Document v6O2rMwYJz1eYkOXYokrjBDjY

Westinghouse Building 1556 272-3891 September 12, 1985 Westinghouse Building 1558 - Frank S. Beal Westinghouse Building 1740 - Allen Wuchenich Attached is the meeting agenda for the next NEMA Products Liability Committee. Your input on these subjects would be appreciated. DEA/353J/18 Attachment Donald Ayers Director, Product Safety Environmental Affairs m '0 a* m ns 1 '.zyz ..are INEMA National Electrical Manufacturers Association 2101 l Street. N w Suite 300 Washington. O.C 2G037 ,'2021 -S'-S^OC Telex 904C77 nema -a Washington/ D.C. I. FEDERAL LEGISLATION The Senate Commerce Committee has under consideration Staff Draft #1 of a bill that includes both tort reform and a victims' compensation scheme* Committee members have noted that Draft #1 does not correlate well with NEMA's position on Product Liability Reform. Comments were submitted to the Commerce Committee in mid-August/ and Staff Draft #2 should be available by mid- to late September* If so, copies will be available at the meeting* Martin Connor, Washington Corporate Counsel for General Electric Company, will be available to bring the Committee up to date on Washington legislative activities on product liability* Among the issues the Committee needs to address are: whether to support the Senate bill and/or modify the NEMA position statement; whether to take any position on victims1 compensation schemes; and whether to engage in lobbying on product liability during the last quarter of 1985* wJ rJ> -f'- II. NATIONAL COALITION FOR LITIGATION COST CONTAINMENT wCT1 Attached are documents related to the newly-formed National -i - Coalition. Mr. Steinmetz has been active in forming the Coali.."'V' tion and will discuss its importance to NEMA and NEMA members. m III. USING NEMA PUBLICATIONS IN PRODUCT SAFETY PROGRAMS NEMA has recently issued Standards Publication No. ICS 1.1, safety. Guidelines,, fox the Application / Installation and Main:: tenance of Solid State Control. Mr. Steinmetz will discuss how this Publication and others can be effectively used in a company's product safety program through reprints and references. IV. NEMA PRODUCT LIABILITY WORKSHOP - FEBRUARY 20-1, 1985 The Committee will sponsor a Product Liability Workshop in Orlando, Florida, at the Hyatt Orlando, on February 20-1, 1985. Putting on the program will take effort and cooperation from many people. Committee members should study the attached list of possible topics for talks or breakout sessions. All Cominittee members should fill out and return the attached pink form. Mr. Schmidt will also report on his visit to the hotel during a recent NEMA trip. U'O-'i rn <9 r_fin ;c^si O0 V. EUROPEAN ECONOMIC COMMUNITY DIRECTIVE Attached is a copy of the recently adopted European Economic Community Directive on product liability. Also attached are six questions that were posed to a NEMA member company from a friend in an English company. The Secre tary's proposed anecdotal responses are included. Members should offer whatever insights they have on the subject, in advance of the meeting, if possible. VI. CAPTIVE INSURANCE Members of the Committee are no doubt familiar with the insurance crisis industry is currently facing. Reports reaching NEMA include both steeply increasing premiums and the strong possibility that some companies will not be able to purchase insurance coverage. NEMA's Arc Welding Section met on September 5, 1985, to discuss whether or not to conduct a feasibility study on forming a captive insurance company. Mr. Schmidt will report further on this meeting. VII. PRECAUTIONARY INFORMATION - ANSI Z535 Since the Committee's last meeting, NEMA's Joint Section Committee on Precautionary Labeling met to decide on NEMA's position on the ANSI Z535 standards. The ANSI Z535 Committee al60 met at the end of June and continues to work toward a three-tier system of signal words. . Mr. Steinmetz will discuss certain problems NEMA members, and NEMA itself, may face in trying to adjust to a three-tier system. -2- p--n n--n Jil D=* ' ^j' VIII. RECENT DECISIONS All members are urged to be prepared to discuss important decisions they have found since the last meeting. IX. TIME AND PLACE OP NEXT MEETING X. ADJOURNMENT 'O a* o S3 P----- 1 isi ! ^Jf C=* -3- National Coalition for , Litigation Cost Containment Statement of Definition & Purpose p^. 