April 26, 1995 CONGRESSIONAL RECORD — SENATE S5703

of these murders were committed with

firearms and many with handguns.

Democrats and Republicans in Congress, together, tried to do something

about this disturbing trend when we

enacted the gun-free school zones legislation in 1990. Today, a slim majority

of the court has shot Congress down,

and in so doing, put America’s children

at greater risk.

Now, because we reenacted and perfected the Gun-Free School Act last

year as part of the crime bill, the current law may still be constitutional.

Indeed, we may yet be able to ensure

the constitutionality of the law with a

technical amendment, and I plan to introduce a bill to do that next week.

Broadly interpreted, however, the

reasoning of the majority in this case

could have far-reaching consequences

that may undermine a variety of crucial Federal laws, like the Drug-Free

School Zones Act on which the GunFree School Zones Act was based, or

the bans on cop-killer bullets, or our

Federal wetlands laws, and many of

our civil rights statutes.

Mr. President, I agree with the

strong dissent by Judge Souter, joined

by Justices Ginsburg, Stevens, and

Breyer, who labeled this ruling today

by the Supreme Court a step backward.

I again want to express my disappointment with today’s decision.

I suggest the absence of a quorum.

The PRESIDING OFFICER. The

clerk will call the roll.

The bill clerk proceeded to call the

roll.

Mr. FEINGOLD. Mr. President, I ask

unanimous consent that the order for

the quorum call be rescinded.

The PRESIDING OFFICER. Without

objection, it is so ordered.

COMMONSENSE PRODUCT LIABILITY AND LEGAL REFORM ACT

fThe Senate continued with the consideration of the bill.

Mr. FEINGOLD. Mr. President, I rise

today to express my strong opposition

to S. 565, the Product Liability Fairness Act of 1995. It is because I really

see it as the worst of both worlds.

First, I think it is a bill that has

been shown to have little, if any, demonstrated need; second, I think it will

have drastic and undue effects on some

of our most vulnerable citizens in this

country.

Those who support this legislation

have stated over and over that the bill

is to everyone’s benefit. It supposedly

will benefit manufacturers, investors,

business owners, workers, and consumers, they say.

Yet, I have still not heard of a single

major U.S. consumer organization that

has endorsed this legislation. The legislation is, in fact, opposed by virtually

every group in the country representing working people, consumers, children, and the elderly.

The Product Liability Fairness Act

says that it seeks to set uniform Federal standards for product liability legislation that would override certain existing State laws.

It is not really a bill that provides

uniformity at all. Those State laws

that are more protective of injured

consumers are preempted under this

bill while those State laws that go beyond what this bill would do in terms

of shielding negligent manufacturers

are left intact. They are left the same.

It is not a bill that has anything to do,

really, with uniformity.

In addition, Mr. President, it establishes a heightened—that is, more difficult—conscious and flagrant standard

for the rewarding of punitive damages

in product liability cases, and it would

arbitrarily cap damage awards for punitive damages at $250,000, or three

times economic damage.

Again, those State laws with higher

caps or no caps are preempted. Those

States with lower caps or no punitive

damages awards are left completely

untouched.

The bill would also set a 20-year statute of repose, unless, of course, a State

law has a lower statute and is, therefore, left alone and also a 2-year statute of limitation.

Finally, Mr. President, this legislation would eliminate joint liability for

noneconomic damages and create new

standards for seller liability.

There are several reasons why I oppose this bill. Before I talk about the

specific flaws of this legislation, I

think it is important to note the larger

context that the issue of product liability reform fits into. That is why, as I

look at this whole bill, I oppose the

whole approach. It is not a question of

fixing this and fixing that. I think the

whole concept driving this bill is an

error and should be defeated.

For the past several months, all of

us, Republicans and Democrats, have,

of course, been trying to interpret the

meaning of the November election.

Many of our Republican colleagues

have interpreted those elections as

being a statement against big, inefficient and bureaucratic government. I

disagree with a lot of the statements

that have been made about what the

November elections have been about.

But I think that maybe is one legitimate interpretation of the elections, to

say that people have had it with big

government. And I think in many cases

that is a legitimate complaint that our

constituents have, and that they did

express on November 8.

It would make no sense to argue that

all Government programs should be

run by Washington, DC, or that all

Government programs should be run by

the States. Some programs do address

underlying problems that are national

in scope, across State borders. But others are more local in nature and are

best left to the local and State governments to determine how they can best

address problems that they are more

familiar with than are the folks that

work in Washington, DC.

With regard to this matter I, for one,

strongly believe that there are many

issues that should clearly be left to the

State and local governments to address. One of the reasons I opposed last

year’s crime bill was precisely because

it shifted power away from our State

and local courts and the law enforcement officials there, who have been

dealing with crime problems in their

own regions and are best equipped with

the knowledge and creativity to solve

those problems. So that is one reason

why I opposed the crime bill, because I

did not think we should have an

overarching Federal Government controlling all aspects of that issue.

Many on the other side of the aisle

have been among the strongest proponents for the so-called States’ rights

issue. Indeed, our distinguished majority leader has stated repeatedly this

year his intention to dust off the 10th

amendment and give greater control

over local problems to the State governments. It was the Speaker of the

other body who stated the following in

his address to the Nation on April 7,

about the intent of the congressional

Republicans in the 104th Congress. He

said:

We must restore freedom by ending bureaucratic micromanagement here in Washington. This country is too big and too diverse for Washington to have the knowledge

to make the right decision on local matters.

We’ve got to return power back to you, to

your families, your neighbors, your local and

State governments.

Given those statements, how does

this square with the legislation we are

considering today? What happened to

the need to address local problems on

the local level? All this talk about

States’ rights is about to go right out

the window, as we usurp over 200 years

of State control over their tort systems. It seems a very odd trend indeed.

It should come as no surprise that

this legislation is vehemently opposed

by the American Bar Association, the

National Conference of State Legislators, and the Conference of State Chief

Justices. But those who support this

legislation do not want to listen to

State legislators or State judges or

consumer organizations. They do not

even want to listen to those individuals

who have been tragically maimed or

injured by the negligence of a small

but powerful group of manufacturers.

Of course, those who support this legislation justify the bill by saying that

such drastic action is needed to curb

the so-called litigation explosion that

has supposedly resulted in a court system totally bogged down in product liability litigation. Let us take a quick

look at just how bogged down are our

courts with product liability claims.

The Department of Justice, using data

compiled by the National Center for

State Courts, recently released a study

of 378,000 State tort cases which apparently represents about half of all tort

suits completed between July 1991 and

June 1992. According to the study, only

3 percent of all tort claims involve

product liability, just 3 percent of all

tort claims. The bulk of the tort claims
S5704 CONGRESSIONAL RECORD — SENATE April 26, 1995

come in the form of automobile accidents and premises liability.

This study also found that in 1993

tort claims comprised only about 10

percent of all civil case filings. That

means that the so-called massive

usurping of State sovereignty because

of a so-called explosion is occurring to

address an area that represents less

than 1 percent, actually less than a

half a percent of all civil case filings.

So, this is no panacea for our civil justice system.

Despite these statistics supporters

continue to claim that our small business and manufacturing communities

are suffocating under the burden of liability insurance and the constant

threat of litigation. Yet just 2 years

ago the National Association of Manufacturers—clearly one of the biggest

backers of this legislation—announced

their own results of a survey they had

conducted of their own members in

which they asked their members what

specific issues were of concern to them

and what problems in their minds pose

the largest impediments to growth in

the manufacturing industry. The results are very interesting and I think

somewhat at variance with the claims

of those who are so strongly supportive

of this bill.

Somewhat incredibly, given the rhetoric, just 8 percent of the respondents

listed product liability as a major

problem in the manufacturing industry, only 8 percent. This is not a survey

of the whole public. This is a survey of

manufacturers. In fact, almost three

times as many of the respondent manufacturers listed the Federal budget deficit as undermining the growth of the

manufacturing sector.

So who is on the side of the manufacturers here? Those who support reforming the legal system, which less than 1

in 10 manufacturers listed as a major

impediment to growth in investment?

Or those of us who have consistently

been out here voting for legislation

that slashes Government spending and

reduces the deficit, such as the President’s 1993 budget bill that has cut our

annual projected deficits by almost

$100 billion.

I guess I am a little surprised at the

eagerness of those on the other side to

usurp the authority of the States to address a problem that has traditionally

been a State issue. Unfortunately,

though, I am no longer surprised at the

continued pecking away at the provisions and principles contained in our

Constitution. In this case I think this

has something to do with some of the

principles embodied in the Bill of

Rights. I think it is astonishing the

number of different efforts underway in

this Congress that would dramatically

alter the U.S. Constitution. Let us just

start with the proposed constitutional

amendments.

We had the balanced budget amendment, which was thankfully defeated in

this body. We had a constitutional

amendment being proposed for lineitem veto authority. Soon we will apparently be considering term limit constitutional amendments, which in my

view represent a profoundly undemocratic viewpoint, that we need to limit

people’s voting rights by telling the

voters back home for whom they can

and cannot vote.

There are other things this Congress

apparently has in store for rewriting,

redrafting, and in my view gutting the

Bill of Rights. Constitutional amendments have been introduced on school

prayer and flag desecration which, to

my knowledge, would mark an unprecedented historical event by amending

the first amendment. And in the Judiciary Committee recently, Mr. President—you sit on that committee as

well—the Republicans have all but

stated their intention to toss out the

exclusionary rule, a key legal principle

derived from the fourth amendment, on

unlawful search and seizures. Perhaps

we will soon be holding hearings in the

Judiciary Committee on the eighth

amendment and what may be obsolete

principles, according to some, of excessive bail and cruel and unusual punishment.

In a sense I think this bill unfortunately turns us to another provision of

the Bill of Rights, the seventh amendment. This product liability legislation

in my view really, at least in principle,

contradicts an important legal principle that has been the cornerstone of

our judicial process for the last 200

years, and that is the right to trial by

jury. True, there have been no proposals in the 104th Congress, at least not

yet, to eliminate an individual’s right

to a jury trial. But I am concerned

about it, especially after the senior

Senator from West Virginia has described the efforts of some in this Congress to relegate the Constitution to

the rare book room of the library.

But I think it is clear what a tremendous emphasis our Founders placed on

the notion of allowing a panel of your

peers to determine your fate, and that

it is the jury, representative of the

American people as a whole, that is

best equipped to hear the facts of a

case, filter out the truth, determine

who is at fault in a case, and then finally determine the appropriate degree

of punishment. That is a jury function

in our common law tradition, not a

judge function, traditionally, and certainly not the function of the Federal

Government as embodied in the U.S.

Congress in Washington.

I will speak in more detail about this

at a later time but I view this measure

as nothing more or less than an assault

on the concept of trial by jury.

Mr. President, in addition this legislation is riddled with complications

and contradiction. Let me discuss this

cap on punitive damages for a moment.

Under this legislation, punitive damages are capped at $250,000, or three

times a plaintiff’s economic damages,

whichever is greater.

First, I find it interesting that those

who support this legislation claim that

it provides uniform Federal standards

with respect to product liability. How

can they even stand up with a straight

face and say that? It is simply not true

because, if this was truly a uniform

standard, that would mean the punitive damages would be capped at

$250,000, or three times economic damages in all of our 50 States. But that is

not the case. Those States that currently prohibit punitive damages would

be permitted to continue to completely

prohibit punitive damages. They would

not have to comply with this new Federal standard of allowing at least up to

$250,000 or three times economic damages in punitive damage awards.

So let us be clear about what this

means. This is the opposite of uniformity. If two individuals living in States

with different sets of product liability

laws are injured by defective products

produced in those respective States the

two individuals have substantially different legal rights and remedies available to them. But that is not all. One

of the foremost purposes of punitive

damage awards is not only to punish

those manufacturers who deliberately

and willfully market a product they

know to be effective and dangerous, it

also is to deter other manufacturers

from engaging in such practices. I

would presume that the reason some

punitive damage awards are permitted

under this bill—at least I hope this is

the view—is because the supporters of

this bill presumably agree that punitive damages have at least some sort of

role, some purpose to play in deterring

such abuses and protecting consumers.

Mr. President, this just does not add

up. Under this bill, those States that

currently prohibit punitive damages

would be able to continue to completely prohibit punitive damages.

That means consumers, children, and

the elderly living in different States

with different sets of laws will have

substantially different protection from

injuries and defective products.

So much for this notion that this bill

is all about uniform Federal standards,

and so much for the idea that this bill

is fair, equitable, and beneficial to consumers. But again, I assume that most

of the supporters of this legislation do

have a feeling of supporting some concept of punitive damages, recognizing

that there are clearly a set of cases

where punitive damage awards are appropriate and necessary to sanction a

manufacturer who has been willfully

negligent.

Mr. President, I ask: Why do we not

force those States that currently have

this absolute rule prohibiting any punitive damage awards to change their

laws and to meet this new Federal

standard that is proposed in this bill?

I guess I am going to have to take a

crack at predicting the answer to that

question. I presume that the answer

would be that we here in Congress

should defer to the State legislatures

that have made the determination that

there should be no punitive damage

awards in their State’s product liability cases.
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5705

But how does this rationale justify

the preemption of State laws, such as

those in my home State of Wisconsin,

that allow punitive damage awards

where appropriate? Why do we not respect the State of Wisconsin enough to

defer to the wisdom and judgment of

its legislature and its Governor on this

matter?

It appears to me to be completely

contradictory to say that you support

uniform Federal standards for product

liability laws, and also support the notion that States can have different

standards for punitive damage awards.

The bottom line for those on the other

side of this aisle is clear: Giving more

power to the State and local governments is a great idea, but only when

you agree with the principles and policy that those entities are pursuing.

Second, I assume that those who support limiting punitive damages do so

because they believe that these awards

are out of control and that limiting punitive damages will allow us to somehow simultaneously improve our productivity and innovation and somehow

continue to constrain the abuses—

sometimes very willful abuses—of manufacturers who market defective products.

I would like to now examine those

premises. First, with regard to the frequency and size of punitive damage

awards, I think that the evidence that

has been presented thus far has made it

clear that punitive damage awards

have been grossly mischaracterized.

They are not out of control. They are

not adversely affecting the competitiveness of American manufacturers.

Recently, the Senate Judiciary Committee on which I serve held a hearing

on punitive damage. At that hearing

Dr. Stephen Daniels of the American

Bar Foundation reported findings of a

study that he completed of over 19,000

civil jury verdicts in 89 counties in 12

States plus the entire States of Alaska,

Idaho, and Montana for the years 1988

through 1990.

Not only did this study find that punitive damages are awarded in a small

percentage of all civil cases—that figure was roughly 4.8 percent—the study

also excluded that punitive damage

awards were modest and more often

awarded in financial property harm

cases than in product liability cases.

This study was consistent with an earlier study of Dr. Daniels of punitive

damage awards in the early 1980’s. That

study at that time produced very similar results.

The bottom line is that in recent

years there has been virtually no proliferation in the size or frequency of

punitive damage awards.

As has been cited by others as well,

another study by Professors Michael

Rustad and Thomas Koening found

that during the years 1965 through 1990,

a 25-year period, there were a total of

just 355 punitive damage awards in

both State and Federal courts. Roughly a quarter of these awards were reversed or remanded upon appeal. Mr.

President, 91 of these cases were related to the asbestos issue. That means

excluding asbestos cases there has been

an average of about 10 punitive damage

awards a year in both Federal and

State courts for the past 25 years.

Clearly these studies and others demonstrate the inaccuracy of claims that

punitive damages are increasing in size

and frequency. Those who believe we

need to cap punitive damage awards in

product liability cases, as this bill prescribes, should understand that we are

only talking apparently about roughly

10 cases per year.

What will happen to the quality of

American-made products under this

legislation? How concerned will multimillion-dollar corporations be about

the safety and quality of their products

when they are most likely to face a punitive damage award that would only

be equal to a fraction of their profits in

one day—just a fraction of one day’s

corporate profits? It does not sound

like much of a deterrent.

Just last year, a California jury ordered Dow Corning Corp. to pay $6.5

million in punitive damages for knowingly manufacturing faulty silicone gel

breast implants. This verdict was

upheld by the ninth circuit court of appeals that found that Dow Corning

knew that the product had possible defects and exposed thousands of women

to a potentially painful and debilitating disease.

Under this legislation, that punitive

damage award would have been reduced

to three times economic damages, or

about $l.4 million. It would have been a

78-percent reduction in that judgment.

Measured against Dow Corning’s assets

of $l.4 million, punitive damage award

for these acts would have only represented about 0.04 percent of that corporation’s assets; just four one-hundredths percent.

What does this mean? It means that

a corporation was able to knowingly

market a product that they knew to be

defective, and they knew it threatened

the health of thousands of women. And

yet under this bill they would only

have had to pay a penalty of four onehundredths of 1 percent of their assets

of a huge corporation.

That is what happens when you replace the jury’s knowledge and familiarity with the particulars of a case and

replace it with an arbitrary cap on certain damage awards. That clearly illustrates just who stands to benefit from

this legislation and demonstrates the

absurdity of the notion that anyone

could say that this bill is fair to consumers.

I also want to discuss the elimination

of joint liability for noneconomic damages under this legislation. Opponents

of the principle of joint liability make

a pretty compelling case. I have to concede that on the surface it is one you

really have to examine in order to

counter it. It is hard to understand.

Why should someone who is held to

only 50 percent, or 25 percent, or even

10 percent liable for an individual’s injury be forced to assume a much greater burden of compensatory damages if

another liable party is financially unable to pay the damages? Certainly

there is a force behind that when you

just look at it on the surface. Why

should a party that is held to be partially liable for an injury be forced to

pay an entire damage award if the

other party or parties are unable to

pay?

Some believe this is a good argument

for supporters of this bill. It sounds

good; it sounds fair, unless, of course,

you are a 10-year-old child who has lost

his vision for the rest of his life because of the negligence and irresponsibility of a manufacturer who is held

not entirely but the manufacturer is

held partially liable for the damages.

The manufacturer is partly responsible

for the horrible thing that has happened to this 10-year-old.

Suppose in this case the manufacturer is held 60 percent liable while the

large multi-million-dollar retail chain

that sold the product is held 20 percent

liable, and other parties involved make

up the remaining 20 percent. Suppose

the manufacturer then files for bankruptcy. What happens then? Sure, the

child’s family will be reimbursed for

their hospital bills and maybe for the

lost wages of the 10-year-old for the

lawns he used to mow or the driveways

he used to shovel.

When we talk about noneconomic

damages—noneconomic damages—the

child under this law, under this bill before the Senate, will only get a fraction

of that to which he is entitled.

I notice that the interests that support this legislation have cleverly chosen to highlight kids in that age group,

using the Little League of America as

an example of the need for tort reform.

But what about the baseball games

that this 10-year-old boy could no

longer participate in because of his loss

of vision? What about the fact that this

10-year-old boy could no longer even

watch a baseball game either at a stadium or on television? Baseball is finally back, as of yesterday and today.

But this bill cuts out those considerations and caps them for a child such

as this.

Is it fair that supporters of this legislation are more concerned about the

manufacturer who is 10 or 20 or even 30

percent liable for an accident, partially

liable, more concerned about that manufacturer than the child who is zero

percent responsible, zero percent responsible, and completely innocent of

any wrongdoing? Is that the right balance?

Of course, those corporate interests

backing this legislation are not terribly concerned about those questions.

They are preoccupied with stock reports and profit margins. You have to

recognize that asking the retailer to

pay more is much more fair than forcing an injured child who is 100 percent

innocent of any wrongdoing to receive

only a fraction of the compensation

that will allow him to return to as
S5706 CONGRESSIONAL RECORD — SENATE April 26, 1995

close a life as possible before the accident, which the retail chain is partially

to blame for, actually occurred. And I

think this provision, this provision

that I am discussing now—and it is

hard to choose because there are a lot

of bad ones in the bill—more than any

other one in the bill as revealing the

outlandish proposition that this bill is

fair. It is this provision that changes

the complexion of our legal system.

