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HOUSE PRODUCT LIABILITY BILL PROVIDES GOVERNMENT STANDARDS DEFENSE

Executive Summary

HOUSE PRODUCT LIABILITY BILL PROVIDES GOVERNMENT STANDARDS DEFENSE against both compensatory and punitive damages. Introduced by Rep. Richardson (D-N.M.), the bill (HR 1115) states that defendants are not liable for injuries resulting from product design defects or failure to provide adequate warnings if "at the time the product was made the injury-causing aspect of the product was in compliance in all material respects with standards, conditions, or specifications in federal law or adopted by an agency of the federal government responsible for the design, formulation, labeling, or performance of the product." In addition, the legislation stipulates that a federal agency "determination," such as FDA approval, provides "conclusive evidence" of such complicance. The bill would place limits on the government standards defense against compensatory damages, however. It can be countered if the plaintiff can demonstrate that, by "exercising reasonable care," the defendant could have taken additional precautions. In contrast, the bill's government standards defense against punitive damages is less limited. The measure states that "punitive damages may not be awarded" against a drug (or medical device) manufacturer or product seller if it received FDA premarket approval or if the product is an OTC or DESI drug generally recognized as safe and effective. In order to be awarded punitive damages, a claimant must establish "by clear and convincing evidence" that the defendant "knowingly destroyed or knowingly failed to make available evidentiary matter" relevant to the litigation, or "engaged in conduct that caused" the claimant's harm and "manifested a conscious and flagrant indifference to the safety of those persons who might be harmed by the product involved." Furthermore, the bill continues, "failure to exercise reasonable care in selecting among available designs is not, by itself, sufficient to manifest a conscious and flagrant indifference to the safety" of product consumers. A key to the measure's chances for passage in the House is that the House Parliamentarian referred the bill solely to the Energy & Commerce Committee. Reportedly, passage of the legislation would have been crippled by a joint referral to the Judiciary Committee, whose members historically are sympathetic to the concerns of trial lawyers. Because lawyers have opposed legislative amendments to tort law, product liability legislation referred to the Judiciary Committee would have been expected to die of neglect. Although the committee may request a sequential referral, any Judiciary Committee consideration of the Energy & Commerce bill will be under a time limit. The House measure addresses many of the same issues in last year's Senate bill, but deliberately avoids couching them in legal terminology. For example, where the Senate bill provided amendments to the statutes of limitation and repose, the Richardson bill provides a "time limitation on liability." Where the Senate bill addressed the collateral source rule, the Richardson bill provides a "worker's compensation offset." One provision, a proposal to amend the doctrine of joint and several liability, is almost identical in both bills. Other provisions in the Richardson measure include a state-of-the-art defense, whereby a defendant is not liable for design defect or inadequate warning disputes if it was not able to discover and eliminate the product's hazard, based on engineering and manufacturing practices at the time of manufacture. The bill also stipulates that manufacturers are liable for their negligence in design and warning cases and strictly liable only in construction and warranty cases.
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