To amend Rule 11 of the Federal Rules of Civil Procedure to improve attorney accountability, and for other purposes.

Summary: Lawsuit Abuse Reduction Act of 2004 - (Sec. 2) Amends Rule 11 of the Federal Rules of Civil Procedure to: (1) require courts to impose sanctions on attorneys, law firms, or parties who file frivolous lawsuits (currently, discretionary); (2) disallow the withdrawal or correction of pleadings to avoid Rule 11 sanctions; (3) require courts to award parties prevailing on Rule 11 motions reasonable expenses and attorney's fees, if warranted; (4) authorize courts to impose Rule 11 sanctions that include reimbursement of a party's reasonable litigation costs in connection with frivolous lawsuits; and (5) make the discovery phase of litigation subject to Rule 11 sanctions.

(Sec. 3) Makes Rule 11 applicable to State civil actions where the court determines, upon motion, that the action affects interstate commerce.

(Sec. 4) Requires personal injury claims (defined to exclude class actions) filed in State or Federal court to be filed in the county or Federal district in which: (1) the person bringing the claim resides at the time of filing or resided at the time of the alleged injury; (2) the alleged injury or circumstances giving rise to the injury occurred; or (3) the defendant's principal place of business is located. Directs the trial court to determine which county or Federal district is the most appropriate forum in those situations where the alleged injury occurred in more than one county or district.

(Sec. 6) Requires a mandatory one-year suspension for attorneys determined by a Federal district court to have violated Rule 11 three or more times in that court during the attorney's career. Authorizes the court to suspend such attorneys for an additional period as the court considers appropriate. Gives suspended attorneys the right to appeal and stays suspensions pending appeal. Requires suspended attorneys to petition the court for reinstatement under procedures and conditions prescribed by the court.

(Sec. 7) Imposes civil sanctions commensurate with those sanctions available under Rule 37 of the Federal Rules of Civil Procedure, in addition to other available civil sanctions, for willfully and intentionally influencing, obstructing, or impeding a pending court proceeding (or attempting to do the same) through the willful and intentional destruction of documents sought in and highly relevant to that proceeding. Makes such sanctions applicable to both Federal and State court proceedings.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Lawsuit Abuse Reduction Act of 
2004''.

SEC. 2. ATTORNEY ACCOUNTABILITY.

    Rule 11 of the Federal Rules of Civil Procedure is amended--
            (1) in subdivision (c)--
                    (A) by amending the first sentence to read as 
                follows: ``If a pleading, motion, or other paper is 
                signed in violation of this rule, the court, upon 
                motion or upon its own initiative, shall impose upon 
                the attorney, law firm, or parties that have violated 
                this subdivision or are responsible for the violation, 
                an appropriate sanction, which may include an order to 
                the other party or parties to pay for the reasonable 
                expenses incurred as a direct result of the filing of 
                the pleading, motion, or other paper, that is the 
                subject of the violation, including a reasonable 
                attorney's fee.'';
                    (B) in paragraph (1)(A)--
                            (i) by striking ``Rule 5'' and all that 
                        follows through ``corrected.'' and inserting 
                        ``Rule 5.''; and
                            (ii) by striking ``the court may award'' 
                        and inserting ``the court shall award''; and
                    (C) in paragraph (2), by striking ``shall be 
                limited to what is sufficient'' and all that follows 
                through the end of the paragraph (including 
                subparagraphs (A) and (B)) and inserting ``shall be 
                sufficient to deter repetition of such conduct or 
                comparable conduct by others similarly situated, and to 
                compensate the parties that were injured by such 
                conduct. The sanction may consist of an order to pay to 
                the party or parties the amount of the reasonable 
                expenses incurred as a direct result of the filing of 
                the pleading, motion, or other paper that is the 
                subject of the violation, including a reasonable 
                attorney's fee.''; and
            (2) by striking subdivision (d).

SEC. 3. APPLICABILITY OF RULE 11 TO STATE CASES AFFECTING INTERSTATE 
              COMMERCE.

    In any civil action in State court, the court, upon motion, shall 
determine within 30 days after the filing of such motion whether the 
action affects interstate commerce. Such court shall make such 
determination based on an assessment of the costs to the interstate 
economy, including the loss of jobs, were the relief requested granted. 
If the court determines such action affects interstate commerce, the 
provisions of Rule 11 of the Federal Rules of Civil Procedure shall 
apply to such action.

