May 22nd, 2007

Oregonian Part III: ATV labels read: Rider beware

Tuesday, May 15, 2007SUSAN GOLDSMITH

Two years after their 7-year-old daughter almost died in an all-terrain vehicle rollover, Bill and Sherry Apple started to think about a lawsuit.

Shelby Apple required round-the-clock care after the 1999 accident. An 11-year-old girl lost control of a 585-pound Arctic Cat that flipped backward on top of Shelby, who was a passenger. For 15 minutes, she could not breathe.

Catastrophic brain and spinal damage left Shelby unable to walk or talk. Doctors said she faced a grim and expensive future. But when the Apples asked about suing Arctic Cat, lawyers were blunt.

Forget it, they said.

As the ATV industry's lobbyists fight to shape regulation in Washington, D.C., its lawyers have built a solid bulwark around their product in another arena: the courts. Injured riders once won huge verdicts, among them a landmark $5.7 million Oregon case that went to the U.S. Supreme Court. But that was long ago.

Many lawyers these days are reluctant to sue ATV manufacturers because it's just too hard to prevail. The ATV companies spend heavily to defend cases and blame the riders for accidents. Victories for plaintiffs are rare. One big reason is the sway that government-sanctioned ATV safety warnings carry with jurors.

In the Apples' case, two attorneys told the couple safety warnings clearly state that children aren't supposed to drive adult ATVs. They also warn against passengers -- Shelby and another girl had piled on behind the driver.

The Apples, of Tumwater, Wash., felt Arctic Cat held some responsibility for Shelby's accident. But now, the very safety warnings that were supposed to protect consumers shielded the company from liability.

"The lawyers won't fight the manufacturers -- they're scared of them," Sherry Apple said. "We finally gave up."

Asked about the Apples' case, Arctic Cat provided a statement saying the company "sincerely regrets when the failure to heed these instructions and warnings leads to injury."

Lawsuits claiming ATVs are dangerously unstable flourished in the 1980s -- until the warnings took effect as part of a legal settlement through which the industry avoided harsher regulation. Now, lawyers for the companies and plaintiffs alike say the day of big-time jury verdicts in ATV cases is over.

Case after case of quadriplegia and paraplegia ends in wins for the companies, The Oregonian's search of legal databases shows. Although the companies have settled some recent cases with big payouts, attorneys on both sides say ATV suits settle for less than other product liability claims. Some settlements are sealed, making it impossible to track industry legal costs with certainty.

Plaintiffs' lawyers argue that the safety warnings amount to little more than a liability shield.

"Consumer product warnings are a pretty smart idea if you've got a problem with the safety of a product and you want a defense when it comes back to roost," said William Gaylord, the Portland lawyer who filed the Oregon case against Honda before the agreement on safety warnings took effect in 1988.

The ATV manufacturers insist that their product is safe when used properly and that warnings are to protect riders. But their own lawyers freely acknowledge that the warnings are a powerful tool in the courtroom.

"The labels gave us the defense that, 'Hey, we told you,' " said Doug Somers, a former Honda corporate attorney who practices in Tacoma. "They made a whole lot of sense to juries."

The ATV industry is not alone. Tobacco companies and others commonly cite consumer warnings as a defense in personal injury cases. But critics say the ATV warnings are unusually sweeping and can be ambiguous, advising against things such as "excessive" speed or hills that are "too steep . . . for your abilities."

"Their advertisements show people riding up hills," said Ed Silva, a Philadelphia lawyer who earlier this year settled a rollover case with Yamaha. "They call them all-terrain vehicles. I think steep terrain is part of all terrain."


Oregon case pivotal


The manufacturers didn't always enjoy this kind of winning streak.

In the 1980s, America fell in love with the ATV. Sales skyrocketed, and with them reports of injuries and deaths. Lawsuits came just as quickly, with the manufacturers' success in court wildly uneven.

