II

104TH CONGRESS

1ST SESSION S. 565

To regulate interstate commerce by providing for a uniform product liability

law, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 15, 1995

Mr. ROCKEFELLER (for himself, Mr. GORTON, Mr. MCCONNELL, Mr.

LIEBERMAN, Mr. DODD, Mr. PRESSLER, Mr. HATCH, Mr. EXON, Mr.

INHOFE, Mrs. HUTCHISON, and Mr. CHAFEE) introduced the following

bill; which was read twice and referred to the Committee on Commerce,

Science, and Transportation

A BILL

To regulate interstate commerce by providing for a uniform

product liability law, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Product Liability Fair5 ness Act of 1995’’.

6 SEC. 2. DEFINITIONS.

7 For purposes of this Act, the following definitions

8 shall apply:
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1 (1) CLAIMANT.—The term ‘‘claimant’’ means

2 any person who brings a product liability action and

3 any person on whose behalf such an action is

4 brought. If an action is brought through or on be5 half of—

6 (A) an estate, the term includes the dece7 dent; or

8 (B) a minor or incompetent, the term in9 cludes the legal guardian of the minor or in10 competent.

11 (2) CLAIMANT’S BENEFITS.—The term ‘‘claim12 ant’s benefits’’ means an amount equal to the sum

13 of—

14 (A) the amount paid to an employee as

15 workers’ compensation benefits; and

16 (B) the present value of all workers’ com17 pensation benefits to which the employee is or

18 would be entitled at the time of the determina19 tion of the claimant’s benefits, as determined by

20 the appropriate workers’ compensation author21 ity for harm caused to an employee by a prod22 uct.

23 (3) CLEAR AND CONVINCING EVIDENCE.—

24 (A) IN GENERAL.—Subject to subpara25 graph (A), the term ‘‘clear and convincing evi-
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1 dence’’ is that measure of degree of proof that

2 will produce in the mind of the trier of fact a

3 firm belief or conviction as to the truth of the

4 allegations sought to be established.

5 (B) DEGREE OF PROOF.—The degree of

6 proof required to satisfy the standard of clear

7 and convincing evidence shall be—

8 (i) greater than the degree of proof

9 required to meet the standard of prepon10 derance of the evidence; and

11 (ii) less than the degree of proof re12 quired to meet the standard of proof be13 yond a reasonable doubt.

14 (4) COMMERCIAL LOSS.—The term ‘‘commercial

15 loss’’ means any loss incurred in the course of an

16 ongoing business enterprise consisting of providing

17 goods or services for compensation.

18 (5) DURABLE GOOD.—The term ‘‘durable good’’

19 means any product, or any component of any such

20 product, which has a normal life expectancy of 3 or

21 more years or is of a character subject to allowance

22 for depreciation under the Internal Revenue Code of

23 1986, and which is—

24 (A) used in a trade or business;

25 (B) held for the production of income; or
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1 (C) sold or donated to a governmental or

2 private entity for the production of goods, train3 ing, demonstration, or any other similar pur4 pose.

5 (6) ECONOMIC LOSS.—The term ‘‘economic

6 loss’’ means any pecuniary loss resulting from harm

7 (including any medical expense loss, work loss, re8 placement services loss, loss due to death, burial

9 costs, and loss of business or employment opportuni10 ties), to the extent that recovery for the loss is per11 mitted under applicable State law.

12 (7) HARM.—The term ‘‘harm’’ means any phys13 ical injury, illness, disease, or death caused by a

14 product. The term does not include commercial loss

15 or loss or damage to a product itself.

16 (8) INSURER.—The term ‘‘insurer’’ means the

17 employer of a claimant, if the employer is self-in18 sured, or the workers’ compensation insurer of an

19 employer.

20 (9) MANUFACTURER.—The term ‘‘manufac21 turer’’ means—

22 (A) any person who is engaged in a busi23 ness to produce, create, make, or construct any

24 product (or component part of a product), and

25 who designs or formulates the product (or com-
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1 ponent part of the product), or has engaged an2 other person to design or formulate the product

3 (or component part of the product);

4 (B) a product seller, but only with respect

5 to those aspects of a product (or component

6 part of a product) which are created or affected

7 when, before placing the product in the stream

8 of commerce, the product seller produces, cre9 ates, makes, constructs, designs, or formulates,

10 or has engaged another person to design or for11 mulate, an aspect of a product (or component

12 part of a product) made by another person; or

13 (C) any product seller that is not described

14 in subparagraph (B) that holds itself out as a

15 manufacturer to the user of the product.

