Document 23nBpyMV5K4YDydok958Qbeb

Westinghouse Building 1556 272-3958 April 29, 1985 NEMA Products Liability Committee Jf a* iT* - cn ' Westinghouse 8uilding 1558 Frank S. Beal cc: Westinghouse Building 1740 - A. Wuchenich On Tuesday, April 23, 1985, the quarterly meeting of the NEMA Products Liability Committee (PLC) was held. As it was at the last meeting, the predominant dis cussion centered about Congressional action on uniform products liability legis lation. A new subject which is starting.to emerge at NEMA is a review of technical committee work with relation to products liability consequences. 1. Uniform Product Liability Legislation Martin F. Conner, a General Electric Washington representative and a member of NEMA-PLC, has been following this subject closely on a day-to-day basis and has made several observations about the present proposals and the advocates on each side of the question. First, he predicts that no products liability bill will be passed in any form without a compensation clause being included. Second, the large manufacturers do not appear to be "playing to the crowd" and their public image is that of being the "bad guys." The trial lawyers, major opponents to the legislation, are coming across as the "good guys." P--j] The manufacturers must work to change their image. Senate Bill S-100 is still in the Commerce Committee and due for a committee vote on May 16. There is speculation that if Robert Kasten cannot count the necessary votes he will postpone the markup. The Commerce Coimittee has 14 votes to be cast and at present only six can be counted as sure votes for. Eight votes are needed to pass out of the Committee. There is presently one other Senate Bill being considered and another that is being drafted and should be presented shortly. The Dodd Amendment to $-100 is the other bill presently being considered. This amendment is written as a complete replacement to the Kasten Sill and is strongly anti-trial lawyer. Senator Dodd has stated four purposes for his amendment: First, to provide a faster system of assured but limited compensation of economic losses of innocent people injured by unsafe products; 5'2Dste Second, by placing limitations on damages in the compensation system, to encourage the production of useful new products by responsible manufacturers who take all possible precautions to produce a safe product; Page 2 Third, to retain the tort system to punish negligent manufacturers and to help determine carelessness by other manufacturers; and Cs"ri a* Fourth, to reduce the overhead costs associated with the present lawsuit system and thus, hopefully, reduce the costs of consumer goods. The Dodd Amendment (Attachment 1) provides a claimant with two alternatives wh seeking compensation for his injuries. First, he can seek a no fault remedy, but would be limited to his net economic loss (total out-of-pocket costs less all reimbursements including Workman's Compensation). Second, the claimant ca?9 0 file under a fault based negligence action and can be awarded excess compensatory damages. There would be no strict liability option available. The claimant must make a choice when he is filing. There is a possibility that the Dodd Amendment may be aimed only at the chemical and pharmaceutical industries. i"~l The Gorton Bill which is presently being redrafted after an initial survey starts off with some premises: (3d) 1. Senate Bill S-100 is a defective product. 2. The federal government cannot tell the state courts that they can only use a fault based system. 3. The federal government cannot force the states to outlaw the use of strict liability. . 4. If strict liability was outlawed, the courts would redefine the ' meaning of negligence to more closely resemble strict liability. Under these premises, the Gorton Bill would allow the states to apply either standard, but would look at the measure of damages for the control. If the lawsuit was filed under a strict liability claim, then the claimant would be limited to only net economic loss recovery. If the lawsuit was filed under a r--r\ negligence standard, then excess compensatory recovery would be possible. The^-^ bill would also contain a clause that it would be more attractive to bring a p__ q strict liability case in federal court than in state court. \^3\ Senator Danforth, Chairman of the Senate Commerce Committee, has said that hearings will be held on all the bills even if S-100 is passed out of Committee to the Senate floor. 2. NEMA-PLC Review of <MA Technical Committee Work At the last Products Liability Committee meeting, a label which Underwriters Laboratory (UL) was approving for attachment to flexible extension cords was sent to the PLC for review. The Corrmittee consensus was that the label tried to say too much and that there was exposure from what may have been left off since the do's and don't;; were so comprehensive (Attachment 2). This recommendation was returned to the Codes and Standards Committee. But since the PLC was brought into it at the eleventh hour on the label, UL decided not to change it. The UL label originated in a NEMA technical committee. Q=S Page 3 This episode raised the consciousness of the Committee as to what the technical groups were doing and the lack of examination as to the results from a liabilifc standpoint. A review of the technical group activities has been undertaken by NEMA but as of yet the authority and method of review has not been decided. This subject will be covered in more depth in future meetings. 