Florida Sens. Marco Rubio and Rick Scott are the latest lawmakers calling for transparency when it comes to foreign influence in third party litigation funding (TPLF). They recently sent letters to the chief judges of Florida’s three federal districts, asking them to require disclosure of foreign TPLF in the district courts they oversee. TPLF is a multibillion-dollar global industry where hedge funds and other financiers invest in lawsuits in exchange for a percentage of any settlement or judgment. Recent ILR research outlined concerns that a significant volume of foreign-sourced money could be pouring into U.S. litigation against American companies through TPLF.
The letters explain that “the potential impacts of allowing unfettered and undisclosed foreign TPLF throughout the judiciary could be severe unless properly addressed. Foreign actors attempting to capitalize on such influence may seek to, among other things, forward frivolous lawsuits, needlessly and excessively prolong litigation disputes, exacerbate domestic discourse, or seize control of the litigation from the case’s original parties.”
These concerns are justified. Bloomberg Law recently published a story that revealed Purplevine IP, a Chinese third-party litigation investment firm, is financing multiple intellectual property lawsuits in U.S. courts against Samsung and a subsidiary. The only reason we learned of this funding is because the Chief Judge of the Delaware federal district court, where one of the lawsuits was filed, issued a standing order requiring disclosure of all litigation funding in his courtroom. The plaintiff in that case has since acknowledged that Purplevine is funding three more similar cases in federal court in Texas.
Fortunately, other lawmakers are also taking steps to address the potential risks of undisclosed foreign influence in TPLF. Sens. John Kennedy (R-LA) and Joe Manchin (D-WV) introduced The Protecting Our Courts from Foreign Manipulation Act of 2023, which would require transparency to courts, to the parties, and to the Department of Justice when foreign persons and entities invest in U.S. litigation and would prohibit foreign governments and sovereign wealth funds from investing in U.S. litigation. Speaker Mike Johnson (R-LA) has introduced companion legislation in the House of Representatives. The consequences of allowing foreign entities, particularly potential adversaries, to exploit the American court system are substantial.
We applaud Sens. Rubio and Scott for continuing to confront the risks posed by foreign TPLF and working to safeguard the integrity of our legal system. We encourage them to co-sponsor The Protecting Our Courts from Foreign Manipulation Act of 2023 to strengthen our defenses against potential foreign threats.