16 (10) NONECONOMIC LOSS.—The term ‘‘non17 economic loss’’—

18 (A) means subjective, nonmonetary loss re19 sulting from harm, including pain, suffering, in20 convenience, mental suffering, emotional dis21 tress, loss of society and companionship, loss of

22 consortium, injury to reputation, and humilia23 tion; and

24 (B) does not include economic loss.
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1 (11) PERSON.—The term ‘‘person’’ means any

2 individual, corporation, company, association, firm,

3 partnership, society, joint stock company, or any

4 other entity (including any governmental entity).

5 (12) PRODUCT.—

6 (A) IN GENERAL.—The term ‘‘product’’

7 means any object, substance, mixture, or raw

8 material in a gaseous, liquid, or solid state

9 that—

10 (i) is capable of delivery itself or as an

11 assembled whole, in a mixed or combined

12 state, or as a component part or ingredi13 ent;

14 (ii) is produced for introduction into

15 trade or commerce;

16 (iii) has intrinsic economic value; and

17 (iv) is intended for sale or lease to

18 persons for commercial or personal use.

19 (B) EXCLUSION.—The term ‘‘product’’

20 does not include—

21 (i) tissue, organs, blood, and blood

22 products used for therapeutic or medical

23 purposes, except to the extent that such

24 tissue, organs, blood, and blood products

25 (or the provision thereof) are subject,
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1 under applicable State law, to a standard

2 of liability other than negligence; and

3 (ii) electricity, water delivered by a

4 utility, natural gas, or steam.

5 (13) PRODUCT LIABILITY ACTION.—The term

6 ‘‘product liability action’’ means a civil action

7 brought on any theory for harm caused by a prod8 uct.

9 (14) PRODUCT SELLER.—

10 (A) IN GENERAL.—The term ‘‘product sell11 er’’ means a person who—

12 (i) in the course of a business con13 ducted for that purpose, sells, distributes,

14 leases, prepares, blends, packages, labels,

15 or otherwise is involved in placing a prod16 uct in the stream of commerce; or

17 (ii) installs, repairs, or maintains the

18 harm-causing aspect of the product.

19 (B) EXCLUSION.—The term ‘‘product sell20 er’’ does not include—

21 (i) a seller or lessor of real property;

22 (ii) a provider of professional services

23 in any case in which the sale or use of a

24 product is incidental to the transaction and
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1 the essence of the transaction is the fur2 nishing of judgment, skill, or services; or

3 (iii) any person who—

4 (I) acts in only a financial capac5 ity with respect to the sale of a prod6 uct; and

7 (II) leases a product under a

8 lease arrangement in which the selec9 tion, possession, maintenance, and op10 eration of the product are controlled

11 by a person other than the lessor.

12 (15) STATE.—The term ‘‘State’’ means each of

13 the several States of the United States, the District

14 of Columbia, the Commonwealth of Puerto Rico, the

15 Virgin Islands, Guam, American Samoa, and the

16 Commonwealth of the Northern Mariana Islands,

17 and any other territory or possession of the United

18 States, or any political subdivision thereof.

19 (16) TIME OF DELIVERY.—The term ‘‘time of

20 delivery’’ means the time when a product is delivered

21 to the first purchaser or lessee of the product that

22 was not involved in manufacturing or selling the

23 product, or using the product as a component part

24 of another product to be sold.
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1 SEC. 3. APPLICABILITY; PREEMPTION.

2 (a) APPLICABILITY.—

3 (1) ACTIONS COVERED.—Subject to paragraph

4 (2), this Act applies to any product liability action

5 commenced on or after the date of enactment of this

6 Act, without regard to whether the harm that is the

7 subject of the action or the conduct that caused the

8 harm occurred before such date of enactment.