3. ANSI Precautionary Labeling Standards Since approximately 1980, American National Standards, Inc. (ANSI) has been working toward a standard on precautionary labeling. The Secretariat of the group had been the National Bureau of Standards (NBS), but due to financial problems NEMA has agreed to share the Secretariat duties. Under NBS the standard had progressed very slowly. Now that NEMA has become involved, efforts are being made to put some more emphasis on the adoption of the standard. The ANSI 2535 Draft Standard now consists of five parts: 2535.1 2535.2 2535.3 2535.A 2535.5 Safety Color Code Specification for Safety Signs (Hazard Alerting Devices) Criteria for Safety Symbols Specification for Product Safety Signs and Labels Specification for Accident Prevention Tags The NEMA Joint Sections Committee is having a meeting on May 20 to provide guidance to NEMA's representative to the ANSI Standards Committee. Even though NEMA has only a single vote on the Conmittee, the NEMA vote sways other voting members. Even though this set of standards has been in work for over five years, some fundamental questions have yet to be resolved. The issue of whether two levej of warning or three levels of warning is best is probably the most sensitive and the one to generate the most debate. An informal poll taken of the PIC showed the Committee split on the issue. The present draft of the standard calls for three levels of warning (DANGER, WARNING and CAUTION) which support; Westinghouse's direction which was established several years ago. I will be* attending the meeting as a member of the JSC and will report back. Mr. R. 0./ Whitt from the Westinghouse Beaver plant is also on the Conmittee so Westing! is well represented. Finally, the NEMA-PLC has agreed to sponsor a products liability seminar duriji^ the first quarter of 1986. The consensus of the Conmittee is leaning toward a seminar on reduction of product liability exposure through prevention oriert^i safety programs. The program would concentrate on the engineering function afS: the source of many safety problems. 'jvua/ Ah^} onald E. Ayers / Director, Product Safety Environmental Affairs c=* DEA/mj Attachments ,, .* :.S c.art4-;.^//,^>*.>r*^4V* '* < -- ' \ ... * ifc**.** March 1$, 198$ CONGRESSIONAL RECORD -- SENATE S 3IS$-n Turn" MeLnugLry Aiud for aervleo to others; the mrd for Distinguished Service to Higher Education from the Council for the Advancement and Sup* port of Higher Education (CASE): the Charles . WUson Memorial Award of Religion In American life: and, the Family Service Corp* Award. Dr. Holland served his community, United Macro Coilece Fuad. Be wrote sums articles on ironamir and social conditions imong Amerirar Macks and was tbs author of a book. "Slack Opportunity." Be is survived by his wife, tbs former Laura Mitchell: two sene. Jerome H. 3d. ef Syracuse, and Joseph, of Manhattan, and two daughter* Pamela Holland Curry of Detroit and Lucy of Manhattan. A private funeral service will be held m or trampevtatieu deaertbod tn eiauM^ (AX (3) "exerdae rveeonahli prudence" to n duet of on ordinary person or clam of p2r! sons in the am or dauer etroum*unciSj4 oeretoin* the ear*, attention, knowiro 1 tntcUtcenor. and Judgment that society quirm ef tte atembere (or the protection - their own Mmm and the intemu ethers: his Government, and his fellow eitl* Auburn. (4) "injury" mesne-- ["J1 tens will. He and his accomplishments (A) bodily harm to an individual caused CD will inspire others to dedicate their Uvea to public service. AMENDMENTS SUBMITTED We all will dearly miss Dr. Holland. I j -------- wish to convey my deepest sympathy / PRODUCT LIABILITY ACT to hit wife. Laura, and his four chil* / dren. ' / -------- a preduet and that individual s iiinma. ease, or death resultine (rom that bodtix__ n harm: and |r--^i (B) actual damage to real or pr*orU^J property ether than the product itself: (!) "manufacturer" mesne (A) any person c who to engaged in a toismree to design or I now ask unantmoua consent that / DODD AMENDMENT NO. IS formulate and to produce, create, make, or Dr. Holtod-. obltuujr. which peared in the January 4. IMS Ne York Times, be printed In the Recoup. There being no objection, the article waa ordered to be printed in the Rscoas. aa follows Joiohx Housn* Poswn UH. Ckvot to ^ commit*. Oh Coo-' merrr science, and Transportation) k; rooo submitted an amend* meat intended to be proposed by him to the bill (S. 100) to regulate inter* state commerce by providing for a uni* form product liability law, and for construct any produet (or component pofis of a product), or any person who to encagM^ m a bavins to produce, create, make, or Leonetruct any produet <er component pert D ' e product); <8) e produet aeiler with ifcjO onset to aO uptcu ef a produet (or eatnp^AJ ' _____ fepfl f eoocatos juts atom sstocatx nm u txx uuuium to swxsor m isrs-rt (By Joan Cook) Or. Jerome H. Holland, an educator, dvtt* rights advocate and former United States Ambaoador to Sweden, died of canesr yso> terday at Msw Tort HomitaL 8s was ft yean old and lived in BronxviUs. M.Y. Dr. Holland was president of n--p+~* to* itnuts. a eoUees tn Hampton. Va> from IMO to 1970 and before that headed another pro* dominantly black institution. Delaware 8tate Collect, for seven yean, A strooe believer in education and Job tmlnlac as the keys to advancement for American black* he encouraged them to puah for wwnnnue sains by wortinc within the; other purposes: aa follows Strike all after the enacting dause and mean tn lieu thereof the foUowmc TXTIX1 snoerrms Ban 101. This Act may be cited as the "Product