This legislation will alter the precept

of our legal system to say that a victim of wrongdoing and negligence is no

longer the principal concern of the tort

law. The principal concern will now be

the profits and economic health of a

business interest that has been convicted by a jury of negligence in the

manufacture, sale, and use of a defective product. This is about companies

that have been adjudicated guilty of

making something that did not work

right and that can hurt people. This is

not about companies that have been

found to be innocent. This legislation

is grounded in a belief that it is more

important for our business and manufacturing communities to remain prosperous, very prosperous in many cases,

and shielded from liability than it is to

return an innocent victim of a defective product back to a state as close as

possible to their well-being before the

accident occurred.

So, Mr. President, I look forward to

returning to discuss a lot of the specific amendments and issues in the bill.

Let me just conclude my opening statement by saying that I believe these

choices here are fairly clear, the lines

are fairly well drawn, and that bill is a

bill that definitely deserves to go down

to defeat in the Senate.

I thank the Chair and I yield the

floor.

Mr. GORTON addressed the Chair.

The PRESIDING OFFICER. The Senator from Washington.

Mr. GORTON. Mr. President, first I

ask unanimous consent that the Senator from North Carolina [Mr.

FAIRCLOTH] be added as a cosponsor

both to S. 565, the Product Liability

Fairness Act of 1995, and to the Gorton

substitute amendment to H.R. 956.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. GORTON. Mr. President, I think

perhaps at this point in the debate, it

may be appropriate to speak not so

much to the broad nature of the bill

but to two or three arguments advanced by the last two opposing Senators, the distinguished Senators from

Wisconsin and from California.

Together with Senator HOLLINGS, the

Senator from Wisconsin was somehow

or another implicating the seventh

amendment right of trial by jury into

this debate and has implied at least

that the bill before us somehow or another restricts that constitutional

right to trial by jury.

This is a curious, perhaps a bizarre

argument. It is an argument which is

equally applicable to every statute,

State or Federal, which sets legal parameters which juries must follow in

reaching verdicts. To say somehow or

another that a limitation on punitive

damages is a violation of the seventh

amendment is to say that a jury instruction limiting actual damages to

those that have really been suffered by

a victim is somehow unconstitutional,

that any instructions to any jury as to

what the law is under any circumstances are unconstitutional.

Even more strange, more bizarre to

this Senator, is the proposition coming

from Members of this body who when

we are dealing with the criminal code

want very strict legal limitations on

sentences that can be imposed on convicted criminals. I have not heard either of these Senators argue that a

jury which finds an individual guilty of

a misdemeanor under Federal law

should be permitted to impose life imprisonment on that convict, and yet

that is exactly the proposition for

which they argue here in connection

with a civil case.

They argue that as a form of punishment, punitive damages, a jury’s discretion should be absolutely unlimited,

no matter how egregious the conduct;

no matter whether we are dealing with

an individual, a small company, or a

large corporation, the jury’s discretion

should be untrammeled, and that the

jury should be permitted to impose punitive damages of whatever limit.

Mr. President, that is analogous to

saying a jury ought to be able to sentence a jaywalker to hanging if for

some reason or other the discretion of

the jury should reach that point.

Why is it—this is one question I have

not heard answers to, directly or indirectly. Why is it that in our entire

criminal code we have as a protection

against convicted defendants limits on

sentences, but in civil actions in which

proof does not need to be adduced beyond a reasonable doubt but only by a

preponderance of the evidence in many

States, and by clear and convincing

evidence should this bill pass, why here

alone should that discretion be absolutely unlimited?

It is a question I would like to have

answered by those who oppose any kind

of limitations. A debate against the

specific limitations of this bill and adjustment, a feeling that we can do better, is something that I know both the

Senator from West Virginia and I are

both open to. We may not have gotten

the formula exactly right.

But the proposition that there should

be some kind of limit seems to me to

be obvious and has even moved the Supreme Court of the United States to

say, without coming up with what

those limits are, that there may be

some constitutional limits, with the

clear implication that Congress could

make just exactly such a decision.

The next point that I should like to

clear up at this stage, Mr. President, is

the confusion, I think—and I can only

ascribe it to that—which is the inevitable result of listening to opposition

speakers about whether or not there is

some kind of limitation in this bill on

the recovery of all of the damages

which an individual actually suffers as

a result of the negligence of a manufacturer.

Mr. President, the only limitations

in this bill are limitations on punitive

damages, which by definition are not

direct compensation for losses suffered

as the result of an accident or of someone’s negligence. No limitations are

imposed by this bill on the recovery of

actual damages—loss of wages, medical

expenses, and the like. No limitations

are included in this bill on the recovery

of noneconomic damages. ‘‘Pain and

suffering’’ is the usual phrase for such

damages. There are those who propose

such limitations, but they are not included in this bill, and this Senator

does not intend to vote for any. And I

believe I also speak for the Senator

from West Virginia in that connection.

So no individual, none cited by the

Senator from California, none cited by

the Senator from Wisconsin, none cited

by the Senator from South Carolina,

will be deprived by the passage of this

bill of his or her right to recover all

economic and all pain and suffering

damages which a jury determines they

have suffered in a product liability action.

The only limitations are on the

amount of punishment to which a negligence defendant can be subjected.

And there, as I have already said, we

have the curious argument that in the

civil courts that punishment should be

unlimited while in the criminal courts

it should be subjected to very, very

real limits.

I also found interesting and somewhat curious the argument of the Senator from Wisconsin with respect to

joint damages. He said—and I believe I

am paraphrasing him correctly—why

should an innocent victim be deprived

of all of the damages that victim suffered even from a party not responsible

for all of those damages? That, if a retailer, for example, is responsible for

only 30 percent of the losses of an individual plaintiff, the plaintiff should

nonetheless be able to collect 100 percent of his total damages from that retailer.

Well, why not from you or me, Mr.

President? Under those circumstances,

what difference is there? Once we have

determined the defendant is responsible for more than what that defendant was responsible for, there really is

not any distinction between one citizen

and another.

Should we, for example, in the Criminal Code, when two brothers, one

wealthy and one not wealthy, are sentenced for a crime, each, in addition to

a jail sentence, is fined $100,000, say

that the wealthy brother should pay

the other brother’s fine because the

other brother cannot pay it? Well, of

course not. We would never think of

doing that in a criminal case. And yet

we do that constantly in connection

with joint liability.
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5707

That is not justice, Mr. President.

And if we feel that the victim should

always be fully compensated, then perhaps that is a duty of society as a

whole, but it should not be imposed on

one party not responsible for the particular harm for which compensation is

being sought.

I want to congratulate the Senator

from West Virginia on his marvelously

logical answers to the Senator from

California on research and development of new products. Of course, if you

look only at a particular victim, that

victim and that victim’s attorneys

want the maximum possible recovery.

But when the net result of the system

which causes that tells one very large

company that it should logically give

up AIDS research or contraceptive research lock, stock, and barrel because

the flame is not worth the candle, that

there are simply too many risks in the

development of a new product, it is not

an answer to say that there are other

companies that are still engaged in research. We in our society want the

maximum possible number of people, of

individuals and of companies, to attempt to deal with all of the ills which

afflict the human race.

We were not advantaged, to take another example, when 20 years ago 20

companies made and developed football

helmets and now only two are left.

That is not an advantage.

Mr. INHOFE. Will the Senator yield?

Mr. GORTON. The Senator is happy

to yield.

Mr. INHOFE. That is a good point to

yield on.

If you will forgive me for this observation. I have been watching the debate on this most significant bill. It

seems as if we have been hearing from

no one except lawyers. And I do not

want to lose sight of the fact that this

bill is not so much a legal reform as a

potential of being the largest jobs bill

passed in probably a decade.

When the Senator talks about the

football helmets, there are so many

products that used to be produced exclusively in America that are not produced here any more for that one very

reason. You mentioned football helmets. I could name a number of things.

But what comes to my mind, in the

real world, I was in the field of aviation. In fact, I have the distinction of

being the only Member of Congress to

ever fly an airplane around the world.

I remember, when I did that, going

across Europe and seeing where all of

the aircraft are being made today that

used to be made in America. Prior to

1980, we manufactured about 17,000 single-engine aircraft each year. In the

last 4 years, we have averaged about

400 a year.

And there is not any big mystery as

to why that happened. It happened because you cannot be globally competitive and offset the costs of product liability.

In fact, in the other body, when I was

in the Aviation Subcommittee, we had

a bill up that we were successful in getting passed finally this last year, the

Aviation Revitalization Act of 1994. We

had testimony from Beech Aircraft

that the average cost to offset the exposure of product liability was $83,000 a

vehicle. Obviously, if you are talking

about a large jet aircraft, that $83,000

is not all that significant. But when

you are talking about a single-engine

plane or a four-passenger aircraft, you

cannot be competitive.

We actually had the repose bill that

I think you remember and you were

participating over on this side on it.

I remember when Russ Meyer, who is

the president of Cessna Aircraft, testified before our committee. Now this is

a product liability bill that did one

thing. It said that once a manufacturer

of an aircraft or of aircraft parts had

had that aircraft or those parts functioning as they were designed to function for 18 years, beyond that point

they could not be held liable for something that went wrong with the product.

They had some exceptions to it. That

seemed to be very reasonable. Russ

Meyer, the president of Cessna Aircraft, said on the record, ‘‘INHOFE, if

you pass that bill, we at Cessna Aircraft will start manufacturing singleengine aircraft which we quit manufacturing in 1986 and we commit that we

will manufacture 2,000 airplanes in the

first year after the bill is passed after

our tooling up.’’

That is exactly what has happened.

You might remember when Piper Aircraft went into bankruptcy. There was

a news conference. The president of

Piper said that the reason they went

into bankruptcy was because they

could not be competitive on a global

basis. In fact, they even suggested they

could move their tooling up to Canada

and make the same airplanes and make

a profit, while they could not in this

country.

Anyway, as a result of all that, we

were successful in passing that bill. I

remember when it started out as being

a 12-year repose and then went to 15

years. When they finally agreed to settle on 18 years, I went to the underwriting community and said, ‘‘I think

that is too long.’’ They said, ‘‘No.’’

The point is there has to be some

point in the future in which lawsuits

cannot be lodged against manufacturers. It is now a reality. Since that

time, Cessna Aircraft has done what

they said they would do, they are producing aircraft.

I have heard estimates as to how

many jobs will be created nationwide,

and it is in excess of 25,000 jobs, just in

one industry where product liability

reform was the cause of the increase in

jobs.

We know in Kerrville, TX, Mooney is

now increasing their production rate

by 40 percent. We know that Unison is

now making electronic ignition systems. In my State of Oklahoma, there

is a single-engine manufacturer whose

first model will be coming off the assembly line in the next few weeks. It is

a composite single-engine airplane. We

know in Nowata, OK, they are making

cylinders, all because of one thing. We

reformed product liability in one industry and that industry happened to

be the aircraft industry.

So I think sometimes when we become too theoretical and try to guess

what the future will bring if we do this,

this is an actual case as to how many

jobs in America are being created as a

result of product liability reform only

in one industry.

I was very glad to be a part of that,

and you were, too. I certainly think

that is the most convincing evidence

that we should expand that to other

manufactured items.

Mr. GORTON. Mr. President, I thank

the Senator from Oklahoma for that eloquent statement. It does seem to me

that the experience of just the past

year, since the passage of that small

aircraft statute of repose, indicates

much more graphically than can any

theoretical argument the actual positive impact on jobs, on the availability

of new products, of American competitiveness. We do not have to argue theory anymore. We can now argue from

fact, and the burden of proof, it seems

to me, is on those who say ‘‘that far

and no further’’ is overwhelming.

I must tell you, when the Senator

from California stated that she felt

that no changes were needed in our

product liability laws, and when we got

the same implication from the Senator

from Wisconsin, I looked up their

record last year in voting on that aircraft bill expecting to find they voted

against it, but they voted for it. So

their position must be that aircraft is

the only thing where any kind of reform is needed. Nothing else. It was the

only industry adversely affected by

product liability litigation.

Of course, that proposition is insupportable. If a statute of repose alone

could have such a dramatically positive impact on the small aircraft industry, it is obvious that balance

changes, such as these are which, as I

already said, does not restrict anyone’s

right to recover all of their actual

provable damages in any product liability case, that the positive impact

of change is going to be dramatic and

significant.

For those who look back and say

here are terrible things that happened

and we want an absolutely risk-free society in any and all circumstances,

they see, I think quite erroneously, one

set of consequences. Those who feel

that we have not developed all of the

products that we ought to develop in

the history of the United States, that

we should encourage new developments

and that we should encourage competition, and that while those who make

serious mistakes, purposeful or negligent mistakes, should be responsible

for the consequences of those mistakes,

we are not going to add to that responsibility, absolutely unlimited, unfettered by any discretion, punishment

without any of the protections of the
S5708 CONGRESSIONAL RECORD — SENATE April 26, 1995

criminal code that we should do that,

seems to me, as I believe it does to the

Senator from Oklahoma, overwhelmingly obvious.

As I said in the beginning, and as the

Senator from Oklahoma said so eloquently, we now have one very positive

example of how this kind of legislation

works. Now let us do more of it, and I

think we will see an even more dramatic recovery in many industries

which have been constricted on the

part of many companies that have

abandoned lines of products and many

new companies, entrepreneurs who

would like to go into new businesses

and who are discouraged from doing so

by the specter of lawsuits.

Mr. ROCKEFELLER addressed the

Chair.

The PRESIDING OFFICER. The Senator from West Virginia.

Mr. ROCKEFELLER. Mr. President,

during the course of the discussion this

afternoon, it seems that the debate has

centered on the premise that somehow

there isn’t anything wrong with the

present system.

Let me try to lay out some of the

reasons why we need to change the

product liability system, not radically,

but change it in a way which makes it

fair to consumers and to businesses.

Let us just start out by saying the

consumers lose often under the current

system. They receive inadequate compensation through product litigation.

Severely injured consumers only recover about a third of their actual

damages, while their mildly injured

counterparts recover approximately

five times their economic losses. There

is a disparity there which is not good.

Consumers wait forever. They have

to wait 21⁄2 years to receive their compensation because of the whole process

of a trial and depositions and then appeals, particularly where punitive damages are concerned, which can force

people to wait even longer. So an injured person can be forced to wait between 21⁄2 to 4 years to get compensated

for something that happened to them,

let us say in a machine shop where

their hand was mangled which puts

them in a position of having to depend

entirely on their own resources, worker’s compensation, and health insurance, if they have any health insurance. The consumer pays heavily for

our current product liability system,

and that is because the costs of liability insurance increase the costs of

products that people need. Consumers

also suffer because manufacturers decide not to introduce needed new products, and thus the consumers do not

get the products they need. Consumers

may be paying 50 percent of the cost of

the ladder in insurance costs for liability. For some pharmaceuticals it is up

to 95 percent. Under our system, consumers can pay outrageous costs.

The current tort system pays more

to lawyers and transaction costs than

it does to claimants. That is really a

quite remarkable statement. How can

we have a product liability system

where somebody is injured and the lawyers on both sides end up getting more

money than does the injured person? I

do not understand why that is not

something that somebody would want

to change and make better. I think the

consumer loses on that.

The consumer also faces a closed

courthouse door under the current law,

and that is because in some States the

statute of limitations simply does not

allow the consumer to take his or her

request for due process into the courtroom because it is already closed; the

door is closed. And we are saying in our

bill that, in fact, we are going to make

sure that anybody who has been injured, but may not even know it at the

time because it may be a toxic injury

or a chemical injury of some sort, will

still be able to be compensated. Under

our bill, injured persons will still be

able to seek compensation 15 or 20

years after they have been injured if

they do not discover that injury until

that much time has elapsed. This is

called the discovery rule, and it applies

not only to the discovery that the individual is sick, but also to the cause of

the illness, and once that has been discovered, the statute of limitations for 2

years begins to run.

This is a very proconsumer change,

particularly in the world that we are

moving into, which has so many toxic

chemicals that can threaten the health

of consumers.

I think, also, because we have talked

about consumers—and this is meant to

be a balanced bill so let us also talk

about manufacturers. I think manufacturers lose under the current system.

Liability stifles research, and it stifles development. This has been amply

recorded in the literature. Many businesses spend a lot more on litigation

than on research and development.

That may not be the only reason. Companies tend to be pulling back on R&D

anyway. But the fact that they spend

more on litigation—many do—than on

R&D does not sound to me like an

American sort of system. Well, that is

our current system. I would think people would want to make it a better one.

Liability makes successful products

unmarketable.

I have already talked this afternoon

about Bendectin, the antinausea medication, different AIDS-related and preAIDS-related vaccines and medicines,

football helmets, and others. They simply are not made available because it is

decided they are too big a risk and

therefore Bendectin, which is available

in Canada and has been for years, is

not available in the United States, and

thus our consumers and our manufacturers lose under this because they are

precluded from doing something for

fear of litigation.

Liability decreases funding. That is

fairly obvious. The fear of product liability has diminished investment in

basic scientific research. Now, that is

important because you have basic research and you have applied research

leading to commercialization of a product, and they are very different. Basic

research is sort of the seminal research. That is the kind of thing where

you really have to have a sense of stability and predictability and confidence in the future, and that is now

way down, and part of the reason for

that is the fear of product liability litigation.

I think that the United States itself,

as a country, loses under the current

system of product liability. Insurance

rates disable manufacturers. American

manufacturers pay 10 to 50 times more

product liability insurance rates than

do their foreign competitors. Well, at

some point, when you are fighting over

every nickel in a car or in some vaccine, or something else, these things

matter, and the foreign country wins

out and we lose out. So America loses

out.

In fact, in Texas, in a single year,

they have estimated that the liability

system has cost the State of Texas

79,000 jobs. I cannot prove that, but

that is what has been said. Texas

stands behind that. Seventy-nine thousand jobs in West Virginia would be as

if a substantial part of the population

simply moved out. And then the funny

thing also is that there is no real proof

that the current product liability system does not enhance product safety.

It is interesting that the number of

tort suits rose dramatically in the

1980’s, even though consumer injury

rates declined steadily. Tort goes up,

injuries go down, and now that was not

just in the 1980’s but also in the 1970’s.

For 20 years, injuries were going down

and tort actions were going up.

Let me spend a moment discussing

the costs of the tort system in the

United States. Estimates of the cost of

tort litigation, of which product liability litigation is part, range from $80

billion to $117 billion a year. Concerning the need for uniformity, the United

States has 51 separate product liability

systems. The European Economic Community, which is 13 countries, has one

product liability system. Japan has one

system. I have worked very hard in

Japan. For years we had something

called the structural impediment talks

with the Japanese, and we would tell

each other what we thought each country ought to do to improve their performance so that our trade deficit

would get better and theirs would get

less better, and one of the things the

Japanese kept saying to us was that

you ought to get more uniformity into

your product liability laws because you

are getting eaten alive by a lot of countries, including ourselves.

This is staggering, and I hope that

those who hear my voice will listen to

this. Nearly 90 percent of all companies

in the United States of America can expect to become a defendant in a product liability case at least once. It has

been suggested that there were only 11

cases in which punitive damages were

awarded in 1990. But if 90 percent of all

businesses can expect to be sued at

some point, this is the so-called
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5709

chilling effect. Are 90 percent of American businesses doing the wrong thing

each day?

Manufacturers today can be sued for

products that were manufactured in

the 1800’s. I do not think that is the

American way.

Companies can be forced to pay damages to persons whose abuse of alcohol

and illegal drugs caused their injuries.

That is wrong; that is unfair. In 1994,

the Gallup survey said that one in five

small businesses reported that they

have decided not to introduce a new

product or not to enhance an existing

one out of concern for potential product liability. That is 20 percent of all

small businesses saying we are not

going to improve our product, or we

are going to withdraw the products we

are about to introduce.

Interestingly, the Brookings Institution found no link between lawsuits

and the safety of products. That is an

important statement. And they documented many instances where safety

improvements are not made, again, because of the fear of litigation. That

being, if they made an improvement, it

would imply that the previous iteration was somehow not safe and therefore they might get sued.

The United States is the only nation

in the world that allows a safety improvement to be admitted as evidence

that the preceding product was less

safe. We do it legally. Therefore, companies have reason to be afraid.

I note that it is 5 o’clock. I yield the

floor.

The PRESIDING OFFICER (Mr.

