Common Sense Product Liability Reform Act of 1995

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Common Sense Product Liability 
Reform Act of 1995''.

SEC. 2. FEDERAL CAUSE OF ACTION PRECLUDED.

    This Act does not provide the district courts of the United States 
with jurisdiction over product liability actions based on section 1331 
or 1337 of title 28, United States Code.

SEC. 3. APPLICABILITY AND PREEMPTION.

    (a) Preemption.--This Act governs any product liability action 
brought in any State or Federal court against a manufacturer or product 
seller, on any theory for harm caused by a product. A product liability 
action brought against a manufacturer or product seller for commercial 
loss shall be governed only by applicable commercial or contract law.
    (b) Relationship to State Law.--This Act supersedes State law only 
to the extent that State law applies to an issue covered by this Act. 
Any issue that is not governed by this Act shall be governed by 
otherwise applicable State or Federal law.
    (c) Applicability.--Nothing in this Act shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any law;
            (2) supersede any Federal law, except the Federal Employers 
        Compensation Act and the Longshore and Harbor Workers' 
        Compensation Act;
            (3) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (4) affect the applicability of any provision of chapter 97 
        of title 28, United States Code;
            (5) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation;
            (6) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum; or
            (7) supersede any Federal law that prescribes a specific 
        regimen for punitive damages.

SEC. 4. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS.

    (a) General Rule.--Except as provided in subsection (b), in any 
product liability action, a product seller other than a manufacturer 
shall be liable to a claimant only if the claimant establishes that--
            (1)(A) the product which allegedly caused the harm 
        complained of was sold by the product seller; (B) the product 
        seller failed to exercise reasonable care with respect to the 
        product; and (C) such failure to exercise reasonable care was a 
        proximate cause of the claimant's harm; or
            (2)(A) the product seller made an express warranty 
        applicable to the product which allegedly caused the harm 
        complained of, independent of any express warranty made by a 
        manufacturer as to the same product; (B) the product failed to 
        conform to the warranty; and (C) the failure of the product to 
        conform to the warranty caused the claimant's harm; or
            (3) the product seller engaged in intentional wrongdoing as 
        determined under applicable State law and such intentional 
        wrongdoing was a proximate cause of the harm complained of by 
        the claimant.
For purposes of subparagraph (1)(B), a product seller shall not be 
considered to have failed to exercise reasonable care with respect to 
the product based upon an alleged failure to inspect a product where 
there was no reasonable opportunity to inspect the product in a manner 
which would, in the exercise of reasonable care, have revealed the 
aspect of the product which allegedly caused the claimant's harm.
    (b) Exception.--In a product liability action, a product seller 
shall be liable for harm to the claimant caused by such product as if 
the product seller were the manufacturer of such product if--
            (1) the manufacturer is not subject to service of process 
        under the laws of any State in which the action might have been 
        brought; or
            (2) the court determines that the claimant would be unable 
        to enforce a judgment against the manufacturer.

SEC. 5. DEFENSE BASED ON CLAIMANT'S USE OF INTOXICATING ALCOHOL OR 
              DRUGS.

    (a) General Rule.--In any product liability action, it shall be a 
complete defense to such action if--
            (1) the claimant was intoxicated or was under the influence 
        of intoxicating alcohol or any drug; and
            (2) the claimant, as a result of the influence of the 
        alcohol or drug, was more than 50 percent responsible for the 
        accident or event which resulted in such claimant's harm.
    (b) Construction.--For purposes of this section--
            (1) the determination of whether a person was intoxicated 
        or was under the influence of intoxicating alcohol or any drug 
        shall be made pursuant to applicable State law; and
            (2) the term ``drug'' means any controlled substance as 
        defined in the Controlled Substances Act (21 U.S.C. 802(6)) 
        that has been taken by the claimant other than in accordance 
        with the terms of a lawfully issued prescription.

SEC. 6. SEVERAL LIABILITY FOR NONECONOMIC LOSS.

    In any product liability action, the liability of each defendant 
for noneconomic loss shall be several only and shall not be joint. Each 
defendant shall be liable only for the amount of noneconomic loss 
attributable to such defendant in direct proportion to such defendant's 
proportionate share of fault or responsibility for the claimant's harm, 
as determined by the trier of fact.

SEC. 7. STATUTE OF REPOSE.