Manufacturers' ReapeaaibOuy Act of 1S99-. ranmutmrgn Bsc. 103. <a) The Congram finds and dm dares that-- (1) hundrete of mllUons of mneumor products are sold la internets commerce each yean (3) there era enormous variations from State tn State with rupee! to what caned tutes a safe produet and what wimtofi dsn* the stream of commerce, the produet vet deafens or forumlatoe and produee* crest meka* or eooscruets aa aspect of a (or eempeneat part ef a produet) made another, or produces, create* makes, or i streets an aapeet of a produet <er comp^__q oent part of a produet) made by another:------- (O any produet seller net faerribid deuce <B) which bolds itself out as a; faeturer to ths user of the produce ___ <9) "parson" mesne tny individual. conSPYr^ ration, eoeroany. areodadon. firm, ponnery Ul sbte. eodety. Joint stock aompvnr. or 4ujr' other entity (Indudlng eny foveremtnia) entity* (7) "prepwilirynne of the evMraee" to that meooun or degree ef proof vhfch. by the wetttto, credit, and value of the aggro* gate eridenee an either dd* aeubttohas that serous products must carry; to to man probable than net that a laet oe* Dr. Holland was named Hmtnmerlm to (S) thass variations among State laws and parted or dMaat pest _n Sweden by Frmldtni Richard M. Nixon tn the uneven snohratton ef ouch laws in indl* (D `produel'* means any object, in* - January 197S and riiaaired ts that poet virtue! cacm reduce the laccnUvci for mane* ilinn mixture. or raw amterial to a suoT 1 until ltU On hto return to the United lecturers to produce safe product* and Statea. he became the flret black to eerve on <4) the lack of uniformity mm. tooted. or sabd state wMchto eapatev otl^/ " eembiertwhote tt|____n the board of the Mew York Stock Btrhenrr He also waa a director of several corpora* laws and ths uneven appliesHen ef law* deny pemsos Injured by coosuoMr paramtMTSdtoM.wMratoptdua^ Uen* Inctudlac tho American Telephone and Telesrapb Company, the Chrysler Cor* porsttan. Federated Department Stores. Oenerai Foods Corporation. Manufacturers Hanover Corporation and Be subddiary. produeta substantially >|"11** benefits and duality ef treatment throughout the United <h) it is therefore the purpose ef the Cam cram in this Act t^ iredurtlnn too trade or eemmana. ehich^f^ bao intrinefe econepde value; end ehleh to^N bmetoded ter mis or lasas to peraens focT J) uss. a*4pt thot the^ Manufacturers Hanover Tram Company, (1) eliminate burdens on manufacturers of and Union Carbide. consumer predutis and on persons Injured Jerome HoartweU Holland was born to by ouch product! by eetehlithHig uniform Auburn. M.Y. one of 13 children of Robert fndarde of produet safety so aa altera* and Viola Batby SoUaad. Be began working dvs to the premnt system: and for his father, a gardener and handyman, at (3) Improve manufacturer tneenthm fir the aee of and eutefcly decided that school* making mfe neneumm products by pravM* ink was thenuUMot dt from poverty. Inga intern ef mtedyaad certain reeurary bdt< ef nolsrepertr n_ in 1939 he graduated wtth honors from Cornell University, where he had twice been named to dll MbsHra. football teams m on end. Be received a^master's degree In sect* elegy from Cornea M1941 and a doctorate from the Unherdty of ralineriven>o in 1990. in 1999 he vh sleeted to the National Football Hah of Fame. for aB tanoeent peraens injured .by 8s* 103. As used In this Ac* tho i (9) -riiiminr mmns (Ai sutontts a pnduet Uobttlty dahn or i product liability aetieo on hto sr her behalf: <B) tho rvpreeenuuve of eueh a d* _____ PCS to birlitenntofli to tmhe toravnmmrnfleani asnod twhdvC^A-y/ emmmsef thtes tranmelten to the farotohingi___n ef jmteme zzzr-- (Oanyi leg O) ecte to only a totbemleefei....- .> til) leaem a preduet undw a ieeee arrange*/ I neend pirann. tf the produel Bablltty dalm Dr. Holland was a pwfdcnlfif rouneflor to nifeuirrod m the --dmc *** aeiton to whtoto ths and sparattoto ef the product end trustee emeritus of Cornea. This year to broutht. through ar an behalf ef an are mmwilled by a prraen attorn than the Cornell named its International Uvtng edatc end (C) the person's parent er guar* lamer: and Ms Center tn his honor for his contributions tn ton. tf eueh a daim toeubmtted. ar sueh an (19) "BUteT mesne any -State ef thev^^ hlfher education and totemaUonol under* action to brought, through er on bebattsf a United States, the Dtotrtet of Cohmibia. the0^~v standing. miner remmwnwmlth ef Puerto Rleo. the VinfWKQ) Dr. Holland aim wea chairmen of tho (3) "commerce" moons trade, traffic, ooro- Islands. Oueaa Amcrima Bum, the North-''--S board of foveroore of the American Red meres, or trajMportaUon (A) between a ero Martono island* the Trust Territory ef^/^v Cross and a member of the boerd of direc place in a State and any pioee outdde ef the Pidfle bland* and any ether urruoryu^Q} tors of the National Urban League and the that State er (B) which affects trad* com* er peowdon ef ths United State* --^ a 2 Attachment 41 Manh 29, 298S CONGRESSIONAL RECORD -- SENATE S Z\* injury. The dattRAnt shall cooperate with person under legal dtsabiltty assy be com dalmant may submit to that manufacturn^ the manu/cturer te its Invratifetfon of the menced within two years after the disability additional dahns for economic ham. nWn circumstances of the injury end of the dem ceases. If the commencement of the action additional claim shall include the mforanrsr-i ises dalmcd as a result of meh injury, la stayed or enjoined, the running of the tion aerified la section 202 reetrtine ~ ~ ptrenr on saiscnow or claim statute of limitatlona under