Foreign Manufacturers Thumb Their Nose at U.S. Legal System

05/15/2010 05:12 am ET | Updated May 25, 2011

As plaintiffs' attorney Daniel Becnel Jr. said of Taishan Gypsum, "They're just thumbing their nose at the American judicial system."

Becnel was talking about Taishan, a Chinese manufacturer of drywall, being held in default for failing to respond to a class action brought by builders that used the company's drywall in homes. The drywall has been blamed for millions of dollars in damages to homes, decreased property values, canceled home insurance policies, and linked to numerous health problems.

Unfortunately, it will be U.S. businesses, like homebuilders and contractors, insurance companies, and taxpayers who are left paying the bill for foreign manufacturers' faulty products because of a loophole in our justice system.

Like in the case against Taishan, it is extremely difficult to hold foreign manufacturers accountable in our legal system. First, a foreign manufacturer must be served papers in their native language, requiring the added time and expense of translating legal documents. Then, foreign manufacturers must consent to jurisdiction, a legal term saying the foreign company consents that the U.S. legal system has the power to render and enforce a verdict over them. Taishan Gypsum has been served the legal papers, but has failed to respond to the litigation, which is why the company is now facing default.

There is legislation in Congress that will help protect consumers and U.S. businesses, the bipartisan Foreign Manufacturers Legal Accountability Act (S. 1606 / H.R. 4678). The legislation requires manufacturers to have an "agent" in the states to accept service of process for civil and regulatory claims and thereby consenting to state and federal jurisdiction in our legal system.

Without this bill, foreign manufacturers will be able to sell their goods in our country without following the same rules U.S. companies do, hurting consumers and our economy.

Today in New Orleans, a trial starts against Knauf Gips, another manufacturer of toxic drywall. The trial is expected to last a week and explore different levels of remediation protocols, ranging from just removing the tainted drywall to removing all the affected homes' pipes and wiring. No matter the outcome, without passage of the Foreign Manufacturers Legal Accountability Act, foreign manufacturers will be able to sell their goods in our country without following the same rules U.S. companies do, hurting consumers and our economy.