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LAWSUIT ABUSE REDUCTION ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON THE CONSTITUTION 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

ON

H.R. 966 

MARCH 11, 2011 

Serial No. 112–18 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM REED, New York 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON THE CONSTITUTION

TRENT FRANKS, Arizona, Chairman 

MIKE PENCE, Indiana, Vice-Chairman 

STEVE CHABOT, Ohio 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

JIM JORDAN, Ohio 

JERROLD NADLER, New York 

MIKE QUIGLEY, Illinois 

JOHN CONYERS, JR., Michigan 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

PAUL B. TAYLOR, Chief Counsel 

DAVID LACHMANN, Minority Staff Director 

(III) 

C O N T E N T S 

MARCH 11, 2011 

Page 

H.R. 966, the ‘‘Lawsuit Abuse Reduction Act’’ ...................................................... 3 

OPENING STATEMENTS 

The Honorable Trent Franks, a Representative in Congress from the State 

of Arizona, and Chairman, Subcommittee on the Constitution ....................... 1 

The Honorable Jerrold Nadler, a Representative in Congress from the State 

of New York, and Ranking Member, Subcommittee on the Constitution ....... 5 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Chairman, Committee on the Judiciary ..................................... 6 

WITNESSES 

Elizabeth Milito, NFIB Small Business Legal Center 

Oral Testimony ..................................................................................................... 9 

Prepared Statement ............................................................................................. 11 

Lonny Hoffman, Professor, University of Houston Law Center 

Oral Testimony ..................................................................................................... 23 

Prepared Statement ............................................................................................. 25 

Victor E. Schwartz, Shook, Hardy & Bacon L.L.P. 

Oral Testimony ..................................................................................................... 45 

Prepared Statement ............................................................................................. 47 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of Peter Lushing, Professor of Law, Benjamin N. Cardozo 

School of Law ........................................................................................................ 69 

(1) 

LAWSUIT ABUSE REDUCTION ACT 

FRIDAY, MARCH 11, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON THE CONSTITUTION, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:06 a.m., in 

room 2141, Rayburn Office Building, the Honorable Trent Franks 

(Chairman of the Subcommittee) presiding. 

Present: Representative Franks, Smith, Forbes, King, Nadler, 

and Scott. 

Staff present: (Majority) Paul Taylor, Subcommittee Chief Counsel; Zach Somers, Counsel; Sarah Vance, Clerk; (Minority) David 

Lachmann, Subcommittee Staff Director; Jason Everett, Counsel; 

and Veronica Eligan, Professional Staff Member. 

Mr. FRANKS. The Subcommittee will come to order. 

Thank you all for being here. 

We have called this hearing because some of the changes, the 

1993 amendments made to rule 11 of the Federal Rules of Civil 

Procedure, need to be revisited. 

Rule 11 provides for one of the most basic requirements for litigation in Federal court, that papers filed with the Federal district 

court must be based on both the facts and the law. That is to say, 

anytime a litigant signs a filing in Federal court that they are certifying to the best of the person’s knowledge, information, and belief formed after reasonable inquiry that the filing is accurate, 

based on the law or reasonable interpretation of the law, and is 

brought for a legitimate purpose. This is such a simple requirement 

but one that both sides to a lawsuit must abide by if we are to 

properly have a functioning Federal court system. 

However, under the current Federal procedural rules, a failure to 

comply with rule 11 does not necessarily result in imposition of 

sanctions. The fact that litigants can violate rule 11 without penalty significantly reduces the deterrent effect of rule 11 itself, 

which harms the integrity of the Federal courts and leads to both 

plaintiffs and defendants being forced to respond to frivolous claims 

and arguments. 

The Lawsuit Abuse Reduction Act corrects this flaw by requiring 

that Federal district court judges impose sanctions when rule 11 is 

violated. Mandatory sanctions will more strongly discourage litigants from making frivolous claims in Federal court, and it will 

also relieve litigants from the financial burden of having to respond 

to frivolous claims as the legislation requires those who violate rule 

2 

11 to reimburse the opposing party reasonable expenses incurred 

as a direct result of the violation. 

Additionally, the legislation eliminates rule 11’s 21-day safe harbor which gives litigants a free pass to make frivolous claims so 

long as they withdraw those claims if the opposing party objects. 

As Justice Scalia correctly pointed out while dissenting from the 

1993 rule’s change, he said, ‘‘Those who file frivolous suits and 

pleadings should have no safe harbor. Parties will be able to file 

thoughtless, reckless, and harassing pleadings secure in the knowledge that they have nothing to lose. If objection is raised, they can 

retreat without penalty.’’ 

Now, while this legislation makes changes to rule 11, it is important to recognize that nothing in this legislation changes the standard by which the courts determine whether a pleading or a filing 

violates rule 11. Courts will apply the same legal standard they 

have applied since 1993 to determine if a filing runs afoul of rule 

11. Thus, all the legislation really does is to make the technical 

and conforming changes to rule 11 necessary to make sanctions 

mandatory rather than discretionary. In Justice Scalia’s words, it 

is simply about making rule 11 a significant and necessary deterrent to frivolous litigation rather than a toothless rule. 

According to the first rule of the Federal Rules of Civil Procedure, the goal of the rules is to ensure that every action and proceeding in Federal court be determined in a, ‘‘just, speedy, and inexpensive manner.’’ I believe that this goal will be well served 

through a mandatory sanctions provision for violating the simple 

requirements of rule 11 that every filing be based on both the law 

and the facts. 

I look forward to hearing from our witnesses. 

And I now recognize the Ranking Member of the Subcommittee, 

the gentleman from New York, Mr. Nadler, for 5 minutes for his 

opening statement. 

[The bill, H.R. 966, follows:] 

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Mr. NADLER. Thank you, Mr. Chairman. 

It is deja vu all over again. After a brief hiatus, we are back to 

legislation supposedly aimed at preventing frivolous litigation, but 

which would in fact revive a rule that gave birth to an entire litigation industry operating in tandem with normal civil litigation. The 

revised rule 11 proposed here would take us back to the failed 1983 

rule which the courts rightly rejected after a decade of catastrophic 

experience. Moreover, this legislation goes even beyond the text of 

the 1983 rule broadening the flawed mandatory sanctions even further. 

