Imagine you are focused on the latest growth trends of your business, working hard to forecast where your next sales will come from. You're thinking about what new staff you will need to support that growth. While you are preparing for an important meeting related to a promising business prospect, a receptionist in your office notifies you that your company has just been served with a lawsuit. The notice says that you have only a few weeks to respond and you now have to set aside other business matters to assess the case, locate help, and decide on a strategy for addressing the claim in an unfamiliar legal system. For many foreign investors, facing the risk of being sued is perhaps the most daunting part of conducting business in the U.S.
The next installment of our doing business series provides an introduction to litigation in the United States. It aims to give readers some basic background of the life cycle of a lawsuit, and describes options for dealing with a dispute, whether through litigation, mediation or arbitration. Understanding what will happen, being prepared, and thinking ahead about what to do in such an event, can help a company face the claim, and also allow the primary focus to stay where it should be: moving a business forward.
Foreign clients investing in the U.S. know there are risks of litigation and conflict that they might not anticipate when conducting business at home. One area, however, that is usually a particularly rude surprise are the U.S. laws relating to environmental matters, particularly relating to environmental contamination of land. One might think that a party not at fault for creating contamination would be safe, but that's not always the way U.S. law works when it comes to Superfund sites. These are sites around the U.S. where hazardous substances in the environment threaten human health or the environment, and clean-up is required.
Thanks to a system of “joint and several” liability, each potentially responsible party may be responsible for the entire cleanup of a site absent contributions from others. Potentially responsible parties in Michigan alone, were reported by the Michigan government to have contributed over $599 million to Superfund clean-up before 2016. Paying even a small percentage of such figures can be costly.
Our next installment in our Doing Business in the U.S. series explains the essential structure of U.S. laws governing such environmental risks. It tells you who can be held liable, and what defenses to liability are possible. It tells you how to avoid assuming liability inadvertently when investing in real estate. There is an old adage: An ounce of prevention is worth a pound of cure. These words of wisdom are particularly apt in describing how a bit of caution before investing in real estate can significantly reduce the risk of substantial liability under environmental laws. Enjoy!
Perhaps you have heard about some of the huge fines companies have faced after being charged with antitrust violations, such as Google’s $2.7 billion fine in June 2017, or the $26.7 million Euro judgment against one of Heineken’s subsidiaries in Greece in July 2017, or the $1.3 billion fine currently under review against Intel. Government suits are bad enough, but after them come private lawsuits from other companies affected by the same conduct. Antitrust litigation from a few ill-considered decisions of individuals in a company can take years to resolve and millions to defend. They disrupt companies and demand substantial human resources, as well. There is no doubt that avoiding antitrust violations is a much more cost effective strategy than waiting until problems occur.
Our next installment of our Doing Business in the U.S. series is a brief introduction to U.S. antitrust laws. For more information or additional training on guidance on antitrust laws, feel free to contact Don Scaramastra at firstname.lastname@example.org or at 206.816.1449.
One of the things any active investor in the United States almost always needs is a place in which to operate its business. Buying or leasing property can be tricky, however. For example, one can face liabilities by merely becoming a lessee of real property with environmental problems, such as contamination from prior uses. Zoning regulations might not allow a company to use the property as planned. Disputes or judgements associated with real property can create huge headaches for a new owner or tenant, alike.
Anyone forming contracts with Japanese businesses or consumers beware: The Civil Code in Japan is likely to face the largest reforms since it became effective in 1898. On April 14, 2017, sweeping reforms to the Civil Code were approved by the Japanese Parliament’s Lower House. Although they must still be approved by the Upper House, and they might change in the process, pundits expect approval without change.
Almost everyone approaching the U.S. consumer market has heard nightmares about lawsuits and read damaging headlines from consumer claims. These range from industry wide antitrust investigations to criminal indictments for racketeering to class actions for deceptive advertising.
In May this year, U.S., Canadian and Mexican government officials met to discuss cooperation in enforcing antitrust laws in an increasingly global market place, suggesting even greater cooperative activity in the antitrust arena relating to global markets.
