April 26, 1995 CONGRESSIONAL RECORD — SENATE S5689

State and Federal efforts to collect delinquent child support. As I stated before, we need to avail ourselves of all

options available to ensure child support payment is enforced. When I reintroduced my child support enforcement legislation, my new bill will provide all welfare program recipients cooperate in child support enforcement

efforts, as a condition of their receipt

of assistance.

I want to reemphasize how much

each of us can learn from the practical

knowledge these frontline eligibility

workers have about how the welfare

system works, where the problems are,

and what the possible solutions are to

address them. They are not defenders

of the welfare system status quo. They

see both the positive and the negatives

of the current welfare system, and they

are just as frustrated with the welfare

system as are the public and Members

of Congress.

The welfare system must be substantially changed, and on that we can all

agree. We can all agree too that there

will always be people who will need the

safety net welfare assistance provides

at some time in their lives, and we

must ensure the net is there for them.

But as the Senate begins its deliberations on welfare reform, we need to

heed the lessons learned by these eligibility workers. As we make the necessary changes, let us always remember to work to ensure the current policy conflicts are not carried forward.

Let us not create more unintended consequences when we change the system.

COMMONSENSE PRODUCT LIABILI yield the floor.

ITY AND LEGAL REFORM ACT

fThe Senate continued with the consideration of the bill.

Mr. BROWN addressed the Chair.

The PRESIDING OFFICER (Mr.

DEWINE). The Senator from Colorado.

Mr. BROWN. Parliamentary inquiry.

What is the business before the Senate?

The PRESIDING OFFICER. The

pending business before the Senate is

amendment No. 599.

Mr. BROWN. Mr. President, I rise to

advocate the adoption of the Brown

amendment No. 599 that proposes to restore the sanctions against frivolous

actions of the Federal Rules of Civil

Procedure.

Most Americans would be shocked, I

believe, to find that the Congress has

acted to gut the restrictions against

bringing frivolous legal action. Many

will ask in this Chamber, ‘‘How is that

possible? Who in this Chamber would

possibly vote or even advocate doing

away with restrictions on bringing

frivolous actions in Federal courts?’’

And the answer is that the previous

Congress did it through neglect. The

last Congress took what I believe most

Americans will find to be an absolutely

outrageous act by neglect, by refusing

to consider the proposed changes to the

Federal Rules of Civil Procedure. Proposed changes in the Federal Rules of

Civil Procedure become effective automatically if Congress fails to act, and

that is what Congress did—fail to even

consider them.

There literally was not a bill brought

up in the Judiciary Committee which

allowed Congress to voice its concern

about the proposed changes to the Federal Rules of Civil Procedure.

To make matters worse, the changes

to rule 11 eliminated the deterrence

against frivolous lawsuits. Let me

quote the dissent from the Supreme

Court opinion with regard to this matter:

It takes no expert to know that a measure

which eliminates, rather than strengthens, a

deterrent to frivolous litigation is not what

the times demand.

Mr. President, that is true, and what

we attempt to do with this amendment

is simply restore to the Federal Rules

of Civil Procedure a form of sanctions

and admonitions against bringing frivolous litigation. I intend to ask for a

record vote on this, and it will be an

opportunity for Members of the Senate

to go on record: Do they favor our Federal courts being used to bring frivolous action, groundless action, or do

they oppose it? It is a very clear vote.

It is a very clear amendment. It is not

complicated.

I think a legitimate question at this

point is how in the world could a

change of this kind ever possibly have

taken place without someone standing

up and calling the attention of this

body to it and making sure it did not

happen?

Let me address that because I think

it is a relevant question and one to

which Members deserve an answer.

In transmitting the changes to the

Federal Rules of Civil Procedure, Chief

Justice Rehnquist, in his letter of April

22, 1993, said the following:

This transmittal does not necessarily indicate that the Court itself would have proposed these amendments in the form submitted.

For those in this Chamber who think

the fact this was transmitted to us by

the Supreme Court means they agreed

with it, they need to take a look at the

very transmittal document itself. The

Chief Justice makes it clear that this

does not involve, or necessarily indicate, the Court favors these changes.

Mr. President, I think it is important

to note that none other than Justice

White issued a separate statement with

regard to that, and I intend to go into

his statements voicing his concern

about the procedure, and the dissent

was filed by Justices Scalia in which

Justice Thomas joined and Justice

Souter joined as well.

I might mention that dissents with

regard to changes in civil procedure are

very unusual, and it is an exceptional

case in which anyone ever dissents because, frankly, as Justice White points

out, it is their view that there is some

constraint on the Court through questions of constitutionality and of what

role they should play in this activity,

which is basically a form of legislation.

Let me quote Justice White because I

think he explains this process in a

clear fashion:

28 U.S.C. Section 2072 empowers the Supreme Court to prescribe general rules of

practice and procedure and rules of evidence

for cases in the Federal courts, including

proceedings before magistrates and the court

of appeals. But the Court does not itself

draft and initially propose these rules. Section 2073 directs the Judicial Conference to

prescribe the procedures for proposing rules

mentioned in section 2072. The Conference

has been authorized to appoint committees

to propose such rules. These rules advisory

committees are to be made up of members of

the professional bar and trial and appellate

judges. The Conference is also to appoint a

standing committee on rules of practice and

evidence to review recommendations of the

advisory committees and to recommend to

the Conference such rules and amendments

to those rules as may be necessary to maintain consistency and otherwise promote the

interest of justice. Any rules approved by the

Conference were transmitted to the Supreme

Court which, in turn, transmits any rules

prescribed pursuant to section 2072 to the

Congress.