'G (7s i"--nCa8--nT The members of the Coalition will come from the defense trial bar, insurance companies, trade associations and industry; all working to reduce unnecessary civil litigation costs* The Coalition firmly believe in the American system of justice and the right to trial by jury. However, excessive and irrational verdicts and.the high cost of litigation have reached a level which threatens the continued existence of our system of civil justice. Furthermore, the economic impact of these excesses, in turn, may provoke undesirable changes in basic institutions of our society. Because of their profound concern about the roots of the problem, the members of the Coalition have combined their resources to mount a broadscale campaign to educate the public, the judiciary, and legislators at all levels about special ..problem areas which are in drastic, need of reform. Among others, these problem areas include discovery abuse, joint and several liability, punitive damages, inappropriate liability determinations and irrational damage awards, inefficient case management and litigation .. , practices., and a need to continue to improve the quality and compensation for judges. . We are fully aware that such an ambitious undertaking will not be quickly nor easily achieved. However, we are committed' to informing the public about these problems. An r---- q Attachment Al -3- preserve the essential rights to fair recovery for injured persons, promote the public good and, yet, be reasonably cost effective so as to preserve the American system of civil justice. '4CAJT* n--n A3 < . M National Coalition for Litigation Cost Containment ISSUES OF CONCERN o GTS r-fion lr--Wsa'nJ The Coalition believes if the following goals are achieved the American system for dispute resolution will again be efficient and effective while fairly compensating the victims of tortuous conduct. 1. Seek wide public awareness of the cost to all Americans of the ever expanding expense of tort litigation and to seek public support for elimination of existing abuses. . The development of substantive law through adjudication is a priceless heritage. But that does not mean that appropriate reforms cannot be achieved so that the cost to society and individual Americans is reasonable. 2. Limit discovery abuse. The discovery process has been allowed to take on a life of its own. Basic institutional reform is needed -- judges must stop litigants from using the discovery process as a means of . blackmail and control lawyers who initiate a ' discovery avalanche which often enriches .* themselves at the- expense of their clients. The Coalition will bring to the attention of the courts, legislators and the public the costly damage done by excessive delays, endless Attachment Bl few Mi -3- C3 y financial protection rather than proven liability of the defendant. In addition, arbitrarily inflated and unwarranted punitive verdicts are a major cause of cost escalation in our legal system. New rules and legislation are needed to limit punitive damages to its proper and traditional role in malicious actions. r----ir-i!i i -- i-- i 4. Improve the quality of judicial education and selection and increase judicial compensation. The Coalition is committed to improving the -quality of judicial selection. It believes that the more knowledgeable, well prepared, and experienced a judge is, the better he is able to rule on pleadings and to manage cases in ways thar balance the desire for justice with the need to contain the cost and delay of litigation. Increase in judicial compensation is essential to achieve this end. The Coalition is prepared to work through national state and local bar associations, legislatures and all those interested in thequality- of justice to see this goal achieved. 5. Seek the cooperation of the judiciary in taking a more active role in case management. Also, seek B3 -5- "reinvent the wheel" in similar cases or to duplicate efforts where cost savings can be made without jeopardizing the defense of the case. 6. Pursue and encourage the use of Alternative Dispute Resolution techniques as appropriate. The Coalition, while supporting the traditional adversary jury system, is cooperating in the search for other means of dispute resolution. Wherever arbitration and mediation are reasonably adequate methods to deal with such disputes, the Coalition will work to promote their use. These methods can be important tools with which to achieve legal cost containment. 