No need for federal product-liability law
If truth-in-advertising could be applied to federal legislation, S44, the Product-Liability Act, would be the snake oil of our day. This so-called ''reform'' legislation, which could come before the US Senate this month, would establish with federal law a set of standards to replace our current state laws on product-liability - the means by which victims of defective products sue manufacturers to receive compensation for their injuries. The framers of the bill argue that differences in state laws have led to skyrocketing legal and insurance costs and have hampered new product development.
With one stroke of the federal pen, proponents say, they can bring ''uniformity, balance, order, and predictability'' to our product-liability system. Not only that, but their bill purportedly will reduce legal and insurance costs, help consumers, and usher in a whole new era of entrepreneurship that will bring with it a host of new products and benefits, the likes of which our society has never seen.
What a wonderful sales pitch! Too bad not a word of it is true. It is anti-consumer, unworkable, uneconomical, and probably unconstitutional.
Since the founding of our nation, product-liability has been left to the judges, juries, and legislatures of the states. Largely through court precedent, product-liability law has evolved over the years to keep pace with our changing technologies and concepts of justice and social responsibility. This is the very essence of federalism - a strength, not a weakness, in our system. It has worked well to balance interests of consumers and workers with those of product manufacturers, distributors, and sellers.
Some facts about the bill:
1. S44 would not create uniformity in product-liability law. In fact, it would likely throw the entire system into chaos. Although the bill would supersede the law of the state, many of its terms and provisions are so complex and confusing that they would surely be interpreted differently by the thousands of state court judges nationwide. Thus, S44 would produce disorder in a system that is already uniform in many important respects.
2. The current system is not an unreasonable burden on manufacturers. Since the mid-1970s, the time of the so-called product-liability ''crisis,'' proponents of S44 have claimed that our system of state litigation provides disincentives to product innovations and results in rising litigation and insurance costs. But they provide no evidence to substantiate this claim. A number of reputable studies have shown the contrary to be true.
According to a 1983 study by the Rand Corporation, statements by industry representatives that product-liability claims were approaching 1 million a year by the mid-1970s have been discredited. The Interagency Task Force on Product-Liability, established by the Department of Commerce to look into the ''crisis,'' concluded that the best estimate of lawsuits filed in 1976 was between 60,000 and 70,000. Less than 1 percent of the millions of annual product-related injuries result in suits, with the average payment to victims totaling no more than a few thousand dollars. As for insurance costs, the task force found that premiums exceeded 1 percent of the total sales for only three industries.
3. S44 would not benefit injured product users. Perhaps the most outrageous falsehood is that S44 is a ''consumer bill'' - that it is more pro-consumer than the laws in most states and would substantially benefit injured product users by increasing their chances for (and the size of) recovery.
The bill would be a tragedy for consumers because it would erect a series of new legal barriers to recovery. Under S44 claimants would have to establish the state of mind of the manufacturer - a more difficult burden of proof, especially for someone who does not possess the internal documents, memoranda, and test results associated with the development of the product.
Perhaps no provision of S44 is so totally out of line with the court decisions of the last 20 years as the section which limits punitive damages. Punitive damages are a necessary weapon for the control of outrageous behavior by product manufacturers. Yet under S44, even with recently proposed amendments, both the right to seek and the availability to recover punitive damages would be curtailed if not in effect eliminated altogether.
A word about legal costs: S44 will not reduce the cost of any given claim or lawsuit, because the increased burden of proof for claimants will result in lengthier and costlier trials. And since the bill will bring disorder instead of uniformity, overall transaction and litigation expenses are bound to increase. Thus, total legal costs in the product-liability area will decrease only if the standards of the bill operate to preclude legitimately injured product users from bringing claims or from pursuing such claims aggressively.
Indeed, this appears to be the aim of S44's proponents. Since most injured product users cannot afford to retain a lawyer, product-liability suits are usually financed through contingent fees (with the attorney recovering one-third of the award if the suit is successful and nothing if it is not). To the extent that attorneys will perceive ''tougher odds'' under the standards of S44, they will be less likely to take on product-liability cases. Prohibiting access to justice may be one way to attempt to reduce costs, but the method is hardly the hallmark of a free and equitable society.
It would be easy to press opposition to the Product-Liability Act by citing specific instances of product users who are killed or maimed by defectively designed products, and yet would have no chance for just compensation under its provisions. Easy, but also unnecessary. S44 is such bad legislation on its face that we don't need to resort to emotionalism - just common sense.