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Woodworking community pushes for product liability reform.


In many minds, what started out centuries ago as a good and just thing has developed, or deteriorated, into something of a national disaster, legally and economically. "Tort Law," which provides the basis for product liability litigation, originally was designed to protect the individual injured by an unsafe machine or environment. But the redefinition of the word "negligence" into "strict liability" in the early '60s and the addition of "punitive damages" in the early '70s led to the creation of a hidden "Tort Tax" with the following, countrywide results, according to the American Tort Reform Assn.:

* Total cost of the U.S. Tort System rose from $5 million in 1930 to $117 billion in 1987.

* The Tort Tax currently costs in excess of $1,200 per American family per year.

* In 1989, the cost of the U.S. Tort System amounted to 2.5 percent of our GNP.

* Between 1974 and 1985, product liability suits increased from 1,579 to 13,544 or 789 percent.

* From the 1960s to the 1980s, jury awards increased anywhere from 212 percent to 1,062 percent, depending upon geographical location.

* In a recent Conference Board survey of chief executives, the threat of lawsuits caused 47 percent of the companies responding to drop one or more product lines, 25 percent ended research programs and 39 percent withheld new products from the market.

* In another Board survey, half of the CEOs of large American companies interviewed said the product liability system is having a major impact on the ability of U.S. firms to compete in world markets.

Because most of the processes within the U.S. woodworking industry involved some cutting action, the product liability system has had a particularly long-term and negative effect. In fact, the very first product liability suit resulted from a radial arm saw injury in 1956 and a very high incidence in all types has persisted ever since.

Just what the size and number of cases within the U.S. woodworking industry are today is almost impossible to pinpoint, according to WMMA sources. In the first place, the large number of small companies in the industry makes it difficult to collect any facts and figures. Second, a large number of cases are settled out of court and not reported by the manufacturers or insurance companies involved. And, third, the "numbers" are considered "sensitive" by many parties. But, be assured, they are high and hurtful. For example, since "punitive damages" came on the scene in 1971, some 35 wood machinery manufacturers have been forced out of business because of financial difficulties stemming from liability losses and increased insurance premiums.

One manufacturer saw his insurance premiums go from $4,000 in 1970 to $1.3 million in 1977. This cost, plus several exorbitant jury awards, forced the company into Chapter 11 in 1981. Some of these suits involved machines that had been out in the field for more than 80 years. The company has since reorganized and is currently making a slow comeback with one-third of its former staff, self-insurance and heavily beefed-up internal and external safety programs.

How wood machinery

manufacturers view product liability

After a literature survey and a number of selected interviews, the following appears to be a consensus of Wood Machinery Manufacturers of America (WMMA) members' opinions on the current situation:

* Product liability is still out of control and still very costly.

* The current laws are too unilateral and limiting in their definition of the liabilities and responsibilities of manufacturers and are particularly unfair to suppliers of secondary or ancillary equipment.

* Both federal and state legislators appear apathetic and must be prodded into changing current liability and/or tort law.

* Today product liability laws are forcing small firms out of business.

* Product liability is inhibiting development and introduction of new and improved woodworking and associated safety equipment.

* The cost of product liability litigation and safe-guarding against it is making U.S. manufacturers noncompetitive with offshore woodworking equipment makers.

Some individual woodworking machinery manufacturers' views and suggested actions follow:

Dana Baldwin, president of Oliver Machinery Co. and chairman of the WMMA National Affairs Committee:

"I fully agree with the consensus. The situation with respect to insurance premiums, legal costs and jury awards is steadily worsening. We thought we effectively testified before the Senate five years ago, but nothing has happened.

"I was pretty frustrated, particularly in view of the fact that even reasonably modern woodworking and pertinent safety equipment is considerably improved and is essentially not at fault for injuries. In the late '70s we did a statistical study of all our machines in the field using a very conservative daily usage factor. It revealed that the incidence of accidents ranged from one per every 2,000 man years to one per 16,000 man years. These figures were confirmed in the late '80s and clearly indicate the inherent safety of the machines. A letter from NIOSH also indicates that 85-90 percent of all industrial accidents are caused by operator carelessness and/or poor maintenance, not by faulty machine design or manufacturing.

"My resolve to continue to fight for new legislation, however, was revitalized at our National Affairs Committee meeting this past March. The goodly number assembled was extremely intense in its interest in the on-going problems of product liability. I cannot emphasize enough how important it is that all wood machinery manufacturers and woodworking companies and their employees pursue their legislative representatives for these reforms."

Gordon Snoeyenbos, chairman of the board, VEGA Enterprises Inc.:

"We have enough trouble competing with foreign manufacturers without this problem. We must change the laws and the system which are restricting product development and introduction. We took one saw guard off the market because of possible liability problems, however slight. We're trying to help through training wherever possible, particularly in schools, plus providing improved literature, video tapes and warning labels."

