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[Congressional Record Volume 141, Number 66 (Monday, April 24, 1995)]
[Senate]
[Pages S5571-S5588]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

           COMMONSENSE PRODUCT LIABILITY AND LEGAL REFORM ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
proceed to the consideration of H.R. 956, which the clerk will report.
  The bill clerk read as follows:

       A bill (H.R. 956) to establish legal standards and 
     procedures for product liability litigation, and for other 
     purposes.

  The Senate proceeded to consider the bill.
  Mr. PRESSLER. Mr. President, as the Senate begins its debate of H.R. 
956 I wish, as chairman of the Senate Committee on Commerce, Science, 
and Transportation, to discuss the provisions of S. 565--the Product 
Liability Fairness Act--as reported by our committee. S. 565 as 
reported will be offered as a substitute for H.R. 956, therefore I 
shall discuss the Senate bill as we begin this debate. Earlier this 
month, the Commerce Committee conducted extensive hearings over 2 days 
and then voted 13 to 6 to report the legislation with an amendment on 
April 6. S. 565 as reported is a fair and balanced bill.
  Mr. President, as we begin I cannot help but point out: Here we are 
again--product liability reform being debated by the Senate of the 
United States. Do not get me wrong. As chairman of the Commerce 
Committee, I am proud to bring S. 565 to the floor. So why do I say, 
``Here we are again''? It is not that I do not think this is an 
important issue. Far from it. This bill is vital. It is vital not just 
to America's businesses but also to our Nation's workers and consumers. 
It also is vital to the victims of injuries caused by products.

                              the history

  It is just that we have come this far before. Indeed, since 1981, the 
Senate Committee on Commerce, Science, and Transportation has held 23 
days of hearings on product liability reform. S. 565 marks the seventh 
piece of product liability reform legislation reported by the Commerce 
Committee over that 15-year period. It is my fervent hope this time we 
can achieve meaningful results.
  Mr. President, I see no reason why we cannot. This year's bill is 
balanced and reasoned. I consider it superior to legislation debated in 
the last Congress in that it does not include a provision to disallow 
punitive damage awards in lawsuits for certain manufacturers receiving 
pre-market certification from the Federal Aviation Administration.
  As my colleagues know, that section of last year's bill made this 
Senator extremely uncomfortable, so uncomfortable as to put me in the 
equally uncomfortable position of voting against cloture on legislation 
addressing other legal reforms I have supported and voted for many 
times over the years.
  I personally have been involved in the product liability reform 
movement since the early 1980's. I am proud of that. I was an original 
cosponsor of the Risk Retention Act that became law in 1981 and 
provided for liability insurance pools--or risk retention groups--for 
businesses. Throughout the 1980's I cosponsored numerous uniform 
product liability bills with Senators Kasten, Danforth, and Gorton. The 
early bills were supported strongly by the business community but 
lacked bipartisan support in Congress. I chaired Small Business 
Committee field hearings in Sioux Falls and Rapid City, SD, on this 
issue in 1985.
  I commend the efforts to Senators Gorton and Rockefeller with regard 
to S. 565. They are, indeed, tireless advocates for meaningful reform 
of America's product liability system. They demonstrated serious 
leadership in the committee on this issue and the bill reflects their 
commitment.

                             key provisions

  I would now like to take a few minutes to briefly highlight some of 
the key provisions of S. 565 as reported.

                     alternative dispute resolution

  This legislation provides either party in a product liability suit 
may offer to participate in a voluntary, nonbinding state-approved 
alternative dispute resolution [ADR] procedure. If a defendant in a 
products suit is asked to participate in ADR and refuses and later a 
[[Page S5572]] judgement is entered for the plaintiff, the defendant 
will be required to pay the claimants reasonable legal fees and costs 
if the court determines the defendant acted unreasonably or not in good 
faith in refusing to participate in ADR. There is no penalty for 
claimants who refuse to participate in ADR.
  The bill's ADR provisions should be particularly helpful to those who 
experience injuries the system considers minor--generally speaking, 
injuries that amount to less than $100,000. These individuals often 
have difficulty finding a lawyer to take their case on a contingency 
basis due to the expense of preparing for trial. The section also puts 
claimants squarely in control of whether to choose ADR procedures as a 
quicker and cheaper mechanism of handling their claim.

                            punitive damages

  Although you would not know it to listen to those on the other side 
of the issue, S. 565 does not remove a plaintiff's ability to recover 
punitive damages. It does, however, make their imposition more 
rational.
  Punitive damages are not designed to compensate those who have been 
injured. They are punishment, punishment of defendants found to have 
injured others in a conscious manner. They are used much as fines are 
used in the criminal system. However, there are two big differences. 
First, unlike the criminal law system, there are virtually no standards 
for when punitive damages may be awarded. Second, when they are 
awarded, there are no clear guidelines as to their amount.
  Under this bill, punitive damages can be awarded if a plaintiff 
proves, by ``clear and convincing evidence'' that his or her injuries 
were caused by the defendant's ``conscious, flagrant indifference to 
the safety of others.'' Thus, S. 565 provides a meaningful standard for 
when punitives may be awarded.
  In addition, the legislation before us allows punitive damages to be 
awarded in the amount of 3 times economic damages or $250,000, 
whichever is greater. This provision provides a measure of certainty as 
to the amount of punishment a wrongdoer will suffer.

                   statutes of limitations and repose

  The bill also establishes a statute of limitations of 2
   years from when the claimant discovered or reasonably should have 
discovered both the harm and its cause. This is another example of how 
this legislation will benefit those injured by products. Under current 
law, some States establish the ``time of injury'' as the point at which 
the time for bringing a claim begins to run. Often this is not a 
problem. However, where the harm has a latency period or becomes 
manifest only after repeated exposure to the product, the claimant may 
not know immediately he or she has been harmed or the cause of that 
harm.

  S. 565 will reduce the number of plaintiffs who, having otherwise 
meritorious claims, would be denied justice solely on the basis of the 
statute of limitations in the State in which they choose to file a 
claim. The bill also establishes a statute of repose of 20 years for 
durable goods used in the workplace. After such goods have been in the 
workplace 20 years or longer, no suit may be filed for injuries related 
to their use unless the defendant makes an express warranty longer than 
20 years.
  The need for a Federal statute of repose was presented well by one of 
my fellow South Dakotans, Art Kroetch, chairman of Scotchman 
Industries, Inc., a small manufacturer of machine tools located in 
Philip, SD. Earlier this month, he told the committee how vital product 
liability reform is to the ability of American manufacturers to compete 
in the global marketplace. Art told me that under the current patchwork 
of liability laws, his company pays twice as much for product liability 
insurance as it does for research and development.

                      Joint and Several Liability

  The doctrine of joint and several liability provides that any 
defendant in a lawsuit may be required to pay all damages, regardless 
of the degree of fault or responsibility. What are the consequences? 
One person is held responsible for the conduct of another. True 
wrongdoers are not always punished. Indeed, the average citizen 
ultimately pays the claim--either through higher prices, loss of 
service, or higher insurance premiums.
  S. 565 would abolish joint liability for noneconomic damages such as 
pain and suffering and emotional distress. Thus, each defendant would 
be liable for noneconomic damages only in proportion to the defendant's 
share of responsibility for the harm. This section goes a long way in 
correcting many of the inequities of the joint and several liability 
doctrine and is essential to any tort reform effort. This section would 
provide some relief. It is an issue in which I have been particularly 
interested for many years.
  In 1986, I attempted to strengthen proposed product liability 
legislation, S. 2760, with an amendment regarding joint and several 
liability. My amendment, which passed the Commerce Committee, would 
have curtailed the joint and several liability abuse that is all too 
common in our current system. The amendment abrogated joint and several 
liability for noneconomic damages in product liability cases. As such, 
defendants would be held liable based only on their degree of fault or 
responsibility, not the deepness of their pocket. Unfortunately, that 
bill was never enacted. I am proud the concept underlying my amendment 
a decade ago is part of the bill before us today.

                           alcohol and drugs

  S. 565 also provides a defendant will have an absolute defense if the 
plaintiff was under the influence of intoxicating alcohol or illegal 
drugs and as a result of this influence was more than 50 percent 
responsible for his or her own injuries.
  I think across the country this is something that is much 
misunderstood. We see the use of alcohol or drugs by a person operating 
equipment causing that person to be injured. In these cases, the 
manufacturer can be held liable, which seems ridiculous. This bill will 
correct that and will put greater responsibility on everybody to avoid 
those situations.

                     biomaterials access assurance

  During markup of S. 565, the committee accepted an amendment I 
offered. In addition to making technical corrections to the 
legislation, my amendment added a new title to the bill. This title II 
is identical to S. 303, the Biomaterials Access Assurance Act of 1995 
introduced by Senators McCain and Lieberman.
  This title would allow suppliers of raw materials--so called 
biomaterials--used to make medical implants, to obtain 
dismissal, without extensive discovery or other legal costs, in certain 
tort suits in which plaintiffs allege harm from a finished medical 
implant. Specifically, it would allow raw material suppliers to be 
dismissed from lawsuits if the generic raw material used in the medical 
device met contract specifications, and if the biomaterials supplier 
cannot be classified as either a manufacturer or seller of the medical 
implant.
  During its hearings, the committee heard compelling testimony that 
without such changes in the law, the millions of Americans who depend 
upon a variety of implantable medical devices will be at risk. 
Suppliers of biomaterials have found the risks and costs of 
responding to litigation related to medical implants far exceeds 
potential sales revenues, even though courts are not finding such 
suppliers liable.
  Indeed, three major suppliers of raw materials used in the 
manufacture of implantable medical devices recently announced they will 
limit, or cease altogether, their shipments of crucial raw materials to 
device manufacturers. All three companies have indicated these were 
rational and necessary business decisions given the current legal 
framework.

                  product liability and small business

  Mr. President, from my comments it should be apparent product 
liability reform is essential to the future health and success of 
America's businesses. This is particularly true for our small 
businesses. According to a 1992 Small Business Administration [SBA] 
study, small firms may be affected more negatively than large firms by 
nonuniform product liability laws.
  This is because small businesses do not enjoy economies of scale in 
production and litigation costs. In addition, they are less able to 
bargain with potential plaintiffs. Finally, their limited assets make 
adequate insurance much more difficult to obtain. The cost of product 
liability insurance in the United States is 15 times higher than that 
of similar insurance in Japan and 20 
[[Page S5573]] times higher than in European countries.
  America's small businesses need rationality and uniformity in the 
product liability system if they are to compete effectively in the 
global marketplace. As I explained previously, this point was at the 
heart of the testimony given by Art Kroetch of Scotchman Industries in 
Phillip, SD at the Commerce Committee hearings earlier this month.
  It also was the point made to me by Jim Cope of Morgen Manufacturing 
in Yankton, SD. Jim calls product liability reform a jobs issue for our 
State. Morgen has had to lay off workers and has been unable to give 
raises to other employees because of losses due to product liability 
claims, claims that never resulted in a verdict against his company. 
Nevertheless, Morgen was forced to spend tens of thousands of dollars 
defending itself. To Jim Cope, tort reform means more jobs for South 
Dakota.

                 product liability reform and consumers

  Aside from the jobs issue, product liability reform also benefits 
consumers in other ways. It would lower the cost of U.S. goods. The 
current product liability system accounts for 20 percent of the cost of 
a ladder, 50 percent of the cost of a football helmet, and up to 95 
percent of the cost of some pharmaceuticals--up to 95 percent of the 
cost of some pharmaceuticals arises from product liability.
  Reform of our product liability system also would foster competition 
and provide consumers with a greater selection of products from which 
to choose. Studies tell us 47 percent of U.S. companies have withdrawn 
products from the market and 39 percent have decided not to introduce 
products due to liability concerns. As a result, Americans depend on 
single companies to provide such vital needs as vaccines for polio, 
measles, rubella, rabies, diphtheria, and tetanus.
  Finally, S. 565 would encourage safety improvements. The current 
system encourages companies to discontinue research. Many companies 
fear research to improve an existing product will be used against them 
in court to demonstrate they knew the product was not as safe as it 
might be. Certainty in the system would reduce this counterproductive 
effect.
  In addition, the bill would encourage wholesalers and retailers to 
deal with responsible and reputable manufacturers. This, in turn, would 
lead to better products for consumers. Under our bill, product sellers 
would be legally responsible for products manufactured by companies 
that are insolvent or do not have assets in the United States. This 
should increase the quality of the products found on the shelves of 
U.S. businesses.
  Mr. President, I have quickly outlined five ways in which this bill 
will benefit consumers. First, it will mean more jobs. Second, it will 
lower the cost of the goods they purchase. Third, it will mean a 
greater selection of goods from which to choose. Fourth, it will 
encourage testing to make goods safer. Finally, it will help to 
maintain and, in some cases, improve the quality of products available 
to consumers.
                product liability reform and the injured

