Center for America

Speaker's Resource: 3. Lawsuit Abuse Costs, p 5

 

 

Lawsuit Abuse Costs Contents | Previous Page

 

Key Reference Citations (KRC)

 

Impact on Products and Services

 

Liability Concerns Drive Products and Services From the U.S. Market

  • “Another measure of the magnitude of the high cost of lawsuit abuse is the number of products and services that have been withdrawn from the U.S. market due to fear of liability, irrationally applied”: (KRC: Hantler, “Seven Myths…” p.10)

  • Overextending liability, especially to drug manufacturers, reduces innovation, because manufacturers whose products meet all government standards and yet who get sued are deterred from investing in research and development and instead must redirect funds to lawsuit defense.  (KRC: TLT, Tort Rules and Reforms and Why They Matter, page 27)

    • “Volvo, for example, makes an integrated child booster seat that is not sold in the U.S. because of product liability concerns.” (KRC: Hantler, “Seven Myths…” p.10, citing Murray Mackay, Liability, Safety and Innovation in the Automotive Industry, The Liability Maze, 191, 217 , Peter W. Huber & Robert E. Litan eds., 1993)

    • “Asahi Chemical Industry has decided not to export its tobacco-deodorizing fiber after evaluating damaging lawsuits filed in the U.S.  The company was not afraid that its product was defective; rather, it was concerned that lung cancer patients who mistakenly concluded that the fiber also eliminated harmful ingredients in tobacco would sue.” (KRC: Hantler, “Seven Myths…” p.10, citing Yomiuri Shimbun, Tobacco-Deodorizer Maker Smells Lawsuits Abroad, The Daily Yomiuri, Feb. 11, 1995)

    • “[F]ears of silicone implant lawsuits in America caused Japanese silicone makers to quit production of silicone coating for hypodermic needles, which reduces the pain of an injection. The director of one of these firms stated, ‘We’re sure our product is safe, but we don’t want to risk a lawsuit’.” (KRC: Hantler, “Seven Myths…” p.10, citing Norri Kageki, Product-Liability Law Scares Silicone Firms Out Of Market, The Nikkei Weekly, Aug. 28, 1995)

    • “Two of the three companies manufacturing the DPT vaccine stopped producing it in 1984 in light of rising product liability costs. The lawsuit-induced shortage was so severe that the Centers for Disease Control subsequently asked doctors to stop vaccinating children over age 1 to conserve the limited supply of the vaccine.” (KRC: Hantler, “Seven Myths…” p.10. citing the Product Liability Reform Act of 1997: Hearings on S. Rep. No. 105-32 Before The Senate Comm. On Commerce, Science, and Transportation, 105th Cong. 7, 1997)

 

Costs of The Tort System Are Not Only Economic

  • “At least two companies delayed research on an AIDS vaccine, while another company abandoned a promising approach altogether due to liability concerns.” (KRC: Hantler, “Seven Myths…” p.10 , citing Joe Cohen, Is Liability Slowing AIDS Vaccines?, Science, Apr. 10, 1992, at 168-69)

  • “Monsanto Company abandoned the planned production of a safe, biodegradable, and effective reinforcing phosphate fiber that would have been a substitute for asbestos.” (KRC: Hantler, “Seven Myths…” p.10 , citing Richard J. Mahoney and Stephen E. Littlejohn, Innovation On Trial: Punitive Damages Versus New Products, Science, Dec. 15, 1989, at 1395)

  • “Union Carbide decided to forego developing a suitcase-sized kidney dialysis unit and offering intravenous equipment.” (KRC: Hantler, “Seven Myths…” p.10 , citing Richard J. Mahoney and Stephen E. Littlejohn, Innovation On Trial: Punitive Damages Versus New Products, Science, Dec. 15, 1989, at 1395)  