this subsection further economic ham. The manulacu. Sac. J&3. (4) A amnufacturar shell, within 75 days after a dalm to received under Me llon 202. determine whether It Is liable for the injury complained of by the claimant. <bxl) IT the manufacturer determlnu that it is liable for such Injury, the manu facturer shall promptly male payment to shall be suspended for the period of the stay or injunction. The period of time during which a manufacturer Is determining under section 202(a> whether the manufacturer la liable for the injury for which a claimant seeks recovery under this title la excluded la the computation of such three-year or t* shall, within 42 days after receipt of the dttfcmaJ dalm. determine whether it w u*i for the economic ham deaertbi<d in tt*c dalm and. If It determines that It is usqi* n for such economic harm, promptly mduT^i payment to the claimant foe all dimAseXiUI payable under section 202. the claimant for all damages payable pursu ant to aeeuoo 205 that have arisen to date from that Injury, or enter Into a binding agreement with Uie claimant for disposition of the claim. <2) No agreement entered into under thio subsection may preclude a claimant from re covering reasonable charges for reasonably needad and used or anticipated medical and rehabilitation senrlcaa which exceed the amount agreed to be paid for such servtcoa in such agreement if the injury which la the cause of such charges was the result of the earlier Injury which was the basts for such agreement, and occurred within three yearn after the date of such agreement. Any claimant who satisfies the requirements of this paragraph may submit to the manufaclurer a claim for such charge* in accord ance with the provisions of this title. (e) If the manufacturer determlnea that It Is not liable for such Injury, the manufac turer may reject such claim, and shall give the claimant written notice of the rejection and the reaaons for such rejection within T9 days after the date of receipt of the claim, aicim ta eass or eanenoa or claim Sac. 204. <a) If a manufacturer rejects a claim submitted under section 202 solely be year period. <ci tn any action brought under this sec tion. the manufacturer M respoodbu to the dabnant If the claimant establishes by a preponderance of the crldcnee that the manufacturer Is responsible for the daiaw anti economic harm, la accordance with the standards set forth la aedloas 291 (a) snd(b). (d) Where a daha haa been submitted under section 30*6X2). and a manufacturer rejects the daha for any reason other than a depute over the amount of maoaobie charges for reasonably needed and used or anticipated medical and rehabilitation serv ices. the manufacturer dull notify the dataant of hh or her right to bring e dvfl action under thM action, and the ---* may bring such aa action to enforce the rttimam's rights for all soch charge* Such ea action mum be brought wtthtn three years of the date of such agreement. (el a claimant may bring ea action under this section-- (l> tn an appropriate coart of the State la which the injury occurred, where the claim ant reside* or where the manufacturer resids* and such action shall be governed by the provisions of this Act; or (2) la the district court of the United <bi If a manufacturer rejects a d4tn--1 under this section solely because of a gidSlI put* over the amount of such econodfc zlj ham. the manufacturer shall pay the zn-c disputed portion wtthtn 72 day* Thereafter, either the manufacturer or the claimant may Initiate binding afbitntion proceed by requesting the Federal Mediation Conciliation gervfc* to appoint an a tor from the rooter of arbitrators tained by soch Service. The procedure rulas of tho 8ervlcs shall be applicable i the selection of eueh aibltntor and arbitration pmrrtiflngi and the f and detomlneuon of the arbitrator i final and conclude* No offtctol or tho United States shall have poorer < dfettoa to review any such findings : termination, except whore there is fraud. mWrprmtntiUon. or other duct by one of the peruse to tho arbtimi or the aitttnter and where there to fled cornplaint with supporting affldavtuj tearing to aedfle instances of eueh Bltfcormentatlon. ar other ITw ponies to the arbitration shall equally bi tho payment of Uw foe ang _ penoas of tho arbitrator. Tho right to tniuato Blading arbitration under this snbese cause of a dispute ever the amount of eco States for the district la whkh the dahnoat tion shaU be a damwatl eadurive nmody nomic loss, the manufacturer shall pay the reddm or la which thr injury occurred. In where a manufacturer rejects a dalm under undisputed portion within 75 days. Thereof- aeeordanct with section 12)2 of this 29. this eertwn aototMmcsMSsjf a dispute over ter. either the manufacturer or the claimant United States Code. may initiate binding arbitration nmrenrtlngi U) If the dalmant meets the mutowsnto tel If a smimfertium rejects the daha for by requesting the Federal Mediation and of Mibeectlon (el. the court shall enter a any reason other than a dtopute over the Confutation Series to appoint an arbitra order enforcing the dabaantl rights under amaunt ef such econourie ham, the maifb.