SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Attorney Accountability Act of 
1995''.

SEC. 2. AWARD OF COSTS AND ATTORNEY'S FEES IN FEDERAL CIVIL DIVERSITY 
              LITIGATION AFTER AN OFFER OF SETTLEMENT.

    Section 1332 of title 28, United States Code, is amended by adding 
at the end the following:
    ``(e)(1) In any action over which the court has jurisdiction under 
this section, any party may, at any time not less than 10 days before 
trial, serve upon any adverse party a written offer to settle a claim 
or claims for money or property or to the effect specified in the 
offer, including a motion to dismiss all claims, and to enter into a 
stipulation dismissing the claim or claims or allowing judgment to be 
entered according to the terms of the offer. Any such offer, together 
with proof of service thereof, shall be filed with the clerk of the 
court.
    ``(2) If the party receiving an offer under paragraph (1) serves 
written notice on the offeror that the offer is accepted, either party 
may then file with the clerk of the court the notice of acceptance, 
together with proof of service thereof.
    ``(3) The fact that an offer under paragraph (1) is made but not 
accepted does not preclude a subsequent offer under paragraph (1). 
Evidence of an offer is not admissible for any purpose except in 
proceedings to enforce a settlement, or to determine costs and expenses 
under this subsection.
    ``(4) At any time before judgment is entered, the court, upon its 
own motion or upon the motion of any party, may exempt from this 
subsection any claim that the court finds presents a question of law or 
fact that is novel and important and that substantially affects 
nonparties. If a claim is exempted from this subsection, all offers 
made by any party under paragraph (1) with respect to that claim shall 
be void and have no effect.
    ``(5) If all offers made by a party under paragraph (1) with 
respect to a claim or claims, including any motion to dismiss all 
claims, are not accepted and the judgment, verdict, or order finally 
issued (exclusive of costs, expenses, and attorneys' fees incurred 
after judgment or trial) in the action under this section is not more 
favorable to the offeree with respect to the claim or claims than the 
last such offer, the offeror may file with the court, within 10 days 
after the final judgment, verdict, or order is issued, a petition for 
payment of costs and expenses, including attorneys' fees, incurred with 
respect to the claim or claims from the date the last such offer was 
made or, if the offeree made an offer under this subsection, from the 
date the last such offer by the offeree was made.
    ``(6) If the court finds, pursuant to a petition filed under 
paragraph (5) with respect to a claim or claims, that the judgment, 
verdict, or order finally obtained is not more favorable to the offeree 
with respect to the claim or claims than the last offer, the court 
shall order the offeree to pay the offeror's costs and expenses, 
including attorneys' fees, incurred with respect to the claim or claims 
from the date the last offer was made or, if the offeree made an offer 
under this subsection, from the date the last such offer by the offeree 
was made, unless the court finds that requiring the payment of such 
costs and expenses would be manifestly unjust.
    ``(7) Attorney's fees under paragraph (6) shall be a reasonable 
attorney's fee attributable to the claim or claims involved, calculated 
on the basis of an hourly rate which may not exceed that which the 
court considers acceptable in the community in which the attorney 
practices law, taking into account the attorney's qualifications and 
experience and the complexity of the case, except that the attorney's 
fees under paragraph (6) may not exceed--
            ``(A) the actual cost incurred by the offeree for an 
        attorney's fee payable to an attorney for services in 
        connection with the claim or claims; or
            ``(B) if no such cost was incurred by the offeree due to a 
        contingency fee agreement, a reasonable cost that would have 
        been incurred by the offeree for an attorney's noncontingent 
        fee payable to an attorney for services in connection with the 
        claim or claims.
    ``(8) This subsection does not apply to any claim seeking an 
equitable remedy.''.

SEC. 3. HONESTY IN EVIDENCE.

    Rule 702 of the Federal Rules of Evidence (28 U.S.C. App.) is 
amended--
            (1) by inserting ``(a) In general.--'' before ``If'', and
            (2) by adding at the end the following:
    ``(b) Adequate basis for opinion.--Testimony in the form of an 
opinion by a witness that is based on scientific knowledge shall be 
inadmissible in evidence unless the court determines that such 
opinion--
            ``(1) is scientifically valid and reliable;
            ``(2) has a valid scientific connection to the fact it is 
        offered to prove; and
            ``(3) is sufficiently reliable so that the probative value 
        of such evidence outweighs the dangers specified in rule 403.
    ``(c) Disqualification.--Testimony by a witness who is qualified as 
described in subdivision (a) is inadmissible in evidence if the witness 
is entitled to receive any compensation contingent on the legal 
disposition of any claim with respect to which the testimony is 
offered.
    ``(d) Scope.--Subdivision (b) does not apply to criminal 
proceedings.''.

SEC. 4. ATTORNEY ACCOUNTABILITY.

