Trying Their Case in Congress

When the manufacturers of a gasoline additive blamed for fouling water supplies across the country were hit with lawsuits, they did what a growing number of businesses are doing: They sought protection from Congress.

A little-noticed measure, approved by the House last month as part of an energy policy bill, would limit the liability the producers of the fuel additive MTBE would face for groundwater contamination. Critics, who hope the provision dies in the Senate, call it special-interest legislation that would force taxpayers to pick up the tab for cleaning up water supplies.

California is among states that have ordered use of the additive be phased out. Meanwhile, a number of water agencies in the state have filed suits over contamination of groundwater.

The battle is emblematic of a larger struggle in Congress over how far the government should go in shielding businesses from lawsuits.

Businesses ranging from HMOs to gun manufacturers to companies that develop anti-terrorism technologies are finding a friendlier climate on Capitol Hill for their efforts to cut down on what they regard as a barrage of frivolous suits.

“Business sees that it has Republican control of the House, the Senate, and the White House ... and it is trying to use this to adopt incredibly protective legislation,” USC law professor Erwin Chemerinsky said.

A bill that would shield gun makers from lawsuits for the “harm caused by the criminal or unlawful misuse” of a firearm cleared the House and stands a good chance of passing the Senate. A bill limiting the liability of airlines if armed pilots accidentally shoot a crew member or passenger has become law. An existing law capping the nuclear industry’s liability in the event of a catastrophic accident is expected to be extended this year.

A bill that would limit medical malpractice awards, a priority of President Bush, has cleared the House but faces an uncertain fate in the Senate. A proposal to limit the liability of former manufacturers of asbestos-containing materials is being drafted. And House GOP leaders are pushing the “Personal Responsibility in Food Consumption Act,” a bill that would ban lawsuits -- like one unsuccessfully brought against McDonald’s -- blaming fast-food restaurants for obesity and other health problems.

These measures are rooted in the deep-seated belief among Republicans that the legal system has been subject to abuse. Add to that a desire by GOP lawmakers to strike back at a favorite target: trial lawyers, a major campaign contributor to Democratic candidates.

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Pet Issue for Bush

The issue -- a favorite one of Bush’s -- is likely to emerge in the presidential campaign.

As governor of Texas, Bush pushed through dramatic limits on punitive damages in the state. As president, he has blamed “junk” lawsuits for driving up health-care costs and running doctors out of the profession.

On the other hand, Sen. John Edwards of North Carolina, who is seeking the Democratic presidential nomination, made a fortune as a trial lawyer before seeking office.

“I trust the regular Americans who serve on juries to do what’s right for women, children, seniors and other people whose rights this president wants to take away,” he said after Bush proposed limiting to $250,000 noneconomic -- or “pain and suffering” -- damages awarded medical malpractice victims.

Donald Kettl, a University of Wisconsin political scientist, called the efforts a “two-fer for Republicans -- protection of many of the party’s important constituencies and an attack on attorneys, many of whom have won large settlements.”

Some legal scholars say there may be instances where limits on liability are needed.

“But there always is a serious cost to limiting liability: People with serious injuries go uncompensated and a key deterrent to wrongdoing for unsafe product is lost,” Chemerinsky said.

In his view, most of the liability-protection bills before Congress are “simply self-interest legislation: business trying to help itself, with what they perceive as a sympathetic Congress and president, at the expense of consumers and the environment.”

“The system fundamentally works,” added Carlton Carl, spokesman for the Assn. of Trial Lawyers of America. “What the advocates of these limits on the legal rights of American families are saying is that they do not trust the American people who [serve on juries] to make an intelligent decision and that Washington somehow knows best, even better than the people who hear the facts of the case.”

But Gretchen Schaefer, a spokeswoman for the American Tort Reform Assn., said, “The system is unbalanced, unfair and out of control. We see the mega-verdicts too frequently, which ultimately slaps a lawsuit tax on goods and services we all must pay.”