Rule 11 of the Federal Rules of Civil Procedure serves a vital role 

in maintaining the integrity of our legal system. As the Rules Committee noted in 1993, ‘‘since the purpose of rule 11 sanctions is to 

deter rather than to compensate, the rule provides that if a monetary sanction is imposed, it should ordinarily be paid to the court 

as a penalty. However, under unusual circumstances, deterrence 

may be ineffective unless the sanction not only requires the person 

violating the rule to make a monetary payment, but also directs 

that some or all of this payment be made to those injured by the 

violation. Accordingly, the rule authorizes the court, if requested in 

a motion and if so warranted, to award attorney’s fees to another 

party.’’ 

While the sponsor has expressed a desire to limit unnecessary 

litigation, the experience with the old rule 11 was the exact opposite. Rule 11 litigation became a routine part of civil litigation, infecting more than one-third of all cases. Rather than serving as a 

disincentive, the old rule 11, which would be restored by this legislation, actually made the system considerably more litigious. In the 

decade following the 1983 amendments, there were almost 7,000 

reported rule 11 cases becoming part of approximately one-third of 

all Federal civil lawsuits. Civil cases frequently, in better than a 

third of all cases, became two cases: one on the merits and the 

other dueling rule 11 allegations. The drain on the courts’ and the 

parties’ resources caused the Judicial Conference to revisit the rule 

and adopt the changes this bill would now have us undo. 

When this Committee considered an earlier version of this legislation in 2005, the Judicial Conference wrote to then Chairman 

Sensenbrenner that the bill would undo, ‘‘the 1993 rule 11 amendments even though no serious problems has been brought to the 

Judicial Conference Rules Committee’s attention,’’ and the bill, ‘‘in 

some ways seems to go beyond the provisions that created serious 

problems with the 1983 rule. It may even cause greater mischief. 

Rule 11 in its present form has proven effective and should not be 

revised.’’ 

When we were considering what became the 2005 amendments 

to the Bankruptcy Code, the original legislation—the original draft 

of the legislation, I should say—contained a provision that would 

have required the imposition of mandatory penalties under bankruptcy rule 9011, the corollary to rule 11. That language was specifically rejected in 2005 and does not appear in the public law. The 

court is given the appropriate discretion to craft sanctions as appropriate, even though the rest of the legislation stripped the bankruptcy courts of discretion in numerous other areas. Congress 

6 

thought better of that inflexible, unworkable rule. We were right 

then and we should consider this proposal in the same light. 

Small businesses, just like all businesses, are concerned about 

baseless lawsuits. I do not know anyone who wouldn’t be. But just 

to keep the situation in perspective, I would also note that in a 

June 2008 survey of its members by the National Federation of 

Independent Business, ‘‘The Voice of Small Business,’’ their membership ranked, quote, costs and frequency of lawsuits and threatened suits 65th of their 75 top concerns; 36.7 percent responded 

that this was not a problem while only 7.3 percent called it, quote, 

critical. Whatever NFIB in Washington may say, I think it is pretty clear that its membership, actual small business people, have a 

healthy perspective on the issue. 

Mr. Chairman, the courts have ample authority under the current rule 11 to sanction conduct that undermines the integrity of 

our legal system, but this legislation is the wrong solution in 

search a problem. By taking us back to a time when rule 11 actually promoted routine, costly, and unnecessary litigation, this bill 

is a cure far worse than the disease. We know what this rule does 

because we lived with it and the courts rightly rejected it nearly 

20 years ago. We should benefit from that experience and reject 

this legislation. 

I thank you and I yield back the balance of my time. 

Mr. FRANKS. Well, thank you, Mr. Nadler. 

I now recognize the Chairman of the full Judiciary Committee, 

the distinguished gentleman from Texas, Mr. Smith, for 5 minutes 

for his opening statement. 

Mr. SMITH. Thank you, Mr. Chairman, and Mr. Chairman, I appreciate your having this hearing, I think, on one of the most important subjects of the year and also on a subject that I think can 

do a world of good for a lot of individuals and business owners in 

the United States. 

Mr. Chairman, on Wednesday I reintroduced H.R. 966, The Lawsuit Abuse Reduction Act. On the same day Senator Chuck Grassley, the Ranking Member of the Senate Judiciary Committee, introduced the same bill in the Senate. 

The Lawsuit Abuse Reduction Act, otherwise known as LARA, is 

just over a page long, but it would help restore much needed rationality to all civil cases brought in Federal court by requiring 

mandatory sanctions against those who file frivolous lawsuits. 

In recent years, frivolous lawsuits have been filed in Federal 

court against the Weather Channel for failing to accurately predict 

storms, against businesses for the actions of wild birds who flew 

onto their premises, and against television shows who claimed that 

some people were too scary. More and more playgrounds are shutting down because of liability concerns, and then fast food companies are sued in Federal court because inactive children gain 

weight. 

Newsweek reported that frivolous lawsuits have become so prevalent in America that children are learning to abuse the legal system as well. One teacher who taught for 20 years before retiring 

said, ‘‘a kid will be acting out in class and you touch his shoulder 

and he will immediately come back with, don’t touch me or I’ll 

sue.’’ 

7 

These cases, and many like them, have wrongly cost innocent 

people and business owners their reputations and even hundreds 

of thousands of dollars. The annual direct cost of American tort litigation alone now exceeds over $250 billion a year. 

When Business Week wrote an extensive article on what the 

most effective legal reforms would be, it stated what is needed are 

penalties that sting. As Business Week recommended, ‘‘give judges 

stronger tools to punish renegade lawyers. Before 1993, it was 

mandatory for judges to impose sanctions such as public censures, 

fines, or orders to pay for the other side’s legal expenses on lawyers 

who filed frivolous lawsuits. Then the Civil Rules Advisory Committee, an obscure branch of the courts, made penalties optional. 

This needs to be reversed by Congress.’’ 

Just a few years ago, the Nation’s oldest ladder manufacturer, a 

family-owned business near Albany, New York, filed for bankruptcy 

protection and sold off most of its assets due to litigation costs, 

even though the company had never actually lost a court judgment. 