9 (2) ACTIONS EXCLUDED.—

10 (A) ACTIONS FOR DAMAGE TO PRODUCT

11 OR COMMERCIAL LOSS.—A civil action brought

12 for loss or damage to a product itself or for

13 commercial loss, shall not be subject to the pro14 visions of this Act governing product liability

15 actions, but shall be subject to any applicable

16 commercial or contract law.

17 (B) ACTIONS FOR NEGLIGENT ENTRUST18 MENT.—A civil action for negligent entrustment

19 shall not be subject to the provisions of this Act

20 governing product liability actions, but shall be

21 subject to any applicable State law.

22 (b) SCOPE OF PREEMPTION.—

23 (1) IN GENERAL.—This Act supersedes a State

24 law only to the extent that State law applies to an

25 issue covered under this Act.
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1 (2) ISSUES NOT COVERED UNDER THIS ACT.—

2 Any issue that is not covered under this Act, includ3 ing any standard of liability applicable to a manu4 facturer, shall not be subject to this Act, but shall

5 be subject to applicable Federal or State law.

6 (c) STATUTORY CONSTRUCTION.—Nothing in this

7 Act may be construed to—

8 (1) waive or affect any defense of sovereign im9 munity asserted by any State under any law;

10 (2) supersede any Federal law, except the Act

11 of April 22, 1908 (35 Stat. 65 et seq., chapter 149;

12 45 U.S.C. 51 et seq.) (commonly known as the

13 ‘‘Federal Employers’ Liability Act’’) and the

14 Longshore and Harbor Workers’ Compensation Act

15 (33 U.S.C. 901 et seq.);

16 (3) waive or affect any defense of sovereign im17 munity asserted by the United States;

18 (4) affect the applicability of any provision of

19 chapter 97 of title 28, United States Code;

20 (5) preempt State choice-of-law rules with re21 spect to claims brought by a foreign nation or a citi22 zen of a foreign nation;

23 (6) affect the right of any court to transfer

24 venue or to apply the law of a foreign nation or to

25 dismiss a claim of a foreign nation or of a citizen
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1 of a foreign nation on the ground of inconvenient

2 forum; or

3 (7) supersede any statutory or common law, in4 cluding any law providing for an action to abate a

5 nuisance, that authorizes a State or person to insti6 tute an action for civil damages or civil penalties,

7 cleanup costs, injunctions, restitution, cost recovery,

8 punitive damages, or any other form of relief relat9 ing to contamination or pollution of the environment

10 (as defined in section 101(8) of the Comprehensive

11 Environmental Response, Compensation, and Liabil12 ity Act of 1980, 42 U.S.C. 9601(8)) or the threat

13 of such contamination or pollution.

14 (d) CONSTRUCTION.—To promote uniformity of law

15 in the various jurisdictions, this Act shall be construed and

16 applied after consideration of its legislative history.

17 (e) EFFECT OF COURT OF APPEALS DECISIONS.—

18 Notwithstanding any other provision of law, any decision

19 of a circuit court of appeals interpreting a provision of

20 this Act (except to the extent that the decision is overruled

21 or otherwise modified by the Supreme Court) shall be con22 sidered a controlling precedent with respect to any subse23 quent decision made concerning the interpretation of such

24 provision by any Federal or State court within the geo-
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1 graphical boundaries of the area under the jurisdiction of

2 the circuit court of appeals.

3 SEC. 4. ALTERNATIVE DISPUTE RESOLUTION PROCE4 DURES.

5 (a) IN GENERAL.—

6 (1) SERVICE OF OFFER.—A claimant or a de7 fendant in a product liability action that is subject

8 to this Act may, not later than 60 days after the

9 service of the initial complaint of the claimant or the

10 applicable deadline for a responsive pleading (which11 ever is later), serve upon an adverse party an offer

12 to proceed pursuant to any voluntary, nonbinding al13 ternative dispute resolution procedure established or

14 recognized under the law of the State in which the

15 product liability action is brought or under the rules

16 of the court in which such action is maintained.

17 (2) WRITTEN NOTICE OF ACCEPTANCE OR RE18 JECTION.—Except as provided in paragraph (3), not

19 later than 10 days after the service of an offer to

20 proceed under paragraph (1), an offeree shall file a

21 written notice of acceptance or rejection of the offer.

