Liability run amok

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We hear of absurd liability stories in aviation all the time, such as Lycoming being sued because a 30 year engine that had never been overhauled quit, or Cirrus being sued because a low-time pilot took off into a thunderstorm. Here's a good one from an industry that's slightly more publicly known.

Montana jury finds H&B at fault in baseball bat lawsuit

The makers of Louisville Slugger baseball bats have been found liable ($850,000!) for the death of a little league baseball player who was struck with a ball during a game. The family of the deceased contends that the company should have had a warning that batted balls from an aluminum bat travel faster than those from a wooden bat, as though that warning would have caused the player to avoid the batted ball.

As a pilot, it's tough to admit, but if the world's small airplane manufacturers stopped producing airplanes, as they did in the 80's and early 90's, life would go on in this country. However, there are other industries that are not so isolated. At what point does the liability environment in this country become so crippling that any product innovation becomes impossible? We already see such effects in aviation (low overall economic impact) and medicine (absurdly high economic impact).

How far are we from becoming an innovative black hole (i.e. the lawyers end up with all profits from innovation, removing all incentive to innovate)? Are we already there? Is there an "easy" fix that can be presented to a well-bribed Congresscritter that would make him or her champion the cause?

-- Joshua Levinson, November 2, 2009


Despite the jaw-dropping legal awards that make the news, I'm not sure that liability is as big a factor in aviation as we might think. Countries that use the Napoleonic Code, for example, such as France, Germany, and Italy, have an advantage in manufacturing airplanes. Perhaps their U.S. dealers could be sued into bankruptcy, but the manufacturer might be able to escape judgement by not doing business here directly. If liability reserves constituted 30 or 40 percent of the cost of a plane, we'd expect to find airplanes being made in China and Code-based countries in Europe and Latin America, then simply sold here by distributors.

Obviously the tort system is a drag on U.S. business, but I'm not sure that it is any worse than our other drags, e.g., hugely expensive health care, high corporate tax rates, poorly educated workers coming out of public schools, etc.

-- Philip Greenspun, December 8, 2009