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26–646 PDF 2006

WORKPLACE GOODS JOB GROWTH AND

COMPETITIVENESS ACT OF 2005

HEARING

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON

H.R. 3509

MARCH 14, 2006

Serial No. 109–91

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 

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

HENRY J. HYDE, Illinois 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

WILLIAM L. JENKINS, Tennessee 

CHRIS CANNON, Utah 

SPENCER BACHUS, Alabama 

BOB INGLIS, South Carolina 

JOHN N. HOSTETTLER, Indiana 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

CHRIS VAN HOLLEN, Maryland 

DEBBIE WASSERMAN SCHULTZ, Florida

PHILIP G. KIKO, Chief of Staff-General Counsel 

PERRY H. APELBAUM, Minority Chief Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

CHRIS CANNON, Utah Chairman

HOWARD COBLE, North Carolina 

TRENT FRANKS, Arizona 

STEVE CHABOT, Ohio 

MARK GREEN, Wisconsin 

RANDY J. FORBES, Virginia 

LOUIE GOHMERT, Texas 

MELVIN L. WATT, North Carolina 

WILLIAM D. DELAHUNT, Massachusetts 

CHRIS VAN HOLLEN, Maryland 

JERROLD NADLER, New York 

DEBBIE WASSERMAN SCHULTZ, Florida

RAYMOND V. SMIETANKA, Chief Counsel 

SUSAN A. JENSEN, Counsel 

BRENDA HANKINS, Counsel 

MIKE LENN, Full Committee Counsel 

STEPHANIE MOORE, Minority Counsel 

(III)

C O N T E N T S 

MARCH 14, 2006

OPENING STATEMENT 

Page 

The Honorable Chris Cannon, a Representative in Congress from the State 

of Utah, and Chairman, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 1

The Honorable Melvin L. Watt, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Commercial 

and Administrative Law ...................................................................................... 2

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Member, Subcommittee on Commercial and Administrative Law ........................................................................................................ 3

The Honorable William D. Delahunt, a Representative in Congress from 

the State of Massachusetts, and Member, Subcommittee on Commerical 

and Administrative Law ...................................................................................... 4

The Honorable Steve Chabot, a Representative in Congress from the State 

of Ohio, and Member, Subcommittee on Commerical and Administrative 

Law ........................................................................................................................ 26

WITNESSES 

Ms. Elizabeth Sitterly, Esq., Legal Counsel, Giddings & Lewis, LLC, Cincinnati Machine, Fond du Lac, Wisconsin 

Oral Testimony ..................................................................................................... 5

Prepared Statement ............................................................................................. 7

Kevin McMahon, Esq., Partner, Nelson Mullins Riley & Scarborugh, LLP, 

Washington, D.C., on behalf of the National Association of Manufacturers 

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

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

Mr. Andrew Popper, Professor of Law, Washington College of Law, American 

University 

Oral Testimony ..................................................................................................... 13

Prepared Statement ............................................................................................. 15

James H. Mack, Esq., Vice President, Government Relations, The Association 

for Manufacturing Technology, McLean, VA 

Oral Testimony ..................................................................................................... 19

Prepared Statement ............................................................................................. 21

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Statement of Mark J. Nuzzaco, Government Affairs Director, NPES, The 

Association for Suppliers of Printing and Converting Technologies on H.R. 

3509 ....................................................................................................................... 38

(1)

WORKPLACE GOODS JOB GROWTH AND 

COMPETITIVENESS ACT OF 2005

TUESDAY, MARCH 14, 2006

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, COMMITTEE ON THE JUDICIARY, Washington, DC.

The Subcommittee met, pursuant to notice, at 1:05 p.m., in Room 

2141, Rayburn House Office Building, the Honorable Chris Cannon 

(Chairman of the Subcommittee) presiding. 

Mr. CANNON. I’d like to call to order this hearing of the Commercial and Administrative Law Subcommittee. 

And we’ll be considering H.R. 3509, the ‘‘Workplace Goods Job 

Growth and Competitiveness Act of 2005.’’ This legislation, introduced by Representative Chabot, would establish a nationwide, 12-

year statute of repose for durable goods in the workplace. This bill 

seeks to address a fundamental problem for American manufacturers, the long tail of liability that extends for creating long-lasting 

quality goods. 

Through ingenuity of design and quality of craftsmanship, American manufacturers produce a range of workplace goods, whose useful life exceeds 12 years. Many of these goods have been in service 

for decades. In one case, a machine that stamped a part for the 

first Smith Corona typewriter—before my time, by the way—was 

used to create a piece of the Apollo rocket over a 100 years later. 

This longevity comes at a cost—a significant cost. These goods expose their manufacturers to suits for products that left their control 

decades before, even when subsequent owners have significantly 

modified the machine. 

However, these suits beg the question: if the design, manufacture, and warnings on a product were good enough to keep it running for 10, 20, or 30 years, how are they suddenly deficient when 

an accident occurs in the 40th year? 

As previous hearings before the Judiciary Committee and this 

Subcommittee have shown, the price of such litigation is staggering. 

A Tillinghast survey that came out yesterday showed that tort costs in the United States reached $260 billion in 2004. That 

amount equals 2.2 percent of the United States gross domestic 

product. The utility of such litigation is often questionable. Defendant companies, faced with possible runaway jury verdicts, will 

often settle otherwise meritless claims. And, as one of our witnesses will testify to today, nearly half of the machine tool indusVerDate 0ct 09 2002 11:19 May 09, 2006 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6601 G:\WORK\COMM\031406\26646.000 HJUD2 PsN: 26646
2

try’s litigation costs go to defense lawyers. The claimants themselves see less than 30 percent of the monies paid out by manufacturers and that amount is reduced by a third or more for their attorneys’ fees. 

The only clear winners in this cycle of litigation are, of course, 

the lawyers, many of which are very good people, I might say as 

an aside. 

H.R. 3509 addresses this problem by creating a nationwide statute of repose for durable goods used in the workplace. Black’s Law 

Dictionary defines a statute of repose as a statute barring any suit 

that is brought after a specified time since the defendant acted; in 

this case, 12 years after the product was delivered to its first purchaser, even if this period ends before the plaintiff has suffered a 

resulting injury. This differs from a statute of limitations, which is 

a statute establishing a time limit for suing in a civil case based 

on the date when the claim accrued. 

Their purpose, however, is very similar: to promote justice by 

preventing surprises through the revival of claims that have been 

allowed to slumber until evidence has been lost; memories are 

faded; and witnesses have disappeared. 

H.R. 3509 is narrowly tailored to address this problem of prolonged liability. The statute of repose contained in the bill only applies to durable goods used in manufacturing as opposed to consumer goods. 

Further, the statute of repose does not apply to personal injury 

or wrongful death actions unless the injured person is covered by 

worker’s compensation. 

Therefore, every person would be compensated for his or her injuries. 

H.R. 3509 also contains exceptions relating to toxic or environmental harms. The provisions of this bill are very similar to statutes of repose that have been enacted in approximately a dozen 

States. H.R. 3509 is very similar to a bill that passed the House 

of Representative in the 106th Congress as well as the statute of 

repose that Congress enacted in the General Aviation Revitalization Act of 1994. That act has been widely credited with saving the 

small aircraft manufacturing industry in this country. 

I’d like to thank Congressman Chabot for introducing this legislation, and I look forward to hearing from all of our witnesses 

today. 

And with that, Mr. Watt, would you like to make an opening 

statement? 

Mr. WATT. Thank you, Mr. Chairman. I’ll be——

Mr. CANNON. The gentleman is recognized for 5 minutes. 

Mr. WATT. I’ll be brief. I doubt I’ll take 5 minutes. What I really 

should do is just record this statement, because I’ve given it so 

many times. It just seems like every time I turn around, we’re addressing this whole issue of tort reform in one way or another. And 

we’re addressing it at the Federal level. And it just seems to me 

to be the most arrogant pursuit we could possibly be engaged in 

at the Federal level, especially given the fact that many of my colleagues who are pushing this agenda came into Congress with the 

avowed purpose of returning power to the States and expressing 

3

grave concerns about the detriment that we are doing to States’

rights. 

Well, tort law throughout our history has been a primary area 

in which the States have been paramount. And I just don’t understand how we can reconcile this assault on States’ rights. 

So this is not about substance for me. Actually, I’m told that 

North Carolina has one of the more restrictive statues of repose—

6 years. Mr. Coble is over there. He’s my expert on these things, 

so he’ll correct me if I’m wrong, and this statute would have a 

longer statute of repose if we federalized it than the North Carolina statute, so this can’t be about the substance of what we’re 

doing. It’s about who has the prerogative to make that decision. 

And I hate to be always the chairman of the States’ rights caucus 

in this Judiciary Committee. I’m just—I didn’t come here expecting 

to have to do that. 

And so it’s disappointing to me that we keep going down this 

road over and over and over again, especially when the—I’m not 

on the side of this that I was expecting to be on when I came to 

Congress. I thought the Republicans were going to fight this States’

rights prerogative issue for me. I’m just not getting any help from 

you all anymore. 

So I’m disappointed. I’m here, but not to argue about the substance, but to argue about whether the Federal Government has 

the prerogative to impose itself on States over and over and over 

again in every area of our life without justification in my opinion. 

With that—I took less than 5 minutes. I took less than 4 minutes. 

Mr. CANNON. Yes. 

Mr. WATT. So happy to yield back. 

Mr. CANNON. I’m impressed and I’m wiling to be the co-chair of 

the States’ rights caucus with the gentleman if he would like to 

create that. 

Mr. WATT. It’s created, Mr. Chairman. I just can’t get any Members on your side to join me because you all keep wandering off the 

reservation to support legislation of this sort, which is inconsistent, 

in my opinion, with the whole concept of States’ rights. 

Mr. CANNON. Without entering into a debate, this Committee is 

the Committee that exists to oversee the commercial processes 

throughout the United States and to not let State law interfere 

with the commerce of the country. And so while I’m a States’ rights 

advocate who was thrust into the middle of these kinds of discussions and frankly have done a great deal of it this year, probably 

more than we’ve done in the history of Congress to date. That is 

last year we did—we passed actually—had signed into law four tort 

reform actions which are bills, of which I’m properly proud. 

Would the gentleman from North Carolina like to make an opening statement? 

Mr. COBLE. Well, I won’t make a full opening statement, Mr. 

Chairman. 

Mr. CANNON. The gentleman is recognized for 5 minutes. 

Mr. COBLE. I want to thank my States’ rights colleague from 

North Carolina for elevating me to the high status of expert. Mel, 

I thank you for you that. 

4

I think Mr. Watt is embellishing my prowess. I’m not an expert 

by any means. But I do think Mr. Watt is correct. And I think our 

statute is 6 years in North Carolina. 

This is an issue, folks, that many of my constituents and perhaps, Chris, you and Mel may have had the same response. I just 

indicate that this is an issue that needs attention and resolving. 

That’s why we’re here today. And hopefully, you four outstanding 

panelists can shed light upon that. 

I thank you, Mr. Chairman. 

Mr. CANNON. The gentleman yields back. 

Mr. COBLE. You got it. 

Mr. CANNON. We’re going to have to take a look at this statute 

and make sure that it doesn’t pre-empt the more restrictive North 

Carolina statute if that is the case, which I think we can probably 

do. 

Mr. WATT. I’m sure you can. 

Mr. CANNON. And all other States that are more restrictive. And 

without objection, all Members will have 5 legislative days to submit additional material for the hearing record. 

I would now like to introduce our witnesses for today’s hearing. 

Our first witness is—oh, pardon me. Would the gentleman from 

Massachusetts like to make an opening statement? 

Mr. WATT. The co-chair of the States’ rights caucus I’m sure 

would like to—— Mr. CANNON. We’re going to have four co-chairs. This has to be 

bipartisan. 

Mr. DELAHUNT. I move to strike the last word, and I will not use 

all the 5 minutes, and I just associate myself. I was listening to the 

remarks of the chairman of the States’ rights caucus, Congressman 

Watt, and I really do have to—I feel compelled—I felt compelled to 

come down to the hearing, so I can hear what I’ve heard before 

again and just say that you know there’s a—it is amazing, it really 

truly is, that those that preach the loudest about devolution, 

States’ rights, really have turned their back on States’ rights. 

So I’m here to support the States and my chair, Congressman 

Watt. 

I would hope that the panelists could direct—or include in their 

remarks if they simply could point to the need and some of the 

data that exists and I guess I’d have a question, why 12 years as 

opposed to 18, and I’d also like to welcome an old and dear friend 

of mine to the panel. That’s Jim Mack. I’m sure he disagrees with 

me on just about everything, but he’s still my pal. And with that, 

I yield back. 

Mr. CANNON. The gentleman yields back. 

I’m just hoping that if we get this caucus organized, that maybe 

some of the people on this side the dais will get some contributions 

from the trial lawyers and that may—who knows? It might affect 

the judgment between the groups, although we may still on this 

side want to do tort reform. 

Our first witness is Ms. Elizabeth Sitterly, Legal Counsel to 

Giddings and Lewis, a manufacturer of machine tools located in 

Fond du Lac, Wisconsin. Giddings and Lewis is a division of the 

Cincinnati Machine Company. Ms. Sitterly received her Bachelor of 

Arts from Northwestern University and her Juris Doctor from ChiVerDate 0ct 09 2002 11:19 May 09, 2006 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6601 G:\WORK\COMM\031406\26646.000 HJUD2 PsN: 26646
5

cago Kent College of Law. In her capacity as Legal Counsel to 

Giddings and Lewis, Ms. Sitterly is responsible for overseeing the 

product liability suits brought against her company. 

Our second witness is Mr. Kevin P. McMahon, Partner at Nelson 

Mullins Riley and Scarborough. He is testifying on behalf of the 

National Association of Manufacturers, where he served as the 

Chairman of the Legal Issues Policy Task Force. Mr. McMahon received his Bachelor of Arts degree from the University of California 

at Santa Barbara, and his law degree from the University of South 

Carolina School of Law. 

In addition to his involvement with NAM, that is, the National 

Association of Manufacturers, he is the Immediate Past President 

and Chairman of the American Tort Reform Association. I think 

those are the guys on our side of the aisle. 

Our third witness is Professor Andrew Popper, Professor of Law 

at American University’s Washington College of Law. Professor 

Popper received his bachelor’s at Baldwin Wallace College. He attended DePaul University’s School of Law for his Juris Doctor and 

subsequently earned his L.L.M. from George Washington University National Law Center. Professor Popper teaches a number of 

courses at American University, including Torts. 

