Why Congress and Clinton May OK Product Liability Reform This Year

THE RULES may be changing.

Product liability reform has a good chance of being signed into law this year, according to Mark Behrens, a senior associate with the law firm of Crowell & Moring. In a presentation at the TTMA convention, Behrens summarized the tort reform legislation that died on President Clinton's desk last year. He also gave reasons why product liability legislation may become law and what trailer manufacturers should do to help.

Despite Clinton's opposition to the previous tort reform bill that Congress approved last year, Congress has begun another effort. In January, Senator John Ashcroft introduced a product liability bill in the Senate. Talks are underway with Democrats to negotiate a bipartisan bill that the president will sign.

"It will look much like the bill that passed Congress last year, but the president has made it clear that the bill must be watered down somewhat if he is to sign it," Behrens said.

Nothing has been introduced in the House. Behrens said that the House realizes that unless 60 members of the Senate can support a product liability bill, the House has little reason to initiate one.

"I would expect that the Senate will pass something, and that the House would approve a stronger measure," Behrens said. "The bill would then go to a conference committee, and we would try to get a bill through. It will be difficult again this year. The trial lawyers are a very good adversary, but they can be beaten. We beat them last year in Congress. We just didn't beat them in the White House."

Looking Back Behrens pointed out some of the provisions of the previous bill that are being included in current proposals. One of the most important is a statute of repose. This restricts liability suits to products that are less than a maximum age. Legislation currently being considered calls for a 15-year statute of repose for durable goods such as a trailer. This means that the manufacturer could not be held liable for injuries associated with a trailer that is more than 15 years old.

"I think this is a very important step," Behrens said. "It is a concept that the White House will support. In 1994, the president signed a bill that called for an 18-year time limit on litigation against manufacturers of small aircraft. Trial lawyers at the time said that the problems aircraft manufacturers were experiencing had nothing to do with product liability. They claimed that the bill would do nothing to create new jobs. But in the past two years, the bill has created almost 10,000 new jobs. An additional 20,000 new jobs are expected to be created in next three years. We are trying to take the same concept that the president supported in 1994 and apply that to other products, including trailers."

Other provisions of the legislation include:

* The drug and alcohol defense. Under this proposal, plaintiffs cannot sue if the principal cause of the accident is drunkenness or the use of illegal drugs. It's already the law in most states.

* Misuse and alteration. The plaintiff's damages will be reduced by the percentage that they are at fault.

* Joint and several liability. "This is deep-pocket liability," Behrens said. "Under joint and several liability, you can be held for 100% of the damages, even if you were only 1% responsible. The bill reflects an initiative taken by California in 1986. Under this action, joint and several liability is abolished for pain and suffering and emotional distress. For those damages, each party is responsible only for its percentage of harm."

* Limits on punitive damages. The bill creates a higher burden of proof. When a jury awards punitive damages, it does so for criminal wrongdoing-not just for a mistake in judgment. It also puts a cap on punitive damage awards. The bill presented in Congress last year put a limit of $250,000 for any awards against businesses with less than 25 employees. For larger companies, the cap would be the greater of $250,000 or two times the plaintiff's damages.

Wait Until This Year Efforts to enact product liability legislation failed in Congress last year, but Behrens believes circumstances are different now.

"We worked hard to get product liability included in the Contract with America," Behrens said. "As it moved quickly through the House, other groups saw that our train was the one leaving the station. Everyone wanted to get on board. Doctors, insurers, and others put cars on the train. While this was good for momentum, the bill had far to much in it to have a reasonable chance of passage."

The bill went to a conference committee, taking almost a year for the Senate to agree to meet with the House. As the election approached, the prospects for passage diminished.

"Our contacts within the Administration told us that the longer into the election year the bill went without being passed, the greater the likelihood that the president would veto it. The single largest source of campaign contributions were trial lawyers. Had the conferees gotten the bill out of committee a year ago, the president probably would have signed it. But with the bill being presented to him late in the election year, he vetoed it simply for political reasons."

Behrens believes the objections to the bill can be addressed this year.

A New Year Behrens said several things have changed that make conditions more favorable for product liability legislation. Among them:

* This is not an election year.

* The administration changes positions. As governor of Arkansas, Clinton twice sat on committees that unanimously called for product liability reform. He also signed the aviation bill. "If we do the right things, we may be able to get the president to sign this year," Behrens said.

* Bob Dole is not running for president. When Dole ran for president, he also was Senate majority leader. "Clinton did not want to do anything that would make Bob Dole look like an effective leader," Behrens said.

* The new Senate majority leader seems to work well with Clinton. "They both are from the South, about the same age, and have similar backgrounds," Behrens said.

* An environment of realism. The House learned from what happened last year.

* Personal interest in the legislation. Behrens said Trent Lott, the new Senate majority leader, has product liability as the fifth most important issue on his agenda. "This means that the issue is very important to the Republican leadership in the Senate. Having Trent Lott endorse this issue means that he has a personal stake in it. Not getting this through the Senate would make him look like an ineffective leader."

Help Wanted Behrens concluded that the environment is good for effective reform in the area of product liability.

"I urge you to contact your congressmen and senators," Behrens said. "Tell them this is an issue about jobs, and give them specific examples of frivolous lawsuits that have been brought against your companies. Tell them how this handcuffs your ability to create jobs and how it hurts innovation within the industry. Those of you who have personal contacts with members of Congress will listen and not just send you a form letter.

"You do not necessarily have to give money. But if you have a plant in his district, invite the congressman to visit. Congressmen like meeting people and seeing what their constituents are doing. Develop a relationship with them. It will help with this and every other issue that is important to you and your business."

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