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Caterpillar settles products liability lawsuit

According to anonymous sources familiar with the settlement, Caterpillar Inc. paid more than $9 million to settle a products liability suit. The products liability suit went to court last year and the jury returned one of the largest verdicts in a products liability lawsuit ever. One legal expert believes the world's largest bulldozer manufacturer did not have a clear path to successfully appeal the verdict and instead chose the certain path of settling the case.

The facts of the case are centered around a tractor accident that caused a worker to become paralyzed. The construction worker was working on a construction site in Texas. At the time of the construction accident, the worker was using a Caterpillar Wheel Tractor 623 G Scraper to build a subdivision. While the worker was using the tractor, the machine "suddenly and without warning began dramatically bouncing up and down," according to the lawsuit.

The intense up and down motion of the tractor caused the seat the worker was sitting on to fail and the failure of the seat caused the man to crash against the frame of the tractor. The 41-year-old worker punctured a lung and suffered spinal injuries. Ultimately, the worker became paralyzed from the accident.

The lawyers who represented the worker argued that Caterpillar was aware of the defects in the tractor that created the erratic motion and failed to address the products liability issue. A jury ordered Caterpillar and the dealer that sold the tractor to pay $56.3 million in damages. Later, a judge reduced the award because Texas law limits the amount of punitive damages to twice the amount of any economic damage in the case plus $750,000. Therefore the award was adjusted to $24.4 million. Caterpillar settled the suit because it was not clear the company would win on appeal.

Source: Bloomberg BusinessWeek, "Caterpillar said to pay $9 million to resolve tractor lawsuit," Jef Feeley, 3/29/11

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