BROWN). Under the previous order there

will be 1 hour of debate equally divided

between the Senator from Michigan

and the Senator from South Carolina.

Mr. HOLLINGS. Mr. President, the

Senator from Michigan would amend

his amendment to provide not just

‘‘claimant’’ but ‘‘parties’’—which

would be both the plaintiff and the defendants.

Therein, Mr. President, goes right to

the reason—one of the big reasons—I

put in my amendment to his. It was

quite obvious to me, quickly reading

on last evening the amendment of the

distinguished Senator from Michigan,

that here they were getting plaintiffs’

lawyers. In my amendment I wanted to

get at all lawyers.

Now, right to the point, in this limited time, once again what we have,

Mr. President, is an issue that searches

for justification, or a solution looking

for a problem that has been going on

for some 15 years.

It started, of course, back in the Ford

administration whereby they said it

was a national problem, and President

Ford appointed a commission. The

commission found it was not a national

problem and recommended leaving it

to the States.

They were not satisfied with that,

Mr. President. They came in and said

insurance was impossible to obtain.

We, of course, refuted this argument,

and they do not even contend for it

today.

Otherwise, they came with the claim

that there was a litigation explosion

and we needed massive product liability reform in order to confront the national litigation explosion, which, of

course, was decreasing not increasing.

Then they came and said they were

not developing certain products out of

fear of litigation, this was particularly

true in the drug and chemical industry.

Of course when we were debating

NAFTA and GATT these industries

proclaimed that they were world class

and could compete with anybody in the

world. So then they came with competitiveness. There was a buzz word

that went on around here for about 5

years, that the market—by the way,

which now we will leave everything to

the market forces—the market was insufficient and what we needed was a

Congress to pass a law to make us competitive, and that unless we legislate

product liability we could not be competitive.

Of course, we pointed out in our own

backyard we had some 100 German industries, 50 Japanese industries, bluechip corporations of America, who all

were coming to my State and never

once complaining about product liability.

I have been the Governor and the

Senator there now for numerous years,

and the attraction of industry and we

can relate industry after industry almost get a habit of asking the question. So it was not competitiveness.

Then they started with various gimmickry with respect to the Little

League. They said, no, they were not

involved. And then they went, of

course, to the matter of the Girl

Scouts. The Girl Scouts said, ‘‘Wait,

wait. That is not the case at all. We do

not have a problem with product liability.’’

Then they had a little TV show where

a former colleague, Senator George

McGovern of South Dakota, came on

and said he went broke on account of

product liability. Now they have quit

running that because that is not the

case at all.

Still a solution searching for a problem, now they place their ace card—

lawyers, aha. Any time we take a poll

in America, immediately the disdain

for lawyers. So they say, if we cannot

get this bill passed on lawyers, it will

never pass.

It talks here in the amendment, as I

was just reading it, of ‘‘equity in legal

fees.’’ I challenged the distinguished

Senator from Kentucky and the Senator from Michigan on last evening to

bring me the series of product liability

cases where somehow the clients had

been done in by the plaintiff’s lawyers.

Of course, the amendment by the

Senator from Michigan termed it

‘‘claimants.’’ Now I guess he would like

to say, just a minute, we will change

‘‘claimants’’ to ‘‘parties’’ and get attorneys on both sides.

But there is not any question that

these men are very erudite and very

learned and have written books in law

and everything else of that kind, and

they knew what they were doing until,

of course, we put up our amendment,

and said, wait a minute, we will bring

into focus the real issue here, and that

is not product liability, but lawyers.

Now, if I could put in a bill to solve

the lawyers problem, I would do it.

However, I do not know that we are

that good here in the Senate of the

United States.

Be that as it may, the idea is, as was

said in Henry VI ‘‘Kill all the lawyers.’’

Take any poll, and if we can convince

the individual Members, who are busy

on so many different issues, to come

now and vote whether for or against

lawyers, they will vote against the lawyers, and we will get this bill passed.

I think of the saying:

Is life so dear, or peace so sweet, as to be

purchased at the price of chains and slavery?

. . . I know not what course others may

take, but give me liberty or give me death.

Patrick Henry, the lawyer.

We can see, Mr. President, that

young leader sitting with his bill in

hand, crafting the Declaration of Independence, Thomas Jefferson, the lawyer, or the father of the Federalist papers.

But what is government, save the best of

reflections on human nature? If men were

angels, the government would not be necessary. And if angels governed man, there

would be no need for controls over the government. So the task in formulating a government to be administered by man over

man is first, frame that government with the

capacity to control the government and

thereupon oblige that same government to

control itself.

James Madison, father of our Constitution.

Again, going up all Presidents right

on up to Abraham Lincoln. We can see

him, ‘‘equal justice under law,’’ signing

the Emancipation Proclamation. Abraham Lincoln, the lawyer.

Or the darkest days of the Depression, people searching for hope. ‘‘All we

have to fear is fear itself.’’ Franklin

Delano Roosevelt, a lawyer.

I can see now in December 1952,

standing before the Supreme Court of

the United States.

But your honor, if the State-imposed policy of separation by race is removed, the

young children will have the freedom to

choose their school and their own classmates

and play together.

The beginning of the end of segregation in this land. Thurgood Marshall,

of the NAACP, a lawyer.

Even today, we find Ralph Nader crusading for safety and health. On last

evening’s TV Morris Dees down in Alabama, working around the clock—or

Mississippi, I forget. I know Morris but

I have forgotten. I just came back from

Mississippi, but I know he has this

Southern policy on poverty, Southern

law center on poverty where he has

been tracking that Ku Klux Klan. And
S5710 CONGRESSIONAL RECORD — SENATE April 26, 1995

now the Michigan Militia and the others, against terrorism, at the risk of

his own life; Morris Dees, a lawyer.

We begin to wonder, if these lawyers

had been silenced what we would have

in this land? Obviously I am very proud

to be an attorney at the bar and I am

not going to join in this derision, save

of those who just really are fixers rather than lawyers at the bar, and Heavens knows this city of full of them—

60,000 lawyers and the majority of them

come now to fix us, the jury, on

billable hours.

Pat Choate wrote his book, ‘‘Agents

of Influence,’’ how the Japanese have

those attorney firms, over 100, retained

at a cost of over $110 million. The country of Japan, by pay, is better represented than the people of the United

States in Washington. The consummate pay of 535 House Members and

Senators is only $71 million. But they

are all over us, and that is the genesis

of this thing that has been going on for

15 to 16 years—the power of the lobby.

Because the problem does not exist. It

is not a national problem. We do have

product liability; 46 of the 50 States

have reformed their product liability

laws in the last 15 years. But now

comes the ace card, if we can play this

with respect to the equity of legal fees.

What is the equity? That is the most

amazing thing, to this particular Senator, to have the parties sponsoring

this legislation and trying to amend it

talking in terms of the consumer, how

they are looking out for the consumer.

Every consumer organization in the

country is absolutely opposed to this

bill. The American Bar Association,

they do not have lobbyists up here. The

Association of State Legislators, they

do not have lobbyists up here. The Association of State Supreme Court Justices, they do not have lobbyists up

here.

But yes, the Business Round Table,

the Conference Board, the National Association of Manufacturers, the chamber of commerce—yes, they keep big

buildings full of lobbyists. So we got

this legal reform movement going and

it has been a faltering point. So now

they will bring in equity in legal fees

on last evening—of course for plaintiff

and not for the defendant. Now the distinguished Senator says, ‘‘I want to

make it for both sides.’’ That is what

my amendment said.

Billable hours—we are paid at

$133,000. I figured it out. If we could

have, rather than a minimum wage,

have a maximum wage for these fixers,

we would have a $50 a billable hour limitation. If they work 51 hours, I would

give them $133,000 a year and then if

they work some on the weekend they

could go on up to a couple of hundred

thousand dollars—pretty good. But I

figure we ought to pay them as much

as we pay the Senators, and that would

be a goodly plenty and I think it would

clear out 30,000 of the 60,000—if we want

to get rid of the lawyers. If we want to

get rid of the lawyers.

So there is the amendment to bring

into focus the absolutely empty nature

of this particular initiative. And it is

lobbyists moved, organized, financed,

motivated, committed for in the campaigns. Yes, when I ran in 1992 I had

the different groups come to me:

‘‘Can’t you help us this time on product liability?’’ I said, ‘‘They just passed

the reform here in South Carolina.

What is the problem? Ask the judges;

go to talk to our judges. Most of them

are Republicans, obviously, in South

Carolina. They had been appointed by

President Nixon, President Reagan,

President Ford, President Bush. They

will tell you in a flash it is not a problem.’’ But they have to find some reason. Now they are playing the ace card,

and that is why I put up this particular

amendment.

I do not guess I will be able to control them. I would like to. But, be that

as it may, we have had our time at bat

to expose the nature of this particular

amendment and the nature of this particular legislation. It is absolutely not

in the interests of consumers, not in

the interests of good law. We have the

professors, 121 professors at law have

come as a group to attest against this

particular measure. They do not have

lobbyists up here. No, it was not considered in the Judiciary Committee

where fundamental law is considered.

There was a quick 2-day turn, adding

on amendments in the evening, destroying any idea of uniformity.

That is what they started with. At

least they had the good conscience to

change the title. I thought maybe it

was a gimmick, but I will give them

credit for conscience. You will find this

bill over on the House side, ‘‘To regulate interstate commerce by providing

for a uniform product liability law.’’

But when you get over to the Senate

side it is some kind of fairness act they

call it now. They at least got away

from the uniformity, not trying to continue that particular charade. ‘‘This

act may be cited as ‘The Product Liability Fairness Act Of 1995.’’’

So we have the amendment relative

to fees and instituting regulatory

measures—bureaucracy at its worst. I

have time to practice law but not to

keep all the records. I have a simple,

clear-cut contingent fee. I assume all

the costs, assume all the expenses, assume all the bills for the doctors, the

witnesses, assume all the printing

measures for the transcript of the

record, the appeal record and everything else of that kind going up to the

court—I assume all of those. And when

I get through, if we win then we get the

third. If we lose we get nothing and I

have paid all the bills.

It goes right to the heart of the misunderstanding of the distinguished

Senator from West Virginia, Senator

ROCKEFELLER, when he talks about

delays, the trial lawyers delay. Heavens above, you get 10 or 15 of these

cases you have backed up in the office

thousands of dollars of cost and hours

spent and never paid for. Billable

hours? I never had a client with

billable hours in 20 years of law practice, but you got that backed up. It is

in my interests to bring that to a conclusion. I have to move on these cases.

We are not trying to delay.

The ones who can sit up in the ivory

tower on the 32d floor with the mahogany walls and Persian rugs and all the

secretaries running around and all the

investigators and you press buttons

and say ‘‘Well, yes, I am having this

coffee but mark it down as thinking.

Give me another billable hour.’’

Come on. You are worried about lawyers and their fees? Let us get to the

defense counsel that is running up the

majority of the costs. He is absolutely

wrong. He is not for the consumers, the

Senator from West Virginia. They are

getting their money. They are not

complaining. And they are getting the

majority of it. When it comes to who

gets the majority of the fees, plaintiff

or the defendant, the defendants do.

The national insurance study, we put it

in the committee report, shows they

are the ones running up the costs. We

have no time or interest in running up

any kind of costs whatever.

It is a proud thing in America that

the poor and middle class can get competent representation. It has worked.

It continues to work. It is not a national problem. They never have had a

hearing in any particular body about

lawyers’ fees. But if that is the game,

then when we take up medical malpractice we will go into doctors’ fees.

And we will try these amendments and

initiatives that they have because they

cannot prove their case otherwise. I

wait for the distinguished Senators

from Kentucky and Michigan to show

me the series of cases in product liability where there was not any, as the

title says here, ‘‘equity in legal fees.’’

I retain the remainder of my time.

The PRESIDING OFFICER. The distinguished Senator from South Carolina retains the remainder of his time.

It is 11 minutes.

The distinguished Senator from

Michigan is recognized.

AMENDMENT NO. 597, AS MODIFIED, TO

AMENDMENT NO. 596

Mr. ABRAHAM. Mr. President, I

yield myself such time as I desire.

Mr. President, following discussions

with my colleague from South Carolina, and the managers, I ask unanimous consent to modify the underlying

first-degree amendment. I send the

modification to the desk.

The PRESIDING OFFICER. Is there

objection to that modification?

Mr. HOLLINGS. No objection.

The PRESIDING OFFICER. Without

objection, it is so ordered.

The amendment (No. 597), as modified, to amendment No. 596, is as follows:

At the end of the amendment add the following new title:

TITLE III—EQUITY IN LEGAL FEES

SEC. 301. EQUITY IN LEGAL FEES.

(a) DISCLOSURE OF ATTORNEY’S FEES INFORMATION.—
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5711

(1) DEFINITIONS.—For purposes of this subsection—

(A) the term ‘‘attorney’’ means any natural person, professional law association, corporation, or partnership authorized under

applicable State law to practice law;

(B) the term ‘‘attorney’s services’’ means

the professional advice or counseling of or

representation by an attorney, but such term

shall not include other assistance incurred,

directly or indirectly, in connection with an

attorney’s services, such as administrative

or secretarial assistance, overhead, travel

expenses, witness fees, or preparation by a

person other than the attorney of any study,

analysis, report, or test;

(C) the term ‘‘party’’ means any person

who retains an attorney in connection with a

civil action arising under any Federal law or

in any diversity action in Federal court;

(D) the term ‘‘contingent fee’’ means the

cost or price of an attorney’s services determined by applying a specified percentage,

which may be a firm fixed percentage, a

graduated or sliding percentage, or any combination thereof, to the amount of the settlement or judgment obtained;

(E) the term ‘‘hourly fee’’ means the cost

or price per hour of an attorney’s services;

(F) the term ‘‘initial meeting’’ means the

first conference or discussion between the

party and the attorney, whether by telephone or in person, concerning the details,

facts, or basis of the claim; and

(G) the term ‘‘retain’’ means the act of a

claimant in engaging an attorney’s services,

whether by express or implied agreement, by

seeking and obtaining the attorney’s services.

(2) DISCLOSURE AT INITIAL MEETING.—

(A) IN GENERAL.—An attorney retained by

a party shall, at the initial meeting, disclose

to the party the party’s right to receive a

written statement of the information described under paragraph (3).

(B) WAIVER AND EXTENSION.—The party, in

writing, may—

(i) waive the right to receive the statement

required under subparagraph (A); or

(ii) extend the 30-day period referred to

under paragraph (3).

(3) INFORMATION AFTER INITIAL MEETING.—

Subject to paragraph (2)(B), within 30 days

after the initial meeting, an attorney retained by a party shall provide a written

statement to the party containing—

(A) the estimated number of hours of the

attorney’s services that will be spent—

(i) settling or attempting to settle the

claim or action; and

(ii) handling the claim through trial;

(B) the basis of the attorney’s fee for services (such as a contingent, hourly, or flat fee

basis) and any conditions, limitations, restrictions, or other qualifications on the fee

the attorney determines are appropriate; and

(C) the contingent fee, hourly fee, or flat

fee the attorney will charge the client.

(4) INFORMATION AFTER SETTLEMENT.—

(A) IN GENERAL.—An attorney retained by

a party shall, within a reasonable time not

later than 30 days after the date on which

the claim or action is finally settled or adjudicated, provide a written statement to the

party containing—

(i) the actual number of hours of the attorney’s services in connection with the claim;

(ii) the total amount of the fee for the attorney’s services in connection with the

claim; and

(iii) the actual fee per hour of the attorney’s services in connection with the claim,

determined by dividing the total amount of

the fee by the actual number of hours of attorney’s services.

(B) WAIVER AND EXTENSION.—A client, in

writing, may—

(i) waive the right to receive the statement

required under subparagraph (A); or

(ii) extend the 30-day period referred to

under subparagraph (B).

(5) FAILURE TO DISCLOSE.—Except with regard to a party who provides a waiver under

paragraph (2)(B) or (4)(B), a party to whom

an attorney fails to disclose information required by this section may withhold 10 percent of the fee and file a civil action for damages in the court in which the claim or action was filed or could have been filed.

(6) OTHER REMEDIES.—This subsection shall

supplement and not supplant any other

available remedies or penalties.

(b) EFFECTIVE DATE.—This title shall take

effect and apply to claims or actions filed on

and after the date occurring 30 days after the

date of enactment of this Act.

Mr. ABRAHAM. Mr. President, the

distinguished Senator from South

Carolina indicated, as we discussed the

effect of the modification, it is to correct the transpositional error that

took place when we took language

from another piece of legislation and

created this amendment. My intent

was, and remains, to apply the amendment that I offered initially, not just

to the clients of plaintiffs’ attorneys

but to the clients of defense attorneys

as well. That is the purpose of the

modification, to fundamentally change

the word from ‘‘claimant’’ to ‘‘party’’

so it would apply to all cases.

Mr. President, what I would like to

do is talk briefly about why this

amendment was offered initially and to

clarify some ambiguities and some

misunderstandings that appeared to

exist and comment a little bit about

the merits of the amendment.

First of all, let me begin by saying

that I am an attorney, as is the Senator from South Carolina and many

other Members of this body. I respect

my colleagues who are lawyers. I respect the attorneys who practice in my

State and those who practice in the

other States. I believe most lawyers

are doing an outstanding job, and I

think that consequently the amendment I am offering is not going to really have much effect on the overwhelming percentage of attorneys in America. In fact, the goal of my amendment

is essentially to eliminate bad practices undertaken by some attorneys

who do not attempt to keep their clients well informed as to the arrangements into which they enter.

Often we have, particularly in cases

where clients who are less experienced

in the legal system, clients who are unsophisticated about the ways in which

attorney-client relationships work, we

have situations where clients are less

informed than they should be about the

arrangements they are entering into.

Such is the case when I go to have my

television or my automobile repaired

and inquire ahead of time for some assessment of what the cost will be and

what is wrong with the car or the television set. I think many clients of attorneys need similar help to make informed decisions about the types of arrangements that they will enter into.

That is basically the purpose of my

amendment. People are unhappy in my

State and elsewhere with respect to the

way the current system of legal fees is

entered into.

Just to mention a couple of cases in

point, I recently received a letter from

a Michigan resident who wrote that the

U.S. District Court for the Northern

District of Illinois had just notified

him that he was included in a class action case, and the court soon would be

holding a hearing whether to give final

approval to a settlement with Chrysler

Corp. under the proposed settlement.

Under the alleged defect in the Chrysler credit leases, each class member

was going to be paid between $2 and

$2.50. The attorney who brought the

case would be paid up to $175,000. Under

this agreement, the lawyer would get

enough money to buy a big, new house.

The victims would get enough to buy a

Big Mac.

That struck me as hardly the kind of

appropriate practice that we should

tolerate without the clients having full

information as they become engaged in

the matter. That is the reason a number of organizations that represent

consumers have called for the kind of

amendment which I am offering here

today.

Bill Pride, the executive director of

an organization of Americans who are

for legal reform—and the only

consumer group, I might add, that has

publicly stated that it accepts no

money from big business, supports disclosure of attorney fees, and the sort of

approach I am taking with this amendment—recently testified before the

House Judiciary Subcommittee on

Courts and Intellectual Property. He

stated that because of its complexity

and expense of lawyers, the legal system is inaccessible to more than half

the population when they have legal

problems. For low-income people, legal

help is almost nonexistent except for

the most poor, who qualify for legal

aid. Millions of middle-income people

cannot get any help from lawyers for

simple remedies because of the complex and expensive and intimidating

procedures established by the legal

profession.

He went on to indicate the need for

reform. One of the reforms that his organization supports is the kind of fee

disclosure proposal which I am offering

here today because of its potential

value to the clients as they enter into

legal relationships and negotiate fees.

So indeed there are people who are

not satisfied with the information they

have with regard to entering into legal

arrangements and who are not sophisticated enough in dealing with entering

into those relations to enter into them

in a knowledgeable way, or to even

know what their options are.

My coming here today is not to argue

that fees are too high or too low or

wrong or right. I did not come before

the Senate with this amendment to affect the fees that are paid. What I came

here for was to try to provide a system

by which fee arrangements would be
S5712 CONGRESSIONAL RECORD — SENATE April 26, 1995

entered into by the less sophisticated

among us on a knowledgeable basis.

