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February 15, 2000

Chamber Says Product Liability Bill Restores Legal Fairness, Protects Small Business

WASHINGTON, D.C., Feb. 16, 2000 – Legislation passed by the House of Representatives today will reform product liability laws to protect small businesses from costly and frivolous lawsuits that could jeopardize their future, the United States Chamber of Commerce said.

“This common sense legislation will go a long way toward lifting the disincentive small business owners face in introducing new products, expanding operations, or hiring more workers,” said Bruce Josten, the Chamber’s Executive Vice President. “Small business owners will no longer have to risk their livelihood, their workers and their future every time they are confronted with an unfounded lawsuit.”

The Small Business Liability Reform Act of 1999 (HR 2366) will help restore fairness to the civil justice system, according to the Chamber. For manufacturing businesses with fewer than 25 employees, the bill caps punitive damages at $250,000 and establishes proportional liability. Under traditional rules of joint liability, where more than one defendant is found liable, each defendant may be held responsible for 100 percent of the damages awarded, regardless of their degree of responsibility for the harm.

“One frivolous lawsuit could bankrupt a small business,” said Josten. “If sued, business owners have had to choose between an long and costly trial or a quick and expensive settlement – not much of a choice.”

Furthermore, HR 2366 will help shield businesses that merely distribute or sell products from being held liable unless the harm was the result of their own egregious misconduct. Innocent product sellers should not be held liable simply because they are part of a product’s distribution chain, according to the Chamber.

“This bill is an important step to correcting the inequities in America’s civil justice system, while still protecting the rights of those with legitimate claims,” said Josten.

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