Mr. President, what he has outlined

quite clearly is that these changes in

the rules, while transmitted through

the Supreme Court, do not necessarily

represent the views of the Court—a

view echoed by the Chief Justice.

Further, Justice White states:

The Justices have hardly ever refused to

transmit the rules submitted by the Judicial

Conference. And the fact that aside from

Justices Black and Douglas it has been quite

rare for any Justice to dissent from transmitting such rules suggests that a sizable

majority of the 21 justices who sat during

this period concluded that Congress intended

them to have a rather limited role in the

rulemaking process. The vast majority, including myself, obviously have not explicitly

subscribed to the Black-Douglas view that

many of the rules proposed dealt with substantive matters the Constitution reserved

to Congress, and that in any event were prohibited by 2072 in injunctions against abridging, enlarging, or modifying substantive

rights.

Mr. President, I mention this because

I think it is critical as Members consider this subject to ask themselves

whether or not the changes that went

into effect automatically carried with

them an aura that we should respect

and honor and not question or even review. Justice White concludes in his

opinion that was transmitted stating

this:

In conclusion, I suggest it would be a mistake for the bench, the bar, or the Congress,

to assume that we are duplicating the functions performed by the standing committee

of the Judicial Conference with respect to

changes in the various rules which come to

us for transmittal.

Mr. President, I believe the record is

quite clear. It is a mistake for anyone

to come before this body and to suggest

that the fact that the Supreme Court

transmitted these proposed rules

changes means that they think they

are good rules changes. I think the

statement of Justice White, and particularly the dissent of the three Justices, which is almost unprecedented,
S5690 CONGRESSIONAL RECORD — SENATE April 26, 1995

indicates very clearly that the Court

itself has serious concerns.

Mr. President, the reality is this:

Congress has the power in the Constitution to enact statutes. Congress

did not perform its function because no

vehicle was allowed to be considered.

That is why I think it is important

that we provide for the consideration

of these changes right now. Let me

state quite clearly, I would like to go

back to the old rules. I think the old

rules were not only far superior to the

changes that happened by default, but

I think they were much stronger. But

the amendment before you is a version

that is somewhere between the old

rules and the new rules. The amendment adopts or accepts many of the

changes that seemed to have

articulable support behind them or for

which the Trial Lawyers Association

could come forward with reasonable arguments. So this amendment does not

go as far as I would like it to. It does

not restore the old rules. But it does

restore a portion of the old rules in

areas where I felt there was literally no

reasonable justification for accepting

the gutting changes proposed by the

Judicial Conference.

Mr. President, rule 11 is one of the

most important tools courts have to

fight frivolous, baseless, and harassing

suits. This amendment gives Members

a chance to go on record on that question. Do you want frivolous actions

brought? Do you want baseless and

harassing suits cluttering up our

courts or not? That is what this

amendment is all about.

Swift action against frivolous lawsuits and claims save time and money

and taxpayers’ dollars and promotes

public respect for the integrity of the

Federal court. I think that may be the

most single important question raised

by this amendment and those rule

changes. Shouldn’t our Federal courts

require integrity in their process and

substance in the allegations? Those

who want to gut rule 11 will say, no, we

should not have any restrictions in this

area. But I believe maintaining the integrity of the Federal court system is

important, and that is why this amendment is brought before the Senate.

The new version of rule 11, which was

changed upon the recommendation of

the Judicial Conference, eviscerates

the deterrent value of rule 11. That is

not just my opinion. It is the opinion

of attorneys and judges who have reviewed the action and who share my

concern about our turning our backs on

ensuring the integrity of the Court.

The December 1, 1993, version of rule

11 allows frivolous lawsuits to go forward. It allows baseless lawsuits. It actually allows attorneys to file allegations without knowing them to be true.

Let me repeat that because I think it is

the core of what we are talking about.

It allows attorneys to go into court and

to file allegations without knowing

them to be true.

How can anyone come before this

body and say that makes sense? How

can anyone come before the American

people and say we are going to set up a

court system in which you are going to

have filings in which even the paid advocate of the cause does not know to be

true? Mr. President, the rules allow attorneys to make assertions without

any factual basis and before they have

done their research. Let me repeat

that. It allows attorneys to literally

make assertions without having any

factual basis for those assertions. It is

scandalous to suggest that our courts

are going to be used for hearings on allegations that have no factual basis

and before any research is done. That

is ludicrous, it is shameful, and it is

why it is so important for us to move

ahead and to correct what is clearly an

abuse by and neglect of previous Congresses.

In short, the December 1, 1993, version encourages the kind of baseless

suits and claims which rule 11 was literally enacted to prevent. The new rule

11 says, ‘‘Sue first and ask questions

later.’’

