Are Products Liability Cases Doing Any Damage?
For decades, some product manufacturers have lobbied Congress to enact federal laws that would greatly limit their liability for injuries caused by harmful and defective products. They say consumer remedies built into the common law (court-made law) are expensive and burdensome.
Although it is undeniable there are costs associated with compensating those injured by defective products, these costs often are exaggerated. Consider these facts:
- Litigation explosion—According to the U.S. Attorney Accounting Office, only four-tenths of one percent of new cases filed in 1991 in state courts nationwide were product injury cases. To the extent the litigation has increased, it is in the category of businesses suing businesses over contract disputes. Contract suits in federal courts increased by 232 percent from 1960 to 1988. By 1988, they were the largest class of civil cases in federal courts. In state courts, contract disputes accounted for 14 percent of all cases filed in 1991, second only to domestic relations cases (divorce and other family disputes), which accounted for 33 percent of the cases filed.
- Product injury cases filed—The number of non-asbestos product injury cases filed in federal courts actually declined to 4,992 in 1991 from 8,268 in 1985 (a 40 percent decrease).
- All injury cases filed—The Rand Corporation found that only 10 percent of those injured ever use the court system to seek compensation for their injuries. Of all accident victims, only 7 percent receive compensation through the legal system.
- Size of injury awards—The GAO found that the amount of awards for injuries in product defect cases were varied by the type and severity of injury and was consistent with the economic loss of the victims.
- Punitive damages—In product injury cases these are special damages juries sometimes are allowed to award for unusually bad behavior by a manufacturer who flagrantly disregards public safety. Of all product injury awards from 1965 to 1990 in both state and federal courts, punitive damages were assessed in only 355 cases. Of these, one-forth were in asbestos cases, and one-fourth were eliminated on appeal.
- Costs of products—A Conference Board survey of risk managers from 232 major U.S. corporations revealed that two-thirds of those responding said the cost of product injuries contributed one percent or less to the final prices of their products. An additional 11 percent said the cost was two to three percent of the price.