The so-called "reform" bills would wipe 200 years of state laws on products liability off the books. They would make it harder for injured consumers to hold wrongdoers accountable and would cap punitive damages for the most egregious misconduct. The proposed federal scheme on products liability is an assault on state sovereignty and the very principle that fortifies our justice system and democracy -- accountability.
Products liability cases account for only 4 percent of all tort cases in state courts, according to the National Center for State Courts.
Non-asbestos products liability cases in federal courts declined by 40 percent between 1985 and 1991, reports law professor Marc Galanter of the University of Wisconsin.
The real increase in litigation these past few years has been in businesses suing each other over contracts, not consumers seeking redress through products liability. The Wall Street Journal has reported that businesses suing each other comprised nearly half of all federal cases filed between 1985 and 1991. These legal revisions would not limit the rights of business and industry, but only those belonging to individuals.
Products liability awards are closely related to the severity of consumer injury, while punitive damages are rare and thus have little impact on the majority of businesses, according to a U.S. General Accounting Office (GAO) study.
The most comprehensive study ever of punitive damages in products liability cases found only 355 punitive awards between 1965 and 1990. The study, by law professor Michael Rustad of Suffolk University in Boston, found that in nearly 80 percent of those cases the manufacturer took some subsequent safety measure in the wake of punitive damages.
A 1995 U.S. Department of Justice study analyzing civil jury cases in the nation's 75 most populous counties found that juries disposed of about 360 product liability cases during the 12-month study period. Plaintiffs won 41 percent of these case. Of the 142 winning cases, just three resulted in punitive damage awards. The total punitive damages awarded in these three cases was $40,000.
Products liability insurance only costs American consumers 26 cents out of a purchase of $100, according to a 1995 report by the Consumer Federation of America. The study also found that products liability premiums dropped 45 percent between 1987 and 1993.
The GAO has found that liability insurance costs large businesses about six-tenths of 1 percent of annual gross receipts and costs small businesses about 1 percent. The National Insurance Consumer Organization found that liability insurance premiums in 1991 accounted for only fourteen one-hundredths of 1 percent of product retail sales.
Given the facts, why do manufacturers and insurers continually overestimate the impact of lawsuits on products liability costs? Lawsuits over defective and dangerous products represent a small percentage of all tort claims, and contribute only a fraction to the costs of products. Is this too high a price to pay for safety?
Used with permission from The Association of Trial Lawyers of America. All rights reserved.