Dick’s battle with insurer headed to China

A federal judge has ruled that a sporting goods store’s lawsuit against a Chinese insurer should go to a Chinese court because of a forum-selection clause in the insurance contract.

Dick’s Sporting Goods is suing the People’s Insurance Co. of China for coverage of personal-injury claims resulting from a burst exercise ball. The ball unexpectedly exploded while Pennsylvania resident Donald Royce was using it, leaving him with life-altering injuries.

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Dick’s, which sold the exercise ball, sought coverage from the Chinese insurer through a policy held by the manufacturer, which names the sporting goods store as an additional insured. According to Dick’s, the bodily injury caused by the ball’s explosion is covered under PICC’s policy with the manufacturer, but the insurer has failed to defend Dick’s in the lawsuit filed by Royce.

PICC wanted the suit tried in China due to the forum-selection clause in the contract, but Dick’s said the clause shouldn’t apply because the store – which didn’t take out the policy – never agreed to it. The store also argued that the clause was invalid because the company was never informed of it, and that PICC had waived enforcement because it refused to negotiate with Dick’s in good faith.

But Magistrate Judge Robert C. Mitchell rejected Dick’s arguments. Mitchell ruled that the clause was clear and should be followed.

“International commerce creates international consequences,” Mitchell wrote in his ruling. “One such consequence is litigating a garden-variety insurance dispute on the other side of the world.”