Richard King, president and COO, Black Bros. Co.:

"Machinery manufacturers and users alike must realize the impact of insurance premiums - an average of 10- 11 percent of new machine costs - which are affecting profit margins and curtailing product development. Manufacturers must pursue and lobby their legislators, especially at the state level, which seems to offer a more promising route. Employers must train their employees plus establish sound safety and maintenance procedures.

"We, at Black Bros., investigate and fight every case because we feel our machines are safe when maintained and operated properly. We also do all we can to help our customers via start-up training, safety-oriented manuals, video tapes, and in-the-field training and refresher seminars. In our own plant, we have on-going safety and maintenance reviews, monthly safety committee meetings, and provide incentives (such as free lunches) for accident-free periods."

Bill Biesemeyer, president, Biesemeyer Manufacturing Corp.:

"I'm tired of being sued just because our label is on the machine, regardless of the fact that our product wasn't involved. What's more, we should be able to recover our legal costs, when we're not guilty. The liability system, maybe the whole judicial system, must be changed.

"Most of our products are safety and measuring devices, but we still use a lot of labels and detailed instruction manuals. We also send operational video tapes on all products to all our dealers. Internally, we hold a monthly safety meeting, bring in the Industrial Safety Commission for quarterly seminars and preach, |Don't Hurry - Stop and Think,' to our employees. I also feel innovation by equipment manufacturers can improve profits through safety."

Darrell Borghi, executive vice president, Yates-American Machine Co.:

"As machinery manufacturers, our only hope is to change the tort laws, with the establishment of a 25-year statute of repose as a particular goal. We fight every injury suit and win virtually all of them, but we can't afford to continue the high cost of defense...It could put us out of business in the next 10 years or so. Currently, we're mounting an intensive campaign to pursue the 19 U.S. Senators who have not co-sponsored Senate Bill 640.

"So far as helping customers is concerned, in 1988 we issued a detailed Supplemental Safety Manual and sent it to all our planer/matcher customers we could find, back to the 1930s. Additionally, our servicemen train and conduct safety courses on all new machines. We also redesigned a number of machines, going beyond ANSI and OSHA standards."

How wood products manufacturers

view product liability

Once again, after searching the industry literature and doing some selected interviews, here is a consolidation of the U.S. wood products manufacturers' views of today's product liability situation:

* Wood equipment manufacturers are doing a good to excellent job of improving their products and communicating about them and associated safety programs.

* Manufacturers are badly hurt by the product liability system and everybody is paying for it.

* Tort law (product liability) reform is definitely needed. And all manufacturers should do something about it.

* We are taking positive action to ensure our products are up to standards. . . and safe!

* Internally, we are implementing stronger training and safety programs. We're also looking for more help from the manufacturers and the legislators.

* OSHA should get tougher with our fellow manufacturers who are in violation.

* Our liability problems are moderating somewhat.

Some comments and actions of individual wood products makers:

Jon Parish, director of loss control and environment, The Lane Co.:

"We are sympathetic to the U.S. wood machinery manufacturers' predicament in the product liability system and appreciative of their efforts to help themselves and us. We see some hope in the move by some states to eliminate or limit punitive damages. We also feel Workmen's Compensation has been and still is fair for both employers and employees and helps keep down the number of suits. Additionally, we work with and through manufacturer associations in pursuit of legislative reform.

"Getting back to the machinery manufacturers, we think their labeling and safety programs, such as Black Bros.' video tapes and seminars, are much improved but we could use more. We also think they could help with manuals more oriented to safe operations than maintenance and total analyses of machine jobs for hazards.

"As for ourselves, we have installed an Employee Orientation Program that teaches trainees how and what to do to minimize unsafe actions. Additionally, we have an organized, company-wide safety program with graduated incentives for progressively longer injury-loss-free time frames. Another thing we do is encourage, after a minor accident, an early return to the job for "light work" at normal pay. We find this speeds recovery and is beneficial to the worker and the company."

Jack Bingham, plant manager, Woodworking Corp. of America:

"The product liability system has had little effect on us. That's because, fortunately, we've had only one injury suit in 10 years. We think that's a result of our intensive employee training and safety programs. For the first full year, an employee is considered a trainee and treated as such when it comes to job assignments. Additionally, we rotate people in their jobs to avoid boredom and carelessness. And on the more complicated machines, we bring in manufacturer training. The manufacturers, incidentally, are doing an all-around better job than did 10 years ago.

"We also have a strong safety program with an employee/management committee making a very detailed, monthly plant tour. And this is supplemented by weekly supervisor/operator safety and production meetings. We don't have an incentive program, because we don't see the need for one."

Dan Palmer, production engineer, Modernfold Inc.:

"We feel for the machinery manufacturers and their liability problems. We also appreciate their help in containing ours. Some of them are doing an outstanding job.

