Last week, premium exercise equipment manufacturer Cybex International agreed to pay $19.5m to a Cheektowaga woman, who was injured by a piece of Cybex equipment when she improperly used a leg machine to stretch her shoulder in October 2004. The settlement was reduced from the $66m originally awarded in the case, considered by many to be a record in Western New York personal injury cases. The settlement is also down from the $44m awarded by the appellate division in November 2011. But even the $44m was expected by many analysts to bankrupt Cybex, which had $4m in liability insurance.
While the reduced settlement may allow Cybex to continue to operate and let its workers keep their jobs, the fact remains that it took the very real prospect of bankrupting another American manufacturer to bring the settlement down. And the cost of this lawsuit extends far beyond Cybex. Looking at this lawsuit, American manufacturers will likely see the need to add more insurance, adding to the cost of their products and increasing the price to consumers.
Similarly, innovation will be stifled as manufacturers consider liability before quality. Even though the plaintiff in this case did not use the equipment for its intended purpose, the court ruled that the manufacturer was liable for the injury since using the equipment for stretching was “foreseeable.” Of course, now manufacturers must consider every foreseeable misuse as they design products, rather than focus on improving the experience of the intended use.
When the initial ruling came down, Cybex Chairman and CEO said the case was an example of “the tort system run amok.” We couldn’t agree more. And while this accident was tragic, if we continue to bring American companies to near bankruptcy with litigation, do not be surprised if there are not many American companies left.
© By: Tom Stebbins, Executive Director