As Bernie Marcus, co-founder and former chairman of the Home 

Depot has described, ‘‘an unpredictable legal system cast a shadow 

over every plan and investment. It is devastating for startups. The 

costs of even one ill-timed abusive lawsuit can bankrupt a growing 

company and cost hundreds of thousands of jobs.’’ 

In his 2011 State of the Union Address, President Obama said, 

‘‘I am willing to look at other ideas to rein in frivolous lawsuits.’’ 

I hope the President will act on those words, and I hope he is 

watching today. 

LARA would require monetary sanctions against lawyers who file 

frivolous lawsuits. It would reverse the 1993 amendments to rule 

11 that made rule 11 sanctions discretionary rather than mandatory. It would also reverse the 1993 amendments that allow parties 

and their attorneys to avoid sanctions by making frivolous claims 

and demands but by withdrawing them within 21 days after a motion for sanctions has been filed. So LARA would get rid of the free 

pass lawyers have now to file frivolous lawsuits in Federal court. 

LARA also would restore mandatory sanctions for frivolous lawsuits without changing the current standard by which frivolous 

lawsuits are judged. 

Further, LARA expressly provides that nothing in the changes it 

makes to rule 11 shall be construed to bar or impede the assertion 

or development of new claims, defenses, or remedies under Federal, 

State, or local laws, including civil rights laws. Consequently, the 

development of civil rights law would not be affected in any way 

by LARA. 

LARA applies evenhandedly to cases brought by individuals as 

well as businesses, both big and small, including business claims 

filed to harass competitors and illicitly gain market share. The bill 

also applies to both plaintiffs and defendants. 

Anyone who opposes frivolous lawsuits should support a one-page 

bill that provides for mandatory sanctions when a judge finds a 

case to be frivolous. 

Mr. Chairman, although I look forward to hearing from the witnesses today, I regret I am not going to be able to stay because of 

a Steering Committee meeting called by the Speaker that I need 

8 

to attend in a matter of minutes. But once again, I appreciate your 

having this hearing and I appreciate the witnesses who are here. 

I yield back. 

Mr. FRANKS. Well, thank you, Mr. Smith. 

I would now recognize the Ranking Member of the full Committee, the gentleman from Michigan, Mr. Conyers, for 5 minutes 

for his opening statement. It looks like Mr. Conyers is not here. He 

was here a moment ago. 

Then without objection, other Members’ opening statements will 

be made a part of the record. 

We have a very distinguished panel of witnesses today. Each of 

the witnesses’ written statements will be entered into the record in 

its entirety. And I ask that each witness summarize his or her testimony in 5 minutes or less. To help you stay within that time, 

there is a timing light on your table. When the light switches from 

green to yellow, you will have 1 minute to conclude your testimony, 

and when the light turns red, it signals that 5 minutes has expired. 

Our first witness is Elizabeth Milito. Ms. Milito serves as senior 

executive counsel with the National Federation of Independent 

Business, Small Business Legal Center, a position she has held 

since March of 2004. Ms. Milito came to NFIB from the Department of Veterans Affairs where she defended VA hospitals in 

Maryland, the District of Columbia, and West Virginia in employment and labor lawsuits and was responsible for training and counseling managers on fair employment and HR practices. She has an 

extensive background in tort, medical malpractice, employment and 

labor law. And we are glad to have you here, Ms. Milito. 

Our second witness is Lonny Hoffman. Mr. Hoffman is the 

George Butler Research Professor of Law at the University of 

Houston Law Center. Professor Hoffman is a specialist on procedural law in Federal and State courts and has authored numerous 

Law Review articles. He has testified before Congress and at the 

state level, served on numerous professional committees and organizations, and he is a member of the Supreme Court of Texas Rules 

Advisory Committee and editor-in-chief of The Advocate, a quarterly journal published by the Litigation Section of the State Bar 

of Texas. And welcome, Professor. 

Our third and final witness is Victor Schwartz. Mr. Schwartz is 

a partner at the law firm of Shook, Hardy & Bacon, where he is 

the chairman of the public policy group and maintains an active 

appellate practice. Before entering the full-time practice of law, Mr. 

Schwartz was a professor and dean at the University of Cincinnati 

College of Law. For more than 2 decades, Mr. Schwartz has been 

co-author of the most widely used torts casebook in the United 

States, ‘‘Prosser, Wade and Schwartz’s Torts.’’ Additionally, he is 

the author of the leading text, ‘‘Comparative Negligence,’’ and has 

written over 150 Law Review articles. Welcome, Professor. 

So without objection, all Members will have 5 legislative days 

within which to submit materials for the record. 

And before I recognize the witnesses, it has been the tradition of 

the Constitution Committee that they be sworn in. So if you will 

all stand and raise your right hand. 

[Witnesses sworn.] 

Mr. FRANKS. Thank you all very much. 

9 

I now recognize our first witness, Elizabeth Milito. 

TESTIMONY OF ELIZABETH MILITO, 

NFIB SMALL BUSINESS LEGAL CENTER 

Ms. MILITO. Thank you, Mr. Chairman and distinguished Subcommittee Members. My name is Elizabeth Milito and I serve as 

senior executive counsel with the National Federation of Independent Business Small Business Legal Center. 

NFIB’s mission is to promote and protect the right of its members to own, operate, and grow their businesses and represents 

about 350,000 member businesses nationwide. The typical NFIB 

member employs 10 people and reports gross sales of about 

$500,000 a year. 

We applaud the Subcommittee for holding this hearing on the 

problem of lawsuit abuse. 

For the small business with 10 employees or less, the problem is with the $5,000 and $10,000 settlements, not the million dollar verdicts. When you consider that many small businesses only net between $40,000 and $60,000 a year, $5,000 paid to settle a case immediately eliminates 10 percent of that business’ annual profit. 

In my experience, the greatest abuses occur in lower dollar suits 

which often target small businesses. In many instances, an attorney will just take a client at his word, performing little, if any, research regarding the validity of a plaintiff’s claim. As a result, 

small business owners must take time and resources out of their 

business to do the plaintiff’s attorney’s homework. They must prove 

their innocence in cases where a few hours of research at most 

would lead the attorney to conclude that the lawsuit was unjustified. 