The requirements I am suggesting in

the amendment I believe are both simple and fundamentally fair. Without

going into all of the details again, as I

did yesterday, basically the amendment requires attorneys—and under

the modification, this will be for the

defense as well as for plaintiffs’ counsel—prior to the entering into an arrangement to provide the potential client with information as to an estimated amount of time that would be

involved in handling the matter with

an explanation of the various options

available as far as the nature of the arrangements that would be entered into,

whether it would be hourly billing, or a

national fee, or a contingent fee, and

then an explanation as to the type of

fee as well as the specific amounts that

would be employed; in other words, the

per-hour amount, the contingent percentage, or the national fee. Following

completion of the matter, a similar

kind of accounting would take place in

which the actual hours would be made

available to the client, the amount of

the fee which was ultimately calculated or charged, and then the computation of what the hourly rate would

be.

I recognize that for some small law

firms, this may be more burdensome

than for others. But like the Senator

from South Carolina, who I gathered

was in a small firm at one time in his

career, I began my legal career when I

left law school in a small firm in Lansing, MI. We did not have a lot of fancy

computer equipment or access to accountants. But we did maintain a pretty good recordkeeping of our own efforts and the hours that we put in on

matters, regardless of the nature of

those matters because, simply, we

thought it was to be able to operate

our offices in an efficient fashion, as

well as to serve our clients better and

to be able to satisfy requests of this

sort if they were to come from clients

who knew their rights included the

ability to make such requests. But I

will add a few other points.

The amount that I am offering has

several options in it. One is a waiver

option. Clients may, under the amendment, waive their rights to this information either preliminary to or following the transaction of a legal matter.

It does not require, therefore, that in

each case the attorney provide this information.

Second, I think it is very consistent

with a recent formal opinion, formal

opinion No. 94–389, addressing attorneys’ contingent fees, which was recently entered into by the American

Bar Association Standing Committee

on Ethics and Professional Responsibility. That section, at page 7, said that,

among other things, regardless of

whether the lawyer and the prospective

client, or both, are initially inclined

toward a contingent fee, the nature

and details of the compensation arrangement should be fully discussed by

the lawyer and client before any final

agreement is reached.

It went on to say that among the factors that should be considered and discussed are the following: The likelihood of success, the likely amount of

recovery or savings if the case is successful, the possibility of an award exemplary or multiple damages, and on

and on. And included in the things that

were recommended was the amount of

time that is likely to be invested by

the lawyer.

In other words, the proposal I am

making is not the only one that I think

many lawyers already follow. It is also

something which the American Bar Association, which may be on different

sides of other parts of this pending legislation, has in its own recent opinion

suggested ought to be followed.

Finally, I will just say that we are

not in this legislation telling the

States what to do. This amendment is

limited to actions within the Federal

court; in short, within the purview of

what I believe is the appropriate purview of this Congress in determining

the areas in which we might apply

these types of regulations; in short, the

matters before our Federal courts.

So I would just conclude by saying

that when I proposed this and brought

it to the floor, I really did it with a belief it essentially was a matter which

would give consumers more information, a right to know what the legal

fees they were entering would be like,

what they should anticipate, what

their options were, an accounting for

those fees. In no way was it my intention to cast aspersions on the legal profession. Certainly it was not my intention to be critical of the many fine lawyers who are referenced by the speech

of the Senator from South Carolina. I

hope that was not the case.

We are always hearing in the Congress the concerns that virtually all of

us have I think about consumers, about

the interest of consumers, about the

interests of people who are frequently

finding themselves in a disadvantaged

position with respect to big business,

with respect to big Government, with

respect to other big institutions. Many

of those individuals find themselves

from time to time in circumstances

where they would like to litigate a concern or defend one. If they are not well

informed, it seems to me they are at an

even greater disadvantage, and I believe that this amendment provides a

chance to help them and at the same

time improve the legal system.

It is the case that there is a lot of

criticism about lawyers and the way

the legal system works. One of the reasons this legislation on product liability was generated obviously was because of concerns about the system. I

do not want to kill all the lawyers. I

wish to improve the legal system. I

think by eliminating from the many

concerns people have the concern that

they are brought into legal arrangements without the full knowledge of

their options, without the full accounting of the time and the dollars involved, that it would substantially improve the system and the way it functions.

Finally, as I said a little earlier, I

think we are asking here lawyers to do

nothing more than we ask of many

other professionals in many other service parts of the economy. As I mentioned, when I go to the auto shop with

a car problem, I am given information

as to what is likely to be wrong, what

the likely cost of repairs are, and so

on, so that I can make an informed decision whether I wish to pursue repair.

We are told that it is harder to do

that in this context because it is a

more complex area, and I agree it is

more complex. But I think, because of

its complexity, because it is a more difficult area, that is all the more reason

why we should try to get the people

who come into this often intimidating

setting the sort of information that

would allow them to make knowledgeable decisions. That is the purpose of

my amendment.

At this time, Mr. President, I reserve

the remainder of whatever time I have

remaining.

The PRESIDING OFFICER. The Senator from Michigan has 17 minutes remaining.

Who yields the Senator from West

Virginia time?

Mr. ROCKEFELLER. Mr. President, I

yield myself time.

The PRESIDING OFFICER. The Senator from West Virginia is recognized.

Mr. ROCKEFELLER. Mr. President,

at 6 o’clock, we are going to have two

votes, and as the Democratic manager

of this bill I wanted to alert colleagues

on both sides as to the plan that the

Senator from Washington [Mr. GORTON]

and myself have, what we are going to

do so that Senators might be appraised

of the situation.

The PRESIDING OFFICER. Will the

Senator suspend for a moment. Since

we are under a time agreement, the

Chair asks who yields the Senator from

West Virginia time?

Mr. ROCKEFELLER. I yield myself 3

minutes.

The PRESIDING OFFICER. The time

remaining is divided between——

Mr. ABRAHAM. Mr. President, I so

yield.

The PRESIDING OFFICER. The Senator from Michigan yields the Senator

from West Virginia time. The Senator

from West Virginia is recognized.

Mr. ROCKEFELLER. Again, I want

to let my colleagues know of the situation and what Senator GORTON and I

will do at 6 o’clock. We are here to consider repairing something called the

product liability bill. We are not here

to determine the hourly rates of lawyers. We are not here to do a variety of

other things.

Therefore, the Senator from Washington will move to table the amendment of the Senator from South Carolina, and I will move to table the

amendment of the Senator from Michigan.
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5713

We are not here, again, to determine

how lawyers’ fees should be publicized.

That is my reason. I understand the interest that both Senators have in raising these questions. But I want the

Senate to consider a bill that has been

the subject of hearings, close scrutiny,

and careful work, and that is called the

product liability bill. I do not think

this bill is the bill to use as a vehicle

for regulating the fees of lawyers, telling them how to publicize their fees or

intervening into the lawyer/client relationship.

In moving to table these amendments, the managers and authors of

this bill want to make a point, however. We are discouraging, actively discouraging amendments outside the

scope of the product liability bill itself.

We welcome constructive revisions to

this bill within the context of the bill,

but we do not welcome the phenomenon of loading up on this bill for the

purpose of making points, some of

which might be valid, but we just do

not want to do that. And we do not

want to have amendments scoring

points against lawyers.

So we are here to do the serious work

of the product liability bill, and I want

my colleagues to be informed as to how

the managers will proceed.

I thank the Senator from Michigan

and I thank the Presiding Officer.

The PRESIDING OFFICER. The Senator from Michigan retains 143⁄4 minutes. The Senator from South Carolina

has 11 minutes remaining.

Who seeks recognition? The Senator

from South Carolina is recognized.

Mr. HOLLINGS. I thank the distinguished President.

Mr. President, I am trying to find—I

thought we had found it. After the day

was over last evening, I went back to

my office and I said on that airline

case, several airlines really of overcharging, and the lawyers steamed up a

class action, and as the distinguished

Senator from Michigan reported in a

letter to the colleagues, the lawyers

got some $16 million and others got

coupons worth $20 or $25, one of my secretaries said, ‘‘Yes, that got lost in the

mail. You had a chance to do it.’’ But

I said I never heard it, but I had plenty

of money left on the table, I guess, because I never knew anything about the

case. So a young attorney in my office

said, ‘‘Well, I denied knowing anything

about the case, but I got $150 when I

got notice.’’ I said, ‘‘Well, who are the

lawyers?’’ He said, ‘‘I don’t care. I do

not know who the lawyers were and

don’t care. They got me some money.’’

Now, no one is complaining about the

lawyers and no one is inventing equity.

The truth of the matter is we had some

15 years ago, I say to the Senator from

Michigan, a big debate about the Federal Trade Commission coming in and

regulating attorneys and attorneys’

fees and everything else of that kind.

And we can have the hearings again

and come back and go over that thing.

But in the last dozen years we have not

had hearings on this. The best the Senator from Michigan refers to is a letter

from Michigan about a class action and

one gentleman over on the House side

who testified supporting disclosure of

fees. I hope he does support disclosure

of fees. All of us at the bar do.

Here I hold in my hand ‘‘Model Rules

of Professional Conduct and the Code

of Judicial Conduct’’ from the Center

of Professional Responsibility of the

American Bar Association. And we

practice under this. And it has on page

18 rule 15 about the fees and it runs

down—I do not want to spend all my

time, but it has not only the time and

labor required, much better than the

amendment of the Senator from Michigan, the amount involved, the time

limitations, the nature and length of

professional relationship, the experience, whether the fee is fixed or contingent, right on down, all in writing.

I never have found that client—I

guess that is the nice experience of

mine—complain to me about the handling of product liability.

And we have had it up five times before the Commerce Committee, five

times with hearings, five times the report and we had every ramification

that you can think of on product liability, and here we come again and without ever having any testimony whatsoever or the subject raised about fees, a

Senator or a couple say, well, let us go

to lawyers. We cannot get them on the

Girl Scouts or the Little League. We

cannot get them about their former

colleague going broke.

There is no litigation explosion. The

only explosion is businesses suing businesses. And after all, remember, we are

representing consumers. Now, if anybody believes that, I happen to represent the consumers in this instance

and not the manufacturers. They are

trying to take advantage here, when

we are talking about welfare reform,

making the recipients more responsible, we are going backward and saying manufacturers be more irresponsible. We have got a long litany in this

debate about the good in America for

the safety of products. We can count on

it. It redounds to our safety and our

health; we almost take it for granted.

Where there have been some adjustments, the States have taken care of

it. But fees, the equity in fees, to assume that there is not any and that

you need to pass a law in Congress to

get it is ludicrous, really laughable.

I mean any lawyer go down here, or

anybody else, to my billable hours

friends. They will tell you the American Bar and everything else like that.

They do have an understanding with

the billable hours. They like it. The

phone rings. ‘‘Wait a minute.’’ ‘‘There

is another $25. I answered the phone.’’

‘‘You got a copy of that? Twenty-five

cents for every copy. Run some extra

copies. We have to pay for the copy machine.’’

‘‘Put a little fee on the computer.’’

Senator ABRAHAM and I can get computers now. Put fees on those. Little

internal fees for computers, like these

MRI’s at the hospitals, paid for five or

six times. They have bought every

computer downtown 10 or 15 times with

little fees on the computers.

Lawyers know how to look at these.

I am one trying to look out for the clients. Let us not diminish the rights of

the clients.

I can tell you now, yes, in Henry VI,

Dick the butcher says, yes, that the

first thing we must do is kill all the

lawyers. That was not, in a sense, a demeaning or pejorative term. He was

saying, if tyranny was to succeed, the

tyrants must first kill the lawyers.

And if demagoguery is going to persist

and succeed, then we are going to have

to get rid of all the lawyers who are

going to expose the demagoguery that

is going on in our Government today.

I can tell you here and now, I am

proud of that expression ‘‘Kill all the

lawyers,’’ because it is the best of all

compliments. We stand in the way of

the takeover of the big business and

the clients that have kept this going

for 15 years, again and again and again

and again, with commitments and elections and everything else working. And

it is that poor, injured client in middleclass America, they cannot pay any

billable hours, so they come in.

And, yes, you know, no matter how

thin the pancake, there are two sides

to every pancake and every question.

And you do not have a sure shot. You

have to get all 12 jurors. You do not try

a case and get a majority vote as we do

in the Senate. You have to get a unanimous vote by the greater weight of the

preponderance of the evidence, or for

punitive, willful misconduct, by the

greater weight of the preponderance of

the evidence.

Do not act as though there is a problem out there with respect to the trial

of cases. If there is runaway verdicts, it

is businesses suing businesses upon

suing businesses upon suing businesses.

They love to come all dressed up and

go in the boardroom and say, ‘‘Well,

take them on.’’ Of course, the lawyers,

billable hours, ‘‘Hot dog. That will

take care of the family and send my

boy through college during the next 4

years. Billable hours, whoopee. We had

a board meeting today, and let me tell

you who we are going to sue. I have no

idea if they are going to win it, but it

will take care of me.’’

That is what has been going on in the

courtroom and cluttering it up, and

not these tort claims because, yes,

they are more safe. There is less injury, and if there is less injury, there is

less tortuous injury.

I cannot understand the logic of the

Senator from West Virginia, who uses

his hands up and down, whatever it is.

It is not relevant whatsoever, or not

responsive.

I retain the remainder of my time.

The PRESIDING OFFICER. The Senator from South Carolina retains the

remainder of his time. He has a little

over 2 minutes remaining.

Who seeks recognition?

Mr. ABRAHAM addressed the Chair.
S5714 CONGRESSIONAL RECORD — SENATE April 26, 1995

The PRESIDING OFFICER. The Senator from Michigan is recognized.

Mr. ABRAHAM. I yield myself such

time as I desire.

Mr. President, I just want to reiterate a couple of points I made. The

purpose of the amendment which I

have offered is not defined to affect

legal fees. In fact, it is the second-degree amendment that the Senator from

South Carolina has offered which

would attempt to put constraints on

those fees.

Again I express, all I am trying to do

is provide information, both before as

well as after the entering into of a

legal arrangement between clients and

their attorneys.

I think the descriptions of such an

amendment as being overly bureaucratic and so on is really inconsistent

with several facts. First, the fact is

that whether it is the distinguished

Senator from South Carolina or other

Members of this Chamber who are attorneys that I have spoken to on this

or heard from about it—and I have

heard from several—virtually to a person, they indicate that in one way or

another they already perform the function of information and transmission

that we are talking about.

The attorneys in my State who have

talked to me prior to the offering of

this amendment and since have likewise said that in their current arrangements, they provide similar information. But they all acknowledge, at

least the ones in my State, that there

are people in the practice of law who do

not. And the people who are unfortunate victims in these situations are the

less knowledgeable, the people who are

less familiar with the legal process and

what their rights are when they enter

into these kinds of arrangements. They

frequently are in a disadvantaged position because they are the victim of an

injury or a harm and in a disadvantaged position because they are intimidated entering into the legal process itself.

Again, I stress that this is really, in

my judgment, a choice between helping

consumers or inconveniencing those attorneys who do not follow the various

American Bar Association and State

bar association guidelines that both

the Senator from South Carolina and I

have referred to or the practices of

most attorneys.

It seems to me that to inconvenience

those attorneys who do not feel it is

their responsibility to at least inform

their clients as to the kind of fee arrangements they are going to enter

into and the likely amount of time involved, as well as to inform them after

the fact of what the costs are and how

much time was involved, to worry

about inconveniencing them rather

than worrying about protecting those

consumers of legal services that are at

least the victims I am trying to help

with this legislation is to have the balance struck the wrong way.

So, for that reason, I believe the

amendment makes sense.

I would also just reference back to

the example we used yesterday that

was in a letter we sent around regarding the airline matter. It was brought

to my attention by an article in the

Washington Post. The article was written from the perspective of one of the

various people who were part of the

class of people that were affected and

received these awards. It was not a

complimentary position that was

taken by that plaintiff. It was a position of somebody who apparently was

representative of a lot of other plaintiffs that were not happy. They were

unhappy with the outcome. That is

often the case. I think it is particularly

the case when people have no information as to what the fee structures will

be. And for that reason, I think the

amendment that I am offering, as I

say, will help consumers.

It may prove to be an inconvenience

for some attorneys, but those attorneys who will be inconvenienced are

the ones who are not following the

kinds of practices and recommendations of the bar association as are

those of the profession who I think are

doing an outstanding job.

Mr. President, I reserve the remainder of my time.

The PRESIDING OFFICER. The Senator from Michigan reserves the remainder of his time. He has 10 minutes

and 42 seconds remaining.

Who seeks recognition?

Mr. HOLLINGS addressed the Chair.

The PRESIDING OFFICER. The Senator from South Carolina is recognized.

Mr. HOLLINGS. Mr. President, just

in the minute or so that I have remaining, I ask unanimous consent to have

printed in the RECORD the full text of

this Monday edition.

There being no objection, the article

was ordered to be printed in the

RECORD, as follows:

[From the Washington Post, Mar. 20, 1995]

IN SETTLING WITH AIRLINES, THERE’S NO

FREE RIDE; COUPONS FOR TRAVELERS, $16

MILLION FOR LAWYERS

(By Anthony Faiola)

When a number of the nation’s major airlines agreed to settle a price-fixing lawsuit

by offering passengers discount coupons on

air fares, it looked as if the flying public was

getting a plum.

But passengers soon discovered, after the

coupons arrived in January, that there

would be no free rides because the terms of

the settlement limited savings on any one

trip.

Meanwhile, the airlines—defendants in the

class-action lawsuit that led to the settlement—found themselves with a wonderful

marketing tool. Although the coupons had a

total face value of $438 million, they could be

redeemed only a few dollars at a time.

And the lawyers who represented the members of the class in the suit were the ones to

make real money—$16,012,500.

The legal fees and the limited benefits to

the flying consumers have led many travel

and legal experts, including the federal judge

in Atlanta who signed the settlement, to

label this a ‘‘lawyers’ case.’’

‘‘Defendant and plaintiff attorneys have

learned to fall in line with each other’’ in

class-action cases, said Cornish Hitchcock,

an attorney with Washington consumer activist group Public Citizen. ‘‘A sweet settlement deal for the defendants can be cut, and

the plaintiffs can get their huge attorneys’

fees, then everyone is happy. Everyone, that

is, except for the class,’’ he said. Hitchcock

was among those who argued for lower legal

fees in the case.

The 4.2 million plaintiffs in the airline case

had little choice in who represented them.

Thirty-seven law firms nationwide raced to

file antitrust suits on behalf of air travelers,

then went in search of a class of clients.

Five firms, in particular, came away with

the most in fees, court documents showed.

They included the offices of the four lawyers

who chaired the steering committee representing the plaintiffs and the Atlanta firm

that oversaw the administration of the case.

In Washington, the firm Cohen, Milstein,

Hausfeld & Toll received $326,912,08. In Philadelphia, considered by legal experts as the

power center of class-action firms, Fine,

Kaplan and Black received $155,685.75; Cohen,

Shapiro, Polisher, Shiekman and Cohen received $261,117.03; and Kohn, Nast, Savett,

Klein & Graf received $382,277.14. In Atlanta,

the firm Carr, Tabb & Pope received

$504,980.16, according to court records.

Attorneys calculated the awards based on

an estimate that 2.3 million travelers would

request coupons. Instead, almost double that

number responded, which led to lower awards

for all plaintiffs.

FRUSTRATION FOR TRAVELERS

The coupons cannot be used for flights during certain blackout dates and cannot be

pooled for significant discounts. The largest

discount on a $240 ticket, for instance, is $10.

Travelers such as Adams Morgan resident

Geraldine Triana, one of 4.2 million passengers who gathered years-old flight receipts in the hopes of gaining an award, said

the case amounted to frustration and wasted

time.

Triana, who flies primarily between Long

Island and Washington on fares of less than

$200, doubts she’ll get much use from her

four coupons, each valued at $25. To get a

full $25 credit, she has to buy a ticket worth

at least $250.

‘‘Where is the justice in that?’’ she said.

The coupons do offer sufficient incentive

that consumers want to use them, making

them an effective marketing tool for the airlines. In fact, Alaska Airlines, one of the few

large carriers not named in the original case,

asked to be a defendant when it learned of

the coupon program and was accommodated.

