Streamlining Product-Liability Suits : Law: A bill in Congress would support manufacturers and real victims, not fee-hungry lawyers.
About 70% of manufactured products are sold outside the state where they’re made. If interstate commerce means anything, this fact alone warrants a national product-liability law to govern accidents and dangerous products. Instead, companies can be sued under a bewildering array of state laws. In 1992, there were an estimated 40,000 such suits. Congress may now curb this chaos by adopting a national law. It’s about time. The Carter Administration first suggested national standards in 1978. Despite repeated efforts, nothing has happened since. This reflects the power of the lawyers’ lobby and Congress’ reluctance to tinker with “victims’ ” rights. What has been preserved is a system whose main beneficiaries are the lawyers who live off it.
Good laws should be clear (people should know what’s legal), operate quickly (victims should get rapid relief) and not impose excessive costs. Our product-liability laws fail all these tests. They are vague; no one knows who’s responsible for an accident. They operate slowly; it typically takes 2 1/2 years for cases to come to trial. They are expensive; nearly half of total costs go to lawyers on both sides. And legal uncertainty has unintended economic side effects.
The general-aviation industry once made 13,000 light aircraft annually. High liability costs--often caused by suits involving older planes--are one reason that production is now fewer than 1,000 annually. Some big chemical companies (Dow, DuPont) won’t supply raw materials for some medical devices. “The cost of responding to litigation . . . even in frivolous suits” was simply too high, the Health Industry Manufacturers Assn. recently told Congress.
Over the years, there have been many unsafe products: the Dalkon shield, asbestos insulation and the Bjork-Shiley heart valve, to name a few. Product-liability law not only compensates victims but also deters dangerous products. It raises the cost of making them. But we cannot live in a risk-free society. Our laws should not excessively burden companies that behave responsibly or, indeed, are hardly connected to an accident at all.
Victims’ rights have expanded enormously, and there is no need to reduce them sharply. Until the 1960s, companies were generally liable only if they had been negligent in making or selling their products. Since then, most state courts have embraced “strict liability,” which compensates victims if products are deemed “defective,” regardless of whether companies were negligent. And courts have increasingly applied “joint and several liability”; this means that almost any company involved with a product can, in theory, be held responsible for all damages.
Damages come in three forms: economic (loss of wages, hospital bills, etc.), pain and suffering and punitive. Big jury awards usually involve punitive damages and pain and suffering. The congressional proposals would restrict some recoveries. Under the Senate bill: * Companies wouldn’t pay any damages if accidents involving their products were caused by alcohol or drug use.
* Drug and medical-device companies would be spared punitive damages (but not economic damages or pain and suffering) if their products had been approved by the Food and Drug Administration--provided the companies didn’t deceive the FDA.
* Manufacturers of industrial machinery couldn’t be sued for accidents once machines were more than 25 years old.
These limits are reasonable. Why should a responsible company pay for an irresponsible drunk? Why should a drug company face punitive damages if it complied with federal safety regulations? Why should manufacturers be liable for machines that should have been scrapped?
More than 95% of product-liability suits are settled before trial. But the possibility of large jury awards and the high cost of litigation encourage weaker suits and higher settlements. It can often cost more to litigate than to settle. Unfortunately, the congressional bills do not include the genuine remedy for this problem: a modified “English rule.” Losers would pay legal fees; losing attorneys would pay if they accepted cases on a contingency-fee basis.
Our whole civil-justice system is warped. There are a million tort cases filed annually in state courts. Businesses sue each other with wild abandon. Lawyers constantly discover or invent new areas of litigation. Our laws need to be more narrowly drawn. More mechanisms of self-discipline--like the English rule--need to be adopted. Product liability is only a small part of this larger problem; but it is a good place to begin repairs.