Small businesses are a target a frivolous suits because lawyers 

understand they can be more likely than a larger corporation to 

settle a case rather than litigate it. Small businesses do not have 

in-house counsels to inform them of their rights, to write letters responding to allegations made against them, or to provide legal advice. They do not have the resources needed to hire an attorney to 

fight small claim lawsuits. And often they do not have the power 

to decide whether or not to settle a case. The insurer makes that 

decision for them. 

In addition to the financial costs of settling a case are the incalculable psychological costs. Small business owners threatened with 

lawsuits often would prefer to fight in order to prove their innocence. Settling a meritless case causes the business to look guilty. 

Frivolous lawsuits take many forms, but I would categorize them 

into four types. Pay me now or I will see you in court. Let’s not 

the law get in our way. Somebody has to pay it. It might as well 

be you. And yellow page lawsuits. 

Pay me nor or I will see you in court often involves a demand 

letter. Demand letters are particularly attractive when the plaintiff 

can sue a small business for violating a State or Federal statute. 

The letter alleges the small business violated a particular statute, 

and at some point the letter says that the small business has an 

opportunity to make the whole thing go away by paying a settlement fee up front, the sooner, the better. If these demands are not 

met, the letter threatens a lawsuit. 

10 

Let’s not let the law get in our way. While most attorneys adhere 

to the ethical standards to which they have been sworn to uphold, 

there are instances where attorneys fall short and fail to research 

the validity of the plaintiff’s claim and may even fail to review the 

statute they allege the defendant violated. 

Somebody has to pay and it might as well be you. This is where 

the plaintiff may have been harmed but is suing the wrong person. 

This is what happened to NFIB member Hugh Froedge. Froedge’s 

business was named in a personal injury lawsuit after the plaintiff 

was injured at work. Although there was no evidence that 

Froedge’s belt conveyor caused the plaintiff’s injuries, the lawsuit 

took 11 years to resolve. In the end, Froedge’s insurance company 

decided to settle the matter, even though Froedge believed he was 

not culpable and would have preferred to fight. 

In yellow page lawsuits, hundreds of defendants are named and 

it is their responsibility to prove they are not culpable. Plaintiffs 

name defendants by using vendor lists or even lists from Yellow 

Pages of businesses operating in a particular area or during a particular time. For example, an NFIB member has been targeted in 

asbestos litigation. The family-owned commercial construction business was founded over 40 years ago and has been targeted in recent years in asbestos litigation as manufacturers have gone bankrupt, leaving a void of solvent defendants. As a result, attorneys 

are now trolling for construction firms that existed in the 1960’s 

and are still in existence today regardless of whether the plaintiff 

had any connection to the firm. Still, to get to dismissed from these 

cases, the NFIB member regularly spends thousands of dollars in 

attorney’s fees and discovery costs. 

Legislation is sorely needed to reform our Nation’s civil justice 

system. H.R. 966, recently introduced by Representative Lamar 

Smith, would be particularly helpful in curbing, if not stopping, 

many of the types of suits I have described. It would put teeth back 

into rule 11. 

Thank you for inviting me to testify today. 

[The prepared statement of Ms. Milito follows:] 

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Mr. FRANKS. Mr. Hoffman? 

TESTIMONY OF LONNY HOFFMAN, PROFESSOR, 

UNIVERSITY OF HOUSTON LAW CENTER 

Mr. HOFFMAN. Chairman Franks, Ranking Member Nadler, 

Members of the Committee, everyone is concerned with costs and 

delays in Federal court, but the proposed legislation will not solve 

the problems that are said to exist. To the contrary, it can confidently be said, contrary to the sponsor’s intentions, that this bill 

will actually increase cost and delays and foster greater litigation 

abuse. 

The source of this confidence is the vast body of empirical evidence that has been collected relating to the 1983 version of rule 

11, the model on which this bill is based. That empirical evidence 

is so persuasive that it has produced a remarkable degree of agreement across the political spectrum that the 1983 amendment of 

rule 11 was one of the most ill-advised procedural experiments ever 

tried. 

Because of the existence of this research, which incidentally I 

cite in my prepared statement at length for the Committee’s review, there is much that we can learn from our past. Yet, in proposing this regressive reform of rule 11, the bill fails to heed what 

the history has to offer. 

One sobering lesson from that history is that the 1983 rule was 

frequently misused as a compensatory fee-shifting device and that 

this was one key trigger for the frivolous satellite litigation over 

sanctions that followed. This point is particularly relevant today 

since the bill that the Committee has before it emphasizes compensation as an expressly authorized objective of the rule. It is likely, therefore, that the proposed legislation will actually make 

things even worse than they were in 1983. After all, we witnessed 

a scourge of meritless rule 11 motions even though deterrence, not 

compensation, was the rulemakers’ intended goal back then, and 

there was no express reference to compensation in the text of that 

rule. 

The bottom line on this point is this. It is difficult to see that 

anyone who is concerned over costs, delays, and abuse could support legislation that, as our history teaches, is almost certain to 

lead to substantially greater costs, delays, and abuse in the Federal 

courts. 

A second and last lesson from history I want to highlight today 

is perhaps more sobering of all. The empirical evidence persuasively shows the profound discriminatory effects of the 1983 rule. 

Civil rights claimants, in particular, were impacted most severely. 

There are numerous reasons why this is so, but we know that one 

is that, as noted, the ’83 rule was often misused as a cost-shifting 

tactic. These claimants, who are frequently resource-poor, faced the 

greatest threat from the monetary sanctions that could be and 

were imposed under that rule. 

Thankfully many, though not all, of the discriminatory effects 

against civil rights claimants and others were ameliorated by the 

1993 amendments to rule 11 and especially its inclusion of a safe 

harbor provision. This result likely explains, at least in part, the 

overwhelming support that the current rule enjoys, as a number of 

24 

surveys of Federal judges and lawyers has consistently shown. And 

again, I cite all of these surveys in my prepared remarks for the 

Committee’s consideration. 

