make headlines. The defendants: U.S. companies that distribute the products to American consumers. The cases might prove to be the vanguard in a march of litigation, with plenty of deep-pocketed American companies targeted.

“On June 26 such a lawsuit prompted regulators to demand a recall of nearly a half-million Chinese-made tires. Foreign Tire Sales, a Union (N.J.) distributor of tires made by Hangzhou Zhongce Rubber, was named in a wrongful death case filed in a New Jersey federal court after one of its made-in-China tires allegedly caused an accident that killed two people. In turn, Foreign Tire Sales has sued its Chinese supplier. Both companies say they're not at fault.

“Lawyers have also gone after U.S. companies such as Del Monte, which sold pet treats made with tainted Chinese ingredients. Del Monte, which issued a voluntary recall, hasn't yet responded to the suit. ‘We're just as interested in getting answers as some of the other folks,’ says John McDonough III, head of litigation at the New York office of Cozen O'Connor, which is representing the company.

“Meanwhile, the Washington (D.C.) firm of Cohen, Milstein, Hausfeld & Toll is weighing litigation against Western distributors of Chinese-made counterfeit glycerin that found its way into cold medicine, killing hundreds of children in Panama and elsewhere. ‘Do people along the chain have responsibility for knowing where key ingredients are coming from? The answer you're going to find in an era of globalization is Yes,’ says Cohen Milstein's Michael Hausfeld.

“Despite a wave of business-friendly legal reforms in recent years, companies can be held liable in most states in the U.S. even if they unwittingly sell a dangerous product. ‘All you have to show is that the product was defective,’ says William Ruskin, a defense litigator with Epstein, Becker & Green in New York. ‘It's no defense to say, We didn't know.' Under product-liability law, one company often can be held 100% liable for all damages awarded to all consumers, regardless of its market share or the amount of tainted product it might have sold.”

(“Made In China. Sued Here.” By Lorraine Woellert Edited by Deborah Stead, Cristina Lindblad. Business Week: July 09, 2007. , Iss. 4042; pg. 9)


GLOBALIZATION: Is the principle or the practice the problem?