Three-wheel ATVs dominated the market and came under attack as a rollover-prone design. As the industry struggled to defend itself, the top executive at American Honda laid out what would become an industry mantra.

"There is no problem with the machine," Tetsuo Chino testified at a 1987 trial in California. "The problem is with the rider."

The strategy also anchored Honda's defense in Gaylord's case.

In 1985, Karl Oberg tried to climb an embankment on his brother's three-wheel Honda. Instead of cresting the hill, the machine flipped over, smashing into his face. The 19-year-old Oberg underwent multiple reconstructive surgeries. Two years after the accident, he sued Honda in Multnomah County Circuit Court.

Gaylord argued that Honda repeatedly had been put on notice about the machine's instability problems. Honda said there was nothing defective about the machine and that Oberg was at fault. Jurors sided with Oberg. They awarded him $735,000 in actual damages and $5 million more to punish Honda for selling an unsafe product.

The case made national headlines as the first time Honda was hit with punitive damages in an ATV case, and it underscored the huge financial stakes the cascade of lawsuits posed for the ATV industry.

Honda appealed the Oberg award all the way to the U.S. Supreme Court and lost. But long before the case was resolved, the ATV companies were at work on a remedy for their litigation woes.

Under pressure from the U.S. Consumer Product Safety Commission and Justice Department, the ATV companies came up with a plan to make sure consumers would see multiple warnings about the hazards of riding.

Federal regulators felt warnings for three-wheelers had been inadequate, said Leonard Goldstein, who was a lawyer with the agency for more than 30 years and worked on the negotiations over warnings.

Manufacturers and the agency each brought in experts to develop the warnings, and the two sides hammered out details adopted as part of a 1988 legal settlement that took three-wheel ATVs off the market, Goldstein said. The warning regimen required placing four labels on the machine and alerting riders to 26 hazards in owners' manuals.

Among them: Never turn "improperly" or operate an ATV at "excessive" speed, on "excessively" rough or loose terrain, or on hills that are "too steep."

Critics blasted the settlement as a giveaway to the industry.

"The manufacturers have waltzed away with a package that will provide them with litigation insurance for the years of individual court battles that are ahead," warned then-Sen. Alfonse D'Amato, R-N.Y., a month before the agreement was finalized. "This settlement is an embarrassment to the American public."

Injured riders and their lawyers could no longer argue that manufacturers failed to warn consumers. Moreover, the settlement also required manufacturers to develop voluntary industry standards for ATVs. One required ATVs to meet a "pitch" standard -- a rough measurement of front-to-back stability.


Debatable protections


The standards and warnings, aided by the imprimatur of the government's top consumer agency and Justice Department, gave ATV companies a powerful argument in court -- just as D'Amato predicted.

The companies ran with it.

"We proved the accidents happened because of rider behavior," said Somers, the former Honda lawyer who worked on cases at the time, "and that behavior was warned against."

Ralph Chapman, a Mississippi attorney who's represented dozens of injured riders, said the warnings "aren't protecting anybody. They're providing defenses for manufacturers in court."

"When one of these accidents happen -- and the manufacturers expect them to happen -- they just open up those warnings and say you weren't supposed to drive it on a hill," he said.

Typical is the case that Philadelphia attorney Silva brought in 2004 on behalf of Mary Lou Kost, who was paralyzed from the waist down when the Yamaha Big Bear 400 she was riding flipped on an embankment.

Yamaha's lawyers said the ATV met federal stability standards and that Kost, then 36, didn't follow the owner's manual warnings about how to climb a hill. Kris Kubly, an engineer for Yamaha, wrote that the accident "was not caused by the design of the Yamaha" but was the "result of the unreasonable conduct of Mrs. Kost."

Silva argued that the warnings didn't convey the real dangers of climbing hills and that the Yamaha was inherently unstable. The parties ended up settling for a confidential sum.

Experts say warning labels are a last resort when a hazard can't be designed out of a product. They work best when they are specific. But in the case of ATVs, records show riders ignore one or more warnings in more than 80 percent of fatal ATV accidents, evidence that consumers don't take them seriously.

