Gas can manufacturer’s bankruptcy a flashpoint for liability law

10/07/2012 7:27 AM

10/07/2012 7:28 AM

Crusading against frivolous lawsuits, the U.S. Chamber of Commerce has had no shortage of cases to highlight, like the man suing a cruise line after burning his feet on a sunny deck or the mother claiming hearing loss from the screaming at a Justin Bieber concert.

Now, the lobbying group’s Institute for Legal Reform is showing a 30-second commercial that uses Blitz USA, a bankrupt Miami, Okla., gasoline can manufacturer, to illustrate the consequences of abusive lawsuits. The ad shows tearful workers losing their jobs and the lights going out at the 46-year-old company as a result of steep legal costs from lawsuits targeting the red plastic containers, according to the company and the institute.

The closing of the 117-employee operation this summer became a rallying point for proponents of tort reform. But the commercial ducks the complexities of the product liability cases surrounding Blitz by making no mention of the dozens of casualties linked to explosions while people used the cans in recent years.

‘Flashback’ danger

In interviews, the company and the lawyers suing it seek to frame the conflict in stark terms: Lawyers with spurious claims are piling on a manufacturer; or a greedy company is hurting consumers by refusing to fix a defective product.

The Blitz cases show the conflict “between makers of products that have some hazard or danger and consumers who on occasion are injured by those products,” said Marshall S. Shapo, an expert on product liability at Northwestern University School of Law. “It is an ancient rivalry that will go on forever.”

The suits generally make the claim that the cans were susceptible to “flashback” explosions caused when gasoline vapors outside the cans ignited and followed the vapor trail back into the container. The lawyers argue that the company should have installed “flame arrester” shields at the mouth of the containers to prevent explosions.

Blitz executives note that the company, which was the nation’s leading gas can producer, sold more than 14 million cans a year over the past decade, with fewer than two reported incidents per 1 million cans sold. The company says the most serious incidents involved obvious misuse of the cans – pouring gasoline onto an open fire.

Lawsuits likely

Frank J. Vandall, an Emory University law professor, said there was probably no way that Blitz could have avoided at least some of the lawsuits.

“There is no way you can avoid liability for a can like this,” Vandall said, “because there is going to be injury, and when there is injury, there is going to be lawsuits.”

Blitz has been sued 62 times since 1994, according to the company. Only two cases have made it to court; the others were settled or dismissed, or were unresolved at the time of the bankruptcy. The company says the cases cost it $30 million in legal fees. Insurance companies paid well over $30 million more in settlements and other payouts.

In the one case Blitz lost, in 2010, a Utah jury awarded more than $4 million to the father of a 2-year-old girl killed when a Blitz can exploded after the father, David Calder, tried to start a fire in a wood-burning stove in his trailer home by pouring gasoline on the flame.

Calder argued successfully that the explosion would not have happened had the can been equipped with a flame arrester, a piece of wire mesh placed at the opening of a container that blocks flames from entering. The company is appealing.

Safety devices

Blitz won the other case that went to trial, in 2008, involving a Texas man named Brody Green, who died in an explosion when he poured gasoline from a can onto a fire. But last year, a Texas court forced the company to pay Green’s mother $250,000 for failing to provide all the documents it had on flame arresters before the trial. The court also said its order must be provided to every other plaintiff who sued Blitz over the past two years. Again, the company is appealing.

Among the documents Blitz neglected to disclose was a 2005 internal memo from Rocky Flick, the company’s chief executive, titled “My Wish List” and “Expectations for Gas Cans.” In it, Flick appears to request that in two years the company “develop and introduce device to eliminate flashback from a flame source.”

U.S. District Judge T. John Ward ruled that, had the memo been disclosed in the original case, it “would have hurt, if not potentially eliminated, Blitz’s defense that they did not add a flame arrester because it would not have been useful.”

Flick said that the list — “a handwritten document that should have been produced in the Green trial but was stuck in a different file” he said — was not a definitive plan and that the company was never against adding arresters. But Blitz officials said that after conferring with experts, they decided the devices would lead to other safety issues, including giving consumers a false sense of confidence when pouring gas on fires.

“There was no proven device that we could get that we thought would prevent somebody from getting hurt when they elected to pour gasoline on a fire,” Flick said.

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Coerced settlements

Flick said Blitz was forced to settle cases, mostly against its will, by a series of insurance companies.

“We’d get an insurance company that would insure us for one year, and they would settle and then drop us,” he said. “Then we’d have to get another insurance company, and they would do the same thing.”

A decade ago, Flick said, the company would face one or two lawsuits a year. The number grew to six or seven a year, and finally to 25 or so last year when Blitz filed for bankruptcy.

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