Supreme Court Ruling in Air-Bag Case Could Reshape Corporate Liability

The Washington Post recently reported that in its 1999-2000 session, the U.S. Supreme Court will hear a case to determine whether an automobile manufacturer can be held liable for accident injuries suffered by a purchaser of one of its cars based upon the company's failure to install air bags, even though the devices were not required by federal regulation at the time of manufacture (Joan Biskupic, "High Court to Hear Air-Bag Case," Washington Post, p. A7, September 11, 1999). The case centers on a 1992 accident involving a 1987 Honda Accord which crashed into a tree in Washington, D.C. and resulted in serious head and other injuries to the driver. The car was equipped with automatic seatbelts, which was one of the safety device options permitted under federal regulations at the time. (Regulations mandating air bags in all new cars only became effective in 1997.) The plaintiff contends that her injuries would have been less severe had the car been equipped with air bags.

The D.C. Court of Appeals found for the manufacturer, stating that a finding of manufacturer liability in the case would interfere with the federal government's then-existing policy of allowing options for passive restraint requirements in automobiles. The plaintiff's attorneys argue that federal safety law permits liability for design defects even where minimum federal safety standards are met.

Naturally, one feels sympathy for this unfortunate accident victim. However, overturning the Court of Appeals' decision in this case would set an extremely negative precedent from a regulatory standpoint. First, it would undercut the regulatory authority of the federal government and would rob manufacturers of the consistency and predictability which are necessary for normal business activities. It could also discourage technological innovation, if manufacturers fear that new safety developments could open the floodgates of retroactive liability.

In short, we live in a world filled with a variety of risks. Protection from all risks is impossible, and safeguards from risks are normally associated with varying costs. For example, we would all be much safer if we rode to work in tanks, but such option is neither cost effective nor feasible. Thus, the federal government takes on the role of setting minimum safety standards for vehicles, and manufacturers endeavor to meet or exceed those standards. It hardly seems fair to retroactively penalize manufacturers for past failures to utilize cutting-edge technologies. To do so would be to discourage innovation and consign consumers to the status quo in terms of product development. No one benefits from that scenario.

The Court will hear oral arguments in Geier v. American Honda Motor Co. in December, with a ruling expected sometime in 2000.