Robert A. Rusbuldt, chief executive officer of the Independent Insurance Agents and Brokers of America, said Republicans see limiting business liability as a jobs issue.

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Long-Running Debate

The debate over whether to limit court awards and lawsuits has raged for years at the state and federal levels, even producing a legendary moment in California politics. In 1987, state lawmakers and lobbyists, meeting at a Sacramento watering hole, drafted on a linen napkin what became known as the “napkin deal.” It led to legislation providing new protections for industry against lawsuits, including a provision exempting manufacturers of tobacco, alcohol and other products for injuries and deaths caused by their products. The tobacco liability provision was repealed in 1997.

John H. Sullivan, president of the Civil Justice Assn. of California, a group seeking to limit business-liability lawsuits, said the current atmosphere in Sacramento is “quite the opposite tone” from that in Congress. At the statehouse, he said, trial lawyers enjoy considerable political clout, thwarting new efforts by advocates of liability limits.

An example of the new federal efforts to limit business liability is the measure that would provide legal protection to producers of the fuel additive methyl tertiary butyl ether, or MTBE. It was added to the House energy bill by lawmakers from Louisiana and Texas, where the additive is manufactured.

Rep. Henry A. Waxman (D-Los Angeles), a critic of the legal protections, said the measure “fits with a series of House policies to shield corporate bad actors from responsibility for the harm they cause.”

The additive, which helps fuel burn more cleanly, was first put in gasoline more than two decades ago. But its use became widespread after Congress in 1990 required the nation’s smoggiest regions to use cleaner-burning gasoline. Since then, MTBE from leaking storage tanks and spills was found to have contaminated groundwater throughout the country, prompting more than a dozen states, including California and New York, to move to phase out its use.

The legal protections were prompted by lawsuits against the fuel additive’s producers, including one in South Lake Tahoe last year that led to a $69-million settlement. Santa Monica also has reached a tentative settlement with two oil companies for $30 million and a commitment from them to pay for a water-treatment plant that could cost more than $200 million. Suits have been filed elsewhere, including one this month by the Orange County Water District against major oil companies.

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Clean-Gas Dilemma

In defense of the legal protections, industry officials say that Congress was responsible for promoting the use of MTBE by requiring cleaner-burning gasoline.

“No one should be penalized for obeying the law,” Bob Slaughter, president of the National Petrochemical and Refiners Assn., said in recent testimony before Congress. Scott Segal, a lobbyist for the Oxygenated Fuels Assn., an MTBE industry group, said that without the legal protections, “it will be very difficult to encourage industry to produce these types of clean-fuel additives in the future.”

Industry lobbyists contend the legislation would not prevent lawsuits for negligence, such as mishandling of MTBE, but would prevent plaintiffs from claiming that MTBE is a “defective” product.

Waxman, however, said the legal protections would “preclude the precise legal action that has allowed some affected communities in California to get compensation to clean up the MTBE contamination.”

“The defective-products suits are what the industry has been losing,” added Rep. Lois Capps (D-Santa Barbara), whose district is dealing with water contaminated by MTBE.

Contending that MTBE producers were aware that the fuel additive posed risks to water supplies, Victor M. Sher, a lawyer who represented the South Tahoe Public Utility District, asked: “What possible public policy would be served by immunizing companies from responsibility for knowingly putting the drinking-water resources of the nation at risk and neglecting to tell anyone about it?”

Water agencies also oppose the legislation -- as well as another provision of the energy bill that would limit the liability of producers of ethanol, which is being promoted as a substitute for MTBE by lawmakers from the Midwest, where it is produced mainly from corn.

Ironically, some of the same water agencies opposing the legal protections for the MTBE industry are lobbying for legislation that would limit their liability from lawsuits.

The legislation would provide protection for companies that have met safe drinking water standards and “discourages frivolous lawsuits from driving up water costs for the rest of us,” according to a briefing paper by the bill’s author, Rep. Gary G. Miller (R-Diamond Bar).