22 (3) EXTENSION.—The court may, upon motion

23 by an offeree made prior to the expiration of the 10-

24 day period specified in paragraph (2), extend the pe25 riod for filing a written notice under such paragraph
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1 for a period of not more than 60 days after the date

2 of expiration of the period specified in paragraph

3 (2). Discovery may be permitted during such period.

4 (b) DEFENDANT’S PENALTY FOR UNREASONABLE

5 REFUSAL.—

6 (1) IN GENERAL.—The court shall assess rea7 sonable attorney’s fees (calculated in accordance

8 with paragraph (2)) and costs against the offeree,

9 if—

10 (A) a defendant as an offeree refuses to

11 proceed pursuant to the alternative dispute res12 olution procedure referred to subsection (a)(1);

13 (B) final judgment is entered against the

14 defendant for harm caused by the product that

15 is the subject of the action; and

16 (C) the refusal by the defendant to proceed

17 pursuant to such alternative dispute resolution

18 was unreasonable or not made in good faith.

19 (2) REASONABLE ATTORNEY’S FEES.—For pur20 poses of this subsection, a reasonable attorney’s fee

21 shall be calculated on the basis of an hourly rate,

22 which shall not exceed the hourly rate that is consid23 ered acceptable in the community in which the attor24 ney practices law, taking into consideration the
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1 qualifications and experience of the attorney and the

2 complexity of the case.

3 (c) GOOD FAITH REFUSAL.—In determining whether

4 the refusal of an offeree to proceed pursuant to the alter5 native dispute procedure referred to in subsection (a)(1)

6 was unreasonable or not made in good faith, the court

7 shall consider such factors as the court considers appro8 priate.

9 SEC. 5. LIABILITY RULES APPLICABLE TO PRODUCT SELL10 ERS.

11 (a) GENERAL RULE.—

12 (1) IN GENERAL.—In any product liability ac13 tion that is subject to this Act filed by a claimant

14 for harm caused by a product, a product seller other

15 than a manufacturer shall be liable to a claimant,

16 only if the claimant establishes—

17 (A) that—

18 (i) the product that allegedly caused

19 the harm that is the subject of the com20 plaint was sold by the product seller;

21 (ii) the product seller failed to exer22 cise reasonable care with respect to the

23 product; and
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1 (iii) the failure to exercise reasonable

2 care was a proximate cause of harm to the

3 claimant;

4 (B) that—

5 (i) the product seller made an express

6 warranty applicable to the product that al7 legedly caused the harm that is the subject

8 of the complaint, independent of any ex9 press warranty made by a manufacturer as

10 to the same product;

11 (ii) the product failed to conform to

12 the warranty; and

13 (iii) the failure of the product to con14 form to the warranty caused harm to the

15 claimant; or

16 (C) that—

17 (i) the product seller engaged in in18 tentional wrongdoing, as determined under

19 applicable State law; and

20 (ii) such intentional wrongdoing was a

21 proximate cause of the harm that is the

22 subject of the complaint.

23 (2) REASONABLE OPPORTUNITY FOR INSPEC24 TION.—For purposes of paragraph (1)(A)(ii), a

25 product seller shall not be considered to have failed
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1 to exercise reasonable care with respect to a product

2 based upon an alleged failure to inspect a product

3 if the product seller had no reasonable opportunity

4 to inspect the product that allegedly caused harm to

5 the claimant.

6 (b) SPECIAL RULE.—A product seller shall be

7 deemed to be liable as a manufacturer of a product for

8 harm caused by the product if—

9 (1) the manufacturer is not subject to service of

10 process under the laws of any State in which the ac11 tion may be brought; or

12 (2) the court determines that the claimant

13 would be unable to enforce a judgment against the

14 manufacturer.

15 SEC. 6. DEFENSES INVOLVING INTOXICATING ALCOHOL OR

16 DRUGS.

17 (a) GENERAL RULE.—Notwithstanding any other

18 provision of law, a defendant in a product liability action

19 that is subject to this Act shall have a complete defense

20 in the action if the defendant proves that—

21 (1) the claimant was under the influence of in22 toxicating alcohol or any drug that may not lawfully

23 be sold over-the-counter without a prescription, and

24 was not prescribed by a physician for use by the

25 claimant; and
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1 (2) the claimant, as a result of the influence of

2 the alcohol or drug, was more than 50 percent re3 sponsible for the accident or event which resulted in

4 the harm to the claimant.