  The present product liability system is unfair to those injured by 
products in at least two ways. The system is full of delay, and 
compensation that eventually is received, often is inequitable.
  Product liability suits take a very long time to process. A General 
Accounting Office study found, on average, that product liability cases 
took 2\1/2\ years to move from filing to trial court verdict. Most 
product liability cases are settled before trial, but even these cases 
suffer from delay. One plaintiff's attorney explained that ``most 
settlement negotiations get serious only a week or so before trial is 
scheduled to begin.''
  Delay can result in undercompensation of victims. Many injury victims 
are forced to settle their claims for less than their full losses so 
they can obtain compensation more quickly. These individuals often are 
forced into this decision because of inadequate resources to pay for 
their medical and rehabilitation expenses.
  Another way in which the current system inequitably compensates 
victims concerns proportionality. Numerous studies have found the tort 
system grossly overpays people with small losses, while underpaying 
people with the most serious losses.
  Mr. President, this provides a brief overview of S. 565 and the 
variety of ways in which it will help business--both large and small--
consumers, and those injured by products. In short, product liability 
means jobs for American workers. It means innovative products for 
American consumers. It means swifter and more equitable compensation 
for victims. It means international competitiveness for American 
companies.
  This is why I strongly support S. 565. It is good for small business. 
It is good for their workers. It is good for consumers. It is good for 
those injured by products. In other words, Mr. President, it is good 
for America.
  I might add, I have been in my State these past days and many people 
have come up to me saying we need to end frivolous lawsuits. That is a 
term that is understandable. We need to preserve people's right to sue 
when something is really wrong. But everybody is suing everybody. It is 
a sort of lottery out there. The average person is beginning to 
understand this increases the costs of goods and services. We do want 
to preserve people's rights to sue. Certainly when there has been a 
wrong done, there should be punishment, but we want to try to improve 
our legal system, and this bill is a step in that direction.
  I want to commend Senator Gorton and Senator Rockefeller and others, 
who have worked so long and hard on this. We are very blessed to have 
their leadership. I stand in strong support of S. 565.
  Mr. ROCKEFELLER. Mr. President, the issue of product liability reform 
is well known to many Senators. I look forward to the debate we begin 
today because I believe that the bill that we will be considering, S. 
565, the Product Liability Fairness Act, builds upon past deliberations 
of this body to achieve reform in the moderate, bipartisan manner that 
has characterized this effort in recent years.
  Let me pause a moment to thank my colleague and friend, Senator Slade 
Gorton, for all his efforts and counsel in crafting the bill that we 
have introduced. In addition, Senator Lieberman, Senator Dodd, Senator 
Hatch,  and Senator McConnell have played critical roles in writing 
this legislation and bringing us to the point of floor deliberation.
  Mr. President, the Senate has considered the topic of product 
liability reform for over 14 years, and six times the Commerce, 
Science, and Transportation Committee has reported bills favorably to 
the floor. Most recently, the committee reported out the current bill, 
S. 565, by a vote of 13 to 6 on April 6.
  We have persisted in our efforts to reform the laws governing product 
liability because we believe that the current system is broken and that 
we can make changes that will benefit both consumers and makers of 
products. We have tried, and I think succeeded, in achieving balance in 
our effort to streamline the law in this area. We have simultaneously 
reduced costs and delays for both plaintiffs and defendants.
  In 1985, when I first came to the Senate and joined the Commerce 
Committee, I voted against a product liability reform measure. The 
committee vote was tied at that time, and I felt strongly that the 
version of the bill then being considered aided manufacturers at the 
expense of safe products for American consumers.
  Since then, the product liability effort has changed 180 degrees. The 
legislation has evolved into the even-handed, moderate approach we are 
considering today. Senator Gorton and I have worked diligently over 
recent months to hone the bill we are looking at today to ensure that 
it strikes the right balance between the interests of both consumers 
and business. Adjustments were made to reflect substantive and other 
concerns which we concluded were obstacles to the enactment of this 
bill. We believe we have significantly improved the legislation from 
earlier drafts and have been responsive to the issues which prevented 
earlier enactment of this legislation.
  Let me draw my colleagues' attention to the substantive changes made 
in this year's bill compared with the version introduced in the last 
Congress. The most significant change addresses concerns that have been 
raised about excessive punitive damages-- 
[[Page S5574]] damages that are awarded to punish and deter wrongdoing. 
This year's bill establishes a standard for awarding punitive damages 
that is essentially unchanged from last year's bill. We have, however, 
added a provision that requires punitive damages to be awarded in 
proportion to the harm caused at a ratio of three times a claimant's 
economic loss or $250,000, whichever is greater. Our rationale for this 
ratio is the goal of bringing to punitive damages some relationship 
between the size of the harm and the punishment, a goal supported by 
the American Bar Association, the American College of Trial Lawyers, 
the American Law Institute, and the U.S. Supreme Court.
  Also concerning punitive damages, we eliminated the Government 
standards defenses in last year's bill, referred to as the FDA and FAA 
defenses, which would have prevented punitive damages for instances in 
which certain classes of products, such as drugs, medical devices, or 
certain types of aircraft had been certified by the Federal Government 
as safe. While I remain supportive of the concept of a Government 
standards defense, a number of Senators expressed reservation during 
last year's debate about this provision, and we have accommodated those 
concerns by removing the provision.
  Another change in this year's legislation concerns the statute of 
repose, which we have slightly modified to include a category of 
products known as durable goods used in the workplace. Last year's bill 
was restricted to workplace capital goods, a slightly narrower 
category. Workplace durable goods are defined as having an economic 
life span of 3 years or greater or being depreciable under the Tax 
Code. The workplace distinction, identical to last year's bill, 
preserves the intent of increasing incentives for employers to maintain 
the safety of equipment used in a place of employment, rather than 
shifting that responsibility off to a manufacturer even after the 
useful life of the product in question has expired. In addition, we 
have moved the statute of repose period to 20 years from 25 years in 
last year's bill, which is still longer than any State statute of 
repose, the longest of which is 15 years.
  The third significant change made prior to introduction of this 
year's bill concerns the addition of a provision that had been part of 
last year's House companion bill that requires a reduction of a 
claimant's award due to unforeseeable misuse or alteration of the 
product. For example, if someone purchases a hair dryer that has 
attached to it a large warning label stating, ``Do not use in the 
bathtub,'' and the purchaser immediately uses the hair dryer in the 
bathtub with adverse consequences, it does not make sense to hold the 
manufacturer liable for such misuse, and this provision would prevent 
that.
  In addition to the changes made prior to introduction, several 
substantive changes were made in the Commerce Committee markup of the 
bill. First, we incorporated a bill, S. 303, the Biomaterials Access 
Assurance Act, introduced by Senator Lieberman and Senator McCain, as 
title II of our committee-reported product liability bill. This title 
of the bill is designed to ensure that needed raw materials are 
available to the manufacturers of medical devices by limiting the 
liability for firms that supply biomaterials. The title only limits 
liability for suppliers who have done nothing wrong; the ability of 
consumers to recover from negligent device manufacturers is preserved.
  We made several other substantive changes in the committee markup. We 
modified our product seller provision to extend protection to blameless 
rental and leasing companies. This will address the fact that in 11 
States car rental companies can be forced to pay for damage caused by 
people who rent their cars, even though the car rental companies did 
nothing wrong. We made a change to the statute of repose that will 
ensure that manufacturers keep their promises by enabling injured 
workers to sue for damage caused by products over 20 years old if the 
manufacturers guaranteed their products' safety for a longer period.
  Finally, we modified our alternative dispute resolution provision, 
which gives States an incentive to create proplaintiff, voluntary, 
nonbinding arbitration mechanisms. This provision contains a penalty 
for defendants who ``unreasonably refuse'' to participate in the 
arbitration, and a criticism was raised during hearings on the bill 
that greater specificity was needed for the definition of 
``unreasonable refusal,'' so a set of factors was added to address that 
concern.
  Mr. President, I will have a lot more to say about the substance of 
the bill as debate unfolds, but I know that other Senators wish to 
speak, so I would like to keep my remarks brief. Let me conclude by 
restating the reasons that we must pass national product liability 
reform this year.
  Under our current system, injured consumers often find it impossible 
to get a just and prompt resolution, and just as frequently, blameless 
manufacturers are forced to spend thousands of dollars on baseless 
lawsuits. The system frequently allows negligent companies to avoid 
penalties and even rewards undeserving plaintiffs.
  Product liability law should deter wasteful suits and discipline 
culpable practices but not foster hours of waste and endless 
litigation.
  The adverse effect of having a hodge-podge of rules is severe for 
everyone. Injured persons and those who make products alike face a 55-
unit roulette wheel when it comes to determining rights and 
responsibilities. The results hurt everyone. Injured persons have 
testified that they may be unable to obtain needed medical devices for 
their continued health and well-being. Manufacturers have indicated 
that good and useful products are not placed on the market. The 
Brookings Institution has documented many instances where safety 
improvements were not made because of fear about uncertainties in our 
legal system. Included in their discussion were built-in child seats 
and air bags.
  As I have studied this complex area, I have found that incentives for 
preventing accidents are often not in the right place. In formulating 
our bill, we have striven to place incentives on the person who can 
best prevent an injury. This is a matter that has not been given 
adequate attention during past debates, but given the opportunity to 
carefully study our bill, Senators will see that care and thought has 
been invested to assure that no wrongdoer goes unpunished and that 
positive prosafety behavior is encouraged.
  For all of these reasons, I look forward to our debate, and I welcome 
the criticisms, insights, and suggestions for improvements that I'm 
sure our colleagues will contribute during this process.
  I yield the floor.
                           Amendment No. 596

  (Purpose: Substitute reported committee language of S. 565 for H.R. 
                                  956)

  Mr. GORTON. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Washington [Mr. Gorton] proposes an 
     amendment numbered 596.

  Mr. GORTON. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. GORTON. Mr. President, what I have sent to the desk to be treated 
as the matter before the Senate is the text of S. 565 as it was passed 
by the Senate Commerce Committee just over 2 weeks ago. H.R. 956 is, of 
course, the text of the bill which was passed by the House of 
Representatives.
  I hope that we will debate the bill and the report that was passed by 
the Commerce Committee and will use that as our text. It is for that 
reason that I have offered this substitute.
  Mr. President, the debate over product liability legislation, which 
begins here this afternoon, is both important and controversial.
  It has both of those qualities because it deals with two elements of 
our life as Americans that are vitally important to everyone. The first 
of those qualities is the openness of our courts for the redress of 
grievances to individuals or to groups of individuals by other 
individuals, groups of individuals, or corporations doing business in 
the United States. That is a value and a set of rights cherished, of 
course, by all Americans.
  [[Page S5575]] The other good--sometimes a conflicting one--is the 
desire of the American people for a growing and a prosperous society, 
for the development and marketing of new goods and services, and for 
the creation of economic opportunity to our young people, indeed beyond 
our young people, to all Americans.
  At its base, of course, the economic prosperity and viability of our 
country. So, we here in the two Houses of the Congress of the United 
States are constantly faced with the necessity, in a dynamic economy 
and a dynamic society, of balancing these goals with other goals in our 
society. And it is the restoration of that balance, a balance often 
distorted to one side of the equation, which is the goal both of H.R. 
956, a bill on the subject that has already passed the U.S. House of 
Representatives, and S. 565, which now is before this body.
  This is far from the first occasion on which we have debated product 
liability, either on a broad scale or a narrow scale, in the U.S. 
Senate. At least since 1982, bills on this subject have been before the 
Commerce Committee of this body and frequently before the Senate 
itself. Already in the course of this debate, however, at its outset, 
we have gone farther down the road toward reform than in any Congress 
since the early 1980's. On some occasions, bills have been recommended 
by the Commerce Committee but never taken up on this floor. On at least 
two occasions, including the last Congress, bills have been reported 
favorably by the Commerce Committee. The following motions to proceed 
to the debate, however, were debated and in fact debated successfully, 
under the guise of a quasi-filibuster, and cloture was not attained on 
the motion to proceed. So never have we been in a position to debate 
the merits of product liability reform itself or, indeed, to offer 
amendments to those bills which have been reported by the Senate 
Commerce Committee.
  In the last Congress, my friend and colleague from West Virginia, 
Senator Rockefeller, and I had a bill not dissimilar from this reported 
from the Commerce Committee by a not dissimilar vote and debated here 
on the floor for the better part of a week. Before, on two occasions, 
cloture on the motion to proceed was defeated in spite of having 
received a substantial majority of the votes of the Members of the 
Senate. So I know I speak both for the primary sponsor of the bill, the 
Senator from West Virginia, as well as for myself, in expressing our 
gratification at the fact that, for the first time in the career of 
either one of us, we are literally discussing a bill on this subject, 
and of this importance.
  The last Congress, however, did succeed in passing a bill which 
ultimately became law on one narrow element of product liability. The 
last Congress created a 1-year statute of repose with respect to 
product liability actions concerning small private aircraft. And I 
submit that Members of this body should carefully consider the debate 
on that proposal, which also lasted over the period of several 
Congresses, the arguments made on either side, and the results of the 
passage into law of that aircraft statute of repose.
  It had been the claim of small aircraft manufacturers in the United 
States that their business had effectively been destroyed by product 
liability litigation. Several famous manufacturers of small aircraft 
had literally gone out of business. Others were no longer engaged in 
the manufacture of such aircraft. And those who stayed in the business 
had their business very significantly reduced, to the point at which, 
if my memory serves me correctly, the production of such aircraft in 
the United States over a 20- or 30-year period had declined by close to 
90 percent. The industry, in other words, was almost dead in this 
country.
  The opponents of the statute of repose argued, among other things, 
that litigation had nothing to do with that loss of business. The 
proponents, including the manufacturers, argued that even this 
relatively minor relief would result in a substantial recovery of that 
business. Ultimately, after several Congresses, less than 2 years ago 
such legislation passed and was signed into law, and already that 
recovery has begun. Already some of those manufacturers have opened up 
lines of production, have begun new assembly lines and are back in 
business.
  Has litigation against negligence in the manufacture of private 
aircraft been terminated by that bill? Of course not. All that Congress 
passed was a simple statute of repose of 18 years. Already, however, we 
have seen the creation of jobs, the beginning of the renaissance of an 
industry, and the return of American companies manufacturing in America 
to a business out of which they had been almost totally driven. Yet, as 
Members of this body will learn during the course of debate on this 
legislation, there are many States with no statutes of repose at all. 
For other products or equipment, we still face the actuality and the 
possibility of product liability litigation involving equipment and 
manufactured items manufactured and originally sold in the 19th 
century, over 100 years ago.
  So in this case we are attempting, on a broader basis, to restore a 
balance between the fundamental and undoubted right of people to sue 
when they have been injured by faulty products and the protection of 
manufacturers and sellers against unwarranted litigation. We will show 
how this imbalance has caused perfectly good products had to be 
withdrawn from the market and caused manufacturers to go out of 
legitimate and important businesses, businesses important to the people 
of the United States. In turn, this has discouraged research into many 
important areas and has discouraged the development of products 
resulting from that research.
  So, Mr. President, when Members of this body listen to the kind of 
doomsday scenarios, threats about the end of justice in our legal 
system, they may wish to reflect on similar arguments made by many 
Members of this body less than 2 years ago with respect to the aviation 
industry, and look at the actual results of such legislation.
  I believe that there is a carefully balanced proposal equalizing the 
right to sue with the encouragement of the American economy and a right 
to be free from frivolous suits and huge legal bills in connection with 
matters that do not arise out of any degree of negligence, or which are 
overcompensated.
  So, Mr. President, I am especially pleased to support the Product 
Liability Fairness Act of 1995. Legislation carefully crafted to 
reflect a bipartisan spirit that takes a moderate and sensible approach 
in reforming the product liability system of United States.
  What are our goals? Our goals are a system that is fair and 
efficient; a system that is, to the greatest possible extent, yields 
predictable results; one that awards damages both proportional to the 
harm suffered as a result of negligence and in a timely manner, and one 
which reduces the overwhelmingly wasteful transaction costs associated 
with the present product liability system.
  Finally, this is a bill which builds on the genius of those who wrote 
the Constitution of the United States, those who placed plenary 
authority in the hands of Congress to regulate interstate commerce. No 
occupation can be more intimately involved with interstate commerce 
than the system by which liability is adjudged with respect to the 
impact of products manufactured, sold and utilized in every one of the 
50 States of the United States.
  (Mr. THOMAS assumed the chair).
  Mr. GORTON. Mr. President, there are in fact few valid arguments 
against a greater degree of uniformity and a greater degree of 
predictability with respect to impacts of such transactions. Estimates 
of total court costs of litigation and assorted transactional costs 
range from $80 to $117 billion a year to manufacturers and sellers in 
this country. It goes without saying that these costs are immediately 
forced back onto consumers through higher prices for products which 
Americans use every day.
  The current product liability system accounts for approximately 20 
percent of the cost of the simple ladder and one-half of the cost of a 
football helmet. Injured parties receive less than half of the money 
spent in product liability litigation. More than half goes to the 
lawyers, and those who work with them in prosecuting and defending that 
litigation. Nearly 90 percent of all manufacturers and many retailers 
and wholesalers in the United States can expect to become a defendant 
in a product liability case at least once. The cost of product 
liability insurance is 15 times greater in the United States 
[[Page S5576]] than it is in Japan, and 20 times greater here in the 
United States than it is in Europe.
  As I have already said, manufacturers can still be sued today for 
products manufactured in the 1800's, simply because the present 
potential defendant purchased, at some time or another, the company 
that was engaged in manufacturing in that century.
  As I have just pointed out, the product liability system in the 
United States is the world's most costly. The editors of a book 
entitled ``The Liability Maze'' published by the Brookings Institute in 
1991 notes:

       Regardless of the trends in tort verdicts, most studies in 
     this area have concluded that, after adjusting for inflation 
     and population, liability costs have risen dramatically in 
     the last thirty years, and most especially in the last 
     decade.

