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October 21, 2010  |   Comments (0)   |   Post a comment

The Roots and Results of School Bus Lawsuits

Litigation can have far-reaching effects throughout the pupil transportation industry — from school districts to contractors to manufacturers. Here, we examine issues that can lead to lawsuits, how legal costs impact bus prices and how to reduce the risk of ending up in court.

by Thomas McMahon - Also by this author

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Startling sums
In pupil transportation lawsuits, the amount of money sought by plaintiffs can run into the millions, and defending against the claims in itself can be a very expensive endeavor.

A common cause of litigation in the school bus industry is crashes with serious injuries or fatalities. Pictured is the aftermath of the 2006 crash in Huntsville, Ala., in which four students were killed and more than 30 others were injured.

“Plaintiffs typically are looking for a ‘deep pocket,’” Marcela says.

In addition to the operator and the manufacturer of the school bus, that may include the driver of a vehicle that ran into the bus.

Palmer says that if the incident resulted in a serious injury or death, “the plaintiff virtually always seeks recovery well in excess of $1 million, and in some cases into the tens of millions of dollars.”

For a bus manufacturer, fees for attorneys and expert witnesses and other defense-related costs can add up to hundreds of thousands of dollars in some cases, Palmer says. Whether these costs are covered by insurance varies by company, depending on the degree of self insurance.

In cases involving an alleged violation of a student’s constitutional rights, plaintiffs sometimes seek six-figure amounts.

“They are often covered by insurance to some extent, but even settlement amounts can be very great, and insurance premiums can reflect this,” says Burns, who co-authored the new book Defensible Decisions about Transporting Students with Special Needs: Lessons Learned from Legal Disputes.

Even in cases in which smaller amounts are sought — a common example being a complaint of a school district not providing appropriate transportation for a student with disabilities — attorney fees can still be significant, Burns notes. Also, the district may have to pay the parents’ attorney costs if the parents prevail.

On the other hand, complaints brought in state court that allege failure to provide appropriate supervision or negligence are often dismissed due to state governmental immunity statutes, and insurance typically covers these cases, Burns says.

Driving up prices
Lawsuits against school bus manufacturers have a far-reaching impact in that they ultimately affect bus prices — not just in the area where the incident occurred, but across the nation.

“The cost of defending against litigation is significant and is thus no different than other operational costs — all of which must be considered in establishing the price of a product,” Palmer says.

Marcela says that there is “no doubt that lawsuits against school bus manufacturers affect prices.” He says that although the manufacturers win most cases, “they pay good law firms to win those cases, and the costs of defense can be high.”

(Representatives for IC Bus declined to comment for this article.)

This effect of litigation costs on bus prices is especially significant at a time when many school districts are struggling with budget shortfalls. SBF’s 2010 School District Survey found that 19 percent of respondents bought fewer new school buses this year than last year, while 36 percent bought no new buses at all.

Separate SBF research shows that North American school bus sales were down 8 percent in 2009 compared to 2008, or 25 percent below the peak in 2006.

Moreover, school bus prices have increased by several thousand dollars this year because of additional engine emissions technology to meet the EPA’s stringent 2010 standards.

Documents go to court
What may come as a surprise to some in the pupil transportation community is that documents and statements from industry organizations are often used by attorneys in litigation proceedings, according to sources with experience in such cases.

While the manufacturers may employ this type of information from industry groups (both state and national associations) in defending themselves against lawsuits, the plaintiffs’ lawyers also make use of it in trying to support their claims.

Examples of documents that have been utilized by both defense and plaintiff attorneys include associations’ position papers, the National School Transportation Specifications and Procedures manual (see sidebar), and rulemaking docket submittals from industry organizations and individuals.

“Unfortunately, there are times when something someone writes or says can be turned around and used in a negative manner,” says Charlie Gauthier, former executive director of the National Association of State Directors of Pupil Transportation Services.

“It is common for plaintiffs’ attorneys to try to establish ‘industry standards’ or high standards for what amounts to ‘reasonable’ conduct on the part of a school district,” Burns says of the use of industry documents. “School districts and contractors would then be in a position where they’d have to explain either how they meet those standards, or why those standards do not apply in the situation at hand, or why the district or company deviated from them in this case.”

Finlayson-Schueler says that these documents that outline best practices for the industry create benchmarks that school bus operations are judged against.

“Either a transportation manager can make it a part of their job to become familiar with those benchmarks and develop an operation that is in line with those recommendations, or it can happen after an accident has occurred that demonstrates that they are out of sync with best practice,” Finlayson-Schueler says. “I have used those standards both to defend districts and to make the case for plaintiffs.”

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