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Ralph Nader > In the Public Interest > Product Liability

Speaker Newt Gingrich and his allies in Congress have given new meaning to the saying “form over substance.” As they debate the various “contract” provisions some members of Congress are moving toward making laws based on little more than myths. The “deliberations” aimed at undermining our civil justice system demonstrate how little some of our elected representatives care about the potential impact of legislative proposals when the corporate lobbyists start making demands and when the victims of corporate wrongdoers are unorganized.

In the last several days, however, the myths put forward by the “wrongdoer’s lobby” have started to unravel.

First, the claim by the National Chamber of Commerce that the Girl Scouts of America were forced to sell huge numbers of cookie boxes just to cover their liability insurance costs has been rebuffed. Sandra Jordan, a spokesperson for the Washington area Girl Scouts issued a statement saying that the Girl Scouts didn’t consider damage suits a problem for them. Moreover, the Girl Scouts council in Washington has never been sued and hasn’t taken any position on tort reform — the euphemism corporations use to weaken state common laws that allow their injured victims to hold them accountable in court.

Consider the second tale of woe. The wrongdoers lobby has placed television ads tearfully saying that Little League, like the Girl Scouts, is sinking under the weight of law suit abuses. Like the Girl Scouts, however, it turns out that the Little League has not taken a position on any of the bills before Congress and could provide no evidence of onerous litigation. The tortfeasors lobby strikes out again.

The mythic trilogy is rounded out by the American Tort Reform Association (ATRA). ATRA, an association of trade associations and business, features George McGovern in a broad-brush television commercial with Jack Kemp that tries to blame the civil justice system for destroying our society’s very civility. McGovern, the former Senator from South Dakota, like the Girl Scouts and the Little Leaguers, seems to be having second thoughts about how people might interpret his message on the civil justice system. He now says he does not endorse the Gingrich legislation.

Legal Times reports that McGovern thinks that legal reforms are best left to the states. McGovern also has qualms about his television ad where he said, “Frivolous lawsuits helped drive my small inn out of business.” He told Legal Times, this sentence from his 30 second commercial might give people the wrong impression. McGovern then explained, “If it leaves the impression that [frivolous lawsuits] were the central problem, that’s wrong.” He added, “there was a terrible recession, and the Marriott put up a beautiful state-of-the-art hotel across the street.”

Now comes J. Robert Hunter, Director of Insurance for the Consumer Federation of America, and former Texas Insurance Commissioner. Mr. Hunter is serving Congress some factual substance to make up for all the industry-spawned puff. In a report titled, Product Liability Insurance Experience 1984-1993, Mr. Hunter, an actuary by training has found that:

— Product liability insurance costs in the United States amount to 1/4th of a penny on a dollar purchase (which includes a hefty profit for the insurance industry);

— Only one in three claimants get a payment.

— For those who file claims, the average payout by insurance companies was under $6,000.

— Defense lawyers are paid $1.31 for every dollar paid to plaintiff’s attorneys; and

— Insurance companies spend about $1 on overhead costs for each $1 in payments to claimants.

Myths may have their place in literature — but not in Congress. Members of Congress should study the facts, consider the plight of victims due to corporate wrongdoers, with their too frequent defective products and toxic chemicals, and encourage the states to strengthen not weaken our civil justice system.