April 25, 2023 - Earlier this month, the 8th Circuit Court of Appeals agreed to hear an appeal from a ruling out of the federal district court for the Eastern District of Missouri located in St. Louis. The appeal stems from the district court’s rulings that apply Missouri law to operations of a former foreign subsidiary of a Missouri based company in contravention of well-established principles of choice of law, international comity, and an existing international trade agreement between the United States and the foreign sovereign where the foreign entity and its operations are located.
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The cases at issue involve potentially thousands of individuals living in and around an industrial complex in a small South American town located in the Andes Mountains. Plaintiffs’ firms based in New York, Puerto Rico, Florida and St. Louis brought the lawsuits in the City of St. Louis beginning in 2007. The cases, which are individual cases and not a class action, have been removed to federal court.
Throughout the course of the sixteen years of litigation, the United States based defendants argued, among other things:
Missouri courts should not retain jurisdiction over lawsuits brought by foreign citizens with no connection to Missouri against United States defendants who did not own the foreign facility allegedly causing the individuals harm;
The proper venue for these lawsuits are in the country where the individuals are citizens, where the alleged harm occurred and where the facility is located;
Missouri does not have an interest in opening its courts to foreign plaintiffs with no connection to Missouri and whose proper defendant, if any, should be the entity that owned and operated the facility in the country where they lived;
If jurisdiction is retained by Missouri’s courts, that the law of the foreign nation should apply;
The international trade agreement between the United States and the foreign nation should be respected; and,
A Missouri judge and jury should not decide what are the proper emissions standards, what is the duty of care owed by the facility located in a foreign land, and what, if any, compensation is due to the purported plaintiffs for the alleged injuries suffered abroad.
Despite these arguments, the federal judge has determined that jurisdiction in Missouri is proper, Missouri law applies to the case, the international trade agreement invites foreign litigants to bring their disputes to the United States, and Missouri has the most significant interest in adjudicating the claims of foreign citizens allegedly injured abroad.
This past January, the federal district court reaffirmed its earlier decisions regarding jurisdiction, choice of law and its interpretation of the international trade agreement, ruling against defendants on virtually every argument before the court. However, this time, the court provided the defendants a unique opportunity and certified the decision for immediate interlocutory appeal to the U.S. 8th Circuit Court of Appeals and, it is from this ruling that the 8th Circuit accepted the appeal.
The importance of the outcome of this case on any company with a foreign subsidiary, or any company that ships products internationally, cannot be overstated. If the rulings being appealed are left to stand, Missouri’s courts will be open to foreign litigants, wherever located, with Missouri law operating as the substantive law in lieu of the laws of the jurisdiction where foreign subsidiaries are located. If the current thinking of the district court is left unchecked, this may also create liability for the domestic entities, officers and directors. In the case at issue, the connection to South America is strained enough, but when the plaintiffs’ attorneys use this decision to create liability for domestic entities shipping products to our North American neighbors, the case becomes easier to make. St. Louis City juries, which are well known for issuing record-setting verdicts, will be invited to assess liability against companies located anywhere in the world on behalf of foreign nationals who have never been to Missouri, irrespective of the law or policy of the foreign nation. This matter also has broad implications for Missouri’s economy as it may open up our courts to foreign plaintiffs, wherever located, bog down our courts, and take workers away from their jobs to serve on juries where they will be asked to determine standards of foreign nations and liabilities impacting foreign citizens with no connection to our state.
Associated Industries of Missouri is preparing to file an amicus brief in support of, among other things, the (i) application of foreign law to foreign matters; (ii) respect of principles of international comity; (iii) respect for international trade agreements; and (iv) proper application of principles of choice of law. If your organization is interested in and concerned about this precedent setting case, please contact Ray McCarty as soon as possible at rmccarty@aimo.com.