5 (b) CONSTRUCTION.—For purposes of this section,

6 the determination of whether a person was intoxicated or

7 was under the influence of intoxicating alcohol or any drug

8 shall be made pursuant to applicable State law.

9 SEC. 7. REDUCTION FOR MISUSE OR ALTERATION OF

10 PRODUCT.

11 (a) GENERAL RULE.—

12 (1) IN GENERAL.—Except as provided in sub13 section (c), in a product liability action that is sub14 ject to this Act, the damages for which a defendant

15 is otherwise liable under applicable State law shall

16 be reduced by the percentage of responsibility for

17 the harm to the claimant attributable to misuse or

18 alteration of a product by any person if the defend19 ant establishes that such percentage of the harm

20 was proximately caused by a use or alteration of a

21 product—

22 (A) in violation of, or contrary to, the ex23 press warnings or instructions of the defendant

24 if the warnings or instructions are determined
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1 to be adequate pursuant to applicable State

2 law; or

3 (B) involving a risk of harm which was

4 known or should have been known by the ordi5 nary person who uses or consumes the product

6 with the knowledge common to the class of per7 sons who used or would be reasonably antici8 pated to use the product.

9 (2) USE INTENDED BY A MANUFACTURER IS

10 NOT MISUSE OR ALTERATION.—For the purposes of

11 this Act, a use of a product that is intended by the

12 manufacturer of the product does not constitute a

13 misuse or alteration of the product.

14 (b) STATE LAW.—Notwithstanding section 3(b), sub15 section (a) of this section shall supersede State law con16 cerning misuse or alteration of a product only to the ex17 tent that State law is inconsistent with such subsection.

18 (c) WORKPLACE INJURY.—Notwithstanding sub19 section (a), the amount of damages for which a defendant

20 is otherwise liable under State law shall not be reduced

21 by the application of this section with respect to the con22 duct of any employer or coemployee of the plaintiff who

23 is, under applicable State law concerning workplace inju24 ries, immune from being subject to an action by the claim25 ant.
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1 SEC. 8. UNIFORM STANDARDS FOR AWARD OF PUNITIVE

2 DAMAGES.

3 (a) GENERAL RULE.—Punitive damages may, to the

4 extent permitted by applicable State law, be awarded

5 against a defendant in a product liability action that is

6 subject to this Act if the claimant establishes by clear and

7 convincing evidence that the harm that is the subject of

8 the action was the result of conduct that was carried out

9 by the defendant with a conscious, flagrant indifference

10 to the safety of others.

11 (b) LIMITATION ON AMOUNT.—The amount of puni12 tive damages that may be awarded for a claim in any prod13 uct liability action that is subject to this Act shall not ex14 ceed 3 times the amount awarded to the claimant for the

15 economic injury on which the claim is based, or $250,000,

16 whichever is greater. This subsection shall be applied by

17 the court and the application of this subsection shall not

18 be disclosed to the jury.

19 (c) BIFURCATION AT REQUEST OF EITHER PARTY.—

20 (1) IN GENERAL.—At the request of either

21 party, the trier of fact in a product liability action

22 that is subject to this Act shall consider in a sepa23 rate proceeding whether punitive damages are to be

24 awarded for the harm that is the subject of the ac25 tion and the amount of the award. 

26 (2) ADMISSIBLE EVIDENCE.—
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1 (A) INADMISSIBILITY OF EVIDENCE REL2 ATIVE ONLY TO A CLAIM OF PUNITIVE DAM3 AGES IN A PROCEEDING CONCERNING COMPEN4 SATORY DAMAGES.—If either party requests a

5 separate proceeding under paragraph (1), in

6 any proceeding to determine whether the claim7 ant may be awarded compensatory damages,

8 any evidence that is relevant only to the claim

9 of punitive damages, as determined by applica10 ble State law, shall be inadmissible.

11 (B) PROCEEDING WITH RESPECT TO PUNI12 TIVE DAMAGES.—Evidence that is admissible in

13 the separate proceeding under paragraph (1)—

14 (i) may include evidence of the profits

15 of the defendant, if any, from the alleged

16 wrongdoing; and

17 (ii) shall not include evidence of the

18 overall assets of the defendant.

