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NAFTA Challenge to Mississippi Jury Verdict Threatens U.S. Justice System

Nov. 24, 1998

NAFTA Challenge to Mississippi Jury Verdict Threatens U.S. Justice System

Statement of Public Citizen President Joan Claybrook

For almost twenty years, lobbyists and executives for some of the world?s largest companies have besieged the United States Congress in a relentless campaign to pass federal legislation to limit access to the courtroom for people injured by dangerous and defective products, negligent health care providers, conniving insurance companies and other corporate wrongdoers. They have asked Congress to preempt the traditional authority of state judges and juries to fairly compensate people for their injuries and to overthrow the ability of state courts to punish and deter corporate misbehavior. They have sought to protect corporate profits at the expense of injured people.

For the most part, these corporate efforts to tie the hands of juries and judges to hold corporations accountable have been unsuccessful. Because of strong opposition to such anti-consumer measures, sweeping measures to limit remedies in state courts have not been enacted.

Today, we are here to talk about one foreign corporation?s attempt to use NAFTA as a weapon to get what companies have not been able to get from lobbying Congress and the president: A way to undo the benefits of the civil jury system and evade justice. The case our friends from Mississippi have come to Washington to talk about represents a serious assault on our legal system and our democratic process.

This case is an attack on our legal system because, if this NAFTA challenge to a civil jury verdict is successful, it would create a legal precedent that other corporations would exploit to escape liability for their wrongful acts. The potential implications are tremendous. Under the theories advanced by the Canadian funeral home conglomerate bringing this case, almost any type of civil verdict or court rule imposing a requirement on a corporate defendant could be challenged as “NAFTA illegal.” This could pave the way to efforts to overturn jury verdicts in products liability cases, such as cases involving defective cars or dangerous drugs and medical devices. It could even require the U.S. government to bail out guilty defendants for punitive damages awards in employment discrimination cases or actions based on consumer fraud.

The universe of corporations that could try to exploit this NAFTA-dodge of the civil justice system is also huge. NAFTA has a broad definition of a foreign corporation. Not only are Canadian and Mexican companies eligible to sue the U.S. government under NAFTA, but so are companies that have a significant percentage of their shares held by Mexican or Canadian investors or that are involved in a joint venture with a Mexican or Canadian partner.

Further, NAFTA?s broad definition of “foreign” will greatly increase the number of both domestic and foreign-based corporations that can take advantage of the trade agreement?s investor protections if NAFTA is expanded to include other countries, as has been proposed. For example, if NAFTA were expanded to other countries, Chrysler Corporation could be considered “foreign” because of its merger with Daimler-Benz. All manner of companies could try to seek to evade their civil liability under state and federal laws by entering into joint ventures or otherwise fitting themselves under NAFTA?s broad definition of “foreign.”

This case is also an all-out attack on democracy. If successful, it would undermine the jury system, which is fundamental to our system of justice. If this challenge is successful, it would mean U.S. taxpayers — not corporate defendants — could end up footing the bill when a corporation is found liable by a jury for fraud or personal injury, wiping out both the concept of fairness and the deterrent effect of our liability system. Further, it would erode democracy because it would open a huge backdoor way for corporations to get protection from their liabilities in a way they have been unable to win in two decades of lobbying Congress.

We cannot stand by and allow NAFTA to be used as the broom for a sore loser to sweep justice aside. If we allow Loewen to use NAFTA to escape justice today, we surrender justice tomorrow and forever.

Due to the fundamental importance of this case, we call on the Clinton administration to release to the public all documents related to this case. The fate of the future of the civil jury system should not be shrouded in secrecy. And we call on the administration to vigorously defend this nation?s court system from this unprecedented attack.

NAFTA costs jobs to workers in the United States. NAFTA threatens our health and safety regulations that provide critical protections to the public and the environment. We knew of these dangers and warned of them both before and since the trade deal was adopted. But even most of NAFTA?s sharpest critics would be shocked at the intrusiveness of this trade regime?s reach into the internal working of U.S. state and local laws represented by this challenge to a Mississippi civil verdict. The fact that NAFTA might be used in this way — to threaten the very foundation of our civil justice system — is the latest, and one of the strongest, reasons for the U.S. to withdraw from NAFTA.