    A product liability action shall be barred unless the complaint is 
served and filed within 15 years after the time of delivery of the 
product. For the purposes of this section, the term ``time of 
delivery'' means the time when a product is delivered to its first 
purchaser or lessee who was not involved in the business of 
manufacturing or selling such product or using it as a component part 
of another product to be sold. This section applies only if the harm 
caused by a product did not include chronic illness and only to claims 
arising after the date of enactment of this Act. This section does not 
affect the provisions of the General Aviation Revitalization Act of 
1994.

SEC. 8. PUNITIVE DAMAGES.

    (a) General Rule.--Punitive damages may, to the extent permitted by 
applicable State law, be awarded in any product liability action in any 
Federal or State court against a defendant if the claimant establishes 
by clear and convincing evidence that the harm suffered was result of 
conduct specifically intended to cause harm or conduct manifesting a 
conscious, flagrant indifference to the safety of those persons who 
might be harmed by the product for which the action was brought.
    (b) Proportional Awards.--The amount of punitive damages that may 
be awarded for a claim in any product liability action subject to this 
Act shall not exceed 3 times the amount of damages awarded to the 
claimant for the economic loss on which such claim is based, or 
$250,000, whichever is greater. This provision shall be applied by the 
court and shall not be disclosed to the jury.
    (c) Applicability and Preemption.--Except as provided in section 2, 
this section shall apply to any product liability action brought in any 
Federal or State court on any theory where punitive damages are sought. 
This section does not create a cause of action for punitive damages in 
any jurisdiction that does not authorize such actions.
    (d) Bifurcation at Either Party's Request.--At the request of 
either party, the trier of fact shall consider in a separate proceeding 
whether punitive damages are to be awarded and the amount of such 
award. If a separate proceeding is requested, evidence relevant only to 
the claim of punitive damages, as determined by applicable State law, 
shall be inadmissible in any proceeding to determine whether 
compensatory damages are to be awarded.

SEC. 9. DEFINITIONS.

    As used in this Act:
            (1) The term ``claimant'' means any person who brings a 
        product liability action and any person on whose behalf such an 
        action is brought. If such an action is brought through or on 
        behalf of an estate, the term includes the claimant's decedent. 
        If such action is brought through or on behalf of a minor or 
        incompetent, the term includes the claimant's legal guardian.
            (2) The term ``clear and convincing evidence'' means that 
        measure or degree of proof that will produce in the mind of the 
        trier of fact a firm belief or conviction as to the truth of 
        the allegations sought to be established. The level of proof 
        required to satisfy such standard is more than that required 
        under preponderance of the evidence, but less than that 
        required for proof beyond a reasonable doubt.
            (3) The term ``commercial loss'' means any loss incurred in 
        the course of the ongoing business enterprise consisting of 
        providing goods or services for compensation.
            (4) The term ``economic loss'' means any pecuniary loss 
        resulting from harm (including the loss of earnings, medical 
        expense loss, replacement services loss, loss due to death, 
        burial costs, and loss of business or employment opportunities) 
        to the extent recovery for such loss is allowed under 
        applicable State law.
            (5) The term ``harm'' means any physical injury, illness, 
        disease, or death caused by a product. The term does not 
        include commercial loss or loss or damage to a product itself.
            (6) The term ``manufacturer'' means--
                    (A) any person who is engaged in a business to 
                produce, create, make, or construct any product (or 
                component part of a product) and who (i) designs or 
                formulates the product (or component part of the 
                product), (ii) has engaged another person to design or 
                formulate the product (or component part of the 
                product), or (iii) uses the design or formulation of 
                the product developed by another person;
                    (B) a product seller, but only with respect to 
                those aspects of a product (or component part of a 
                product) which are created or affected when, before 
                placing the product in the stream of commerce, the 
                product seller produces, creates, makes, or constructs 
                and designs or formulates, or has engaged another 
                person to design or formulate, an aspect of a product 
                (or component part of a product) made by another; or
                    (C) any product seller not described in 
                subparagraph (B) which holds itself out as a 
                manufacturer to the user of the product.
            (7) The term ``nominal damages'' means damages not more 
        than $500.
            (8) The term ``noneconomic loss'' means subjective, 
        nonmonetary loss resulting from harm, including pain, 
        suffering, inconvenience, mental suffering, emotional distress, 
        loss of society and companionship, loss of consortium, injury 
        to reputation, and humiliation.
            (9) The term ``person'' means any individual, corporation, 
        company, association, firm, partnership, society, joint stock 
        company, or any other entity (including any governmental 
        entity).
            (10)(A) The term ``product'' means any object, substance, 
        mixture, or raw material in a gaseous, liquid, or solid state--
                    (i) which is capable of delivery itself or as an 
                assembled whole, in a mixed or combined state, or as a 
                component part or ingredient;
                    (ii) which is produced for introduction into trade 
                or commerce;
                    (iii) which has intrinsic economic value; and
                    (iv) which is intended for sale or lease to persons 
                for commercial or personal use.
                    (B) The term does not include--
                            (i) human tissue, human organs, human 
                        blood, and human blood products; or
                            (ii) electricity, water delivered by a 
                        utility, natural gas, or steam.
            (11) The term ``product liability action'' means a civil 
        action brought on any theory for harm caused by a product.
            (12) The term ``product seller'' means a person who, in the 
        course of a business conducted for that purpose, sells, 
        distributes, leases, prepares, blends, packages, labels, or 
        otherwise is involved in placing a product in the stream of 
        commerce, or who installs, repairs, or maintains the harm-
        causing aspect of a product. The term does not include--
                    (A) a seller or lessor of real property;
                    (B) a provider of professional services in any case 
                in which the sale or use of a product is incidental to 
                the transaction and the essence of the transaction is 
                the furnishing of judgment, skill, or services; or
                    (C) any person who--
                            (i) acts in only a financial capacity with 
                        respect to the sale of a product; or
                            (ii) leases a product under a lease 
                        arrangement in which the selection, possession, 
                        maintenance, and operation of the product are 
                        controlled by a person other than the lessor.
            (13) The term ``punitive damages'' means damages awarded 
        against any person or entity to punish or deter such person or 
        entity, or others, from engaging in similar behavior in the 
        future.
            (14) The term ``State'' means any State of the United 
        States, the District of Columbia, Puerto Rico, the Northern 
        Mariana Island, the Virgin Islands, Guam, American Samoa, and 
        any other territory or possession of the United States, or any 
        political subdivision of any of the foregoing.

