CALIFORNIA COURT PUTS BRAKES ON AUTO LAWSUITS \ MANUFACTURERS CAN'T BE SUED BY THE UNINSURED

CALIFORNIA COURT PUTS BRAKES ON AUTO LAWSUITS \ MANUFACTURERS CAN'T BE SUED BY THE UNINSURED

A recent ruling by a California appellate court will insulate automobile manufacturers from liability under Proposition 213, the state's controversial uninsured motorist law.

By a unanimous vote, the three-judge 6th District Court of Appeal in San Jose refused to review a lower-court judge's ruling that Proposition 213 protects manufacturers from litigation from an uninsured motorist. The appellate court decided that in this case, ''non-economic damages'' also includes ''punitive damages.''The case will be appealed.

In 1996 California voters passed Proposition 213, which precludes uninsured motorists, drunken drivers and convicted felons from collecting non-economic damages or ''pain and suffering'' awards if involved in vehicular accidents.

In the products liability lawsuit at issue, in Hodges v. Ford Motor Co., 17-year-old Ben Hodges sustained severe burns over 26 percent of his body in January 1995 when the 1967 Ford Mustang he was driving was rear-ended and the gas tank exploded. Mr. Hodges was uninsured at the time of the accident. He filed suit in 1996 against Ford seeking an unspecified amount of punitive damages. His lawyers argued that all pre-1971 Ford Mustangs had defectively designed gas tanks. Santa Clara County Superior Court Judge Jeremy Fogel ruled the exclusion included in Proposition 213 applies to an uninsured driver's claim against automobile manufacturers.

ON DIFFERENT SIDES

The Hodges case represents one of the few times that consumers groups were not on the same side of a legal argument with California Insurance Commissioner Chuck Quackenbush, Proposition 213's sponsor.

In a letter to the appeals court, Mr. Quackenbush wrote, ''Proposition 213 was certainly never intended to encompass product liability claims against automobile manufacturers such as in this case. California motorists have a vital and ongoing interest in deterring manufacturers from shipping dangerous and unsafe products into California and in fairly compensating persons injured by defective products.''

He added that the public interest would not be well served by applying Proposition 213 to product liability claims.

''The ruling by the Superior Court in this case directly conflicts with the intent of the initiative and the assurances given to the voters about its impact,'' he wrote.

But Joanne Doroshow, executive director of New York-based Citizens for Corporate Accountability and Individual Rights blasted the district court's lack of action.

ANOTHER ROADBLOCK

''Injured consumers already face enormous obstacles trying to hold accountable the manufacturers of defectively-designed cars,'' she said.

Ms. Doroshow accused Ford of ''shirking its responsibility for contributing to this boy's severe injuries.

This ruling could have major implications for consumers who are injured as a result of defectively designed or manufactured automobiles.

''The electorate never intended and never anticipated Proposition 213 to be construed in this cruel fashion. We hope the California Supreme Court reconsiders this unfortunate ruling on appeal.''

San Francisco attorney David Rand said Mr. Hodges is ready to appeal.

''We'll be asking the California Supreme Court for review because the appeals court never even granted review to consider the arguments in the case, and instead sent it back to the trial court without appellate review,'' he said.

Mr. Rand believes the case is important because of its implications on products liability protection.

Even Mr. Quackenbush ''argued against the application of Proposition 213 to products liability cases, because he never intended for his measure to address that,'' said Mr. Rand.

''This initiative clearly was not aimed at products liability cases,'' he added. Rather, Proposition 213 ''was designed to insure that only those motorists who pay for insurance can derive benefits from it.

''The Ford Motor Co. doesn't contribute to the California auto insurance system, and therefore would derive a windfall from use of Proposition 213. Letting Ford off the hook does nothing to lower insurance rates as Proposition 213 had originally intended to do.''

However, Ford lawyer Frank Kelly maintains that Proposition 213 should apply to products liability exposures. ''By this action,'' said Mr. Kelly, ''the justices correctly affirmed Judge Fogel's ruling.''

Mr. Kelly, partner at Dryden, Margoles, Schimaneck, Kelly & Wait, said that applying Proposition 213 to products liability is ''sound public policy.''

He said it encourages responsible drivers ''to purchase automobile insurance and extend the protection not only to auto insurance companies but also to companies that write products liability protection under commercial general liability policies.''

STATED LANGUAGE

But when told that Mr. Quackenbush said he had never intended Proposition 103 to apply to products liability suits, Mr. Kelly said, ''We based our position on the stated language in the statute, notably that it applies to 'any action to recover damages arising out of the operation or use of a motor vehicle.'

''To read an exception into that language for products liability actions would be contrary to the stated public policy upon which the statute is based, which is to encourage motorists to comply with state law requiring drivers to purchase insurance,'' Mr. Kelly said.

A spokesman for a national insurance trade organization says he recognizes Mr. Quackenbush's concerns, but said there is a point to consider about the law.

''It appears that the justices in affirming the lower-court judge's ruling are doing so because the expansive interpretation of the law is consistent with the language in Proposition 213 itself and court cases which have upheld the measure's constitutionality,'' said Sam Sorich, a Sacramento-based spokesman for the National Association of Independent Insurers, a property/casualty insurance company association.