II

105TH CONGRESS

1ST SESSION S. 1135

To provide certain immunities from civil liability for trade and professional

associations, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 31, 1997

Mr. MCCONNELL introduced the following bill; which was read twice and

referred to the Committee on the Judiciary

A BILL

To provide certain immunities from civil liability for trade

and professional associations, 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 ‘‘Trade and Professional

5 Association Free Flow of Information Act of 1997’’.

6 SEC. 2. FINDINGS; PURPOSES.

7 (a) FINDINGS.—Congress finds that—

8 (1) trade and professional associations serve the

9 public interest by conducting research, collecting and

10 distributing information, and otherwise providing
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1 services to their members with regard to products

2 and materials purchased and used by those mem3 bers;

4 (2) in the decade preceding the date of enact5 ment of this Act, many large class action lawsuits

6 have been filed against manufacturers for allegedly

7 defective products;

8 (3) as a result of the lawsuits referred to in

9 paragraph (2), many members of trade and profes10 sional associations who are consumers of those prod11 ucts have relied increasingly on trade and profes12 sional associations for information concerning those

13 products, including information concerning—

14 (A) the conditions under which such a

15 product may be used effectively;

16 (B) whether it is necessary to repair or re17 place such a product, and if such a repair or re18 placement is necessary, the appropriate means

19 of accomplishing that repair or replacement;

20 and

21 (C) any litigation concerning such a prod22 uct;

23 (4) trade and professional associations have,

24 with an increasing frequency, been served broad and

25 burdensome third-party subpoenas from litigants in
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1 product defect lawsuits, including class action law2 suits;

3 (5) members of trade and professional associa4 tions are seeking potentially beneficial information

5 relating to product defects, quality, or performance

6 from the trade and professional associations;

7 (6) trade and professional associations have

8 been subject to lawsuits concerning methods of col9 lection and dissemination of that information;

10 (7) the burden of responding to third-party sub11 poenas in product defect lawsuits and the threat of

12 litigation have had a substantial chilling effect on

13 the ability and willingness of trade and professional

14 associations to disseminate information described in

15 paragraph (5) to members, and the threat that in16 formation provided on a confidential basis to mem17 bers could be subject to discovery in a civil action

18 also has a chilling effect;

19 (8) because of the national scope of the prob20 lems described in paragraphs (1) through (7), it is

21 not possible for States to fully address the problems

22 by enacting State laws; and

23 (9) the Federal Government has the authority

24 under the United States Constitution (including arti25 cle I, section 8, clause 3 of the Constitution and the
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1 14th amendment to the Constitution) to remove bar2 riers to interstate commerce and protect due process

3 rights.

4 (b) PURPOSES.—The purposes of this Act are to pro5 mote the free flow of goods and services and lessen bur6 dens on interstate commerce in accordance with the au7 thorities referred to in subsection (a)(9) by ensuring the

8 free flow of information concerning product defects, qual9 ity, or performance among trade and professional associa10 tions and their members.

11 SEC. 2. DEFINITIONS.

12 In this Act:

13 (1) PRODUCT.—

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

15 means any object, substance, mixture, or raw

16 material in a gaseous, liquid, or solid state

17 that—

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

19 assembled whole, in a mixed or combined

20 state, or as a component part or ingredi21 ent;

22 (ii) is produced for introduction into

23 trade or commerce;

24 (iii) has intrinsic economic value; and
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1 (iv) is intended for sale or lease to

2 persons for commercial or personal use, in3 cluding improvements to real property and

4 fixtures that are affixed or incorporated

5 into those improvements.

6 (B) EXCLUSIONS.—The term does not in7 clude—

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

9 products used for therapeutic or medical

10 purposes, except to the extent that such

11 tissue, organs, blood, and blood products

12 (or the provision thereof) are subject,

13 under applicable State law, to a standard

14 of liability other than negligence; or

15 (ii) electricity, natural gas, or steam.

16 (2) STATE.—The term ‘‘State’’ means each of

17 the several States of the United States, the District

18 of Columbia, and any commonwealth, territory, or

19 possession of the United States.

