New roof rules limit carmaker liability

Wednesday, September 7, 2005

 

Manufacturers that meet safety standards should be exempt from lawsuits, feds say.

 

 

NHTSA's policy change

 

In three recent auto safety proposals, auto safety regulators are proposing to limit manufacturers' liability from lawsuits if they meet the new federal standards. Critics say it is a dramatic change that may exceed the agency's legal authority.

• Current federal law, based on Motor Vehicle Safety Act:

"compliance with any Federal motor vehicle safety standard issued under this subchapter does not exempt any person from liability under common law."

• Notice of Proposed Rulemaking to rewrite Safety Standard 216, Roof Crush Resistance:

"It is our tentative judgment that safety would be best promoted by the careful balance we have struck in this proposal among a variety of considerations and objectives regarding rollover safety ... if the proposal were adopted as a final rule, it would preempt all conflicting state common law requirements, including rules of tort law."

 

 

WASHINGTON -- Tucked away in the federal government's long-awaited proposal to mandate stronger vehicle roofs is controversial language that will make it far more difficult for motorists to sue automakers.

The proposal, in effect, says that if vehicles meet minimum federal safety standards, consumers do not have standing to file product liability lawsuits.

The shield -- which could save automakers tens of millions of dollars in legal costs -- is seen as part of the Bush administration's push to protect corporate America against rampant litigation costs. But safety experts say it is back-door tort reform that will leave consumers vulnerable and usurp the right of a jury to decide whether a company should be held liable.

"This is a new doctrine, coming straight from the secretary of transportation and the White House," said Clarence Ditlow, executive director of the Center for Auto Safety, a consumer group based in Washington. "I can't tell you how bad this is for consumers."

The issue raises a fundamental question: Should the federal government or the courts have the last word on product safety?

As the roof strength issue has grabbed more attention in the past two years, automakers have repeatedly said their vehicles meet all federal safety standards.

But safety experts have pointed out that automakers successfully lobbied for minimal roof standards 34 years ago before the proliferation of rollover prone SUVs.

Juries in cases across the country have hit the Big Three with major verdicts, basing their decision on whether automakers did enough to protect occupants regardless of federal standards.

But that's about to change if the roof standards become law. The National Highway Traffic Safety Administration will collect public comments on the proposal for 90 days, with a final rule expected several months after that.

The roof-strength proposal is the latest federal effort to rein in litigation.

The Food and Drug Administration recently filed friend-of-the-court briefs asking for the dismissal of lawsuits filed against pharmaceutical firms, arguing that the companies have complied with federal regulations. The latest briefs were filed as part of suits against Merck & Co. over allegations the maker of Vioxx withheld evidence the drug caused heart disease in some test patients.

Backed by the Bush administration, Congress passed legislation this year making it tougher to file class-action lawsuits. Such cases must now be filed in federal courts, where judiciary guidelines are more stringent.

The auto industry has pushed for legal reforms, contending that plaintiffs' lawyers are flooding them with often meritless lawsuits that are settled to save money.

Under the new regulation proposed last month to strengthen vehicle roofs, NHTSA asserts the rules will pre-empt all state laws and court decisions. It argues that the threat of lawsuits, in particular, could lead to poorly engineered vehicles. For example, if automakers fear excessive costs from roof-crush lawsuits, they may respond by adding weight and making SUVs more top-heavy and rollover prone.

But critics say shielding the companies against lawsuits assures that companies will meet only the minimum standards.

In its proposal, NHTSA said the new roof-strength requirements represent a careful balance of safety considerations and engineering costs, and manufacturers that meet the standards should be exempt from legal liability.

NHTSA says it is simply reasserting power -- granted by Congress -- to weigh competing interests when establishing or updating safety standards. NHTSA argues that judges and juries do not have the expertise to make sound automotive engineering and safety decisions.

Allowing states to enforce their own standards would lead to a confusing patchwork of requirements, NHTSA spokesman Rae Tyson said. Tyson added that a recent Supreme Court decision on a lawsuit exonerating Honda Motor Co. from liability in an air bag case made clear NHTSA has the authority to pre-empt state measures."Congress has given us the authority to set safety standards," Tyson said. "We're merely restating our authority. We're the agency that sets standards. Our standards are not minimum standards."

But since they were first enacted in the 1960s, courts have treated federal auto safety standards as minimum benchmarks.

In a San Diego trial last year, a jury awarded ordered Ford Motor Co. to pay $369 million in compensatory and punitive damages to a woman paralyzed when her Ford Explorer's roof collapsed. The jury heard from Ford that the Explorer met federal safety standards.

Weeks before releasing the new roof standard, NHTSA made a similar proposal in a regulation requiring seat belts in the back seat. It also included a liability waiver on a proposal for new child safety seats last week.

Consumer groups say they expect NHTSA to attach liability language in all future regulations.

"They've gone from having just the minimum to setting the minimum and the maximum," said Sean Kane, president of Safety Research and Strategies, a Massachusetts legal research firm. "Under this regulation, there's absolutely no incentive for any manufacturer to go beyond the standard."

Automakers said they were unaware that NHTSA would include protection against lawsuits in the new roof strength standard.

"We were somewhat surprised that this was included," GM spokesman Chris Preuss said. "It was not something we asked for. That said, we think the proposal makes a lot of sense. It's not the role of juries to determine thresholds for something being safe or unsafe."

Legal experts are divided about whether NHTSA has the authority to provide legal immunity.

Some experts said that federal agencies appear to be shifting from being impartial arbiters that balance the needs of consumers and regulated industries to becoming protectors of big business.

Advocates of changing the legal system say there's nothing wrong with the Bush administration's attempt to institute reforms. They point to cases in which juries have issued multimillion-dollar awards based on scant evidence.

"If these regulations are tough, and if they are sound, then there may be some wisdom to it," said Victor Schwartz, general counsel of the American Tort Reform Association. "The real question is, is the standard better than a jury could come up with during a trial?"