  Mr. President, the cost of litigation, court proceedings, attorney 
fees, and expert fees--in other words, transaction costs associated 
with the current system--are absolutely outrageous. A 1992 study 
indicates that for every $10 paid to claimants by insurance companies 
for product liability cases, another $7 is paid for lawyers and other 
defense costs. That is defense costs only. If the contingent fee of 
plaintiff's attorneys is factored in, lawyers' fees account for more 
than 60 percent of the funds expended on product liability cases.
  Obviously, liability insurance costs reflect these increased 
transaction costs, and insurance rates rise accordingly. Over the past 
40 years, general liability insurance costs have increased at more than 
four times the rate of growth of the national economy. One small 
manufacturer in my own State of Washington, Connelly Water Skis, Ltd. 
pays $345,000 a year for liability insurance, even though that company 
has never lost a product liability case.
  Paradoxically, the victims of this system are very often the 
claimants, the plaintiffs themselves, who suffer by the actual 
negligence of a product manufacturer, and frequently are unable to 
afford to undertake the high cost of legal fees over an extended period 
of time. Frequently, they are forced into settlements that are 
inadequate because they lack resources to pay for their immediate 
needs, their medical and rehabilitation expenses, their actual out-of-
pocket costs.
  In 1989, a General Accounting Office study found that on average, 
cases take 2\1/2\ to 3 years to be resolved, and even longer when there 
is an appeal. One case studied by the GAO took 9\1/2\ years to move 
through our court system. In an insurance industry study, it was found 
that it took 5 years to pay claims with an average dollar lost and that 
``larger claims tended to take much longer to close than smaller 
claims.''
  An early insurance offices product liability study found that injured 
plaintiffs with losses of between $1 and $1,000 received on average 859 
percent of their actual losses, while those with losses over $1 million 
received on average 15 percent of their losses, even before attorneys 
fees were paid.
  This is to be contrasted with the results of those lawsuits we often 
see in the newspapers, or hear about on television, in which a 
particular plaintiff has received a bonanza, a lottery style set of 
winnings.
  In today's system, consumers, manufacturers, and product sellers are 
trapped in a product liability litigation system that is essentially a 
lottery. Identical cases in two different States often produce 
strikingly different results. And, of course, here in the United States 
we have 51 separate product liability systems--in 50 States and the 
District of Columbia, while the European Economic Community, Australia, 
and Japan each have adopted a uniform, predictable product liability 
statute. In one of the many hearings held on this issue over the years, 
University of Virginia law professor Jeffrey O'Connell explained, and I 
quote him:

       If you are badly injured in our society by a product and 
     you go to the highly skilled lawyer, in all honesty the 
     lawyer cannot tell you what you will be paid, when you will 
     be paid or, indeed, if you will be paid.

  Three distinguished judges: Chief justice, Richard Neely, of the 
supreme court of West Virginia; Federal district court judge, Warren 
Eginton, author of the ``Product Liability Journal;'' and New Jersey 
Court of Appeals judge, William Dreier, author of the ``Product 
Liability Journal of New Jersey,'' have presented congressional 
testimony attesting to the need for uniformity. While they state that 
there will naturally be different interpretations of any law, 
conflicting interpretations will obviously be fewer with a single law 
than with 51 different ones.
  Uncertainty in the present system is a reason for change. Plaintiffs, 
those injured by faulty products, need quicker, more certain recovery--
recovery that fully compensates them for their genuine losses. 
Defendants, those who produced the products, need greater certainty as 
to the scope of their liability.
  Mr. President, under the current system, consumers are required to 
pay increased and unnecessarily high prices on necessary goods. Here 
again the excessive costs of an out-of-control tort system fall on the 
shoulders of consumers through increased prices.
  An example. Lederle Labs, the lone maker of diphtheria, pertussis, 
and tetanus vaccine, raised its dose from $2.80 to $11.40 simply to 
cover the costs of lawsuits. According to Prof. George Priest of Yale 
Law School in testimony before the Senate Judiciary Committee this 
month, excessive punitive damages awards have increased the general 
price level for products and services provided in the United States 
economy, harming consumers--and low income consumers most of all.
  In addition to higher prices, Americans suffer from the current 
system because of the lack of choice. At the present time, for example, 
only one company is willing to supply vaccines for polio, measles, 
mumps, rubella, rabies, and DPT. In 1984, two of the three companies 
manufacturing the DPT vaccine decided to stop production because of 
product liability costs. Can it seriously be asserted that we should 
abandon that vaccine?
  Later that same year, the Centers for Disease Control recommended 
that doctors stop vaccinating children over the age of 1 in order to 
conserve limited supplies of the DPT vaccines for the most vulnerable 
infants.
  Next, product development is hindered in many ways by the existing 
system. The unpredictability of the product liability system 
discourages the development of innovative products and cutting edge 
technology. Innovation is frequently stifled because scientific 
research essential for advanced product development is foregone or 
abandoned, due to the excessive costs of product liability.
  In 1984, a closed claims study by the ISO found that United States 
industries spent more on product liability defense costs than on buying 
equipment to boost productivity.
  In an American Medical Association report titled ``The Impact of 
Product Liability on the Development of New Medical Technologies,'' we 
read, and I quote:

       Innovative new products are not being developed or are 
     being withheld from the market because of liability concerns 
     or inability to obtain adequate insurance. Certain older 
     technologies have been removed from the market, not because 
     of sound scientific evidence indicating a lack of safety or 
     efficiency, but because the product liability suits have 
     exposed the manufacturers to unacceptable financial risks.
       Rawlings Sporting Goods, Mr. President, a leading 
     manufacturer of competitive football equipment for more than 
     80 years, announced in 1988 that it would no longer 
     manufacture, distribute or sell football helmets. Joining 
     Spalding, McGregor, Medalist, Hutch, and others who have 
     stopped manufacturing helmets, Rawlings was the 18th company 
     in as many years to give up the football helmet business 
     because of increasing liability exposure. Two manufacturers 
     out of the 20 that existed in 1975 remain in the helmet 
     business today.

  A recent article in Science magazine reported that a careful 
examination of the current state of research to develop an AIDS 
vaccine, and I quote, ``Shows that liability concerns have had negative 
effects.'' It points out that Genentech, Inc., halted its AIDS vaccine 
research after the California Legislature failed to enact State tort 
reform. Only after a favorable ruling did that company resume its 
research.
  And consider--perhaps because of its history this is the most 
important quotation of all--the comment by Jonas Salk, inventor of 
polio vaccine:

       [[Page S5577]] If I develop an AIDS vaccine, I don't 
     believe a U.S. manufacturer will market it because of the 
     current punitive damage system.

  Think of where we would be had we had the present system when Dr. 
Salk developed the polio vaccine. Would it not have been marketed? 
Would we still be faced with that scourge?
  Not only does the present system hurt medical innovation, it also 
inhibits small companies from producing everyday goods.
  Again, in my own State, for example, Washington Auto Carriage of 
Spokane distributes various kinds of truck equipment throughout the 
United States. Here is what its owner, Cliff King, says. And I quote 
him:

       We have been forced out of selling some kinds of truck 
     equipment because of the exorbitant insurance premiums 
     required to be in the market. As a result, this type of 
     equipment tends to be distributed only by a few very large 
     distributors around the country, who can afford to spread the 
     cost over a very large base of sales. Ultimately, there is 
     much less competition in those markets.

  In other words, Mr. President, as tough as the present system is on 
large corporations, it is even tougher on small companies--companies 
who can be driven out of business by a single lawsuit.
  Mr. President, I spoke a few moments ago about the undoubted 
interstate nature of our product manufacturing and distribution system 
and the overwhelming justification for a greater degree of uniformity 
than we have today, and for the obvious constitutional basis in the 
commerce clause for such legislation.
  One would expect, however, that many of those connected with State 
government would oppose any further limitation of their control over 
their tort systems. Yet, the representatives of the top organization of 
State elected officials, the National Governors Association, recognizes 
both the need for product liability reform and the necessity of such 
reform at the Federal level. A resolution adopted by the National 
Governors Association last January summarizes both the need and the 
support of State Governors for change in the product liability system 
here by the Congress of the United States. In part, the resolution 
adopted by the NGA reads:

       The National Governors Association recognizes that the 
     current patchwork of U.S. product liability laws is too 
     costly, time-consuming, unpredictable and counterproductive, 
     resulting in severely adverse effects on American consumers, 
     workers, competitiveness, innovation, and commerce.
       The issues of product liability reform has increasingly 
     pointed to Federal action as a way to alleviate the problems 
     faced by small and large businesses with regard to 
     inconsistent State product liability laws. This lack of 
     uniformity and predictability makes it impossible for product 
     manufacturers to accurately assess their own risks, leading 
     to the discontinuation of necessary product lines, reluctance 
     to introduce product improvements and a dampening of product 
     research and development. American small businesses are 
     particularly vulnerable to disparate product liability laws. 
     For them, liability insurance coverage has become 
     increasingly expensive, difficult to obtain, or simply 
     unavailable. Further, the system causes inflated prices for 
     consumer goods and adversely affects the international 
     competitiveness of the United States.
       Clearly, a national product liability code would greatly 
     enhance the effectiveness of interstate commerce. The 
     Governors urge Congress to adopt a Federal uniform product 
     liability code.

  It should be noted at this point, Mr. President, that this resolution 
reflects the position that former-Arkansas Governor, William Clinton, 
supported during his many terms as Governor.
  Mr. President, I believe it appropriate, briefly at this point, to 
outline for Members the chief reform features of this proposal. While 
it makes more uniform laws related to product liability in many fields, 
it continues to defer to the States in many other areas. As such, it 
retains a balance between Federal and State concerns over this branch 
of interstate commerce. It does so, however, in a thoughtful and sober 
fashion by eliminating those elements of the present system that cause 
the greatest degree of uncertainty and have the most adverse impacts on 
interstate commerce, on productivity, on the creation of jobs, and on 
the competitiveness of American business.
  First, Mr. President, we reform the almost uniform system of joint 
and several liability. In most States, when there are multiple 
defendants in a product liability action, a deep-pocket theory applies. 
Under the joint and several liability rule, any defendant who has 
contributed in any way, to an injury can be held responsible for the 
entire amount of the damage award. Such a deep-pocket rule encourages 
plaintiffs and their lawyers to target the wealthiest defendant in each 
case, even if that defendant can be, and has been found, by the jury to 
be only minimally at fault.
  S. 565 provides for only several liability and not for joint 
liability on noneconomic damages. This means that each defendant is 
liable only for his, hers or its portion by reason of its proportion of 
the fault in causing the injury. This is currently the law in the State 
of California.
  It does, however, apply only to noneconomic damages, those that 
include pain and suffering and emotional distress. Under this bill, 
States will be permitted to retain joint liability, if they wish to do 
so, for economic damages--medical costs, lost wages, and so forth--so 
that an injured plaintiff can be assured of recovering fully, no matter 
who the source of that recovery, for those actual out-of-pocket damages 
themselves.
  Pain and suffering and other noneconomic losses under this bill will 
be tied to the concepts of both fault, and also responsibility.
  Mr. President, it is unfair and highly unproductive to make 
defendants pay for damages of a nature that are literally beyond their 
control or beyond their fault. In California, it has been found, under 
this new law, that juries are much more likely to apportion liability 
fairly according to each defendant's fault.
  Mr. President, the particular kind of damages about which we read 
most frequently are punitive damages. Punitive damages, of course, are 
damages awarded to punish the defendant, rather than to compensate the 
victim either for the victim's economic or noneconomic emotional 
damages. As such, they are a troubling concept in our system of law.
  Generally speaking, we punish for criminal activities through the 
Criminal Code, a code which provides a multitude of protection for 
those accused under it--proof beyond a reasonable doubt, a right 
against self-incrimination, limited sentences designed to fit the 
crime.
 None of these concepts, however, applies to the imposition of punitive 
damages. A handful of States, my own included, do not generally permit 
punitive damages in civil litigation at all. And, Mr. President, there 
is nothing to indicate that justice is denied in those States, that 
recoveries on the part of the injured plaintiffs are inadequate, or 
that companies operate in a less safe and responsible fashion.