Mr. President, that is not an exaggeration. That is literally what rule 11

allows in its current form. Sue first

and do research later.

What this amendment does is put

teeth back into rule 11. It does so by

making sanctions for frivolous suits

mandatory, as they once were.

Mr. President, I want to take a few

minutes and go through specifically

what this amendment does, how it

compares with the old rule, and how it

compares with the new rule.

I think it is important for Members

to know and understand that what is

before them is a very moderate version.

The amendment adopts many of the

changes the Judicial Conference wanted. But it does not adopt the concept

that we will gut rule 11 and threaten

the integrity of the court system.

How can anyone looking at our Federal court system want to allow courts

to be cluttered up with frivolous actions? The facts are these: In 1990, over

10 percent of the Federal district court

cases were over 3 years old. Mr. President, we have such a huge backlog that

we literally have more than 10 percent

of the cases who, after 3 years, have

not been resolved.

The current trend of more and more

cases filed in Federal court continues.

In 1992, over 226,000 cases were filed,

and literally, under the current trends,

the number of cases will double every

14 years. In the face of eviscerating

rule 11, Congress did not act to save

the one effective tool that deters frivolous litigation. Congress allowed a new

rule to be adopted that weakens the

process despite evidence and opinions

of judges and lawyers.

Mr. President, I want to go into those

opinions because the judges and lawyers that work with this are alarmed

at the changes in rule 11. Someone will

say, well, now, wait a minute, at least

there was a committee, there are some

people who admit they like these

changes, and that is the Judicial Conference Committee that dealt with

this. Take a look at the attitudes of

the bar in general, because one should

not assume that the fact that the Judicial Conference or, more specifically, a

committee of that conference, made

the recommendations, that they speak

for attorneys and judges across this

country.

Here are the facts: In a recent study

by the Federal Judicial Center, they

found that a strong majority of Federal

judges support the old rule 11, not new

rule 11, but the old rule 11. The study

found that 95 percent of Federal judges

who responded believed that rule 11

does not impede the development of

law. They found that 71.9 percent believe that the benefits of rule 11 outweighed any additional requirement of

judicial time. They found that 80.9 percent believe the old version of rule 11

had a positive effect on litigation in

the report. Mr. President, let me repeat

that: Over 80 percent of the judges felt

the old version of rule 11 had a positive

impact on litigation in the Federal

courts. The proponents of the new form

of rule 11 that come to this body and

claim this somehow has the blessing of

the legal community have not looked

at the facts. This had the blessing of a

group of insiders, of a committee, but

it did not have the blessing of the bar

as a whole. Over 80 percent believe the

old rule 11 should be retained in its

current form.

Mr. FORD. Mr. President, would the

distinguished Senator from Colorado

take a question?

Mr. BROWN. I would be happy to

take a question at the completion of

my remarks.

Mr. FORD. I wanted to insert because

the Senator said ‘‘of those judges responding,’’ and I did not know whether

half responded, 25 percent responded—

the Senator is using the 80 percent—or

whether 100 percent responded and the

Senator is using 80 percent. ‘‘Of those

who responded,’’ I wonder if it was a

large number or a small number.

Mr. BROWN. I appreciate the question of the distinguished Senator. I

think he may not have heard in my remarks I quoted the 1990 study of the

Federal Judiciary Center, and I will be

happy to supply the Senator with the

study.

It might also be noted that rule 11 issues were raised in only 2 to 3 percent

of all cases; that they concluded that

rule 11 imposes only modest burdens on

Federal judges and that rule 11 sanctions have typically been taken in the

form of monetary charges payable to

the injured party.

Mr. President, I want to turn now to

the rules changes themselves. I will, of

necessity, deal and focus particularly

on three of them. There are additional

nuances, but I think these three are

the most important and at the heart of

the amendment that is before this

body.

Mr. President, the first one that we

want to look at is the old rule, which

required that the attorney or the party
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5691

must sign the pleading of the motion

and indicate that the facts designated

therein represent the best of the signer’s knowledge and that they are based

on information and belief formed after

a reasonable inquiry that is well

grounded in fact and that is not interposed for improper purposes such as to

harass or cause unnecessary delay or

needlessly increase the cost.

Mr. President, the new rule guts

those provisions that are meant to ensure integrity in the process. Here is

how it reads:

By presenting to court, an attorney is certifying the allegations and other factual contentions have evidentiary support, or if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.

The option which then controls is ‘‘or

likely to have support, if investigated.’’ In other words, they do not

have to certify any longer that they

are true or that they have investigated

them. They are literally saying we can

bring filings in the court that have not

been investigated and which a person

does not know are true.

Here is what we do with the version

that is presented in this bill. We say,

‘‘by presenting to court, an attorney is

certifying the allegations and other

factual contentions have evidentiary

support or are grounded in fact.’’ It is

less severe than the old rule. I would

like to go back to the old rule. But at

least this amendment requires that the

allegations are grounded in fact or

have evidentiary support.

Now, that is a clear question. Should

filings in Federal court be grounded in

fact? Should they have evidentiary

support? Or should a person be allowed

to find anything they want without a

requirement of knowing that it is true?

