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Consumer Protection Bills Spark Bitter Lobbying Battle

Manufacturers, consumer advocates, trial lawyers in backroom tug of war

By Joseph S. Enoch
ConsumerAffairs.com

January 25, 2008

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The Consumer Product Safety Commission's authority and funding may be vastly improved by one of two bills in Congress, but lobbyists are locked in a bitter tug-of-war that some say could derail the legislation.

The House's H.R. 4040 and the Senate's S. 2045 look the same upon first glance. But there are four key differences that have consumer advocates and trial lawyers cheering and industry lobbyists scared.

H.R. 4040 unanimously passed the House hours before the holiday recess and Senate Majority Leader Harry Reid (D-Nev.) placed it on the Senate calendar.

S. 2045 has also been placed on the Senate calendar, but in actuality, according to sources, is locked in negotiations, which have temporarily broken down, between the bill's author, Sen. Mark Pryor (D-Ark.) and Sen. Ted Stevens (R-Alaska), a staunch defender of manufacturers.

The Senate bill contains a section that reverses many of the Consumer Product Safety Act's provisions that protect companies, even those that have broken the law or manufactured dangerous products, from disclosing almost any information other than what is available in the recall press releases, which are usually less than 250 words.

S. 2045 also gives state attorneys general the ability to not only act on behalf of the CPSC, which is offered in H.R. 4040, but also to seek damages for those consumers affected.

The bill also provides the CPSC with preemptive protection from lawsuits that corporations may file against the agency in response to fines or legislative decisions. Almost every other regulatory agency has preemption. The CPSC has not had it since the agency was founded in 1973.

The final controversial section of the Senate bill provides extended whistleblower protections.

Bitter background

While controversies like this are not uncommon, the three apparent sides lobbying for or against these clauses are in a particularly bitter fight. Almost no one ConsumerAffairs.com interviewed for this story would go on the record, but all spoke liberally on background about the “dirty games” the other sides are playing against each other.

Consumer advocates and trial lawyers appear to be lobbying hard for the disputed clauses to remain in the bill.

“The idea is to pass this bill to get a majority of votes and we want it to stay as strong as possible,” said Rachel Weintraub, director of product safety at the nonprofit Consumer Federation of America.

While no trial lawyers with inside information would speak on the record, many industry lobbyists told ConsumerAffairs.com that the consumer advocates have enlisted the help of trial lawyers, who have an ample amount of funds for lobbying, to “do their bidding.”

If consumer advocates and the trial lawyers are successful in keeping these clauses in the legislation, the trial lawyers could make “hundreds of millions of dollars over a four- or five-year period” by suing companies on behalf of injured consumers, said Victor Schwartz, an industry lobbyist, one-time trial lawyer and now general counsel to the American Tort Reform Association.

Trial lawyers who take cases on contingency are paid only when they win damages for their clients. If trial lawyers are not allowed to sue companies for manufacturing products that harm or kill consumers, the consumers will have no way to be compensated for their loss.

Weintraub, the only consumer advocate who would speak on the record for this story, adamantly denied that consumer advocates had teamed up with the trial lawyers.

“I have absolutely no knowledge of that,” she said. “I haven't heard from anyone on the Hill that they've been contacted. I just don't know.”

The American Association for Justice, formerly the Association of Trial Lawyers of America, did not return four calls for comment.

In a memo distributed yesterday by Jim Neill, Assistant Vice President of Corporate and External Affairs at the National Association of Manufacturers (NAM), to a coalition of manufacturers working to influence the pending legislation wrote, “As we know, coalition member trade associations and companies are targets of consumer advocates and the trial bar. Efforts to keep S. 2045 unacceptable to manufacturers and retailers and reject the bipartisan achievement H.R. 4040 have not ended.”

Neill did not return three phone calls for comment.

While consumer advocacy groups, which are usually run on minimal budgets and have very little money for lobbying, may have enlisted the help of trial lawyers, NAM, the nation's largest industrial trade association, has admittedly bankrolled a huge campaign against Pryor's proposals and according to one source close to the negotiations, “has spent thousands and even hired a PR firm.”

Level ground

Richard Doherty, a consumer protection lawyer for 13 years in Chicago, said that the House legislation brings the beleaguered agency back to a level ground where it might be able to operate the way it should and that the controversial Senate clauses give the agency a fighting chance to stand up to the corporations who have millions of dollars to silence their critics and support lobbying firms such as NAM.

But industry lobbyists, who have mostly supported H.R. 4040, claim that the controversial clauses in the Senate bill are going to delay any vote and may eventually derail the legislation, which Pryor originally hoped to get onto the Senate floor before Christmas.

“Published reports about the Senate agenda would indicate that S. 2045 will not see floor consideration before the President's Day recess in February and could actually extend into March,” Neill wrote in his memo.

“I do not want to see the proposals get off in a sidecar that dooms the whole thing,” said Schwartz, who conceded that the agency needs more money and staff.

Weintraub said the controversial clauses will not doom the legislation and that the final product will be a combination of 2045 and 4040.

With both bills looming on the Senate calendar, Reid has the potential to trump Pryor's legislation and vote on 4040. Reid's spokespeople would not comment and insiders on both sides said that would be unlikely.

Stevens did not return two calls for comment and in an e-mail, Pryor wrote that the ultimate goal of the legislation was to protect consumers.

“I urge the Senate leadership to schedule floor time for consideration of this very important bill as soon as possible, and I am 100 percent committed to working for its passage,” he wrote. He did not address specific questions regarding lobbying.

Weintraub said the best interest from CFA's perspective and the Senate bill is for consumers, who will likely be more protected from companies who outsource cheap labor and parts to Chinese manufacturers if the Senate bill stands.

“Consumers are the entity who will benefit from this legislation,” she said. “That's the goal of the legislation and I think that's the result as well.”

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