March 18, 2013

Non-U.S. Companies: Don’t Fear Being “Hometowned” in American Courts

By Dr. Ken Broda-Bahm: 

  Liberty - Scales of Justice

Many companies which are headquartered or do the bulk of their business outside the United States can be a little freaked out by the prospect of being at the mercy of an American jury. After all, as a uniquely American notion, the act of resolving disputes by drawing upon the experience and judgment of average citizens without any particular skill or knowledge in the subjects at issue, can be at best unfamiliar, and at worst terrifying. Might this unsophisticated mass be moved by tricks or emotion? Might they simply favor the American individual or company who has the home court advantage? For the company that is relatively inexperienced in American courts, that fear might be understandable. But thankfully, it isn’t borne out by the research. Instead, the most recent studies show that foreign companies fare as well, or even better than their domestic adversaries in front of American juries. 

Of course the message “don’t worry” is never complete advice to someone entering an uncertain situation. Newcomers to Yankee-style civil justice still need to appreciate, adapt, and adjust. But what they don’t need to do is reflexively settle, arbitrate, or run to the bench just to avoid a U.S. jury. In this post, I’ll take a look at several studies that have looked at this question directly, including a recent attitudinal survey (Leibold et al., 2013) focusing on Japanese companies in particular. I’ll also provide a quick list of considerations for l’etranger of any sort seeking to get a fair shake in a U.S. venue. 

The Research: No Legal Xenophobia

Over the years, there have been a number of studies focusing on the question of whether foreign companies are treated differently in U.S. courts, and this research is helpfully reviewed in a current article in DRI’s For the Defense (Leibold et al., 2013). An investigation of patent cases (Janicke & Ren, 2006), for example, compared domestic and foreign company win rates in those cases and found that the foreign company was actually slightly more likely to win, whether they were in the role of accused infringer or patentee. Looking at commercial cases, another analysis (Bhattacharya, Galpin, and Haslem, 2007) controlled for litigation type, company size, profitability, year, and region, and found that “U.S. firms in a jury trial and foreign firms in either bench or a jury trial have statistically indistinguishable win rates.” 

In yet another study (Clermont & Eisenberg, 2007), the researchers looked at longitudinal data over the years and found that any reliable gap in favorable verdicts between foreign and domestic companies had been eliminated by at least 2007. These authors suggested that in prior decades, foreign companies had feared U.S. courts and were therefore reluctant to go to trial with anything other than their strongest cases. This, the authors say, accounted for the slightly higher win rate experienced by foreign companies. Over time, those companies relaxed their objections and were more willing to go to trial with their weaker cases, and that led to an equivalence in win rates between U.S. and foreign companies. After 9/11, they suggest, foreign companies temporarily feared greater xenophobia, but that fear has eased over time, moving things once again back to even. 

Most recently, a team of litigation consultants and attorneys (Leibold et. al., 2013) looked not at win rates but at the attitudes that would drive any differential evaluation. Looking specifically at attitudes toward Japanese corporations and using current data from 417 mock trial participants, the team found the great majority held positive or neutral opinions. “Most jurors,” they conclude from the data, “start a trial without negative predispositions against Japanese corporate defendants or their witnesses.” Furthermore, the minority who do hold negative views also exhibit relatively consistent attitudes making them identifiable in voir dire. They advise looking at the attitudes that relate most specifically to your case: 

“In voir dire, it will be important to dig down into specifics with those seemingly neutral jurors to find out if they sway toward a plaintiff on safety or quality issues specific to the product or company in question. Does the juror have the same amount of faith in Japanese regulators as he or she does in the U.S. government? Does a juror believe that U.S. safety standards are stricter than those in Japan? Does a juror continue to hold neutral or uncertain attitudes about a range of Japanese specific industries such as the automobile, pharmaceutical, electronics industry?”

That advice strikes a good balance: No, international companies shouldn’t automatically fear a U.S. jurisdiction, but yes, attorneys should do their homework and find out about attitudes in the trial venue through voir dire and the use of pretrial research.

The Implication: No to Fear (but Yes to Preparation)

The most obvious takeaway from this research is that international companies should not overreact to the prospect of an American jury. No, they won’t automatically discount or distrust you, and no, they won’t default to a purely ethnocentric sense of right and wrong. In fact, they might even grant a certain credibility to the overseas party, and draw some favorable associations with competence, quality, and sophistication. That doesn’t mean, however, that foreign companies can just glide into a U.S. courtroom presuming that they’ll enjoy the ‘British advantage‘ of greater perceived intelligence. Instead, they’ll need to work to understand and to be understood. 

1. Know Your Specific Reputation

These days, large companies are unlikely to be purely “American” or purely “foreign.” Instead, they’re multinational, with operations and control in many places around the globe. As that situation becomes more common, it is less likely that jurors will be reacting to the broad stereotypes that draw a hard line at our borders. Instead, they’ll be reacting to what they know or believe about the specific company or the more general industry. For that reason, it can be critical to assess the company’s or the industry’s reputation. A community attitude survey or a focus group can help to assess the specific challenges and opportunities. And knowing the specific is always better than knowing the general. 

2. Know Your Particular Venue

America is a big and diverse country. While xenophobic attitudes won’t necessarily show themselves in broad nationwide samples, they may yet be evident in particular venues. So, there is no substitute for doing that research – the community attitude survey or focus group – within your trial venue. By researching locally, you’ll know how both the broad “foreigner” attitudes as well as any specific impressions of your company are likely to play out. 

3. Know the Uniqueness of Your Case

Ultimately, the most important reminder is to test the specifics of the case. American jurors are not just reacting to characters (like ‘the foreign company’), they’re reacting to stories (like ‘what did that company do?’). While generalizations might drive first impressions, the more influential and durable reactions are likely to be driven by the story itself: Who did what to whom, why, and with what effect? While a judge or arbitrator might aim toward simply applying the law to the facts, the untrained citizen is going to be looking at the broader picture. And a good story that shows care, competence, and responsible action will generally, by the end of trial, overwhelm any xenophobic preconceptions. 

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Other Posts on Perceptions of Companies: 

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Bhattacharya, U., Galpin, N., & Haslem, B. (2006, August). The home court advantage in international corporate litigation. In AFA 2006 Boston Meetings Paper.

Clermont, K. M., & Eisenberg, T. (2007). Xenophilia or Xenophobia in US Courts? Before and After 9/11. Journal of Empirical Legal Studies4(2), 441-464.

Janicke, P. M., & Ren, L. (2006). Who wins patent infringement cases. AIPLA QJ34, 1.

Leibold, J.M., Pitera, M.J., Price, J.M., & Dukart, J.Y. (2013). Attitudes Toward Japanese Corporations. For the Defense, Feb. pp. 10-15. 

Image Credit: Clipartof.com, Used under license

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