Or even having been required to investigate it before it is filed? It is a very

clear question. It is one I think Members will be anxious to cast their vote

on and let citizens know how they feel.

The second change deals with an additional question. Let me read the old

rule:

If a pleading, motion or other paper is

signed in violation of this court rule, the

court, upon motion or upon its own initiative, shall impose upon the person who

signed it, a represented party or both, an appropriate sanction.

In other words, if a person is guilty

of violating the rules, that person will

get sanctioned. That must not sound

very unusual for observers. Why would

we want to change that?

The new rule does a couple of things.

What it says is that if a person is

guilty, if they violate the rules, a person does not have to be sanctioned. In

other words, an opposing counsel can

point out that this was done without

any background, and when the attorney—who has made an inaccurate filing, when an attorney who has violated

the rules—is caught, the new rules say

that even though you are guilty, even

though you have been caught, even

though you have caused the other

party harm, you can get off scot-free.

That is not my idea of justice and I do

not think it is the American people’s

idea of justice.

Here is what we do. We restore that

portion of the old rules that says if you

are guilty you are going to get sanctioned. It leaves it up to the court to

decide what the appropriate sanction

is, but at least we say if you are guilty

of violating the rules and it is shown to

the court, you will be sanctioned.

Those who want violators to get away

without being sanctioned will want to

vote against this amendment. But

those who think if you are guilty you

ought to be sanctioned will want to

vote for it.

The third one I want to summarize is

one that I think Members will find

hard to imagine that the committee

recommended. The new rule says that

if you are guilty of violating the rules,

and even though under their changes

you do not have to be sanctioned, but if

you are sanctioned even though you do

not have to be sanctioned, then they

say the penalty for this misbehavior

can be paid to the court and not to the

injured party. Talk about rigging the

rules. They are saying: First of all, we

are going to dilute what is impermissible behavior; but if you are found

guilty of impermissible behavior even

under the diluted rules, you do not

have to be sanctioned; and even if

under the diluted rules you are found

guilty and you are sanctioned, the

money does not go to the injured

party. In other words, they pull the rug

out from under any incentive of the injured party to seek redress.

The amendment addresses the third

area in a pretty basic and simple way.

It restores the preference that if you

are guilty and if you are sanctioned,

the awards first go back to the injured

party, not to the court. The amendment reads as follows:

A sanction imposed for violation of this

rule may consist of reasonable attorneys’

fees and other expenses incurred as a result

of the violation, directives of a nonmonetary

nature, or an order to pay penalty into court

or to a party.

In other words, we eliminate the priority that the sanction go to the court

and give the court discretion in that

area. That is basically what we are

talking about in this amendment. We

restore to the rules some of the integrity of the process. We indicate that

there will be sanctions if you are

guilty, and we eliminate the favored

status of having the penalty, if it is imposed, go to the court and allow it to

go to the injured party if they wish.

This does not solve all the problems

with frivolous litigation. I wish it did.

But it does restore some of the integrity to rule 11 and some of its effectiveness.

I want to quote the dissent signed by

three Justices of the Supreme Court

when they forwarded these. It is very

unusual for dissents to be written in

these transmittals, but I think the

words speak for themselves.

In my view, the sanctions in the new rule

are not strong enough; thus, the new rule

eliminates a significant and necessary deterrent to frivolous litigation . . . and perhaps

worst of all introduce into the trial process

an element that is contrary to the nature of

our adversary system.

That is what this is all about. Will

we eliminate a deterrent to frivolous

litigation? Will we burden the district

courts? That is really what this is all

about. I think a reasonable question

could be raised at this point and that

reasonable question would be simply

this: Do lawyers, do attorneys behave

differently if these sanctions, monetary sanctions exist? If there are mandatory sanctions for violating the

rules, does it affect the behavior of attorneys? That is the assumption this

process is based on anyway, that by

having a rule that prohibits frivolous

litigation and provides mandatory

sanctions, that counsel will behave differently; they will behave different if

they have to pay a mandatory penalty

than they will if they do not.

There is some evidence on that.

There is some evidence because before

1983 you did not have mandatory sanctions and after 1983 and before this recent change you did have monetary

sanctions. So there was a study done.

It is known as the Nelken study, by

Melissa L. Nelken. She did a study of

rule 11 and she considered the impact

on the Federal practices of both lawyers and judges in the northern district

of California. It is confined to that

area. It was part of the ninth circuit.

The survey questionnaire was sent to

some 17 judges, 7 magistrates, and 107

attorneys. All of these individuals had

been involved in rule 11 proceedings.

That was done to make sure the survey

was conducted among people who had

some knowledge of the process and

some experience with it. Mr. President,

68 attorneys, 64 percent of them, responded; 12 judges or magistrates, or 50

percent of those, responded to the survey. Here is what it showed.

The question was, ‘‘Has amended rule

11 changed your practice, if any, in the

following areas?’’

The change they are talking about is

the change of making sanctions mandatory in 1983. Mr. President, 46 percent of the respondents indicated that

they had engaged in additional prefiling factual inquiry. What we are literally seeing is 46 percent of those attorneys, those practitioners, those on

the line, had said when sanctions are

mandatory they engaged in more prefiling factual inquiry than they did

when they were not mandatory. I think

that is a plus. I think that improves

the integrity of the system.