--1 tor from the roster of arbitrators main this Act and shall also award raasooaMe at- facturar ehafl notify tho ntofmaN ef his tained by such Service. The procedure and torneyi feos sad cods and Interest on the her right to bring a srtfl eeuon under rules of the Service shall be applicable to amount of the payment equal to two per* section, and tho dalmant may bring such the selection of such arbitrator and to tueh eent per month for each month after the TV action to enforce tho dalmantl nthta to; arbitration proceedings, and the findings and determination of the arbitrator shall be final and conclusive. No official or court of the United States shall have power or Juris diction to review any such findings and de termination. except where there M allsgsd fraud, misrepresentation, or other aiscon duet by one of the parties to the arbitration or the arbitrator and where there to a veri fied complaint with supporting affidavits at testing to jpedfle instancss of such fraud, misrepresentation, or other misconduct. The parties to the arbitration shall share equally in the payment of the foe and ex penses of the arbitrator. The right to Initi ate binding arbitration under this suborn tion shall be a demand exclusive remedy where a manufacturer rejects a claim under this title solely bsetups of a dispute over the amount of Iota. <b> U a manufacturer rejseta a claim ub- mitted under sectloo 292 for any reason other than a dispute over the amount of economic loss, the manufacturer shall notify the claimant of his or her right to bring a dm action under this section, and the claimant may bring tueh an action to enforce the claimant's rights for all dam ages payable pursuant to sectloo 209 that have arisen to dale from that Injury. Such an action must be brought within three day period msciftod la section 2D*e> that tho payment remaira unpaid. ttaporamuaxa'a tsagnnr Sat 29$. A manufacturer h HaMt only for irnnemto harm, ahum the total of the com* pwallow paid or parable to the dahaaot by raaaea of the aame damage (o real or per sonal property or the same physical injury. Ihnsm or death from any other mures, to* dudtag any such oompcaaatloo paid or pay able under any lovsrnmsmal program or employes benefit plan, or purauam to any private insurance policy or program or say prepaid medical benefit plan. Where the Injury occura la a situation that might enti tle Uw dahnant to warkaaa rnaniwstlim biasnta. aad It Is not char whether eueh benefits will be paid wttJUa the thae for oarmsat b> -thr, maaufactorar .aerified under thh title or what meh benafha wfB b* mo menufariurar man pay att the riahaaatf economic harp* Including that lem which might bo raimburaebie under wasters mmprnmftnn The manufacturer than then have a right, notwtthriandtng any ethrr provision of law. to mover the mount of such benefits from the person who h to p*y or provide them, or from the rtshnont who actually received them cover for such oceaomie ban* (tf> in any MM draught under this tion. the umnufecturar h irapondbte 4* dahnant if Urn nhtmane oneNhhee to pnpiindsraiiM of the oridsnse that nnufartnrw * rmpcnribte for tho uty Mmatf han* m mSuKs the standards sst forth hi ssedon 20ltai i tbt. to) A rtslnmnf must brtog any dvil art) tn nouvsr dmnagm under thh wtthto thrau yeara aftor the date of --ixifenmm i final payment far ham, except that any eueh action of I penen mder Mgtf MraMttty may be owned wuhM two yeara after tho dtosbuif h stayed or ihjrlnodi the mnntng of tt statato of amturiiw under thh eut ehafi btsuspended for tl period of the < sir injunction Tho period of rime which a amnufacturar to determining this aectiea whether the maimfecturar liable far the eranoarie ham for which a eletiuanf seeba to raoevsr under this section to sirtudrt in tho oompute non of uch-A thrao-yoar or tumysar period. u1 tf) A ~1slmom may bring aa action undergo, this section u_iQ) aim an appropriate seat ef the State ^ years of the time the dalmant dlaeovrrsd which the Injury auuurad. where the cteinv>-<\ or. in exercising reasonsNs pruderies, 8k 29$. (a) if. after submitting a dalm to ent rasiito* or whore the manufactum should have dMcovrrod the Injury and Sts a manufacturer under section 292. a daha- ride* and eueh action shall bo governed bv _ cause, except that any such action of a ant Incurs further economic harm, the the provisions ef thto Act: er r\^) 3 i March 19,198$ CONGRESSIONAL RECORD -- SENATE S 3187 ^ The amendment ts the product of uct (as. for example, where there is a twwv taM ** many months* wort and extensive eon* long latency period before the injury tMpti tA fMaaalin_ sultations with aU involved parties, starting last summer when S. 44. the Product liability Act. was scheduled for action on the Senate floor. At the time. 1 carefully studied the argu- manifests Itself): second, people who are injured by a product where the manufacturer was not negligent, in States that do not apply a strict liabil ity standard (or. in strict liability 330001 tAtlMOOO ClfWimt t/.<MAAAA IMA Mt lALIUtM 3300.001 to 3400.000 t*, fiwvfQg ............. . -------------------- menu of both the proponents and the States, where the product's value to <730.001 to 31.000.000 --------------------- T3n opponents of 8. 44 and concluded that society is found to be greater than Us 3 both sides missed the mart. First. 