In conclusion, it is instructive to recollect that judicial rulemakers remain actively involved in monitoring the state of civil litigation in the Federal courts and can be relied upon to do their 

work. For those who are concerned about costs and delays, the 

sounder course is to set this legislation aside and look for more productive ways to improve the administration of justice. 

Thank you. 

[The prepared statement of Mr. Hoffman follows:] 

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Mr. FRANKS. Thank you, Professor. 

Mr. Schwartz? 


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TESTIMONY OF VICTOR E. SCHWARTZ, 

SHOOK, HARDY & BACON L.L.P. 

Mr. SCHWARTZ. Good morning and thank you for the invitation, 

Chairman Franks; Mr. Nadler, my home State Member; Mr. Scott; 

and Members of the Committee. 

I guess lawyers can prove almost anything, but I am just going 

to get to the base of what actually goes on in real life. 

I had a small client. Up in New Jersey, they have strong laws 

against frivolous claims. And she was barraged with lawsuits on 

dram shop acts. We found one where the fellow had stopped at numerous bars. His police report did not indicate that he stopped at 

her place of business. We filed a frivolous claim. She was compensated for the costs she endured. No more claims were filed 

against her that were phony at all. It was over. And they had 

strong sanctions against frivolous claims. 

Frivolous claims are defined in the bill. These are not some weird 

hypotheticals. It is real serious stuff. You have to misstate facts, 

misstate law. There is no ambiguities at all. And under the current 

system, unfortunately, people who are engaging in this practice are 

not caught. 

The 21-day safe harbor rule is unbelievable, but I will share with 

you just briefly how it works. Instead of filing a frivolous claim petition in court, you give it to the plaintiff’s lawyer. You have to 

spend $8,000-$10,000 to write the motion. Then he can decide 

whether or not he wants to just dismiss the claim, and then 30 

days later, he can file it again. The court does not even see it. So 

that system allows anyone, if they are unscrupulous, to game the 

system. 

If the court actually hears a frivolous claim motion, under the 

current rules, it is basically a wrist slap, money going to the court, 

not the small business that Ms. Milito represents who now will see 

his or her insurance go up over a completely and totally baseless 

claim. 

Our testimony shows that 95 percent of the judges believe that 

rule 11 had a positive effect on practice when the change was 

made. Three-quarters of them felt that the benefits of rule 11 outweighed their problems. When rule 11 was changed, all the checks 

and balances that we have on rules simply folded. The Supreme 

Court is the ultimate party to approve the rules, but as Chief 

Rehnquist said at the time, we really did not look at the merits of 

it. Earlier Chairman Smith quoted what Justice Scalia said, and 

that was that between somebody who is abused and an abuser, we 

are going to go with the people who are abused by this system and 

this rule change is wrong. And he was very prophetic because that 

is exactly what has occurred. 

There is also a domino effect of rule 11. When the Federal rules 

change, State rules change. And as my testimony shows, in 

States—and it is printed there—States felt they had to change it 

because they want to have the same rules in the Federal courts, 

Mr. Forbes, as they do in the State courts to avoid forum shopping. 

So States, all of a sudden, were imprisoned with a rule that they 

did not like because the sanctions were not there. They had no 

problems that the professor spoke of in their State courts. 

46 

966 ends the 21-day game system and it puts penalties where 

they should go, on the lawyer who brings them, and the money 

that is lost to the small businesses who have suffered the problem 

of the system. It is their costs. And some of the businesses are not 

insured. One frivolous claim can put a small business right under 

after they pay for it, and they are weaponless to fight it. 

There have been past, as Mr. Nadler says, considerations of prior 

LARA’s, but we tried, and the people who drafted this learn from 

questions that were raised. The bill says, with respect to anything 

in civil rights, nothing in this act shall be construed to bar or impede the assertion of the development of new claims, defenses, remedies under State or Federal law, including civil rights laws. You 

could not be clearer than that. 

There were federalism claims raised by some prior bills, and that 

has been addressed too. 

I am just going to conclude with four things that have been asserted against the bill. 

That LARA will prolong satellite litigation. After rule 11 in 1983 

was enacted, there was a lot of litigation, but once it settled out, 

there was not a lot. And think of the alternative. A person has no 

weapon to stop a frivolous claim. In terms of basic risk-benefits in 

our society, which do you go with? Some litigation or no weaponry 

to stop a baseless claim that the President has talked about? 

The sanctions will not impede justice. The rule works both ways. 

And finally—and I have heard it so many times from my trial 

lawyer friends, plaintiffs lawyer friends, well, bring me more data 

to show me that it is really a problem. It is asking for a bucket 

of steam. As Ms. Milito says, most of these things occur with a demand letter. The frivolous claim never gets to court. Under the 21- 

day rule, basically the plaintiff’s lawyer gets his money. It is disposed of and the frivolous claim never sees the light of day. We 

don’t have any legal way to strike a demand letter. You can’t do 

that. So this idea that it is not a problem because there are no 

great numbers of suits is just phony. 

You have done a good job with this bill. It is really needed now. 

In this economy, the last thing we need is more businesses and others, individuals, hurt by frivolous claims. 

[The prepared statement of Mr. Schwartz follows:] 

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Mr. FRANKS. I want to thank the witnesses for their testimony. 

I will now begin the questioning by recognizing myself for 5 minutes. 


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Ms. Milito I will begin with you, if I could. As you know, lawsuits 

affect the costs and availability oftentimes of liability insurance for 

small businesses, and this is true, obviously, for meritless lawsuits 

because in many instances it will be cheaper for a small business 

to settle a meritless case than to defend against it in court. 

In NFIB’s experience, have the effects lawsuits have on the costs 

and availability of liability insurance forced small businesses to 

close their doors or not be able to expand or not be able to hire additional employees? 

Ms. MILITO. Thank you. That is a good question, and the answer 

is yes and our experience has shown that. In a poll NFIB conducted, nearly one-quarter of small employers reported they had either been sued or credibly threatened with a lawsuit. As Mr. 

