Bush Administration makes it Tougher for Consumers to Sue Companies

February 20, 2006 – Last week, the Consumer Product Safety Commission (CPSC) approved new rules that make it tougher for consumers to file law suits against mattress manufacturers. And last month, the FDA imposed similar rules, making it more difficult for consumers to sue drug manufacturers. These are just the latest moves from an administration and Congress that appear to be doing everything that they can to stop state regulation of industry.

 

In 2004, Congress passed the Fair and Accurate Credit Transactions Act (FACTA) which stopped the states regulating how banks share customer information with their affiliate companies. Since then, both Congress and the administration have continued to push through laws that usurp state regulatory authority in favor of more relaxed federal standards. And they have done this despite repeated polling data that shows the vast majority of consumers disagree with them.

 

Yet, there is no sign that either the administration or Congress are about to change their ways. The National Highway Traffic and Safety Administration is now seeking to exempt automobile manufacturers from law suits for car rollovers. Specifically, they want to make it illegal for states to impose laws that require stronger automobile roofs than the federal government requires.

 

"Having a single federal standard is the best way to guarantee safety," said Brian Turmail, spokesperson for the Transportation Department.

 

But the trend is quite disturbing and may have significant ramifications where financial privacy and identity theft are concerned. There are no fewer than 19 bills in Congress right now to regulate data brokers and data collection practices. A good number of these bills would set a very weak federal standard for notifying consumers when their information is exposed to anyone who is not authorized to see it. In effect, the laws of 21 states with strict standards of consumer notification could be nullified.

 

This is precisely what happened in the case of FACTA. California had passed an extremely strong privacy law that would have prevented banks from sharing consumer information with affiliate companies if the consumer opted out of such sharing. Almost as soon as the law passed, lobbyists for the banking industry were in Washington, trying to get federal legislators to overrule it. They succeeded.

 

But the White House denies that it is trying to stop states from regulating certain industries. Decisions about federal preemption "are made agency-by-agency and rule-by-rule," said Alex Conant, spokesman for the Office of Management and Budget. "Under the Constitution, federal laws take priority over inconsistent state laws." But this type of usurpation of states rights was clearly not the intent of the founders of this country. In fact, the Constitution specifically states that rights not reserved for the federal government are reserved for the states.

 

One of the great ironies of the new CPSC rule on mattress fires is that when adopting it, the CPSC also set higher standards for mattress safety. These standards are nearly identical to the standards set by California. And California’s standards were adopted as a result of a consumer law suit. In that case, a seven year old boy was burned over 85% of his body. A humidifier that had been near his bed malfunctioned, causing the initial fire. Investigators estimated that once his mattress caught fire, it only took two minutes for it to become fully engulfed.

 

Under the new standards, mattresses will have to limit the spread of a fire for up to 30 minutes. The CPSC expects that the new standards will eliminate 75% of injuries or deaths due to mattress fires. But if the new CPSC rule had been in effect prior to the law suit in California, it is doubtful that there would have been any further improvement in mattress safety.

 

One of the most disturbing aspects of this attack on states rights is that the federal legislators who are putting these laws in place know that they are doing so over the wishes of voters. They are clearly aware when voters at the state level implement new laws that they override.

 

The reason for this type of behavior is clear. Corporate campaign donations and perks. The unfortunate truth is that until it becomes illegal for legislators to take corporate donations, even in the form of “soft money”, the politicians in Washington will continue to do what they do best; exchange votes for cash. Don’t hold your breath for that to happen. Such laws require political courage; something is short supply in Washington.

 

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