Opinion ID: 1878598
Heading Depth: 1
Heading Rank: 6

Heading: Analysis of Close Correspondence

Text: The rationale of products liability statutes of repose are threefold: First, the fact that a product has been used safely for a substantial period of time is some indication that it was not defective at the time of delivery. Second, if a product seller is not aware of a claim, the passing of time may make it extremely difficult to construct a good defense because of the obstacle of securing evidence.... The third rationale is that persons ought to be allowed, as a matter of policy, to plan their affairs with a reasonable degree of certainty. Department of Commerce, Model Uniform Product Liability Act, Analysis ง 110(B)(1), 44 Fed.Reg. 62,713, 62,734 (1979). It is this third rationale which goes to the heart of the product liability rate-setting problem, 44 Fed.Reg. at 62,734, [15] and which appears to have motivated the passage of the North Dakota Products Liability Act. This is indicated by the goals of the legislature explained in Section 28-01.1-01, N.D.C.C., Declaration of legislative findings and intent, which reads: 1. The legislative assembly finds that the number of lawsuits and claims for damages and the amount of judgments and settlements arising from defective products has substantially increased in recent years. Because of these increases, the insurance industry has drastically increased the cost of products liability insurance. The effect of increased insurance premiums and increased claims has increased product cost through manufacturers, wholesalers, and retailers passing the cost of premiums to the consumer. Certain product manufacturers are discouraged from continuing to provide and manufacture certain products because of the high cost and possible unavailability of products liability insurance. 2. Because of these recent trends, and for the purpose of alleviating the adverse effects which these trends are producing in the manufacturing industry, it is necessary to protect the public interest by enacting measures designed to encourage private insurance companies to continue to provide products liability insurance. 3. It is the purpose of sections 28-01.1-01 through 28-01.1-05 to provide a reasonable time within which actions may be commenced against manufacturers, while limiting the time to a specific period for which products liability insurance premiums can be reasonably and accurately calculated; and to provide other procedural changes to expedite early evaluation and settlement of claims. Much of the attention given to statutes of repose concerns their inability to influence products liability insurance rates. Testimony was presented to North Dakota legislative committees to the effect that the legislature could not accomplish its intended purpose through this statute. The committees were informed that products liability insurance rates were determined on a national basis and that action by a single state legislature would have virtually no effect on the prices of products liability insurance. This was subsequently supported by the report of the Department of Commerce on the Model Uniform Product Liability Act, in which the following observation was made: Product liability insurance rates are set on the basis of countrywide, rather than individual state, experience. Insurers utilize countrywide experience because a product manufactured in one state can readily cause injury in any one of the other states, the District of Columbia, or the Commonwealth of Puerto Rico. One ramification of this practice is that there is little an individual state can do to solve the problems caused by product liability. 44 Fed.Reg. at 62,716 (1979). It has been urged, however, that this argument must be kept in perspective and should not be used to force the state legislatures to roll-over and play dead when faced with products liability insurance rate problems. [16] Section 28-01.1-02 does indicate that one of the main legislative goals involved in the North Dakota Products Liability Act, and certainly the goal which received the most attention, was to reduce products liability insurance rates with attendant benefits to industry, the public, and future claimants within limits. See 28-01.1-01. And while the legislature was provided with testimony suggesting that the statute of repose could not achieve this goal, the legislature decided to enact the statute nonetheless. The legislature apparently accepted the view that there was a lack of adequate information from products liability insurers regarding their ratemaking procedures and that this act would help solve the problem of uncertainty resulting from the `open-ended' liability exposure of products, thus making it possible to accurately rate premiums. Report of the North Dakota Legislative Council, Forty-sixth Legislative Assembly, at 139-140. The suggestion that this legislative goal could not be achieved was based upon the argument that one state, especially a state the size of North Dakota, would have little or no effect on products liability insurance rates. However, the North Dakota Legislature was also informed that several other states had enacted measures similar to the North Dakota Products Liability Act. At least 48 states have had statutes that can be considered product liability statutes of repose. McGovern, 30 Am.U.L.Rev. at 580. At least twenty-one states have had statutes of repose intended specifically for products liability cases. McGovern, 30 Am. U.L.Rev. at 585. This information suggested the existence of a trend among the states and that while one state might have little influence on insurance rates, a similar effort by many states could have a significant effect. Consistent with the idea that the existence of a trend could be significant to rate-making are the following findings of the December 21, 1979, report of the New Hampshire Commission to Study Products Injury Reparations: Since products manufactured in one state are generally marketed nationally, and since legal action involving a nationally marketed product can arise virtually anywhere, product liability rates are unlikely to be influenced by other than national trends. See Frumer and Friedman, 2A Products Liability, ง 16C[1][iii]. See also 44 Fed. Reg. at 62,716-717; Berry