1 was not convinced by the proponents' arcumcnts that the bill would have the effects they wanted. While one can make food arguments for uniform rules so that manufactur ers who sell in SO States will know what the rules will be everywhere. I don't think that uniform rules would have produced the results the support* ers hoped tor--fewer awards in bizarre accident cases and lower transaction cost. Judges and juries can and do stretch most factual situations to fit any legal rules when they are gym* pathic to the plight of the injured party. There Is no reason to believe that the provisions of S. 44 would have chanced those reactions. Moreover, transaction costs would have remained high because they are the result of having to use the legal system to settle eases, not because lawyers have to spend a lot of time researching the law. Most trial attorneys spend the vast bulk of their time taking deposi tions and preparing the factual side of their cases. That would not chance were & 44 enaeted. Even if & 44 had been enacted and achieved all of its objectives. It would have done little If anything to help people injured by products. That is the crux of my quarrel with both sides. Whatever the merits of the op ponents' arguments, they have failed to offer a belter alternative to the tort lawsuit to victims. The tort system is a very poor compensation system. It fails to pay a significant number of people we would all consider worthy of compensation; it grossly overpays people with small losses and sadly un* derpayt those with the most serious losses; it takes too long to pay the people it does pay; and it is highly in efficient. paying more to lawyers and Insurance companies than to victims. Let me be more specific about the deficiencies of the tort system. In 1977. the Insurance Services Offlea produced a volume entitled "Product liability Closed Claims Survey: A Technical Analysis of Sumy Results," based on data from 24,463 survey forms from 23 major insurers about .claims they processed between July 1. risks): third, people who are injured by "unavoidably unsafe" products, a de fense based upon the utility of the produet to society as a whole, regard less of its effect on particular individ uals (as in the DPT vaccine cases); and fourth, people whose negligence has made a minimal contribution to the injury, in the States that maintain the defense of contributory negligence. Second, the pattern of recovery for thoee who prevail finds the amount of recovery as a percentage of the lorn going down as economic losses rise. Foir example, the people with the greatest percentage recovery were thoee with economic losses between tl and 11.000. who recovered an average of 4S2 percent of economic lorn (the amount over 100 percent being for noneconomic damages). Technically, the highest recovery belongs to the second largest category of prevailing victims, those with no economic losses. Since this group's recovery avenged 3604 a person, their percentage recov ery was infinity. I`art of the reason for such high re coveries at such low levels of loss lies in the nuisance value of a daim, where It is cheaper for a company to pay a small amount in a questionable case than it is to fight the claim. Neverthe less, the survey did find that losses up to 6100400 were compensated on the average at more than 100 percent of lom, * After 9100.000 of lots, the picture changes dramatically. People with lomes over,3100,000--those most de monstrably in need of compensation-- www 2 percent of the victims, but they Incurred 76 percent of the losses. On the other, hand, they received only 32 percent of the payments. The dispari ty between lomea and recoveries was must Aumatte for the 10 people whoee loom exceeded 62 million. Their net recovery, after subtracting their attor neys' fees, was only 6 percent. The fol lowing table, based on the ISO data, lew one third for attorneys* fees where lomes exceed 62400. gives a breakdown of losses and recoveries for all people whq did recover (except for thorn with no losses): Almost as disturbing was the ISO finding that it took 3 years to pay the claim for the average dollar amount involved. For people who have inad equate other resources to pay for their medical and rehabilitation losses and their wort losses which is most of us--it is an unconscionably long time, f; Moreover, studies have shown that )(jc> when rehabilitation has to be delayed. " the decree of recovery is less than when the problem can be treated ira-pn mediately. Finally, the ISO data revealed that n----- 1 the tort lawsuit system is highly inef- Lq n| ficient. paying lawyers almost as mtich (^J as victims, before even taking into sc- count the considerable overhead costs jrj>^ of Insurers. For all 'the reasons just discussed.,* the tort system is a poor compensation system. Because of Its uncertainty and unpredictability, it is also of question able value in deterring the production of unsafe products. Unfortunately, both sides of this debate so far have focused on how to tinker with the tort system to produce better results for their interests, I think they have calmed the major point the lawsuit system Itself is the problem. The I am submitting today is designed to carry out four purposed ,, First to protids a faster system of assured but limited compensation of economic losem of Innocent people in jured by unsafe products; Second, by placing limitations on damages In the compensation system, to encourage the production of useful new products by rtspondble manufac turers who take aU posdhle precau tions to produce a safe produet; Third, to retain the tort system to punish negligent manufacturers and to help determine carelessness by other manufacturers; and Fourth, to reduce the overhead coats modeled with the present lawsuit system and thus, hopefully, reduce the coats of ooesumer good*. The leghltMon seeks to achieve these goals by giving injured persons a ireal choice between seeking recovery for LscUJl their ecooomM toassa in a speedy 1976. and March IS. 1977. This data is very revealing. teomemie Iwwnn4 recomhttjor jntwet * hebUUt injurut claims system with a lower standard of proof for recovery and seeking full First, it shows that one-third of aU claims were closed with no payment. While It Is impomible to tell from the data how many of these people were, innocent" rietims who most of us 31 toSUOO-----*1.001 U 31000, MMiuMim 33.0010 34.000 34,001to36JOS ...... --..... ____________ - ,,, , ............. ould think deserve a recovery, it is 33.0011> 37JOS .......................... leer that many of these people would 37.301 to 310,000________________ it Into the following categories of In* 310.001 to <13.000 ........................ tort itimigf cronnmlr noneconomic 03 373 333 333 Itl 330 1M m and. where appropriate, punitlve-ln a tort system in which they would have ,r-A, to prove that the manufacturer was " negligent in produdng the product. In the claims system, a person in jured by a product would simply flic a claim for economic damages--medics) nocent victims: First, people who <13,001 IQ 330.000 .. lit and rehabilitation expenses as wen as cannot Identify the maker of the prod 330.001 to 333.000 ............-.............. 130 wort leas, reolacemeat services loss. March 19, 198$ CONGRESSIONAL RECORD -- SENATE S3!#9 and Ok* titnifieaM variations from 6tatr to Jurod persona when they po to one or the while it w-- being used m the funinn win- State u to what constitutes safe produet other to are# dam--cs. la emrncr. manufac ally anticipated or that muld rr--nnabiv and *lia a-arntfido dangerous products turer* and attorneys would be required to have been anttdpated by the mamifanufer must ramr The findings alae note that (He the Injured penon the information For example. It also would rover mnenm l thrw variation* and the uneven appurstloa that they mtfht not wtoh to volunteer on that oeeomd tn the worXpive wi>m* *ir- f- uf ih*M* taw --in reduce incentive* for their own. This information te designed to rtats used in the wuraptMe proved to be r*rmatiufuciurra la produce asfe product* and be sufficient te enable a penon to under* nnovrnle. (ft-ftv (K-ofrir nilU utmiar tiuurka auMan* stand the element* of the two options and The subsection provtdrs for four e*rvp- Mmiiar brtw-hu. Sa-ttion 103 diet the punMurs of oie Act: <H iu <-NUblt*h uniform standards for safe luodtK is :uid for n-rowry for injvrtrs from miuifr ptnrturtx as an aJtrmativi* to the pn-M ut jjtkhi and <2i to Improve manufac- the consequences of choosing one or the other. Nerfioa 19S. Retatiannhio to Other Jew. deal* wuh how thts law aetiM Interact with other laws. Subsection ta> provide* that the An shall not apply witerr recovery b per Uons to the tmerai rule. Cxmxlno mimbpr tO refates to the nature of ihr pmditn.r There would be no rrrovrry dhen t Im* mjiiryl was eaused by an "epm and obvk*uN danytr** o(the product. This eierption to in tended to addms *ituationt where thO iun-r inrenttvtd for producing tafr produru 0y prov klma a system of mwrdy and certain rvcowry for all innocent pemons injured by unsafe products. Section it), /kfiuitivni. set* forth the intoninv of definitions relevant to the oprr etion nf the legislation- Hertion UW. Aespoastbffffp for Injury Conned be Product. contains provisions draifnc titn the rtrluMriry of the remrdle* *H forth tn this Art. the nature of the riietee between the alternative remedies, and the duty of manufacturers and alter* neys to inform vtetims of these ettoteeo and the rarntflrxlmra of men rhoire. Si)bamIon <a> seta tnvth the fenrral prop* tuition that the pro<-alone of thta Art are the sole bases for recovery for an injury caused by a product. There ate two excep tions. Pint, * lietim could area recovery from some oilier source that to obligated to pay for his or her injure, such u a private health plan, aoeitrra compcnaMion or Social Rmtriiy. Second, ttie Act would not apply to disputes between butoncawa where there mitted under any FVderal law. other than (hr Federal Employees Compensation Act. the Loneshoremen's and Harbor Warpers* Compensation Act and any eevemmemal program or employee benefit plait The last two excepttons are destined to avoid the anomalous result of denying recovery to people who could aqpuro such things a* Sorts! Security Disability insurance benefit* beesuse of an injury caused by a product. Subsection tb> provides that this Act shall rot apply where an environmental protec tion law provides (or recovery (ram (ajurtsa. where there (a a right tn such ireoesry under the common law of a State or where any law providra a recovery (ram a relearn into the environment or the threat of re lease into the environment, of a wale --M stance or waste, hazardous substance or op* tertai. hazardous waste or other eeniaml* nans wflailuiaM. Serfion JSC fflMirr Osfr. provides that this Act shall tab* eftset at* months after the dale of enactment --- danevr to an inherent charactertooc of Uu produrt that would be recognized by the or! dinary persons who use* or consume* thco 0 product, Thu*, a pcmoo injured by eutiina himself oo a sharp anlfcbladc or while under the influence of alcohol would not bc<-^ able to recover from the manufacturer otO^? the knife or the alcohol This defeme would net apply to produeU in the workplace. FurlT n ther. this doctrine to to be dtsii--utohvdzrz^! from Urn patent danger rule, where ihiuJ danger to not inherent. Thto exetusioo duer-A-^ net apply to that xUuallon. ^n The otherihrro exceptions all Oral wit the injured person's conduct. Thus, -- Jurod person cannot recover tf hi* or Injury till wm caused by aa aiurratJeo modification of the product by the clai tUti was the result of the claimant s Uoe of the r-- (where a person know* of dander but takm the rtott anyway, aa trastod with