* Obama administration backed family who brought lawsuit
* Supreme Court ruling is a defeat for Mazda
* 2004 collision killed rear-seat passenger in minivan (Adds details from ruling, background, byline)
By James Vicini
WASHINGTON, Feb 23 (Reuters) - The U.S. Supreme Court ruled that federal regulations setting vehicle safety standards do not bar lawsuits seeking damages from automakers for installing lap-only seat belts.
The unanimous ruling held that a California lawsuit against Mazda Motor Corp (7261.T) over a fatal 2002 collision involving a 1993 Mazda minivan could proceed. A passenger sitting in a rear seat and wearing a lap-only seat belt was killed.
The lawsuit by the family of the passenger, Thanh Williamson, claimed that the minivan was defectively designed because it lacked a lap-and-shoulder seat belt for the rear seat.
Mazda said it complied with federal safety regulations in effect at the time and that an appellate court in California correctly ruled the product liability lawsuit could not go forward.
The Supreme Court overturned the appellate court ruling.
Justice Stephen Breyer said in the court’s opinion that the federal safety regulation does not preempt state tort lawsuits claiming manufacturers should have installed lap-and-shoulder belts, instead of lap-only belts, on rear inner seats.
The ruling adopted the position argued by the Obama administration, which said the California and other courts have interpreted federal law too broadly in barring lawsuits against automakers that put in lap-only seat belts. It said the federal regulations were meant only as minimum standards.
The vehicle safety regulations have been changed, and most passenger vehicles built after Sept. 1, 2007, include shoulder-and-lap seat belts in all rear seats that face forward.
The administration said the issue still was important and estimated that more than 1 million vehicles in the United States still have some lap-only belts. (Reporting by James Vicini, Editing by Derek Caney and John Wallace)