v. Beech Aircraft . I consider it important that, at the time 28-01.1-02 was passed by the legislature, there did appear to be a common concern in the state legislatures relating to products liability insurance rates. Apparently the most common solution for attacking the problem of products liability insurance rates has been the enactment of statutes of repose similar to, albeit not uniform with, 28-01.1-02. McGovern, 30 Am.U.L. Rev. at 579-80. Pertinent for possible future consideration by our legislature is a statement by the Alabama Supreme Court: The harshness of an absolute date-of-use limitation period is evident when compared to the Model Uniform Product Liability Act proposed by the Commerce Department. Section 110(B)(1) of the Act states: `In claims that involve harm caused more than ten (10) years after time of delivery, a presumption arises that the harm was caused after the useful safe life had expired. This presumption may only be rebutted by clear and convincing evidence.' (emphasis added) The Model Act merely creates a presumption and does not provide for an absolute cut-off date. Lankford, 416 So.2d at 1003. Section 110(A) of the Model Uniform Product Liability Act, which creates a defense for a manufacturer if the injury occurs after the ordinary useful life of the product, also may be worthy of consideration, 44 Fed.Reg. at 62,732. [17] See also, Minn. Stat. ง 604.03 (1976). [18] However, the fact that the legislature might possibly have passed a statute that would have been less restrictive does not necessarily lead to the conclusion that there is not a close correspondence between the statutory classification and the legislative goals. The art of fashioning better solutions to problems such as this within the framework of our government is best left to the legislative branch. While controlling products liability insurance rates has been given much attention, it is not the only legislative goal. Statutes of repose, such as 28-01.1-02, allow manufacturers to plan their affairs free from indefinite exposure to products liability claims and prevent claims when evidence may be unreliable and unavailable due to lapse of time. Stutts v. Ford Motor Co., 574 F.Supp. at 105; Davis v. Whiting Corp., 674 P.2d at 1195-96. It is possible that these objectives were part of the legislative effort in enacting 28-01.1-02. In light of the evidence of the crisis nature of products liability insurance problems in North Dakota, and apparently nationwide, at the time of the enactment of 28-01.1-02, it does appear that there was not only a rational connection between 28-01.1-02 and its basic purpose of reducing products liability insurance rates, but also a close correspondence between 28-01.1-02 and that purpose, for with the liability being limited to a definite period of years, the risks would be more limited and could be more easily determined, resulting in lower rates or at least the availability of the insurance and, hopefully, both, as more and more states across the Nation adopted similar legislation. In Arneson v. Olson, id ., this Court concluded after reviewing the findings of the legislature: The evidence in the case before us, however, indicates that either the Legislature was misinformed or subsequent events have changed the situation substantially.... [T]he trial court made a finding that there did not appear to be an availability or cost crisis in this State. We cannot say that this finding is clearly erroneous, based upon the evidence in this case. In the absence of such a finding of crisis, and in view of the drastic limitation on recovery, we conclude that the $300,000 limitation on recovery in malpractice cases is a violation of the equal-protection provision of the North Dakota Constitution. 270 N.W.2d at 136. I believe the approach applied by the trial court and by this Court in Arneson was an erroneous approach, and accordingly, I will not apply it. It is not the function of the Court to second-guess the accuracy of a legislative determination of fact. Minn. State Board of Health v. City of Brainerd, 308 Minn. 24, 241 N.W.2d 624, 629 (1976), appeal dismissed, 429 U.S. 803, 97 S.Ct. 35, 50 L.Ed.2d 63 (1976). See also, Montana-Dakota Utilities Co. v. Johanneson, 153 N.W.2d 414, 423 (N.D.1967). Furthermore, it is not the responsibility of a court to strike down legislation based upon evidence which surfaces or events which occur subsequent to the passage of the legislation. It is the legislature's responsibility, at least initially, to adapt our statutes to conform to new evidence and circumstances and reasonable opportunity should be provided the legislature to accomplish that objective. Application of Zimbelman, 356 N.W.2d 99, 102 n. 1 (N.D. 1984). Accordingly, I find that 28-01.1-02 does not violate Article I, Section 21, of our state constitution. Although it has been urged that 28-01.1-02 also violates the equal protection clause of Section 1 of the Fourteenth Amendment to the United States Constitution, as we have been referred to no supporting authority, I shall assume there is none. My inexhaustive research indicates that authority is to the contrary. See, Hartford Fire Ins. v. Lawrence, Dykes, Goodenberger, 740 F.2d 1362; Barwick v. Celotex Corp., 736 F.2d 946; Wayne v. Tennessee Valley Authority, 730 F.2d 392; Braswell v. Flintkote Mines, Ltd., 723 F.2d 527; Dague v. Piper Aircraft Corp., 513 F.Supp. 19. Taking a cue from Justice White in a fairly recent case involving an equal protection issue, I am satisfied 28-01.1-02 does not offend that provision: In ordinary civil litigation, the question frequently is which party has shown that a disputed historical fact is more likely than not to be true. In an equal protection case of this type, however, those challenging the legislative judgment must convince the court that the legislative facts on which the classification is apparently based could not reasonably be conceived to be true by the governmental decisionmaker. Vance v. Bradley, 440 U.S. 93, 110-111, 99 S.Ct. 939, 949, 59 L.Ed.2d 171, 184 (1979). I am not convinced that the legislative facts on which 28-01.1-02 is based could not be conceived to be true by the legislature. Accordingly, I believe that 28-01.1-02 does not violate the equal protection clause of the Fourteenth Amendment.