  I can express a personal preference, dating from the time at which I 
was admitted to the bar for such a system, for the use of nonpunitive 
damages only, in civil litigation. But because the vast majority of the 
States utilize such a system, this bill continues to permit it in 
States that allow it at the present time, but with a number of 
limitations.
  Under this law, claimants would be required to provide, by clear and 
convincing evidence proof, that a defendant engaged in egregious 
misconduct and there would be a degree of proportionality in punitive 
damages--a cap of $250,000, or three times the economic damages 
awarded, whichever is greater. A separate jury consideration of 
punitive damages would also be required from the determination of the 
jury for compensatory damages.
  Reforms of this nature are supported by mainstream academic groups in 
the American Bar Association and the American College of Trial Lawyers. 
More recently, these reforms were recommended in a 5-year report 
studied by scholars of the prestigious American Law Institute.
  Third, this bill deals in general terms with exactly the subject of 
last year's aviation product liability bill, a statute of repose. Under 
the current product liability system, manufacturers are liable for 
injuries caused by products without regard to the age of these 
products, even when the equipment has been rebuilt, altered, or used 
improperly. Mr. President, it is clearly unreasonable to hold a 
manufacturer liable for a product that may have been made 30 or more 
years ago, particularly when it has no control over the use or 
maintenance of that product.
  [[Page S5578]] S. 565 adopts a 20-year statute of repose for 
workplace durable goods, or less if State law provides a lower statute 
of repose. By this provision, we inject a degree of predictability in a 
system, which literally at the present time calls for endless 
liability.
  One example, Mr. President. Since 1830, the firm of Davis & Ferber 
was one of the largest textile machinery manufacturers in the world. 
Recently, that company was required to defend itself against a claim 
involving a machine that left its plant in 1895 and had been modified 
again and again by different owners for 88 years. In 1982, Davis & 
Ferber was forced out of business because of the high cost of 
settlement in this case.
  There is one other element of this bill notable for this opening 
debate, and that element arises out of the fact that at the present 
time, consumers can sue, not only the manufacturer of an alleged faulty 
product, but also the retailer who sold it or the firm that rented or 
leased the product. In over 95 percent of all such actions, the 
manufacturer ultimately pays any judgment that is awarded, but the web 
of litigation adds to spiraling unnecessarily legal costs to the 
wholesaler or the retailer that are ultimately paid for by the 
consumer.
  Under S. 565, product sellers, as well as those who engage in the 
leasing and renting of products, will be liable for their own 
negligence or failure to comply with an expressed warranty but not for 
the negligence of the manufacturer. These provisions will reduce 
litigation among retailers, wholesalers, distributors, lessors, renters 
and manufacturers saving legal costs that, at the present time, are 
passed on to the consumer in the form of higher prices. Unless they are 
directly responsible for product failure due to negligence or 
misrepresentation, a seller, lessor, or renter shall not be held liable 
for injuries caused by a product. If the manufacturer is negligent, 
that manufacturer should be liable.
  Mr. President, in summary, this proposal is aimed at a very real 
challenge and a very real problem in our society today. It is aimed at 
spiraling costs of litigation, far more often than not, on the part of 
manufacturers and sellers in successful litigation, but costly and 
risky nevertheless.
  It is aimed at limiting recovery to those who are responsible by 
their own negligence for injury to a far greater extent than is the 
case today; to providing an end to that responsibility after two 
decades, in the case of certain manufactured equipment; to limiting the 
arbitrary nature of punitive damages, as the Congress has been invited 
to do by the Supreme Court of the United States and fundamentally to 
seeing to it that a greater share of the recovery in litigation of this 
sort gets to the injured party and less to transactional costs, the 
present division of which is a disgrace.
  Mr. President, as I said at the beginning, I am gratified that for 
the first time in a debate, which has lasted in the Congress of the 
United States for almost two decades, we are actually discussing the 
merits of this kind of legislation. I look forward to a spirited and 
contested debate, but I also look forward to a conclusion, which 
creates a greater degree of balance and restores a degree of fairness, 
competitiveness and common sense to American industry and to its 
employees.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Mr. President, in the words of our fearless leader, 
President Ronald Wilson Reagan, ``Here we go again.''
  As we begin the proceedings, Mr. President, the issue is whether the 
Members of this body will agree to have an open and full debate on this 
legislation.
  Each time this legislation has been brought before the Senate, the 
proponents have offered up one anecdote after another to justify the 
bill. We have attempted to ensure that, at a minimum, this bill is 
fully examined and debated.
  I am particularly concerned about the manner in which the current 
bill has been rushed through without much time for review. The 
legislation was introduced on March 15. A couple of weeks later, the 
Commerce Committee held 2 days of hearings and then a markup a day and 
a half later. The substitute offered at markup--which was not received 
until 6 p.m. The preceding evening--contained a number of changes and 
amendments. None of the changes was ever considered by the committee, 
at the hearings or before the markup. Now, less than a week after the 
bill was reported, the bill is up for consideration on the floor.
  I am not certain what is driving this process. I understand that 
there may be a desire by some to act in accordance with the House 
Republicans' Contract With America agenda. However, I did not sign the 
so-called contract, and as far as I know, neither did any other 
Senator.
  The sole purpose of this bill is to erect barriers regarding the use 
of the civil justice system for redress of injuries caused by dangerous 
products. However, I would like to remind the supporters of this bill 
that unlike the judicial systems of other countries, the American 
judicial system is rooted in democratic principles of individual 
redress, the right to a jury trial, and reliance on the people to 
resolve disputes. These were principles established by the Founding 
Fathers when they proposed the adoption of the 7th and 10th amendments 
to the Constitution. Surely, issues such as whether to limit access to 
courts, limit redress remedies, or penalize citizens for merely 
bringing suits were considered by the Founding Fathers, as well as the 
judges and State officials that have administered our system of justice 
for over 200 years. But they decided against such measures, and opted 
instead to maintain a system that features free access to the courts, 
common law, and giving the people the ultimate authority to resolve 
conflicts. The supporters of this bill, however, are seeking to 
overturn this longstanding American history and judicial precedent.
  I am, in fact, confounded by the fact that the Senate is even 
considering this legislation. At the beginning of this Congress, Member 
after Member came to the floor during consideration of S. 1, the 
unfunded mandates bill, to declare that this would be the Congress of 
``States rights,'' where government would be returned to the people. 
The Jeffersonian
 democracy of government was revived. If I heard it once, I heard it a 
million times, that State and local governments know best how to 
protect the health and safety of their citizens, and that they do not 
need Congress telling them what to do. How many times did I hear that 
the one clear message sent by the voters last November was that the 
people wanted to get the Federal Government off their backs and out of 
their pocket?

  The 10th amendment, lost in the shuffle for many years, was given new 
light. The majority leader himself, in his opening address to the new 
Congress, proclaimed:

       America has reconnected us with the hopes for a nation made 
     free by demanding a Government that is more limited. Reigning 
     in our government will be my mandate, and I hope it will be 
     the purpose and principal accomplishment of the 104th 
     Congress.
       We do not have all the answers in Washington, DC. Why 
     should we tell Idaho, or the State of South Dakota, or the 
     State of Oregon, or any other State that we are going to pass 
     this Federal law and that we are going to require you to do 
     certain things.

  The majority leader went on to say:

       Federalism is an idea that power should be kept close to 
     the people. It is an idea on which our nation was founded. 
     But there are some in Washington--perhaps fewer this year 
     than last--who believe that our States can't be trusted with 
     power. If I have one goal for the 104th Congress, it is this: 
     That we will dust off the 10th Amendment and restore it to 
     its rightful place.

  Those are the words of the majority leader himself. These words, 
spoken so eloquently, make it clear why the Congress should stay out of 
the business of the States.
  During consideration of the balanced budget amendment, Senator Byrd 
made a compelling argument with respect to the need and obligation of 
this body to give thorough deliberation to bills that impact our 
Nation's constitutional structure. He spoke of the need of Members to 
carefully read and study legislation.
  I ask, Mr. President, how many Senators have carefully read this 
bill? How many are aware of how this bill will affect their 
constituents?
 For example, how many Members know that this bill will result in 
disparate treatment of working-class Americans? How many 
[[Page S5579]] Members know that this bill stands to perpetuate 
discrimination against women and children? How many Members know that 
this bill will make it much more difficult for workers who suffer 
product-related injuries to recover for their injuries?
  How many Members are aware of how this bill will affect the comfort 
level we have in the drugs we buy, and the health and safety devices we 
use? How many are aware of how it will impact their State laws, 
judicial order, and constitutions? These are the important questions 
that must be answered, and deeply debated before we consider passing 
this bill.
  The proponents claim that this is a modest bill, one that is 
different from the House bill, and more reasonable than previous Senate 
bills. First, Mr. President, this is not an accurate statement. This 
bill actually has reincorporated many provisions of previous Senate 
bills that many sponsors of the current bill once opposed. Second, we 
all know that, if a Senate bill goes to conference with the House bill, 
House Members will be pushing their version of the bill.
  The proponents have offered a number of explanations regarding the 
need for this legislation. However, every claim that has been made 
about the need for this bill has been refuted.
  The proponents initially lamented that the legislation was needed 
because of a liability insurance crisis. The alleged crisis became the 
impetus for the entire tort reform movement. According to Prof. James 
Henderson, a major supporter of tort reform, and Prof. Theodore 
Eisenberg of Cornell University, tort reformers were concerned mostly 
about convincing the American public that there was a crisis and 
linking the alleged crisis to product liability. They showed less 
concern over the reality of the crisis itself. The idea was to tie the 
product liability system to the crisis in a way that reshaped public 
opinion. Efforts were forcefully made to link the so-called crisis to 
basic American activities, such as Little League baseball and the Boy 
Scouts--almost literally motherhood and apple pie. To quote Professors 
Henderson and Eisenberg, ``using every technique of modern media-
shaping, tort reform groups sought to insure that the public believed 
that products liability law was the cause of this threat to their way 
of life.''
  This, Mr. President, is according to Prof. James Henderson, a 
supporter of tort reform. Numerous studies have shown, however, that 
product liability had nothing to do with the availability or 
affordability of insurance. In fact, during the midst of the so-called 
crisis, the director of government affairs for the Risk and Insurance 
Management Society--an association
 of corporate risk managers which includes more than 90 percent of the 
Fortune 1000 companies--himself expressed concern about linking tort 
reform and the insurance availability crisis. Studies by the GAO, and 
numerous other studies, have shown that to the extent there was a 
crisis, it was caused by insurance companies themselves, not product 
liability.

  But what is conspicuously missing from this bill, Mr. President, is 
any requirement that insurance companies submit data to justify the 
premiums charged to businesses. Former Texas Insurance Commissioner 
Robert Hunter has stated clearly that unless the insurance problem is 
resolved, the whole matter concerning legal or transaction costs will 
not be addressed by this bill.
  Next, the sponsors contended that the bill was needed because of a 
litigation explosion. Some continue to make this claim, despite ample 
evidence that there never was, and is not now, any litigation 
explosion.
  A recent study by the Rand Corp. found that less than 10 percent of 
the people who are injured by products ever even consider filing a 
lawsuit, and only 2 percent actually go forward with filing a suit. 
According to recent statistics published by the National Center for 
State Courts, product liability cases are only 4 percent of State tort 
filings, and a mere thirty six-hundredths of 1 percent of all civil 
cases.
  Throughout this debate, there has been an inordinate degree of 
contempt toward the American jury system. Some have even characterized 
the system as an open lottery. However, this is part of a well 
organized misinformation campaign. The evidence unequivocally 
demonstrates that our Nation's jury system has not run amok. Last June, 
the New York Times featured a front page story on how juries are 
growing tougher on plaintiffs. Citing the latest research by Jury 
Verdicts Research, Inc., the Times states that plaintiffs' success 
rates in product liability cases have dropped from 59 to 41 percent 
since 1989.
  Professors James Henderson and Theodore Eisenberg of Cornell 
University released a study in 1992, which showed that product 
liability filings had declined by 44 percent by 1991. They concluded 
that by ``most measures, product liability has returned to where it was 
at the beginning of the decade,'' beginning in the 1980's.
  A 1991 New York University Law Review article by Prof. James 
Henderson, along with Brooklyn Law School Prof. Aaron Twerski--another 
major supporter of tort reform--stated that:

       With sharper focus and fewer distractions, American 
     products liability may be better equipped than ever to 
     provide appropriate incentives for product manufacturers and 
     distributors to act
      responsibility in the public interest. But the days of 
     wretched excess are over, very probably for the indefinite 
     future.

  Where is the real litigation explosion, Mr. President? It is in the 
corporate board rooms. According to Prof. Marc Galanter of the 
University of Wisconsin Law School, the real litigation explosion in 
recent years has involved businesses suing each other, not injured 
persons seeking redress of their rights. He found that business 
contract filings in Federal courts increased by 232 percent between 
1960 and 1988, and by 1988 were the largest category of civil cases in 
the Federal courts.
  Reports by the National Law Journal show that since 1989, of the 83 
largest civil damage awards nationwide, 73 percent have involved 
business suits. Between 1987 and 1994, just 76 of the top business 
verdicts alone have accounted for more than $10 billion. In 1993, the 
top 13 business verdicts alone amounted to approximately $3 billion. 
They included: Litton Systems versus Honeywell, a patent infringement 
dispute--$1.2 billion; Rubicon Petroleum versus Amoco, a breach of 
contract dispute--$500 million, including $250 million in punitive 
damages; Amoco Chemical versus Certain Lloyds of London, a breach of 
contract dispute--$425 million, including $341 million in punitive 
damages; Avia Development versus American General Realty Investment, a 
breach of contract--$309 million, including $262 million in punitive 
damages. Of course, this does not include the greatest verdict of
 them all--the $10.5 billion awarded in 1985 in the Pennzoil versus 
Texaco case. According to the testimony of Jonathan Massey, an expert 
on punitive damages, the total punitive damage awards since 1965 come 
to only a fraction of the $3 billion punitive award in Pennzoil versus 
Texaco. However, the proponents of S. 565 refuse to even discuss that 
businesses themselves might be the primary reason for increasing 
litigation--which leads me to their new claim that product liability is 
stifling competitiveness.