‘‘The airlines using those coupons are

going to see substantial additional ticket

sales because of them,’’ said Louis Cancelmi,

a spokesman for Alaska Air. ‘‘We asked to be

named in the case because, once we saw the

settlement, we realized it was to our competitive disadvantage not to do so.’’

Spokesmen for the other defendant airlines—American, Continental, Delta, Northwest, TWA, United and USAir—cited the

court-approved agreement that provided the

coupons and declined to comment further.

Under the agreement, the defendant airlines

did not admit fault. Eastern and Pan American World Airways, both now defunct as operating entities, also were among the original defendants.

In her Philadelphia office, Dianne Nast,

one of four lawyers who served as co-chair of

the plaintiffs’ committee, said that the 4.2

million plaintiffs ‘‘should be satisfied’’ with

what they got. Coupons, she said, ‘‘are better

than nothing.’’

‘‘Just because a settlement may benefit a

defendant doesn’t mean it won’t benefit the

plaintiff; that’s not logical,’’ said Nast, a

partner in Philadelphia’s Kohn, Nast, Savett,

Klein & Graf. She now is working on class-
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5715

action cases against tobacco and siliconbreast implant manufacturers.

BEST JOB POSSIBLE

Nast said she and her colleagues expended

thousands of hours of legal time wrangling

against some of the best corporate attorneys

in the business. Class-action cases, she said,

remain the best way to bring together scores

of people commonly wronged, but who could

never gain retribution on their own.

‘‘Considering the circumstances, we did the

best job possible,’’ Nast said. ‘‘I don’t feel

the fees were too high. In fact, in this case,

I would say they were low.’’

The lawyers had asked for $24 million in

fees and expenses. The federal judge in the

case lowered that amount to slightly more

than $16 million.

The case started in the shadow of Washington Dulles International Airport, where the

Airline Tariff Publishing Co. (ATP) has its

headquarters.

The company is owned by 30 domestic and

international air carriers and was created by

the airline industry to distribute fares to

travel agencies through one database.

But in 1989, the U.S. Justice Department

was alerted by reports in the aviation trade

press of suspicions that the database was

being used for electronic fare negotiations

among its member carriers.

Mark Schechter, deputy director of operations for the department’s antitrust division, said an investigation was begun in the

summer of 1989. Schechter said the Justice

Department believed the airlines were comparing fares through the computer system

before they were listed on travel agents’

computers.

For example, according to Justice Department interrogatories filed in connection

with its case, United Airlines inserted a

‘‘proposed’’ fare into the ATP computer on

Dec. 15, 1988, that would increase prices by

$15 between Chicago and several cities. Two

weeks later American, Braniff, Continental,

Delta, Northwest, TWA, USAir and Piedmont, which later merged into USAir, also

posted ‘‘proposed’’ increased fares in the

computer, matching United’s and essentially

ratifying its increase. On Jan. 14 all these

airlines implemented the suggested $15 increase.

On Dec. 21, 1992, the department filed a

civil antitrust suit against most major airlines in U.S. District Court. The Justice Department settled its case with the airlines

last March. The airlines agreed to stop using

the database to compare fares but did not

admit fault.

‘‘This was a major case, probably the most

important civil antitrust case brought since

AT&T,’’ Schechter said. ‘‘It was hotly contested and hotly litigated, there were nine

defendants out there and each of them had

top legal talent, they were very well represented and ready for a fight.’’

On June 28, 1990, long before the Justice

Department settlement, lawyer Nast read

about the department’s investigation in the

Wall Street Journal. She immediately asked

her Philadelphia firm’s researchers to begin

investigating.

Dozens of other lawyers saw the Journal

story too and launched their own investigations. In Washington, Philadelphia, Atlanta,

San Francisco and more than a dozen other

cities, firms specializing in class-action litigation rushed in.

‘‘I had heard some things, you know, some

hints at Washington parties, that this airline

case was brewing,’’ said Jerry Cohen, a

Washington lawyer who was co-lead counsel

on the case. Cohen is a former member of the

Senate antitrust and monopoly subcommittee and his firm, Cohen, Milstein, Hausfeld &

Toll, played a key legal role in the Exxon

Valdez case. The tanker Exxon Valdez ran

aground in 1989 in Alaska’s Prince William

Sound, spilling 10 million gallons of oil.

‘‘But when we saw the Journal article, we

assigned a couple of people to look into it,

and we prepared a complaint. Before we

filed, we talked to several other law firms to

find out how they were going to handle it.’’

By August, 37 firms had filed suits.

The attorneys, Cohen said, used a complicated formula to quantify the airlines’ liability, and came up with a total of $3 billion.

‘‘These lawyers don’t waste their time on

the small stuff,’’ said Laurance Schonbrun, a

San Francisco attorney who argued before

the court that the plaintiffs’ attorneys

should be paid in coupons, not cash, because

that’s what they won for their clients.

When the suits were filed, attorneys listed

specific individuals as plaintiffs. These plaintiffs were, in many cases, friends or pre-existing clients of the law firms, said Federal

District Judge Marvin Shoob, who presided

over the case in Atlanta.

The 42 named plaintiffs took home as much

as $5,000 each, for a total of $142,500. They

were the only members of the plaintiffs to

receive money, court records show.

Judah I. Labovitz, also a co-chair in the

case, said the 42 plaintiffs ‘‘are more than

just names on a piece of paper.’’ His law

firm’s plaintiff was a longtime friend and client, Labovitz said. ‘‘He dug up his travel

records and gave a deposition. The entire

class benefited from his actions, why

shouldn’t he get some money?’’ Labovitz

said.

In September 1990 the cases were consolidated in Atlanta and a steering committee

was established to coordinate the efforts of

the 37 law firms. Some of the largest and

best-known firms became the leaders and

Nast, Labovitz, Cohen and Philadelphia attorney Allen D. Black became co-chairs.

COUPONS, NOT CASH

Several factors pushed the parties toward a

settlement with coupons rather than cash,

attorneys for both the airlines and the plaintiffs said.

The airline industry was in financial chaos

in the midst of a recession that would see it

lose more than $10 billion over three years. If

the case were won and cash settlements were

huge, it could bankrupt the industry, lawyers for both the plaintiffs and the airlines

agreed.

Meanwhile, the plaintiffs’ lawyers faced

the prospect of proving electronic collusion

in front of a jury that might not have the patience for a technical trial potentially lasting three years or more.

‘‘You’ve got to have a little common sense.

All the airlines were in serious trouble at the

time,’’ Cohen said. ‘‘They literally had no

money. Eastern and Pan Am had already

gone belly up, and Continental, Northwest

and TWA were in serious trouble.’’

But opponents, primarily consumer activists, cried foul. ‘‘It would have been better

for the plaintiffs if the lawyers took the case

to trial,’’ said Edward M. Selfe, a corporate

attorney from Birmingham who filed a motion to stop the settlement on the grounds

consumers should receive rebates, not coupons.

However, plaintiffs counsel had invested

considerable time and effort in developing

the case, with no guarantee they could win

and recover even their costs, much less their

legal fees.

$16 MILLION IN LEGAL FEES

So the settlement was reached: $438 million worth of coupons to an unknown number

of passengers for up to a maximum of 10 percent of the cost of their air fares, and $16

million in legal fees to plaintiffs’ counsel.

Each individual plaintiff, however, did not

receive even as many coupons as originally

expected because there were many more applicants than the settlement presumed, and

there was a ceiling on the payout.

The plaintiffs’ lawyers had estimated that

2.3 million people would seek coupons, Shoob

said. The plaintiffs’ attorneys formulated

that number based on the advice of experts,

and relying on the history of plaintiffs’ response in similar cases.

The number of travelers responding came

in at 4.2 million. Included were huge corporations, such as International Business Machines Corp. and AT&T Corp., which entered

claims of more than $1 billion and ended up

getting most of the coupons. However, AT&T

and several other companies now say the

coupon restrictions make them extremely

difficult to redeem.

‘‘Obviously, we were surprised,’’ Nast said.

‘‘We believe it was due to all the publicity

the case received.’’

The miscalculation had the effect of making the settlement appear more lucrative

then it actually was, Shoob now said. The

minimum payback per person worked out to

$73 in coupons, with a limit per flight of a 10

percent discount. Earlier projections had put

the minimum payback at almost $140 in coupons per person, he said.

‘‘I based my approval on the belief that

claimants would get much more back than

they actually did,’’ Shoob said. ‘‘I believe

[the attorneys made] an honest mistake—

there was no attempt to purposely mislead

the court. But it was a mistake nonetheless.’’

Nast said: ‘‘We looked at the historical response to this type of situation to calculate—but this was an extraordinary case. I

feel it’s a comment on how good a job we did

for the class that so many people responded.’’

Shoob said, ‘‘in this case, even in the event

of a cash settlement, chances are, each person in the class would have received an extremely small amount of money in comparison to the return to the lawyers.’’

‘‘I think [class-action] cases are absurd,’’

he said. ‘‘So many are generated by lawyers

not to benefit the class, but to generate legal

fees. The lawyers are just doing their job

under the law. The flaw is with the law that

allows it.’’

Mr. HOLLINGS. The amount of

money in that case referred to by the

distinguished Senator in the justification for his amendment, the airlines

case, with the total verdict of $438 million, that is where the lawyers got $16

million. There were 4.2 million plaintiffs. They had law firms racing all

over; 37 law firms were racing around.

They have all the law firms listed.

But rather than a third or 20 percent

or 10 percent or 5 percent or 1 percent,

it is less than 1 percent that the lawyers got.

Now, you have all of those clients in

there. I knew that this particular fee,

even though it sounded outrageous in

the news story, was based in reason by

the court. The court would not approve

giving the clients $25 and giving the

lawyers $16 million. That is the garish

nonsense that you find going on as justification for product liability reform.

On that basis, if Senators want to

vote on that basis not only for the

amendment of the distinguished Senators from Michigan and Kentucky,

but on product liability, let them do
S5716 CONGRESSIONAL RECORD — SENATE April 26, 1995

that. But that is how extreme they

have gotten.

Now, here is the case. I hope everybody will read about the 37 law firms

and the 4.2 million plaintiffs and the

$438 million obtained, to be divided up.

And the lawyers, all those 37 law firms,

got $16 million. I rest my case, Mr.

President.

I hope you do not table our amendment. If we can get a good vote on this

amendment, it will bring attention to

the really fanciful nature of this entire

exercise on product liability.

We have welfare reform, we have the

budget, we have telecommunications,

we have terrorism, we have a crime bill

to come up, we have more work to do

that is good work of national significance, rather than manufacturing

amendments through halfway stories

in the Washington Post.

I yield back the remainder of my

time.

The PRESIDING OFFICER. The Senator yields back the remainder of his

time. There are 10 minutes 42 seconds

remaining to the Senator from Michigan.

Who seeks recognition?

Mr. ABRAHAM addressed the Chair.

The PRESIDING OFFICER. The Senator from Michigan is recognized.

Mr. ABRAHAM. Thank you, Mr.

President. I just will make several

comments.

One, in the case the Senator from

South Carolina and I have been discussing, I just will point out, again,

this is a quote from the media, the

judge in that case actually later said

that he regretted having approved of

the fees that were involved for the reasons that he believed they were inappropriate.

Again, my point is not to talk about

excessive fees or fees that are inadequate. I have not yet encountered any

attorney who says they did not earn

the fees that they charged, and since

they feel that way, my guess is they

should not object to the requirements

of this amendment, which would simply ask that prior to and following the

conclusion of matters, accountings be

made and the fees, as well as the hours

involved, be tabulated.

I would also stress though, as I did

earlier, the amendment provides a

waiver provision so that those attorneys who feel this is too burdensome

and cumbersome can at least seek to

have their clients waive this right to

have both prior- as well as post-litigation or settlement accounting occur.

But basically, again, Mr. President, I

think that the thrust, at least of my

underlying amendment, is one of disclosure, it is one of providing consumers with the right to know the kind of

legal arrangements that they are getting into, and the right to know what

has transpired and how the fees that

they are paying will be structured.

I believe it is pro-consumer. I believe

the only people who might find this inconveniencing are those attorneys who

are not following the common practice

that is outlined by so many legal organizations of calling upon attorneys to

provide that sort of information.

Mr. President, at this time, I suggest

the absence of a quorum.

The PRESIDING OFFICER. The

clerk will call the roll.

The assistant legislative clerk proceeded to call the roll.

Mr. GORTON. Mr. President, I ask

unanimous consent that the order for

the quorum call be rescinded.

The PRESIDING OFFICER. Without

objection, it is so ordered.

AMENDMENT NO. 598 TO AMENDMENT NO. 597

Mr. GORTON. Mr. President, what is

the pending business?

The PRESIDING OFFICER. The

pending business before the body is

now the amendment by the Senator

from South Carolina.

Mr. GORTON. Has all time for debate

expired?

The PRESIDING OFFICER. All time

has expired for the debate.

Mr. GORTON. Mr. President, I move

to table the Hollings amendment.

Mr. President, I ask for the yeas and

nays.

The PRESIDING OFFICER. Is there a

sufficient second?

There is a sufficient second.

The yeas and nays were ordered.

VOTE ON MOTION TO TABLE AMENDMENT NO. 598

The PRESIDING OFFICER. The

question is on the motion to lay on the

table amendment No. 598, by the Senator from South Carolina.

All those in favor of the tabling motion will vote aye, those opposed will

vote no.

The clerk will call the roll.

The assistant legislative clerk called

the roll.

Mr. LOTT. I announce that the Senator from Missouri [Mr. BOND] and the

Senator from Oregon [Mr. HATFIELD]

are necessarily absent.

Mr. FORD. I announce that the Senator from Nebraska [Mr. EXON] is necessarily absent.

The PRESIDING OFFICER. Are there

any other Senators in the Chamber

who desire to vote?

The result was announced—yeas 94,

nays 3, as follows:

[Rollcall Vote No. 134 Leg.]

YEAS—94

Abraham

Akaka

Ashcroft

Baucus

Bennett

Biden

Bingaman

Boxer

Bradley

Breaux

Brown

Bryan

Bumpers

Burns

Byrd

Campbell

Chafee

Coats

Cochran

Cohen

Conrad

Coverdell

Craig

D’Amato

DeWine

Dodd

Dole

Domenici

Dorgan

Faircloth

Feingold

Feinstein

Ford

Frist

Glenn

Gorton

Graham

Gramm

Grams

Grassley

Gregg

Harkin

Hatch

Heflin

Helms

Hutchison

Inhofe

Jeffords

Johnston

Kassebaum

Kempthorne

Kennedy

Kerrey

Kerry

Kohl

Kyl

Lautenberg

Leahy

Levin

Lieberman

Lott

Lugar

Mack

McCain

McConnell

Mikulski

Moseley-Braun

Moynihan

Murkowski

Murray

Nickles

Nunn

Packwood

Pell

Pressler

Pryor

Reid

Robb

Rockefeller

Roth

Santorum

Sarbanes

Shelby

Simon

Simpson

Smith

Snowe

Specter

Stevens

Thomas

Thompson

Thurmond

Warner

Wellstone

NAYS—3

Daschle Hollings Inouye

NOT VOTING—3

Bond Exon Hatfield

So the motion to lay on the table the

amendment (No. 598) was agreed to.

Mr. GORTON. Mr. President, I move

to reconsider the vote.

Mr. ROCKEFELLER. I move to lay

that motion on the table.

The motion to lay on the table was

agreed to.

Mr. LEVIN. Mr. President, I am generally a supporter of disclosure requirements, but I will vote to table the

Abraham amendment for two reasons.

First I believe that the States are

more familiar with the issues raised by

this amendment and that it is inappropriate for us to take over this area of

the law in a floor amendment which

has not even been considered in committee.

Second, the amendment would impose a cumbersome new regulation on

attorneys—not just in product liability

cases, but in all cases in Federal court.

Attorneys would have to send not one,

but two notices of fees to each client in

a case. That may sound simple, but the

chief case that has been cited as the

basis for this amendment was a class

action brought on behalf of some 4.2

million individuals. That means, presumably, that 8.4 million separate notices would have to be mailed out in

that case alone.

Moreover, the amendment would require attorneys to calculate hourly fee

rates even in cases where the client is

being charged on a basis other than

hourly rates—such as a contingent fee

or a flat fee. That means that every attorney would have to keep records of

every hour spent on every case, even in

cases where those hours are not the

basis for the attorney’s fees, and the

actual basis for those fees is fully disclosed to the client. That is a huge new

paperwork requirement, the cost of

which would inevitably be borne not by

lawyers, but by their clients.

I believe that we should avoid these

cumbersome new requirements and

leave requirements for disclosing attorneys’ fees in the hands of the State

governments unless and until a clear

need is shown for the Federal Government to take over.

I also intend to vote to table the

Brown amendment to revise rule 11 of

the Federal Rules of Civil Procedure.

The Rules Enabling Act delegates to

the Supreme Court the power to prescribe rules of procedure for the Federal district courts. The courts have

far greater expertise in rules of judicial

procedure than does the Congress. Accordingly, I do not believe that we

should step in and overturn the courts’
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5717

decision without hearings and without

a clear showing of need.

VOTE ON MOTION TO TABLE AMENDMENT NO. 597,

AS MODIFIED

The PRESIDING OFFICER. Under

the previous order, the question now

occurs on amendment 597, as modified,

offered by the Senator from Michigan.

Mr. ROCKEFELLER. Mr. President, I

move to table the amendment and ask

for the yeas and nays.

The PRESIDING OFFICER. Is there a

sufficient second? There appears to be

a sufficient second.

The yeas and nays were ordered.

The PRESIDING OFFICER. The

question is on agreeing to the motion

of the Senator from West Virginia [Mr.

ROCKEFELLER] to table the amendment

of the Senator from Michigan [Mr.

ABRAHAM]. The yeas and nays have

been ordered. The clerk will call the

roll.

The assistant legislative clerk called

the roll.

Mr. LOTT. I announce that the Senator from Missouri [Mr. BOND] and the

Senator from Oregon [Mr. HATFIELD]

are necessarily absent.

Mr. FORD. I announce that the Senator from Nebraska [Mr. EXON] is necessarily absent.

The PRESIDING OFFICER (Mr.

GRAMS). Are there any other Senators

in the Chamber who desire to vote?

The result was announced—yeas 45,

nays 52, as follows:

[Rollcall Vote No. 135 Leg.]

YEAS—45

Akaka

Biden

Bingaman

Breaux

Bryan

Bumpers

Byrd

Cochran

Cohen

D’Amato

Daschle

Dodd

Ford

Gorton

Graham

Gramm

Harkin

Heflin

Hollings

Hutchison

Inouye

Jeffords

Johnston

Kennedy

Kerrey

Kerry

Leahy

Levin

Lieberman

Mack

Moseley-Braun

Moynihan

Murray

Nickles

Nunn

Pell

Pryor

Reid

Rockefeller

Roth

Sarbanes

Shelby

Simon

Specter

Thompson

NAYS—52

Abraham

Ashcroft

Baucus

Bennett

Boxer

Bradley

Brown

Burns

Campbell

Chafee

Coats

Conrad

Coverdell

Craig

DeWine

Dole

Domenici

Dorgan

Faircloth

Feingold

Feinstein

Frist

Glenn

Grams

Grassley

Gregg

Hatch

Helms

Inhofe

Kassebaum

Kempthorne

Kohl

Kyl

Lautenberg

Lott

Lugar

McCain

McConnell

Mikulski

Murkowski

Packwood

Pressler

Robb

Santorum

Simpson

Smith

Snowe

Stevens

Thomas

Thurmond

Warner

Wellstone

NOT VOTING—3

Bond Exon Hatfield

So the motion to lay on the table the

amendment (No. 597) was rejected.

Mr. GORTON. Mr. President, I move

to reconsider the vote.

Mr. ROCKEFELLER. I move to lay

that motion on the table.

The motion to lay on the table was

agreed to.

The PRESIDING OFFICER. The

question is now on agreeing to the

Abraham amendment.

So the amendment (No. 597) was

agreed to.

Mr. DOLE. I move to reconsider the

vote by which the amendment was

agreed to.

Mr. ABRAHAM. I move to lay that

motion on the table.