Mr. President, 33 percent indicated

additional prefiling legal inquiry; that

is, when sanctions were mandatory, 33

percent indicated—admitted that they

had done additional prefiling legal inquiry over and above what they did

when sanctions were not mandatory.

This is only one study. It is a limited

area. But I think it is real proof of
S5692 CONGRESSIONAL RECORD — SENATE April 26, 1995

what our common sense would tell us.

When sanctions are required there is

more work that goes into making sure

the filings are correct than when there

is no sanction.

I want to take one more quote out of

the opinion of the Supreme Court accompanying the recommended changes

in 1993. This is at the conclusion of the

dissent. It says as follows:

It takes no expert to know that a measure

which eliminates rather than strengthens a

deterrent to frivolous litigation is not what

the times demand.

I do not think it could be said any

clearer. Should we eliminate deterrence to frivolous litigation? That is

what this amendment is all about. If

you favor deterring frivolous litigation, you will want to vote yes. If you

do not want to deter frivolous litigation, then you will vote no.

It boils down to these substantive

changes in the rules—to efforts to restore these basic rules: First, should

filings be grounded in fact? I think

they should.

Second, should sanctions be required

if you file frivolous actions? If you are

found guilty of filling frivolous actions, should sanctions be required? I

think they should.

Third, should the injured party have

a standing for compensation, or more

particularly should the priority of the

court be to have a sanction for someone who is guilty, and should the priority be for that money to go to the

court, or should it be the priority or at

least the option for that money to go

to the injured party? I think the injured party should not be shortchanged

in this process.

These are moderate changes in rule

11. Again, they do not go back to the

old rule 11 which I would like to. They

do adopt some of the changes proposed

by the conference. But, Mr. President,

this is an important matter because

this is an effort to restore the integrity

to the legal process. It is an effort to

restore integrity to our courts and discourage frivolous actions by restoring

rule 11. I think it is appropriate for

this bill. I do not think the amendment

could be more appropriate because at

the heart of addressing the problems

with the litigation system in the United States—at the heart of it—is to restore integrity to the system. That is

what this amendment is intending to

do.

Mr. GORTON. Mr. President, I would

like to comment very briefly on the eloquent remarks of my friend from Colorado. His remarks are equally and

highly thoughtful and persuasive.

There is no question but that this Senator strongly supports his judgments

with respect to rule 11 and the desirability of a return to a much more fair

and balanced such rule.

At the same time, Mr. President, I

must say that rule 11 has little if anything to do with the subject before the

Senate, the product liability bill,

which almost universally will apply to

litigation brought in State courts and,

therefore, whether or not it is appropriate to be included with this bill is a

question which I think relates primarily to the attitude of Members of

the body itself.

This is an extremely controversial

bill. Should this strengthen its chances

for passage, it would be welcome. If it

weakens the chance for passage of

something as important as product liability, I hope at some point or another

the bill would be withdrawn and dealt

with at a more appropriate time.

Mr. ABRAHAM addressed the Chair.

The PRESIDING OFFICER. The Senator from Michigan.

Mr. ABRAHAM. Mr. President, I rise

today in support of the Product Liability Fairness Act which I consider to be

a very important piece of legislation. I

believe it is the principal first step in

reforming our increasingly irrational,

often unfair and very costly civil justice system. This system is burdening

our economy, it is burdening America’s

consumers and its middle class; ultimately it is weighing down the community institutions and organizations

that help us live together as friends

and neighbors. By enacting product liability reform, we can begin reinvigorating our economy, giving consumers

a choice of products and decreasing the

expense and unpredictability of our

tort system.

This bill makes a number of muchneeded reforms. First, it caps punitive

damages in product liability suits. This

reform does not limit anybody’s right

to recover in full for any damages suffered. That right remains intact even if

the recovery runs into the millions.

Rather, it merely limits the punitive

damages that can be awarded over and

above what is needed to compensate

those injured by defective products.

These punitive damages are supposed

to function as a punishment for the defendant. But because they are awarded

to claimants, their potential availability attracts lawsuits whenever somebody thinks he or she might get lucky

and hit the jackpot.

Capping these damages will place a

real limit on windfall profits in product

liability lawsuits and thus lead to

fewer frivolous claims being filed and

less unnecessary extension of lawsuits

which could be settled.

In addition, the bill would eliminate

joint liability for noneconomic damages in product cases, and replace it

with proportionate liability. It thus

would end the costly and unjust practice of making a company pay for all

damages when it is only responsible

for, say, 20 percent, just because the

other defendants already have gone

bankrupt. Instead each defendant

would have to pay only for the noneconomic damage he or she actually

caused.

The bill also establishes important

limits to the liability of product sellers, as well as suppliers of raw materials critical to the production of lifesaving medical devices. Generally

speaking, the bill makes clear that

these sellers and suppliers can be held

liable only for their own misconduct in

connection with the product. If, for example, the purchaser misuses the product, then that purchaser is responsible

to the extent he or she is injured on account of his or her own misuse.

