NLBMDA, with the combined strength of our state and regional building material associations, has launched an all-out effort to provide liability protection for our 8,000 dealer members. On May 25 the Innocent Sellers Fairness Act (ISFA) (H.R. 5500) was introduced in the 109th Congress by Representatives Ric Keller (R-Fla.) and Dan Boren (D-Okla.). Additional co-sponsors for the bill include Representatives Lincoln Davis (D-Tenn.), Jeb Hensarling (R-Texas), Wally Herger (R-Calif.), Nancy Johnson (R-Conn.), Randy Kuhl (R-N.Y.), Michael McCaul (R-Texas), Marilyn Musgrave (R-Colo.), and Bob Ney (R-Ohio).
Their support represents the first steps toward providing justice for innocent retailers victimized by predatory lawsuits. NLBMDA is working with Congressmen
Keller and Boren to advance this important legislation, which would protect the innocent retailer who merely sold a legal product to his or her customer. This legislation ensures that a retailer would only be liable for damage or injury for which their company was directly responsible.
NLBMDA Risk Management Forum, Oct. 25, 8:30 a.m.–4:30 p.m., Phoenix. The forum will take place before the start of the Industry Summit sponsored by NLBMDA and PROSALES. Look for more information at www.dealer.org.
This is common-sense legislation to restore fairness to a system that penalizes anyone seen as having “deep pockets” to target. In some cases, plaintiffs have been awarded damages on products they were not even sure had been purchased from the defendant's store.
Unfounded and unfair lawsuits are increasingly having a negative effect on the ability of lumber and building material dealers to run their businesses and contribute to their communities. A winter 2005 survey of NLBMDA members found that more than 1 in 4 have been the subject of product liability lawsuits within the past five years; 65 percent of those have been involved in more than one. The high costs of defending such lawsuits ($50,000 to $100,000, according to the Small Business Administration) typically force building material dealers to settle, regardless of the merits of the case.
Current law imposes liability without wrongdoing on sellers and exposes them to all the damages allegedly suffered by a plaintiff, even though other defendants may have played the critical role in causing the damages. The “mistake” may have been in the manufacture or design of the product, or in a customer's improper use of the product; however, the seller is oftentimes faced with some or all of the liability. No amount of care can free a seller from disproportionate product liability, and plaintiffs' lawyers know this—they routinely sue anyone in the chain of distribution of a product, often forcing settlements out of otherwise innocent merchants.
These abusive product liability cases are part of a growing litigation burden on our nation's small businesses. According to a 2003 study by the U.S. Chamber Institute for Legal Reform, small businesses bear 68 percent of business tort liability costs. The high price of liability insurance forces many small businesses to pay more than $15 billion a year in combined out-of-pocket tort liability costs because they cannot afford insurance. For a typical building material supplier with $1 million a year in revenue, the average tort liability cost is $17,000 a year. These costs drive up the price of building materials, ultimately increasing the cost of a new home.
All LBM executives can play a significant role as NLBMDA seeks passage of H.R. 5500. Dealers can support the association's efforts by calling, writing, faxing, or e-mailing their members of Congress and asking them to co-sponsor the Innocent Sellers Fairness Act. Please visit www.buildthevote.org for more information on how you can join the ISFA team.
NLBMDA would like to thank each of the representatives who co-sponsored this bill for getting involved and bringing this important legislation to Congress to protect the rights of our dealers and small business owners across the country. —Christine Stollas is director of communications and public affairs for NLBMDA.
NLBMDA The National Lumber and Building Material Dealers Association represents more than 8,000 lumber and building material companies with more than 400,000 employees, 20 state and regional associations, and the industry's leading manufacturers and service providers. NLBMDA's member companies are the suppliers of builders in every state across the U.S. www.dealer.org.
The opinions expressed in NLBMDA Briefings are that of NLBMDA and may not represent that of PROSALES.