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http://ssrn.com/abstract=1987223
 
 

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Personal Jurisdiction and Product Liability


Daniel M. Klerman


University of Southern California Law School

January 17, 2012

USC Law and Economics Research Papers Series No. C12-2
USC Legal Studies Research Papers Series No. 12-4

Abstract:     
This article is the first sustained economic analysis of personal jurisdiction. It argues that plaintiffs should be able to sue where they purchased a product which caused injury. Such a rule allows manufacturers to set prices which take into account the quality of the forum state’s courts. If the courts are biased against out-of-state corporations, have overly generous judges or juries, or apply substantive law which is excessively pro-consumer, manufacturers can, through contracts with distributors and retailers, charge a higher price to consumers in that state. This prevents judges and juries from engaging in inter-state redistribution and gives states an incentive to provide efficient substantive rules and adjudicative institutions. In contrast, a rule which required suit in a place more fully under the control of the defendant – such as the place of manufacture or the location of the distributor – would encourage manufacturers to select inefficiently pro-defendant jurisdictions for their activities. Because consumers are unlikely to know where products are manufactured or distributed and are unlikely to be able to evaluate the quality of the law in those states, it is implausible to think that the market will give manufacturers incentives to locate their jurisdiction-triggering activities in states with efficient laws and institutions. This analysis is particularly important, because the Supreme Court has recently deadlocked on personal jurisdiction in product liability cases.

Number of Pages in PDF File: 35

Keywords: personal jurisdiction, products liability, jurisdictional competition, choice of law

JEL Classification: K40, K13

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Date posted: January 20, 2012 ; Last revised: November 12, 2013

Suggested Citation

Klerman, Daniel M., Personal Jurisdiction and Product Liability (January 17, 2012). USC Law and Economics Research Papers Series No. C12-2. Available at SSRN: http://ssrn.com/abstract=1987223 or http://dx.doi.org/10.2139/ssrn.1987223

Contact Information

Daniel M. Klerman (Contact Author)
University of Southern California Law School ( email )
699 Exposition Boulevard
Los Angeles, CA 90089
United States
213-740-7973 (Phone)
213-740-5502 (Fax)
HOME PAGE: http://www.klerman.com

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