These provisions go a good way toward restoring individual responsibility as the cornerstone of tort law. They

also recognize an important problem

with our legal system: Ultimately, in

its current form the system is profoundly anticonsumer.

The tort tax imposed by our legal

system raises prices on many important goods, rendering them unavailable

to poor people. And in extreme cases,

our legal system can literally bring

death or misery; it does so by driving

off the market drugs that can cure terrible but rare diseases, or medical devices for which raw materials are unavailable on account of liability risks.

Mr. President, this is not mere hyperbole. There are some 5,000 diseases

that affect small numbers of Americans. Many of these diseases, such as

cystinosis, a fatal kidney disease, and

leprosy, are extremely serious. But a

number of them go untreated. Pharmaceutical companies cannot afford to

market drugs to treat these diseases

because the cost of liability insurance

is prohibitive.

To give just one example: A West

German chemical company at one

time supplied Americans with

botchyoulinum. If properly used this

drug, otherwise a paralytic poison, can

control a rare but incapacitating disease, characterized by uncontrollable

twitching of the eye muscles. Unfortunately the company cut off American

supplies to avoid the risk of being held

liable should people misuse its product.

And this is no isolated instance. A recent Gallup survey found that one out

of every five small businesses decides

not to introduce a new product, or not

to improve an existing one, out of fear

of lawsuits. And, according to a Conference Board survey, 47 percent of

firms withdraw products from the market, 25 percent discontinue some form

of research, and 8 percent lay off employees, all out of fear of lawsuits.

Mr. President, this bill takes important steps to address these problems.

The reforms I have specifically noted,

as well as others in the bill, will help

consumers. They will help our economy. And they will help our legal system. I pledge my full support for this

well-considered legislation.

However, I would also like to take

this opportunity to urge my colleagues

to go further. And I mean go further in

two respects. First, the reforms under

consideration apply only to product liability. That is, they affect only suits

involving manufacturers’ and sellers’

liability for defects in manufacturing

and handling products. And second, the

reforms do not address certain key

flaws in our civil justice system.

The problems with our current system are deep and pervasive. They are
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5693

not limited to product liability. They

affect homeowners, accountants, farmers, volunteer groups, charitable organizations, small businesses, State and

local governments, architects, engineers, doctors and patients, employers

and employees. In short, they affect all

of us.

We need to repair our system for all

Americans. And doing that will require

reforms that go beyond the field of

products liability. We must replace our

litigation lottery with a civil justice

system that is less costly, more predictable, and ultimately more fair to

everybody. And we must replace the

current incentives to sue with incentives to settle disputes before they get

into court.

This is why in the course of the next

few days I intend, along with others, to

offer and support amendments that

would broaden the legislation currently under consideration.

These amendments fall in two classes. The first class takes valuable reforms currently in the current product

liability reform bill and applies them

to other kinds of cases. Thus I will be

leading an effort to broaden application of this bill’s joint and several liability reform and supporting an effort

to broaden application of this bill’s punitive damages reform.

The other category of amendment I

am supporting would reorient our current system’s distorted incentives.

Today, Mr. President, our tort system

encourages people to spend money on

lawyers and litigation rather than on

resolving disputes quickly and compensating deserving claimants.

The right to know and rapid recovery

amendments I have introduced with

my colleague from Kentucky will promote speedy compensation for claimants, save attorney’s fees, greatly reduce the cost of liability insurance and

change our culture of litigation, which

brings me to my last point, Mr. President. A broad approach to legal reform

will help our communities. Our current

system discourages the voluntarism

and civic participation that hold our

towns and neighborhoods together. A

Gallup survey found that 8 percent of

nonprofit organizations had volunteers

resign over liability concerns; 16 percent reported volunteers withholding

their services due to fear of liability,

and 49 percent reported seeing fewer

volunteers willing to serve in leadership positions.

This is disastrous, Mr. President.

When almost half our nonprofit organizations are finding it more difficult to

get people to serve in leadership positions, we are in trouble. When our citizens are afraid to serve their neighbors

out of fear of being sued, we are in danger of losing that sense of common

cause and mutual reliance that is at

the heart of any community.

We have been hearing a good deal

lately about the breakdown of our communities. And it is a real problem. This

problem arises in part from peoples’

understandable fear of local bullies and

strangers who prey on them in their

streets and homes.

But today our law-abiding citizens

suffer from another even more debilitating fear: a fear of each other.

Too many Americans are afraid to

get involved with their local little

league or Girl Scouts or volunteer fire

department because they seriously believe that if they make an honest mistake they will be sued and lose everything they have merely for trying to

help.

So long as Americans see one another

as potential plaintiffs, they cannot see

one another as neighbors. So long as

we encourage lawsuits rather than personal responsibility and early dispute

resolution our citizens will fear even

those they know well—and come to see

them as strangers whom they themselves will sue at the slightest provocation.

Neighbors no longer trust one another enough to look out for each

other, and each others’ children. The

result is a breakdown of mutual support and pride in the community, leaving it easy prey for other social ills

like crime and delinquency.