"The perception of risk is just not there," said Carol Pollack-Nelson, a warnings expert who formerly worked at the Consumer Product Safety Commission. "You can put the biggest, best warning on certain products," she said, "but there are some products for which there is an inherent risk that can't be addressed by a warning label."

Ed Karnes, a Colorado warnings expert who studied ATV safety in the 1980s and has appeared as a plaintiff's witness in scores of cases, said it's not surprising that warnings are ignored. "A lot of people think of warnings like some dumb lawyer trick, put on for liability," he said.


Pursuing insurers


With Arctic Cat off limits, Bill and Sherry Apple followed what's become a common path in ATV cases: going after insurance companies to recover under homeowners' policies.

That was the strategy of Harold Carr, the second lawyer the Apples consulted.

Oct. 23, 1999, was the day of Shelby Apple's first and only ATV ride. The Apples had not given Shelby permission to ride. She was being watched by her mother's best friend, Dena Platter, whose daughter, Jessy, and another neighbor girl spent the day on a farm owned by Platter's grandmother in Tenino, Wash.

Platter owned the ATV and kept it at her grandmother's place. That overcast morning, Platter told the three girls they could ride the ATV to the pasture to feed the cows. Platter allowed an 11-year-old neighbor who had two years' experience on the machine to drive, according to Carr.

After a brief stop near the woods, the driver put the machine in reverse, failed to engage the clutch, and the ATV lurched backward and flipped, according to the police report. Two of the girls were thrown free, but Shelby, who rode on the back of the seat, ended up underneath the machine.

She spent 18 days on life support and two months more in the hospital. The Apples said their health insurer dropped Shelby's coverage two weeks after the accident as bills exceeded the limit of $78,000, Carr said. By the time the Apples met with Carr, Shelby's medical bills had exceeded $400,000, about half covered by Medicaid.

Carr tried to puzzle out who was at fault. "Would it be the 11-year-old operator of the vehicle, the manufacturer, or the person the child was left in the care of?" he said.

Because the accident happened at a friend's farm, the Apples did not know Shelby would be riding an ATV that day. They were not present and would not have approved, they said. At any rate, Carr felt the safety warnings set too high a hurdle to recover damages from Arctic Cat.

Instead, the Apples sued the farm owner's insurance company. He took the case all the way to the Washington Supreme Court, but because the homeowner's policy had an express exclusion for ATVs, the Apples lost.

Carr did manage to get $300,000 from the homeowner's policy of the driver's parents.

Records show the state collected nearly $100,000 of the settlement for outstanding medical bills. The family set up a trust for Shelby with the $92,000 left after attorneys' fees and costs. The trust, overseen by a court, will help pay for some of the expenses Medicaid doesn't cover, the Apples said.

Platter, who has moved since the accident, could not be reached for comment despite calls to family members.

Seven years later, the Apples' lives revolve around caring for their daughter, who is now 14.

Sherry Apple, an in-home caregiver who works for the state, spends much of her time doing vocal and other kinds of therapy with Shelby. Apple and her husband, a truck driver on disability, have to bathe and dress Shelby, change her diapers and give her medication to aid digestion. She is fed by a tube in her stomach while she sleeps.

Medicaid, the taxpayer-financed health care program, has paid $839,000 toward Shelby's medical care. Ongoing Medicaid billings are $7,750 a month, including $1,000 for anti-seizure medication. She has been hospitalized repeatedly and had her spine reinforced with surgically placed rods. When one rod broke, she ended up back in the hospital.

The Apples say ATV companies should bear more financial responsibility for accidents.

"The manufacturers and our government are allowing it to go on and on," Sherry Apple said. "These companies need to be made responsible for the products they're selling."

News researchers Margie Gultry and Kathleen Blythe of The Oregonian contributed to this report. Susan Goldsmith: 503-294-5131; [email protected]