whero a risk to saw there to no real option, as. for whero o person drtrm on a flat Ur* in oeosKv-T ts no personal injury, such as ahvre a ma chine sold by Company A to Company B mboperates and damagra Company B' property. . Subsection <b says that a prraon injured by a product shall hate altemttlv* systems through which to sc-- recovery. one. a TTTLltl Id get out of the dram, only to hove the mf] n) Section tit, ttnponaittutg of c Afowafbo* erash --cause of U* nature. That to not dkUci Inter apo* SuOmtuion of * CSdJxs. sets "mtroaao--" um of the produet ttwt forth the situation* in which a manufactur would result In a d--Mi of recoveryl. and er la liable to an injured per--a la the . del was mused by what Is tantamount to dab-- system, in general, the ooocept Is grom negugenee on the port of the vtotlm. that as between an "innocent** victim sad There is no societal mason for compensat ctatms process against a manafacturer and. aa --ascent** manufacturer, the manufac ing auctoeonduet. two. o lawsuiL This suboceUoo further turer should bear the loos, to the extent of ubosstMto tb) deals with dad-- sttuattona states that if a person film a claim under paying eosspensaUon foe otherwise uncom whsro the MJond per-- eamot identify Title jl and then recent-* payment from tho iwnaltd economic Imam. Thta. the mams* the Mamrfartw--. to that dtuatioo. manufacturer ter fifes a lawsuit to force facuaer's conduct, la terms of the degree of pansa May robosM a cM-- to any manut payment where the manufacturer refuse* to pay the claimi. the penon may not thereaf ter file an action for dam--ea from (ho same injury. fUnea* or death under the lawsuit at-rnam-e contained in Title 1IL The subsection also provides that If a car* to manufacture, a irrelevant, but the Injured penon'* conduct b relevant to the extent that It relates to that person* ~tnneceneg." Specifically, subsection tar provides that a ctilnmnt a entitled to reeover damages if taror of a prodact that la "fonetMoatty tkal to and toterchan--atili with' the wet whkto earned the ciafmami harm, torn, that manstfactaror amy at-- to r from other mannfactbtots of mrt> uctwho sold tbsir product* at the person file* a product liability action under the -manufacturer's pm-- w-- "unsaid to the smshst -- w-- the produrt Title 111. that person may not thereafter file a claim for damages from the same and the unsafe aspoet of the produrt w-- a praxtomte muse of the Man--w tnlwry* caue--the oMMw--to injury vm Thto provision oddremes one of the injury, illness or death under the efsiaa al* tentative contained in Title U. The submetioa tom ea to deft-- a peeduct -- "wnmfe" U a "cauom the rislmanrb probMmgwiihMidarbtoctaratem. of rodrom for o vtotMu who cermet In effect, a person Injured by a product ham wMM the product is being used la a the omfcee of the produrt that bouwd may areb rroomy from aw system or an* omaasraad (Or a purpose whieft was to fact toettoa of a Ctoroa other but may not play both ends against sot--paled by the manufacturer or which MUorod the middle. If he or she fuse a lawsuit, than seem so commonly among peoduet users td a Mgnnfswnrrr M order, that person aunt accept the comraweae-- that the --imfaturvr may w ammasd td to* a formal cMMb. The required inf of the derision. The person may net tharo* has* --hrtpatsd such use.'' (a part. Kbdr- tiea she--d -- snougli for a aaaufi after opt into the datma system tf thin-- Ugasd -- hold the momtoetum M--M not --bwalM whether Ms produrt caused are not cot-- tfl bribe lawsuit On the cadr whs** a per--a w--Injured wad--eh* tajavy and thoamooaa of daaagea iroof- other hand, a prison is net leebed Into the that the manufact-- art--ny-: MM M M|MM Vr mtfttim etabm system wot11 payment is actually butptoo where yw am of the msp C--tm, gtvm the Msuoftturrr 19 made, the point at which the injured per-- wet w-- m rommon that one can --Me- gsisrmbw whether * la wmensmts foe sets what he ae she Pertained for by enter* baovisd-- of the omiraldetaror. Thus, tor JhJ--y and. tf oa. w say tn* rtoimaM's tna u>e claims system. U such payment in not forthcoming. the prison may ehoow euamnta. a asMlminr ouM bo net --y whero a defective toy lajusud a with Urn or dor mho aa rtolmaid ta dtopeor of urn either to art economic and nenreonemio chUd who w--ostag a m a proper the partMs pm-- an damayes (and. where appropriate, punitive but. ah* where the child w-- Uwwwbig a -- btodMM rxcept for any dainaees) m a tort lawsuit pursuant to the a--Mat the wan. On the other head, the Mom a--anUdpatcd M the--roement that provisions of Title U1 or srob the temer ra- maaoCaeturtr- would am be HabM tf a t artoe from the mats --Jury or amem duMndn nomte dam--ea authorised throttsh the year aid attorney dropped the toy from the the throe years after the injury- Thto exmg~-J claims system tn Title If where the injured pemon a standard of proof would be sute atanttally lower. Once that choice to made, the injured prison would be loebed Into the i-ystero chosen. Sufrwcuon <e sew forth the Information top of a trot sad tu (all tajoeed a young child--low. tn aOditloo. K is designed td roach aarv mil--m conduct of a marMifactaree when tae --jury artoro from a hoard that wasn't him-- or bnowibli when the product *-- ttou is ea--g-- with thr --Jcetfre of msking propto whole. If a maaufartum/BrC\ Jrcu a claim, ho wwo* notify thr rtaiiwani >J wtoblu 19 day* tad indicate the moon* jber um rojscUon. freetou H4, jrfsdcs hi Com oi *tjeetloit$z) manufacturers and attorneys must give in* mod* but the product ciumd the injury o Chin arts forth the tonl `