The motion to lay on the table was

agreed to.

AMENDMENT NO. 599 TO AMENDMENT NO. 596

Mr. GORTON. Mr. President, what is

the pending business?

The PRESIDING OFFICER. Amendment numbered 599.

Mr. BROWN. Mr. President, I believe

the next item for consideration is

amendment numbered 599, which is an

amendment that I proposed which

would restore the deterrence against

bringing frivolous actions and frivolous

lawsuits.

Mr. President, it is my personal feeling, and I believe the feeling of the distinguished senior Senator from Alabama, that this debate could be concluded fairly quickly, perhaps as short

as 20 minutes on each side; and then it

would appear that it is the will of Senators to move to a vote at that point.

Mr. President, rule 11 is a very important part of civil procedure. Rule 11

changed in 1983 to provided strong admonishment against attorneys bringing frivolous actions.

It was changed again in December of

1993. It was changed, unfortunately,

not through a vote or deliberation of

this body, but by our failure to act.

Tragically, that automatic change in

the Federal Rules of Civil Procedure

resulted in the gutting of the protection against frivolous actions embodied

in rule 11. The new rule 11 now allows

someone to allege facts, bring facts before the court without knowing that

they were true or without having fully

investigated the facts.

This amendment restores parts of the

old rule 11 that more effectively deter

frivolous action. I will be dealing with

rule 11 in detail in a few minutes. I

wanted simply to alert Senators that

we will be moving to a vote on this, I

believe, within 40 minutes or so. This

vote is about discouraging frivolous action and frivolous lawsuits.

Our hope is that this amendment will

play an important part in this bill, because stopping inappropriate actions

and frivolous lawsuits is very much an

essential ingredient, I believe, in reform of the judicial process. I yield the

floor.

Mr. HEFLIN. Mr. President, I rise in

opposition to the Brown amendment.

Let me first explain a little bit about

the procedure, what happens regarding

the Federal Rules of Civil Procedure,

which include rule 11.

There has been controversy over the

history of this country as to how

courts ought to take care of its rule

making authority. The prevailing view

is that the judiciary—and this includes

the States—has inherent power to determine its own rules.

However, Congress felt it had a role,

and so it adopted the Rules Enabling

Act by which rules of procedure would

be changed by first having a committee

appointed by the Judicial Conference

of the United States, to study any proposed change or changes.

After the committee made its report

to the Judicial Conference, which is a

body composed of judges from all levels

of the judiciary, the Judicial Conference would study any proposals and

then make recommendations to the Supreme Court of the United States. Then

the Supreme Court of the United

States would consider the issue and

make recommendations to Congress.

Under the Rules Enabling Act, Congress has 6 months to either adopt the

recommendations, to modify them, or

to delete them.

This particular rule 11 that came up

was submitted to the Congress and the

6-month time period expired prior to

Congress taking any action, and so all

of the proposed Rules of Civil Procedure, including rule 11, went into effect

on December 1, 1993. We knew toward

the end of the Congress in 1993 that if

any changes had to be made, they had

to be made before December 1, 1993.

If a Senator was interested in making a change to a rule, he or she could

introduce a bill, but no bill was introduced proposing to change rule 11.

During that 6-month period in 1993 in

the House or in the Senate, if there

were reasons for change, a bill could

have been introduced in the House or

the Senate.

In all fairness to Senator BROWN, he

said that he did not like rule 11, but he

never took the steps to modify the proposed changes, and now he is now belatedly taking steps on this particular

bill, which is unrelated and not germane to the pending legislation.

My colleague from Colorado raises issues about frivolous lawsuits and let

me say that this has been considered

by many concerned groups of people.

The Brown amendment is completely

opposed by the civil rights community.

The Brown amendment is opposed by

the Department of Justice. Six members of the Supreme Court approved

rule 11 that is now in effect. Senator

BROWN quoted from Justice Scalia’s

dissent. There are always going to be

dissents over at the Supreme Court,

but if you have a 6 to 3 vote in the Supreme Court of the United States, that

is a pretty good vote.

As I have listened to the criticisms of

the new rule 11 from Senator BROWN

and others, I do not agree with them. I

have before me a memorandum from

the Administrative Office of the U.S.

Courts which says:

I am writing to address criticism raised

during the markup of H.R. 2814 that the

amendments to Rule 11 of the Federal Rules

of Civil Procedure will eviscerate the rule’s

effect on parties filing frivolous proceedings

and papers.
S5718 CONGRESSIONAL RECORD — SENATE April 26, 1995

The amendments to Rule 11 retain the

rule’s core principle to ‘‘stop and think’’ before filing: By broadening the scope of Rule

11 coverage and tightening its application,

the amendments reinforce the rule’s deterrent effect and also eliminate abuses that

have arisen in the interpretation of the rule.

Although the amendments strike a balance

between competing interests, the changes

strengthening the rule have been neglected

by those critical of the amendments and

need to be highlighted.

First, the amendments expand the reach of

the rule by imposing a continuing obligation

on a party to stop advocating a position once

it becomes aware that that position is no

longer tenable.

What they would like to go back to

under the old rule, as I interpret it,

would be to allow ‘‘a party to continue

advocating a frivolous position with

impunity so long as it can claim ignorance at the time the pleading was

signed, which could have been months

or years ago.’’

Second, the amendments specifically extend liability to a law firm rather than limiting the liability to the junior associate

who actually signs the filing.

Third, the amendments specifically extend

the reach of Rule 11 sanctions to individual

claims, defenses, and positions, rather than

solely to a case in which the ‘‘pleading-as-awhole’’ is frivolous. Some court decisions

have construed the rule to apply only to the

whole pleading, relieving a party of the responsibility for maintaining a single or several individual frivolous positions.

So rule 11 that went into effect on

December 1, 1993 was designed to

strengthen this matter.

Fourth, the amendments equalize the obligation between the parties by imposing a

continuing obligation on the defendant to

stop insisting on a denial contained in the

initial answer. Frequently, answers are general denials based on a lack of information

at the time of the reply. The amendments

impose a significant responsibility on the defendant to act accordingly after relevant information is later obtained.

It is also important to highlight the provisions of the rule that the amendments retain. A party must continue to undertake

‘‘an inquiry reasonable under the circumstances’’ before filing under the amendment. In those cases where a party believes

that a fact is true or false but needs additional discovery to confirm it, the amendments allow filing but only if such ‘‘fact’’ is

specifically identified. The provision does

not relieve a party of its initial duty to undertake a reasonable prefiling investigation.

In cases of abuse, the court retains the power

to sanction sua sponte and the aggrieved

party can seek other remedies, e.g., lawsuit

for malicious prosecution.

The existing rule does not require a court

to impose a monetary sanction payable to

the other party. Instead, the rule does provide a court with the discretion to impose an

appropriate sanction, including an order requiring monetary payments to the opposing

party and to the court.

Now, as to the hearings that we had

in the Judiciary Committee, the old

rule 11—that is one that was in effect

before December 1 of 1993—had language that said that signature to a

pleading demonstrated that the pleading ‘‘is well grounded in fact.’’

Senator BROWN at the subcommittee

hearings on July 28, 1993, grilled the

chairman of the Rules Advisory Committee that had proposed to the Judicial Conference this aspect of the rule

change.

Senator BROWN claimed that under

the new rule 11, a party ‘‘no longer has

to research a claim and know that it is

true.’’ He feels that a party ‘‘no longer

has to know his facts’’ before bringing

a lawsuit.

Well, what Senator BROWN ignores

from the testimony and the response

the chairman of the committee, Judge

Sam Pointer, gave is that the new rule

11 ‘‘still calls for and demands that attorneys have made a reasonable investigation under the circumstances.’’

As Judge Pointer demonstrated, oftentimes a party does not get all the

facts until the discovery is finished,

and the new rule does, indeed, require

high standards and is not an egregious

loosening of standards.

The point is that under this new rule

11, ‘‘if a plaintiff is going to make an

allegation that he does not have hard

support for, the plaintiff should say, I

do this on information and belief, and

be under a responsibility to withdraw

that or not continue to assert it, if

after reasonable opportunity for discovery, it turns out there is no basis

for it.’’

Now, the new rule 11 has changes

from the old rule in that if a violation

regarding a pleading is found, then the

court may impose sanctions.

Under the old rule, the language was

that a court must impose a sanction if

it found a violation of the rule.

As Judge Pointer demonstrated in

his testimony, a court needs the flexibility or discretion to impose sanctions

because a complaint, or for that fact an

answer or motion to dismiss may contain a technical violation, but the rest

of that pleading could be perfectly acceptable. Why, then, should a court be

required to impose a sanction? Such

discretion would not, in my judgment,

giveaway to mass, irresponsible pleading.

Obviously, those who are purporting

to change rule 11 raise the possibility

that a party could intentionally bring

a frivolous action and, upon a finding

of such by the court, might escape a

penalty. The response to that concern

is that well, yes, there could be no penalty, but in that type of egregious intentionally frivolous pleading a court

will most likely impose a sanction.

Under the new rule—

[I]f warranted, the court may award to the

party prevailing on the motion the reasonable expenses and attorney’s fees incurred in

presenting or opposing the motion.

Also, a court on its own initiative

may begin a show-cause proceeding as

to whether a party has violated the

rule. This should take care of concerns

by Senator BROWN that plaintiffs could

irresponsibly plead, claim, et cetera.

The court has its own power to initiate

an inquiry as to whether rule 11 has

been violated.

As the Senate can clearly see, this is

a highly technical matter that we are

being called upon to consider, and it is

attempting to be amended onto an unrelated bill without the Members of

this body having an adequate opportunity to study the issues. For us here

in Congress to have to consider this

amendment on an unrelated bill seems

to me to be an irresponsible way of legislating.

So it is my opinion that we ought not

to be involved in this at this time. The

Judiciary Committee had hearings, and

there was ample opportunity for action

to be taken. But no action was brought

forth through the form of a bill being

introduced to make any changes to

rule 11.

There are always efforts to look at

matters and matters can always be

considered by this body. But the Judicial Conference is designed and is much

better equipped than this body to make

the decisions pertaining to that matter.

It seems to me that it is just improper and an inappropriate time to

bring this matter up at such a late

stage as this. If there had been a real

sincere effort, it could have been done

within the 6-month time period allowed

pursuant to the Rules Enabling Act. It

seems to me that we ought not to be

dealing with this amendment at this

time on this unrelated bill.

It may be that a bill could be introduced later, if they wanted to, and at

other times go through the process.

But I feel that the new rule is a flexible rule and has provisions that

strengthen—not weaken—the efforts to

prevent frivolous lawsuits. The new

rule is expected to reduce the number

of inappropriate motions requesting

sanctions, thereby allowing courts to

focus more attention on legitimate

sanction requests.

Mr. President, let me read from Rule

11 as it now exists. This is about representations in a pleading.

By presenting to the court, whether by

signing, filing, or submitting, or later advocating a pleading, a written motion, or other

paper, the attorney or unrepresented party is

certifying to the best of the person’s knowledge, information, and belief, formed after

an inquiry reasonable under the circumstances, that it is not being presented

for any improper purpose, such as to harass,

or to cause unnecessary delay, or needless

increase in the cost of litigation. The claim,

the defenses, and other legal contentions

therein are warranted by existing law, or by

nonfrivolous argument for the extension,

modification, or reversal of existing law, or

the establishment of the new law. The allegation and other factual contentions have

evidentiary support, and if specifically so

identified are likely to have evidentiary support of a reasonable opportunity for further

investigation or discovery. The denials of

fact show contentions are warranted to the

evidence, and, if specifically so identified,

are reasonably based on a lack of information or belief.

This is strong language. I want to

point out basically what the difference

is. The current rule 11 allows a judge

some discretion rather than making

sanctions mandatory.
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5719

That is the guts of the rule, whether

or not a judge ought to have some discretion pertaining to a matter or

whether, on the other hand, it ought to

be absolutely mandatory.

This is being opposed by the civil

rights community and by a number of

others.

I ask unanimous consent that a letter that was addressed to the Honorable George J. Mitchell, from the Committee on Rules of Practice and Procedure of the Judicial Conference of the

United States, Judge Alicemarie H.

Stotler, be printed in the RECORD.

I ask unanimous consent that a letter from the Alliance for Justice relative to this issue also be printed in

the RECORD.

There being no objection, the material was ordered to be printed in the

RECORD, as follows:

COMMITTEE ON RULES OF PRACTICE

AND PROCEDURE OF THE JUDICIAL

CONFERENCE OF THE UNITED

STATES,

Washington, DC, March 15, 1994.

Hon. GEORGE J. MITCHELL,

Majority Leader, U.S. Senate,

Washington, DC.

DEAR SENATOR MITCHELL: I am requesting

your assistance in opposing Senator Brown’s

amendment (No. 1496) to S. 4, the ‘‘National

Competitiveness Act of 1993.’’ Senator

Brown’s amendment would change certain

parts of the amendments to Rule 11 of the

Federal Rules of Civil Procedure, which became effective on December 1, 1993. The Rule

11 amendments were submitted to Congress

in May 1993 only after extensive scrutiny by

the bench, bar, and public in accordance with

the Rules Enabling Act.

Serious consideration of amendments to

Rule 11 began about four years ago. The rule

had been the subject to thousands of decisions and widespread criticism since it was

substantially amended in 1983. In an unusual

step, the Advisory Committee on Civil Rules

issued a preliminary call for general comments on the operation and effort of the

rule. It also requested the Federal Judicial

Center to conduct two extensive surveys on

Rule 11.

After reviewing the comments and studies,

the committee concluded that the widespread criticisms of the 1983 version of the

Rule, though frequently exaggerated or premised on faulty assumptions, were not without merit. There was support for the following propositions:

Rule 11, in conjunction with other rules,

has tended to impact plaintiffs more than defendants;

It occasionally has created problems for a

party which seeks to assert novel legal contentions or which needs discovery to determine if the party’s belief about the facts can

be supported with evidence;

It has too rarely been enforced through

nonmonetary sanctions, with cost-shifting

being the normative practice;

It provides little incentive, and perhaps a

disincentive, for a party to abandon positions after determining they are no longer

supportable in law, or in fact; and

It sometimes has produced unfortunate

conflicts between attorney and client, and

exacerbated contentious behavior between

counsel.

The draft amendments broadened the scope

of the obligation to ‘‘stop-and-think’’ before

filing or maintaining a position in court, but

placed greater constraints on the imposition

of sanctions. The amendments were later revised by the advisory committee and the

Standing Committee on Rules and approved

by the Judicial Conference of the United

States and then adopted by the Supreme

Court, with two justices dissenting.

The amendments strike a fair and equitable balance between competing interests,

remedy the major problems with the 1983-

version of the rule, and should reduce both

the extent of court-involvement with Rule 11

motions and the time spent on frivolous

claims, defenses, and other contentions.

The amendments represent the end product

of a rigorous public rulemaking process that

worked as contemplated by Congress under

the Rules Enabling Act. The issues were

fully aired in a public forum. Interested individuals and organizations were provided, and

responded to, opportunities to comment on

the changes. The language of the amendment

was meticulously drafted only after the Judicial Conference committees, which consist

of prominent lawyers, law professors, and

judges, had the benefit of this public examination.

Senator Brown’s amendment to Rule 11

would undercut the Rules Enabling Act process frustrating not only the intent of the Act

but also the participants in the rulemaking

process, including the public and many advocates of Rule 11 change. Your leadership in

maintaining the integrity of the Rules Enabling Act would be greatly appreciated.

Sincerely yours,

ALICEMARIE H. STOTLER.

ALLIANCE FOR JUSTICE,

April 26, 1995.

U.S. Senate,

Washington, DC.

DEAR SENATOR: The undersigned organizations urge you to oppose the changes to Federal Rules of Civil Procedure 11 that have

been offered as an amendment to the Products Liability Fairness Act. This amendment

poses a grave threat to civil rights and public interest litigation.

The proposed changes would roll back advances in Rule 11 that were recently enacted

following careful and thoughtful discussion

involving all concerned parties across the

political spectrum. We know from experience

that returning to the old Rule 11 will be particularly devastating to underrepresented

Americans.

Under the old rule, threats of sanctions

quickly became the standard ammunition in

the arsenal of defense counsel. The result

was an avalanche of satellite sanctions litigation that occupied a great deal of judicial

resources and was often as frivolous as the

litigation Rule 11 was designed to eliminate.

The old rule had a particularly harsh effect

on civil rights and public interest organizations and their clients. As the Judicial Conference’s Advisory Committee on Civil Rules

found:

(1) Rule 11 . . . has tended to impact plaintiffs more frequently and severely than defendants; (2) it occasionally has created

problems for a party which seeks to assert

novel legal contentions or which needs discovery from other persons to determine if

the party’s belief about the facts can be supported by the evidence; [and] (3) it has too

rarely been enforced through nonmonetary

sanctions.

Noting these concerns, the Judicial Conference offered amendments that made sanctions permissive; created a 21-day ‘‘safe harbor’’ period; and made clear that the purpose

of sanctions was to deter frivolous claims.

These amendments garnered broad support

among judges, bar associations, legal scholars, litigators and the Department of Justice, and were ultimately adopted by Congress.

The safe harbor provision was a particularly significant and welcome change. Once a

party raised a Rule 11 objection to a pleading, the opposing party has 21 days to consider the objection and, if warranted, withdraw the challenged claims—drawing the

courts into further litigation.

The Rule 11 amendment threatens to roll

back these achievements and resurrect the

very problems that prompted the Judicial

Conference, the Supreme Court and many

others to take action. The amendment would

have an especially heavy impact on plaintiffs, placing the cost of litigation beyond

the reach of ordinary Americans, particularly public interest and civil rights litigants. It compromises the very notions upon

which our legal system is based—fairness

and equity.

We urge you to reject any amendments to

Rule 11.

Respectfully,

NAN ARON,

Alliance for Justice.

LOU BOGRAD,

American Civil Liberties Union.

LESLIE HARRIS,

People for the American Way Action Fund.

Several Senators addressed the

Chair.

The PRESIDING OFFICER. The Senator from Colorado.

Mr. BROWN. Mr. President, I want to

commend the distinguished Senator

from Alabama for his thoughtful comments. He is a delight to work with

even when we do not always see eye to

eye. This is an area where we do not

see eye to eye.

I wanted to comment briefly on his

remarks. First of all, there was the implication that these suggested changes

have only been considered for a short

period of time and we have not had a

real opportunity to look at what effect

they would have on the rules. That

would not be my assessment of them.

Let me explain why.

The rule changed originally in 1983

from having permissive sanctions for a

violation of the rule to having mandatory sanctions for a violation of the

rule. That is, when someone has

brought a frivolous action prior to 1983,

the rule was as it is now: that is, you

did not have to have mandatory sanctions.

So the fact that this has not been

tried before really does not square with

our experience. The fact is we did try

this permissive approach to sanctions

prior to 1983. I think one could reasonably ask what were the results of that

experiment when the sanctions were

not required? There was a study done

of that, and it studied the reaction of

practitioners and judges in changing

from permissive to mandatory sanctions.

Here are the results of that study.

I might mention that this study was

conducted of both lawyers and judges

in the northern district of California,

which is part of the ninth circuit. The

questionnaire was sent to 17 judges, 7

magistrates, and 107 attorneys, all of

whom had been involved in rule 11 proceedings, so these were not inexperienced people. They were people who

had understood the process and worked

with it.
S5720 CONGRESSIONAL RECORD — SENATE April 26, 1995

Sixty-eight lawyers, 46 percent of

them, responded; 12 judges and magistrates, 50 percent, responded to the

survey, so there was a good response.

Here is the response: 46 percent of the

respondents indicated that they had

engaged in additional prefiling factual

inquiry when the sanctions were mandatory. That is, when sanctions were

mandatory, it resulted in the attorneys

doing additional prefiling factual inquiry.

Now, if you favored more factual inquiry before filings are made, you are

going to want mandatory sanctions because that is what mandatory sanctions resulted in. If you do not care

about the additional prefiling inquiry,

if that is not one of your objectives,

then you will not want the mandatory

sanctions and you will want the rules

as they currently stand.

