PRODUCT LIABILITY

Provisions of the Compromise Legislation:

The compromise bill would have contained (and may well contain next year) many of the main provisions embodied in the original bill vetoed last Congress, but with a few changes:

• It would include the 18-year statute-of-repose for printing, publishing, and converting equipment, along with other "workplace durables" which is so critical to our industry. State statutes-of-repose would continue to apply to consumer products. Twelve states currently have absolute statutes-of-repose (all of them shorter than eighteen years); thirty states have no statue-of-repose.

• It would also include tough standards for the imposition of punitive damages and a $250,000 cap on punitive damages imposed on very small businesses ($5 million in annual sales and 25 or fewer employees). Caps on punitive damages for larger businesses, however, would be deleted. Under this bill parties would, however, have the option of "bifurcating" trials, so that the proceedings on punitive damages would be separate from and subsequent to the proceedings on compensatory damages.

• The bill would further provide a drug and alcohol abuse defense for manufacturers being sued for product liability. This provision would supercede the laws in eleven states which allow a person who is inebriated or under the influence of illegal drugs to recover on a product liability action, even if that condition was a substantial cause of the harm.

• The bill could stem the rise of the trial lawyers’ "state constitutionalism" project, which is a nationwide effort to persuade state courts to nullify state tort reform legislation. Since 1990 state tort reform has been declared unconstitutional in more than 80 cases, most recently in Kentucky, where punitive damages legislation was struck down, and Illinois, where a comprehensive tort reform bill was lost. Federal product liability reform would send a signal to state supreme courts that they should respect rational and reasonable judgments by their legislatures regarding state tort law.

• The bill would eliminate the workers’ compensation lien and reduce the claimant’s award by the same amount. It would also eliminate strict liability for retailers, distributors, and car rental companies, reduce damages in non-workplace cases involving alteration and misuse, give either party the option of offering to participate in non-binding arbitration, impose a two-year "discovery" statue of limitations, and eliminate strict liability for bio-materials suppliers.

• Finally, the bill would not apply to claims involving tobacco, breast implants, or reckless endangerment; nor would it provide federal limits on joint liability, leaving the issue for state resolution. This is a departure from the 1995-96 bill, which eliminated joint liability for non-economic damages (e.g. pain and suffering.)