SEC. 10. EFFECTIVE DATE.

    This Act shall apply with respect to product liability actions 
which are commenced after the date of the enactment of this Act.

Summary: Common Sense Product Liability Reform Act of 1995 - Declares that this Act: (1) does not provide US district courts with jurisdiction over product liability actions based on specified provisions of the Federal judicial code. (2) governs any product liability action brought in any State or Federal court against a manufacturer or product seller, on any theory for harm caused by a product, except product liability actions brought against a manufacturer or product seller for commercial losses which shall be governed only by applicable commercial or contract law. And (3) supersedes State law only to the extent that such law applies to an issue covered by this Act. Makes a product seller other than a manufacturer liable to a claimant in a product liability action only if the claimant establishes that: (1) the seller sold the product which allegedly caused the harm, the seller failed to exercise reasonable care with respect to the product, and such failure was a proximate cause of the claimant's harm. (2) the seller made an express warranty applicable to the product independent of any express warranty made by a manufacturer, the product failed to conform to the warranty, and such failure caused the claimant's harm. Or (3) the seller engaged in intentional wrongdoing as determined under applicable State law and such intentional wrongdoing was a proximate cause of the harm complained of by the claimant. Specifies that a product seller shall: (1) not be considered to have failed to exercise reasonable care based upon an alleged failure to inspect a product where there was no reasonable opportunity to inspect the product in a manner which would have revealed the aspect of the product which allegedly caused the claimant's harm. And (2) be liable, in a product liability action, for harm to the claimant caused by such product as if the seller were the manufacturer of such product if the manufacturer is not subject to service of process under the laws of any State in which the action might have been brought, or the court determines that the claimant would be unable to enforce a judgement against the manufacturer. Makes it a complete defense to a product liability action that the claimant: (1) was intoxicated or under the influence of intoxicating alcohol or any drug. And (2) as a result of such influence, was more than 50 percent responsible for the accident or event which resulted in such claimant's harm. Specifies that in a product liability action the liability of each defendant for noneconomic loss shall be several only and not joint, and that each defendant shall be liable only for the amount of noneconomic loss attributable to such defendant's proportionate share of fault or responsibility for the claimant's harm, as determined by the trier of fact. Bars a product liability action unless the complaint is served and filed within 15 years after the time of delivery of the product, with exceptions. Authorizes punitive damages, to the extent permitted by applicable State law, in any product liability action in Federal or State court against a defendant if the claimant establishes by clear and convincing evidence that the harm suffered was the result of conduct specifically intended to cause harm or conduct manifesting a conscious, flagrant indifference to the safety of those persons who might be harmed by the product for which the action was brought. Sets forth provisions regarding: (1) proportional awards, (2) applicability and preemption, and (3) bifurcation of proceedings at either party's request.