The survey also indicated that 33 percent indicated additional prefiling

legal inquiry when the rule in effect

employed mandatory sanctions. That

is, before they filed, they did additional

work to make sure they were right on

the law before they filed.

Is that not what we want? Is that not

what we should be hoping for, that people take the time to find out what the

facts are and find out what the law is

before they bring the lawsuit?

The survey indicated clearly that

having sanctions required resulted in

additional legal work and additional

factual work before lawsuits were

brought. That is the essence of mandatory sanctions and mandatory sanctions are the essence of this amendment.

So the suggestion that this is some

wild idea that has never been tried does

not square with the pre-1983 and post1983 experience. The fact is we had permissive sanctions prior to 1983, and it

resulted, at least according to the survey, in less legal research before you

filed and less factual research before

you filed.

Mr. President, it was alleged earlier

that the issue of rule 11 could have

been brought up earlier, but it was not,

somehow implying that the people who

are concerned about the gutting of rule

11 had been dilatory.

Mr. President, let me be very clear

about that. I did introduce a bill, but

that bill was not brought up for a vote.

What happened is that the Supreme

Court transmitted to us the rule

changes and made very clear in that

transmittal that they were not necessarily endorsing them—let me read it

because that is a serious comment, a

serious charge. The letter from the

Chief Justice of the Supreme Court,

William Rehnquist reads:

Transmittal does not necessarily indicate

that the Court itself would have proposed

these amendments in the form submitted.

It cannot be more clear than that.

The reality is that this was not voted

on before, and the reason it was not

voted on before was because we could

not get it put on the agenda and we

could not get a recorded vote. But a

bill was introduced, and I did do all I

knew how to have the issue come before the Senate. That is why it has to

be brought up here.

Now, when you do not allow a vote on

a bill, to say somehow the proponents

of that position have been dilatory I

think raises real questions. What actually happened here is that these

changes became law because we did not

have a vote. And the Supreme Court’s

own documents say that their transmittal of it does not necessarily mean

they agree.

Now, Mr. President, for those who

have read the report, Justice White

also commented on this, and he made a

very important point. He made a point

that the practice of the Court has generally been—except for two Justices,

the practice of the Court has generally

been not to interfere with this process,

to simply transfer proposed changes

on, because they have some questions

as to whether or not it is a proper role

for the Court to draft these changes.

Justices felt so strongly about this

that three of them did dissent, which is

highly unusual in this matter, and let

me read to the Senate from that dissent. This is a dissent by Justices

Souter, Thomas, and Scalia. All three

of them dissented. Remember, Justice

Rehnquist indicated it was not necessarily endorsement; they passed it

on, and remember Justice White’s comments as well. But here is a quote from

the dissent.

In my view, the sanctions proposed will

eliminate a significant and necessary deterrent to frivolous litigation.

That is a direct quote out of the Justice’s comments.

The dissent goes on:

Under the revised rule, parties will be able

to file thoughtless, reckless, and harassing

pleadings secure in the knowledge that they

have nothing to lose.

Mr. President, that is it in a nutshell. If we fail to address this question, it is very clear what the new rules

do. Let me read what he said.

Under the revised rule, parties will be able

to file thoughtless, reckless, and harassing

pleadings secure in the knowledge that they

have nothing to lose.

Now, Members of this body are going

to have a chance to go on record to see

whether or not they favor allowing the

filing of ‘‘thoughtless, reckless, and

harassing pleadings secure in the

knowledge that they have nothing to

lose.’’

Lastly, Mr. President, it was suggested on this floor that there are people who would object to my motion.

Let me assure this body I have personally sought out the groups that

were discussed. I have called them repeatedly. I have asked for meetings. I

have asked for their suggestions. They

have not been willing to respond or

meet with us. And this happened not

just once but on many occasions.

If Members have questions about this

amendment, I hope it is not on the

basis that this Senator was not willing

to go out and ask for advice, was not

willing to contact the parties that

might have concern, and was not willing to try and work with them, because

I did. I did ask for their advice. I did

offer to work with them. And as a matter of fact, the measure that is before

the Senate is not a full restoration of

the old rulings but willingly adopts a

number of the measures that were proposed.

Mr. President, I could not come to

this body and acquiesce, as the dissent

says, in revised rules that will enable

parties ‘‘to file thoughtless, reckless,

and harassing pleadings’’ or acquiesce

in allowing them to do so ‘‘secure in

the knowledge that they have nothing

to lose.’’ That would be wrong. And

these new rules are wrong.

Now, it has been suggested that this

amendment will eliminate a judge’s

discretion with regard to sanctions.

The facts are these. The old rules and

the amendment that I offer this body

does restore the requirement that you

have sanctions when someone is guilty.

This is not a game where you blow the

whistle and say start over. When you

are wrong and your actions impede the

process in the court, I think sanctions

are important. But to suggest that we

eliminate judge’s discretion is not accurate. The judge retains discretion

under the rules to decide what type of

sanction is appropriate as well as how

substantial the sanction is.

Mr. President, I say that because I

think it is important to take care of

the questions that were raised.

I simply want to ask the body three

questions that I think come full circle

on this issue of frivolous lawsuits and

capture the essence of it.

Should filings be grounded in facts or

not? If the Members of this body feel

filings in Federal court should be

founded in facts, they should vote for

this amendment. If they do not think

it is necessary that the filing should be

founded in facts, they will want to vote

‘‘no.’’

Two, should sanctions be required if

you file frivolous actions? I believe if

you file frivolous actions and they are

found to be frivolous actions that sanctions should be required. But if you do

not think there should be sanctions if

you file frivolous actions, then you will

want to vote ‘‘no.’’

Mr. President, finally, should an injured party be compensated for the

costs or not? That is, let us say someone files a frivolous action, a party is

injured because they have to respond

and they have to pay for attorneys’

fees and expenses. The question before

us is, should the injured party be compensated for costs or not?

I think they should be. But if you do

not think they should be, or if you

think that priorities should be given to

having the sanction go to the court and

not to the injured party, which is what

the new rules give priority to—the new

rules give priorities to having the sanction, if there is any, go to the court instead of the injured party. If you think
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5721

the injured party should not be compensated or that should be the low priority, then you are going to want to

vote ‘‘no.’’

Mr. President, the summation of the

concern of the Justice who dissented in

the transmittal closes with this quote.

It takes no expert to know that a measure

which eliminates rather than strengthens a

deterrent to frivolous litigation is not what

the times demand.

Mr. President, it cannot be said better than that. If Members of this Senate think that our times demand that

you ought to eliminate sanctions for

frivolous action, then vote no. But I

agree with the Justice when he says:

It takes no expert to know that a measure

which eliminates rather than strengthens a

deterrent to frivolous litigation is not what

the times demand.

Mr. President, it is wrong to bring

frivolous actions. It is wrong to file

and not know the facts. It is wrong and

I believe personally it is unethical for

an attorney to bring frivolous actions

before our courts. That is what the

question is in this amendment. Do we

favor frivolous filings or do we think

there ought to be some sanctions for

them?

I yield the floor, Mr. President.

Ms. MOSELEY-BRAUN addressed the

Chair.

The PRESIDING OFFICER. The Senator from Illinois.

Ms. MOSELEY-BRAUN. Thank you

very much.

Mr. President, the Senate is currently engaged in what is, in my opinion, a constructive debate on the subject of product liability. The pending

amendment, unfortunately, is destructive. It is destructive, certainly, of the

relationship between the Congress and

the courts, a relationship established

pursuant to the Rules Enabling Act,

that has worked and is working. And it

is destructive of efforts to craft a product liability bill under the guidance of

the Commerce Committee.

Mr. President, the fact is that the

Brown amendment is, as you can no

doubt tell from the ‘‘legalistic’’ nature

of the debate, a Judiciary Committee

issue. To the extent that this issue

should be taken up and debated, it

should be done under the auspices of

the Judiciary Committee.

I know the distinguished Senator

from Colorado feels strongly about

this. But the question is whether or not

it belongs as part of our effort to address the issue of product liability reform. I want to strongly express my

opinion that it does not. This amendment does not belong on a Commerce

Committee bill.

In the first instance, Mr. President,

the whole argument that we should

make rule 11 sanctions for the filing of

frivolous pleadings mandatory—and

overturn what was established pursuant to the Rules Enabling Act, and

what has been accepted by the legal

community—presumes that there is a

single definition of what is frivolous.

I submit to my colleagues that there

is no single definition of what is frivolous. Indeed, in many instances, what

one person may consider to be frivolous

another might not.

I would remind my colleagues that

there have been instances in our history, instances that we look back with

some pride at this point, which, at first

blush, might have been considered frivolous claims. Under a mandatory sanctions regime similar to the one being

proposed by the pending amendment,

those cases may not have ever been

brought, due to the chilling effect of

mandatory sanctions. These novel, but

legitimate, cases may never be given

an opportunity to be heard if this type

of amendment were to be passed willynilly, without the reasoned consideration that I believe it ought to have.

I remind my colleagues that it is

often necessary to come up with novel

theories in cases in the areas of civil

rights and discrimination cases. Rule

11, as amended, reduces this incentive

to filing novel pleadings. If you think

back in the history for a little bit, I

think this issue becomes clear. When

Thurgood Marshall filed the Brown versus Board of Education case, to challenge the notion of ‘‘separate but

equal,’’ the plaintiffs relied a great

deal on psychological arguments—the

so-called Brandeis brief. The plaintiffs

in Brown relied on psychological and

sociological evidence that proved the

devastating impact our separate educational systems were having on the

educational and human development of

minority youths. Who is to say that at

first impression someone might have

said, ‘‘Well, this is a silly argument.

This is a silly idea.’’ Who is to say that

Thurgood Marshall might not have

been intimidated from ever bringing

the Brown case under a mandatory

sanctions regime.

But because there was not the prospect of mandatory sanctions, because

Linda Brown could file her novel claim

without the threat of satellite litigation over whether the claim was frivolous, the doctrine of separate but equal

was struck down. I could cite several

examples of that sort of thing happening.

And so I believe that it makes sense

for Congress to allow the court discretion in sanctioning parties for the filing of frivolous pleadings.

Mr. President, Congress has established a procedure to amend the Federal Rules of Civil Procedure, and that

procedure is called the Rules Enabling

Act.

Under the Rules Enabling Act, the

Judicial Conference appoints a committee to consider proposed changes to

the Federal rules. The committee recommends any necessary changes to the

Judicial Conference, which then studies the issue and then decides whether

or not to transmit those proposed

changes to the Supreme Court.

The Supreme Court then decides

whether or not to transmit those

changes to Congress, to us, and then we

then have 180 days either to reject or

modify those changes. If Congress does

nothing, then the changes go into effect.

Mr. President, the changes to rule 11

that Senator BROWN opposes were

adopted by the Supreme Court on April

22, 1993. Congress had until December 1,

1993, to reject or modify the rule 11

changes. The Senate Judiciary Committee, on which I served with Senator

BROWN, held a hearing on this issue on

July 28, 1993. Yet in that time Congress

took no action to reject the rule 11 provisions. I believe that Congress should

take no action now.

There is no evidence to indicate that

the revised rule 11, which will be

thrown out by this amendment, has

had an adverse impact on Federal litigation. Preliminary indications are

that it has produced cost savings by decreasing the amount of ‘‘satellite litigation’’—litigation on the side—as to

what is frivolous, and by encouraging

parties to withdraw frivolous pleadings

within the 21-day safe harbor.

It is not as though the 1993 amendments to rule 11 completely repeals the

rule. The amendments gave attorneys

the 21-day safe harbor in which to

withdraw challenged pleadings and

made sanctions discretionary in the

judges, not mandatory.

In addition, sanctions would normally be paid to the court in the form

of a fine, rather than to opposing counsel in the form of compensation.

Mr. President, these changes have

been strongly supported by the civil

rights community. As I stated earlier,

it is often necessary to come up with

novel theories in order to pursue civil

rights cases. This proposed change, I

think, would have an extremely detrimental effect.

In fact, I have a correspondence here

from the NAACP Legal Defense Fund

in which they state that, ‘‘The Brown

amendment would be extremely detrimental to civil rights litigation.’’

But, again, to get back to what the

studies say, the studies back up the

claim that the rule, as amended, is

working.

A Federal Judiciary Center study

demonstrated that, under the mandatory sanctions regime, sanctions were

imposed in a disproportionately higher

percentage of civil rights cases than in

tort or contract cases. Inherent in this

problem, of course, is the vagueness of

the term ‘‘frivolous.’’

In the same study, a group of judges

asked to study a complaint divided

evenly over whether or not the complaint was frivolous, prompting one

commentator to observe that ‘‘one

man’s frivolous complaint is another

man’s serious question.’’

And so, Mr. President, I would argue

this afternoon that while the Senator

from Colorado has obviously a concern

in this area, this is the wrong forum

and the wrong time. He spoke about

the timeliness of the issue. This is the

wrong time to take this issue up, and
S5722 CONGRESSIONAL RECORD — SENATE April 26, 1995

certainly this is the wrong bill on

which this issue should be taken up.

If, indeed, further changes, further

debate about whether or not judges

should have discretion with regard to

rule 11 issues, if that debate is to happen, then it should happen in the context in which we can make a judgment

about it that is a sensible judgment

and not just a rush to judgment.

I submit to my colleagues that the

effect of this amendment would not

only be to limit the kind of cases that

can be filed but also to limit the

court’s discretion, because in this instance, with this amendment in place,

all that a judge could do would be to

choose an either/or—either the case is

frivolous and thrown out altogether, or

he has to apply mandatory sanctions.

That is not the direction in which to

go. That is going to increase the cost of

litigation. That is not going to help the

process to work, and certainly I come

back to my original point, that will

then create a further imbalance and a

further disruption in a relationship

that has been established giving the

courts a process for deciding on amendments to the Rules of Civil Procedure.

That relationship will have been greatly impaired by this kind of rush to

judgment.

So I reluctantly, again—understanding that I serve on the Judiciary Committee with the Senator from Colorado—submit to my colleagues, at this

point in time, on this legislation, this

amendment is ill founded, and I ask my

colleagues to reject it.

Thank you.

Several Senators addressed the

Chair.

The PRESIDING OFFICER. The Senator from West Virginia.

Mr. ROCKEFELLER. Mr. President, I

say to the Senator from Iowa, I am

going to be literally 2 minutes.

I just want to explain the position of

the manager of the bill on this, and for

the benefit of my colleagues who are

listening to this debate and their staff

who are listening.

We are now considering an amendment of the Senator from Colorado,

Senator BROWN, that tries to repeal

part of the Federal Rules of Civil Procedure dealing with rule 11 and the way

it serves to inhibit so-called frivolous

pleading.

This rule was modified as a result of

action taken in 1993 following the work

of the Federal Judicial Conference. I

have listened to the concerns expressed

by the Senator from Alabama and the

Senator from Illinois, and others,

pointing out this amendment is outside

the scope of the bill before us, which is

the product liability bill. From my previous tabling motions and votes, I

think my colleagues know that I am

dead serious about trying to keep this

bill limited to the bill, unloaded, unadorned with amendments that are not

directly related to it.

I think that every Senator would

agree that frivolous lawsuits should be

curbed, but I just want to say that at

the proper time, I will move to table

the amendment. It was received very

recently and one would hope there

could be full hearings on the amendment. I wanted people to understand

what my plan was.

Mr. BROWN. Will the Senator yield?

Mr. ROCKEFELLER. Of course.

Mr. BROWN. Mr. President, I just

simply will say to the Senator, I am

very sensitive to the remarks he made.

I understand fully his concerns. He has

a very important bill that he has

brought forward. I want to assure the

Senator that it would be the last thing

I would want to do, to somehow burden

his bill so that it could not pass. I want

to assure the Senator, in the event it is

adopted but proves later to be a burden

for the Senator in terms of getting his

underlying measure passed, that I will

work with him in that regard.

Mr. ROCKEFELLER. I am thoroughly grateful to the Senator from

Colorado.

Mr. GRASSLEY addressed the Chair.

The PRESIDING OFFICER. The Senator from Iowa.

Mr. GRASSLEY. Mr. President, when

is it time to take up an amendment in

the Senate? When is it appropriate to

discuss any amendment? Everybody

knows the rules of the Senate. Almost

any time in the Senate is a time to discuss anything that you can get before

the body. Particularly in the case of

this approach, it seems to me very appropriate now because we are talking

about an underlying piece of legislation that is basic to making the courts

a more effective tool for the settlement

of disputes.

In the particular case of the underlying piece of legislation, it is to establish some standards in the courts so

that those cases that are going to be

considered by the courts will have

some continuing thread running

through them from State to State to

make sure the cases are fairly heard.

And this issue that is before us, that is

presented by Senator BROWN, is such an

amendment as well, an amendment

that is going to make the Federal

courts a more effective body for the determination of disputes.

It has become otherwise because

courts can be very easily loaded down

with frivolous suits. The Brown amendment, which I support, is about making

the courts serve the intent of the Constitution writers, to be an impartial

body for the settlement of disputes, but

not just any suit that might come to

people’s minds, very serious suits.

So I want to associate myself with

this amendment, and I want to say to

my dear friend from Alabama, we very

seldom disagree. This is one of those

times because I think it is time now to

restore the effectiveness of rule 11. A

strong, effective rule 11 is one of the

most important tools that the courts

have to fight frivolous, baseless, and

even sometimes harassing lawsuits.

A strong effective rule 11 preserves

judicial resources for litigants who

truly need access to our court system,

and to give a swift action against frivolous lawsuits and claims is, in the end,

going to save time and going to save

money and, by the way, that happens

to be taxpayers’ dollars, and it is going

to, most importantly, promote public

respect for the integrity of the Federal

courts.

Now, on the other hand, the current

version of rule 11, the one that Senator

BROWN wants to modify, the current

version is of little value as a deterrent

to baseless lawsuits. It actually allows

attorneys to file allegations without

knowing them to be true. It allows lawyers to make assertions without having any factual basis and before any research is done.

In short, the current version of rule

11 encourages the kind of baseless suits

and claims that rule 11 was originally

enacted to prevent.

The current rule eventually says

‘‘Sue first and ask questions later.’’

Senator BROWN’s amendment puts

teeth back into rule 11. It does so by

making sanctions for frivolous suits

mandatory, as they once were. In fact,

Mr. President, rule 11 was amended

years ago to make sanctions mandatory because rule 11, up to that time,

was ineffective when sanctions were

discretionary, as they are under the

current version of the rule.

This amendment thus forces people

who come into court to present the

facts and to present the law in a reasonable and honest way. It deters frivolous claims and frivolous suits by denying litigants the opportunity to overreach with unresearched facts and to

shoot for the Moon with unresearched

law.

This amendment also provides the

courts with a variety of tools to defer

frivolous suits, from attorney’s fees

and expenses to court penalties to

nonmonetary sanctions. It also accounts for the innocent party who has

to spend time and money defending

against baseless claims, which the current version of the rule fails to do.

This amendment would enable the

court to make the moving party whole

for the money spent defending against

frivolous lawsuits or claims.

Let me use a very specific example.

The milkshake case that Senator

HATCH talked about yesterday. A driver, as we recall, bought a milkshake at

a McDonald’s restaurant and placed it

between his legs. When he reached for

something, he squeezed the milkshake

and it spilled into his lap. He became

distracted and drove into the car of another driver who sued the milkshake

purchaser and McDonald’s. His attorney’s theory was that McDonald’s

failed to warn the driver of the danger

of eating and driving at the same time.

Now, in reality, he was after McDonald’s deep pocket because the driver

who caused the accident was uninsured. This case was thrown out of trial

court but was appealed up to the New

Jersey Supreme Court—consuming, if

we can believe this, 3 years of the court

system’s time, and thousands and
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5723

thousands of dollars of McDonald’s

money for defense of a baseless action.

Now, when McDonald’s asked for reimbursement for these fees, the judge

refused, saying of the plaintiff, ‘‘He’s

creative and imaginative and should

not be penalized for that.’’

Now, how ridiculous can we get when

we talk about frivolous suits? This case

shows that far from discouraging frivolous litigation, the current rule actually encourages it.

Senator BROWN’s relatively modest

changes will restore the deterrence

value of rule 11 and will have a positive

impact on the ability of the Federal

courts to deal with the ever-increasing

onslaught of litigation, because cases

delayed is justice denied for some people who have a legitimate suit.

