Michigan Bar Journal pointed out, for instance, that since 1968 the government has been trying to adopt a rear-end collision fuel tank standard for autos, but that through its lobbying efforts the auto industry resisted the adoption of a standard until very recently. “The standard finally adopted was technically weak, favoring the finances of the auto industry,” the author said. Also, government agencies often do not have employees with the technical expertise to monitor industry practices effectively, and some agencies have industry employees examine their own products to determine compliance with standards. \(A shining example is the Federal Avaiation Administration, which Three bills which would do even more to cut out the heart of consumer remedies are these: Comparative fault. McFarity cases. As Rep. Bob McFarland says, “Comparative fault is designed with the idea that whoever is at fault should have to share in the damages.” Sounds reasonable so far, right? But McFarland continues: “If a consumer is partly at fault, he should not be able to collect damages from the manufacturer” [emphasis added]. McFarland-Farabee’s statute would create what is known as a system of “modified comparative fault.” Under this bill, if an injured plaintiff was found by a jury to be Insurers claim that manufacturers could make their products safer. Manufacturers claim that insurance premiums are too high. A spate of bills before the Legislature would offer a solution convenient for both groups-restrictions on the consumer’s right to recompense for the harm done by unsafe products. more than half at fault, he could not collect anything from the manufacturer; that is, if consumer Jones was found to have caused 51 percent of the accident and manufacturer Brown’s fault was set at 49 percent, Brown would not have to pay any . thing. But if the tables are turned, and manufacturer Brown is determined to be 51 percent at fault, and consumer Jones 49 perthe damages. So the consumer who is more than half at faultgets nothing at all, while the manufacturer who is more than half at fault pays for just his share. A “pure” comparative fault system, says UT law professor Page Keeton, is much fairer. Plaintiff and defendant would each bear their share of the cost, regardless of whose fault is greater. According to McFarland, modified rather than pure fault was introduced because a modified fault statute that applies to negligence cases is already on the books. “If we had two different systems, it would be very confusing to the jury,” he says. Page Keeton agrees, but believes the best solution would be to change both comparative fault statutes to the “pure” form. Statute of Limitations. HB 377 tive product suits based on strict liability. A case could not be filed after six years from the date of manufacture or five years from the date of sale, whichever is lessno matter when the injury occurred. Fourteen states have passed statutes of limitations relating to products liability, but this one would, along with that adopted by South Dakota, be the most restrictive in the U.S. No allowances would be made for the different life spans of different productssay, a toy expected to wear out in a year or two compared to an industrial drill press intended to have a useful life of several decades. And after the period of limitations runs out, it would make no difference that a plaintiff could actually prove a defect existed when the product left the factory and did, in fact, cause injury. Using the Pinto as an example, under this bill a person rear-ended this year in a Pinto purchased new in 1973 could not collect for burns suffered because the Pinto’s defective gas tank ruptured; had that person been injured the same way a year earlier, he or she could have sued Ford. As Consumers Union’s Barger says, the effect of this sort of arbitrary cutoff would be to punish the consumer who “simply isn’t injured soon eough.” Design defects. There are two types of product defects. Manufacturing defects occur when the product comes off the assembly line differently than its manufacturer intendeda defective safety catch on a rifle or a brake master cylinder which is not properly mounted, for instance. A design defect occurs when the product comes off the line exactly as intended, but it was poorly or faultily designed; Pinto’s gas tank, children’s sleepwear made with flammable materials, and toys painted with lead-based paint are examples of design defects. cases, putting them back into the negligence category. Negligence cases are much tougher to win,,since the plaintiff must show that the manufacturer clearly made a careless misjudgment in his design choice. The Texas Trial Lawyers have observed that taking design defects out of strict liability would allow manufacturers to be relieved of responsibility “when they did a good job of manufacturing a bad product.” The Umbrella Bill. Representative McFarland describes his HB 1161 as the “umbrella” which he hopes will be the vehicle for enactment of the total package of products liability legislation. It embodies all the above measures and adds three more. It would restrict damages awarded to plaintiffs to “actual damages” only, which would eliminate damages for pain and suffering and punitive damages. On the positive side, McFarland’s bill also contains a section that would require more strict regulation in Texas of products liability insurance. Companies would have to disclose the amounts put into reserves for those “incurred but not reported” losses and the income they receive from investing their reserves. And this reserve income, in addition to capital gains, would be credited directly against premium rateswhich means every dollar earned by investing hypothetical “losses” would take the place of a dollar a policy-holder would otherwise have had to pay. The bill also provides for stricter reporting requirements on company annual statements \(some of which require the SBI to hold an annual products liability rate hearingsomething the board says it has done only once in the last 14 years. The insurance portions of McFarland’s bill would probably do more than any liability restrictions to alleviate the real products liability probleminsurance affordability. The degree to which it would be effective can be measured by the strength of the fight insurers mount against it, since only they know what its effects would be. One clue: industry’s Insurance Services Office told the House state affairs committee that it does not need this additional information to help it determine rates, and that it could not accept such data because it must gather standardized data from all states, and Texas’ data wouldbe different from that of other states. Whether the insurance provisions of the umbrella bill are retained in the weeks to come, as debate on products liability continues, or whether they will be dropped because they are “too hot” remains to be seen. But if the Legislature is serious about solving the problem of the high cost of products liability insurance, then tighter regulation of insurers is the indispensable.first step. If insurers can prove that their rates are fair, by accepting tougher disclosure requirements such as these, and if manufacturers can be prodded to step up their safety and loss control programs, and if products liability rates are still too high, then and only then should legislators consider the industry-backed bills that purport to solve the problem at the expense of consumers. 0 Tina Lam is an Austin-based freelance writer. THE TEXAS OBSERVER 7
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