Hindsight is a wonderful thing

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It’s real. It’s widely recognized. The law of unintended consequences dictates that the harder you try to make a complex thing work, the more likely you are to create an unanticipated outcome. As Gene Lukianov (ATTI, November 2014) sagely reminds us, this is especially true when it comes to the design and testing of shiny new things. The more sparkly, the greater the enthusiasm, and the lower the understanding of the potential ramifications. Any student of Greek tragedy will tell you that excessive pride and ambition invariably leads to the hero’s downfall.

The law of unintended consequences is widely taught. I certainly teach it to lawyers and graduate engineers, along with Murphy’s law, to which I will return momentarily. I rather hope that Bentley Motors will teach it at the University Technical College when it opens in Crewe, UK.

The genesis of this weighty law goes back to the 1930s and a sociologist from Philadelphia called Robert Merton. He even went so far as to try to capture the possible causes of unanticipated consequences at the design stage. He cited factors such as ignorance, analysis errors and the myopic effect of immediate interests. Fast-forward to today, to the other side of Pennsylvania from my office in Philadelphia, for a current example of this law at work.

The National Union Fire Insurance Co of Pittsburgh insured Visteon. It was happy to insure the Visteon products, but it incorporated a ‘general pollution exclusion’ clause in the policy. Now the story moves to a town called Connersville, Indiana, where a Visteon plant was involved in a trichloroethylene contamination event. State regulators in Indiana made Visteon spend some US$5m on the cleanup. Visteon asked National Fire to reimburse it and also to cover it for payments to local land owners. “Whoa,” came the response from the insurer’s lawyers. “We have a pollution exclusion clause. We win, right?”

The insurers had thought of the peril.

They had certainly considered the law. They had even recognized that state laws vary. Visteon is headquartered in Michigan and by Michigan state law, pollution exclusion clauses are perfectly valid. National Fire had it covered. Or did it? Remember that the law of unintended consequences states that in complex systems there is always one consequence of which you haven’t thought. And Murphy’s law dictates that this is precisely the event that will occur. The unintended consequence that National Fire had not planned was this. Not only do some states interpret insurance policies differently, they even vary on the question of which state wins in such a conflict. Visteon declared that what counts is that the accident happened in Indiana, a state where pollution risks cannot be excluded. Indiana, said Visteon, trumps Michigan.

The solution to both the law of unintended consequences and to Murphy’s law, is the same: hindsight. It is a technology we all crave and none of us has. Except judges, obviously. In the Visteon case, US Circuit Judge Richard Posner told both sides that the entire dispute could have been prevented by adding a ‘forum selection’ clause into the policy. The case, as we lawyers like to say, continues.

Alexander M Geisler is a partner at Duane Morris. He has over 20 years’ experience in the automotive sector and is regularly retained by OEMs, Tier 1 and Tier 2 suppliers, test facilities and engineering companies. He is the resident legal columnist for Automotive Testing Technology International.

Alex can be reached at amgeisler@duanemorris.com, +44 20 7786 2111 (London) and +1 215 979 1000 (Philadelphia).

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