  Like the refutation of the insurance crisis and litigation explosion, 
it has been clearly proven that product liability has nothing to do 
with American business competitiveness. According to a survey of 232 
risk managers of the largest corporations in the country, product 
liability for most businesses is less than 1 percent of the final price 
of products, and has little, if any, impact on larger economic issues, 
such as market share or jobs.
  The Office of Technology Assessment conducted an extensive study of 
the competitiveness of American businesses and did not, among its 
findings, list product liability as a primary problem or concern. The 
GAO recently stated that it ``could find no acceptable methodology for 
relating product liability to competitiveness, and that businesses 
refuse to release the information needed to conduct such an analysis.'' 
Mr. President, we should not be debating this bill without having the 
information necessary to make an informed decision, information that 
businesses and insurance companies are unwilling to provide.
  To the extent that American businesses are having competition 
problems, it has nothing to do with products liability. It could, 
however, have a lot to do with our Nation's trade and 
[[Page S5580]] economic policy. In fact, I am somewhat surprised that 
we are even discussing competitiveness after the passage of GATT and 
NAFTA. It was my understanding that the these were the so-called 
panacea to our trade dilemma. The fact of the matter, Mr. President, is 
that if we are going to have a discussion about trade policy, then let 
us have that debate, and quit wasting time with these nonessential 
issues.
  The proponents have had ample time to make their case, and have yet 
to produce any evidence to justify the passage of this legislation. It 
is for these reasons that I believe that this legislation must be 
defeated.
  It would be irresponsible of us as Members of Congress, to consider a 
bill that has such serious consequences for American consumers, 
without, at the very least, requiring the sponsors of such a bill to 
provide factual data--not anecdotal arguments--to support their claims.
  Mr. President, as we talk about ``Here we go again,'' and in 
listening to my distinguished colleague from Washington, he has a very, 
very reasonable demeanor, and as he pleads how this, after years, has 
been worked out and is so reasonable, I would not want my colleagues to 
be misled.
  First, this is not a more reasonable bill and the distinguished 
Senator knows it.
  For the past three Congresses, we have not had caps on punitive 
damages. But now we do have caps in this particular bill. In the past 
Congresses, we never had misuse, the failure to follow directions. Now 
we have a provision in here for misuse. I could go right on down the 
list. The argument is that years of having this idea turned back is the 
reason now to come forward; however, the very reasons for having been 
turned back persist even more strongly.
  It persists more strongly, Mr. President, because that is the theme 
of this particular Congress. Whether we like it or not, we have the 
Contract With America. Whether we like it or not, we have what they 
call a revolution. And the theme of that revolution and contract, Mr. 
President, is that the Government here in Washington is the enemy; the 
Government is not the solution, the Government is the problem. And 
whether we like it or not, the only way to do it is tear it down and 
get rid of it and maybe some day rebuild. But for now, get rid of the 
department of Congress; get rid of the Department of Housing and Urban 
Development; abolish the Department of Energy; abolish the Department 
of Education; cut out the revenues, give everybody a tax cut. Of 
course, we are operating at over a $300 billion annual deficit. We do 
not have any revenues to cut. But in this pollster exercise behind 
political reelection, cut the revenues, cut the taxes, increase the 
deficit, get rid of the departments, and send it all back to the 
States. That is the very old theme--Jeffersonian.
  I have never heard so many Republicans fall in love with Jefferson. 
They all say that the best government is that closest to the people. 
Get it back there. When it comes to crime, the bill that we passed 
really should be reduced to block grants. We debated it and we had 
Republican support for that crime bill. But now, all of a sudden, that 
same crime bill that we debated for some 3 years before it was passed 
needs to be block granted to get it away from the Washington 
bureaucrats. With respect to welfare reform, get that back to the 
States. The States know better how to handle these things. Housing--get 
that back to the States. Whatever it is, abolish the entity up here at 
the Washington level and get it back to the States and the local level.
  That is the theme of the contract save, Mr. President, this fix--and 
this is a fix. This is a fix. They ought to get my friend down there 
who has been fixing it for years, Victor Schwartz. That is who O.J. 
needs. He has taken a little time to get it fixed, but Victor Schwartz, 
representing this small little manufacturing entity is fixing it. The 
chambers of commerce, the National Association of Manufacturers, the 
Business Roundtable, all of those are not interested in injured 
parties; they are interested in injured pocketbooks.
  Of course, they are making more profits than they ever made in their 
lives. That is what we heard on the GATT: Do not worry about it, we are 
competitive now, and we have to get a mindset for global competition. 
And do not worry about the pharmaceutical companies which, they pointed 
out, with truth and distinction, are making their biggest profits.
  But now, under this bill here, we are told that the pharmaceutical 
industry cannot produce a drug at all on account of product liability. 
The chemical industry, the biotechnology industry, all of the 
industries that have been leading in wealth and corporate profits, they 
have reached higher ceilings than you have ever seen in the history of 
this land. But now, to justify this bill, we are told America's 
industry has gone broke, and we finally have found a real solution here 
in product liability. If we can only get this Federal fix, can you 
imagine that? With all of the things going on in this town. The tax cut 
was given the very same day they had the circus out on the east front, 
trampling around. After that, they want to finally come and ask, ``Who 
can do it better than the States and the people that sent us here?"
  That is a sort of interesting thing to this particular Senator. The 
people back home are so wise, so studied, so alert, so sensible with 
the issues of the contract, and the very same people that sent us here 
to Washington all of a sudden have lost their minds when it comes to 
product liability. They do not really know how to make a judgment. Of 
course, they are the only ones who heard the sworn testimony; they are 
the only ones who are familiar with the facts. But irrespective of the 
facts, and particularly the English law, the tort system, adopted by 
the several 50 States over the 200-some year history of this land, all 
of a sudden we do not single out herein and say automobile accident 
cases, we do not single out and say, well, there are contract cases 
exploding. They talked about a litigation explosion. That is where it 
is, not here. We do not single that out. But we single out this unique 
fix. And, as I say, here we go again, because nothing has changed.
  The American Bar Association, Mr. President, appeared and testified 
against this bill despite this quick fix because they just had summary 
hearings before our Commerce Committee that reported the bill out, just 
as we were leaving town, and we were told it was going to be the first 
thing called. You can bet your boots they will file cloture tomorrow. 
They do not want to debate this and understand the law. Just a bunch of 
business Senators on the Commerce Committee with this fix are going to 
take care of manufacturers. Just at a time that what we really need to 
do is get the welfare recipients more responsible, we want to make the 
manufacturer more irresponsible.
  It is the darnedest experience I have ever seen in a mature group. It 
shows how controlling pollster politics has become, because if you have 
been in a recent race back home, they are obviously conducted in 
accordance with the polls. The candidates have too many things to say 
grace over, and when it comes to product liability, when the chamber of 
commerce comes, and the business group comes, and they all seek to see 
the particular candidates, it shows up in the polls. It makes the 
candidate say it is a terrible problem and, yes, I am for product 
liability at the Federal level.
  Well, how did we start this? We started this under President Ford, 
and our distinguished President Ford had the good, common sense to 
realize that it was an onrush of business nonsense, because we have the 
safest products and we have business booming, and we have, as they talk 
about, lack of competitiveness. I have foreign industries just diving 
into my State and saying: We want to come under your product liability 
law, South Carolina. We love it. One hundred German industries and over 
50 Japanese industries have come in--I could go right on down the list.
  I have worked in the field now almost 40 years, working and bringing 
industry in. Never once--never once--have I heard a business leader or 
industrialist say, ``Representative or Governor or Senator, what about 
this product liability? We are worried about juries and runaway 
verdicts,'' and that kind of talk that you hear up here at this level.
  We never heard that, and we do not hear it today. When they had the 
hearing, it was an actual embarrassment, 
[[Page S5581]] having worked in the vineyards over these many years, to 
see the witnesses that they brought in to try to give credence to their 
hearing. They had some makeshift, unnamed organization, and they came 
with what? They came with statistics about businesses suing businesses 
down in Alabama.
  We could go on over to Texas. We have the business of Pennzoil suing 
Texaco, and I remember that was a $12 million verdict. That is more 
than all the product liability verdicts put together over the history 
of product liability in this land. Add them up. One business verdict, 
Pennzoil. But the sponsors of the bill started out first saying there 
was a litigation explosion. Again, we studied it out and we find that 
actually in tort cases, in civil filings in the courts of the several 
States over this land, tort only represents 9 percent of all civil 
filings, and that 4 percent of the 9 percent, or .36, is product 
liability.
  The trend, in the State's justice system, it was firmed up again in 
our hearings, is lowering, going down. There has been one exception 
that has held constant, and that is the asbestos cases. Other than 
that, tort filings and product liability are diminishing rather than 
increasing. They are receding rather than exploding.
  What has exploded is business suing business--and we will have plenty 
of time, I am sure, with the amendments we will have at hand, to cite 
the various verdicts. If they are really worried about money, if 
businesses are worried about money, they better stop suing each other 
and keep their contracts.
  So we had first the litigation explosion. Then they said that they 
could not get insurance. They were using these little vignettes, 
anecdotal examples. They use that Little League and some babble, that 
same nonsense, about the cost of insurance being more than the bats and 
the uniforms and everything else.
  I guess kids do get hurt. Mine played in the Little League, but we 
never had any trouble with the Little League in my town of Columbia, 
SC, at that time, and later on in Charleston, SC, we have not had any 
real problem with the Little League. It is a very viable, wonderful 
group. I guess in certain instances they take out insurance, but they 
have not been denied on account of product liability.
  They tried, more recently, to update it into the McDonald's coffee 
case, saying what a terrible thing, this lady who had been burned by 
the coffee ought to have known better. She really did not have a claim.
  I was very much interested, Mr. President, in that treatment given by 
Newsweek magazine for product liability. In the Newsweek magazine, in 
the account of the juror in the McDonald's coffee case, she said she 
thought at first it was a frivolous claim. Thereafter, on listening, 
she found out there were 700 cases of individuals being burned by the 
coffee.
  Of course, the question that this Senator asked was, ``Why?'' It 
comes to my attention now, of course, if the heat of the water is 
increased inordinately over the coffee beans, you get more coffee. 
Money--money--is the answer here. It is the answer in this particular 
case.
  The Conference Board questioned 232 particular risk managers. These 
risk managers overwhelmingly said product liability was less than 1 
percent of the cost of the operation. Even the business study showed it 
was not a litigation explosion.
  The availability of insurance problem was studied and found to be bad 
real estate investments they made in the early and mid-1980's. Like our 
S&L crisis, the savings and loan industry principally based in the 
investment in homes, real estate, shopping centers, and what have you--
the insurance companies in their real estate portfolio had similarly 
used bad judgment. The result was that the cost had gone up, but more 
recently the availability has been there and everything else of that 
kind.
  Then they said we should be more like the European system, the EEC, 
so we could compete with them. During 1988, 1989, 1990, we found out 
the European system became more similar to ours, and we put those 
documents in the record, with joint and several liability moving toward 
the American system rather than the other way around.
  Now they say ``compete''--we want Government to compete. If they had 
listened to our debates with respect to NAFTA and GATT, we would have 
found out how this Government can compete, because this is what it is: 
government-to-government competition in international and global trade. 
Forget David Ricardo and Adam Smith and comparative advantage and free 
market. We will discuss in this debate where the Japanese approached 
Alexander Hamilton--incidentally, the approach of using the Government 
to determine what decisions can be made in the theory of free market, 
but whether or not it strengthens the economy or whether it weakens the 
economy.
  On that governmental approach with business, immediately you say, 
``Wait a minute. That is industrial policy.'' Well, you are right. I 
think after 45 years of trying for free market, free market, free 
trade, free trade, we finally learned our lesson. We cannot do as we do 
or do as we say; we have to find out the predominance. The global 
competition is the Japanese model. The Japanese model has been emulated 
not only throughout the Pacific rim but by Germany and countries in 
Europe and particularly now the East European countries.
  The Japanese have schools. They have instructors in the system, as 
South Korea has done, Taiwan and Singapore, Malaysia, and the others 
have done. That is why we just had our Secretary of the Treasury in 
Bali on an economic summit and monetary conference and they cannot seem 
to understand why they are not going for free trade, free trade, free 
trade.
 This crybaby whining about opening up your markets--the fact is, we 
are losing our industrial and manufacturing backbone.

  I was at a conference not many years back with Akio Marita, of Sony, 
in Japan. He came, and Marita at that time, talking of emerging 
countries, said that you had to have a strong manufacturing sector if 
you were going to be a nation-state. Then he went on to say, ``Look, 
that country that loses its manufacturing power ceases to be a world 
power.'' And that is what has happened with merry old England. They 
told the Brits some years back, rather than a nation of brawn we are 
going to be a nation of brains. Instead of producing products we are 
going to provide services, ``service economy, service economy.'' We 
have heard that same chant here on the floor of the U.S. Senate. 
``Instead of creating wealth we are going to handle it and be a 
financial center.'' And England has gone to hell in an economic 
handbasket. They have two levels of society there. And that is exactly 
the road your country and my country is on at this present time.
  So, with respect to competing on product liability, being a 
deterrent, let me invite you to any State in America, and particularly 
mine, where you will find foreign entities, as a result of the lack of 
a competitive trade policy, have come in now and bought up, with gusto, 
the American entities and are now producing those Japanese cars and 
other products here in the United States, like gangbusters. They are 
down right now, with the devaluation of the dollar, into Miami. I read 
that in the Wall Street Journal, where they are buying it up down there 
right and left, because the dollar has lost 20 percent of its value 
against the mark since the first of January.
  The sponsors of the bill have used every argument that they could 
possibly think of. And again and again and again the States involved 
say, ``No, we don't need this.'' Again and again and again that 
bipartisan group, the American Bar Association, has said, ``No, this is 
bad legislation.'' And, again and again and again, the Conference of 
State Supreme Court Justices has come in and testified that, as a 
group, they oppose this.
  Then the sponsors come in and say, with a straight face, that what 
they are trying to do is get uniformity. Now, now, now--uniformity. 
Uniformity. It is very interesting that this particular bill provides 
no uniformity; no uniformity when it comes to holding the manufacturer 
responsible. Oh, yes, we want uniformity for the customer, the 
consumer, the user of the particular product, but not for the 
manufacturers themselves.
  There is no better example of an unfunded mandate than this 
particular 
[[Page S5582]] bill. Everyone has attested to the fact that, because 
the bill has not given a Federal cause of action, you leave it at the 
State level, with words of art enunciated by this high and almighty 
Congress up here that knows best, exactly what to do and what caps 
there are and what tests there are, all to be interpreted by the 50 
supreme courts of the 50 States. And then, if there is a further 
appeal, up to the U.S. Supreme Court. So what is started, is a surge 
against lawyers, ``Get rid of the lawyers.'' Now more lawyers are going 
to be hired under this particular bill just for product liability, 
which is not a national problem whatever. But they manufacture it and 
rig it so, even in contradiction to their own theme of trying to give 
meaning and cause to the 10th amendment that those things not delegated 
under the Constitution to the Federal Government shall be reserved to 
the several States.
  No, no. They do not want this one reserved to the States. In spite of 
the legislatures, in spite of the attorneys general, in spite of the 
Supreme Court Justices, in spite of the American Bar Association, and 
in spite of--oh, heavens above--the list of different groups here that 
we have who oppose this so-called product liability bill--they, all of 
a sudden, are being so reasonable. They do not really care what passes. 
They are going to get into conference with that House crowd and that 
House crowd has gone amok now. Look at what's going on over there--I 
mean they can really sell them on voting to cut revenues that they do 
not have. They have a $300 billion deficit but they say we have to buy 
the vote, we have to get to the middle class. Unfortunately, I do not 
speak in a partisan fashion, the President of the United States says 
the same thing. There are a group of Senators here, in a bipartisan 
fashion, who say we cannot afford tax cuts. But here it is.
  Mr. President, I ask unanimous consent this list of entities be 
printed in the Record at this particular point.
  There being no objection, the list was ordered to be printed in the 
Record, as follows:

     Who Opposes the ``Contract With America's'' Liability Reform?