Our fourth witness—our fourth and final witness is Mr. James 

H. Mack, the Vice President of Tax and Economic Policy at AMT, 

the Association for Manufacturing Technology, where he has 

worked since 1975. Mr. Mack graduated from the University of 

Wisconsin at La Crosse, where he earned a Bachelor of Science, as 

well as from the University of Wisconsin School of Law. He’s been 

active in promoting a national statute of repose for a very long 

time, and, in fact, testified before the House Committee on the Judiciary on this very issue in the 106th Congress. 

Again, I welcome all of our witnesses, and I look forward to hearing your testimony. 

Before you get started, let me just draw your attention. The light 

panel before you—there’s one on either side. That starts out green. 

After 4 minutes, it turns yellow, and then it turns red. And that 

suggests it’s time to wrap up. We’re actually interested in what you 

have to say, and if you go a little longer, that’s fine. If not, if it 

goes too long, I’ll tap the gavel and remind you. 

Now, it’s the practice of this Committee to swear in all witnesses 

appearing before it, so if you would please stand and raise your 

right hand. 

[Witnesses sworn.] 

Mr. CANNON. The record should reflect that the witnesses all 

said yes, and you may be seated. We’ll now proceed with our first 

witness, Ms. Sitterly. 

TESTIMONY OF ELIZABETH SITTERLY, ESQ., LEGAL COUNSEL, 

GIDDINGS & LEWIS, LLC, CINCINNATI MACHINE, FOND DU 

LAC, WISCONSIN 

Ms. SITTERLY. My name is Elizabeth Sitterly. I’m Legal Counsel 

for Giddings & Lewis, a division of Cincinnati Machine. 

I’ve been an attorney for—okay. I’m sorry. I’ve been an attorney 

for over 20 years, of which 19 have been dedicated in some form 

6

to the defense of product liability actions; most recently for the last 

9 years with Giddings & Lewis, located in Fond du Lac, Wisconsin. 

Being part of the machine tool industry has been an extraordinary learning experience. I’ve learned what an integral part 

these companies and the machines these companies produce play 

in our society. 

The companies that I represent have been around for a long 

time—G&L since 1852 and Cincinnati Machines since 1884. 

Robust is the word commonly used to describe the machines 

these companies make. They are the Cadillacs of their kind, and, 

therefore, last for a very long time. 

Anyone familiar with this industry will tell you that it’s cyclical, 

and the cycle has been down for the last few years. To use my company as an example, in the last 5 years we have not turned a profit. This lack of profitability, in part, was caused by the exorbitant 

costs of litigating product liability actions across the country. 

These companies are in danger. Litigation costs are strangling 

companies like mine. We’re spending money not on improving productivity and safety, but on defending claims 

I was asked here today to share with you the experiences of the 

product liability history of two venerable machine tool companies. 

If you would walk into my office today, you would find that, of 

the 11 open product liability cases, eight of them involve claims on 

products that were manufactured at least 12 years prior to the 

claimant’s injury. The claims involve products that were manufactured between 1941 and 1982. In the last 2 years, I have resolved 

three cases. All three involve machines manufactured 12 years before the date of the plaintiff’s injury. We’ve paid $740,000 in defense costs and have paid $1.4 million in settlement costs. The 

largest settlement in that time period was on a claim involving a 

machine manufactured in 1966. This case is a good example of why 

we need legislation such as H.R. 3509. An experienced machine operator sustained a near amputation of his non-dominant hand. 

Though the machine that the plaintiff was injured on was manufactured in 1966, its design was born in the 1930’s. There were 

9,000 of these machine sold, and this was the first claim of injury 

we’ve ever received. The plaintiff was injured performing an operation in a way that was specifically prohibited in our operator’s 

manual. He was trying to save time by doing it his way. 

You’re probably thinking this a great case for the defense, but 

given the disfiguring nature of the injury and the difficulty in finding expert testimony on a product of that vintage, giving it to a 

jury was too great a risk. The matter was settled in an amount 

over $700,000, but not before $410,000 was spent on preparing the 

defense. 

In 9 years, I have taken only one case to trial. It was a case that 

I believed could not be lost and involved a machine that was built 

in 1982. It was so substantially modified from the time it was 

shipped, that I thought no jury in the world could find against us. 

Furthermore, the operator was trained incorrectly and insufficiently and took a chance on ‘‘beating the machine,’’ and he lost. 

But I was wrong to the tune of $533,000. But that wasn’t before 

we paid $409,000 to defend the claim. The plaintiff was disVerDate 0ct 09 2002 11:19 May 09, 2006 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6601 G:\WORK\COMM\031406\26646.000 HJUD2 PsN: 26646
7

appointed in the verdict as well. His demand was in excess of $2 

million, which wouldn’t be unusual in a case of this nature. 

Honestly, when a plaintiff is injured on a machine that’s over a 

decade old, I’m hard pressed to take that case to trial because of 

the difficulty in preparing that defense. 

When machines are that old, none of the engineers involved in 

the product design are still with the company. More often than not, 

they’re deceased. So the company has nobody left to defend the design or the pains taken by them to make that product safe, as that 

was defined at the time of manufacture. 

It is also an almost insurmountable task to get a jury to stay focused on standards that were in effect at the time the machine was 

designed. The impact on the bottom line of the Cincinnati Machine 

group of companies is staggering. Companies like ours can’t be 

looking over our shoulders in fear of what liability lurks in the 

past, dedicating our scant resources to create reserves for liabilities 

that never die. 

We need to set our sites on the future, dedicating those resources 

to R&D, to create safer, more productive machines. The beauty of 

this bill is that it does not overreach in my mind. It seeks to set 

a reasonable statute of repose in those cases where the party sustained a workplace injury and was compensated. This is a good 

piece of legislation. It supports companies that make America more 

productive and competitive. We respectfully urge its adoption. 

Thank you. 

[The prepared statement of Ms. Sitterly follows:]

PREPARED STATEMENT OF ELIZABETH SITTERLY

I. INTRODUCTION

My name is Elizabeth Sitterly, Legal Counsel for G&L, a division of Cincinnati 

Machine. I have been an attorney for over 20 years of which 19 have been dedicated, 

in some form, to the defense of product liability actions—most recently, for the last 

nine years, with G&L. 

Being part of the machine tool industry has been an extraordinary learning experience. I have learned what an integral part these companies and the machines 

these companies produce play in our society. I have also learned the historically important roles these companies have played, not the least of which has been to help 

aid in the defense of this country. The companies that I represent have been around 

for a long time—G&L since 1852 and Cincinnati Machine since 1884. ‘‘Robust’’ is 

the word commonly used to describe the machines these companies make. They are 

the ‘‘Cadillac’s’’ of their kind and, therefore, last for a very long time. 

Anyone familiar with this industry will tell you that it is cyclical, and the cycle 

has been down for the last few years. It is returning to an upward climb slowly. 

But to use my company as an example, in the last five years we have not turned 

a profit. But for the generosity of a benevolent corporate parent, G&L would have 

closed its doors and with that lost its history and all its contributions. This lack of 

profit in large part was caused by the exorbitant costs of litigating product liability 

actions across the country. 

These companies are in danger. Litigation costs are strangling companies like 

mine. We are spending money not on improving productivity and/or safety, but on 

defending claims involving machines sometimes older than the people on this panel. 

This problem also interferes with our ability to compete with our overseas competitors who, unlike us, have no product liability laws to fear. 

I was asked here today to share with you the experiences of the product liability 

history of two venerable machine tool companies. 

II. THE COMPANIES’ PRODUCT LIABILITY HISTORY 2002–2005

If you would walk into my office today, you would find that, of the 11 open product liability cases, eight of them involve claims on products that were manufactured 

8

over 12 years prior to the claimant’s injury. The claims involve products that were 

manufactured between 1941 and 1982. All three of our recently resolved cases involve products older than 12 years (1991—$225,000 settlement, $112,000 expenses; 

1966—$700,000 settlement, $410,000 in expenses; 1942—$90,000 in settlement, 

$151,000 in expenses). From 2003 to 2005, we have spent over $740,000 in defense 

costs. We have paid $1.4M in settlements (out of that amount less than half was 

paid with insurance dollars). Therefore, in two years we have paid almost $1.3M on 

product liability litigation. 

The largest settlement in that time period was on a claim involving a machine 

manufactured in 1966. This case is a good example of why we need legislation such 

as H.R. 3509. An experienced machine operator sustained a near amputation of his 

non-dominant hand. He sustained this injury as he was trying to change an arbor 

on a horizontal milling machine that was manufactured in 1966. These milling machines were designed in the mid-1930s. The model that this gentleman was operating was only slightly changed from the original design. Approximately, 9,000 of 

these machines were sold. The Company stopped producing machines altogether in 

1994. 

The plaintiff was injured performing an operation in a way that was specifically 

prohibited in the operator’s manual. His employer and fellow employees advocated 

the method he used at the time of the injury to save time. The plaintiff’s attorney 

proffered arguments regarding standards, guarding and the like that were state of 

the art at the time of trial rather than at the time the machine was manufactured. 

One of the many frustrating aspects of this case was that, despite the large number 

of these machines in the field and the amount of time that they have been operated, 

the Company never had a claim on this type of mill. 

You are probably thinking this is a great case for the defense. But given the horrendous disfiguring nature of the injury, taking the risk of what a jury might do 

with this was too great. The matter was settled for an amount over $700,000 but 

not before $410,000 was spent on preparing the defense. The company had a 

$500,000 Self Insured Retention (SIR). 

We also settled a case on a mill shipped in 1942. Here we settled for $90,000 and 

spent $151,000 in defense costs. 

In nine years, I have taken only one case to trial. It was a case that I believed 

could not be lost and involved a machine manufactured in 1982. It was so substantially modified from the time it was shipped, that I thought no jury in the world 

could find against us. Furthermore, the operator was trained incorrectly and insufficiently and took a chance on ‘‘beating the machine’’ and lost. I was wrong to the 

tune of $533,000. The plaintiff felt it was a loss, as his demand was well over $2M. 

We paid $409,000 to defend this matter. 

Honestly, given the nature of injuries sustained on machine tools, I am hard 

pressed to take a case to trial. When machines are over 12 years old, none of the 

engineers involved in the product design are still with the company. More often 

than not, they are deceased. So the Company has no one left to defend the design 

or the pains taken by them to make the product ‘‘safe’’ as was defined at the time 

of manufacture. It is also an almost insurmountable task to get a jury to stay focused on standards that were in effect at the time the machine was designed. That 

is assuming there were standards that controlled design at the time the machine 

was manufactured. All of these factors make it difficult to take a case to trial, ESPECIALLY on an old product. 

III. THE NEED FOR H.R. 3509

The impact on the bottom line of the Cincinnati Machine group of companies is 

staggering. It is not only in the dollars paid out, but also the increase in insurance 

premiums due to settlements or verdicts, the damage to reputation in publicized 

outcomes, and the increased litigation when ‘‘word gets out’’ that companies such 

as ours are paying out for injuries on machines that were manufactured several decades ago. 

The dollars that have been paid out on the examples that I shared with you today 

could be put to much better use on things such as research and development. Developing newer, safer, more productive machines adds to the well being not only of our 

group of companies but to the economy as a whole. 

This bill does not over-reach, it sets a reasonable statute of repose in those cases 

where the claimant sustained a workplace injury and is eligible for workers’ compensation. No injured worker would go uncompensated under H.R. 3509. 

This is a good piece of legislation. It is sorely needed by companies that make 

America more productive and competitive. We respectfully urge its adoption. 

Thank you for your attention.

9

Mr. CANNON. Right on time. Thank you. Mr. McMahon. 

TESTIMONY OF KEVIN McMAHON, PARTNER, NELSON 

MULLINS RILEY & SCARBORUGH, LLP, WASHINGTON, D.C., 

ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS 

Mr. MCMAHON. Mr. Chairman, Members of the Subcommittee, 

my name is Kevin McMahon, and I’m a Partner in the law firm of 

Nelson Mullins Riley & Scarborough. 

Today, I’m appearing on behalf of the National Association of 

Manufacturers. Along with several other clients, our firm represents Owens Illinois in litigation matters. 

Owens Illinois is an active member of the NAM. Additionally, I’m 

the Immediate Past Chairman of the American Tort Reform Association and currently serve on its Board of Directors and Executive 

Committee. 

I’ve been involved in efforts to enact common sense legal reforms 

at the State and Federal level for several years. 

The NAM supports enactment of H.R. 3509, the ‘‘Workplace 

Goods Job Growth and Competitiveness Act of 2005,’’ as introduced. 

H.R. 3509 would establish a national statute of repose of 12 

years, a time beyond which a manufacturer would no longer be expected to be responsible for claims attributable to workplace durable goods. The NAM, with membership of manufacturers that extends well beyond durable goods, however, would prefer to see a 

final bill that would extend the coverage and reduce the number 

of years before the bill’s protections apply. 

With that said, however, the NAM wants to see H.R. 3509 become law and will work with the sponsors and supporters to ensure 

that any potential changes to the bill do not diminish support for 

it. 

In past Congresses, statute of repose legislation has enjoyed 

strong bipartisan support in the House. In fact, H.R. 3509 is based 

on a compromise negotiated with the Clinton White House during 

consideration of the Comprehensive Product Liability Reform 

Measure. 

The experience of the General Aviation Revitalization Act, or 

GARA, which established an 18-year statute of repose for makers 

of light, privately owned aircraft, demonstrates that a Federal statute of repose can be successful. GARA, which was passed during 

a Democratically controlled Congress and signed by President Clinton in 1993, is credited with reviving an industry that was once 

thought to be dead, and in the process created thousands of jobs. 

Perhaps more importantly, contrary to what plaintiff attorneys 

and some consumer groups predicted, the skies are as safe, if not 

safer, than they were prior to the enactment of GARA. 

Our country has a long history of encouraging the development 

and production of useful goods for the benefit of our society and the 

world, and that system is undermined by excessive liability exposure. 

The policy of the United States should be to recognize that as 

products age, the responsibility for their integrity and operability 

shifts after a reasonable period to those who exercise control over 

10

them. Like manufacturers, owners and employees have an equal 

responsibility to ensure that products and tools they use are safe 

and effective for the job. 

The statute of repose also recognizes that many owners take the 

liberty of modifying their equipment. These alterations may even 

go against express warnings issued by the manufacturer. The 

longer a good has been separated from its manufacturer, the more 

likely this is to occur. 

Another difficulty with the passage of time is ironically the 

progress of technology and the state-of-the-art innovations. Defendants will themselves unfairly have to explain why they did not 

think of an innovation that came 20 or 30 years after the time the 

good was produced. 