"Here, at Modernfold, we have an intensive, on-going program. We conduct our own regular training seminars and also bring in manufacturers with theirs. Additionally, we hold monthly safety meetings preceded by management plant inspections, plus regular machine maintenance checks. Everything we do is on a very informal, personal basis with our employees to the point where incentives aren't necessary."

Wendell Smith, owner/president, Valley Countertop Co.:

"First off, the machinery manufacturers are doing a good job helping us to avoid problems. However, ever since the early, iron-fisted days of OSHA subsided, we haven't had many.

"Since we are a relatively small company we can work very closely with our people. We use the manufacturers for start-up training and have the insurance companies bring in their safety slide films. particularly at danger points, works best. We also have monthly staff meetings with free lunches for loss-free periods. And we regularly rotate a family of machines to avoid boredom. The result in our accident rate has dropped drastically and even those that do happen are usually minor."

Anonymous, major chair manufacturer:

"We whole-heartedly agree with the U.S. wood products manufacturers' consensus on product liability. The law makes it too easy to sue - and the results too far reaching. Lawyers encourage and pursue liability suits. Judges and juries are too generous. Legislative are apathetic. The whole system just has to change.

"We do think the machinery manufacturers are very concerned and pro-active. We applaud their inventiveness and improved technology in safeguarding their equipment as well as the associated communications. But they are somewhat limited to start-up training and they can't control replacements or production changes.

"In our plants safety, along with production and quality, get very high priority. Our managers meet twice daily on these subjects with their supervisors who, in turn, carry the message onto the floor daily. We also use our bulletin boards heavily to communicate with our employees (especially those located |at the clock'.) Additionally, we also have a very strong, company-wide recognition program. Every loss-free 90 days, we open up the vending machines for a day. Every six months and 12 months, we have plant-wide cook-outs, plus individual awards, with management doing the cooking and serving.

"Our is a somewhat unique system in that we coach and instruct daily on a personal basis. We strive for a high degree of bonding and sharing in a plant-wide team effort. The organization, as opposed to the individual, is held responsible for any wrong-doing or failure. And this really works!"

How a qualified professional views

product liability

Neil Mizen is a graduate mechanical engineer and a licensed professional engineer, who designs and consults on process machinery, including woodworking. He also has served as an expert witness in over 100 cases of the predominately plaintive product liability suits. His may be a lone voice in the wilderness but here is his view: "With all its faults, I sincerely believe in product liability. Admittedly, it's been abused by lawyers pursuing and developing big claim suits; by insurance companies distorting and exaggerating settlements so as to increase premiums; by juries with their |deep pockets' awards; and by the courts for justifying the awards although they do sometimes try to control them and are severe on |frivolous' suits. Nevertheless, the system is basically a reasonable and good vehicle for promoting individual safety, improving equipment and processes plus generating higher quality products. In much the same vein, I also feel OSHA is a good thing.

"As I see it today, the liability situation is beginning to show some signs of improvement. The size and number of claims is plateauing. And there are signs that fairer laws are on the way, particularly at the state level.

"In almost all the injury cases I have seen, the major cause of the accidents is misuse of the machine, either by careless or bored operators, or indifferent or intimidating employers. The second and third major causes are poor design and maintenance. Obviously, all three can and should be corrected."

What's happening in product

liability today

There seems to be a greater awareness in all sectors of the economy and society of the faults in the current product liability system and the resulting problems. This, in turn, may be effecting an increase in conservatism throughout the judicial system and an accompanying moderation in the number and claim size of liability lawsuits.

The WMMA is experiencing a definite resurgence of interest and activity in the pursuit of fairer liability laws. To wit, Senate Bill S-640 is being sponsored by Senator Robert Kasten (R-Wis.) along with 30 co-sponsors. It, among other things, more clearly and fairly defines the responsibilities of manufacturers; establishes a 25-year state of repose for capital goods; establishes a clear and convincing burden of proof for punitive damages with an option for a separate proceeding on same; takes into account Workers' Compensation benefits and imposes sanctions for frivolous proceedings. With the backing it has, S-640 is expected to receive Senate approval without much ado. However, considering the past, it would behoove the entire U.S. woodworking industry to pursue their Senators with vigor.

Some states are taking the lead in limiting liability, particularly punitive damages. While this could lead to confusion, it also could be a quicker, easier step in the right direction because of weaker lobbying efforts at the state level.

While both the machinery and the wood products manufacturers are making good strides towards safer, more comfortable and presumably more productive equipment and environments, they should continue these efforts and bolster "the pursuit of happiness" through state and federal legislators.

One bright light in the tunnel: A 1990 article by Cornell Law School Professors James A. Henderson, Jr. and Theodore Eisenberg proposes that from the mid-1980s there has been "a significant turn in the direction of judicial decision making away from extending the boundaries of product liability and toward placing significant limitations on plaintiffs' right to recover in tort for product-related injuries.
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Publication:Wood & Wood Products
Date:Jun 1, 1991
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