Statutes of Repose: Eroding Protection Against Older Products

Statutes of repose terminate a manufacturer's liability for defective products -- including toys, medical devices, elevators, farm machinery, appliances, freight trains, trucks, nuclear power plant parts, and factory equipment -- after a statutorily specified number of years. A person injured after the cut-off date has no recourse to hold the manufacturer of the defective product accountable. Cutting off liability after a designated number of years is both arbitrary and unfair. Consider the example of two people suffering the same injury from the same product. If one of the victims was injured just before the statute of repose went into effect and one was injured just after, only the person injured before the statute of repose went into effect could collect from the defective product's manufacturer. Ending a manufacturer's liability while that product is still on the market is unfair to those injured after the statute of repose goes into effect.

There are three major problems with statutes of repose:

1. Statutes of repose act as a disincentive to manufacturers to publicize and fix defective older products that are still in use. Continued liability serves as an incentive for companies to locate and fix product defects. When a jurisdiction has implemented a statute of repose, however, this incentive disappears. It then becomes more cost effective for corporations to hide product defects when they are discovered near the end of their potential liability than to publicize and/or fix them. This is turn results in more injured consumers who have no chance at recovery, even for lost wages and medical costs.

2. Statutes of repose disproportionately affect low-income Americans. Since statutes of repose limit liability based on time in the marketplace, they will disproportionately harm those people who cannot afford to buy new products. Consumer protections should effect all income levels equally; statutes that disproportionately effect the low-income are particularly egregious.

3. Statutes of repose skate on thin constitutional ice. A strong argument can be made that statutes of repose are unconstitutional under several Constitutional provisions, most notably the Equal Protection and Due Process clauses. Because these statutes distinguish people who are injured by defective products from people hurt through other forms of tortious conduct, such as medical malpractice and general negligence, courts may well determine that there is no rational reason for making this determination and find that these statutes are unconstitutional. An additional argument can be made that statutes of repose violate the constitutional right to a jury trial. People injured by long-term products have just as much right to sue as people injured by short-term products and should have the same access to the courts.

Tort "reformers" claim that statutes of repose are needed for three reasons: the statute will help to curb the "litigation explosion" in the United States, will address the "unfairness" of unending litigation, and will reduce insurance rates. None of these claims are accurate.

  • There is no litigation explosion in the United States. In 1995, the National Center for State Courts and the Bureau of Justice Statistics of the United States Department of Justice released the findings of a collaborative 30-month study of state court civil jury trials. Their reports found that in 1992 product liability cases represented only about 3% of all civil jury trials. Only 3% of these cases were ever heard by a jury. In addition, damage awards in these cases are generally small, and the trend has been to smaller, not larger awards. An extensive U.S. General Accounting Office study of product liability verdicts concluded that the size of damage awards generally correlated to the severity of the injury suffered and the amount of actual economic loss.
  • Statutes of repose are unfair to consumers. As long as manufacturers sell products with the expectation that they will be in use longer than the statute of repose, the unfairness would be to limit their liability for defective products. Manufacturers would like to have it both ways: they do not want to be responsible for defects in older products, but they also will not tell consumers that their products are so unsafe that the manufacturers will not be responsible for defects after a specified number of years.
  • There is no evidence that insurance rates would fall. While the assertion that lowered litigation rates will help lower insurance rates sounds plausible, there is no proof that this would actually occur. First, according to a Consumer Federation of America report, liability premiums only cost businesses 11 cents for every $100 of retail sales in 1996. With costs already low, it is unlikely they will drop further. Second, since the percentage of products liability cases that deal with products older than a statute of repose is very small, insurers are unlikely to lower rates. Third, even if product liability suits decreased substantially, there is no evidence that insurers would correspondingly lower their rates. It is highly unlikely that insurance companies will lower their profit margin without being forced to do so.

Statutes of repose leave injured consumers completely without redress. In order to protect people injured by older products, keep statutes of repose from limiting liability on the basis of product age.