Unlike Hollywood, manufacturers cannot go back to the future to 

add innovation to products 60, 70, or 80 years old. 

For example, Harris Corporation, a manufacturer of printing 

equipment has been sued on equipment manufacture in 1922 after 

decades of multiple modifications and alterations, which were out 

of their control. How can this be equitable or just? 

Some States have recognized this inequity in the legal system 

and have enacted their own statutes of repose. In States that have 

a fixed statute, the number of years usually begins at the time of 

initial purchase. Some of these States limit the application to workplace goods, but most apply to all goods. 

Most States with a statute of repose have a shorter time period 

than H.R. 3509. North Carolina, for example, has a 6-year statute 

of repose that applies to all goods. 

It’s very important to highlight that under the current language, 

someone who is injured on the job would be covered by worker’s 

compensation; and, therefore, would not be left without a remedy. 

If there is no worker’s compensation coverage, then a statute of 

repose does not apply and claimants can file a lawsuit. 

Additionally, a statute of repose will simply help level the playing field with some of our cheap international competitors—Japan 

and the European Union. Both Japan and the EU have 10-year 

statutes of repose that cover all goods. 

As it is, U.S. legal costs are twice as high as a percentage of GDP 

as our international competitors. According to the Tillinghast study 

cited in yesterday’s Wall Street Journal, in 2004, total tort costs 

were $260 billion and nearly $900 for every person in the country. 

It’s projected that the cost will rise to nearly $315 billion by 

2007. Enactment of 3509 would begin to reduce the substantial tort 

tax, which is a drag on innovation and job creation. 

I’ll sum up. Even though 11 States have a fixed statute of repose 

applicable to goods, their effect is limited by the fact that 70 percent of domestic products travel in interstate commerce; thus, only 

30 percent of goods are manufactured and sold in one State. That 

is why, like the GARA bill, Congress should enact a Federal statute 

of repose Moreover, Federal law establishing a statute of repose for 

10 years or less that covers all goods would be the best and preferred solution to truly help the United States overcome its comparative disadvantage in terms of legal costs. 

If sponsors and other supporters concluded after consulting with 

their colleagues that this is not politically feasible at this time, the 

11

NAM would encourage passage of H.R. 3509 as a meaningful step 

toward helping our domestic manufacturers better compete with 

our international competitors. 

On behalf of the National Association of Manufacturers, I thank 

you for the opportunity to appear before you today, and I would be 

happy to take any questions that Members of the Subcommittee 

may have. Thank you. 

[The prepared statement of Mr. McMahon follows:]

PREPARED STATEMENT OF KEVIN MCMAHON

Mr. Chairman, members of the subcommittee, my name is Kevin McMahon. I am 

a partner in the law firm of Nelson Mullins Riley & Scarborough. Today, I am appearing on behalf of the National Association of Manufacturers (NAM). Along with 

several other clients, our firm represents Owens Illinois in litigation matters. Owens 

Illinois is an active member of the NAM. Additionally, I am the immediate past 

chairman of the American Tort Reform Association, and currently serve on their 

Board of Directors and Executive Committee. I have been involved in efforts to 

enact common sense legal reforms at the state and federal level for several years. 

The NAM is the nation’s largest industrial trade association representing small 

and large manufacturers in every industrial sector and in all 50 states. Through our 

direct membership and our affiliate organizations—the Council of Manufacturing 

Associations, the Employer Association Group and the State Associations Group—

we represent more than one hundred thousand manufacturers. 

The NAM supports enactment of H.R. 3509, the Workplace Goods Job Growth and 

Competitiveness Act of 2005, as introduced. It would establish a national statute of 

repose—a time beyond which a manufacturer should no longer reasonably be expected to be held liable for a product—of 12 years for workplace, durable capital 

goods. The NAM, however, would prefer to see a final bill that would extend the 

coverage, reduce the number of years before the bill’s protections apply and allow 

states greater flexibility. With that said, the NAM most wants to see H.R. 3509 become law and will work with the sponsors and other supporters to ensure that 

changes made to the bill do not diminish the support for it. 

In past Congresses, statute of repose legislation has enjoyed strong, bipartisan 

support in the House. In fact, H.R. 3509 is based on a compromise negotiated with 

the Clinton White House during the consideration of a comprehensive product liability reform measure. Unfortunately, despite strong and bipartisan votes in the 

House, the proposal was not taken up by the full Senate except as part of the broader comprehensive bill. 

The experience of the General Aviation Revitalization Act (GARA) of 1993, which 

established an 18-year statute of repose for makers of light, privately owned aircraft, demonstrates that a federal statute of repose can be successful. GARA, which 

was passed during a Democratic-controlled Congress and signed by President Clinton, is credited with reviving an industry that was once thought to be dead, and 

in the process creating thousands of jobs. Perhaps more importantly, contrary to 

what opponents of GARA predicted, the skies are as safe if not safer than they were 

prior to the enactment of GARA. 

It is a sad commentary on today’s U.S. legal system that a statute of repose even 

needs to be contemplated. Unfortunately, however, the plaintiff’s bar has brought 

lawsuits against products that are decades (if not more than a century) old and, 

even more unfortunately, both the federal and state judiciaries have allowed these 

lawsuits to go forward. 

Nothing lasts forever. Every perfectly designed and manufactured product will 

eventually fail. Yet the law imposes a duty on those who make things to do so responsibly, so as not to unreasonably put at risk those who use them. Our country 

has a long history of encouraging the development and production of useful goods 

for the benefit of our society and the world, and that system is undermined by excessive liability exposure. The policy of the United States should be to recognize 

that, as products age, the responsibility for their integrity and operability shifts to 

those who exercise control over them. It is unfair and unreasonable to hold a manufacturer liable for long-term, ordinary wear and tear, for natural degradation of materials, or the effects of the environment or other outside forces. Like manufacturers, users have an equal responsibility to ensure that the products and tools they 

use are safe and effective for the job. 

It is true that in the vast majority of cases involving older products that the manufacturer/defendant almost always wins. Juries tend to understand that owners 

12

need to take responsibility for upkeep and routine maintenance. Thus, plaintiff’s 

counsel will usually offer to settle the case for less than the value of defending the 

litigation, in full knowledge that the defendant’s insurer will insist on a settlement. 

While the plaintiff may be somewhat better off, a hefty portion of his or her award 

will be needed to cover legal fees and expenses. 

A statute of repose also recognizes that many owners take the liberty of modifying 

their purchases. These alterations may even go against express warnings issued by 

the manufacturer. The longer that a good has been separated from its manufacturer, the more likely this is to occur. 

Another difficulty with the passage of time is, ironically, the progress of technology and other state-of-the-art innovations. Defendants will find themselves unfairly having to explain why they did not think of an innovation that came 20 or 

30 years after the time that the good was produced even though the product in 

question was revolutionary in its safety features at the time of manufacture. 

Harris Corporation, for example, has resolved printing industry equipment cases 

during this millennium involving equipment manufactured as early as 1922 and 

throughout each decade thereafter through the ’70s. Many of those cases involve 

issues related to industry standards that are decades old and disputes over the affect of multiple modifications and retro-fitting. Harris Corporation eventually sold 

its printing industry equipment assets in the early ’80s. 

Another important consideration regarding the length of time following an initial 

acquisition is the ability of the manufacturer to notify purchasers about the need 

to replace a certain part, or to not use the product in a certain manner. Even if 

the producer has information about the customer, such as a purchase order, mailin warranty card, or credit data, the notice will be sent to the initial acquirer only. 

If the product has been sold, bartered or given away, there is little that the manufacturer can do to ensure that the notice gets to the current owner. 

Some states have recognized this breakdown in the legal system and have begun 

to enact their own statutes of repose. Specifically, twelve states have a ‘‘fixed’’ statute of repose of a set number of years, while seven additional states have a ‘‘soft’’

statute of repose that relies on terms and concepts such as ‘‘useful life’’ that are 

open to litigation. Seven state supreme courts have found statutes of repose to violate the state’s Constitution and 26 states do not have a statute of repose. 

In the states that have a fixed statute, the number of years usually begins at the 

time of the initial purchase, except for Vermont. (That state has a special statute 

of repose of 20 years that applies specifically to latent exposure to noxious medical 

agents.) Some of these states limit the application to workplace goods, but most 

apply to all goods. With the exception of Texas and Iowa—each of which has a fixed, 

15-year statute of repose—the other states with a fixed statute of repose all have 

a shorter time period than does H.R. 3509. North Carolina, for example, has a six 

year statute of repose that applies to all goods. 

The NAM appreciates that the number of years in the proposed legislation has 

been lowered from 18 years in the past to the current 12. Eighteen was initially 

chosen because of the precedent found in GARA. Since H.R. 3509 creates a uniform 

period of time, the NAM hopes that an even lower number of years reflecting the 

consensus of the states that have fixed statutes of repose (such as 10 or less?) could 

be feasible for continued strong and bipartisan House support. Another consideration would be to allow states that have chosen to enact shorter statutes of repose 

to keep the length of time of their choosing as long as they do not exceed the federal 

standard. 

In addition, since most states with a statute of repose allow for the coverage of 

all goods, the NAM would hope that the sponsors and other supporters could consider extending the coverage. Under the current language, of course, someone who 

is injured on the job would be covered by worker’s compensation and therefore 

would not be left without any reparation. On the other hand, the basic principle underpinning the need for a statute of repose remains the same: purchasers need to 

take responsibility for upkeep and maintenance of their products. Even the highest 

quality products wear down over time. 

Consider as a hypothetical, for example, the case of a couple with young children 

who buy a metal swing set. As the children grow up, the swing set is used less and 

less, but remains standing in the yard. The once-young children grow up, get married and have children of their own. On a visit to grandma and grandpa’s, one of 

the grandchildren is allowed to play in the backyard. He begins to swing as strong 

as he can. The old and, by now, rusted, swing set is not able to handle the stress 

and collapses onto the grandchild. The family sues the swing-set manufacturer and 

the jury awards millions of dollars in punitive damages, even though the swing set 

had long outlived its useful life and was allowed to rust. 

13

In this example, should the swing-set manufacturer even have to face the prospect 

of losing a jury award and, in the case of a small manufacturer, possibly the entire 

business? 

A statute of repose of 10 or fewer years applicable to all goods will simply level 

the playing field with some of our chief international competitors, Japan and the 

European Union (EU). Both Japan and the EU have 10-year statutes of repose that 

cover all goods. Moreover, many foreign firms have entered the U.S. market only 

relatively recently, thereby putting established domestically based companies at a 

competitive disadvantage because of the higher legal costs they face connected with 

defending lawsuits against older products. By the same token, well-established, 

long-standing American companies are put at a competitive disadvantage with respect to new domestic competitors that do not face the same long tail of exposure 

from products sold years ago. This puts added financial pressure on companies with 

substantial legacy costs to cut back or eliminate wage, health care and retirement 

benefits, at a time when those crucial elements of our standard of living are already 

at great risk. 

As it is, U.S. legal costs are twice as high as a percentage of GDP as our international competitors. According to Tillinghast-TowersPerrin, in 2004 total tort costs 

were $246 billion, or nearly $3,400 for every family of four. Enactment of H.R. 3509 

would begin to whittle down this ‘‘tort tax’’ and, if the political will is there to improve its provisions, its contribution to reducing the tort tax will become even greater. 

Even though 11 states have a fixed statute of repose applicable to goods, their 

effect is limited by the fact that 70 percent of domestic products travel in interstate 

commerce. Thus, only 30 percent of goods are manufactured and sold in one state. 

If a manufacturer were based in North Carolina, for example, but 12 years later 

its merchandise ended up in the possession of an owner in New Jersey (which does 

not have a statute of repose) who did not perform the proper care, the 6-year North 

Carolina statute of repose would not apply. Conversely, if the manufacturer were 

based in New Jersey and the good ended up in North Carolina, the chances are that 

the lawsuit would be filed in New Jersey. 

Thus, a federal law establishing a statute of repose of 10 years or less and that 

covers all goods would be the best and preferred solution to truly help the United 

States overcome its comparative disadvantage in terms of legal costs. If the sponsors 

and other supporters concluded after consulting with their colleagues that this is 

not politically feasible at this time, however, the NAM would encourage passage of 

H.R. 3509 as introduced in order to at least begin to help domestic industry better 

compete with our international competitors. 

On behalf of the National Association of Manufacturers, I thank you for the opportunity to appear before you today. I would be happy to take any questions that the 

members of the subcommittee may have. Thank you.

Mr. CANNON. Thank you, Mr. McMahon. Professor Popper, you’re 

recognized for 5 minutes. 

TESTIMONY OF ANDREW POPPER, PROFESSOR OF LAW, 

WASHINGTON COLLEGE OF LAW, AMERICAN UNIVERSITY 

Mr. POPPER. Good afternoon. Thank you. Two quick Supreme 

Court cases before I get to my testimony. One Silkwood v. KerrMcGee, which held that tort law is inherently State law; and two, 

CFTC v. Schor. In CFTC v. Schor, the Supreme Court said, dealing 

with federalism, that there are often blendings in functions between houses of Congress or between the Executive and the Judicial, and the same is true with federalism and State rights. But the 

Court says in Schor that when there is a phalanx of activity that’s 

in the wrong place, action has to happen. And that is exactly the 

case with tort reform. 

So in response to the comments earlier, I certainly align myself 

with the positions that were made before. This is a serious federalism problem. 

Let me get to my statement. Think about tort reform for a moment. This has never been a fair fight. Think about the alignment 

of forces. On one side, you have the entire GNP. All of American 

14

industry, all of American retailing and health care and pharmaceuticals and the insurance companies. And for that matter, you 

have the press, who would very much like to never have to pay punitive damages when they defame into oblivion some private citizen. That’s on one side of the aisle. 

On the other side, you have underfunded consumer groups who 

are often fragmented. You have a few victims’ rights groups who 

have been somehow mocked as shameless seekers of underserved 

damage awards. 

And then you have trial lawyers, the people who protect you 

when you’re injured, the people who brought you the consumer’s 

rights movement, who have been horribly defamed and vilified over 

the last few years. This is not a fair fight. 

And when it comes to this specific piece of legislation, this is a 

seemingly simple bill. It is unclear, however, whether it could 

apply to regulatory actions. It is unclear whether it affects recall 

litigation. It’s unclear about dealing with knowing concealment of 

defects. And, by the way, since you raised GARA, now GARA is 18 

years, and it has an exception for fraudulent concealment. This bill 

does not. This bill is unclear on vested claims. This bill is even unclear on how it’s supposed to achieve its stated objective of competitiveness. 

