AS he lifts a document from his desk, T. W. Wakefield's voice
has a "here we go again" tone.
"This case just came in," says the vice president and general
counsel of Cessna Aircraft Company, an airplane builder in Wichita,
Kan. "Farley v. Cessna, in Pennsylvania. The pilot and a passenger
were killed last April when one of our single-engine Model 140s
crashed. The plane was built in 1946 - 47 years old. Forty-seven
years, and the next-of-kin say Cessna is still liable."
"In other words," Mr. Wakefield says, "Cessna has the deep
It needs those deep pockets. Since 1986, the company "has spent
$20 million to $25 million each year to defend hundreds of
product-liability cases," Russell Meyer Jr., Cessna chairman and
chief executive officer, told a United States Senate subcommittee
"Crash cases are very expensive to defend," says Peter
Puciloski, an aviation lawyer in Boston. "There are no
fender-benders in this field.... A manufacturer can spend $1
million to defend a case, even if it wins. That's why the companies
often settle, even when their liability is slim."
The general aviation industry (builders of all planes except
commercial airliners and military aircraft) has a unique liability
profile, since the longevity of airplanes gives the industry an
unusually long "liability tail."
Still, executives and lawyers for companies all over America -
manufacturers of everything from cars, heavy machinery, and power
tools to ladders, sports equipment, and prescription drugs, as well
as their suppliers and distributers - sympathize with Wakefield's
frustration over a legal system that he contends is "unfair."
For many business-people, actual or potential exposure to
personal-injury lawsuits imposes a heavy cost. Some companies have
been driven out of business or into bankruptcy by litigation costs.
Piper Aircraft Corporation, a Cessna competitor, has been in
Chapter 11 since 1991, owing to liability suits, it says. Last
month, Keene Corporation became the 18th company to file for
bankruptcy as a result of asbestos claims: Keene has paid out $450
million in litigation and settlement costs for an insulation
subsidiary it purchased for $8 million in 1968 - more than 20 years
after most of the plaintiffs were exposed to asbestos in US
shipyards during World War II.
Moreover, some executives and economists contend, the "tort
tax" - the amount added to a product's price to cover liability
costs and insurance - inhibits the competitiveness of American
products in international markets. And critics of the legal system
argue that fear of lawsuits causes companies to discontinue
products or deters product innovation.
The Product Liability Coordinating Committee, an industry group,
cites recent effects of "the litigation climate existing in the
* Monsanto Company abandoned development of a safe substitute
* Of the 20 makers of football helmets in 1975, only two
companies still manufacture the product; one of them, Riddell Inc.,
says 50 percent of the price of a helmet is attributable to
* "Liability concerns have had negative effects" on research
for an AIDS vaccine, Science magazine reported in 1992.
From such reports and the writings of researchers like Peter
Huber and Walter Olson of the Manhattan Institute (a conservative
think tank in New York), who popularized the notion of a
"litigation explosion," one could infer that personal-injury
lawsuits and other litigation have reached crisis proportions.
The issue is slippery, however. While tort-reform literature is
rife with horror stories about "bet your company" lawsuits and
entire industries awash in "frivolous" claims, hard numbers on
the economic effects of litigation are elusive.
In a 1991 speech to the American Bar Association advocating tort
reform, then-Vice President Dan Quayle - drawing on the research of