7. Establish rules to limit contingent attorney fees to reasonable amounts. The contingent fee serves a useful purpose. It enables persons with limited means to seek redress and affords them access to our courts. However, the volume of tort litigation and the explosion in the size of awards, particularly in - large cases, have resulted in grossly disproportionate compensation to plaintiffs' attorneys. Furthermore, the client rarely has . anything approaching an equal bargaining position c=* in setting such fees. It is imperative that these B5 INBVIA For Release: For More Information Contact: rw r- cn Immediate Dan Larson NEW SAFETY GUIDELINES DEVELOPED FOR SOLID STATE CONTROLS WASHINGTON, D.C. -- The National Electrical Manufacturers Association (NEMA) has just released a new standards publication on solid state controls. It is entitled Safety Guidelines for the Application, Installation and Maintenance of Solid State Control. Solid state controls are now found in nearly every category of electrical equipment. In many cases they are virtual substitutes for electro-mechanical controls, which perform similar control functions. It is the considerable knowledge and familiarity in the manufacturer and user industries with electromechanical control which becomes the base line for this Guideline. The Guideline points out those particular characteristics of solid state devices which differ from electromechanical for application. Installation and maintenance. The APPLICATION GUIDELINES range from the unique off-state current, present in some solid state devices/ to circuit considerations and special application consideration^^ such as converting ladder diagrams. Other factors covered [cQ include unique environmental*considerations. The INSTALLATION GUIDELINES include factors such as wiring practices, enclosure cooling and ventilating and NATIONAL 2101 L Street NW ELECTRICAL Washington. O.C. 20037 MANUFACTURERS Phone (202) 457-8400 ASSOCIATION Telex 90477 Attachment Cl Aside from standards development, NEMA's major activities include statistical and marketing programs, government rela tions, international trade and industry leadership in new technologies. -30- Dist. NP 7/16/85/56 fN, :r cr* :e C=i C3 PRODUCT LIABILITY PROGRAM February 20-21, 1986 Orlando, Florida - Grand Hyatt r.a*** rca_* Lr-hXsSH-i Program Modules/Breakouts/Subdivision Sessions Accident investigation. Comments that it should be Product, not pathology, oriented. How to conduct, how results are used. NTSB model: very thorough investigation that may not be used in the case. \J#f Geewfctfcee product safety committees and their functions."} uesign review and safety review. FMEAs. Risk analysis, ^ including how to avoid smoking guns and whether to warm or to j redesign. (3) Supplier's exposure. Component manufacturer selling to OEMs, special problems. Manufacturer-vendor issues. --;l r\ n (4) Warnings, labels, precautionary information. Use of other materials, reliance on training. Making warnings understandable, ANSI 2535 etc. (5) The product with direct consumer exposure. For example, batteries, smoke detectors, extension cords, appliances. Ray Balfour might be able to put this together. U< Demonstrative evidence. Preparation and effective use. Some legal rules surrounding admissibility. Help technical people in companies to understand what lawyer is after and explain the vagaries of teaching judge and jury highly technical matter. (7) Medical products. Device reporting rule. The special problems when the product is subject to strict federal regulation. Diagnostic v. therapeutic problems: where the cure can be the cause (8) Document issues: Record retention policies, care in preparing documents. ISS a (9) Product recalls, current law. potential as an equitable remedy. Negotiated in consideration of removing punitive damages. Insurance crisis and how* it might be solved. Group solutions, financing settlements, Captives and association assistance Federal legislative solutions. Lobbying strategy sessions. The Kasten-Danforth draft. ATTACHMENT Dirfn) t IS Official Journal of tht European Communities No l 210/29 COUNCIL DflUCrrVB of 25 July IMS oo the approximation of the lava, regulations and administrative provieiosa of die Member Some onocernlng liability for defective product! ' fllS/374/BBC) na council of thi sueopian OOUMUNTHSL Having rtfard to the Treaty ettablishini the European Economic Community, sad in particular Artida 100 thereof. Having rtfard to the proposal from the ComnitseiooO, Havinf rtfard to the opinion of the European Pariiamenrft Havinf refaid to the opinion of the Economic and Social Committee ft Whetam approximation of the leva of the Member Sestet concerning the liability of the producer for damaft caused by the defectivensas of hie products is necessary because the existing divergence** may distort competition sad effect the movement of foods wfthia the common market and entail s differing degree of protection of the consumer against damage caused by a defective product to bis health or property; ( Whereas liability without fault on the pert of Che producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the riiki inherent is modem technological production; Whereas libilicy without fault should apply only to movable* which have been mdwtrially produced; whereat, at a result, it la appropriate to exclude UafriUtp for Agricultural products and game; except wheat they have undergone a proceating of an mdaatrial nature which could cause a defect in these product*; whereat the liability provided for in*thi* Duective should also apply to movable* which am used fat the construction of immovable* or are installed is immovables; Whereas protection of tht consumer requires that tO producer* involved in the production proem* slwuld be nude liable, in to far u their finished product, component part or any raw material supplied by them U.O OJ No C 241, H. 10.1*7* p. 9 sad OJ No C 271, 18. 