Transcript Slide 1

Can the EU “REACH” the
American Tort System?
Presented to the SOCMA Corporate
Excellence Conference
May 16, 2008
Savannah, Georgia
By:
Dr. Karl J. Duff, Ph.D., J.D.
Attorney at Law (Georgia and Illinois)
Professional Liability Consultants, LLC
Telephone: 770-345-3577
EMail: [email protected]
©2008 Professional Liability Consultants, LLC / ALL RIGHTS RESERVED
A New EU Agency with a
Mission …
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The European Chemical Agency is
charged with implementing the
REACH regulatory approach
– This is NOT the same world view as
bringing a chemical to market in the US;
– REACH wants to create a regulatory
world where it must be shown that the
chemical in question is safe.
US Companies and REACH
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When US firms sell to consumers or
intermediary firms in the EU, they will
have to comply with EU rules and regs
in order to compete for EU business.
This isn’t news.
So what is the news?
The News is …
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US firms need to think about REACH,
even in connection with operations
here in the US.
What??!!! Why?
– The answer lies in the machinations of
the US legal system;
– The US legal system, even absent
Congressional or regulatory action,
might impose REACH rules here.
Know Your Tort-Feasor …
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The American tort system is frequently the
engine driving much of our civil litigation.
Generally, tort liability is fault (negligence)
- based.
However, as the chemical industry knows
all too well, we have a robust category of
risks which arise without the need for
fault: products liability.
So, which is it?
Negligence or not?
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REACH could be used as a tool by
judges in creative ways to change
standards of liability and to create new
levels of risk.
Here’s the bad news:
– It could be either; or
– It could be both.
REACH and Standard Tort
Approaches
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Negligence and fault are driven by
the notion of a standard of care;
What this means is that the law
requires a duty of reasonable care
under the particular circumstances;
This idea adapts and evolves over
time.
– Story of Court of Appeals Duff Case
Learning from Judge
Cardozo …
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“Precedents drawn from the days of
travel by stagecoach do not fit the
conditions of travel today. The principle …
does not change, but the things subject
to the principles do change. They are
whatever the needs of life in a developing
civilization require them to be.”
MacPherson v. Buick Motor Co.
217 N.Y. 382 (1916)
What does this mean?
It means that Courts are free to adopt new
rules as they see fit to face new
developments, as I learned under live fire
in the Court of Appeals.
It means, too, that Courts can redefine
what negligence means by looking to the
“needs of a developing civilization.”
Courts can look to foreign
jurisdictions …
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In October of 2003, then-Supreme
Court Justice Sandra Day
O’Connor gave a speech in Atlanta,
Georgia where she predicted that:
“[O]ver time we will rely
increasingly, or take notice at least
increasingly, of international and
foreign courts in examining
domestic issues."
What does the Supreme
Court say today?
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In a recent (March, 2008) decision,
three of the nine Justices appeared
ready to go down the road posited
by Justice O’Connor: Justices
Breyer, Souter and Ginsberg.
– See: Medellin v. Texas U.S. Supreme
Court Case No. 06-984, March 25, 2008, slip
op.
In fact, courts can look to
regulatory requirements,
not just laws …
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Judge Eldrige instructs us in
another classic case that:
– “[L]egislative or administrative
requirements that persons or
businesses conduct their operations in
a particular manner and adhere to
specified standards have never been
viewed as supplanting tort liability.”
Wait, there’s more …
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Judge Eldrige continues:
– “On the contrary, such statutory or
regulatory requirements are deemed
to furnish standards by which courts
or juries determine along with other
circumstances whether or not conduct
is negligent.”
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Volkswagen of America, Inc. v. Young
272 Md. 201 (1974)
How can this change
the rules?
First of all, the whole concept of REACH is
different from our approach in the US. At
present, we don’t conform to a “proof of
the negative” approach.
A Court could look to the EU and say that
it was time for a change, and not doing the
EU testing and proof of safety in the US
amounted to negligence, since the
standard of care has apparently changed.
But wait! I only have to
do this in the EU …
And that’s part of the crux of the problem:
A firm complying with EU REACH would be
asked why it chose to not do the work and
testing here in the US …
“Because I don’t have to” - might not be a
good answer … especially when one of the
questions preceding this one related to
corporate concern for safety, persons and
the environment.
What if the REACH data
base indicated a problem?
“A defendant who continued
manufacturing a substance, or using it in
its products or preparations, in ignorance
of hazards set out in the [REACH] data
base, would find it difficult to [assert
certain defense arguments] or, indeed,
defend a more traditional negligence
claim.”
“Effects of the EU’s New Chemicals Regime”, Andrew
Austin, Esq., For the Defense, December, 2007
EU Data Base: A Trap for
the Unwary?
Austin, a senior associate at
Freshfields, goes on to cogently
argue:
“[E]xistence of the database may
make it more difficult for companies
on either side of the Atlantic to
defend chemicals-related product
liability litigation.”
What do to?
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First: confer now with your counsel and
technical advisors about whether you
think this might be an issue, and what
steps you may want to take to address
it.
This initial effort should be informed by a
careful reading of Mr. Austin’s analysis.
The decisions about which courses of
action to follow could be crucial in later
years if the US risk/liability paradigm
changes by judicial fiat (even without
Congressional or administrative action).
Limitations
1. These materials are intended only to stimulate thought, dialogue and risk
analysis on the part of SOCMA conference attendees, as well as the
Counsel, Brokers and Risk Management personnel of such attendees
(collectively: “SOCMA”). No representation or warranty is made or intended
that following these suggestions will successfully address particular risks.
These materials are not intended to be a comprehensive catalogue of risk
issues. SOCMA must seek assistance from its own team of advisors,
including locally-licensed Counsel, Brokers and Risk Management personnel
on a case-by-case basis.
2. This document is not a legal opinion, nor is it intended to be legal
advice. It is an attempt by the author to flag risk issues based upon the
author’s experience for the consideration of SOCMA. No attorney-client
relationship to non-AIG entities or personnel is made or intended, and any
such relationship is hereby expressly disclaimed.
3. Opinions by the author or his firm are not in any event to be understood
as the view or position of AIG Environmental or any AIG company. No
opinion is intended or given as to whether a particular risk may be (or may
not be) covered by a particular policy of insurance. Any non-AIG entity or
person (third parties, including but not limited to SOCMA) in receipt of this
document receive it “for information only”, not for reliance, and in every
respect subject to the terms and provisions of these limitations.
Questions and Answers /
Contact Information
Dr. Karl J. Duff, Ph.D., J.D.
Attorney at Law (Georgia and Illinois)
Professional Liability Consultants, LLC
2205 Riverstone Blvd. – Suite 108
Canton, Georgia 30114
Telephone: 770-345-3577
Fax: 770-345-3573
EMail: [email protected]