Those technical shortcomings in the bill, however, pale in comparison to what’s substantively wrong with this legislation. This 

bill undermines incentives for better design. It undermines incentives for innovation. It displaces manufacturers from the cycle of liability, when they are the ones who are in the best position to 

cover the claims from the products they sold, from which they profited, and in the better position to improve the long-term integrity 

of those products themselves. 

It undermines the whole theory of risk distribution, which I 

thought was the predicate for tort reform in the first place. It denies innocent injured persons of their right to redress of wrongs in 

court, raising questions of fairness and due process and access to 

the courts. It abolishes lawful claims of consumers. 

It seemingly exposes employers to greater liability rather than 

sharing that liability with manufacturers, and, by and large, statistically it deals with a tort reform fantasy: that we have a large 

amount of claims involving older products where there has not 

been a showing of a breach of a duty of care. 

This bill punishes workers, not for filing at the wrong time or 

bringing a frivolous claim. This bill punishes workers for being 

hurt at the wrong time. It cuts away at incentives to keep longterm records. It cuts away at the incentives to do longitudinal studies. It cuts away at recordkeeping obligations that manufacturers 

have now. 

It undermines transparency in the production community, because, gee, why should you talk about the deficits you know about 

in your product if liability is cut off after 10 years. 

It creates a de jure interference with private contract, creating 

an incentive in the long run for courts to muddle the common law 

meaning of due care. 

It creates no incentive to recall products. It creates tension in 

labor management relationships, because it’s going to take out of 

15

1 Biography at conclusion of testimony. (It is not the policy of the Committee on the Judiciary 

to print witness biographies.) 2Susan Lorde Martin, The Litigation Financing Industry: The Wild West of Finance Should 

Be Tamed Not Outlawed, 10 Fordham J. Corp. & Fin. L. 55, 75 (2004). ‘‘Very cleverly, they have 

used the term ‘tort reform’ to refer to their efforts to make it harder for tort plaintiffs to win 

cases and, when they do win, to receive awards that fully compensate them for their injuries 

and adequately punish defendants for egregious acts.’’ Richard S. Miller, Tort Law And Power: 

A Policy-Oriented Analysis, 28 Suffolk U. L. Rev. 1069, n.61 (1994). ‘‘[T]he proponents of ‘tort 

reform’ have succeeded in grossly misleading the public and its decisionmakers about the nature 

and dimensions of the problems produced by tort law....’’ Andrew F. Popper, A One-Term 

Tort Reform Tale: Victimizing the Vulnerable, 35 Harv. J. on Legis. 123, 127 (1998). 3Michael L. Rustad, Access To Justice: Can Business Co-Exist with the Civil Justice System? 

The Closing of Punitive Damages’ Iron Cage, 38 Loy. L.A. L. Rev. 1297, 1417 n.354 (2005). ‘‘Despite the controversy over punitive damages, the empirical reality is that there is no nationwide 

crisis requiring radical judicial tort reform.’’ Tort Questions, 16 Risk & Insurance 9, Vol. 16 (AuContinued

the cycle the true source of liability if there is genuinely a defective 

piece of machinery. 

In fact, there’s not one line in this bill that helps consumers. 

There’s nothing to facilitate claims. There’s nothing to improve 

product quality. There’s nothing to lessen the costs that workers 

are going to sustain. 

The fact of the matter is that the only thing this bill does is legally and forever remove fault from at-fault manufacturers. 

This is tort reform, as I have come to know it: a series of bills 

that have but one meaning—reducing accountability and giving 

consumers absolutely nothing in exchange. It’s not that it’s incomprehensible. In fact, it’s perfectly understandable. Who wouldn’t 

want to be excused of responsibility after they engaged in misconduct? 

But the fact that it’s understandable doesn’t mean that it’s right 

or proper or fair or just, particularly to an injured worker. It is 

none of these things, and I urge the Committee to reject the legislation. Thank you. 

[The prepared statement of Mr. Popper follows:]

PREPARED STATEMENT OF ANDREW F. POPPER

My name is Andrew Popper.1 I appreciate the opportunity to testify on H.R. 3509, 

a modest side-show in the broader tort reform war. 

1. A SHORT PERSPECTIVE ON TORT REFORM

Tort reform has always been an unfair fight. Think about the alignment of forces. 

On the side of those seeking to limit liability is the entire GNP. All of U.S. manufacturing, all of retailing, the health care industry, the pharmaceuticals, the insurance 

companies, and even much of the press who have abandoned consumers on this 

issue, with the hope of never having to pay punitive damages when they defame 

into reputational oblivion a private citizen. 

On the other side, opposing these limits on accountability, are the defenders of 

the tort system—underfunded and often fragmented consumer groups, a few victims 

rights groups, some of whom have been mocked as shameless seekers of undeserved 

damage awards and, of course, trial lawyers. Trial lawyers—the architects of the 

consumer rights movement, the advocates for you and me when we are injured, the 

lawyers who represent the consumer perspective—have been horribly vilified by a 

decades long comprehensive campaign to undermine their credibility. 

This is hardly a fair fight. 

And then there is the term ‘‘tort reform.’’ Laws that provide no protection for consumers, no incentive for greater safety, and limit the rights of those who lack power 

are hardly the stuff of reform.2

And the data—or lack thereof—regarding the current civil justice system. From 

the CRS report forward, no credible juried study documents a crisis in the tort or 

insurance system 3 that could conceivably justify legislation that limits arbitrarily 

consumer rights, as does H.R. 3509. 

16

gust 1, 2005). ‘‘The debate over the tort litigation crisis is driven by hyperbole, faulty evidence 

and ‘secret’ data, according to The Frivolous Case for Tort Law Change, a recent study by the 

Economic Policy Institute. The authors, economist Lawrence Chimerine and attorney Ross 

Eisenbrey, found no evidence to link the tort litigation crisis with economic difficulty. Nor did 

they uncover any evidence to connect benefits to proposed tort system reforms.’’ 4 Jennifer R. Sentivan, The Statute of Repose Precludes Community Affairs Department From 

Filing Enforcement Action, 12 New Jersey Lawyer 17 (May 5, 2003). 5For a ‘‘fraudulent concealment’’ exception, see General Aviation Revitalization Act of 1994, 

Pub. L. No. 103–298, 108 Stat. 1552, Section 2(b)(1), 49 U.S.C. 49101 et. seq. 6 ‘‘[T]he basic, if not singular, function of tort law is to create incentives for reducing tortious 

risks. Optimally, tort achieves this goal by threatening potential injurers with liability for all 

losses their tortious conduct may cause, compelling them to internalize the costs of tortious 

harm before they take risky action....’’ [footnotes omitted]. David Rosenberg, Mass Tort Class 

Actions: What Defendants Have and Plaintiffs Don’t, 37 Harv. J. on Legis. 393, 404 (2000). ‘‘One 

manner in which tort liability may affect well-being is through the incentives it creates for potential injurers to take care or otherwise to adjust their behavior to reduce harm and thereby 

decrease their chances of having to pay damages....’’ Louis Kaplow and Steven Shavell, Fairness Versus Welfare, 114 Harv. L. Rev. 961, 1039 (2001). 7Manufacturers of products used the workplace have a duty to warn of defects discovered 

after a product has been sold. Liriano v. Hobart, 170 F.3d 264 (2d Cir. 1999). Quite obviously, 

they have a duty to exercise due care in the design of such products, based on their foreseeable 

use. With durable goods, the notion that those duties would be extinguished arbitrarily after 

12 years seems irrational, particularly if the goods are marketed to an employer on the basis 

of their ability to function effectively over longer periods of time. 8Despite significant regulatory efforts [e.g., 29 U.S.C. 654 (2000), that requires every employer 

‘‘(1) shall furnish to each of his employees employment and a place of employment which are 

free from recognized hazards that are causing or are likely to cause death or serious physical 

harm to his employees....’’], the American workplace is not as safe as it should be. Every 

year, more than 6,000 workers die of workplace injuries. Tens of thousands are injured. ‘‘Many 

worker deaths are the types of deaths that would make headline news if the perpetrator was 

an ordinary citizen. For example, some workers have been decapitated on assembly lines, 

ground up in a cheese grinder, buried alive in corn, or seared to a furnace room floor.’’ [footnotes 

omitted]. Elizabeth A. Lambrecht Karels, Current Public Law and Policy Issues: Make Employers Accountable for Workplace Safety! How the Dirty Little Secret of Workers’ Compensation Puts 

Employees at Risk and Why Criminal Prosecution and Civil Action Will Save Lives and Money, 

’’ 26 Hamline J. Pub. L. & Pol’y 111, 129, 143 (2004). Passing a law that eliminates responsibility for those who design and sell workplace equipment only exacerbates this situation. 9 Jan Allan Baughman, Comment, 25 Cap. U. L. Rev. 671, 703 (1996). ‘‘Statutes of repose are 

reform measures that provide unnecessary, inappropriate protection to manufacturers and insurers at the expense of injured consumers. Important policies such as safety promotion and 

risk-spreading are compromised. Injured plaintiffs are denied redress for manufacturers’ wrongs, 

regardless of a product’s defectiveness, notwithstanding a claim’s legitimacy. Instead, an arbitrary time period determines a manufacturer’s liability.’’

2. THE BILL

H. R. 3509, a seemingly simple bill imposing a 12-year statute of repose on civil 

actions involving durable goods, is flawed at a technical level. 

It is unclear whether it applies to regulatory post-repose actions initiated by state 

or federal consumer protection agencies.4

It is unclear whether it affects recall litigation in the post-repose period. 

It is unclear about what happens in the presence of knowing concealment of design or structural deficits.5

It is unclear what happens to vested claims—that is, injuries that have already 

occurred (for which a claim has not been filed) prior to the 12-year bar. 

And it is unclear in text and import as to how it would meet its stated goals of 

increasing competitiveness or reducing insurance. 

3. THE BILL DOES NOT ADVANCE THE INTERESTS OF CONSUMERS

The technical shortcomings of the bill, however, pale in comparison to the harm 

this bill will cause consumers. 

The bill undermines incentives for better design, for innovation, in products designed for long term use.6

The bill displaces manufacturers from the liability cycle when they are in the best 

position (a) to cover claims made from products they sold 7—and from which they 

profited—and (b) to improve the long term integrity of the products they will sell 

in the future.8

The bill undermines the distribution of risk that underlies much of the liability 

theory that has been argued by those seeking tort reform.9

17

10States have long recognized that for certain activities and products, statutes that restrict 

litigants’ rights based on artificial time frames can be greatly unfair. For example, in Terry v. 

N.M. State Highway Comm’n, 98 N.M. 119, 120–23, 645 P.2d 1375, 1376–79 (1982), the court 

held that a 10-year statute of limitations was unfair as applied to architects, contractors, and 

engineers because their work was designed to be used and relied upon well beyond that time 

frame. The same can be said about durable goods. They are supposed to last far beyond the 

12-year limit H.R. 3509 suggests—presumably, that is why they are referred to as durable. A 

number of states faced constitutional challenges to such statutes, often finding the statutes denied rights protected under a state constitution, e.g., Jackson v. Mannesman Demag Corp., 435 

So. 2d 725 (Ala. 1983); Turner Constr. Co. v. Scales, 752 P.2d 467 (Alaska 1988); Hazine v. 

Montgomery Elevator Co., 861 P.2d 625 (Ariz. 1993); Austin v. Litvak, 682 P.2d 41 (Colo. 1984); 

McCollum v. Sisters of Charity of Nazareth Health Corp., 799 S.W.2d 15 (Ky. 1990); Dickie v. 

Farmers Union Oil Co., 611 N.W.2d 168 (N.D. 2000); Hanson v. Williams County, 389 N.W.2d 

319 (N.D. 1986); State ex rel. Ohio Acad. of Trial Lawyers v. Sheward, 715 N.E.2d 1062 (Ohio 

1999); Lyons v. Lederle Labs., 440 N.W.2d 769 (S.D. 1989); Daugaard v. Baltic Co-op Bldg. Supply Ass’n, 349 N.W.2d 419 (S.D. 1984), abrogated by Cleveland v. BDL Enters., Inc., 663 N.W.2d 

212, 224 (S.D. 2003); Nelson v. Krusen, 678 S.W.2d 918 (Tex. 1984); Sax v. Votteler, 648 S.W.2d 

661 (Tex. 1983); DeYoung v. Providence Med. Ctr., 960 P.2d 919 (Wash. 1998); Kohnke v. St. 

Paul Fire & Marine Ins. Co., 410 N.W.2d 585 (Wis. Ct. App. 1987), review granted 416 N.W.2d 

296 (Wis. 1987), aff’d and remanded, 424 N.W.2d 191 (Wis. 1988). 11Friedrich K. Juenger, The Complex Litigation Project’s Tort Choice-of-Law Rules, 54 La. L. 

Rev. 907, 916 (1994). ‘‘Agitation for ‘tort reform’ has produced a motley array of laws lobbied 

by powerful and well organized special interest groups. The manner in which these enactments 

curtail the rights of tort victims differs from one state to the next. Among them are arbitrary 

caps on damages, stunted limitation periods, ‘statutes of repose’ that bar actions before they 

arise, as well as provisions abolishing the collateral source rule or joint and several liability, 

to name just a few....’’ (footnotes omitted). 12 If a worker’s recourse is limited to workers’ compensation, after 12 years innocent workers 

suffering severe injury from workplace accidents caused by defective machinery will have no 

ability to collect for the broad ranges of compensable losses not covered by workers compensation. ‘‘Often, workers’ compensation benefits paid to injured workers are lower than the actual 

damages they have incurred.’’ S. Elizabeth Wilborn Malloy, The Interaction of the ADA, the 

FMLA, and Workers’ Compensation: Why Can’t We Be Friends? 41 Brandeis L. J. 821, 849 (2003) 

[footnotes omitted]. 13 Robert Van Kirk, Note, The Evolution of Useful Life Statutes in the Products Liability Reform Effort, 1989 Duke L.J. 1689, 1712–3 (1989). ‘‘Some studies indicate that as many as ninetyseven percent of all product related injuries occur within the first six years following manufacture. Although proponents may use this figure to suggest that relatively few plaintiffs will be 

affected adversely by a typical ten-year statute of repose, the figure also suggests that many 

of the arguments in favor of statutes of repose may be overstated. If only three percent of all 

claims are eliminated by a six-year repose period, then the efficacy of such statutes undoubtedly 

is called into question. . . . [T]he insurance industry has failed to demonstrate that suits 

against older products actually are responsible for a proportionately larger share of damage 

awards....’’ 14 ‘‘Another drawback of a statutorily defined time limit is that statutes of repose simply lack 

the flexibility to deal effectively with products of varying anticipated lives....’’ Van Kirk, id.

at 1714. 15 In DeLuna v. Burciaga, 2005 WL 1862395 (1st Dist., Aug. 5), the court held that ‘‘[a] statute 

of repose gives effect to a policy different than that advanced by a period of limitations; it is 

intended to terminate the possibility of liability after a defined period of time, regardless of a 

potential plaintiff’s lack of knowledge of her cause of action.’’ Reported in GARMISA, ‘Test Case’

that Failed Results in Legal Malpractice Claim, Chicago Daily Law Bulletin, Sept. 8, 2005, p. 

