Court opens car industry to lawsuits

The US Supreme Court opened the car industry to new lawsuits over seatbelt design, ruling that Mazda Motor Corporation must defend against claims pressed by the family of a woman killed while riding in an MPV minivan.

The justices unanimously said that compliance with a 1989 federal seatbelt regulation doesn't shield a company from claims that it should have installed a safer type of belt. Justice Stephen Breyer wrote for the court that regulators intended to set only a minimum standard.

The ruling, which directly applies to cars made before 2007, marks a change in the law in much of the US.

Every lower court to consider the issue had concluded that the federal rules pre-empted suits by accident victims over seatbelt design.

Shares in carmakers plunged after the ruling.

Ford Motor Company shares fell as much as 4.38 per cent to US$14.44 ($19.31), the lowest price since November 3. General Motors Co. fell 1.3 per cent, to US$35.30.

The ruling scales back a 2000 decision that said federal law insulated carmakers from claims under state product-liability law that they should have moved more quickly to install air bags. The latest dispute centred on the use of two-point seatbelts - lap belts without a shoulder strap - at a time when federal regulations allowed them in some minivan seats.

Under National Highway Traffic Safety Administration rules put in place in 1989, shoulder straps were required only for so-called outboard seats - those next to a window, rather than alongside an aisle or in the centre of a row.

Thanh Williamson died in Kane County, Utah, in August 2002 when she was riding in an aisle seat equipped with a lap belt in the second row of a 1993 MPV.

The van struck a Jeep Wrangler that had become detached from a motor home that was towing it.

The collision caused Williamson's body to jackknife around her seatbelt, causing severe abdominal injuries and internal bleeding.

Mazda, which is based in Hiroshima, Japan, contended that NHTSA wanted carmakers to have flexibility as to which type of belt to install and that the Williamson suit would interfere with that policy.

- BLOOMBERG