SCOTUS: Complying With Regulations Is Not A Tort Defense

In what may be one of the most important Supreme Court rulings for the car industry in some time [full opinion in PDF here], the highest court in the land has found that compliance with minimum federal safety standards is not a defense against personal injury or wrongful death suits brought in state courts. The case in question involved a 2002 accident in which Than Williamson was killed when a Jeep Wrangler hit her family’s 1993 Mazda MPV. The Williamson MPV had only lap belts because shoulder belts weren’t required by federal law until 2007. A California court has already barred the lawsuit from coming forward, arguing that federal regulations supersede any local rulings, and that then-legal seatbelts should protect manufacturers from personal injury liability. But in the wake of another ruling involving pharmaceutical companies, it seemed that the court might overturn that ruling, which it now has.

The issue, according to Justice Stephen Breyer’s majority opinion, comes down to the government’s intent. A previous ruling had held thata different portion of (an older version of) Federal Motor Vehicle Safety Standard 208 (FMVSS 208)—a portion that required installation of passive restraint devices—pre-empted a state tort suit that sought to hold an auto manufacturer liable for failure to install a particular kind of passive restraint, namely, airbags. We found that the federal regulation intended to assure manufacturers that they would retain a choice of installing any of several different passive restraint devices. And the regulation sought to assure them that they would not have to exercise this choice in favor of airbags. For that reason we thought that the federal regulation pre-empted a state tort suit that, by premising tort liability on a failure to install airbags, would have deprived the manufacturers of had assured them.The lower courts used this logic to protect Mazda from a lawsuit by the Williamson family, but the Supreme Court found that in the case of three-point seat belts, however, the issue changes. When it comes to the previous ruling about airbags, wrote Breyer,That regulation required manufacturers to equip their vehicles with passive restraint systems, thereby providing occupants with automatic accident protection. But that regulation also gave manufacturers a choice among several different passive restraint systems, including airbags and automatic seatbelts. By requiring manufacturers to install airbags (in order to avoid tort liability) the tort suit would have deprived the manufacturers of the choice among passive restraint systems that the federal regulation gave them.In that case,the regulation’s history, the agency’s contemporaneous explanation, and its consistently held interpretive views indicated that the regulation sought to maintain manufacturer choice in order to further significant regulatory objectives.But, in this casethese same considerations indicate the contrary. We consequently conclude that, even though the state tort suit may restrict the manufacturer’s choice, it does not “stan as an obstacle to the accomplishment . . . of the full purposes and objectives” of federal law. Thus, the regulation does not pre-empt this tort action.Why?The more important reason why DOT did not require lap-and-shoulder belts for rear inner seats was that it thought that this requirement would not be cost-effective. The agency explained that it would be significantly more expensive for manufacturers to install lap-and-shoulder belts in rear middle and aisle seats than in seats next to the car doors. Ibid. But that fact—the fact that DOT made a negative judgment about cost effectiveness— cannot by itself show that DOT sought to forbid common- law tort suits in which a judge or jury might reach a different conclusion. For one thing, DOT did not believe that costs would remain frozen. Rather it pointed out that costs were falling as manufacturers were “voluntarily equipping more and more of their vehicles with rear seat lap/shoulder belts.”…to infer from the mere existence of such a cost-effectiveness judgment that the federal agency intends to bar States from impos- ing stricter standards would treat all such federal standards as if they were maximum standards, eliminating the possibility that the federal agency seeks only to set forth a minimum standard potentially supplemented through state tort law. We cannot reconcile this consequence with a statutory saving clause that foresees the likelihood of a continued meaningful role for state tort law.It’s a complicated ruling that centers on regulatory intent, but it’s already having a huge impact. Bloomberg reports:Auto shares plunged following the ruling. Ford Motor Co. shares fell as much as 4.38 percent to $14.44, the lowest price since Nov. 3. Ford fell 43 cents, or 2.8 percent, to $14.80 at 10:27 a.m. in New York Stock Exchange composite trading. General Motors Co. fell 48 cents, or 1.3 percent, to $35.30.This is definitely a ruling to remember if and when the Motor Vehicle Safety Act comes back to congress.