Schwartz pointed out, the precise dimensions of the frivolous lawsuit problem are hard to pin down, but if you ask any NFIB member whether frivolous lawsuits are a problem, they will tell you, 

yes, they are because even if their business has not been sued or 

threatened with a lawsuit or demand letter, they know a business 

that has. 

And I think it is particularly problematic that this poll conducted 

by NFIB showed that over 20 percent of small business owners reported that they spend more time on liability problems and potential liability problems than such vital business activities as obtaining or repaying business loans, evaluating the competition, or looking for ways to cut costs. 

I was on the phone yesterday with a member. She has not taken 

a paycheck out of her business for herself in over 6 months because 

she is concerned about meeting the payroll for her two employees. 

She is concerned about paying the rent. A $5,000 settlement would 

put her under because that is her rent. That is her weekly payroll. 

So these small dollar lawsuits and demands do affect our members. 

Mr. FRANKS. Thank you. 

Mr. Schwartz, I am just one of your many admirers, and I wanted to ask you a—sir? 

Mr. SCHWARTZ. I always have trouble with that. 

Mr. FRANKS. No, no. 

Mr. SCHWARTZ. But thank you, sir. 

Mr. FRANKS. With the prior versions of LARA, opponents have 

often expressed deep concern about the act’s potential to impede 

just causes such as landmark developments in civil rights cases because at that point in history, perhaps the legal claims might have 

been deemed frivolous. Would LARA, if it was in effect in the 

1950’s, have stifled the civil rights movement and led to the dismissal of cases such as Brown v. Board of Education or cases like 

that? 

Mr. SCHWARTZ. Under the bill you put together, sir, absolutely 

not. The bill is crystal clear that nothing in the act is going to be 

there to impede the assertion or development of new law, including 

civil rights laws. So that is not an argument against this bill. The 

development of new law is right there and not blocked in any way. 

Mr. FRANKS. Well, as you know, Mr. Schwartz, nothing in LARA 

changes the legal standard that Federal district courts apply to determine whether a litigant has violated rule 11. It is really simply 

62 

about making sanctions mandatory and clearly stating what will be 

included in the monetary penalty. 

In the past some have, as you know, characterized these changes 

as draconian and argued that they will lead to delay, increased 

costs, and satellite litigation. And you touched on that partially, 

but would you expand and respond to those arguments? 

Mr. SCHWARTZ. Absolutely. The criteria of rule 11 are tough as 

to what a frivolous claim is. We are talking about claims that have 

no basis in fact, and a Federal judge is going to have to make a 

determination about that. And I worked for a Federal judge for 2 

years, a trial judge, and he was not going to find a claim has no 

basis in fact unless it had no basis in fact. 

As far as satellite litigation is concerned, some will arise, but 

think of all the claims that will not be filed if there is a strong deterrent against filing them. Right now, there is none. It is papermache, and that deterrent will save legal costs because the cases 

just will not be filed against businesses and individuals when there 

is no basis in fact. 

Mr. FRANKS. Thank you very much. My time is about up. So I 

am going to refer to the Ranking Member here for questions. 

Mr. NADLER. I thank you, Mr. Chairman. 

Professor Hoffman, during the decade that the 1983 version of 

rule 11 was in effect, the version that this bill would in effect bring 

back, at least a quarter of all cases on the Federal civil docket were 

burdened by rule 11 proceedings that did not result in sanctions. 

Based on our experience with the 1983 version of the rule and, for 

that matter, our experience with the 1993 revision of the rule, will 

this bill lead to less litigation or more litigation and why? 

Mr. HOFFMAN. Thank you for your question. 

As I indicated in my prepared remarks, I am concerned that this 

bill will lead, as the evidence shows compellingly, to a great deal 

more cost and delay, fostering additional abuses. 

And if I could expand on that to speak even further to your point, 

one of the things that is astonishing is when you survey the Federal judges who are in charge of applying the rules, who were in 

charge back in ’83, who are in charge today after the ’93 amendment went into effect in applying the rules, the same Federal 

judges that Mr. Schwartz was speaking about a moment ago—and 

when they are polled—these are the people who are on the front 

lines who are dealing with these cases—the numbers are astonishingly against this bill. 

So just to give a few of these, all of which are—and more—in my 

prepared statement, when asked in 2005 by a survey from the esteemed Federal Judicial Center, more than 80 percent of 278 Federal district judges agreed with this statement: rule 11 is needed 

and it is just right as it stands now. An even higher percentage, 

87 percent, preferred the existing rule to the 1983 version, the 

version on which this bill is based. 

Equally strong support, 85 percent, existed for the safe harbor 

provision that is now in the rule, while more than 90 percent oppose changing the rule to make the imposition of sanctions mandatory for every rule 11 violation. 

Mr. NADLER. Okay, thank you. 

63 

Now, when the advisory committee amended rule 11 in 1993, 

they gave the courts discretion to impose sanctions and noted that 

the purpose of sanctions is to deter bad conduct, not to reward the 

other party. Why did they give the court this discretion, which this 

bill would take away? And why did they make sanctions about deterrence rather than about compensation? 

Mr. HOFFMAN. So, look, let me start with the business of mandatory. First, it is vital that district courts have discretion to apply 

not just rule 11 but all of the critical rules, all of which are in the 

toolbox, and this notion, again, that was suggested that there are 

no other alternatives for controlling and managing litigation costs 

and managing the litigation system is just utterly contrary to the 

actual experience of litigants and judges every single day. Whether 

it be rule 8 on pleadings or rule 11 on sanctions or rule 12 on motions to dismiss or rule 56, we know that district judges are appropriately the ones at the front lines to handle these things, and that 

is exactly why the discretion needs to be there. 

On compensation, as I have already said in my remarks, we 

know that the focus on compensation that wasn’t, again, the intent 

of the ’83 rulemakers and wasn’t even in the bill was something 

that utterly deluged and was one of the key problems for the avalanche of satellite litigation over sanctions that followed. So we 

know that the monetary focus is what is drawing there. And that 

is why I say in my prepared remarks the concern should be even 

greater where this bill specifically mentions compensation as a goal 

to be achieved. It is offering it on a silver platter. 

Mr. NADLER. Thank you. 

