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Consumers, you are screwed — Senate approves measure to curb big class actions


Consumers are f*cked. Now companies like Merck, our Big Pharma friends that gave us the heart-stopping Vioxx, are probably doing the happy dance. I’ll have a little history lesson about corporate responsibility (the Ford Pinto debacle) after this snippet from the NYT on the grim news. (NYT):

Handing President Bush a significant victory, the Senate overwhelmingly approved a measure on Thursday that would sharply limit the ability of people to file class-action lawsuits against companies.

The measure, adopted 72 to 26, now heads to the House of Representatives, where Republican leaders say it will be approved next week and sent to the White House for Mr. Bush’s signature.

The measure would prohibit state courts from hearing many kinds of cases they now consider, transferring them to federal courts. Experts say many cases will wind up not being brought because federal judges have been constrained by a series of legal precedents from considering large class actions that involve varying laws of different states.

Mr. Bush issued a statement praising the vote, his first legislative victory of his second term.

Our country depends on a fair legal system that protects people who have been harmed without encouraging junk lawsuits that undermine confidence in our courts while hurting our economy, costing jobs and threatening small businesses,” the president said. “The class-action bill is a strong step forward in our efforts to reform the litigation system and keep America the best place in the world to do business.”

The legislation has long been promoted by large and small businesses, particularly manufacturers and insurance companies, and failed by a single vote in the Senate in 2003. It could have an especially significant effect on cases involving accusations of defective products, like drugs and cars; plaintiffs in such cases have had success in bringing large class actions in state courts. Automakers and drug makers have worked for years with manufacturers and insurers to press Congress to adopt the bill.


Repug Grassley is in the pocket of big business; Dem Reid can’t stop this train.

…”This is a modest bill which will help reform a class-action regime that many times serves no one but the lawyers who bring these class-action lawsuits,” said Senator Charles E. Grassley, Republican of Iowa, who was the chief sponsor of the measure and who introduced a version of it eight years ago. “Out-of-control frivolous filings are a real drag on the economy. Many a good business is being hurt by these frivolous claims.”

But the measure has been attacked by civil rights organizations, labor groups, consumer organizations, many state prosecutors and environmental groups, who say it would sharply curtail important cases and provide new protections for unscrupulous companies. Many federal and state judges and state lawmakers have also criticized the bill, saying it would strip states of an important role in judging such contests and could add a considerable number of cases to already burdened federal dockets.

This bill is one of the most unfair, anticonsumer proposals to come before the Senate in years,” said Senator Harry Reid of Nevada, the minority leader. “It slams the courthouse doors on a wide range of injured plaintiffs. It turns federalism upside down by preventing state courts from hearing state law claims. And it limits corporate accountability at a time of rampant corporate scandals.”

***


We’ll be back to the good old days of assumed risk, as in the days of the exploding Ford Pinto. See moving video of the crash test here.

Back in the day, before some of you House Blenders were born, there was a little car called the Ford Pinto. We actually had a 1973 Pinto station wagon. But the wagons are not the real story, it’s the little hatchback version. They had a little problem with exploding gas tanks, courtesy of Ford’s penny pinching. Everything is about risk assessment, and for greedy companies, it’s all about what it will cost to either implement safety or pay out in settlements. What they don’t want is something to go before a jury.

If you don’t believe that corporations are going to run rampant with behavior like what you will read below, you’re smoking something. For those that remember the Pinto debacle, it’s “deja vu all over again.” Just wait and see. (fordpinto.com):

Safety was not a major concern to Ford at the time of the development of the Pinto. Lee Iacocca, who was in charge of the development of the Pinto, had specifications for the design of the car that were uncompromisable. These specifications were that “the Pinto was not to weigh an ounce over 2,000 pounds and not cost a cent over $2,000.” Any modifications even if they did provide extra safety for the customer that brought the car closer to the Iacocca’s limits was rejected.

The rush of the Pinto from conception to production was a recipe for disaster. Many studies have been concluded by Mother Jones on Pinto accident reports which have revealed conclusively that if a Pinto being followed at over 30 miles per hour was hit by that following vehicle, the rear end of the car would buckle like an accordion, right up to the back seat. The tube leading to the gas-tank cap would be ripped away from the tank itself, and gas would immediately begin sloshing onto the road around the car. The buckled gas tank would be jammed up against the differential housing (the large bulge in the middle of the rear axle), which contains four sharp, protruding bolts likely to gash holes in the tank and spill still more gas. Now all that is needed is a spark from a cigarette, ignition, or scraping metal, and both cars would be engulfed in flames. If a Pinto was struck from behind at higher speed say, at 40 mph chances are very good that its doors would jam shut and its trapped passengers inside would burn to death.

The financial analysis that Ford conducted on the Pinto concluded that it was not cost-efficient to add an $11 per car cost in order to correct a flaw. Benefits derived from spending this amount of money were estimated to be $49.5 million. This estimate assumed that each death, which could be avoided, would be worth $200,000, that each major burn injury that could be avoided would be worth $67,000 and that an average repair cost of $700 per car involved in a rear end accident would be avoided. It further assumed that there would be 2,100 burned vehicles, 180 serious burn injuries, and 180 burn deaths in making this calculation. When the unit cost was spread out over the number of cars and light trucks which would be affected by the design change, at a cost of $11 per vehicle, the cost was calculated to be $137 million, much greater then the $49.5 million benefit. These figures, which describe the fatalities and injuries, are false. All independent experts estimate that for each person who dies by an auto fire, many more are left with charred hands, faces and limbs
. This means that Ford’s 1:1 death to injury ratio is inaccurate and the costs for Ford’s settlements would have been much closer to the cost of implementing a solution to the problem. However, Ford’s “cost-benefit analysis,” which places a dollar value on human life, said it wasn’t profitable to make any changes to the car.

Remember, the Bush admin also wants to limit damages in malpractice awards as well, limiting pain and suffering and punitive malpractice awards to $250,000. He plans to get you coming and going on this front, people.

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Pam Spaulding

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