  • “Sunstar, a health-spa manufacturer, decided not to market a safety device due to a liability-related increase in its insurance costs. The product would have set off an alarm every time the cover of a spa was opened. Because the product was a safety device, only one insurance company was willing to write a policy.” (KRC: Hantler, “Seven Myths…” p.10, referencing A Letter to Representative Ron Pickard, Aug. 8, 1991, cited in American Tort Reform Association, Facts about Tort Liability and Its Impact on the Economy, www.atra.org )
     

Runaway Tort Costs Discourage Foreign Exports

  • “After French kitchen appliance maker Robot-Coupe S.A. was notified that insurance for its U.S. subsidiary was being cancelled, it had to scramble to find a new insurer, which charged 12 times the previous cost.” (KRC: Hantler, “Seven Myths…”, p.6, citing Steven P. Galanted, American Insurance Crisis Begins to Hurt European Firms With Operations Here, Wall St. J., Nov. 29, 1985)

  • “Singaporean Sinsin Food Industries, a maker of soy and chili sauces, had to pull back its marketing efforts because ‘the product liability insurance for North American operations is very costly and complicated—not many insurance companies are willing to take it up’.” (KRC: Hantler, “Seven Myths…” p.6, citing Kau Yi Kang, Sinsin Food to Consolidate, Go For European Focus, Bus. Times. Singapore, June 23, 1998)

  • “One British-based chemical company, ICI, was sued because the Oklahoma City bomber used fertilizer—not necessarily the company’s—to make the Oklahoma City bomb in 1995. The lawsuits claimed that ICI was negligent for not putting an additive into its fertilizer to make it less explosive. This company was also sued in an earlier case for manufacturing anti-theft paint. Bank robbers who were sprayed by the paint sued for pain and suffering, and the case cost the company over $200,000.” (KRC: Hantler, “Seven Myths…” p.6, citing Paul Rodgers, Corporate Punishment: America Seeks To Curb Litigation Frenzy – as Britain Catches It, The Indep., London, May 21, 1995)

  • “The Austrians have a wonderful cognate — Nordamerika-Risiko — that reflects the need for excessively high premiums to cover liability insurance costs in the United States. America is acquiring a reputation as a legal backwater, to be avoided or entered only with the costliest protection”. (KRC: Hantler, “Seven Myths…” p.6, citing Willibald Posch, Product Liability In Austria, Comparative Law Yearbook of International Business, p. 15, Dennis Campbell,  ed., 1993)

So, Is Extortion Legal?

  • “Consider the case of Bayer, whose share price lost 25 percent of its value in the first few days of a trial in a Texas courtroom last year. ‘Your stock price is going in the tank,’ the plaintiffs’ attorney reportedly whispered to the Bayer counsel. Of such tactics, George Priest of Yale Law School writes, ‘It’s the fear of the nuclear-bomb verdict that gives leverage to plaintiffs’ lawyers to make threats and play off a company’s stock price’.” (KRC: Hantler, "The Mounting Assault By Trial Lawyers, Inc.”)

  •  Or consider the case of the HMOs: “When the threat of lawsuits caused health maintenance organizations to lose $12 billion in stock value in a single day, Richard Scruggs — the “king of tobacco torts” — actually participated in a conference call with institutional investors on the exposure of HMOs. Former U.S. Attorney General Richard Thornburgh has noted that plaintiffs’ attorneys first threaten a lawsuit, ‘then use the legal system to coerce the beleaguered company into a large settlement’.”  (KRC: Hantler, "The Mounting Assault By Trial Lawyers, Inc.”)

 

Lawsuit Abuse Costs Contents | Previous Page

 

 

Please Note:  The material presented in this Speaker's Resource has been collected from a wide variety of sources.  You are welcome to use this material for quotations and factual material in your speeches, presentations and articles.  To the best of our ability, we have provided original citations so that you can document the comments you use.  If you become aware that any of the citations or facts presented in this collection are inaccurate or outdated by newer information, please send an email to Speakers@lawexec.com to tell us so that we can update this material.  The materials cited are generally copyrighted by the original author and when you quote from their material, you should include the original attribution to acknowledge their role as authors.  Original material © 2005 American Justice Partnership.