July 2007

From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH products liability and safety publications.

If you have any comments or suggestions concerning the information provided or the format used, we'd like to hear from you. Please send your comments to pamela.maloney@wolterskluwer.

Products Liability

Celotex Settlement Trustees Unable to Block N.Y. Asbestos Claims
An asbestos settlement trust was required to defer to the judgment of the trust's administrator over that of the trustees in a decision to pay 491 out of 769 claims by New York City concerning property damage caused by the existence of asbestos in its public buildings. Although the trust's administrator initially allowed 439 of the city's claims with 52 more allowed under a binding arbitration process, the trust's trustees refused to pay most of the allowed claims, arguing that the administrator's decision to allow them was erroneous. The settlement trust's plan documents, however, granted nearly exclusive authority to the trust's administrator and gave no authority to the trustees to independently review or overrule the administrator's determinations. (Asbestos Settlement Trust v. City of New York (In re: Celotex Corp.), 11th Cir., CCH Products Liability Reporter ¶17,773)

Although Banned in U.S., Jury Finds PCBs Not Defective
The finding that polychlorinated biphenyls (PCBs) did not constitute a defective product was sufficiently supported by the evidence presented to the jury, according to a Pennsylvania appeals court. The state of Pennsylvania brought suit against the Monsanto Company as the manufacturer of PCBs that were used in components of a state building's HVAC system. After the second trial concluded, Pennsylvania challenged the jury's finding that PCBs were not unreasonably dangerous. Although the manufacturer had not argued that PCBs were not defective, the court found that there was sufficient evidence that supported the jury's finding. The court noted that despite the harmful effects of PCB exposure, the overall level of contamination in the building weighed in favor of finding that PCBs were not defective. In addition, the court considered numerous statements by the state informing workers that the building's PCB levels were safe. The court also cited the lack of any personal injury claims related to PCB exposure from individuals who had worked in the building. Although the parties' experts did not dispute that PCBs cause serious health effects, their disagreement over what level of PCB exposure constituted a minimum safe level also supported the jury's finding. The court concluded that there was sufficient evidence to support the jury's finding that PCBs were not unreasonably dangerous or defective. (Pennsylvania v. U.S. Mineral Prods. Co., Pa. Commw. Ct., CCH Products Liability Reporter ¶17,768)

Consumer Product Safety

Safety Benefits of Seat Belts on School Buses Discussed
In a public meeting held on July 11, U.S. Transportation Secretary Mary E. Peters met with local and state government policymakers, education officials, safety advocates, consumer organizations, and school bus manufacturers, to address the safety benefits and economic factors associated with requiring seat belts on large school buses. Under current federal safety standards (FMVSS No. 222, "School bus passenger seating and crash protection"; CCH Consumer Product Safety Guide ¶30,866), crash protection in large school buses is based on the concept of compartmentalization, which does not require seat belts but, rather, combines flexible, energy-absorbent seat backs and narrow spacing between seating rows to create compartments that confine occupants during a crash. "The statistics tell us that school buses are the safest form of transportation on our highways," Secretary Peters said. "The question we should ask is how we can make them even safer." The National Highway Traffic Safety Administration (NHTSA) is aware that an average of 21 deaths occur each year involving school-aged children and school buses. Of the 21 fatalities, 6 involve passengers inside the school bus and 15 involve pedestrians around the school bus. Every year, almost half a million school buses transport more than 25 million students a total of 4.3 billion miles. According to NHTSA, school buses remain the safest means of transporting students to school and school-related activities. NHTSA Administrator Nicole Nason commented, "If there are sensible and practicable ways to more safely transport our children to school, it is our responsibility to investigate and make them a reality." (NHTSA Press Release, July 11, 2007, CCH Consumer Product Safety Guide, No. 894, July 13, 2007)