SEC. 4. PREVENTION OF FORUM-SHOPPING.

    (a) In General.--Subject to subsection (b), a personal injury claim 
filed in State or Federal court may be filed only in the State and, 
within that State, in the county (or Federal district) in which--
            (1) the person bringing the claim, including an estate in 
        the case of a decedent and a parent or guardian in the case of 
        a minor or incompetent--
                    (A) resides at the time of filing; or
                    (B) resided at the time of the alleged injury; or
            (2) the alleged injury or circumstances giving rise to the 
        personal injury claim allegedly occurred; or
            (3) the defendant's principal place of business is located.
    (b) Determination of Most Appropriate Forum.--If a person alleges 
that the injury or circumstances giving rise to the personal injury 
claim occurred in more than one county (or Federal district), the trial 
court shall determine which State and county (or Federal district) is 
the most appropriate forum for the claim. If the court determines that 
another forum would be the most appropriate forum for a claim, the 
court shall dismiss the claim. Any otherwise applicable statute of 
limitations shall be tolled beginning on the date the claim was filed 
and ending on the date the claim is dismissed under this subsection.
    (c) Definitions.--In this section:
            (1) The term ``personal injury claim''--
                    (A) means a civil action brought under State law by 
                any person to recover for a person's personal injury, 
                illness, disease, death, mental or emotional injury, 
                risk of disease, or other injury, or the costs of 
                medical monitoring or surveillance (to the extent such 
                claims are recognized under State law), including any 
                derivative action brought on behalf of any person on 
                whose injury or risk of injury the action is based by 
                any representative party, including a spouse, parent, 
                child, or other relative of such person, a guardian, or 
                an estate; and
                    (B) does not include a claim brought as a class 
                action.
            (2) The term ``person'' means any individual, corporation, 
        company, association, firm, partnership, society, joint stock 
        company, or any other entity, but not any governmental entity.
            (3) The term ``State'' includes the District of Columbia, 
        the Commonwealth of Puerto Rico, the United States Virgin 
        Islands, Guam, and any other territory or possession of the 
        United States.
    (d) Applicability.--This section applies to any personal injury 
claim filed in Federal or State court on or after the date of the 
enactment of this Act.

SEC. 5. RULE OF CONSTRUCTION.

    Nothing in section 3 or in the amendments made by section 2 shall 
be construed to bar or impede the assertion or development of new 
claims or remedies under Federal, State, or local civil rights law.

SEC. 6. THREE-STRIKES RULE FOR SUSPENDING ATTORNEYS WHO COMMIT MULTIPLE 
              RULE 11 VIOLATIONS.

    (a) Mandatory Suspension.--Whenever a Federal district court 
determines that an attorney has violated Rule 11 of the Federal Rules 
of Civil Procedure, the court shall determine the number of times that 
the attorney has violated that rule in that Federal district court 
during that attorney's career. If the court determines that the number 
is 3 or more, the Federal district court--
            (1) shall suspend that attorney from the practice of law in 
        that Federal district court for 1 year; and
            (2) may suspend that attorney from the practice of law in 
        that Federal district court for any additional period that the 
        court considers appropriate.
    (b) Appeal; Stay.--An attorney has the right to appeal a suspension 
under subsection (a). While such an appeal is pending, the suspension 
shall be stayed.
    (c) Reinstatement.--To be reinstated to the practice of law in a 
Federal district court after completion of a suspension under 
subsection (a), the attorney must first petition the court for 
reinstatement under such procedures and conditions as the court may 
prescribe.

SEC. 7. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION.

    (a) In General.--Whoever willfully and intentionally influences, 
obstructs, or impedes, or attempts to influence, obstruct, or impede, a 
pending court proceeding through the willful and intentional 
destruction of documents sought in, and highly relevant to, that 
proceeding shall be punished with mandatory civil sanctions of a degree 
commensurate with the civil sanctions available under Rule 37 of the 
Federal Rules of Civil Procedure, in addition to any other civil 
sanctions that otherwise apply.
    (b) Applicability.--This section applies to any court proceeding in 
any Federal or State court.

            Passed the House of Representatives September 14, 2004.

            Attest:

                                                 JEFF TRANDAHL,

                                                                 Clerk.