    (a) Sanctions.--Rule 11(c) of the Federal Rules of Civil Procedure 
(28 U.S.C. App.) is amended--
            (1) in the matter preceding paragraph (1) by striking 
        ``may'' and inserting ``shall'';
            (2) in paragraph (1)(A)--
                    (A) in the second sentence by striking ``, but 
                shall'' and all that follows through ``corrected''; and
                    (B) in the third sentence by striking ``may'' and 
                inserting ``shall''; and
            (3) in paragraph (2) by striking ``A sanction imposed'' and 
        all that follows through ``violation.'' and inserting the 
        following: ``A sanction imposed for a violation of this rule 
        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. 
        Subject to the limitations in subparagraphs (A) and (B), the 
        sanction may consist of an order to pay to the other 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.''.
    (b) Applicability to Discovery.--Rule 11 of the Federal Rules of 
Civil Procedure is amended by striking subdivision (d).

SEC. 5. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Subject to subsection (b), this Act and the 
amendments made by this Act shall take effect on the first day of the 
first month beginning more than 180 days after the date of the 
enactment of this Act.
    (b) Application of Amendments.--
            (1) The amendment made by section 2 shall apply only with 
        respect to civil actions commenced after the effective date of 
        this Act.
            (2) The amendments made by section 3 shall apply only with 
        respect to cases in which a trial begins after the effective 
        date of this Act.

            Passed the House of Representatives March 7, 1995.

            Attest:

                                                ROBIN H. CARLE,

                                                                 Clerk.
Attorney Accountability Act of 1995 - Amends the Federal judicial code to set forth provisions regarding the award of costs and attorney's fees in Federal civil diversity litigation after an offer of settlement.  Provides that any party may, at any time not less than ten days before trial, serve upon an adverse party a written offer to settle a claim for money or property or to the effect specified in the offer, including a motion to dismiss all claims, and to enter into a stipulation dismissing the claim or allowing judgment to be entered according to the terms of the offer.  Directs that any such offer, together with proof of service thereof, be filed with the clerk of the court. Specifies that:  (1) if the party receiving the offer serves written notice that the offer is accepted, either party may then file with the clerk of the court the notice of acceptance, together with proof of service thereof; and (2) the fact that an offer is made but not accepted does not preclude a subsequent offer (but evidence of an offer is not admissible for any purpose except in proceedings to enforce a settlement or to determine costs and expenses). Authorizes the court, at any time before judgment is entered, upon its own motion or the motion of any party, to exempt from such provisions any claim that the court finds presents a question of law or fact that is novel and important and that substantially affects nonparties. Specifies that if a claim is exempted, all offers made by any party under this Act with respect to that claim shall be void and have no effect. Provides that if all offers made by a party with respect to a claim, including any motion to dismiss all claims, are not accepted and the judgment, verdict, or order finally issued (exclusive of costs, expenses, and attorney fees incurred after judgment or trial) in the action under this Act is not more favorable to the offeree than the last such offer:  (1) the offeror may file with the court a petition for payment of costs and expenses, including attorney fees, incurred with respect to the claim from the date the last offer from the offeror or from the offeree was made; and (2) the court, if it makes such a finding, shall order the offeree to pay the offeror's costs and expenses unless it finds that requiring the payment of such costs and expenses would be manifestly unjust. Specifies that such an attorney's fee shall be a reasonable fee attributable to the claim, calculated on the basis of an hourly rate which may not exceed that which the court considers acceptable in the community in which the attorney practices law, taking into account the attorney's qualifications and experience and the complexity of the case, subject to specified limitations. (Sec. 3) Amends rule 702 of the Federal Rules of Evidence to provide that:  (1) testimony in the form of an opinion by a witness that is based on scientific knowledge shall be inadmissible in evidence unless the court determines that such opinion is scientifically valid and reliable, has a valid scientific connection to the fact it is offered to prove, and is sufficiently reliable so that the probative value of such evidence is not outweighed by the dangers of unfair prejudice, confusion of the issues, or misleading the jury or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence (but makes this provision inapplicable to criminal proceedings); and (2) testimony by a witness who is qualified is inadmissible in evidence if the witness is entitled to receive any compensation contingent on the legal disposition of any claim with respect to which the testimony is offered. (Sec. 4) Amends rule 11(c) of the Federal Rules of Civil Procedure to require (currently, permit) the court to impose sanctions upon the attorneys, law firms, or parties that violate provisions regarding certain representations to the court (e.g., regarding frivolous lawsuits).  Specifies that a sanction imposed for a violation of this rule:  (1) 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; and (2) may consist of an order to pay to the other party 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.  Repeals provisions making rule 11 (regarding the signing of pleadings, representations to the court, and sanctions) inapplicable to discovery.
Attorney Accountability Act of 1995