Many people have heard about the lawsuit in which a consumer won a substantial verdict against McDonalds over a burn from a cup of hot coffee. Last year, General Motors faced claims due to a faulty ignition switch that shut off the engine during driving, disabled power steering and power brakes, and even prevented airbags from inflating. Toyota faced similar problems in the past with claims of sudden acceleration in certain car models. Tobacco companies like Philip Morris faced lawsuits over cigarettes and many medical device companies have faced serious claims that their products harmed the very people they had aimed to help. Products liability cases affecting consumers tend to make headlines. Defending companies often take a hit to their reputation as well as their bottom line.
Our next installment of GSB’s Resource for Doing Business in the U.S. introduces products liability law concepts and explains why negligence or fault may not even matter. Moreover, it’s not just the manufacturer who is at risk; others in the distribution chain can be sued too. With judgements frequently in the millions of dollars, foreign investors in the U.S. must think ahead about ways to mitigate the substantial risks that products liability claims can present. This installment offers a few concrete steps a potentially affected company can take to protect its business and investment.
Imagine that you’ve had great sales of your product in your home country and you attend an international trade show, where a representative of a famous company from the U.S. approaches your booth. Perhaps the rep tells you that there’s nothing like your product available in the U.S. and it’s guaranteed to be a hit. Can they represent you, the rep asks. Suddenly the potential of the U.S. market opens up and you see dollar signs everywhere. But where do you begin?
It all depends on the perceived opportunity. If a foreign enterprise wants to sell its goods in the U.S., it usually starts small and gradually increases its investment. Our next installment of the Resource for Doing Business in the U.S. describes the different approaches a business might take to sell its wares in the U.S.
- We start with the simplest of legal structures (a simple buy and sell transaction)
- We then describe the other types of structures through which such sales might occur, including distribution and sales agency relationships.
- We also highlight some of the most salient considerations to keep in mind at the outset:
- Compliance with customs;
- Anti-dumping considerations; and
- Other federal laws governing goods entering the U.S. market.
However, stay tuned for future installments of our guide, which will address other considerations and legal risks associated with entering the U.S. market to sell goods or services. This will include information on products liability laws, consumer protection laws, environmental protection laws, intellectual property laws, antitrust laws and the like. Today’s installment is merely to provide an initial introduction to the topic of selling goods in the U.S., and to provide our readers with the key points to first consider when exploring the U.S. market.
As The Associated Press recently reported, U.S. alcohol producers are increasingly interested in brewing sake, the traditional Japanese rice wine. Producers believe that there is a strong untapped market among U.S. consumers for premium sake that is accessible, in terms of both price and language.
This trend could make progress in the state of Washington, which is reported as having the most craft distilleries of any state and continues to have a strong craft brewing industry. The laws and regulations surrounding the interstate transportation of liquor tend to favor homegrown production, and Washington lawmakers have recently altered the state’s laws to make distilling in this state easier and, potentially, more profitable. Cheers to that!
So you want to do business in the United States. One of the very first things to think about is tax planning. It can make the difference between a profitable and unprofitable overseas venture. The level of scrutiny on cross border transactions has increased over the years, as technology has allowed governments to cooperate and collect data more easily. Both your home country’s tax authorities and the U.S. authorities will be interested in how your business is operated, to make sure that they are each getting their fair share of tax from your revenues. You need to make sure you are both complying with applicable laws and structuring your business in the most tax efficient way possible. Tax attorneys can help with that planning. Working with tax advisors in your home country and your accountants, they can help you develop a strategy and implement it.
Our next installment of our resource for doing business in the U.S. therefore seeks to give you some basic information about the different ways that foreign enterprises are taxed in the U.S. This is not aimed at telling you how to structure a particular project, but we hope that an introduction to the concepts will make it easier when you start considering tax planning. It should help you:
- Know what information you’ll need when talking with your tax attorney or other advisor
- Understand the reasons why certain facts and circumstances will likely impact that advisor’s analysis and recommendations.
A link to the installment is available here.
Foster Garvey’s International practice group comprises a cross-disciplinary group of attorneys practicing in areas ranging from business transactions, immigration, maritime, government regulatory work, transportation and logistics and estate planning. The group members include bilingual and multicultural attorneys who are well-versed in handling these subject matters in a cross-border context. A number of attorneys have been actively practicing in the international arena since the early 1970s.