1*79, p. J. (*) OJ No C U7. . J. 1*79, p. 41. fl OJ No C 114, 7. 5. 1*7*. p. 15. was daficive; whereas, for the same moon, liability should extend to importers of products tarn the Community and to persona who present themselves sa producer* by affixing their name, trade mark or ocher distinguishing feature or who supply * product' the producer of which cannot be identified; . Where** in situation* where arena! persons are Habit for the same damage, the protection of rise consumer requires that the injured pyrson should b* able so claim hill compensation for the damage bom any one of them; whereas, to protect the pbyiscal well being and property of the oonsumm, the dsfsctivencm ef the product should be determined by tefefence ooc ao is fimees for use butte the lack of tht safety which the public at large is entitled to expect; whereat the safety is messed by excluding any oueum of the product not masormbic tint circumstance*; Whma* a fair apportionment of risk betamn the injured person and the producer implies that the producer should be able to free himtetf from Eabdky if be furnishes proof as to the extant* of certain exonerating circumstaaem; Whereas the protection of the consumer require* dint the liability of the producer remains unaffected by act* or omissions of ocher persona having contribute to esum the damage; whereas, bowavar, the contributory negligence of the injured peteoft may be take* bun account to reduce or diaadow such liability; Whereas the protection of the pnrumtr mqoime toapMMtioa for death and personal injury well m compensation for damage to property; wherma dm tear should neverthete be liaised So goods for paves* use or fonsumptioo and bo subject so deduo* tion of a lower threshold of a fixed amount in order m avoid litigation In an mesastva number of ernes; whateea this Directive should not prejudice compsnm tion for pais and suffering and other arm material damage* payable, where appropriate, under the low applicable to tha case; Whereas a unifotm period of limitation for tht bringing of action for compensation is hi the imetesa both of the injured person and of the producer; Attachment Pi 23*d 8U2 BSZ-2T2T HZ* >W0A MSN 3D0 9052T S8, 82*5fW ir\ oa* fn C*3 n_,-- !581 n--n isei c=* fto t 41W41 2. hbeu ^fTTodict 10 Ac liability of Ae producer, sy person who imports ten Ae Community preduet for tele, kin, tearing or any farm of dktribo* doa in ch course 0/ kit hutinesa shall dr deemed to b* producer within the "H| of this Dtioctive end the!) bo responsible ao a producer. X Where the producer of tbt product cannot hr identified, each tuppUtr of the product shall hr united to producer unless hr intense dir tabard pemoa, within a weeooabk time, of the identic? of the producer or of thr person who sipplied hfon with Ae product. The nmc shall apply, is At car of as imported product, if thd product doca aoc terilrafe At identity of the importer mimed to is ponjnph X eves if thr soar of the prodace ia fothenreri, Ankk 4 The injured pmoo ihaO he required ta pent the damage, the defect and the ouaal relationship between tsd damape. purpose oor aaaufoctwod or distributed by him is the count of hie buriaaw; ar (d) that the defect ia due to compliance of the product with mandatory regulations iaued by the public authorities; m fa) that At rate of adeotific and technics! k&owtedge at Ae time wbra he put thr product into ciicufo- tien wa sot such w to enable the ccsancc of Ae defect to be discover'd; or 0 in Ae case of a aenufoctum of a component, that the detect h attributable to the design -of Ae peoduct is which the component has been fitted or to Ae testructiom given by the manufacturer of Ae product Artkk 9 1. WlAout prejudice to the ptmiifom of aatiosal tew concerning the right of contribution or mount, the UabOity of the producer ahall 00c be reduced when tbt damege ia cauaed both by a detect ia product and by tin act or omfrafon of a Aitd patty. Aifkk S Where, as a mult of the provisions of thia Directive, two or more peno&a an liable for the cosw damage, they ahaii he liable joiody and oroeiliy, without piejudiet 0 the proviaioftt of national tew coacomisg At halts of contribution or 00011110. . 