And what are the advantages of the 21-day safe harbor provision 

of rule 11? Has that helped to reduce satellite litigation? 

Mr. HOFFMAN. An enormous amount. The studies show that it 

helps across the board, though it helps especially with civil rights 

claims. 

And actually if I could just speak to that also for a moment. This 

notion that the bill has in the end of it that it is going to protect 

against assertions of novel claims and that somehow, therefore, we 

can just utterly dismiss all of the strong empirical evidence on discrimination from the ’83 bill is utterly misguided. We know that 

there were all kinds of reasons why those civil rights claimants—— 

Mr. NADLER. And could you comment on Mr. Schwartz’s comments on the safe harbor provision that people just do this, in effect, out of court and this will prevent that? 

Mr. HOFFMAN. And so that is another interesting point. If in fact, 

as both of the other witnesses indicated, that one of the serious 

problems here is that these problems happen at the demand letter 

stage right before there is litigation, then rule 11 has no application whatsoever to that. Right? Those problems, if they exist, will 

continue to exist independent of this rule. The value of the safe 

harbor—— 

Mr. NADLER. And getting rid of the safe harbor provision will not 

affect that? 

Mr. HOFFMAN. No, because it is before there is a lawsuit. In 

other words, that is just to say rule 11 is inapplicable because it 

is prior to a lawsuit, which is an interesting point. 

Mr. NADLER. Let me ask Mr. Schwartz to comment on that. 

64 

Mr. SCHWARTZ. Well, you have to connect the dots, Mr. Nadler. 

The fact that the demand letters are capitulated to is because there 

are not really strong rules against frivolous claims. 

Mr. NADLER. No, no, no. But Professor Hoffman’s point is that 

the question of the safe harbor provision is irrelevant to a demand 

letter sent before the litigation commences because rule 11 in any 

form can’t reach that conduct because it isn’t part of the lawsuit. 

Mr. SCHWARTZ. Well, in the life that I have led, the two are connected because if a person knows that he has a weapon to sanction 

the lawyer who has brought the frivolous claim, they are not going 

to capitulate to the demand letter and make a settlement, and lawyers calculate in their own mind in the real world how much it is 

going to cost to defend—— 

Mr. NADLER. Let me just ask Professor—— 

Mr. SCHWARTZ [continuing]. And then they considerably lower 

what is in their complaint and that is how they game the system. 

Mr. NADLER. And Professor Hoffman, would you comment on 

that? And then my time has expired. 

Mr. HOFFMAN. So just to wrap up on that, two points there. So, 

one, the point there is that rule 11 has no application at all. It cannot be used as a sword, and although it may serve as this potential 

deterrent effect that Mr. Schwartz is talking about, that turns out 

to only be true to the extent that you have any risk at all of being 

sanctioned. And of course, if everything settles out of court, there 

is no risk whatsoever there. 

The other quick point to make is I wanted to commend Chairman 

Franks for your memo of Thursday, March 10, and one of the 

points that you make there is important—again, I commend you for 

it—pointing out that nothing LARA changes the current standards 

by which frivolous lawsuits are judged. And so when Mr. Schwartz 

talks about this deluge and the paper-mache that exists in the current rule, none of that is addressed. And so one must assume, 

therefore, that the rule is fine, which is the underlying presumption that is obviously there. 

Mr. NADLER. Thank you very much. 

I yield back. 

Mr. FRANKS. Thank you, Mr. Nadler. 

And I now recognize for 5 minutes Mr. Forbes. 

Mr. FORBES. Mr. Chairman, thank you for this hearing today. 

Mr. FRANKS. Mr. Forbes, I don’t think your microphone—— 

Mr. FORBES. I am sorry. Can you hear now? 

I just wanted to thank our witnesses. We have a very talented 

panel and I appreciate your written comments. 

Mr. Chairman, I would like to just kind of make some comments 

about what I have heard both from the dais here and from the 

panel. 

First of all, this is not about civil rights claims. I mean, you 

know, basically when you cut to the chase on this, we know what 

this is about. If you like the plaintiffs lawyers, you don’t like this 

legislation. If you support small- and medium-sized businesses who 

hire most of our constituents, you like this legislation. 

One of the things I heard the Ranking Member mentionis that 

this was a solution in search of a problem, but then I heard Mr. 

Hoffman say that this was not the right solution, that there is a 

65 

problem, it is just not the right solution. I remember when we 

brought gang legislation before this very Committee, the first comment that was made was that that was a solution in search of a 

problem. Where is the problem? Nobody raises the fact today that 

we don’t have a problem with gangs and that we need to do something about it. 

The other thing, Mr. Chairman, that I would just say is oftentimes—Ms. Milito, the one thing I disagree with you on is I don’t 

think it is just the $5,000 settlements that we are talking about. 

We talk about those a lot, but the real world is this. Mr. Schwartz 

is exactly right. We don’t hear from the people that this really impacts the most. We don’t get them walking in here because they 

are working. They are home and it is very difficult for them to 

come up here and sit where you are sitting and make those claims. 

Let me give you a real-world case that brings this home, and it 

wasn’t a $5,000 claim. 

Several years ago, I had a constituent of mine that came to me 

and they were wrapped up in one of these frivolous suits. It was 

a tort situation that they had absolutely no liability in at all, and 

they were brought in as an additional party defendant to that case. 

They came in and they had the demand letter. They contacted the 

attorney and said we don’t have any liability. We weren’t even involved in the contract that you are talking about in the tort liability that took place. The plaintiff’s attorney said, no, no, we are continuing to move forward. We are bringing all of these individuals 

in as party-defendants. 

So they did what most small business people would do that you 

represent, and they said, well, we are going to turn it over to our 

insurance company because we have been paying all the premiums 

on our insurance company and let them defend it. Well, unfortunately for them, the insurance company was the reciprocal, which 

had filed bankruptcy and therefore wasn’t there to defend them. 

They then approached me and I said you need to go to a law firm 

and have an analysis done and see what they say. They brought 

me the letter back that I read, and here is the analysis. The law 

firm said you are absolutely right. You have zero liability in this 

case. We will win this case if you go to court, but it will cost you 

$500,000 to defend this case. The claim is $300,000 that is being 

made to you. What do you do if you are a small businessman? 