Legislation Proposed to Address Import Safety
Safety concerns regarding imports from China have prompted lawmakers to introduce legislation aimed at fixing perceived weaknesses in the current consumer product safety system. Chinese imports ranging from pet food to toothpaste, seafood, and all-terrain vehicles, have all come under scrutiny. According to the Consumers Union, Chinese-made products account for 60 percent of all consumer-product recalls, and 100 percent of all 24 toy recalls so far this year. At a July 18 meeting of the Senate Commerce, Science and Transportation Committee, Sen. Bill Nelson (D-Fla.) unveiled Senate Bill 1833, the Children's Products Safety Act of 2007, which would ban imported children's products if they are not first tested and certified by an independent group. Sen. Sherrod Brown (D-Ohio) told the hearing that individual shipments from China rose from 82,000 in 2002 to 199,000 in 2006, adding that the Food and Drug Administration (FDA) cannot protect the U.S. food supply given its current structure and resources. Brown introduced the Imported Food Security Act that would allow the FDA to approve or disapprove of countries that are eligible to import into the U.S. Brown also said he is currently writing safety recall bond legislation to combat another recent product safety concern, faulty tires from China. The bill would ensure that if a domestic distributor of tire and auto parts has to institute a safety recall, then the distributor is guaranteed by a third party that it can afford the recall. Meanwhile, Sen. Ted Stevens (R-Alaska) has introduced the Senate Bill 1815, the All-Terrain Vehicle Standards and Compliance Act of 2007, which requires all companies and manufacturers who market and sell ATVs in the U.S. to meet the same product safety standards. President Bush, on July 18, signed an executive order creating an interagency working group on import safety, to be headed by Department of Health and Human Services Secretary Mike Leavitt. The panel will make recommendations to the White House within 60 days after reviewing existing import safety regulations and procedures. Bush has tasked the panel to develop a strategy to ensure the U.S. food supply "remains the safest in the world." Creation of the panel follows several instances of food-borne illnesses linked to Chinese imports. The working group will be composed of the heads of twelve federal departments and agencies, including the Attorney General, the Secretaries of State, Agriculture and Commerce, and the heads of the Consumer Product Safety Commission and the Office of the U.S. Trade Representative. (CCH Consumer Product Safety Guide, No. 894, July 13, 2007)

Standard for Tire Pressure Monitoring System Amended
The National Highway Traffic Safety Administration granted a petition for reconsideration of a September 2005 final rule [see CCH Consumer Product Safety Guide Transfer Binder "Developments 2005 to 2006," ¶41,925]. The petition raised technical concerns regarding the combined low tire pressure/tire pressure monitoring system (TPMS) malfunction indicator, and accordingly amended Federal Motor Vehicle Safety Standard No. 138, "Tire Pressure Monitoring Systems." The final rule retains a requirement that the system detect a malfunction and initiate a 60-90 second flashing sequence by the combined TPMS telltale, followed by continuous illumination, within 20 minutes of the malfunction. The amendment provides that if the TPMS subsequently encounters additional, separate malfunctions, the TPMS may initiate another flashing sequence for each distinct malfunction condition, although additional flashing sequences are not required. The test procedures specified in the standard also were amended to provide that only one malfunction will be simulated during each malfunction detection test. Although the agency may test for more than one malfunction, each additional malfunction would be simulated in a separate test during a different ignition cycle. The amendments take effect on August 13, 2007. (CCH Consumer Product Safety Guide ¶41,960).

Compliance with Standards Did Not Disprove Recklessness
Compliance with federal motor vehicle safety regulations was not dispositive evidence that a manufacturer's conduct was not reckless and, therefore, did not insulate the manufacturer from an exception to the statute of repose for negligence claims, according to a federal district court in Georgia. The driver of a sport utility vehicle was fatally injured when the vehicle rolled over after a collision. A negligent design claim brought by survivors of the driver 13 years after the vehicle was first sold for use—3 years after such claims were barred by the statute of repose—raised a genuine issue of material fact to place the claim within an exception to the statute for negligence claims against a manufacturer for harm arising out of conduct that "manifests a willful, reckless, or wanton disregard for life or property.” Agency regulations, the court reasoned, establish minimum expectations for manufacturers, but do not provide an assessment of the recklessness of a manufacturer's conduct on any particular occasion. Survivors of the driver needed only to prove reckless disregard by a preponderance of the evidence, not the stricter clear and convincing standard required for punitive damages, to bring the claim within the statutory exception. The burden was met, the court found, after the survivors' expert, an engineer employed by the manufacturer for 14 years, presented evidence that the manufacturer decided to forego structural changes for the vehicle that were feasible and would have promoted consumer safety, in order to maximize profits. The court held that whether the manufacturer's decision to value profits above consumer safety, notwithstanding compliance with federal regulations, constituted reckless disregard was a genuine issue of material fact for a jury to decide, and denied the manufacturer's motion for summary judgment of the negligent design claim. (Woodard v. Ford Motor Co., ND Ga, CCH Consumer Product Safety Guide ¶75,752).