       Action on Smoking and Health.
       AIDS Action Council.
       Alabama Citizen Action.
       Alaska Public Interest Research Group.
       Alliance Against Intoxicated Motorists.
       Alliance for Justice.
       American Association for Retired People (AARP).
       American Association of Suicidology.
       American Bar Association.
       American Board of Trial Advocates.
       American Coalition for Abuse Awareness.
       American Council on Consumer Awareness.
       American Public Health Association.
       Americans for Democratic Action.
       American Federation of Labor and Congress of Industrial 
     Organizations.
       Arab American Anti-Discrimination Committee.
       Arizona Citizen Action.
       Arizona Consumers Council.
       Arkansas Fairness Council.
       Association of Trial Lawyers of America.
       California Citizen Action.
       California Crime Victims Legal Clinic.
       California Public Interest Research Group.
       Center for Public Interest Law at University of San Diego.
       Center for Public Interest Research.
       Center for Public Representation, Inc.
       Center for Women Policy Studies.
       Children NOW.
       Citizen Action.
       Citizen Action of Maryland.
       Citizen Action of New York.
       Ctizens Action Coalition of Indiana.
       Citizen Advocacy Center.
       Citizens Clearinghouse for Hazardous Waste.
       Citizens Coalition for Chiropractic.
       Clean Water Action Project.
       Coalition for Consumer Rights.
       Coalition of Labor Union Women.
       Coalition to Stop Gun Violence.
       Colorado Public Interest Research Group.
       Command Trust Network.
       Connecticut Citizen Action Group.
       Connecticut Public Interest Research Group.
       Consumer Action.
       Consumer Federation of America.
       Consumer Federation of California.
       Consumers for Civil Justice.
       Consumers League of New Jersey.
       Consumer Protection Association.
       Consumers Union.
       Cornucopia Network of NJ.
       Democratic Processes Center.
       DES Action of New Jersey.
       DES Action USA.
       DES Sons.
       Empire State Consumer Association.
       Essex West Hudson Labor Council.
       Fair Housing Council of San Gabriel Valley.
       Families Advocating Injury Reduction (FAIR).
       Federation of Organizations for Professional Women.
       Florida Consumer Action Network.
       Florida Public Interest Research Group.
       Fund for Feminist Majority.
       Georgia Citizen Action.
       Georgia Consumer Center.
       Gray Panthers.
       Handgun Control, Inc.
       Harlem Consumer Education Council.
       Help Us Regain the Children.
       Hollywood Women's Political Committee.
       Idaho Citizens Action Network.
       Idaho Consumer Affairs, Inc.
       Illinois Council Against Handgun Violence.
       Illinois Public Action.
       Illinois Pubilc Interest Research Group.
       Institute for Injury Reduction.
       International Association of Machinists and Aerospace 
     Workers.
       International Brotherhood of Teamsters.
       International Ladies Garment Workers Union.
       International Longshoremen's and Warehousemen's Union.
       Iowa Citizen Action Network.
       Judge David L. Bazelon Center for Mental Health Law.
       Justice for All.
       Kentucky Citizen Action.
       Lambda Legal Defense and Education Fund.
       Latino Civil Rights Task Force.
       Lead Elimination Action Drive.
       Local 195, International Federation of Professional and 
     Technical Engineers.
       Louisiana Citizen Action.
       Maine Peoples Alliance.
       Maryland Public Interest Research Group.
       Massachusetts Citizen Action.
       Massachusetts Consumer Association.
       Massachusetts Public Interest Research Group.
       Michigan Citizen Action.
       Michigan Consumer Federation.
       Minnesota COACT.
       Minnesotans for Safe Foods.
       Missouri Citizen Action.
       Missouri Public Interest Research Group.
       Montana Public Interest Research Group.
       Mothers Against Drunk Drivers.
       Mothers Against Sexual Abuse.
       Motor Voters.
       National Asbestos Victims Legal Action Organizing 
     Committee.
       National Association of School Psychologists.
       National Black Women's Health Project.
       National Breast Implant Coalition.
       National Council of Senior Citizens.
       National Coalition Against the Misuse of Pesticides.
       National Conference of State Legislatures.
       National Consumers League.
       National Council of Jewish Women.
       National Fair Housing Alliance.
       National Farmers Union.
       National Head Injury Foundation.
       National Hispanic Council on Aging.
       National Organization for Women, Virginia Chapter.
       National Rainbow Coalition.
       National Women's Health Network.
       Nebraska Citizen Action.
       Network for Environmental & Economic Responsibility.
       United Church of Christ.
       New Hampshire Citizen Action.
       New Jersey Citizen Action.
       New Jersey Environmental Federation.
       New Jersey Public Interest Research Group.
       New Mexico Citizen Action.
       New York Consumer Assembly.
       Niagara Consumer Association.
       North Carolina Consumers Council.
       NOW Legal Defense Fund.
       Nuclear Information and Resource Service.
       Ohio Citizen Action.
       Ohio Consumer League.
       Ohio Public Interest Research Group.
       Oregon Consumer League.
       Oregon Fair Share.
       Pennsylvania Citizen Action.
       Pennsylvania Citizens Consumer Council.
       Pennsylvania Institute for Community Services.
       Pennsylvania Public Interest Research Group.
       People's Medical Society.
       Public Citizen.
       Public Citizen's Texas Office.
       Public Interest Research Group in Michigan.
       Public Voice for Food and Health Policy.
       Purple Ribbon Project.
       Ralph Nader.
       Safety Attorneys Federation.
       Southern Christian Leadership Conference.
       Southern Poverty Law Center.
       Stephanie Roper Committee, Inc.
       Tennessee Citizen Action.
       Texas Alliance for Human Needs.
       Texas Citizen Action.
       Third Generation Network.
       Truth About Abuse/S.O.F.I.E.
       Uniformed Firefighters Association of Greater New York.
       United Auto Workers.
        United States Public Interest Research Group.
       Violence Policy Center.
       Voices for Victims, Inc.
       Vermont Public Interest Research Group.
       Virginia Citizen Action.
       Virginia Citizens Consumer Council.
       Virginia NOW.
       Washington Citizen Action.
       Washington Public Interest Research Group.
       West Virginia Citizen Action.
       [[Page S5583]] White Lung Association of New Jersey.
       Wisconsin Public Interest Research Group.
       Wisconsin Citizen Action.
       Women Against Gun Violence.
       Women's Institute for Freedom of the Press.
       Women's Legal Defense Fund.
       Young Women's Christian Association.
       Youth ALIVE.

  Mr. GRAMS assumed the chair.
  Mr. HOLLINGS. Mr. President, there are over 100 of these 
organizations all over the country, not only the trial advocates, of 
course, but the consumer organizations, the AFL-CIO, the working people 
and everything else of that kind.
  I will dwell, later on, on what good has really come of product 
liability. We never hear that. We act like it is one of the most 
torturous things in the world. The truth is that under product 
liability the using public here in the United States of America can 
pretty well count on the safety of particular products. What happens in 
rare cases, and they are rare ones, is that something goes wrong--with 
respect to medical devices, the Dalkon shield and the different other 
devices of that kind; the Pinto case. I can tell you, the other day 4 
million Chrysler minivans were pulled off the market to change the back 
door switch. That multimillion-dollar effort on behalf of the traveling 
public in America was certainly not brought about by the National 
Association of Manufacturers or the chamber of commerce or the Business 
Roundtable. It was as a result of the product liability system that we 
have in America.
  The sponsors could not produce a Governor. I was waiting at the 
hearing for a Governor to come in and say we need a national law. The 
truth is that 46 of the 50 States over the last 15 years have treated 
their particular problems. In my State they debated it. They got 
together, not only with the chamber of commerce and the trial lawyers, 
but the insurance companies and all other business groups, consumer 
groups, and they worked out upgrading, as they thought needed to be 
done, the State law on product liability in South Carolina.
  Now we are going to come and say, ``Well, you did not know what you 
were doing. We know best up here. In fact we do not have any work to 
do. We are going to meddle into your State entity under the 10th 
amendment here that which has historically been under the States. We 
are going to want it handled still by the States, but with our 
guidelines.''
  Heavens above, to come at this particular hour here, right at the so-
called climax of the Contract With America, based upon the idea that 
``that government closest to the people is the better government,'' to 
come now and say, ``no, no, no'' with respect to this matter, product 
liability, we have to get it up to the Federal level--I want to see 
that Governor who comes and says so, because he is just politically 
answering the Contract With America and political polls.
  I have been a Governor. You go before your legislature and you change 
things that need changing, whatever they are. If you have a good enough 
case, that legislature, that is very close to the people, is going to 
respond. But this has been a national fix for over 15 years.
  President Ford had a study commission. The result of that study 
commission said to leave it to the States. They did not like that. So 
they come in year in and year out, nibbling here and there, ``Well, can 
I get your vote if I change this? Can I get your vote if I change 
that?'' There's a fix on this side of the Capitol to get together with 
the House crowd to move forward with the English system, with caps, 
with all the other particular interests that they may be able to tag 
on.
  Like the sheepdog that has tasted blood now with that contract, they 
are going to turn to product liability and gobble up the rest of the 
flock while they can. Maybe so. Maybe so. But I hope my colleagues in 
this supposedly most deliberative body would stop and look and listen 
and understand that this is not any fairness act whatever. Everyone who 
has really treated with this, as lawyers--I will have to make a talk 
later on about the lawyers.
  We can go to Shakespeare where he said the first thing we do is kill 
all the lawyers. That was because the only thing standing between 
tyranny and freedom were lawyers. Jefferson was a lawyer. All these 
others, we could go down and mention these forefathers, outstanding 
lawyers, and, of course, they really drew that Constitution and they 
really had a feel for individual freedoms and the right of trial by 
jury under that seventh amendment. There are not any restrictions on 
that seventh amendment--until now. But now we are going to put on a 
national restriction that says a trial by jury should conform to these 
particular guidelines that we on high have decided, because you do not 
have sense enough at the local level to listen to the judge that 
charges that jury.
  I am going to yield because I see the distinguished chairman of our 
Judiciary Committee, who I am sure is proud of lawyers and is ready to 
speak.
  We could take murder cases like the O.J. Simpson case, and federalize 
that. I can give them some guidelines where they can move through in a 
judicious and expedited fashion rather than the theater that they have 
going on out on the west coast. No one would really dream of putting in 
a bill to federalize murder and murder cases with Federal guidelines.
  One big interest I have had as an attorney is: Give me a Federal 
cause of action. Let us get some uniformity amongst the 50 States.
  The 50 States, incidentally, do not mind taking some 50 to 75 
insurance policies--and I have been in the insurance business--the 50 
States do not mind going before the 50 State commissions and filing 
their particular policies. They say with insurance they have a very 
difficult time trying cases under different jurisdictions. Well, they 
do it with respect to all business and contracts. We have certain 
uniformity under the Restatement of Torts. But with respect to 
insurance itself, they will not give the Judiciary Committee or the 
Commerce Committee the facts as to how they have been losing money. 
They came in the mid-1980's and said there was a big insurance problem. 
We had an amendment which we will propose again--requiring information 
that they file.
  We have the Senators from the insurance State of Connecticut who are 
going to be heard later on. That crowd up there, Aetna, Hartford, the 
different insurance companies that are benefiting and making even more 
money will not tell you where they have had their losses. We have tried 
to get that information. I have been chairman of that committee for 
years on end, and now ranking member at this moment. But you cannot 
find the facts about insurance because they file them separately in the 
50 States and they tell you they do not have a correlation. I know you 
have to have an actuary if you are going to have good insurance. I can 
tell you there are actuaries in those particular outstanding companies. 
They know whether they are winning or losing. They know where their 
costs are. But they will not give them to the National Congress.
  So, we are flying blind without the truth in a very abbreviated 
hearing with the arrogant assumption that the people who sent us here 
to Washington had the good sense and judgment to make you and I a 
Senator but all of a sudden they have lost their minds when it comes to 
trying a little law case in the courtroom back home. They are the only 
ones who have heard the sworn testimony. We have not heard any sworn 
testimony. All we have heard is from the fixers downtown. When we get 
to the chairman of the Judiciary Committee to talk about lawyers, we 
are going to have a good heyday. They have 60,000 downtown in the 
District of Columbia--60,000 lawyers. I doubt if many of them have ever 
been in the courtroom. They are all hired to fix you and fix me. They 
all are lobbyist lawyers to take anything they can for someone. I never 
heard of such fees around here. A poor fellow gets charged under 
ethics, and he has to hire a lawyer for $400 an hour to peruse all of 
his records and start looking at this and what happened 15 years ago, 
and all of that kind of nonsense.
  They do not come cheap. Billable hours is their theme. I practiced 
law for 20 years and never had a billable hour. If we won the case, we 
got a fee. If we did not win, that was my responsibility. That is the 
retainer system. We have many an injured party that is out of work. 
There is no salary, large medical bills, and everything else. Yes. 
[[Page S5584]] I have taken those under a one-third contingent basis. I 
tell that poor client not to worry about it. I am going to pay for the 
investigation. I am going to pay for the court costs. I am going to pay 
for the interrogatories. I am going to pay for the depositions. We are 
going to pay for the trial. I am going to pay for my time. If it goes 
up on appeal, I am going to pay for the printing of the record. I will 
appear before the Supreme Court. And, unless we prevail, you do not owe 
me one red cent.
  That worked in America for the poor folks, middle-class America. That 
would not work for the middle class, if they had to come under billable 
hours at $200, $300, $400. I think we maybe ought to have an amendment 
that we limit billable hours for defense lawyers, not put caps on 
punitive damages, but let us put caps on billable hours to, let us say, 
$50 an hour. If we had that, they would be making over $100,000, making 
as much as a Senator. That is just 40 hours a week for 52 weeks. But if 
they worked overtime like trial lawyers have to do, then they would 
make even more money. But they do not want to talk about caps on 
billable hours.
  That is the group of lawyers that are moving this thing. Nobody that 
represented an injured party is coming to this National Government and 
saying we have a national problem. They know differently. It is not 
easy. You have to get all 12 jurors to agree. The defense side has the 
investigative staff. When the plaintiff prevails, they are not runaway 
juries. In my State of South Carolina, the trial judge can look and 
say, such as recently was done in a case in Greenville, ``I do not like 
that finding under punitive damages. I am ruling out all punitive 
damages with respect to the actual verdict. Actual damages, I do not 
believe you should get but so much. You can take this much or get a new 
trial. One or the other. You can count on that.'' We have responsible, 
conservative jurors in my State. And I do not know where in the Lord's 
world the business community thinks this Congress is going to be more 
conservative and responsible than my State of South Carolina. That is 
why I feel so keenly about this.
  They might have the Gingrich leadership and the contract and the 
conservative bunch at this particular hour. But give it time. Give it 
time. This crowd is way more liberal than what we are back home. That 
business crowd, in the years to come, are going to find that you will 
trip up on the carpet and go over to the window and get your money. You 
watch how they move in on you when you get these national trends.
  This is not in the interest of business. It is not in the interest of 
consumers. It is not in the interest of good, sound law, and certainly 
does not respond to any need other than the political fix that has been 
worked in here. We have thwarted it time and again, by thoughtful 
Senators looking at it and understanding. We have a lot of work to do 
up here in the National Government. But certainly tort reform is not 
one of the great needs in this land.
  We have investors coming from all over the world because they like 
our system here as compared to the systems they have in their own 
countries. The particular industries involved, whether chemical, 
pharmaceutical and all, just under GATT were making profits, their 
biggest return, and they were being able to compete. Now the purposes 
of this particular bill is to try to allow them to put on the market 
certain pharmaceuticals that they are being prohibited from putting on 
the particular market because of product liability.
  It is a false chant and claim that should not be honored in this 
particular bill before us. The Commerce Committee members, I know them 
intimately. They know better but they are caught up in this particular 
jam, and we will have a good debate as we move along.
  I do thank my colleagues for their attention here this afternoon.
  I yield the floor.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, I understand the distinguished Senator 
from Utah is here to speak on this bill and I want to allow him to do 
so. I simply have a mechanical motion to make at this point.
  Mr. President, I ask unanimous consent that the other sponsors of S. 
565 be added as cosponsors to my substitute amendment: Mr. Rockefeller, 
Mr. McConnell, Mr. Lieberman, Mr. Dodd, Mr. Pressler, Mr. Hatch, Mr. 
Exon, Mr. Inhofe, Mrs. Hutchison, and Mr. Chafee, and also added as 
cosponsors of the substitute amendment Mr. Hatfield, Mr. Lugar, and Mr. 
Frist.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. I always enjoy hearing my colleague from South Carolina. 
He is one of the more intelligent people in this body. He is certainly 
a great lawyer, and I agree with many of the things he says. In fact, I 
consider him one of my dearest friends in the Senate and I learned how 
effective he was many, many years ago as a brandnew, freshman Senator 
when we worked together on a variety of issues. Nothing would please me 
more than to always be together, on every issue.
  So I just want to say that I have a lot of respect for him. I know 
that he believes in what he is doing, and that is very important to me.
  Mr. President, I am extremely pleased to speak in support of the 
Product Liability Fairness Act of 1995. As an original cosponsor of 
this legislation, it has been my pleasure to work with Senators 
Rockefeller and Gorton, and many others, in addressing the significant 
issues underlying product liability litigation reform.
  I particularly commend Senator Rockefeller and Gorton for the hard 
work they have gone through in trying to being people together on this 
very significant bill, and for their longstanding leadership and their 
dogged pursuit of meaningful product liability reform. It is long 
overdue. It is my hope that we in the 104th Congress will finally be 
able to pass some of the needed reforms that the American people have 
demanded for years.
  This act represents a bipartisan effort to correct what many 
observers have long recognized to be serious malfunctions in our 
product liability system. This act aims to help American business to 
grow, to provide more jobs and more affordable consumer goods, to 
reduce unnecessary and outrageous insurance and litigation costs, and 
to encourage the medical and technological breakthroughs that benefit 
the people of Utah and all Americans.
  If passed, this act will do that at the same time it ensures that 
those who are wrongfully harmed by trule defective products are 
compensated through a prompt, effective system in which the bulk of 
their compensation will not be eaten up by court costs and attorneys' 
fees.
  Under the current system, however, American manufacturers and others 
have been forced to devote far too many resources to the costs of 
product liability actions. Too often those actions have been frivolous 
attempts to vex and harass American businesses into unwarranted and 
unjustified settlements. American consumers in all States have had to 
bear those costs.