We must break this destructive

cycle, Mr. President, for the sake of

our families and our children. We must

begin to rebuild our communities by

restoring the sense that we can count

on one another’s good will and forgiveness for innocent mistakes. We must

restore trust among our citizens, and

health and vigor to our economy, by

remaking our civil justice system to

reward neighborliness rather than

stubborn greed.

Mr. President, we must reform our

tort system so that we encourage people to come together on their own to

settle disputes before they end up in

court, costing time, money, and bad

feelings.

The result will be a reinvigorated

economy, more jobs and necessary

products for us all, and a revival of

that civility and common feeling some

of us remember with regret from an era

not too long ago; an era in which

Americans thought of one another not

as potential plaintiffs and defendants

but as neighbors trying to help each

other in making their community a

better place.

Mr. President, I yield the floor.

Mr. BURNS addressed the Chair.

The PRESIDING OFFICER. The Senator from Montana.

Mr. BURNS. I thank the Chair.

I am starting my seventh year in the

Senate, and every year it seems as if

we always come up with a product liability bill. I have served on the Commerce Committee under the leadership

of Senator HOLLINGS and under the

leadership also of Senator Danforth,

who was a great champion of product

liability reform.

I want to thank Senator GORTON,

who has picked up the traces, so to

speak, and especially to Senator

ROCKEFELLER who through all of the

years I have been here, starting the

seventh year, has also played a very

strong part in leadership on this issue,

diligently trying to seek reform.

I have supported product liability reform primarily because I believe it is

time now for Congress to act on what

some would term barriers to economic

growth in this country. And the need

to reform our product liability system

is no less urgent now while the economy is seemingly healthy than if we

would experience economic downturn.

The current system drives up costs in

nearly every sector of the economy and

does very little to improve our quality

of life and does very little to increase

safety at the workplace. In the last 30

years, the number of cases filed in Federal courts has more than tripled, to

over 250,000 a year.

Now, this issue, yes, is a jobs issue; it

is a competitiveness issue, and some

would term it even a moral issue. Currently, the typical American manufacturer faces product liability costs that

are 20 to 50 times higher than that of

his or her foreign competitor. This additional cost makes American companies less competitive; they lose market

share to foreign competition.

So what do they do? They raise

prices and they lay off workers. The

costs of runaway litigation are felt by

American companies, workers and, yes,

consumers alike. It is not just a big

business issue either. It affects small

businesses as much if not more than

our large businesses.

The 1,100-percent rise in the number

of Federal product liability cases in

the 1970’s and 1980’s has driven up the

cost of liability insurance to astronomical amounts. The burden of this increased cost is proportionately much

greater for small business and in some

cases it is the element that is a ‘‘make

or break’’ issue for them.

This issue is most often presented as

a consumer issue, Mr. President. I disagree with those who say that if you

are for product liability reform, you

are against the consumer. I reject that

argument. Consumers do not benefit

when the business community has to

protect itself from runaway lawsuits.

They pay for it. As we have often been

told, it just goes into the operating

costs; that companies and corporations

do not pay taxes either. People pay

taxes. And the threat of lawsuits keeps

the vital consumer products from the

market and discourages safety and

other improvements that would make

it a better product. Moreover, liability

stifles research and development for

new consumer and medical products.

This bill seeks to bring fairness to a

system without taking away an injured

person’s right to a fair and speedy trial

and, yes, just settlement. Right now

the system fails to compensate those

injured in proportion to their losses

and it takes them far too long to receive the compensation.

The people who benefit the most in

the current system, let us face it, are

the principals involved, the lawyers.

Studies say that 50 to 70 cents of every
S5694 CONGRESSIONAL RECORD — SENATE April 26, 1995

dollar a jury awards to an injured person goes to the attorney. This hardly

seems like a system that benefits the

consumer.

There is a tremendous amount of

support for this liability lawsuit reform in my home State of Montana. In

a recent poll, 89 percent of Montanans

indicated that the current system has

problems and it should be fixed. There

is a growing awareness that the only

winners in the lawsuit lottery game

are the attorneys and the professional

plaintiffs.

S. 565 will reform the current system

to make it more effective. We must

protect people from careless manufacturers and defective products. This bill

does not compromise that objective. It

just ensures that we do so in a fashion

that still allows American businesses

to compete and grow in a global economy.

Congress has the opportunity to reform our product liability system, and

I hope that we do not miss this window

of opportunity and that we take advantage of it. This bill must become law. I

ask my colleagues to support it.

Mr. President, I suggest the absence

of a quorum.

The PRESIDING OFFICER. The

clerk will call the roll.

The bill clerk proceeded to call the

roll.

Mr. DOLE. Mr. President, I ask unanimous consent that the order for the

quorum call be rescinded.

The PRESIDING OFFICER (Mr.

BURNS). Without objection, it is so ordered.

Mr. DOLE. Mr. President, I want to

signal my strong support for S. 565, the

Product Liability Fairness Act. My distinguished colleagues, Senators GORTON, ROCKEFELLER, and PRESSLER, are

to be commended for their leadership

on this particular legislation.

This legislation is needed for several

reasons. Our present system of liability

has been estimated to cost the American economy an astounding $117 billion. In addition to this tort tax, our

system of liability stifles innovation

and prevents better—often safer—products from reaching the marketplace.