And there is no disincentive for them to bring those cases and 

to push it and to try to get hose businessmen to come up, and if 

they don’t settle for $300,000, it is $50,000 or it is $100,000, but 

it is oftentimes even more than that $5,000. 

So, Mr. Chairman, I think Mr. Schwartz is right. I think this is 

a huge incentive to stop those frivolous cases and to strike a balance that we need if we are really serious about putting America 

back to work and hiring and jobs instead of staying in the courtroom. 

And I yield back. 

Mr. FRANKS. Thank you, Mr. Forbes. I am glad you came by 

today. 

Now I will recognize Mr. Scott from Virginia for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. 

66 

Ms. Milito, you indicated—could you remind me what portion of 

your members had suits filed against them? 

Ms. MILITO. In a poll NFIB conducted—and again, this was not 

just of NFIB members, but of all small business owners—nearly a 

quarter of small employers reported they had either been sued or 

credibly threatened with a—— 

Mr. SCOTT. And how many of your small businesses filed suits 

against somebody else? 

Ms. MILITO. I do not have that information. 

Mr. SCOTT. Is it fair to say that most, at one time or another, 

have filed suit, collection or some other kind of lawsuit? And is the 

fact that a suit has been filed evidence that it is necessarily frivolous? 

Ms. MILITO. You are saying suits that a small business owner 

might file? Is that what you are asking? 

Mr. SCOTT. Or might be filed against them. The fact that it is 

filed against them does not mean it is necessarily frivolous. 

Ms. MILITO. No, you are correct. You are correct. 

But what I can tell you—— 

Mr. SCOTT. And that small businesses file suits against other 

small businesses. 

Ms. MILITO. Our members don’t like to go court. Period. They 

don’t like to have suits filed against them, and they don’t like to 

file lawsuits. They don’t want to get involved in litigation. Period. 

Mr. SCOTT. We have heard comments about $5,000 cases. How 

many of these are subject to rule 11 because they would be in Federal court? 

Ms. MILITO. Well, as Mr. Schwartz—first of all, certainly our 

members are sued in Federal court. The asbestos litigation story 

that I referred to—most of those claims are occurring in Federal 

court. So in those yellow page lawsuits, a lot of those are in Federal 

court. And I do believe LARA would reach those claims. 

And as Mr. Schwartz pointed out in his written statement too, 

many of the States’ rules of civil procedure do mimic or change 

when the Federal rules change. So I think it would have a deterrent effect and aid small businesses. 

Mr. SCOTT. The $5,000 cases would not be affected by rule 11 in 

Federal court. 

Ms. MILITO. Well, these aren’t $5,000 claims. These are $5,000 

settlements. The claims can be much more. 

Mr. SCOTT. Thank you. 

Mr. Hoffman, comments have been made about civil rights litigation. The bill has this savings clause in it that says that nothing 

in this act shall be construed to bar or impede civil rights cases. 

The present standard in rule 11 would not be affected. Is that 

right? 

Mr. HOFFMAN. That is correct. 

Mr. SCOTT. And if civil rights cases are adversely affected, this 

wouldn’t help that situation. Is that right? 

Mr. HOFFMAN. That is right, and of course, remember it has no 

application whatsoever when the issue that is allegedly 

sanctionable isn’t the bringing of a novel legal theory. For instance, 

if the claim is you didn’t do you right factual investigation, that 

provision has no application whatsoever. 

67 

Mr. SCOTT. And is changing existing law—if you are asking for 

a change in existing law, is that necessarily exempt from a sanction or is it up to the judge? 

Mr. HOFFMAN. Correct. The question of whether that is 

sanctionable is not saved by that final provision that is in there. 

That is right. It is not dispositive, if that is your question. 

Mr. SCOTT. But the judge gets to decide when it is frivolous and 

when it is not frivolous. 

Ms. MILITO. The judge gets to decide whether or not rule 11 has 

been violated. 

Mr. SCOTT. And so in 1954 when the law was fairly clear that 

separate but equal was the law of the land, could a court reasonably conclude that a lawsuit to change that would be frivolous? 

Mr. HOFFMAN. Certainly. 

Mr. SCOTT. And in the 1960’s when the law of the land was that 

Blacks and Whites couldn’t marry, that was well established law. 

Is that right? 

Mr. HOFFMAN. That is correct. 

Mr. SCOTT. Would such a filing to try to change that law be up 

to the judge to determine whether it was frivolous or not? 

Mr. HOFFMAN. Correct. 

Mr. SCOTT. In an automobile accident, just a routine automobile 

accident, when a filing is made, my experience is that what you get 

back is a general denial of liability. In a case of a rear end automobile accident, when you get a general denial, would the defendant be subject to sanctions for not admitting liability? 

Mr. HOFFMAN. So rule 11 technically applies to all pleadings, all 

motions, and all other papers that are filed by lawyers and their 

parties in Federal court. 

Mr. SCOTT. And so if you get a general denial and you get in this 

rule 11 litigation that the gentleman from New York has talked 

about, would the next filing be I need attorney’s fees for your general denial? 

Mr. HOFFMAN. The rule would technically apply to them as well. 

Mr. Scott, it is one of the most astonishing things that when critics 

talk about the deluge of inappropriate lawyering, somehow it is always a one-way street and there is no suggestion ever even considered that the defense lawyer, who is billing by the hour, might 

have some incentive to increase costs and delays unnecessarily. 

Mr. SCOTT. And the attorney’s fees, if this is applied against the 

defendant, would be mandatory. Is that right? 

Mr. HOFFMAN. The rule would apply equally for plaintiffs and defendants. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Mr. FRANKS. Well, with that, I want to thank all of our witnesses 

for their testimony today. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witnesses 

which we will forward and ask the witnesses to respond as promptly as they can so that their answers may be made part of the 

record. 

And without objection, all Members will also have 5 legislative 

days to submit any additional materials for inclusion into the 

record. 

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And with that, again I thank the witnesses and the Members, 

and this hearing is adjourned. 

[Whereupon, at 10:59 a.m., the Subcommittee was adjourned.] 

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