Tuesday, July 22, 2003

Small-business tort aid sought

By Laura Baverman
The Cincinnati Enquirer

Some small-business owners say they fear that a lawsuit against them will put them out of business.

A bipartisan bill introduced in the House of Representatives Monday by Reps. Steve Chabot, an Ohio Republican, and Ken Lucas, a Northern Kentucky Democrat, is intended to reduce their potential liability in such suits.

The three parts of the Small Business Liability Reform Act include:

• A cap on punitive damages for businesses with fewer than 25 employees. The cap would be the lesser of three times compensatory damages or $250,000. Many businesses involved in suits settle outside court at high costs rather than face damages incurred in court. Either way, they can endure costs that they are unable to pay. The legislation would encourage businesses to go to court because damages would be restricted.

• Abolishing joint liability for non-economic damages for businesses with fewer than 25 employees. Current joint and several liability rules say that when two or more people or businesses participate in liable conduct, and this conduct produces a single injury, both are liable for the total amount of damages, despite the degree of participation. The reform act would allow small-business owners to be responsible only for their share of the fault.

• Protection of non-manufacturing-product sellers from liability when the manufacturer is at fault for the harm.

"These folks are the backbone of the business economy as we all know," Lucas said to a room full of media and small-business owners Monday morning in Chabot's district office in downtown Cincinnati. "We need to bring some justice and reason to this."

Small-business owners agreed.

Paul Michels, owner of Paul Michels and Sons Construction in Covington, said he is thankful for the non-manufacturer portion of the legislation.

"We do not only use other people's products, but we produce a product as well. Some of these lawsuits nowadays can put you out of business," he said.

He hopes the legislation will be revised to include small businesses with more than 25 employees. His 23-year-old company is family-owned with 125 employees.

Chabot said increasing the size of companies covered by the legislation would be discussed with the judicial committee after the bill is introduced.

The legislation has critics, who say relieving liability for small businesses leaves them no incentive to protect consumers.

"The law imposes responsibilities on sellers of dangerous products. All companies involved need to be held responsible so consumers are not purchasing things that could hurt their families," Joanne Doroshow, executive director of a New York consumer rights group, the Center for Justice and Democracy, said.

"If they've engaged in reckless behavior, they need to be held accountable like anybody else."


E-mail lbaverman@enquirer.com.

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