19 SEC. 9. UNIFORM TIME LIMITATIONS ON LIABILITY.

20 (a) STATUTE OF LIMITATIONS.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2) and subsection (b), a product liability ac23 tion that is subject to this Act may be filed not later

24 than 2 years after the date on which the claimant

25 discovered or, in the exercise of reasonable care,
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1 should have discovered, the harm that is the subject

2 of the action and the cause of the harm.

3 (2) EXCEPTIONS.—

4 (A) PERSON WITH A LEGAL DISABILITY.—

5 A person with a legal disability (as determined

6 under applicable law) may file a product liabil7 ity action that is subject to this Act not later

8 than 2 years after the date on which the person

9 ceases to have the legal disability.

10 (B) EFFECT OF STAY OR INJUNCTION.—If

11 the commencement of a civil action that is sub12 ject to this Act is stayed or enjoined, the run13 ning of the statute of limitations under this sec14 tion shall be suspended until the end of the pe15 riod that the stay or injunction is in effect.

16 (b) STATUTE OF REPOSE.—

17 (1) IN GENERAL.—Subject to paragraphs (2)

18 and (3), no product liability action that is subject to

19 this Act concerning a product that is a durable good

20 alleged to have caused harm (other than toxic harm)

21 may be filed after the 20-year period beginning at

22 the time of delivery of the product.

23 (2) STATE LAW.—Notwithstanding paragraph

24 (1), if pursuant to an applicable State law, an action

25 described in such paragraph is required to be filed
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1 during a period that is shorter than the 20-year pe2 riod specified in such paragraph, the State law shall

3 apply with respect to such period.

4 (3) EXCEPTION.—A motor vehicle, vessel, air5 craft, or train that is used primarily to transport

6 passengers for hire shall not be subject to this sub7 section.

8 (c) TRANSITIONAL PROVISION RELATING TO EXTEN9 SION OF PERIOD FOR BRINGING CERTAIN ACTIONS.—If

10 any provision of subsection (a) or (b) shortens the period

11 during which a product liability action that could be other12 wise brought pursuant to another provision of law, the

13 claimant may, notwithstanding subsections (a) and (b),

14 bring the product liability action pursuant to this Act not

15 later than 1 year after the date of enactment of this Act.

16 SEC. 10. SEVERAL LIABILITY FOR NONECONOMIC LOSS.

17 (a) GENERAL RULE.—In a product liability action

18 that is subject to this Act, the liability of each defendant

19 for noneconomic loss shall be several only and shall not

20 be joint.

21 (b) AMOUNT OF LIABILITY.—

22 (1) IN GENERAL.—Each defendant shall be lia23 ble only for the amount of noneconomic loss allo24 cated to the defendant in direct proportion to the

25 percentage of responsibility of the defendant (deter-
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1 mined in accordance with paragraph (2)) for the

2 harm to the claimant with respect to which the de3 fendant is liable. The court shall render a separate

4 judgment against each defendant in an amount de5 termined pursuant to the preceding sentence.

6 (2) PERCENTAGE OF RESPONSIBILITY.—For

7 purposes of determining the amount of noneconomic

8 loss allocated to a defendant under this section, the

9 trier of fact shall determine the percentage of re10 sponsibility of each person responsible for the

11 amount of noneconomic loss caused to the claimant,

12 whether or not such person is a party to the action.

13 SEC. 11. WORKERS’ COMPENSATION SUBROGATION STAND14 ARDS.

15 (a) GENERAL RULE.—

16 (1) RIGHT OF SUBROGATION.—

17 (A) IN GENERAL.—An insurer shall have a

18 right of subrogation against a manufacturer or

19 product seller to recover any claimant’s benefits

20 relating to harm that is the subject of a product

21 liability action that is subject to this Act.

22 (B) WRITTEN NOTIFICATION.—To assert a

23 right of subrogation under subparagraph (A),

24 the insurer shall provide written notice to the
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1 court in which the product liability action is

2 brought.

3 (C) INSURER NOT REQUIRED TO BE A

4 PARTY.—An insurer shall not be required to be

5 a necessary and proper party in a product li6 ability action covered under subparagraph (A).