1. 16The problems of document retention and record keeping are troubling. Efficiency pressures 

and litigation anxiety have led businesses to purge office environments of all documents arguContinued

The bill denies innocent injured persons their right to redress of wrongs in a court 

of law 10 raising questions of basic due process, equal protection, and access to 

courts. 

The bill abolishes lawful claims of consumers before a consumer could know of the 

risks they face.11

The bill seemingly exposes employers to greater liability rather than sharing that 

liability with manufacturers of defective workplace equipment.12

The bill addresses a tort reform fantasy—litigation regarding older durable 

goods—when in the grand scheme of things there is not much evidence of litigation 

regarding long term goods.13

The bill ignores the reality of variation in the anticipated life of durable goods— the fact is, there are products designed, and priced, for very long term use.14

The bill punishes consumers and workers, not for filing at the wrong time or 

bringing claims with questionable merit, but rather for being injured by a defective 

product at the wrong moment in time.15

The bill cuts away at incentives to undertake long-term longitudinal studies of 

risk or engage in long-term product monitoring and record-keeping.16

18

ably not required to be maintained. Such purges have led to obstruction of justice charges when 

investigations of misconduct are thwarted by overly aggressive document retention policies. 

Christopher R. Chase, To Shred or Not to Shred: Document Retention Policies and Federal Obstruction of Justice Statutes, 8 Fordham J. Corp. & Fin. L. 721 (2003). It is quite easy to imagine 

a 12-year ‘‘total shred’’ policy for equipment manufacturers if H.R. 3509 becomes law—and 

equally easy to see how that policy would destroy the ability of injured workers to develop proper product function/product failure histories. 17 ‘‘At purchase, the expectations of both parties will embody a generalized conception about 

the length of time the product will render service. Intertwined with these expectations is an implicit understanding that if the product contains a defect and is therefore unreasonably dangerous, then the purchaser will be able to seek redress from the manufacturer. Manufacturers 

cannot justifiably express surprise or claim unfairness when injured parties ultimately bring 

suit. Presumably, a manufacturer of industrial machinery understands that her product is designed to last for at least a decade and perhaps much longer. She must realize at the point of 

sale, therefore, that suits may be brought against her at any time in the course of that product’s life.’’ Van Kirk, supra, note 13, pp. 1714–15. 18 It is already difficult to compel disclosure of material facts outside of a clear duty to do so. 

Even in cases of arguable fraudulent concealment of facts, courts have been cautious in finding 

a duty to disclose information in the absence of a clear statutory or common law duty to do 

so. Moses.com Securities, Inc. v. Comprehensive Software Systems, Inc., 406 F.3d 1052, 1064– 1065 (8th Cir. 2005). If H.R. 3509 passes, it will greatly limit the ability of an injured worker 

to get data from a manufacturer in the post repose period. 19 Jeffrey A. Lamken, Note, Efficient Accident Prevention as a Continuing Obligation: The 

Duty to Recall Defective Products, 42 Stan. L. Rev. 103, 127 (1989). ‘‘Concern over potential liability provides efficient incentives to recall a defective product....’’ 20 Cutting off liability, arbitrarily, may undermine the incentives for better products and services. See Gary T. Schwartz, Mixed Theories of Tort Law Affirming Both Deterrence and Corrective Justice, 75 Tex. L. Rev. 1801 (1997). 21 Joan T.A. Gabel, Escalating Inefficiency in Workers’ Compensation Systems: Is Federal Reform the Answer? 34 Wake Forest L. Rev. 1083, 1136 n.285 (1999) (‘‘Workplace injuries involving 

defective products are liability concerns for the product manufacturers as well as the employers.’’), citing Thomas A. Eaton, Revisiting the Intersection of Workers’ Compensation and Product 

Liability: An Assessment of a Proposed Federal Solution to an Old Problem, 64 Tenn. L. Rev. 

881, 886 (1997). The workers compensation funds are simply not sufficient to cover broad losses 

from devastating injuries. See Malloy, supra, note 12. 22Suffice it to say that the incidents of equipment related injuries in agriculture and industry 

are frightening. ‘‘While there are various reasons why farm injuries occur, many of the most 

severe incidents are directly related to the use of farm equipment. Agricultural machinery is 

becoming more complex and more powerful as new technologies develop, creating an intense 

need for implements to be as safe as possible.’’ [footnotes omitted]. Nathaniel R. Boulton, Note, 

The Farmer’s Retort to Tort Reform: Why Legislation to Limit or Eliminate Punitive Damages 

Hurts the Agricultural Sector, 9 Drake J. Agric. L. 415, 427 (2004). 23 E.g. factory machinery (presses, mixers, joining apparatus, molding machines, fork lifts, 

packing machines, steam or hydraulic lifts, high power pumps), farm equipment, including 

balers and tractors, and many types of construction tools from compressor to drills, are all made 

to last longer than 12 years. 24Legislation of this type leads inevitably to the conclusion that our political system has made 

its choice: as between at-risk workers and large corporations, the corporations are the favored 

interest. ‘‘[T]he environment created by the current executive administration is to give lip service to the American worker while giving a wink and a nudge to big business....’’ Lambrecht, 

supra, note 8, p. 136. 

The bill creates a de jure interference with private contracts, limiting a sellers 

claim of ‘‘useful life’’ and the common law obligations that would otherwise flow 

therefrom.17

The bill undermines transparency, creating an incentive for a manufacturer to be 

circumspect about data they may have on long term use of their goods.18

The bill creates no incentive to recall products 19 found to be dangerous after extended use.20

The bill creates tension in terms of labor/management relations since workers and 

employers would be denied access to the ‘‘true source’’ of fault in a factory accident 

caused by defects in the equipment or machinery used.21

The bill affects disproportionately low to moderate income workers who are more 

likely to work in traditional blue collar employment environments where exposure 

to equipment—as defined in the bill 22—is common.23

People injured by products used properly should have no less right to compensation if they are injured in the 11th or 13th year of a product’s useful life. 

There is not one line in this bill that actually helps consumers; nothing to facilitate claims, nothing to improve product quality, nothing to lessen worker costs for 

injuries.24

And what arguments support the bill? H.R. 3509 relieves ‘‘at fault’’ manufacturers 

of their responsibility. 

19

4. CONCLUSION

This is tort reform as I have come to understand it—a series of bills that have 

but one meaning: reducing accountability and giving consumers and workers nothing in exchange. It is not that it is incomprehensible. In fact, the reasoning is all 

too understandable. Who would not like to be excused of responsibility after they 

engaged in misconduct? The fact that the reasoning underlying this bill is understandable, however, does not mean that it is right, proper, just and fair. It is none 

of those things. I urge the committee to reject H.R. 3509. Thank you.

Mr. CANNON. You may not have noticed, but you ended exactly 

as the red light came on. This is a remarkable panel. Thank you. 

Mr. Mack, you’re recognized for 5 minutes 

TESTIMONY OF JAMES H. MACK, ESQ., VICE PRESIDENT, GOVERNMENT RELATIONS, THE ASSOCIATION FOR MANUFACTURING TECHNOLOGY, McLEAN, VA 

Mr. MACK. Thank you, Mr. Chairman. This is not the first time 

that AMT has appeared before this Committee in support of product liability reform. Over the years, we’ve testified before this and 

other Congressional Committees in support of numerous product liability bills. 

Because these bills were broader in scope than H.R. 3509, some 

of their provisions drew controversy that could not be overcome 

during their consideration by the Senate and or the White House. 

H.R. 3509 is different. It deals only with the issue of over-age 

workplace products. It does not contain controversial provisions on 

other product liability issues that have held up passage in past 

years 

Under this proposal, no injured worker would go uncompensated. 

H.R. 3509 would only deal with claims involving injuries allegedly 

caused by workplace durable goods for which the plaintiff has received or is eligible to receive worker’s compensation. 

For those specific kinds of cases, it would create a uniform national statute of repose, preempting any State statutes of repose 

that apply to these claims. Otherwise, State law would continue to 

apply. Thus, State statutes of repose that may cover consumer 

goods and other non-durable goods would not be affected. 

Why make a special rule for machine tools and other manufacturing equipment? 

Well, let me try to deal with that. Everything in this hearing 

room, except for the people, was either made by a machine tool or 

made by a machine that was made by a machine tool. A strong machine tool industry is vital to America’s military and economic security. Our industry is very cyclical. Price pressures are very strong. 

Profitability is very low, even in good years. Domestic consumption 

of machine tools is 14 percent higher today than it was a year ago, 

but domestic production is only up 7 percent. Imports now represent 65 percent of domestic consumption. 

AMT estimates that the average age of machine tools installed 

in American factories has climbed from 10 years, the last time we 

testified in 1999, to 13 years in 2004. When a factory decides to invest in new capital equipment, the old machinery is usually not 

thrown in the trash heap. Instead, companies who lack the resources for new machines purchase these over-age machines, often 

altering them to fit their needs. 

20

This process is repeated, as newer machines are required and 

older ones are resold. Safety features built into the original equipment have sometimes been negligently or intentionally disabled by 

employers or workers in an effort to increase production or to avoid 

the nuisance of dealing with guards or lockout mechanisms and 

other safety features. 

The result of all these factors is a big overhang of overage machine tools in the U.S. market, which are the subject of four-fifths 

of our industry’s lawsuits. 

Under product liability law today in many States potential liability for my industry’s products is endless, literally forever. Many of 

these machines built before Ronald Reagan became President, before the creation of OSHA, before Neil Armstrong walked on the 

Moon, before the Beatles came to America, and yes, even before I 

was born 70 years ago are still in use today. 

The survey data contained in my written testimony documents 

that such litigation is a drain on financial resources not only from 

adverse settlements or verdicts, but from the cost of successful defense. 

Most cases involving overage machine tools never go to trial, and 

if they do, a jury almost always finds for the defendant. If a machine has functioned properly for 12 years, it’s highly unlikely that 

it was improperly designed. 

However, even when these lawsuits are won, the litigation nevertheless results in unnecessarily high legal and transaction costs. 

The claimant’s pleadings must be answered. Depositions taken. Design experts consulted. Historical records, if any, unearthed and 

evaluated. And the result is a substantial expenditure of funds, additional litigation in our courts, and the diversion of resources that 

could be invested in greater competitiveness. 

Our most recent financial performance report shows that the median expenditure by our members for product liability costs was 0.6 

percent of sales, about half of this for insurance premiums; the 

other half on settlement awards and out-of-pocket costs. 

This 0.6 percent may not sound like much until you learn that 

in 2004, median after-tax profits for companies in our industry was 

only 1.9 percent of sales. 

Mr. Chairman, H.R. 3509 is a narrow bill that addresses the 

problem of overage workplace equipment in the U.S. market for 

manufacturers of that equipment. It’s the end result of years of negotiations with the Congress. It provides for two-way preemption. 

It’s limited to workplace products. It assures no claimant would go 

uncompensated, and it contains a toxic harm exclusion, including 

but not limited to exposures to asbestos. 

It’s essentially the same bill this Committee approved 5 years 

ago. And it—and the bill that the House passed. 

It will improve the competitiveness of U.S. workplace equipment 

manufacturers and at the same time it assures no injured worker 

would go uncompensated. It’s good legislation, and we respectfully 

urge its adoption. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Mack follows:]

21

PREPARED STATEMENT OF JAMES H. MACK

I. INTRODUCTION

My name is James H. Mack, Vice President of Tax and Economic Policy at AMT—

The Association For Manufacturing Technology—a trade association whose membership represents over 350 manufacturing technology providers located throughout the 

United States, almost the entire universe of machine tool builders who operate here. 

Most of them would be classified as small businesses, with only about a half dozen 

having more than 500 employees. About 40 percent of our industry’s output is exported. 

Pursuant to House Rule XI, clause 2(g)(4), I am obliged to report to you that AMT 

received $225,100 from the Commerce Department’s Market Co-operator Development Program for a technical center in China. One hundred sixty-five thousand 

three hundred dollars was disbursed in 2005. The $59,800 balance will be disbursed 

by the end of this month. 

According to the U.S. Census of Manufacturers, 78 percent of the companies in 

our industry have less than 50 employees. They build and provide to a wide range 

of industries the tools of manufacturing technology including cutting, grinding, 

forming and assembly machines, as well as inspection and measuring machines, and 

automated manufacturing systems. 

Everything in this hearing room, except for the people, was either made by a machine tool or made by a machine made by a machine tool. Several years ago, the 

Reagan and first Bush Administrations, responding to strong encouragement of 

over 250 Members of Congress provided temporary import relief for our industry, 

based on the threat posed to our national security from Asian machine tool imports. 

They did so because of their recognition that a strong machine tool industry is vital 

to America’s military and economic security. 

Our industry is very cyclical. Price pressures are very strong, and profitability is 

relatively low—even in good years. Domestic consumption of machine tools is 14 

percent higher than a year ago, but domestic production is only up seven percent. 

Imports represent 65 percent of domestic consumption. 

AMT estimates that the average age of machine tools has climbed from 10 years 

in 1998 to nearly 13 years in 2004. When a factory decides to invest in new capital 

equipment, the old machinery is usually not thrown in the trash heap. Instead, companies, who lack the resources for new machines, purchase these over-age machines, 

often altering them to fit their needs. This process is repeated, as newer machines 

are acquired and older ones resold. The result of all of these factors is a big overhang of over-age machine tools in the U.S. market. This exposes the manufacturers 

of the old equipment to costly litigation. 

II. THE NEED FOR A FEDERAL STATUTE-OF-REPOSE FOR WORKPLACE DURABLE GOODS

Unlike a statute of limitations, a statute-of-repose measures the time limitation 

from the date of the initial sale of the capital equipment. Statutes of limitations, 

by contrast, typically impose a time limit measured from the time of the injury or 

the discovery of its cause. 

