Personal Jurisdiction and Aggregation

By Dodson, Scott | Northwestern University Law Review, January 1, 2018 | Go to article overview

Personal Jurisdiction and Aggregation


Dodson, Scott, Northwestern University Law Review


Introduction

Consider the following scenario. Wow Chemicals, which is headquartered and incorporated in Russia, develops a new air-freshener product designed for use in cars to give them "that new-car smell." Wow does not sell the product directly to consumers but instead sells to various distributors around the world. Its American distributor is incorporated and headquartered in Delaware. The distributor markets and sells the product to retail stores in every state. Neither Wow nor the distributor puts any warnings on the packaging or in the advertising for the product.

The air freshener is an immediate hit. The first year the product is available, more than ten million Americans purchase and use it in their cars, including many ridesharing and taxi drivers. Five years later, medical experts conclude that an estimated one million people exposed to the air freshener have developed a chronic and painful throat condition triggered by chemicals in the product. Eventually, many affected individuals decide to file civil lawsuits against Wow and its distributor for failure to adequately warn of the air freshener's dangers.

Nothing prevents each injured individual from suing the distributor in a one-on-one lawsuit in either Delaware or the state where the injured individual purchased or used the air freshener, or from suing Wow in a separate one-on-one lawsuit in Russia (to the extent Russian law would permit the suit).1 But such individualized litigation is highly problematic.

It would be costly and inconvenient for plaintiffs to travel to possibly distant states (the place where they purchased or were exposed to the air freshener may be across the country from where they now reside) or foreign countries to sue in individual litigation. Plaintiffs forced to sue each defendant separately would suffer the costs of duplicative litigation and could face an "empty-chair defense," in which Wow blames the distributor to escape its fair apportionment of liability, while the distributor blames Wow to escape its fair apportionment of liability, leaving plaintiffs short of full, if any, compensation.2

Individualized litigation presents risks to defendants as well.3 Each defendant faces the prospect of being forced to litigate the same issues in thousands of cases brought by separate plaintiffs, perhaps in different places around the country. The first successful judgment against a defendant could be used to establish liability against that defendant in future cases brought by different plaintiffs through the doctrine of issue preclusion.4 Separate suits against Wow and its distributor could lead to a reverse-empty-chair problem of excessive liability apportionment against both, effectively overcompensating plaintiffs. Each plaintiff can seek punitive damages to deter the same conduct, effectively overpunishing both defendants. If plaintiffs seek injunctive relief directing the addition of warning labels on the packaging, courts may issue injunctions that create inconsistent obligations on each defendant.

The crush of individualized litigation burdens the system, too. Each individual case will present the same crucial issue-whether the defendants failed to provide adequate warnings-risking repetitious discovery and pretrial motions, as well as exponential increases in litigation costs and attorney's fees.5

In contrast to the burdens, inefficiencies, and potential unfairness of individualized litigation, aggregation makes sense from all perspectives. Aggregation permits the common issues to be litigated once, with all interests presented and determined in a single adjudication. Both plaintiffs and defendants can pool their resources and share information to make their litigation efforts more efficient and effective. The lawsuits can be heard in a single court before a single judge and jury, saving the judicial system, the witnesses, and the parties millions of dollars and a great deal of time. A federal court would likely have jurisdiction to hear all related claims, even if some were for smaller values than others,6 and the joinder rules would extend to all claims that depend upon a common issue, such as the defendants' alleged failure to provide adequate warnings. …

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