Product liability compromise scuttled
By Staff -- Industrial Distribution, 8/1/1998
Washington, D.C.--A failure to gain any new ground on product liability, one of 1997's biggest political disappointments on the distribution front, has happened again.A new federal product liability reform bill failed to make it to the Senate floor for debate in July. Proponents blamed the failure on both the limits of the legislation and last-minute controversy over language added to the bill by Senate Majority Leader Trent Lott (R-Miss.). The legislation was the product of a compromise between Senators Slade Gorton (R-Wash.) and Jay Rockefeller (D-W.Va.).
According to James Anderson Jr., vice president of government relations for the National Assn. of Wholesaler-Distributors, the White House indicated that President Clinton, who vetoed product liability reform in 1996, would sign this measure into law.
The NAW-backed compromise appeared to be a significant victory for the distribution industry because it includes a provision establishing a uniform standard of liability for wholesaler-distributors and other non-manufacturing product sellers that will reduce the filing of product liability lawsuits against distributors. The legislation would also provide significant help to renters, as it states that parties who rent or lease products will not be subject to liability for the negligence of others beyond their control.
"It's imperative for all businesses to get some kind of handle on what our responsibilities are, and this will somewhat take the distributor out of it, assuming you don't misrepresent a product or make any false statements and so forth," says Cliff Cheatwood, president of Arkansas Mill Supply and a member of the Industrial Distribution Assn.'s government affairs committee. Cheatwood says he has been sued numerous times for product-related discrepancies. "We've never lost, but we still have to pay lawyers and it takes up a lot of my time, so it's a no-win situation. The biggest advantage [of product liability reform] is it takes [distributors] out of the picture, establishes [tougher] grounds for suing, and puts a cap on punitive damages."
The cap would place a limit on punitive damages for businesses that have 25 or fewer employees, and annual revenues of $5 million or less.
"This bill is not the be-all and end-all for civil justice or even product liability reform, but it is a measure that will do a lot of good for a lot of people without undermining the very important reforms that have been achieved in the states," Anderson said before the Senate vote. "NAW members and others who have worked hard and for a long time for the victory that is clearly within reach now know with certainty what can be achieved --what the President will sign into law."
Despite industry support, Anderson says that there is opposition, mainly from trial lawyers, the Civil Justice Reform Group, and ironically, by some retailers who don't think the law has enough teeth.
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