Under product liability law today, in many states, potential liability for my industry’s products is endless—literally ‘‘forever.’’ Many of these machines—built before 

Ronald Reagan became President, before the creation of OSHA, before Neil 

Armstrong walked on the moon, before the Beatles came to America, and yes, 

even before I was born seventy years ago—are still in use today. 

Although these machines were built decades ago to safety standards of their day 

and although they are likely to have passed through several owners—each of whom 

are likely to have made their own modifications to accommodate their needs—they 

are still the subject of four-fifths of our industry’s lawsuits. Safety features built into 

the original equipment have sometimes been negligently or intentionally disabled by 

employers or workers in an effort to increase productions or avoid the ‘‘nuisance’’

of dealing with guards, lock-out mechanisms, and other safety features. But proving 

such circumstances is extremely difficult. This litigation imposes liability in situations where our members have not exercised control over the product for such a long 

period that it is unfair to hold them accountable for the products performance. 

Such litigation is also disproportionately expensive and socially unproductive. It 

is a drain on financial resources, not only from the adverse verdicts, but from the 

costs of successful defense. Most cases involving overage machines never go to trial, 

and if they do, a jury almost always finds for the defendant. If a machine has functioned properly for 12 years, it is highly unlikely that the machine was improperly 

designed. 

22

However, even when these lawsuits are ‘‘won,’’ the litigation nevertheless results 

in unnecessarily high legal and transaction costs. No matter how frivolous the actual facts, the claimant’s pleadings must be answered, depositions taken, design experts consulted, and historical records, if any, unearthed and evaluated. The result 

is a substantial expenditure of funds, additional litigation in our courts, and the diversion of resources that could be invested in greater competitiveness. Insurers 

know this and factor it into insurance premiums. 

This also results in legal extortion, in which baseless suits are filed by entrepreneurial lawyers, who know that many companies and/or their insurers will pay an 

out-of-court settlement rather than accept the risk and high cost of defense. When 

a case does go to trial and the jury finds for the claimant, the judgment can force 

a company to close its doors. The $7.5 million verdict in 1996 involving a machine 

built in 1948 against Mattison Technologies, a 100-year-old Rockford, Illinois machine tool builder, led to the company’s bankruptcy. 

In contrast, the incursion by foreign machine tool builders into the U.S. market 

is fairly recent (within the past 25 years). Therefore, foreign machine tool builders 

do not bear the significant long-tail exposure of U.S. builders. American companies 

that have been in business for many years must factor into their prices the risk of 

litigation involving thousands of overage machines. Our Japanese and European 

competitors don’t have those risks and those costs. Their liability exposure is relatively small (both Europe and Japan have 10-year statutes-of-repose, if they are 

sued in their home markets). Enactment of a statute-of-repose for workplace durable 

goods would therefore level the playing field for U.S. manufacturers and achieve the 

uniformity and certainty necessary to produce the state-of-the-art products for 

which we are noted. 

III. H.R. 3509

I appreciate the opportunity to testify in support of ‘‘The Workplace Goods Job 

Growth and Competitiveness Act of 2005’’ (H.R. 3509). This is not the first time 

AMT has appeared before this Committee in support of product liability reform. 

Over the years, we have testified before this and other Congressional committees 

in support of numerous product liability bills. Because those bills were broader in 

scope than H.R. 3509, some of their provisions drew controversy that could not be 

overcome during their consideration by the Senate and/or the White House. 

H.R. 3509 is different. H.R. 3509 deals only with the issue of overage workplace 

products. It does not contain controversial provisions on other product liability 

issues that have held up passage in past years. Under this proposal, no injured 

worker would go uncompensated. H.R. 3509 would only deal with claims involving 

injuries allegedly caused by 

workplace durable goods for which the plaintiff has received or is eligible to receive worker compensation. For that specific category of cases, the provision would 

create a uniform, national statute-of-repose, preempting any state statutes-of-repose 

that apply to those claims. Otherwise, state law would continue to apply. Thus, 

state statutes-of-repose that may cover consumer goods and other non-durable goods 

would not be affected. 

Some earlier product liability bills had ‘‘one-way preemption,’’ which would create 

a federal statue-of-repose in those states with no statutes-of-repose while preserving 

shorter state repose periods. Unlike those provisions, H.R. 3509 has ‘‘two-way preemption,’’ which will actually extend the repose period for capital goods to 12 years 

in nine of the 11 states that have enacted time limits; but our members are willing 

to accept that extension in order to achieve the certainty a national period of repose 

would provide. 

An additional eight states have enacted statutes-of-repose based on the ‘‘useful 

safe life’’ of the product. This approach has proven to be ineffective; because the 

‘‘useful safe life’’ of each product must be litigated in every case, and substantial 

transaction costs must still be incurred. 

IV. AMT’S 31ST ANNUAL PRODUCT LIABLITY SURVEY

Preliminary results of AMT’s 31st Annual Product Liability Survey indicate that 

our members and/or their insurers could reduce their product liability costs by 62 

percent, through adoption of a federal product liability statute-of-repose. 

Twenty-five percent of the respondents reported claims in 2005. Virtually all of 

the claims were brought in state courts. 

None of the closed claims reported from 2005 reached trial. Fifty percent were settled for an average of $146,100 and the remaining 50 percent were dropped without 

awards being paid. In addition, companies experiencing litigation had an average 

of three claims pending at year’s end. 

23

Whether cases are won, lost, or settled—defense costs for our members are substantial. The 1992 Insurance Services Office (ISO) closed claims study shows that 

for every $10 paid out to claimants by insurance companies for product liability, another $7 is paid for lawyers and other defense costs. These transaction costs will be 

reduced substantially, if Congress enacts H.R. 3509. 

Based upon these survey results, every 100 claims filed against machine tool 

builders ‘‘cost’’ $10.4 million—including $5.1 million in defense costs and $2.3 million in subrogation paid to employers and/or their workers’ compensation carriers, 

regardless of employer fault or the lack thereof. In other words, the current system 

provides $3.0 million to claimants (less whatever they pay out in contingency fees, 

which average 33 percent) and $7.4 million in transaction costs. 

If a 12-year statute-of-repose were to be enacted, the ‘‘cost’’ of the same 100 claims 

filed against machine tool builders would be $4.0 million—a savings of $6.4 million 

or 62 percent. Eighty-four percent of our members’ closed and pending claims 

(and the substantial transaction costs associated with them) would have been 

eliminated by a 12-year statute-of-repose. 

IV. CONCLUSION

Mr. Chairman, H.R. 3509 is a narrow bill that addresses the problem of overage 

workplace equipment in the U.S. market for manufacturers of that equipment. It 

does not affect claims involving other products. It establishes no precedent on 

whether states should enact statutes-of-repose governing other products nor on the 

appropriate scope or length of these statutes. 

H.R. 3509 is the end result of years of negotiations within the Congress. It provides for two-way preemption; it is limited to workplace products; it assures no 

plaintiff would go uncompensated; and it contains a toxic harm exclusion, including, 

but not limited to, exposures to asbestos. 

H.R. 3509 is essentially the same bill approved by the Judiciary Committee in 

1999 and passed by the House in 2000. If this bill is broadened in an attempt to 

help manufacturers of non-workplace durable goods, or to provide one-way preemption; no company will ultimately be better off because the bill will not become the 

law of the land. The concerns of other manufacturers can be addressed in other legislation now or in the future. 

By enacting H.R. 3509, as it is written, you would be declaring that endless litigation involving overage workplace equipment in the U.S. marketplace is a serious 

problem facing American producers who are, after all, the foundation of our industrial economy; and that the interstate commerce clause impels a federal solution. 

It is a problem not faced by our Asian and European competitors in their own markets nor, because of the longtail of exposure, in ours. The current system has cost 

jobs, money, and time. The principal beneficiaries have been lawyers on both sides 

of the counsel table. Advances in high-tech products are slowed as a result. Resources that could have gone toward the development of new technology and higher 

productivity for America have been expended on wasteful transaction costs with a 

relatively small percentage of total litigation dollars going to injured workers. 

Enactment of H.R. 3509 will improve the competitiveness of U.S. workplace equipment manufacturers by driving down their litigation costs and cutting down on 

meritless lawsuits. At the same time, it ensures that no injured worker would go 

uncompensated. Passage of similar legislation relating to private aircraft has revitalized the domestic aircraft industry. 

This is good legislation, and we respectfully urge its adoption. 

Thank you for your attention. I would be pleased to respond to your questions.

Mr. CANNON. Thank you, Mr. Mack. The Chair would now recognize Mr. Watt for 5 minutes for questioning. 

Mr. WATT. Thank you, Mr. Chairman, and I appreciate your allowing me to go first. And I apologize to the witnesses because I 

need to leave to make something that’s over at 2 p.m., and I’m trying to get there just for a few minutes. 

I guess I’m tempted to pick up on the personal responsibility tack 

that Professor Popper picked up on, since that was the other 

mantra that a number of my colleagues came into Congress on—

personal responsibility. I’m not sure exactly how I think this bill 

supports that or the proposition of States’ rights, but I’m not going 

there. He covered that. 

24

I’m tempted to pick up on the 7,000 plus machines that were sold 

by Ms. Sitterly’s employer with only one lawsuit. But I don’t think 

I’ll go either, because that’s really not substantively what I’m concerned about. 

What I am concerned about is Mr. McMahon’s comment. Not concerned, I just want to get more clarity because I’m not sure under 

the standard that you have put forward here, whether there would 

be any State tort law anymore. This notion that any time you have 

some movement in interstate commerce, that gives you the basis 

for Federal preemption, just talk to me a little bit about what your 

theory is on what the standard for States should be in this area 

and then maybe I can get a better idea of what you think the 

standard ought to be. 

Mr. MCMAHON. Right. Well, Congressman Watt, as you know, 

the Constitution gives Congress the power to legislate in matters 

of interstate commerce, so the issue is what particular scenarios 

arise where it becomes compelling for Federal preemption. With regard to the particular issue we have before us and workplace durable goods, as I indicated in my testimony, 70 percent of the products that are manufactured in one particular State will be sold and 

resold and sold and resold over period of time and moved in many 

different States. 

And, therefore——

Mr. WATT. But this bill applies to 100 percent. It doesn’t apply 

to 70 percent. Even if you accept that proposition, then what about 

the machine that was sold 15, 18, 20 years ago. It sat in the same 

State. You’re saying that because that machine moved in interstate 

to get to that location, all of a sudden the Federal Government has 

some preemptive right to tell what the statute of limitations ought 

to be? 

Mr. MCMAHON. Well, again, I think it’s a balancing of equities 

and an issue of fundamental fairness. I think you have to be cognizant of the fact that because so much machinery moves State to 

State that in order to have a situation where you don’t have a 

patchwork quilt, if you will, of differing State laws that apply and 

that manufacturers would have to then prescribe to all of these 

varying standards. There are many inequities there. It’s inefficient. 

It’s not cost effective. 

Mr. WATT. Is it constitutional? Yeah. That’s a good point. 

Mr. MCMAHON. I—yeah. Okay. 

Mr. WATT. But, you know, I’m just——

Mr. MCMAHON. I understand. 

Mr. WATT [continuing]. You know I’m trying to get some understanding of under your theory whether there would be any State 

tort law. Well, let me postulate this case. This is the one I always 

enjoy talking to my colleagues about. You got a doctor who’s operating on a patient inside North Carolina, a patient certainly not 

straddling the State line. Maybe the doctor is using a piece of operating equipment that was bought in another State. That’s enough 

to get you interstate preemption, Federal preemption or you’re saying—where’s the line here. I’m just trying to figure out what is 

the——

Mr. MCMAHON. Right. Well, first of all——

25

Mr. WATT. What is the logical line that we are going to draw 

here between what the Federal Government’s right is and what the 

States have to do. 

Mr. MCMAHON. Right. Well, first of all that good would have to 

be 12 years earlier. 

Mr. WATT. No. I’m not talking about under that. I’m talking 

about. That was my shot at others’ tort reform that they already 

did, which I couldn’t for the life of me understand why medical negligence is a matter of Federal law as opposed to State law. Nobody 

operates or sees a patient across State lines. Now, maybe once and 

a while, I do live on the South Carolina line, and I concede that 

some of my constituents may go to South Carolina and get inferior 

medical care. Or some of their constituents might come to North 

Carolina and get superior medical care, whichever way you want 

to look at it. I hope nobody from South Carolina is watching this. 

I get a lot of nasty phone calls. 

But I just—I mean I don’t even—I don’t understand what the 

standard would be here that would give the Federal Government 

the right to just—I mean and it’s not substantive. I mean North 

Carolina has got a shorter statute of repose, but it seems to me 

that North Carolina ought to have that right to decide what the—

whether it’s going to have a statute of repose and what the statute 

should be. What is the justification for even from a business standpoint taking the North Carolina 6-year statute of repose and making it a 12-year statute of repose? 

Mr. MACK. Congressman, could I perhaps help——

Mr. WATT. Yes, sir. 

Mr. MACK [continuing]. And——

Mr. WATT. Help me please. 

Mr. MACK [continuing]. Help add to the confusion here. The—I 

can’t address anything other than product liability cases here. 

That’s what the subject of this hearing is about. And if you’re asking what is the justification for a Federal preemptive statute addressing product liability cases, let me try to give you one. 

The insurance industry rates its product liability claims on a national basis, with good reason. North Carolina has a very short 

statute of repose for capital goods or for all products. One of our 

members in North Carolina or perhaps a woodworking machinery 

company in North Carolina pays the same insurance rates as a 

company in New Jersey. Why? 

Mr. WATT. I appreciate it, Mr. Mack. I hear what you’re saying, 

but now you’re telling me that——

Mr. WATT. Without objection, the gentleman is recognized for an 

additional minute. 

Mr. WATT [continuing]. Just because the insurance industry 

rates on some national basis that that’s some basis constitutionally 

for doing something. 

Mr. MACK. Well——

Mr. WATT. I just don’t accept that. Nor do I accept the fact that 

just because a machine moved in interstate commerce 15 years ago, 

that somehow the Federal Government has the right to tell that 

State what their statute of repose ought to be. That is—that is a 

radical departure from where the law has been in this country, and 

26

my—based on everything I know—you know, I just don’t understand how we get there from here. 

Mr. MACK. Sure. The courts I think have, as I understand it, 

have interpreted the 14th amendment to give Congress the right 

to enact legislation that affects interstate commerce. Then really it 

seems to me the question that you’re asking is should it do so. 

What justification is there to follow this constitutional prerogative 

that Congress has and hopefully in our written testimony and what 

we will say through the afternoon’s hearing that we will provide 

some justification for doing that would satisfy your concerns, Congressman. 

