Product Liability, Where Art Thou?

Reversing many Bush regulations, President Obama on May 21st signed sweeping orders that gave much of the power of product liability regulation back to the state courts. While much of this regulation does not affect farm equipment, it underlines the direction U.S. law promises to take in the future.

Bowing to his friends in the trial bar, The Wall Street Journal reported that Obama in a memo stated that “federal agencies and departments should claim that state law is preempted by federal law only when there is a well-defined legal basis.” All federal agencies were instructed to review regulations over the past ten years to see if any of their regulations improperly asserted federal preemption.

The American Association of Justice (the renamed trial lawyer’s lobby) said that Obama’s order “overturned actions taken by Bush administration bureaucrats who were influenced by powerful, well-connected corporations.” The lobby goes on to say that the new order will strengthen “laws designed to give Americans basic rights to hold wrongdoers accountable.”

What it DOES DO is increase the propensity for trial lawyers to sue among the myriad versions of differentiated state laws. It also increases the chances of runaway state court juries to offer huge punitive damages to those “big” corporations located elsewhere.

As we said earlier, much of President Obama’s two-page order will not affect farm equipment manufacturers. Those firms it will affect include drug manufacturers and producers of consumer goods. Most product liability court cases of farm equipment are settled in state courts.

What it does show quite clearly are the left-leaning tendencies of this administration to hamstring the very producers of goods the U.S. depends upon to lead the country out of its current economic doldrums. Bryan Quigley of the U.S. Chamber of Commerce stated it quite nicely when he said, “One thing we know is you can’t sue your way into an economic recovery…” He added, “Allowing for more lawsuits will not create more jobs, except maybe for plaintiffs lawyers.”

“Unfortunately,” and we enclose the word advisedly in quotes, those manufacturers that have not had to experience a product liability suit in a state court, cannot appreciate the lengths to which some plaintiff’s lawyers will go to collect their 33¨÷% to 50%. Those of us on the FEMA Risk Management Committee regularly scratch our collective heads as we review potential claims about every six months from the FEMA-Sentry Product Liability Insurance Program.

Just to name a few examples: Farmers getting wrapped up in drivelines when the guards, which would have prevented such accidents, have intentionally been removed; jumping up-and-down on tub grinders while they’re running, attempting to dislodge jammed materials; and sticking hands in augers that, which may not have been running when the accident happened, but were not shut down from the power source. The list could go on and on.

However, time and again, we see plaintiff’s attorneys blaming the manufacturer for not protecting or warning against what should normally be considered user carelessness. Time and again we see years spent by executives in court defending themselves and their companies, as well as the expenditures of thousands of dollars by insurers, if the company is not “bare.” Even if the manufacturer wins, which happens in the majority of cases, it still loses.

From all the talk in Washington about a “fair” and “level” playing field, it appears that politics is still just politics. All too often, our pols well remember the Golden Rule: Those that have the gold make the rules.