Muzzling the watchdogs: The high cost of consumer advocacy

Sunday, November 9, 2003

Suddenly the world feels a little less safe.

The U.S. Supreme Court’s failure to review a federal court decision has dealt a serious blow to America’s consumer watchdogs.

At a time when so many of our security concerns are focused on terrorism, it’s easy to forget that about 42,000 Americans die each year in automobile accidents. The structure and integrity of America’s automobiles are important to our collective safety.

One of the greatest allies the public has is Consumers Union, a nonprofit organization that publishes Consumer Reports magazine. The publishers have a track record of independence and integrity, refusing to run advertising or accept corporate contributions. The mission of Consumers Union is to monitor products for quality and safety, providing objective assessments to the American people.

This record, however, was not sufficient to protect Consumer Reports from a lawsuit by automaker Suzuki, angered by a 1988 negative review of the Suzuki Samurai. Astonishingly, 15 years after the critical coverage, Suzuki is being allowed to bring a multimillion-dollar lawsuit against Consumer Reports.

A federal court had thrown the lawsuit out, citing First Amendment protection, but an appellate court has reinstated it, exposing the magazine to extraordinarily costly litigation.

In 1988, Consumer Reports tested the Samurai and other SUVs on an avoidance maneuver track. The Samurai performed well.

Then a technical director at Consumer Reports asked to take a turn behind the wheel. On one of his test runs, the two front wheels of the Samurai suddenly rose about a foot off the road. This incident led the examiners to test more thoroughly, putting the Samurai through an additional series of tests, which showed a potential for rollover.

The July 1988 article described the Suzuki Samurai as “not acceptable” because of this tipping tendency. Consumer Reports was not alone in its concerns. Before the article was published, the Center for Auto Safety had pushed for a recall based on the threat of rollovers. In time, accident victims filed lawsuits against Suzuki, alleging a defective product.

Initially, Suzuki did not sue Consumer Reports. In fact, the statute of limitations had run out and no libel suit was possible. Unfortunately for Consumer Reports, though, it briefly referred to the allegedly unsafe 1988 Samurai in a 1996 anniversary article, opening the door for Suzuki to file a new suit.

Suzuki contended that Consumer Reports distorted the results of the test, citing the technical director’s additional rides as an effort to find something wrong with the car. It also alleged that the magazine engaged in corrupt testing in order to increase magazine sales and help pay for its new headquarters in Yonkers, N.Y.

This is where the First Amendment kicks in. A pivotal case called New York Times v. Sullivan in 1964 established that the news media cannot be held liable for their reporting — even if it contains some inaccuracies — if the publication does not print the story with “actual malice.” This means that there is such a strong public interest in having the news media scrutinize government figures, public figures and major corporations, that society cuts them some slack. Libel suits are permitted only when there is evidence that the publication knew it was publishing falsehoods or engaged in such reckless behavior that it should have known that its report was false.

When this stale Suzuki case hit the federal court system, the judge knew exactly what to do. Consumer Reports had conducted 71 test runs on the Suzuki, published its methodology and explained in detail why it was giving the car an unfavorable rating. These were not the steps of a reckless publisher determined to do in an automaker. Without evidence of actual malice, the judge threw out the case.

That should have been the end of it. Unfortunately, a three-member panel of the 9th U.S. Circuit Court of Appeals reinstated the case, Consumers Union of United States, Inc. v. Suzuki Motor Corp.

That decision was so controversial that the full appellate court took a vote to decide whether it wanted to hear the appeal. By a vote of 13 to 11, the appellate court decided to toss the case back to the trial court.

This probably doesn’t sound like a bad decision to most Americans. After all, we treasure the notion that everybody can have his day in court. Why not let a jury decide this one?

The problem is the court’s decision invites major corporations to pummel America’s consumer publications and watchdogs anytime an unflattering review sees print. For years, courts have turned away these complaints, citing the public’s need for an unintimidated consumer press. This appellate decision means that any critical article — even if absolutely truthful and painstakingly accurate — can end up costing publications millions in legal fees, even if they eventually prevail at trial.

Federal Judge Alex Kozinski was one of the federal appellate judges who objected to this case going to trial. In his dissent, he recognized how this new low threshold for bringing a lawsuit can affect consumer reporting.

If Consumer Reports “can be forced to go to trial after this thorough and candid disclosure of its methods, this is the death of consumer ratings,” Kozinski wrote. “The ultimate losers will be American consumers denied access to independent information about the safety and usefulness of products they buy with their hard-earned dollars.”

Suzuki’s pursuit of this case is baffling and disturbing. After all, there isn’t much of a market for a 1988 Suzuki these days. This clearly is no longer about the marketing of an automobile, it’s about punishing — and possibly silencing — a critic.

When this case goes to trial, I suspect that Consumer Reports’ methodical and professional approach to evaluating products will lead to a decision in the magazine’s favor.

But that victory will come with a multimillion-dollar price tag and at a real long-term cost to America’s consumers. Vigilance shouldn’t be that costly.

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