The Products Liability Mess: How Business Can Be Rescued from State Court Politics. - book reviews

Washington Monthly, Jan, 1989 by Daniel Farber

We clog the courts with crazy liability cases while the real crooks get off

Daniel Farber is the Henry J. Fletcher Professor of Law a University, of Minnesota.

*The Products Liability Mess: How Business Can Be Rescued from State Court Politics. Richard Neely. Free Press, $24.95.

Richard Neely sits on the supreme court of West Virginia. This is how he describes his job: 'As a state court judge, much of my time is devoted to designing elaborate new ways to make business pay for everyone else's bad luck. I may not always congratulate myself at the end of the day on the brilliance of my legal reasoning, but when I do such things as allow a paraplegic to collect a few hundred thousand dollars from the Michelin Tire Company-thanks to a one-car crash of unexplainable cause-I at least sleep well a night. Michelin will somehow survive (and if they don't, only the French will care), but my disabled constituent won't make it the rest of her life without Michelin's money."

This passage tells you a lot about Judge Neely's latest book, The Products Liability Mess.* The style is brash but disarming. Here are some other Neely gems: "Jesse Jackson is interesting but not powerful; courts are powerful but not interesting." "Senior partners in large firms make money buying young lawyers at wholesale and selling them at retail." "Horse riding is the ideal sport for politicians because at its heart is the skill of convincing the horse to do all the work." As one of the blurbs on the dust jacket says, "It is difficult not to like Judge Richard Neely. . .his blend of learning, irreverence, candor, and common sense would be hard to resist."

One of the reasons Neely is so disarming is that his candor stops short of cynicism. In the Michelin case, he admits to bending the legal rules to help a constituent, with the rueful implication that he's willing to be a bit unprincipled for political reasons. But it's not merely political, because his constituent really is destitute, and no one else is willing to help. So he may be a bit of a rogue, we infer, but he's a rogue with a golden heart. How can you help but like the Robin Hood of the state courts?

While it displays Neely's engaging style, the Michelin story also exemplifies his thesis. Neely argues that products liability law has gotten out of hand because of the incentives for state court judges to help out hometown plaintiffs at the expense of outof-state manufacturers. Like most "beggar thy neighbor" strategies, this one can end up hurting everyone, because the resulting legal rules may ignore the legitimate needs of business. To solve this problem, he calls upon the United States Supreme Court to start reviewing state court decisions in products liability cases. Only the Supreme Court, he suggests, can prevent the state courts from exploiting out-of-state companies.

Most of Neely's attention is devoted to this reform proposal. Before worrying about reform, however, it's important to understand the problems with current law, which is at once too harsh on some companies, too lenient with others, and much too expensive and cumbersome.

Plain tiffs

Products liability dates from the 1960s, when the courts "let the buyer beware" on its head. The theory now is that consumers are entitled to assume that products are safely designed and properly manufactured. Businesses are increasingly beleaguered by lawsuits. Their concerns may be exaggerated, but they do have some foundation. There has been a steady expansion in the scope of liability, and defenses have become harder to establish. According to one study, about 13,500 products liability suits were filed in federal court in 1986, as opposed to 1,500 in 1974. Is the system working better to hold corporations properly accountable? Or have the courts run amok?

Neely's answer is rather guarded. On the one hand, he does believe that products liability has increased consumer safety by deterring unsafe conduct. He tells a long, amusing story about French and American horse owners. The Americans can't afford to have riding stables because the insurance is too costly; the French take no precautions against injury because they don't care who gets hurt. Neely concludes that "we are wrong to have a liability law that is so plaintiff-oriented that it makes it nearly impossible for riding schools to operate. Yet I also find that France is a needlessly dangerous society." On the whole, he still thinks that business should be responsible for dangerous products; the problem with product liability law is "the tendency to carry a good thing too far."

It might be more accurate to say that in some ways the law has carried a good thing too far and in other ways not nearly far enough. It's not hard to find examples of socially beneficial activities needlessly hampered by excessive liability. The vaccine situation is a classic example, which Neely discusses in passing. Vaccination has been one of the great success stories of the twentieth century. In 35 years, polio cases dropped from 57,000 a year to four; in 50 years, whooping cough deaths dropped from 7,500 a year to four Despite this phenomenal success, state courts upheld large verdicts against drug companies when juries concluded either that warnings to patients of dangerous side effects of certain vaccines were not sufficiently detailed or that some other vaccine would have been preferable. As a result of the threat of liability, the availability of vaccines in the United States was threatened. In 1986, Congress responded with legislation intended to protect the industry from excessive liability. Without federal legislation, large-scale vaccination programs might not be possible in this country.