I support and I ask my colleagues to

support the needed change suggested

by Senator BROWN.

Mr. SPECTER addressed the Chair.

The PRESIDING OFFICER (Mr.

ASHCROFT). The Senator from Pennsylvania.

Mr. SPECTER. Mr. President, I have

sought recognition to have a brief colloquy or discussion with the proponent

of this amendment, the distinguished

Senator from Colorado, Senator

BROWN. I have already talked with him

about the matter, and I think it is useful to make it a matter of record as to

the meaning of this amendment, which

I think is reasonably apparent from the

language.

There is always a consideration as to

legislative intent as derived from these

discussions, but I think that it is especially appropriate when we have an

amendment to have the view of the author of the amendment.

As I understand the amendment, it

essentially restores the old rule 11

which was in existence prior to its

amendment. In general terms, is that

true?

Mr. BROWN. Yes, it restores the rule

that was in effect prior to December 1,

1993.

Mr. SPECTER. As I understand the

interpretation of the old rule, it provided some reasonable flexibility with

respect to the imposition of sanctions.

My question to Senator BROWN is, does

his amendment leave it to the discretion of the court as to what sanctions

would be imposed?

Mr. BROWN. It does leave to the discretion of the court as to what sanctions are appropriate.

Mr. SPECTER. So that there is no requirement that there be an imposition

of attorney fees or a loser-pays rule for

a violation of the rule arising from this

amendment to rule 11?

Mr. BROWN. That is correct.

The fact is, in the past, before December 1, 1993, there were occasions on

a number of times when the judges

would find that it would be inappropriate to award those fees although they

found—

Mr. SPECTER. It would be appropriate?

Mr. BROWN. It would not be appropriate to award those fees, even though

they did find a frivolous action.

Mr. SPECTER. Although the language is mandatory that there has to

be some sanction, the scope of the

sanction is up to the judge? That is, it

is discretionary with the court?

Mr. BROWN. That is correct.

Mr. SPECTER. And the amendment

does not require that attorneys fees be

paid or that the rule of loser pays be a

consequence of a violation of the rule

under the amendment that is being offered?

Mr. BROWN. That is correct.

Mr. SPECTER. Mr. President, this, I

think, is something which is important

to have clear, which we have now clarified.

It is my sense that the adoption of

the tightening provisions by Senator

BROWN achieves a purpose of further

discouraging frivolous litigation. That

is already discouraged to some extent,

under the existing rule 11, but it further discourages frivolous litigation.

There is legislation in one of the bills

passed by the House which would impose the loser-pays rule, which is not

in the House product liability legislation, but their companion bill and it

might be applicable to all litigation so

that it might apply to product liability

cases.

It is my sense, given the concern

about whether there is frivolous litigation or the extent of frivolous litigation, that there is merit to try to reduce frivolous litigation to the extent

that we can, and to discourage some

more drastic, draconian measure,

which I think would be presented by a

loser-pays rule.

The United States has had a tradition throughout the judicial experience

we have had, that a loser-pays rule is

not appropriate for our society. Without getting into the pros and cons and

the extent of what may or may not be

the rule in Great Britain, loser pays

has not been our rule.

My experience as a practicing attorney has demonstrated to me that we

ought not to make that kind of a drastic rule which would, in effect, close

the courts.

What Senator BROWN has done here

in proposing a tightening of the rule

against frivolous lawsuits, it seems to

me, would tend to discourage any more

drastic approach in this field.

I wonder if my colleague from Colorado would agree with that generalization?

Mr. BROWN. I might say that I concur in the view of the Senator.

It seems to me if there is a reasonable and a fair procedure to discourage

frivolous actions in place, that will act

as the strong deterrent to go to the

loser-pays provision that, for example,

England has incorporated.

On the other hand, if the rule stays

without significant restrictions against

frivolous lawsuits, my guess is there

will be much greater strength in this

country of movement to go to loser

pays.

Mr. SPECTER. I thank my colleague.

Moving on to the one other provision I

wanted to discuss, with respect to the

knowledge of the attorney who prepares the pleadings.

As I understand the amendment of

Senator BROWN, and I pose this question to my colleague from Colorado:

does the amendment permit a goodfaith interpretation as to what the attorney for the plaintiff knows; that it

is to the best of the person’s knowledge, information, and belief, as the

language says, formed after an inquiry,

reasonable under the circumstances.

So in essence, it is a good-faith representation by the attorney who signs

the pleadings.

Mr. BROWN. Indeed, that is correct.

Rule 11 before and after my amendment allows filings for which the party

has a reasonable belief that it is true.

The basic notice pleading system is not

affected. One can still make a general,

encompassing pleading, and then conduct discovery.

I might add, the proposals in the new

rule which were meant to discourage

rule 11 proceedings are retained in this

amendment. In other words, 21-day safe

harbor that is part of the new rules, I

retain.

What that does is require someone

who is going to bring rule 11 proceedings to identify what they think is frivolous, then allow the person who has

brought the action to correct that

within 21 days, and indeed if they do it

ensures that they are totally free from

sanctions.

That safe harbor provision, that I

think is protection against rule 11 proceedings, was retained. I retained it basically because I thought that part of

the change seemed to have merit and

could be helpful.

Mr. THURMOND. Mr. President, I

rise today in support of the amendment

offered by my good friend from Colorado, Senator BROWN. This amendment

is appropriate to restore rule 11 of the

Federal Rules of Civil Procedure to its

proper role. Rule 11 is an important

weapon to prevent the filing of frivolous claims and contentions in Federal

courts. Significant alterations to rule

11 went into effect on December 1, 1993,

and several of these changes are not desirable.

This is not an issue of favoring one

party or group over another, but relates to the standards of veracity

which apply to all advocates in Federal

courts. The issue is whether we in the

Congress are going to accept changes

in rule 11 which lower the standards

that attorneys must satisfy when filing

claims and assertions in Federal court.

This is an issue which is of importance to the American people, too

many of whom already hold lawyers

and our system of justice in low regard.

The Congress is ultimately responsible

for both the laws and the procedures

under which our Federal courts operate. We simply should not accept the
S5724 CONGRESSIONAL RECORD — SENATE April 26, 1995

lower standards in Federal courts

which are made by the 1993 changes to

rule 11.

The amendment by Senator BROWN

will correct undesirable changes in rule

11, while maintaining other changes in

the rule which improve the administration of justice. The most critical correction made by the Brown amendment

would require all factual contentions

made in writing to a court to have evidentiary support or be well grounded in

fact. The 1993 changes in rule 11 permit

a party to make contentions which are

likely to have evidentiary support

after further investigation or discovery. It is important to correct this

change in rule 11 to prevent litigants

from making broad assertions in the

hope that they will be able to support

them through future discovery. On the

other hand, I am pleased that Senator

BROWN agreed to my suggestion to incorporate the long-standing standard

that contentions must be well grounded in fact, because requiring every contention to have evidentiary support

prior to discovery might be too high a

standard and preclude claims and assertions that should be permitted.

Mr. President, I consider the Brown

amendment to be desirable to restore

the standards of rule 11. I urge my colleagues to support this amendment.

Mr. SPECTER. Mr. President, I

would further inquire of my distinguished colleague from Colorado,

whether the legislative intent here is

to allow discovery as to matters that a

plaintiff could not know about? So that

when there is language here which says

that, ‘‘by presenting to the court * * *

an attorney * * * is certifying * * * the

allegations and other factual contentions have evidentiary support or are

well-grounded in fact,’’ if a plaintiff

makes representations to the attorney

which the attorney has reason to accept, that that would be a sufficient

evidentiary basis for the allegations in

the complaint?

Mr. BROWN. Yes, I believe the Senator has said it correctly. All rule 11

requires is an objectively reasonable

belief that it is true. Certainly the case

the Senator has outlined would fit

that.

Mr. SPECTER. If there is something

which plaintiff does not know about,

which the attorney does not know

about, there would be an opportunity

for discovery to ascertain facts which

are not within the knowledge of the

plaintiff before there could be a challenge that there was a violation of rule

11?

Mr. BROWN. It is my understanding

of the workings of this rule that it is

quite clear that you can still make

general encompassing pleadings and

then conduct discovery.

Mr. SPECTER. Because a plaintiff

would know on many matters what had

happened, but if there were some technical matter, some defect in a mechanism, for example, in a product, that

could not be within the knowledge of

the plaintiff, it might require some discovery. But you have to state a sufficient claim to withstand a motion to

dismiss, or perhaps just notice pleading. There would be an opportunity for

an attorney to undertake discovery before there would be a basis for seeking

sanctions under rule 11?

Mr. BROWN. Yes. It would be my

feeling that this could well come under

the general pleadings and all it would

require is a general belief it was true.

And it would, under those circumstances, allow the discovery.

Mr. SPECTER. I thank my colleague

from Colorado. It is my intention to

support this amendment and I do so because I think the experience under the

old rule—if I might ask the specifics of

Senator BROWN, when was the old rule

in effect specifically?

Mr. BROWN. The provision that required sanctions if indeed someone had

made frivolous filings was adopted in

1983 and lasted through December 1,

1993.

Mr. SPECTER. Within the 10-year period, I think that rule had sufficient

flexibility to deter frivolous suits but

was not so rigid and burdensome as to

make it impossible to work in a reasonable fashion. And by returning to

the old rule, which had been in effect

for that period of time, it is my sense

that there will be a tightening of the

legal procedure and that it will make

an improvement and satisfy those who

are concerned about the filing of frivolous lawsuits.

It is my sense generally that in seeking congressional changes in rules governing judicial proceedings that we

have to proceed with substantial caution. In my comments on Monday I

pointed out some of my experience. As

a practicing lawyer, I represented both

plaintiffs and defendants in personal

injury cases and had a major piece of

litigation, which I had discussed on

Monday, and have a sense that, as we

have had accretion or encrustation by

the courts since the early 19th century

on the rules of law, where the cases are

very, very carefully analyzed and considered—I have read many of those

cases personally in connection with the

litigation which I handled many years

ago, described in some detail in my

earlier presentation—that the courts

have a much better opportunity to

handle changes in the law than we do

in Congress, where frequently only one

or two Senators may be present at a

hearing and our markups do not have

the kind of careful and close analysis

of an issue which judicial decisions

have.

So that when Senator BROWN seeks

to return to a rule which had been in

effect for 10 years, which tightens the

procedures and which may well foreclose a more drastic or draconian

change on loser pays, I think it is

worth enacting. So I compliment my

colleague from Colorado and I also

compliment my colleague from Alabama, who has no peer here in terms of

his knowledge of the judicial system

and of judicial temperament. We do not

always agree, but Senator HEFLIN and I

have been on the Judiciary Committee

for 14-years plus together and we have

agreed most of the time.

I might say we are going to miss you,

Senator HEFLIN. But on this one I must

respectfully disagree and decide with

Senator BROWN.

I thank the Chair and yield the floor.

The PRESIDING OFFICER. The Senator from Colorado.

Mr. BROWN. Mr. President, I ask

unanimous consent to add Senator

Abraham as a cosponsor of the amendment.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. HEFLIN addressed the Chair.

The PRESIDING OFFICER. The Senator from Alabama.

Mr. HEFLIN. Mr. President, first let

me apologize to Senator BROWN, when I

said that he had not filed a bill on this.

It was my understanding—I was told

that, that was done after a reasonable

search. My staff or someone, must not

have done it.

That sort of illustrates why there

ought to be discretion in regards to

facts, sometimes, that might be stated

or alleged. You ought to have an opportunity to correct a mistake. There

ought to be discretion when a party

makes an honest mistake.

But basically this is an issue on

whether or not we should return to a

rule that was in effect for 10 years from

1983 up until December 1, 1993. The Judicial Conference, through an advisory

committee, looked at the way rule 11

then was operating and it felt that

there ought to be some changes made.

So they proposed changes and the Judicial Conference of the United States

agreed that there ought to be some

changes made in rule 11, and that the

rule ought not to be mandatory, but

should be discretionary.

It went to the Supreme Court and six

out of the nine members of the Supreme Court, agreed with the Judicial

Conference and the Supreme Court recommended the changes to the Congress. And the 6-month deadline went

by and therefore the new rules of civil

procedure, including rule 11 went into

effect because there was no vote trying

to amend them or trying to prevent

them from going into effect.

So we have a situation in which I feel

we ought to see how rule 11 is going to

work. The judiciary studied it for 10

years, the 10 years that the old rule operated and basically this amendment

attempts to take us back to the old

rule. Basically, the Brown amendment

has a lot of different language but it

really comes down to whether or not

rule 11 ought to be mandatory in every

instance or whether it ought to be discretionary with the judge.

Senator GRASSLEY talked about the

milkshake case. There are bad cases.

They say bad cases make bad law. You

will have, probably, 1 out of 1,000 bad

cases, but that ought not to necessarily

be the controlling factor relative to a

determination of whether or not the
April 26, 1995 CONGRESSIONAL RECORD — SENATE S5725

rule ought to be mandatory or whether

it ought to be discretionary.

I think the procedure that was followed by the judiciary was a very deliberate procedure. It involved a studied approach, and scholars spent hours

and days considering this issue. And

here we are going to consider this bill

on the floor of the Senate, highly technical in nature, in about 1 hour and 10

minutes and are going to vote on it. It

seems to me that the proper course

that we ought to follow is to follow

what the advisory committee of the

Judicial Conference did, and what the

Supreme Court recommended to the

Congress.

So, in my judgment I feel it is a mistake to adopt the Brown amendment.

Mr. BROWN addressed the Chair.

The PRESIDING OFFICER. The Senator from Colorado.

Mr. BROWN. Mr. President, I ask for

the yeas and nays.

The PRESIDING OFFICER. Is there a

sufficient second?

There is a sufficient second.

The yeas and nays were ordered.

Mr. ROCKEFELLER addressed the

Chair.

The PRESIDING OFFICER. The Senator from West Virginia.

Mr. ROCKEFELLER. Mr. President, I

wanted to note that I previously indicated that I wanted to have a tabling

motion to establish the fact that I

want this bill to be kept a product liability bill alone and not to have outside material added to it. But the prevailing sentiment of the chairman

clearly is for an up-or-down vote, and I

have yielded to that.

The PRESIDING OFFICER. Is there

further debate on the amendment. If

not, the question is on agreeing to the

amendment of the Senator from Colorado. On this question, the yeas and

nays have been ordered, and the clerk

will call the roll.

The legislative clerk called the roll.

Mr. LOTT. I announce that the Senator from Missouri [Mr. BOND] and the

Senator from Oregon [Mr. HATFIELD]

are necessarily absent.

Mr. FORD. I announce that the Senator from Delaware [Mr. BIDEN], the

Senator from Arkansas [Mr. BUMPERS],

the Senator from Nebraska [Mr. EXON],

the Senator from Massachusetts [Mr.

KENNEDY], and the Senator from Arkansas [Mr. PRYOR] are necessarily absent.

The PRESIDING OFFICER. Are there

any other Senators in the Chamber

who desire to vote?

The result was announced—yeas 56,

nays 37, as follows:

[Rollcall Vote No. 136 Leg.]

YEAS—56

Abraham

Ashcroft

Baucus

Bennett

Brown

Bryan

Burns

Chafee

Coats

Cohen

Conrad

Coverdell

Craig

D’Amato

DeWine

Dole

Domenici

Dorgan

Faircloth

Frist

Gramm

Grams

Grassley

Gregg

Helms

Hutchison

Inhofe

Johnston

Kassebaum

Kempthorne

Kerry

Kohl

Kyl

Lott

Lugar

Mack

McCain

McConnell

Murkowski

Nickles

Nunn

Packwood

Pressler

Reid

Robb

Roth

Santorum

Simpson

Smith

Snowe

Specter

Stevens

Thomas

Thompson

Thurmond

Warner

NAYS—37

Akaka

Bingaman

Boxer

Bradley

Breaux

Byrd

Campbell

Cochran

Daschle

Dodd

Feingold

Feinstein

Ford

Glenn

Gorton

Graham

Harkin

Hatch

Heflin

Hollings

Inouye

Jeffords

Kerrey

Lautenberg

Leahy

Levin

Lieberman

Mikulski

Moseley-Braun

Moynihan

Murray

Pell

Rockefeller

Sarbanes

Shelby

Simon

Wellstone

NOT VOTING—7

Biden

Bond

Bumpers

Exon

Hatfield

Kennedy

Pryor

So, the amendment (No. 599) was

agreed to.

Mr. SANTORUM. Mr. President, I

MORNING BUSINESS

fask unanimous consent that there now

be a period for the transaction of morning business, with Senators permitted

to speak for up to 5 minutes each.

The PRESIDING OFFICER. Without

objection, it is so ordered.

APOLOGY TO THE GOVERNOR OF

THE STATE OF NEW YORK

fMr. MOYNIHAN. Mr. President, as

the senior senator from the State of

New York, and as a Democrat, I rise to

offer an apology to our Governor,

George E. Pataki, for the inexcusable

conduct of the national chair of the

Democratic National Committee yesterday in Albany.

As has now been reported, and not

disputed, Mr. Donald L. Fowler referred to our Governor as a ‘‘quasi-Governor’’. This, he said, is self-defining.

‘‘It means almost a governor, a governor who’s not quite there, a governor

who doesn’t quite have it together

* * * ’’ Later he volunteered to reporters, ‘‘You know what ‘quasi’ means. It

means half-assed.’’

In the annals of political invective,

there has been yet more vulgar calumny, but in this already sufficiently

raucus time, this will serve. But will

not be allowed to stand.

Mr. Pataki is our duly elected Governor; a person of manifest ability and

quiet dignity. It defies reason that the

national chair of the Democratic Party

should journey to the State capital for

the purpose of summoning New Yorkers to support President Clinton in the

next election, whilst simultaneously

insulting the person New Yorkers

chose to be Governor in the last election.

I am sure Mr. Fowler regrets his remarks. I await his apology. And, to say

again, tender my own on behalf of the

great majority of Democrats who

would not wish to be associated with

what has now taken place, and who

will insist that it not occur again. The

President’s task in New York will be

difficult enough; that would make it

impossible.

WAS CONGRESS IRRESPONSIBLE?

THE VOTERS HAVE SAID YES!

fMr. HELMS. Mr. President, before

contemplating today’s bad news about

the Federal debt, let’s have that little

pop quiz again:

Question: How many million dollars

are in $1 trillion? While you are arriving at an answer, remember that it was

the U.S. Congress that ran up the Federal debt that now exceeds $4.8 trillion.

To be exact, as of the close of business Tuesday, April 25, the total Federal debt—down to the penny—stood at

$4,842,767,648,608.66—meaning that

every man, woman, and child in America now owes $18,383.23 computed on a

per capita basis.

Mr. President, again to answer the

pop quiz question, How many million

in a trillion? There are a million million in a trillion; and you can thank

the U.S. Congress for the existing Federal debt exceeding $4.8 trillion.

IN MEMORY OF MARY BINGHAM

Mr. FORD. Mr. President, I would

flike to take a few moments to express

my sadness over the passing of Mary

Bingham, philanthropist and former

owner of the Louisville Courier-Journal.

It has been said that ‘‘we are defined

by those we have lost,’’ and this could

not be more true than with Mary Bingham and the city she called home for

over 60 years.

Her husband, Barry Bingham Sr.,

brought her to Louisville, and though

they forged a partnership that gave the

city a spark it had not known before,

her personal contributions both to the

newspaper and to the community at

large, stood alone.

The Louisville Courier-Journal wrote

that ‘‘for those who understood the remarkable partnership that shaped this

region’s intellectual, political and cultural climate for a century, Mary Bingham’s own stature and contributions

were never in doubt.’’

And while Mary Bingham was not a

native Kentuckian, she quickly embraced the place she would live out her

life and we were proud to call her our

own.

Throughout the years, she was always the picture of grace and

loveliness, a charming hostess and

much-in-demand guest. But Mary Bingham was not afraid to reveal the fierce

fighter within, when it came to battles

on issues most important to her from

the environment to high education

standards.

And if those passionate beliefs placed

her at odds with the powers that be,

than so be it—whether they were foes