7 (2) SETTLEMENTS AND OTHER LEGAL PRO8 CEEDINGS.—

9 (A) IN GENERAL.—In any proceeding re10 lating to harm or settlement with the manufac11 turer or product seller by a claimant who files

12 a product liability action that is subject to this

13 Act, an insurer may participate to assert a

14 right of subrogation for claimant’s benefits with

15 respect to any payment made by the manufac16 turer or product seller by reason of such harm,

17 without regard to whether the payment is

18 made—

19 (i) as part of a settlement;

20 (ii) in satisfaction of judgment;

21 (iii) as consideration for a covenant

22 not to sue; or

23 (iv) in another manner.

24 (B) WRITTEN CONSENT.—Except as pro25 vided in subparagraph (C)—
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1 (i) an employee shall not make any

2 settlement with or accept any payment

3 from the manufacturer or product seller

4 without the written consent of the insurer;

5 and

6 (ii) no release to or agreement with

7 the manufacturer or product seller de8 scribed in clauses (i) through (iv) of sub9 paragraph (A) shall be valid or enforceable

10 for any purpose without the consent of the

11 insurer.

12 (C) EXEMPTION.—Subparagraph (B) shall

13 not apply in any case in which the insurer has

14 been compensated for the full amount of the

15 claimant’s benefits.

16 (3) HARM RESULTING FROM ACTION OF EM17 PLOYER OR COEMPLOYEE.—

18 (A) IN GENERAL.—If, with respect to a

19 product liability action that is subject to this

20 Act, the manufacturer or product seller at21 tempts to persuade the trier of fact that the

22 harm to the claimant was caused by the fault

23 of the employer of the claimant or any

24 coemployee of the claimant, the issue of that

25 fault shall be submitted to the trier of fact, but
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1 only after the manufacturer or product seller

2 has provided timely written notice to the em3 ployer.

4 (B) RIGHTS OF EMPLOYER.—

5 (i) IN GENERAL.—Notwithstanding

6 any other provision of law, with respect to

7 an issue of fault submitted to a trier of

8 fact pursuant to subparagraph (A), an em9 ployer shall, in the same manner as any

10 party in the action (even if the employer is

11 not a named party in the action), have the

12 right to—

13 (I) appear;

14 (II) be represented;

15 (III) introduce evidence;

16 (IV) cross-examine adverse wit17 nesses; and

18 (V) present arguments to the

19 trier of fact.

20 (ii) LAST ISSUE.—The issue of harm

21 resulting from an action of an employer or

22 coemployee shall be the last issue that is

23 presented to the trier of fact.

24 (C) REDUCTION OF DAMAGES.—If the trier

25 of fact finds by clear and convincing evidence
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1 that the harm to the claimant that is the sub2 ject of the product liability action was caused

3 by the fault of the employer or a coemployee of

4 the claimant—

5 (i) the court shall reduce by the

6 amount of the claimant’s benefits—

7 (I) the damages awarded against

8 the manufacturer or product seller;

9 and

10 (II) any corresponding insurer’s

11 subrogation lien; and

12 (ii) the manufacturer or product seller

13 shall have no further right by way of con14 tribution or otherwise against the em15 ployer.

16 (D) CERTAIN RIGHTS OF SUBROGATION

17 NOT AFFECTED.—Notwithstanding a finding by

18 the trier of fact described in subparagraph (C),

19 the insurer shall not lose any right of subroga20 tion related to any—

21 (i) intentional tort committed against

22 the claimant by a coemployee; or

23 (ii) act committed by a coemployee

24 outside the scope of normal work practices.
28

•S 565 IS

1 (b) ATTORNEY’S FEES.—If, in a product liability ac2 tion that is subject to this section, the court finds that

3 harm to a claimant was not caused by the fault of the

4 employer or a coemployee of the claimant, the manufac5 turer or product seller shall reimburse the insurer for rea6 sonable attorney’s fees and court costs incurred by the in7 surer in the action, as determined by the court.

8 SEC. 12. FEDERAL CAUSE OF ACTION PRECLUDED.

9 The district courts of the United States shall not

10 have jurisdiction under section 1331 or 1337 of title 28,

11 United States Code, over any product liability action cov12 ered under this Act.

Æ

S 565 IS——2

S 565 IS——3