The present system of liability also undermines American competitiveness,

both here and abroad.

There has been a concerted effort to

spread misinformation about these reforms—scare tactics—in order to hide

the real issues. So let me be clear: The

reforms contained in this bill, despite

efforts to portray them otherwise, do

not prevent persons who are harmed

from recovering full compensation for

their injuries. In fact, this legislation

addresses abuses that undermine such

compensation. Nor does this legislation

alter civil rights and environmental

laws in any way. In fact, the legislation explicitly excludes such Federal

laws.

What this legislation is about is fairness. Our legal system is one of the

bedrocks of our free society. But over

the last 25 years, it has succumbed to

efforts to turn it away from American

principles, individual responsibilities

and justice. In many cases, our system

of liability resembles a lottery, where

damage awards become windfalls and

often deserving plaintiffs do without.

Thus, I strongly support the provisions of this bill that seek to rein in

abusive punitive damages. Punitive

damages are not intended to compensate victims, as the name suggests,

they are intended to punish wrongdoing. But punitive damages have been

widely abused in recent years, and the

problem now affects every American.

Mr. President, I plan to offer an

amendment later today. As I understand, after a couple of votes and after

disposition of the Brown amendment, I

will be recognized to offer an amendment. That may be later tonight, 7 or

8 o’clock or it may be sometime tomorrow morning. In any event, I will offer

the amendment later and expand on

these protections at that time and

what I believe the amendment does and

does not do.

But I am talking about protection for

Little League players, the Girl Scouts,

and small business. Groups like that

are at risk from abusive lawsuits and

overwhelming punitive damages. I hope

to give you some examples of how this

affects the Girl Scouts, Little League,

and others—how many boxes of cookies

they have to sell to protect themselves

from frivolous lawsuits, in some cases.

We cannot allow the threat of liability to keep hard-working Americans

from volunteering their time to help.

We must not allow the threat of liability to sink small businesses who often

can barely keep their doors open.

Although I support the RockefellerGorton bill, I believe we cannot simply

stop with reforms that help big business alone. We have to take a look at

small business and some of the charitable groups and other groups that

most American families have contact

with. It is as much our responsibility

to help the little guy, and that is what

my amendment will achieve.

This amendment leaves the underlying provisions on the measure of punitive damages intact. Thus, punitive

damages would be limited to three

times economic damages, or $250,000,

whichever is greater.

What my amendment would do is to

take the same provision in the underlying bill and extend these protections to

Americans who are often least able to

cope with outrageous punitive damages.

Thus, instead of limiting these protections to product liability actions,

my amendment would extend them to

‘‘any civil action affecting interstate

commerce.’’

I emphasize again that this amendment in no way undermines full compensation to victims, nor does it alter

Federal laws.

Most of the issues raised by the

Rockefeller-Gorton bill are well

known. The Commerce Committee has

considered similar legislation in the

97th, 99th, 100th, 101st, and 102d Congresses, and a similar bill was considered on the floor in the 102d and 103d

Congresses. We will have a reasonable

time to debate these issues, but it is

my hope we will not engage in dilatory

tactics to distract the Senate from

moving forward on this important legislation.

Having said that, I hope we will complete action on this legislation sometime midweek next week. I know that

on Friday of this week the Democrats

have a conference outside the city and

Republicans have a conference inside

the city. But we will be in session late

tonight and late, late tomorrow night

and, hopefully, we can at that point see

the end when we might complete action on the legislation.

It would be my intention to file a cloture motion if it appears we cannot

complete action in a timely fashion. I

will say, as I have said before, the Senate has a lot of work to do to catch up

with many things that have been sent

to us from the House. My view is we

will get it done. It will mean we will

have fewer recesses in the Senate. It

means we will be here many more days

probably than the House will be in the

next 100 days. It will mean long evenings. But I hope my colleagues on

both sides of the aisle understand that

we have a responsibility, that we all

made statements to get here to the

voters of the United States, and we intend to keep our word to the American

voters, win, lose, or draw.

So it is my hope we will have a very

productive several weeks before the

brief Memorial Day recess and that

will be about the last recess, maybe

with the exception of a couple of days

July 4 and 5 before we decide what to

do with the August recess. It is not a

statutory recess. It can be changed by

resolution and it may be if we cannot

complete our work in time we might

have to abbreviate the August recess. I

hope that is not the case, because

many of my colleagues have made

plans to be with their families and

made other plans. So we will do the

best we can to accommodate people on

both sides of the aisle.

I do believe that we have a responsibility. We know it takes longer in the

Senate. We know the Founding Fathers

planned it that way. This was to be the

deliberative body and we are deliberate, believe me. Sometimes it is almost too deliberate. Today is an exceptional day because many of our colleagues are attending services for

former Senator John Stennis. I think

25 of our colleagues are in Mississippi

today. So that necessarily means we

may not accomplish much until they

return about 5 o’clock.

RECESS UNTIL 2:30 P.M.

fMr. DOLE. Mr. President, I am advised by staff and the manager of the

bill on this side, Senator GORTON, that

it will be about an hour before there

will be speakers available. They are