It also cost Lamperts $25,000 to get a dismissal of a case involving one of its drivers who, while making a delivery in Apple Valley, Minn., damaged a homeowner’s tree. Lamperts offered to replace the tree and to provide $4,500 in additional landscaping. But the owner “wanted a new house,” says Fesler, and withheld payment of $160,000 for building materials the dealer had supplied.
“There’s no such thing as ‘innocent’ in the world, at least where product liability is concerned,” Fesler laments and notes that “90 percent” of the suits filed against his company never even get to court. “Most litigants don’t want to go to trial” and are looking for a settlement, says Martin, the Washington-based attorney.
Kincaid of Parker Lumber adds that the product liability arena has become a haven for “legalized extortion” and “shakedowns of insurance companies.” He points to a competitor that recently settled a product-related suit for $70,000 and adds that his own company paid out $6,000 a few months ago to settle a complaint from a customer over mold in an apartment he built over his garage with lumber he bought from this yard. “My insurer recommended that we not fight it,” Kincaid says.
Gibson says that Indiana Mutual hasn’t “gone to the mat” for dealers on many product liability cases lately, either. “It’s just too expensive. Even when you know you’re right, and it’s laughable, we still settle for nuisance value.”
Lobbying Pays Off That’s why NLBMDA is pushing so hard for H.R. 5500, which can trace its genesis to a meeting in Washington two years ago. Johnson of ILMDA and Dan Welty, who owns Jones-Berry Lumber in Amboy, Ill., were delivering a “support check” on behalf of NLBMDA to Speaker of the House Dennis Hastert (R-Ill.), who is Welty’s congressman and a customer, to boot. Johnson and Welty used that occasion to inform Hastert about dealers’ headaches with product liability suits, and Hastert, according to Johnson, agreed to support an industry initiative to draft legislation.
A year after meeting with Hastert, Welty became chairman of NLBMDA’s Government Affairs Committee and appointed Johnson and Morse co-chairs of the task force assigned to write this bill. Johnson says two other people were instrumental in shaping the bill: George Burns, who is NLBMDA’s staff attorney and who wrote the first draft, and Rita Ferris, a vice president with the Northeast Retail Lumber Association, which Johnson says had been trying to get product liability reform passed on a local level. Burns’draft, recalls Johnson, was “too broad. We wanted to keep the bill as clutter-free and enemy-free as possible.” The final version, he says, “is a rifle shot” that goes right to the heart of the matter without bringing in extraneous issues.
Gibson of Indiana Lumbermens Mutual Insurance says that the scope of this bill could have a “chilling effect” on a plaintiff’s willingness to file against dealers because the bill might allow dealers to request that their cases be moved to federal court, which, Gibson explains, is far less friendly to these types of legal actions than state or local courts.
The question that dealers are asking themselves, though, is whether this bill actually has a chance to pass, and if so, when? Stringham, the Utah dealer, thinks the bill is “wonderful” but fears that it might stumble over the inability of lawmakers to understand the plight of small businesses. “People see Wal-Mart and [The] Home Depot and Lowe’s and think, ‘They have plenty of money.’” Other dealers worry that product liability reform could wind up in the same limbo as the National Asbestos Trust Fund, the financing for which Congress has yet to approve.
On the other hand, Levine points out that so-called “cheeseburger” bills, which protect restaurants against suits filed by customers over their obesity, took only two years to become law (versus the seven or more years bills usually take to finally pass). And while Johnson believes that product liability reform could have “a very narrow window of opportunity,” Welty and Brian don’t think the November elections will affect the bill’s progress, one way or the other. “It’s so bipartisan,” says Brian, a point supported by the fact that the bill has both Republican and Democrat co-sponsors in the House. At press time, Levine said that NLBMDA was looking for a Democratic senator to co-sponsor similar product liability legislation in the Senate along with Mitch McConnell (R-Ky.), who was already on board as a sponsor.
Limited Self-Protection In the meantime, dealers can take some measures themselves to protect their flanks from product-related lawsuits. “Save your insurance policies forever,” advises Parker Lumber’s Kincaid, who says that the wrongful death suit his company is involved in forced him to “go digging in our basement for policies to see who was insuring us 20, 30 years ago.”
