Not to nitpick, because I agree, but I think it's a more accurate to say "litigation doesn't work like that" or "lawyers don't work like that". I was under the impression that it's less a specific law which spells out the liability, but rather a patchwork of regulation and court cases that leave a company with so much uncertainty that the only intelligent choice is to cover your ass any-which-way that you can.
My impression (and it is merely that) comes from today's earlier discussion on liability, regulations and compliance: http://news.ycombinator.com/item?id=3889512