20 (3) TRADE OR PROFESSIONAL ASSOCIATION.—

21 The term ‘‘trade or professional association’’ means

22 an organization described in paragraph (3), (4), (5),

23 or (6) of section 501(c) of the Internal Revenue

24 Code of 1986 that is exempt from taxation under

25 section 501(a) of such Code.
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1 SEC. 3. QUALIFIED EXEMPTION FROM CIVIL LIABILITY.

2 (a) IN GENERAL.—

3 (1) IN GENERAL.—Except as provided in sub4 section (b), a trade or professional association shall

5 not be subject to civil liability relating to harm

6 caused by the provision of information described in

7 paragraph (2) by the trade or professional associa8 tion to a member of the trade or professional asso9 ciation.

10 (2) INFORMATION.—The information described

11 in this paragraph is information relating to a prod12 uct concerning—

13 (A) the quality of the product;

14 (B) the performance of the product; or

15 (C) any defect of the product.

16 (3) APPLICABILITY.—This subsection applies

17 with respect to civil liability under Federal or State

18 law.

19 (b) EXCEPTION FOR LIABILITY.—Subsection (a)

20 shall not apply with respect to harm caused by an act of

21 a trade or professional association that a court deter22 mines, on the basis of clear and convincing evidence, to

23 have been caused by the trade or professional association

24 by the provision of information described in subsection

25 (a)(2) that the trade or professional association—

26 (1) knew to be false; or
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1 (2) provided a reckless indifference to the truth

2 or falsity of that information.

3 SEC. 4. SPECIAL MOTION TO STRIKE.

4 A trade or professional association may file a special

5 motion to strike any claim in any judicial proceeding

6 against the trade or professional association on the ground

7 that the claim is based on an act with respect to which

8 the association is exempt from liability under section 3.

9 SEC. 5. REQUIRED PROCEDURES REGARDING SPECIAL MO10 TION TO STRIKE.

11 (a) TREATMENT OF MOTION.—Upon the filing of any

12 motion under section 4—

13 (1) to the extent consistent with this section,

14 the motion shall be treated as a motion for summary

15 judgment under Rule 56 of the Federal Rules of

16 Civil Procedure (or an equivalent motion under ap17 plicable State law); and

18 (2) the trial court shall hear the motion within

19 a period of time that is appropriate for preferred or

20 expedited motions.

21 (b) SUSPENSION OF DISCOVERY.—Upon the filing of

22 a motion under section 4, discovery requests to or from

23 the moving party shall be suspended pending a decision

24 on—

25 (1) the motion; and
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1 (2) any appeal on the ruling on the motion.

2 (c) BURDEN OF PROOF.—The responding party shall

3 have the burden of proof in presenting evidence that a mo4 tion filed under section 4 should be denied.

5 (d) BASIS OF DETERMINATION.—A court shall make

6 a determination on a motion filed under section 4 on the

7 basis of the facts contained in the pleadings and affidavits

8 filed in accordance with this section.

9 (e) DISMISSAL.—With respect to a claim that is the

10 subject of a motion filed under section 4, the court shall

11 grant the motion and dismiss the claim, unless the re12 sponding party has produced evidence that would be suffi13 cient for a reasonable finder of fact to conclude, on the

14 basis of clear and convincing evidence, that the moving

15 party is not exempt from liability for that claim under sec16 tion 3.

17 (f) COSTS.—If a moving party prevails in procuring

18 the dismissal of a claim as a result of a motion made

19 under section 4, the court shall award that party the costs

20 incurred by the party in connection with making the mo21 tion, including reasonable attorney and expert witness

22 fees.
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1 SEC. 6. QUALIFIED EXEMPTION FROM THIRD-PARTY DIS2 COVERY.

3 (a) IN GENERAL.—Notwithstanding any other provi4 sion of law, a trade or professional association may only

5 be served with a subpoena in a civil action described in

6 subsection (b) if the party that serves the subpoena first

7 establishes to the court, by clear and convincing evidence

8 that—

9 (1) the materials or information sought by the

10 subpoena are directly relevant to the civil action; and

11 (2) the party serving the subpoena has a com12 pelling need for the materials or information because

13 the materials or information are not otherwise avail14 able.

15 (b) CIVIL ACTIONS DESCRIBED.—A civil action de16 scribed in this subsection is a civil action—

17 (1) relating to the quality, performance, or de18 fect of a product; and

19 (2) to which the trade or professional associa20 tion involved is not a party.

