COLUMN RIGHT/ BARBARA HACKMAN FRANKLIN : Reform Laws on Product Liability Now : Case after incredible case raises the stakes against research and new products. : lines.

When the Founding Fathers were weaving high principles and common sense together in crafting the Constitution, they could never have envisioned an American legal system that would one day undermine the nation’s prosperity and global competitiveness.

Consider the following:

-- In California, a drunk driver crashed into a telephone booth and injured a man talking on the phone. The injured man sued the manufacturer of the telephone booth and won the case.

-- An Oregon jury found an auto manufacturer liable and awarded damages to the estate of a woman who was killed when a horse fell through the roof of her car.

-- A U.S. machinery manufacturer--now out of business--was sued under existing product-liability laws over a machine that had left the plant in 1895 and been modified many times by different owners over the course of 88 years.

And so it goes, case after incredible case.

In an era of growing competition and expanding markets, commerce is America’s front line for jobs, growth and innovation. But if American businesses are to stay in front of global competitors, we need to reform our legal and regulatory system.

America is now the most litigious society on Earth. Eighteen million lawsuits were filed in the United States in 1989. Between 1974 and 1990, product-liability cases increased by more than 1,000%.

Estimates on annual costs to all businesses range from $80 billion to more than $100 billion for direct litigation and higher insurance premiums. Billions more are eaten up in indirect costs.

Instead of building better mousetraps, business executives often end up spending too much of their time with their lawyers. The bottom-line result is a strike against U.S. competitiveness.

As one of the original members of the Consumer Product Safety Commission, I know firsthand the importance of protecting consumers against unsafe products. But, as a former entrepreneur, I also recognize that misuse of our current product-liability system is imposing a steep price on America.

Product-liability suits and concerns are forcing U.S. businesses to bear costs that their international competitors do not have. While businesses have a responsibility to make safe products--and to compensate people injured by any products that prove unsafe--American companies should not be forced to bear unreasonable costs that stifle innovation and hamper their ability to compete at home and abroad.

U.S. businesses also should not have to deal with a legal system that is a 51-headed Hydra of unpredictability. There are wildly divergent product liability laws for each of the 50 states plus the District of Columbia. Trial lawyers often shop among the states, seeking million-dollar jackpots that are all too common these days.

Businesses are particularly frightened by the fact that culpability is not necessarily the only determining factor. Under the “deep-pockets” theory favored by many juries, big companies end up subsidizing consumers and lawyers. In one major amusement park, for example, a woman was injured in a “bumper car” collision with her fiance. A jury found the couple 99% responsible for the accident, yet decided that the amusement park should pay 86% of the damages.

Further, a survey of chief executives found that threat of lawsuits caused 47% of companies to drop one or more product lines, 25% to end research programs and 39% to withhold new products from the market.

Yet, as dire as the situation may seem, all is not lost. Under pressure from President Bush and the American people, Congress may finally act to reform our product-liability laws.

The product liability reform proposals now before Congress are modest, appropriate and reasonable. They encourage safe, responsible products and practices, and add uniformity and predictability to state systems in several key areas:

-- They eliminate the “deep pockets” rule for non-economic damages. This rule makes it possible to force any defendant, even one at only minimal fault, to pay full damages.

-- The bills limit punitive damages to where “clear and convincing evidence” proves “flagrant indifference for safety.”

-- The liability of defendants is limited if the plaintiff was under the influence of drugs or alcohol.

-- The bills encourage settlement of cases out of court.

The net result of this legislation would be more jobs and economic growth while ensuring that injured consumers get fairer and more effective compensation.