Mr. WATT. I obviously am not picking on anybody. I’m just trying 

to get a standard here. 

Mr. MACK. No, I know. 

Mr. WATT. I appreciate it. I yield back, Mr. Chairman. And I appreciate you for allowing me. 

Mr. CANNON. The gentleman’s time has expired. Once again, I 

just might note that I’ve invited the new—the Chairman of the 

Proposed Democratic States’ Rights Caucus to take up as his first 

issue the elimination of the Department of Education. I will see if 

that—if we can gain some bipartisan support on that. 

Thank you. Mr. Chabot, would you like to make an opening 

statement? 

Mr. CHABOT. Yes. 

Mr. CANNON. Without objection. 

Mr. CHABOT. Mr. Chairman, I ask unanimous consent to make 

a statement, and I’ll keep it much shorter than the 5 minutes. 

But I’d thought as the principal sponsor of this legislation, I 

wanted to take just a couple of minutes why I think we do need 

this important liability reform. 

American manufacturers of durable goods are frequent targets of 

litigation over products that are decades old and have met all safety standards when that particular product was put onto the market. The endless tale of liability puts U.S. manufacturers at a disadvantage with their foreign counterparts. Most often, when these 

suits are brought to trial, defendant companies win, as has been 

mentioned. However, because it costs so much to litigate these 

claims, companies must often settle within their insurance limits 

and these manufacturers are then forced to incorporate the risk of 

litigation in the form of higher prices, which then ends up on the 

backs of the consumers. 

This bill will help save millions of dollars that would have otherwise been spent on these types of frivolous lawsuits, resources that 

could be used to compete in the global marketplace and create jobs 

back home; therefore, it would be a much better use of these dollars. 

I also wanted to highlight the three core aspects of the bill. Number one, H.R. 3509 imposes a nationwide statute of repose. This national standard will provide needed stability in the marketplace. 

And secondly, because the bill would only apply to plaintiffs who 

are eligible to receive worker’s compensation, no one would go uncompensated, as has also been mentioned. 

Twelve years is an adequate amount of time to test a product’s 

viability without needlessly barring victims from the courthouse. 

27

Since the 106th Congress, I’ve worked to pass a national statute 

of repose for durable goods in the workplace. In fact, in the 106th 

Congress, the legislation passed the House and then passed both 

bodies of Congress in product liability reform legislation that was 

then unfortunately vetoed—unfortunately, in my view, by President Clinton. 

Since that time, I’ve continued to work with national groups like 

the National Association of Manufacturers and small groups located in my district in Cincinnati, Ohio, who continue to pay settlements in frivolous cases, because it will cost more to defend the 

case than to settle. 

Jobs in the district that I represent, for example, are continually 

threatened by frivolous suits and, in fact, back in 2001, a local company, Madison Grinder, was forced to close its doors after a products liability suit. 

Just the machine tool industry alone employs over 1,500 workers 

in the Cincinnati area. I might note, however, that it wasn’t too 

long ago when that 1,500 jobs was 7,000 jobs in the Cincinnati 

area. It was always one of the premier areas for the machine tool 

industry. 

After the passage of several tort reform measures this year, I’m 

pleased to see that we’re once again highlighting the runaway litigation costs that businesses in our country face at the expense of 

the average consumer. 

And I want to thank you, Chairman Cannon, for holding this 

hearing, and we appreciate the testimony of the witnesses thus far. 

I think whichever side they’re on, I think it’s really been excellent. 

And I yield back my time. 

Mr. CANNON. I thank the gentleman. Thank you for introducing 

this legislation. We very much appreciate it. And without objection, 

all Members will have 5 days—5 legislative days to submit opening 

statements or additional materials for the hearing record. Hearing 

no objections, so ordered. 

At this point, we’re a little bit out of order, because Mr. Watt 

needed to leave. So if it’s okay, Mr. Delahunt, we’ll call on Mr. 

Coble. Is that? Thanks. Mr. Coble—the gentleman is recognized for 

5 minutes 

Mr. COBLE. Thank you, Mr. Chairman. Bill, are you on a short 

leash? Do you need to go earlier? 

Mr. DELAHUNT. No. I’m fine. 

Mr. COBLE. Okay. Mr. Chairman, thank you for holding this 

hearing. Thank you all for being with us. 

Mr. Mack, what impact would the 12-year statute of repose have 

upon a worker’s ability to receive worker’s comp and would employers still be held liable for injuries that occur on the job? 

Mr. MACK. Well, under the provision of 3509, the only time it 

comes into play is when the claimant is eligible for worker’s compensation, so we say unequivocally that no injured worker would 

go uncompensated. 

Mr. COBLE. So no negative impact? 

Mr. MACK. It would not in any way affect the claimant’s right to 

get worker’s compensation or ability to get worker’s compensation, 

and only those persons who are injured in the workplace and are 

eligible for worker’s comp would this bill be—go into effect. 

28

Mr. COBLE. All right. Now, you mentioned durable goods, Mr. 

Mack. Comment a little bit more in detail, if you will. What goods 

are intended to be included in the bill’s definition and what goods 

are not intended to be included? 

Mr. MACK. Well, I think basically it is intended to cover equipment like the stuff our folks make, which I indicated, makes other 

things. 

It might be construction equipment—equipment that is used in 

the workplace to either produce a product or to work on a project 

that—and I think under the definition of the bill is intended to 

have a life of at least 3 years; is subject to depreciation under the 

Internal Revenue Code; is used in the trade or business for the production of income. It’s intended to cover workplace products that 

are used in the workplace that cause traumatic injury. The last 

time we had this hearing, 5 or 6 years ago, there was a long discussion about toxic harms and how do you define toxic harms and the 

Committee, in its wisdom, provided a definition in the markup for 

toxic harm—— Mr. COBLE. I know, and my time is about to run out, Mr. Mack. 

Mr. MACK. But it specifically said asbestos isn’t covered. 

Mr. COBLE. Mr. McMahon, talk to me about two-way preemption 

versus one-way preemption. 

Mr. MCMAHON. Sure. I mean two-way preemption means that 

the statute of repose will be extended in States that currently have 

a fixed-time statute, like North Carolina has 6 years, that would 

now be extended to 12 years under that bill. 

One-way preemption creates Federal statute of repose in States 

with no current statute of repose and preserves the shorter statute 

of repose, so in North Carolina, it would be 6 years. 

So many claim that that is unfair or has been claimed as unfair 

and so, therefore, under this bill, there is two-way preemption, not 

one. 

Mr. COBLE. And North Carolina would then be under the 12 

year? 

Mr. MCMAHON. Correct. 

Mr. COBLE. Okay. Mr. Chairman, in closing—I’m about out of 

time here—this matter is clearly subject to interpretation, some 

good, some bad. But I’ve heard horror stories. Ms. Sitterly, you 

mentioned some that simply demand our imagination in resolving 

it. You want to give one more before the red light turns on? Before 

the red light illuminates in my eye and the Chairman hammers me 

down? 

Mr. CANNON. If you could turn the mike on, please? 

Ms. SITTERLY. I just recently settled a case on an mill that was 

shipped in 1942, and we spent $151,000 in defense costs and then 

settled it for $90,000. And I mean 1942. So I think that’s reason 

right there. 

Mr. COBLE. Well, what caused the injury? 

Ms. SITTERLY. A lot of comparative negligence honestly on the 

operator. He stuck his hand in the mill. So the employer trained 

him poorly, provided him with gloves, when the operator manual 

clearly stated no gloves are to be used. 

Mr. COBLE. And the defendant was the original manufacturer I 

take it in that case? 

29

Ms. SITTERLY. It was. Yes. 

Mr. COBLE. I see the red light, Mr. Chairman. Thank you, sir. 

Mr. CANNON. The gentleman yields back. Mr. Delahunt. 

Mr. DELAHUNT. Yes. Thank you. 

Mr. CANNON. The gentleman is recognized for 5 minutes 

Mr. DELAHUNT. Yeah. I thank the Chair. 

Counsel Sitterly, have you testified before the Wisconsin State 

Legislature? 

Ms. SITTERLY. I have not. 

Mr. DELAHUNT. You haven’t? Has there been a proposal made before the Wisconsin State Legislature that would embrace basically 

the legislation that’s before us now? 

Ms. SITTERLY. I’m afraid I don’t know the answer to that. 

Mr. DELAHUNT. You don’t? Do you know if anybody has gone to 

the Wisconsin State Legislature or the Administration in Wisconsin 

and put forth legislation or a proposal that would deal with I guess 

the word is horror stories or frivolous lawsuits? 

Ms. SITTERLY. I’m afraid I don’t know. I think they should, 

though, if they haven’t. 

Mr. DELAHUNT. Well, that’s my point. I mean I think they 

should, too. If all these horror stories—and I’ll accept your version, 

okay and your conclusions—it’s inarguendo, as we say. 

I mean I sit here and I wonder, you know, I think the key question was asked by Mr. Watt. You know, where is the line and when 

is the Commerce Clause implicated? Maybe—I just jotted some 

notes down. It’s to ensure stability in the marketplace. Maybe 

that’s it. But, you know, this Constitution gets to be a pesky thing 

sometimes when it doesn’t work to your particular advantage. 

You know that’s the problem with constitutions. You know they 

can cause you aggravation and cause you to go out and spend some 

money. But, you know, we heard—we hear the term frivolous lawsuits thrown around. You know, I’m sure some lawsuits are frivolous except can you—somebody give me a definition that we could 

implicate into legislation. 

I mean we’re a democracy that prides ourselves in giving access 

to the courts. And you know the Federal justice system simply can’t 

accommodate. But when I reflect and think of the arguments that 

my friends and colleagues make who support this legislation, I 

just—you know why not just file a bill and abolish, you know, the— you know, State judicial systems. Now, let’s get a new amendment 

and update it. Maybe things have changed because of the changes 

in the marketplace. Professor? 

Mr. POPPER. Well, that’s a terrible idea. Thank you. Just to comment on these horror story questions. I mean the real horror story 

is the fact that there’s 6,000 workers who die in the workplace 

every year. There are tens of thousands of people who are horribly 

injured. I made reference to it in my testimony at Footnote 8. 

Now, you want horror stories. There are horror stories of a person ground up in a cheese grinder, buried alive in corn, or seared 

to a furnace from the floor. The workplace is not a safe place. We 

do our best. But when you try and think about legislation that’s 

balancing out profitability on one hand and excess profitability in 

many cases, against basic safety from those who are least able to 

protect themselves, I think the balance has to tilt the other way. 

30

I mean in—and on this federalism question, gee, you know the 

Constitution isn’t all that clear on a lot of areas, but one thing it 

is clear on and that is it was written to limit the power of the Federal Government, not to expand it. 

Mr. DELAHUNT. Well, I—if I may, Professor, you know, as I’m 

reading this bill for the first time, and I—as I read it, I think 

there’s some equal protection issues that are implicated here as 

well in terms of how we treat different victims. 

You know and two-way preemption, I don’t think that really 

solves the constitutional issue, Mr. McMahon, and I’ll pronounce 

your name properly. 

Mr. MCMAHON. One Irish to another. 

Mr. DELAHUNT. These non-Irish, they just don’t know how to do 

it. I mean I can’t believe what I’ve been hearing. 

Mr. MCMAHON. We’re close to St. Patrick’s Day. 

Mr. DELAHUNT. You know that’s right. 

But I mean we’ve heard these arguments, you know, before, and, 

you know, Ms. Sitterly, I mean, you have had 7,000 cases and only 

one went to trial? Did I catch that right? 

Ms. SITTERLY. Nine thousand machines. Yes. Yeah. 

Mr. DELAHUNT. Okay. And only one went to trial. You know my 

position is if—I think that the insurance carriers don’t—I think 

they take an easy approach, okay. And I don’t think they go to trial 

often enough. And when I hear arguments such as, you know, oh, 

these are complicated cases. Well, I don’t think that most jurors 

are dumb. I really don’t. And, you know, there’s that instinctual, 

common sense that you know that people have, especially when it’s 

done in a collective way. 

I really do believe in the justice system, you know—— Mr. CANNON. Without objection, the gentleman’s time will be extended by 1 minute. 

Mr. DELAHUNT. Thank you, Mr. Chairman. And I’ll—I’ll try not 

to just ramble on. 

But, you know, you got to tell these insurance companies, if 

you’re a company, hey, defend these things. If there are frivolous 

lawsuits out there, go to trial. Go to trial and establish the fact 

that, you know, that that’s unacceptable and is creating costs. I 

haven’t seen any of the data, but, you know, the whole profitability 

that Jim Mack brings up about .06 percent and 1.9 percent. I dare 

say an analysis is that if this is a piece of our non-competitiveness, 

it’s such—it’s almost infinitesimal, and that there are, you know, 

other factors that are going into the equation that are hurting us 

competitively. I mean I can think of you know those jobs going 

overseas and labor costs and a whole variety of other things. But 

you know those who might have a particular agenda when they 

come to tort reform try to make it sound as, you know, these are 

runaway costs for all these frivolous lawsuits and yet whenever I 

ask for any data, I don’t get any. I just get free-for-all. With that, 

I’ll yield back. 

Mr. CANNON. Thank you. Very close to that additional minute. 

We appreciate that. 

Mr. Chabot. 

Mr. CHABOT. Thank you, Mr. Chairman. 

Mr. CANNON. The gentleman is recognized for 5 minutes. 

31

Mr. CHABOT. Thank you. Before, I answer—ask questions, I 

would just comment that the gentleman from Massachusetts I 

mean I would stipulate that most juries aren’t dumb and I, however, think that many of the cases don’t make it to trial. They get 

settled. It’s causing insurance rates to go up. It’s making U.S. companies less competitive. That’s one of the reasons that we have lost 

an awful lot of jobs in this country. 

And perhaps—I’ll open this up to any of the panelists—my understanding is the statutes of repose in some of the other countries—Japan, Korea, and others and relative to lawsuits—does put 

us at a tremendous disadvantage, and if one of the members would 

like to discuss that, either Mr. Mack or Mr. McMahon. 

Mr. MACK. Sure. The—yeah—both the EU and Japan have 10-

year statutes of repose that apply across the board to all products, 

including those that cause toxic harms. I mean it—and I’m not advocating that. But the point is that our principal competitors are 

basically insulated from lawsuits in their home market and in each 

other’s markets by these statutes of repose, and, therefore, don’t 

have in their home markets or each other’s markets long tails of 

liability. 

Mr. CHABOT. Okay. 