                            Punitive Damages

  I have studied these problems and listened to experts, including 
those who testified at a tort reform hearing I chaired in the Judiciary 
Committee in early April. I am particularly concerned about the effect 
arbitrary punitive damage awards have on our economy and civil justice 
system. They are sought with an alarming frequency that adversely 
affects our manufacturers, distributors, and retailers with threats of 
potentially unpayable damages.
  Arbitrary punitive damage awards adversely affect consumers. George 
L. Priest, professor of law and economics at Yale Law School, testified 
before the Judiciary Committee on April 4. He has taught in the areas 
of tort law, products liability, and damages for 21 years and has 
directed the Yale Law School Program in Civil Liability since 1982. He 
testified as a private citizens, not on behalf of any client. He said, 
``The reform of punitive damages alone even reforms that would cap
 punitive damages or introduce a proportionality cap--will help 
consumers * * *.'' He added, ``Where punitive damages become a 
commonplace of civil litigation * * * or even where they become a 
significant risk of business operations, 
[[Page S5585]] consumers are harmed because expected punitive damages 
verdicts or settlements must be built into the price of products and 
services.''
  We have all heard about astronomical punitive damage awards for 
spilled coffee and other horror stories. The dollar amounts of those 
awards have rapidly grown to reach the mind-numbing highs we hear about 
today. In California, for example, the largest punitive damage award 
upheld on appeal in the 1960's was $250,000. In the 1970's, the largest 
award of punitives upheld climbed to $750,000. But in the 1980's, the 
largest punitive damage award upheld in California soared to $15 
million.
  It is not simply the amount of the awards that have been granted that 
is a problem, however. It is the alarming frequency with which punitive 
and other damages are sought that has a distorting impact on our 
economy and our civil justice system. Plaintiffs who feel they may hit 
the litigation jackpot will hold out for large settlements, prolonging 
litigation and its attendant costs. The mere threat of punitive damage 
awards raise the settlement value of a case, regardless of its merits.

                      Joint and Several Liability

  Often, this problem is compounded when parties are joined as 
defendants in the hopes that those parties--as deep pockets--can be 
forced to cough up a settlement.
  I think most Americans have heard about the McDonald's coffee case, 
in which the jury awarded a tremendous amount of punitive damages to a 
woman who spilled hot coffee on herself. But how about the McDonald's 
milkshake case?
  In a 1994 New Jersey case, Carter v. McDonald's Corp., (640 A.2d 850, 
N.J. 1994), the plaintiff was injured when his car was hit by another 
car driven by a motorist named Mr. Parker.
 Mr. Parker had purchased a milkshake at McDonald's and had placed the 
milkshake between his legs while he was driving. He inadvertently 
squeezed his knees together and popped the top off of the milkshake. 
This spilled the milkshake all over his legs. He became distracted and 
drove into the plaintiff's car.

  I would not argue with the fact that the plaintiff was injured or the 
fact that Mr. Parker played a key role in that car accident. I would 
not argue that Mr. Parker should not be liable for any injuries he 
caused to Mr. Carter through his negligence.
  However, in that case, the plaintiff not only sued Mr. Parker, but he 
also sued McDonald's. You might ask on what theory? He sued McDonald's 
on a product liability theory. He alleged that McDonald's had sold Mr. 
Parker the milkshake, knowing that Mr. Parker would consume it while 
driving and without warning Mr. Parker of the dangers of eating and 
driving.
  Now I do not think anybody would disagree that that is ridiculous. It 
simply flies in the face of common sense.
  Of course, as a matter of law, ultimately McDonald's was legally 
vindicated and won the case. The New Jersey trial court granted 
McDonald's a summary judgment and reached the unsurprising conclusion 
that McDonald's did not owe a duty to its customers to warn them not to 
eat and drive.
  Even that did not satisfy the plaintiff, however, who forced 
McDonald's to endure an appeal. Again, and not surprisingly, the 
appellate court agreed with the trial court. But even that still did 
not satisfy the plaintiff. He sought review in the New Jersey Supreme 
Court, which eventually denied review.
  In the end, and after nearly 3 years of litigation, three levels of 
courts passed on the case. None of them concluded that McDonald's could 
be held responsible on that far-fetched theory. But was McDonald's 
really vindicated?
  As that case unfortunately shows, in product liability lawsuits it is 
too often the case that even a so-called win is a loss. McDonald's had 
to endure almost 3 years' worth of legal proceedings under a cloud of 
potentially high damages and had to bear its legal costs. If a corner 
ice cream shop had sold the allegedly offending milkshake rather than 
McDonald's, it is highly likely that the milkshake seller would not 
still be in business today. Does that make sense? Does that benefit 
consumers? Does it satisfy justice?
  Now, it is not unsafe to conclude that the cost to McDonald's of 
those three levels of trial and appeals was in the thousands and 
thousands of dollars, all passed on, of course, to you and me as 
consumers.
  The problem with the current product liability environment is that 
the law actually fosters such abuses by encouraging trial lawyers to 
file suit against various parties who have little real responsibility 
for whatever harm is caused. Those trial lawyers do so because they can 
extract settlements from parties who may not be at fault at all but who 
may be unable or unwilling to endure the cost and uncertainty of legal 
proceedings. Those trial lawyers have their own economic incentives to 
enter these suits: their share will be in the neighborhood of 30 
percent or more of whatever they can force the defendants to pay.
  Now, I have to say, these are matters that concern me greatly. 
Frankly, these abuses are encouraged. In fact, it has gotten so 
widespread that it would almost be malpractice for a lawyer not to 
claim punitive damages in these cases, because juries have been giving 
punitive damages, I guess not realizing that all those costs, even 
though some of them may be paid by third parties, are passed on to 
consumers in this society. All of those costs are part of the reason 
litigation is so expensive.
  I might add, that same type of reasoning is what is demoralizing 
America as we watch the O.J. Simpson case go on for months and months 
of ridiculous histrionics, with attorneys playing PR people outside of 
the courtroom and with jurors telling the judge what to do. This is 
ridiculous. I do not know of any other State in the Union that would 
allow that kind of travesty to continue.
  Yet, those are only two things I would mention at this time.
  Take another case. This one comes from New York State.
   [Kerner v. Waldbaum's Supermarket, Inc., 149 A.D. 2d 411 (N.Y. App. 
Div. 2d Dep't 1989)]. In that case, a woman cut her hand while using a 
knife to separate frozen hors d'oeuvres. She had not allowed them to 
thaw and was cutting into them when they were frozen. What did she do? 
She brought a lawsuit. Whom did she sue? She sued the supermarket and 
the manufacturer and packager of the frozen hors d'oeuvres.

  Yet again, all the defendants were ultimately vindicated as a matter 
of law. The trial court issued a judgment for the defendants, saying in 
effect that they were not responsible, and that judgment was upheld on 
appeal.
  Again, however, legal vindication was not necessarily justice. It 
came only after a costly legal defense and lengthy legal proceedings 
were foisted on the defendants. That is not fair, and it is not just. 
How can that possibly be called a win?
  Cases like these demonstrate the power that can be wielded over 
individuals or companies who may have at best a tenuous connection to 
the cause of an injury. Once those parties are named in a lawsuit, they 
will face significant costs even if they win on the legal merits.
  This specter of large and potentially unlimited liability has fueled 
irresponsible litigation in our country again and again. That is an 
injustice that we must correct. It is a needless expense our economy 
cannot afford to bear.
  The fact is--whether the terrific sums expended in such litigation 
come from large awards imposed by juries, from settlements that have 
been extracted from parties, or from attorneys' fees and costs that are 
expended in successfully defending lawsuits--those amounts impose a 
tremendous cost on our economy and that cost crosses State lines.
  That cost ultimately hits us most in the impact it has on where those 
dollars could be going. The moneys spent on litigation are not funds 
being invested in new research, expanding inventory, hiring employees, 
rewarding employees, building new facilities, acquiring new equipment, 
or paying dividends to shareholders. These huge sums are coming from 
the budgets of small business, individuals, insurance companies, and 
others every day. If not spent on irresponsible litigation, those 
dollars could create jobs and spur innovation and research. But, by 
forcing the reallocation of those dollars away from productive, job-
creating uses, product liability lawsuit abuse has created serious 
interstate economic damage.

[[Page S5586]]

  The crux of the problem is that all of this harms our economy and our 
consumers. It removes companies' incentives to invest and discourages 
them from engaging in research and development of newer and safer 
products. The threat of expensive and dragged-out litigation raises the 
risk of innovation.
  Moreover, not only does our current tort system limit the amounts 
companies can spend on wages. research, and technology by increasing 
the amounts companies must spend on liability insurance and litigation 
costs, that is, it imposes high opportunity costs, but it also raises 
the direct costs necessary for a person or company to protect against 
litigation. In short, the increasing demand for liability insurance and 
the increasing amounts of the settlements raise the price of the 
premiums.
  The costs that companies must pay to cover their expected liability 
are passed on to consumers.
  Of the price of a simple ladder, for example, a shocking 20 percent 
goes to paying the costs of product liability litigation; equally 
appalling, one-half of the price of a football helmet goes to liability 
insurance. Unnecessary litigation and insurance costs impact the prices 
we pay for those and all sorts of other goods and services that we need 
and use everyday.

                  what should be the role of congress?

  Critics of this legislation have pointed out that this is an area in 
which the States should be involved. I do not disagree with that, and I 
applaud State innovations to curb excessive
 litigation. However, it has become clear that some of these problems 
cannot be addressed comprehensively without a uniform, nationwide 
solution to put a ceiling on at least the most abusive litigation 
tactics.

