Reasonable product-liability reform

Nation's Business, Sept, 1997

It has long been apparent that the legal procedures established to compensate individuals injured by defective products are badly flawed. Among the defects:

* While 70 percent of the products made and sold in this country cross state lines, each of the 50 states has its own product-liability law, which adds substantially to the complexity and cost of business defenses against personal-injury lawsuits.

* Product-liability laws of many states lack guidelines for assessing punitive damages, which are added to compensatory damages covering economic costs such as lost wages and medical expenses resulting from an injury.

* In 30 states, a business that sells a product containing defects of which it is not aware can be held liable for damages if people are harmed by that product.

* A company bearing only 1 percent responsibility for an injury can be forced to pay virtually all of an award for damages.

* Eleven states permit liability suits by people who were under the influence of alcohol or illegal drugs when they used the products allegedly responsible for their injuries.

* In some states, the gross misuse or alteration of a product does not preclude suits for damages related to that product.

* Fear of liability lawsuits has caused manufacturers to withhold from the market a wide range of products that could make important contributions to the health, safety, and convenience of the American people.

The total cost of the current tort liability system, which covers all types of personal-injury claims, is an estimated $150 billion a year, which represents resources that could otherwise be put into developing new products, creating jobs, and improving U.S. competitiveness in global markets.

Business has been trying for nearly, 20 years to bring order and fairness to the laws for resolving product-liability claims. Legislation to that end cleared Congress last year for the first time, but President Clinton vetoed it on the ground that it did not address consumer interests adequately. He said he would support "reasonable" legislation.

Product-liability-reform legislation is again pending in Congress. The measure was drawn up to meet many of the objections the president stated in his veto and to offer room for compromise on others.

These are among the key provisions of the measure:

* A federal liability law would replace the complex and frequently conflicting patchwork of 51 individual arrangements in the states and Washington, D.C.

* Product sellers would be liable only for their own negligence or failure to comply with an express warranty.

* The influence of alcohol or illegal drugs and the misuse or alteration of a product would be factors in determining liability.

* Punitive damages could be awarded if "clear and convincing evidence" proves that harm was caused by a defendant's "conscious, flagrant indifference to the safety of others." Such damages would be limited to two times compensatory damages or $250,000, whichever is greater.

* Defendants would be liable for noneconomic damages only in direct proportion to each defendant's responsibility for the claimant's harm.

Product-liability reform enjoys bipartisan support in Congress. The pending legislation surely qualifies as the "reasonable" approach that the president has pledged to support.

There is no reason why he should continue to stand in the way of changes to a system that supposedly benefits victims of product-related injuries but is itself the cause of serious injury to the economy, to U.S. competitiveness abroad, to the consuming public, and to the sense of fairness on which the nation prides itself.