Mr. MACK. Now, in the United States, a Japanese company or a 

European company is subject to the U.S. laws whatever they are. 

But in our market, our home market, our members are subject to 

this long tail of liability and the incursion of foreign imports to the 

degree they are now is relatively recent. 

So a Japanese company or a European company or a Korean 

company, because it doesn’t have this long tail of liability, when it 

goes to insure the products that it does sell in the United States, 

the costs are infinitely lower, and their overall liability costs are infinitely lower than a company that has been around for a long time 

in the United States and has produced jobs in the Cincinnati area 

for a gazillion years. 

Mr. CHABOT. Thank you. Mr. McMahon, I don’t know if you—if 

that was sufficient. It probably was. Let me get at a different question, and you’ve already answered this to some degree, but could 

you once again very briefly explain why the statute of repose 

should be a Federal issue, and why we’re moving forward that way; 

why you think this is an appropriate route for the Congress to go? 

Mr. MCMAHON. Sure. I’d be glad to, Congressman. 

As you know, Congress has the authority to act here under article I, section VIII. The Constitution gives Congress the power to 

legislate matters of interstate commerce. As was raised in my testimony, at at least 70 percent we know of manufactured workplace 

durable goods are moving in interstate commerce. So even if you 

had a perfect set of State laws that protected manufacturers and 

frankly balanced the rights of manufacturers with plaintiffs, because that product is moving across, especially a product, say, 30 

years old that has been owned and resold and sold and resold and 

moved in and out of different States and all around that you don’t 

have the ability to apply any one State’s particular law. Essentially, you can allow plaintiff’s attorneys to forum shop and because 

it has been so many places and pick a jurisdiction in which they 

want to file a claim, the manufacturers have no certainty; they 

32

have no predictability because they don’t know which particular 

laws they’re going to be held accountable to. 

Mr. CHABOT. And just to be clear, if a State, say, North Carolina 

has a 6-year statute of repose, it goes up to 12? 

Mr. MCMAHON. Correct. 

Mr. CHABOT. If the State had 15, it comes down to 12? 

Mr. MCMAHON. Correct. That’s two-way preemption. 

Mr. CHABOT. Right. And if a State has nothing, it’s 12. 

Mr. MCMAHON. Twelve. 

Mr. CHABOT. So 12 is going to be the statute of limitations nationwide? 

Mr. MCMAHON. Correct. 

Mr. CHABOT. Ms. Sitterly, let me conclude with you if I can real 

quickly. 

You mentioned in your testimony that you’re hesitant to bring 

cases to trial. Could you expand on that and the factors that companies like yours must consider when evaluating a case, even if it 

is frivolous. 

Ms. SITTERLY. Well, first, when you’re dealing with——

Mr. CHABOT. I think the mike’s not on there, too. 

Ms. SITTERLY. I think it is. There. 

Mr. CHABOT. Okay. 

Mr. SHAYS. The first thing is on a machine that’s been manufactured a decade or more ago, you have to retrieve the old records 

and that implies that you can find the records, and then you need 

to find an engineer, an expert, who is familiar with the standards 

as they existed at the time. And then you have to be able to have 

a jury focus on those standards and not just go to the standards 

of today. 

And also the fact that the transaction costs of defending a case— depositions and outside experts and the cost that the company 

bears on the witnesses that are in-house, for example, the engineers. I mean instead of doing their jobs, they’re out preparing for 

depositions and the like. And also in machine tool industries are 

usually graphic, and you have great sympathy on the part of the 

plaintiff as well. 

So those are some of the factors that we look at when we decide 

whether or not we’re going to take a case to trial or settle it. 

Mr. CHABOT. Thank you. Thank you, Mr. Chairman. 

Mr. CANNON. The gentleman yields back. Thank you. And again, 

thank you, Mr. Chabot, for introducing this legislation, which I 

think is great. And I’ll talk about that. In fact, I’m going to get on 

the soap box in a minute like many other people have, but I have 

a couple of questions. First, Mr. McMahon, previous versions of 

this bill as well as the General Aviation Revitalization Act have 

contained an 18-year statute of repose. Why is the 12-year statute 

of repose better? 

Mr. MCMAHON. Mr. Chairman, that is a good question. You 

know, why 12 years? 

I think the key notion is a reasonable time period. As you stated, 

GARA is 18 years. Nine of eleven States with statutes of repose 

have—are shorter than 12 years. Japan and EU have 10 years. But 

they apply to all consumer goods. I know many members of the 

NAM would support moving to that level, 10 years. The original or 

33

one of the original provisions related to the statute of repose was 

in the Contract with America. That was 10 years. Twelve years 

seems to be a more modest number than past efforts at Federal 

legislation. It’s also the mean, between 6 and 18. 

Mr. CANNON. Thank you. In addition to the 11 or so States that 

currently have a fixed statute or term statute of repose, an additional half dozen States, including my home State of Utah have enacted a statute of repose that was ultimately held unconstitutional 

under that State’s constitution for violating a right to trial or open 

courts provision. 

First, is there any reason why a statute of repose would be unconstitutional under the United States Constitution? And second, 

why should Congress pass a law that effectively forces those States 

to adopt a statute of repose when it would not be constitutional for 

their State legislature to do so? 

Is there any difference than the situation that occurred when 

Congress passed the General Aviation Revitalization Act? Mr. 

McMahon? 

Mr. MCMAHON. I think GARA sets the precedent. I think it explains the rationale. You know ultimately, this is a policy decision. 

You want to balance the equities and adopt reasonable limits on 

long tail liability. Again, products moving in interstate commerce, 

this is a particular area similar to GARA where there is an availability to do it, and I believe a desire to do it, a justification I 

should say for it. 

Mr. CANNON. Thank you, Mr. Mack, do you have any comment 

on that constitutionality question? 

Mr. MACK. Well, you’re correct that some States have provisions 

in their State constitutions dealing with open courts and access to 

courts and the like, which provisions do not appear in the United 

States Constitution and, therefore, do not—would not bar a Federal 

statute of repose. I would argue that the legislature in those 

States, having seen the need to pass a statute of repose. One could 

argue that the people of those States, represented by their legislatures and governors do—would like to see some restraint on lawsuits involving overage products. 

The trend line, by the way, in States that have adopted fixtermed statutes of repose has been to both in Texas, in Connecticut, in Colorado, which I think are the most recent to restrict 

the application to workplace injuries, perhaps for the reason that 

this legislation does we should be able to argue that no injured person, no injured worker under these—under this bill would go uncompensated. 

Mr. CANNON. Thank you. You know, I was struck, Mr. Popper, 

by your comment that the real tragedy is the—first of all that the 

workplace is not a safe place, and that the real tragedy is 6,000 

deaths and you described a couple of ways people have died recently in some graphic detail, and that is a matter of concern. I 

personally have worked in that very unsafe workplace—in a coal 

mine and also in a steel mill, and one of the things that really 

strikes me, from my own personal experience, and having watched 

the development of society over the last few years is that there has 

been a dramatic reduction in the number of people that are dying 

in the workplace. 

34

And you talked earlier about the likely effect that this bill would 

have on innovation and on design, and suggested that that would 

be negative. 

My own experience is that the global workplace has changed. 

The paradigm has changed, and the companies that are going to 

continue to compete have to be focused on design. They have to be 

focused on innovation, but they have to also be able to have an 

endpoint to the liability that their prior products have caused. 

Now, on the other hand, the reason injuries have declined and 

deaths have declined is in large part because there’s a partnering 

between people that buy equipment and people that design and sell 

equipment. And so people that have equipment or resell equipment 

or move equipment and buy equipment from people who’ve bought 

it before and they haven’t used, there’s a huge incentive on the 

part of those people to be safe. 

There are also incentives to make money and then to cut corners 

and sometimes you get employees who cut corners and unfortunately you let—there are employers who let employees do that. I 

will never forget the yelling at I got when I didn’t card out an electronic circuit that I was involved in helping—or working in the context of, because that was a company that was deeply concerned 

about safety. Not all companies are. 

But the key here-and the reason I think this legislation so important—is that to the degree that you have—you bid up the number 

of jobs, in other words, as you remove these obstacles to new jobs, 

and the economy has more jobs, then part of the compensation 

package becomes a safer work environment and people move away 

from the kind of world view that allows people to do dangerous 

things, and they move more toward the harsher and safer world. 

It would be harsher in the sense that you correct people that do 

unsafe things. 

And over time, as we do that, we then refocus on innovation and 

improved design and the effect of that is not just that American 

workers, of whom 6,000 died last year, not only are those American 

workers going to be safer, but around the whole world workers are 

going to be safer. 

So if we’re really concerned about workers—in the first place, 

how on earth do you compensate 6,000 deaths? That’s a very difficult problem. 

On the other hand, how do you avoid the deaths, and it seems 

to me that at some point you have to be looking at how we create 

a world that in which the incentives align to create a safer workplace. And it seems to me that this bill does that, because it creates 

a virtuous cycle between the machine manufacturer and his future 

business and the machine operator company and his future business. 

Did you want to comment on that, Mr. Popper? 

Mr. POPPER. Of course. Thank you. I guess we’re going to have 

to agree to disagree. Let’s make the positive assumption. Let’s 

make the optimistic assumption that you’re right; that the workplace safety records have improved. And I think there’s a lot of 

data to that effect. 

Mr. CANNON. That’s not an assumption. I mean there’s massive 

data to that over the last—if you take last 20 years, I mean the 

35

trend line is massive. Now, if it—whether it will continue or not 

that’s a different question. I agree. And we may—— Mr. POPPER. Right. 

Mr. CANNON [continuing]. May not be so optimistic about that, 

but there are lots of reasons to believe that we would. 

Mr. POPPER. Even if—making that assumption, why in the world 

would you want to pull out of the marketplace a primary incentive 

to make the workplace safer? You maintain liability standards with 

the manufacturers, if that’s had a positive effect, then great. 

This piece of legislation pulls out the rug from under the workers, because right now—— Mr. CANNON. Can we interact on this just a little bit, because——

Mr. POPPER. Surely. 

Mr. CANNON [continuing]. It seems to me that what this legislation does is it says to the employer I’m the guy who’s going to be 

stuck, because the manufacturer is going to get off the hook. And 

so the guy who’s in charge of safety now has a much higher reason 

to not be the deep pocket in the lawsuit. Is there not some of that? 

Mr. POPPER. I don’t really think that’s the dynamic that will 

occur, because the employer is going to have its liability limited by 

worker’s compensation. They’re not going to be liable in major 

product liability cases. They’re not going to be liable when there 

are foreseeable losses. They’re not going to be liable when the manufacturer is sitting on a longitudinal study about downstream risk. 

They’re not going to be liable for any of that. They’re going to be 

only liable to the extent that there’s worker’s comp, which, as you 

know, is an exclusive remedy and bars the kind of civil litigation 

that you’re describing. 

Mr. CANNON. Unless there is negligence or gross negligence depending upon the State standard on the part of the employer and 

allowing a machine that’s been modified to the point that it’s dangerous probably constitutes that kind of negligence in many cases. 

I mean you got lots of standards in different States. 

Mr. POPPER. Right. And the fact of the matter is I’d be curious 

in seeing any case law which suggests that where there is significant product modification, a manufacturer of a product, who produced the product as originally constructed in good order and followed regular due care regimes was, in fact, liable. As you know, 

if there is significant modification of a product, the manufacturer 

doesn’t bear the same—— Mr. CANNON. But we’re not talking about the manufacturer. 

We’re talking about the company that buys the machine and operates it. 

Mr. POPPER. Precisely. Precisely. 

Mr. CANNON. That company, but I think what we’ve had testimony of is that juries do strange things here, and my personal experience in this regard is fairly significant and juries, in fact, do—

they want to take care of the individual who has the problem. If 

you happen to get in front of one, there’s probably going to be conversation one way or another. 

So it isn’t a question here of the larger societal question. Moving 

away from the—what you’re just describing is not liability on the 

part of the manufacturer of the equipment and toward responsiVerDate 0ct 09 2002 11:19 May 09, 2006 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6601 G:\WORK\COMM\031406\26646.000 HJUD2 PsN: 26646
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bility on the guy who really can actually control the safety of the 

workplace environment, which the employer who bought the equipment. 

Mr. POPPER. Right. And in the event that you have that scenario 

and the employer bears liability—that’s what I was testifying about 

before—that creates a tension that’s really I don’t think particularly healthy, and I do think the manufacturer ought to stay in 

there. And if it is a product that has a useful life that goes well 

beyond this 12-year period, it’s inconceivable to me that you would 

eliminate that regime of responsibility. Who benefits in this? Certainly not the worker. Certainly not the employer. The only one 

who benefits in this is the manufacturer, who’s going to shore up 

profitability and to me it’s like the constitutionality question, 

frankly. 

You know I gave you a whole series of cases that question the 

constitutionality of statutes of repose, but it’s a policy question. 

This is a policy question as well. And it seems to me that if the 

policy that you’re really concerned about is vitality of the American 

marketplace, then you want to optimize the incentives on the producers of durable goods to be responsible for those goods, particularly when they malfunction. And this legislation frankly is inexcusable in that it would allow for a manufacturer who’s fraudulently concealed a deficit in the machine to be immunized after 12 

years. You don’t even do that with GARA. 

Mr. CANNON. Well, but I think the point is that within the 12 

years that defect that may you’ve suggested be concealed is probably going to become apparent or if it’s not concealed, then there’s 

just a better design possibly out there in the mind of God and 

somehow we infer some part of that better design. 

It seems to me the failure of your logic is that somehow we’re 

going to stop the innovation or stop the promulgation of those 

kinds of designs that make it more safe. And it seems to me that 

the logic on the other side of this equation, which is employer 

wanting safe employees, bidding up the cost of is employment by 

increasing the safety for his employees, wanting better equipment, 

having the ultimate liability if he messes with the equipment and 

leaving the equipment manufacturer out of the cycle, that seems to 

me to be a virtuous cycle that increases the rate at which we’re 

progressing toward fewer deaths and fewer injuries in the workplace. And that’s why I think this is really actually a very good 

piece of legislation. 

I want to thank the panel for having been here today. We appreciate your comments, your input. It’s been very valuable. Do you 

have more questions? 

With that, we stand adjourned. Thank you. 

[Whereupon, at 2:38 p.m., the Subcommittee was adjourned.] 

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STATEMENT OF MARK J. NUZZACO, GOVERNMENT AFFAIRS DIRECTOR, NPES, THE ASSOCIATION FOR SUPPLIERS OF PRINTING AND CONVERTING TECHNOLOGIES ON H.R. 

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