Innovation in America
American Innovation Paralyzed by Lawsuit Threat
Looking for what to do next? Find out at the end of this article.
Higher costs are not the only way in which consumers are negatively impacted by our litigious society. The flood of lawsuits has put a damper on innovation. The threat of a lawsuit can kill the incentive a company has to invent new products, many of which are conveniences and modern-day necessities that make your life more manageable and productive. According to Jackpot Justice, “when businesses operate in a high-liability-risk environment, they respond to increased liability burdens by eliminating investments in product novelty because novel products have more uncertain safety characteristics.” Sometimes, the threat of being sued is enough for companies to keep their products off the market.
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Fear of lawsuits also causes companies to withhold beneficial products from markets, costing jobs. Volkswagen had planned to sell a 46 miles-per-gallon, three-wheel vehicle in the United States. It had qualified for California's car-pool lanes.
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This ‘green machine’ would have cost $17,000, but VW decided not to market it in the United States because of lawsuit fears.” ~ John Engler, president and chief executive of the National Association of Manufacturers, and Lawrence J. McQuillan, director of business and economic studies at the Pacific Research Institute and co-author of the U.S. Tort Liability Index, writing in the Detroit News in May 2008.
- Volvo makes an integrated child booster seat but it will not sell it in the U.S. because of product liability concerns.
Who Wins? Ironically, It’s Not the Plaintiffs Themselves
Plaintiffs are too often the losers even when they win. When a class-action suit against the Bank of Boston was settled, $8.64 was awarded to each member of the plaintiffs’ class member. But they ended up losing money, as their lawyers charged each of them $90 in legal fees.
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In a case against Blockbuster, the attorneys took in more $9 million in fees. The plaintiffs? Each got a coupon worth $1 off of future video rentals.
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A suit against Thomson Consumer Electronics was settled when the plaintiffs’ attorneys collected $22 million while their clients received $25 to $50 rebates good for a future television purchase.
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For suing Ameritech, plaintiffs’ attorneys raked in $16 million. Members of the class they represented got $5 pay phone cards.
- Lawrence Schonbrun, a lawyer who’s fought excessive attorney fees, said he once had a client who “received a settlement check for 14 cents – along with four pages of Internal Revenue Service instructions on how to report the payment.”
Now What Do We Do?
Foundation for Fair Civil Justice (FFCJ) exists to bring empowering programs and education to retired Americans and Americans on fixed incomes.
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Please take the time to sign up for our Fairness Matters e-newsletter, which will bring you news items right to your email that tell the ongoing story about the need for legal reform by clicking here. We don’t share your email address with anyone – that’s important to us.
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Learn more about the bread-and-butter, common sense need for legal reform and how lawsuit abuse affects you as a retired American or American on fixed income by listening to our “Let’s Be Fair” radio commentaries, hosted by FFCJ Senior Fellow Bob Dorigo Jones by clicking here.
Bob is a bestselling author and founder of the nationally profiled “Wacky Warning Label Contest,” which annually picks the wackiest warning labels on products to underscore the absurd lengths to which American business has to go in response to the threat of lawsuits.
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Finally, we hope that FFCJ programming is a good investment for your business and for America! Please take the time to invest in our work to protect you by making a tax-deductible contribution by clicking here.
