Senate Is Set to OK Reform of Liability Laws

The Senate is expected to approve historic legislation today reforming the nation’s product-liability laws, embracing sweeping changes sought for nearly two decades by American manufacturers but successfully resisted, until now, by consumer advocacy groups and trial lawyers.

The outcome became clear Tuesday after the bill’s predominantly Republican backers dropped their efforts to broaden the legislation and gained just enough votes to shut off debate on the issue.

“Today’s vote was a tremendous victory,” said Senate Majority Leader Bob Dole (R-Kan.), referring to the 60-38 cloture vote.

Despite the major changes it would impose in product-liability law, the Senate bill is a mere shadow of a much more expansive tort reform bill passed, 265 to 161, by the House in March.

Whether the differences between the two bills can be reconciled into a single piece of legislation that President Clinton will sign is unclear. The White House previously has expressed its opposition to several key features in the Senate bill, including a cap on punitive damages.

“Now, of course, we have to work with the White House,” said Sen. John D. (Jay) Rockefeller IV (D-W. Va.), a co-author of the Senate measure with Sen. Slade Gorton (R-Wash.). Rockefeller, one of Clinton’s staunchest Capitol Hill allies on other issues, has pushed for product-liability reform since the 1980s.

The bill deals only with product liability and not tort reform in general.

It would stringently limit the dollar amount of punitive damages that victims of defective products could receive. It also would give plaintiffs only two years to file a lawsuit, starting from the time when they “reasonably” should have discovered both an injury and the cause.

The bill’s most controversial provision would impose a cap on punitive damages at no more than twice the amount of compensatory damages, or $250,000--whichever is greater. But it would allow a judge to increase punitive damages above the cap.

Compensatory damages are meant to make up for actual economic damages that a victim of a defective product has suffered as well as for non-economic damages, namely “pain and suffering.” Punitive damages, on the other hand, are intended to punish irresponsible corporate or individual behavior as well as to serve as a deterrent to such conduct.

The bill’s punitive-damages provision offers special protection for small businesses, defined as firms with fewer than 25 employees. For such businesses, the cap on punitive damages is set at the lesser of either $250,000 or twice the compensatory damages.

Advocates of caps on punitive damages say that such limits are needed to deter frivolous personal-injury lawsuits that increasingly are clogging the nation’s civil courts, preventing more deserving cases from being adjudicated. But opponents say caps limit the remedies available for deserving plaintiffs.

“This bill opens up the courthouse doors to consumers,” Rockefeller said. He also said the reforms in his bill would encourage manufacturers to seek to improve their products without fear of being sued for allegedly selling the earlier products that may have been less than perfect.

The bill’s other provisions:

* A manufacturer would have a near-absolute defense if a plaintiff is found to have been under the influence of illegal drugs or alcohol at the time of an injury.

* A defendant’s liability would be limited if a victim had misused or altered the product in an “unforeseeable manner.”

* Abolition of a legal concept known as “joint and several liability” as applied to non-economic damages. This means that no longer would a defendant be liable for all the monetary damages if it had been responsible for only a part of the injury.

Despite its far-reaching provisions, the bill is also notable for its omissions: Gone are a host of provisions adopted by the House, such as a “loser-pays” system requiring plaintiffs to pay defendants’ legal expenses in some cases and a $250,000 cap on payments to medical malpractice victims as compensation for pain and suffering.

The Senate bill also does not contain the so-called “FDA defense,” which would exempt from punitive damages makers of medical devices and drugs that have been approved by the Food and Drug Administration.

Still, the measure’s opponents strongly criticized the bill. Sen. Paul Wellstone (D-Minn.), for instance, called it “profoundly anti-consumer.” Longtime consumer activist Ralph Nader called it the “wrongdoers protection legislation.”

“This bill is all rigged for defendants,” Nader fumed in an interview.