21 SEC. 7. SPECIAL MOTION TO QUASH A SUBPOENA.

22 A trade or professional association may file a special

23 motion to quash a subpoena on the grounds that the trade

24 or professional association is exempt from any third-party

25 discovery request under section 6.
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1 SEC. 8. REQUIRED PROCEDURES REGARDING SPECIAL MO2 TION TO QUASH.

3 (a) IN GENERAL.—Upon the filing of any motion

4 under section 7, the trial court shall hear the motion with5 in the period of time that is appropriate for preferred or

6 expedited motions.

7 (b) SUSPENSION OF COMPLIANCE.—Upon the filing

8 of a motion under section 7, the court shall not compel

9 compliance with the subpoena during the period during

10 which—

11 (1) the motion is under consideration; or

12 (2) an appeal on the determination by the court

13 to deny the motion has not resulted in a final ruling

14 by the court on the appeal.

15 (c) BURDEN OF PROOF.—The responding party shall

16 have the burden of proof in presenting evidence that a mo17 tion filed under section 7 should be denied.

18 (d) BASIS OF DETERMINATION.—A court shall make

19 a determination on a motion filed under section 7 on the

20 basis of the facts contained in the pleadings and affidavits

21 filed in accordance with this section.

22 (e) QUASHING A SUBPOENA.—The court shall grant

23 a motion filed under section 7 and quash the subpoena

24 that is the subject of the motion, unless the responding

25 party proves, by clear and convincing evidence, that the

26 trade or professional association that received the sub-
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1 poena is not exempt from responding to the subpoena

2 under section 6.

3 (f) COSTS.—If a trade or professional association

4 prevails in procuring the quashing of a subpoena as a re5 sult of a motion made under section 7, the court shall

6 award the trade or professional association the costs in7 curred by that trade or professional association in connec8 tion with making the motion, including reasonable attor9 ney and expert witness fees.

10 SEC. 9. RIGHT TO OBJECT UNDER RULE 45 OF THE FED11 ERAL RULES OF CIVIL PROCEDURE.

12 Nothing in this Act may be construed to impair the

13 right of a trade or professional association to serve written

14 objections under rule 45(c)(2)(B) of the Federal Rules of

15 Civil Procedure, or any similar rule or procedure under

16 applicable State law.

17 SEC. 10. QUALIFIED ASSOCIATION-MEMBER PRIVILEGE.

18 (a) IN GENERAL.—Except as provided in subsection

19 (b), a member of a trade or professional association shall

20 not be required to disclose any information described in

21 section 3(a)(2), including any materials containing that

22 information, that—

23 (1) relates to actual or anticipated litigation in24 volving the quality, performance, or defect of a prod25 uct;
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1 (2) is considered to be confidential by the trade

2 or professional association and that member; and

3 (3) is communicated by the trade or profes4 sional association with the reasonable expectation

5 that the information will—

6 (A) be used in connection with actual or

7 anticipated litigation; and

8 (B) be maintained in confidence.

9 (b) EXCEPTION.—Subsection (a) does not apply in

10 any action in which a party seeking information described

11 in that subsection has established to a court, by clear and

12 convincing evidence, that—

13 (1) the materials or information sought are di14 rectly relevant to an action filed by that party; and

15 (2) the party has a compelling need for the in16 formation because the information is not otherwise

17 obtainable.

18 SEC. 11. ELECTION OF STATE REGARDING NONAPPLICABIL19 ITY.

20 This Act shall not apply to any civil action in a State

21 court with respect to which all of the parties are citizens

22 of that State, if that State enacts, pursuant to applicable

23 State law, a State statute that—

24 (1) cites the authority of this section;
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1 (2) specifies that the State elects to be exempt

2 from the requirements of this Act pursuant to this

3 section; and

4 (3) contains no other provisions.

5 SEC. 12. PREEMPTION; APPLICABILITY.

6 (a) PREEMPTION.—This Act supersedes the laws of

7 any State to the extent such State laws apply to matters

8 to which this Act applies.

9 (b) APPLICABILITY.—Except as provided in section

10 11, and subject to subsection (a), this Act applies to any

11 civil action commenced in a Federal or State court, on

12 or after the date of enactment of this Act.

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