  This bill addresses a national need and the regulation of interstate 
commerce. James Madison observed in Federalist No. 42 that the ability 
of the Federal Government to protect interstate commerce was one of the 
central facets of the Federal Government's authority and its reason for 
being. Alexander Hamilton, in Federalist No. 11, agreed with that 
sentiment when he noted that one of the key purposes of the 
Constitution was to prevent interstate commerce from being ``fettered, 
interrupted and narrowed'' by differing State regulation.
  I agree that national power has overreached in some areas and has 
been overly involved in areas in which it cannot be justified. I agree 
that in many areas the Federal Government has imposed excessive 
regulatory burdens on the American people.
  That is why we are working so hard on a regulatory reform bill that 
will end that.
  It has become evident over the years, however, that Federal action is 
needed here precisely to protect citizens of some States from the 
litigation costs imposed on them by other States' legal systems.
  For example, the fact that a company may be subject to huge punitive 
damage awards in one State--say, Texas or Alabama--and none in another 
State--say, Massachusetts, which outlaws punitive damages unless 
expressly authorized by statue--has led to a troubling result. The cost 
of those differing State standards will not be borne solely by those in 
the respective States.
  Plaitiffs' trial lawyers cross State boundaries to bring suits in 
certain States rather than other States. They seek to join certain 
defendants just to bring suit in a given State. The higher costs pass 
directly across State lines in those cases to harm those businesses 
that are dragged into another State's courts. The fact is that 
Massachusetts or Utah or any other State may be unable to protect its 
businesses from suit in other States.
  Moreover, in a more pervasive effect, the insurance and litigation 
costs that are forced on the system by the laws in some States will be 
passed on to consumers and workers in other States. These harmful 
effects cannot be contained in one State, nor can the costs be passed 
on to consumers only in one State or another. Both unpredictability of 
litigation and the interstate character of markets--whether for 
insurance, products, or services--has prevented that.
  Critics of this legislation are also wrong in contending that the 
States can address these problems adequately. A number of States have 
attempted reforms, only to be thwarted by State courts.
  Many States have enacted statutes of repose similar to the one 
included in our product liability bill. Our bill sets a 20-year statute 
of repose for durable goods. It prevents manufacturers from being sued 
for old equipment or machinery, and ensures that after a sufficiently 
long period of time after which the manufacturer has no longer 
controlled a particular machine or piece of equipment, responsibility 
will lie with those who are responsible for its use and upkeep.
  Unfortunately, State efforts in this area have been thwarted. State 
statutes of repose have been struck down in at least 14 States based on 
State constitutional grounds. [See Berry v. Beech Aircraft Corp., 717 
P.2d 670, 677-678 (Supreme Court of Utah 1985) (citing cases)].
  More sweeping efforts have been equally frustrated. In Alabama, tort 
reform legislation passed by the Alabama State legislature in 1987 
required independent court review of punitive damage awards, and placed 
a $250,000 flat cap on punitive damages for most civil cases. However, 
in 1991, the Alabama Supreme Court struck down the provision requiring 
independent court review of punitive damages [Armstrong v. Roger's 
Outdoor Sports, 581 So.2d 414 (Ala. 1991)]; and, in 1993, the Alabama
 Supreme Court ruled that the Alabama Legislature does not have the 
authority under the State constitution to impose any cap on punitive 
damages [Henderson v. Alabama Power Company, 627 So.2d 878 (Ala. 
1993)].

  Given the inability of State legislatures to carry through on reforms 
that they conclude are necessary, Federal action in the area is the 
only viable course through which to attack lawsuit abuses.
  The bill corrects a variety of problems, and it does so in a 
reasonable, modest manner. This is not a radical bill. In fact, it is a 
very modest bill. It has been criticized for being too modest.
  As for the details of how this bill works, the specific provisions of 
the bill correct certain inequities in the law as it stands and makes 
those corrections uniform nationwide. At the same time, it allows 
State-to-State variation of the law within certain protective 
boundaries so that, for example, States will be free to prohibit 
punitive damages altogether or take other steps to toughen the law. In 
that way, the bill seeks to balance and accommodate the State and 
Federal roles.
  The alternative dispute resolution section of the bill, for example, 
encourages resort to alternative dispute resolution--so-called ADR--by 
providing procedures through which parties can arrange to go through 
ADR and by providing for some fee-shifting to any defendant that 
unreasonably refuses an offer to proceed through alternative dispute 
resolution.
  I have strongly favored using means outside the court system for 
resolving disputes. This bill encourages the use of those procedures, 
but leaves it to the States to experiment with providing various sorts 
of ADR, such as mediation or arbitration, to determine what works best 
for their citizens.
  Other provisions of the bill encourage responsible litigation. For 
example, the bill contains a 2-year statute of limitations provision. 
Under that provision, a product liability action must be filed within 2 
years of the date on which the injury occurred or on which the 
plaintiff, in the exercise of reasonable care, should have discovered 
the injury and its cause.
  This requires parties to take action within a reasonable time after 
they know of an injury and its cause. It will prevent late-in-the-day 
lawsuits, like one that was filed in my own State of Utah.
  In that suit, the plaintiff purchased a Cannondale bicycle from the 
Bicycle Center on Salt Lake City in July 1986. In August 1986, the 
plaintiff fell off the bicycle when, he claimed, it suddenly stopped. 
Now, at that point, he knew he was injured and knew that his injury was 
caused by falling off the bike. However, it was not until 3 years 
later, in August 1989, that he filed suit against Cannondale and 
against the bike shop.
  The plaintiff acknowledged in court papers that he did not think of 
filing 
[[Page S5587]] suit at the time of the accident. He admitted that he 
only became interested in litigation after seeing a report on 
television about a successful personal injury lawyer from San 
Francisco. That was the sole reason explaining why the lawsuit was 
delayed for so long.
  I have nothing against parties seeking representation of counsel and 
getting legal advice so they know what their legal rights are. And I 
have nothing against the plaintiff being compensated for his injuries 
if the bicycle manufacturer and the bicycle shop really were at fault.
  However, I do have a problem with lawsuits driven solely by 
aggressive trial lawyers rather than by real people who face real 
injuries for which they deserve compensation. Potential defendants 
should not be forced to wait for a prolonged period of time with no 
idea that an injury may have occurred involving a product they made or 
sold. When that happens, key employees with relevant facts may have 
moved on, memories may have faded, and records may be lost or 
discarded.
  Even if defendants can successfully defend such suits on the merits, 
as occurred in the Utah case, substantial litigation costs are once 
again incurred.
  This product liability bill includes numerous other provisions to 
encourage responsible litigation and to ensure that liability is 
imposed only on truly responsible parties rather than on whatever deep 
pocket a plaintiff's attorney thinks can be picked successfully.
  To that end, for example, the bill imposes liability on product 
sellers--rather than manufacturers--only under certain circumstances in 
which the product seller actually is responsible for the safety of the 
product it sells. If, for example, the seller fails to exercise 
reasonable care with respect to a product and in so doing causes an 
injury, then the product seller may be liable. A product seller should 
not be able to be held hostage to a lawsuit, however, where the damage 
is the responsibility of the manufacturer and where the plaintiff can 
and should be suing the manufacturer.
  Along similar lines, the bill provides that those who rent or lease 
products should only be liable in situations similar to those in which 
product sellers can be liable--that is, where they themselves have 
actually been negligent or otherwise
 responsible for the harm and not where they are simply in the chain of 
supply and have done nothing wrong.

  Likewise, liability against biomaterials suppliers--who supply raw 
materials for use in life-saving and life-enhancing medical devices--is 
also limited to apply only in circumstances where the raw material 
supplier should be responsible for the ultimate end use of the 
material, for instance, where it supplied material in accordance with 
certain specifications and the material did not meet those 
specifications.
  The bill also provides a defense if the injured party was intoxicated 
or under the influence of drugs at the time of the accident and if the 
intoxication or drug-use was more than 50 percent responsible for the 
harm caused.
  The bill reduces damages if harm is caused by any misuse or 
alteration of the product. And, the bill provides that an employer may 
not be able to recover from a manufacturer any workers compensation 
benefits that the employer paid out to an injured employee if that 
employer was, in fact, responsible for the harm--for example, if the 
employer encouraged the worker to operate a machine improperly.
  In another provision that places responsibility where responsibility 
should lie, the bill limits joint and several liability. Under joint 
and several liability law as it stands in many States, manufacturers 
and others in the chain of production can be held responsible for 
striking amounts of damages for harm that they did not cause--just 
because another defendant cannot or will not pay its fair share.
  How is it fair that a party judged to be only 30 percent at fault 
pays 100 percent of the damages? This bill strikes a fair balance by 
providing that joint and several liability in product liability cases, 
in State or Federal court, is limited only to economic damages. Thus, 
an injured person will always be ensured of receiving full compensation 
for economic loss so long as some defendant who is legally liable is 
capable of paying that loss.
  As to noneconomic loss, the bill provides that responsible parties 
will be responsible for covering that share of the loss for which they 
are responsible. This fairness approach means that defendants will for 
the most part be responsible for the harm they cause rather than the 
harm of other defendants.
  As one final point, I note that the threat of having to bear 
responsibility for harm caused by another party is not the only threat 
that has skewed the incentives in our legal system. The possibility of 
exorbitant punitive damages awards has grown so that it effectively 
amounts to legalized extortion.
  The threat alone of excessive punitive damages forces parties to 
settle under conditions in which they otherwise would not. We need to 
put an end to extortion by litigation and curb practices further 
harming our economy and threatening our small businesses with claims 
that exceed their net worth.
  In my own view, limitations on punitive damages should apply to all 
civil actions--not just product liability actions. Volunteer 
organizations, blood banks, restaurants, and everyone else subject to 
punitive damages deserve these commonsense safeguards. And, whether 
businesses face product liability lawsuits or some other civil 
lawsuits, the same harm is done to our economy, our interstate 
commerce, and to our society.
  If businesses face outrageous punitive damage awards in some States, 
they must impose the increased litigation and insurance costs on 
consumers in all States. Likewise, the costs to workers are passed on 
throughout the Nation when a company must defend outrageous claims in 
one State and then has correspondingly fewer resources to spend on 
expansion and growth in other States. That occurs whether the lawsuits 
are product liability actions or are fraud, breach of contract or other 
types of civil lawsuits.
  I intend to join Senator Dole and others in seeking adoption of an 
amendment to address these matters.
  Similarly, I believe the joint and several liability reform in this 
bill should be extended to all civil actions.
  I hope that we will soon consider addressing those problems as debate 
on this legislation progresses. Again, I thank Senators Rockefeller and 
Gorton for their leadership and commend them for their efforts.
  I yield the floor.
  Mr. GORTON. Mr. President, I want to thank and congratulate my friend 
from Utah not only on his support, but on his eloquence and on his 
understanding of the values involved in this debate and for his 
eloquent statement of the case for this bill.
  I believe that we will have several other opening statements during 
the course of the afternoon. And my friend and colleague, the primary 
cosponsor of the bill, the Senator from West Virginia, will be here 
momentarily. I believe the Senator from Kentucky [Mr. McConnell] wishes 
to speak.
  I will make only one brief comment with respect to the position 
stated by my friend, the Senator from South Carolina, and that has to 
do with the alleged inconsistency of believing that it is appropriate 
to delegate some responsibilities on which Congress has done a poor job 
to the States, while to a certain extent providing for uniform rules 
with respect to product liability. If the position of the Senator from 
South Carolina is that it is appropriate to delegate those other 
responsibilities and inappropriate to federalize these and that had 
been the position of those who wrote the Constitution of the United 
States, I suppose we would still be operating under the Articles of 
Confederation.
  But, Mr. President, those who did write our Constitution expressly 
gave to Congress control over interstate commerce. That is an express 
line, an express section in the Constitution of the United States. It 
is up to the Congress to determine the degree to which interstate 
commerce is so implicated in a particular business or profession as to 
not only authorize but perhaps to require legislation at this level. 
And it is very difficult, Mr. President, to think of a single field in 
which interstate commerce is so important as it is 
[[Page S5588]] in the manufacture and distribution of actual hard goods 
in our national economy.
  It really does not matter in the American system whether or not goods 
are manufactured in South Carolina and sold in the State of Washington 
or in the State of Minnesota, or manufactured in the State of Minnesota 
or Washington and sold in South Carolina. Almost every significant 
manufacturer sells its goods in every State in the country. As a 
consequence, the burden of a legal system which encourages litigation 
in which results are likely to be dramatically different in one State 
than in another--a fact, incidentally, known to most trial lawyers who 
see, obviously, the most favorable forums for their litigation--calls 
for a degree of uniformity. The desire that American industry be more 
competitive, the desire that American industry spend freely on 
research, the desire that American industry develop products as a 
result of that research, the desire for the kind of competition which 
causes lower prices to consumers is obviously in the national interest. 
When it has been demonstrated so dramatically that the present system 
discourages research and development, it causes many manufacturers that 
abandon particular fields, sometimes totally and sometimes leaving them 
to monopolies or quasimonopolies. When consumer prices in certain areas 
are so adversely affected, it is appropriate that we seriously consider 
whether or not we cannot consistently, with justice, provide for a more 
uniform system than we have at the present time.
  Does this bill entirely nationalize it? No, of course not. It would 
be inappropriate to do so. Does it make it more uniform? Yes, Mr. 
President, it does. That has no more relevance to whether or not we 
should continue to maintain a nationalized welfare system or perhaps a 
myth that it has been a failure and that we need State experimentation. 
There is no relevance between the two. Each should be judged on its own 
merits. This should be judged on its own merits. And to say that there 
are somehow or another seventh amendment of the Constitution 
implications, again, Mr. President, seems to me to be an equally 
bizarre argument.
  Every jury is subject to the law. Every jury is instructed as to what 
the law is. Juries are instructed on the degree of the burden of proof 
and the like, and juries determine facts. Nothing, not one line, not 
one phrase of this bill, deprives any jury of the right to determine 
matters of fact which come before it. It sets up a framework--we 
believe a just and balanced framework--for one relatively small but 
vitally important field of litigation, perhaps the single field of 
litigation in which interstate commerce is most implicated. It does 
that, and it does that in a way which does not deny justice or full 
compensation for any injury subject by reason of the negligence of a 
manufacturer, Mr. President.
  There are no caps in this bill on compensation, on compensatory 
damages of any kind. But it does make somewhat more predictable the 
course of litigation, somewhat lowers the cost of litigation. And, Mr. 
President, I suspect that no actual victim is likely to suffer at all. 
But I am convinced that the transaction costs for lawyers and expert 
witnesses and the like, which now eat up way more than half of all of 
the money that goes into the product liability system, that those 
transactional costs will be significantly lessened by the passage of 
this bill.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina.

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