1 The liability of Ao producer owy be wduetd or diaailowvd when, having regard to a& the dram* acancto. At damage ia earned both by a dates is Ao pcodus and by the hull of tin injured panes or any penos ter whoa the injured penes ii mponaftk Ankk $ 1. A ptodus ia detective whan k doca not provide the safety which a person ia entitled to expect, toting n otcuaatancm into *****--tecteding. (a) the presentation of Ac product; (b) the use to which h could naaonabiy be txpacted Act the ptodus would bo pot; fc) Ac time when Ac ptodus w*a put ina circulation.1 1 A ptodus shall not be eonaidend detection ter the sole reason Act a beam product ia subeeguoady * put isto diculatiom Per the purpose of Attick 1, `tfosuft* means: {) damage muaad by dacA or by pcaoocl kjurim; (b) damage to, or destruction of. any team of property other then Ae defective product iaelf, wfch a lower Anahold of AO ECU, provided titot the hem of property: * A la of a type ordinarily intended for private me s consumption, and (U) was used by the injured piieon meialyfarhte owa pnvear mb m trmsimprins Thia Aitide shall be without prejudice to national provisions slating to son-material damage. Ankk 7 The producer shall not be liable as a ncuk of Ate Disecriv* if he proves t . (a) ths be did sot pot Ac psodus into circulation; or (b) that, having tegetd to Ac timnitncn, k is probable ths Ac dates which mused the damage did net exist s the time when Ae ptodus wen put into circulation by him or As this detes name into being afterwards; or (c) that Ac produs was neither manufactured by trim ter sale or any teem of disoibution ter economic Artkk iQ . 1. Member Stem shall provide in their legislation As a limitation period of duee yearn shall apply to proceedings foe Ae rsccvsy of damages provided note this Directive.The limitation period shall begin to us tern Ae day as which Ae pteisriff locust ware, or should icaoaacbiy heve become coast, of Ac damage, the detes tad the identity of the prndumc. 2. The laws of Member States regulating suspension or interruption of the limitation petted shall sot be affected by this Diiccsvt. VO -iff cn p----- q --mi tf--n t=* 7. S. 15 Official Joumil of foe European Communities No L 210m 4rtfcfc 19 I. Member Semes shiS brief into force, am kter three yeaa from the due of aobficabon of this Directive, the lews, rtfulitioas sad edauiuettitiwe provitioai aeeesmry to comply with due Directive. They thill forthwith iafoem foe CMBnauoo thereof 0 1 The procedure aet out in Aftide 15 (2) thill apply from foe fote of ftontifiooo of this Dinoitvo. ArtitU 20 Member Sutat thill communicate to foe Ooagumion foe tern of foe ou'n provisions of natiooal lev which they subsequently adopt ifi foe field fonmod l>y this Directive. Arndt 2X leery See yem foe Comafotioe thill present report to foe Couftd! oo foe tpplicaaoo of chit Directive ad, if necessary, thill tubmit appropriate propoult to Artidt 22 This Directive is tddreswd s the Member Sates. Done t Brumeli, 25 July 1915. Hr foe Cmmnl The fnridnu j. rood ' f>pss;. l^C1 0o r. [O^] 13 \ * (*) Tbit Directive w notified to the Member Stom ea SO July 1915. Ir S3 F5 EUROPEAN ECONOMIC COMMUNITY DIRECTIVE ON PRODUCT LIABILITY QUESTIONS REGARDING INSURANCE COVERAGE oo r**. Os 1. Is it possible to indicate how much the insurance cover [coverage?] costs you to provide against product liability claims as a percentage of turnover [sales?] ' Answer: Statistics should be available on the subject, with considerable variation from industry segment to industry segment. C0 .2 Is there a limit in the policy as to the amount of liability that the insurance company will pay? Answer: Most policies are limited by the amount of coverage per incident and per policy. It is also possible that a carrier will cancel the policy if it deems loss experience excessive. 3. Is there a limit to the number of claims the insurance company will accept during the term of the policy? Answer: This limit is also related to the overall policy limits. The insurance carrier can accept many small claims or a few large claims. 4. What is the normal term of a policy before the insurance company renegotiates? Answer: Policies are normally written for three renewable one-year terms. fc=il o 5. What is the situation is [if?] an insurance company refuses to accept an application for a policy to provide cover [coverage] against product liability claims and thus a company, in effect, bears its own risk? Answer: Because of the steep increases in premium for insurance coverage, some companies will be forced to do just this. .6 What is the rate of increase, if any, in the cost of premiums over a perios [period] of say 5 years? ur------- na Answer: [Could the Committee supply me with any articles or other statistics?] .. . ATTACHMENT G