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[Congressional Record Volume 141, Number 72 (Wednesday, May 3, 1995)]
[Senate]
[Pages S6068-S6078]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

           COMMONSENSE PRODUCT LIABILITY AND LEGAL REFORM ACT

  The Senate continued with the consideration of the bill.

                 Amendment No. 600 to Amendment No. 596

   (Purpose: To provide for proportionate liability for noneconomic 
  damages in all civil actions whose subject matter affects commerce)

  Mr. ABRAHAM. Mr. President, I ask unanimous consent to lay aside the 
pending Thompson amendment so I may offer an amendment.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:
  The Senator from Michigan [Mr. Abraham], for himself, Mr. McConnell 
and Mr. Kyl, proposes an amendment numbered 600.
  Mr. ABRAHAM. I ask unanimous consent further reading be dispensed 
with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       Strike out section 109 and insert in lieu thereof the 
     following new section:

     SEC. 109. SEVERAL LIABILITY FOR NONECONOMIC DAMAGES.

       (a) Findings.--The Congress finds that--
       (1) because of the joint and several liability doctrine, 
     municipalities, volunteer groups, nonprofit entities, 
     property owners, and large and small businesses are often 
     brought into litigation despite the fact that their conduct 
     often had little or nothing to do with the harm suffered by 
     the claimant;
       (2) the imposition of joint and several liability for 
     noneconomic damages frequently results in the assessment of 
     unfair and disproportionate damages against defendants that 
     bear no relationship to their fault or responsibility;
       (3) producers of products and services who are only 
     marginally responsible for an injury risk bearing the entire 
     cost of a judgment for noneconomic damages even if the 
     products or services originate in States that have replaced 
     joint liability for noneconomic damages with proportionate 
     liability, because claimants have an incentive to bring suit 
     in States that have retained joint liability; and
       (4) the unfair allocation of noneconomic damages under the 
     joint and several liability doctrine disrupts, impairs and 
     burdens commerce, imposing unreasonable and unjustified costs 
     on consumers, taxpayers governmental entities, large and 
     small businesses, volunteer organizations, and non-profit 
     entities.
       (b) General Rule.--Notwithstanding any other section of 
     this Act, in any civil action whose subject matter affects 
     commerce brought in Federal or State court on any theory, the 
     liability of each defendant for noneconomic damages shall be 
     several only and shall not be joint.
       (c) Amount of Liability.--
       (1) In general.--Each defendant shall be liable only for 
     the amount of noneconomic damages allocated to the defendant 
     in direct proportion to the percentage of responsibility of 
     the defendant (determined in accordance with paragraph (2)) 
     for the harm to the claimant with respect to which the 
     defendant is liable. The court shall render a separate 
     judgment against each defendant in an amount determined 
     pursuant to the preceding sentence.
       (2) Percentage of responsibility.--For purposes of 
     determining the amount of noneconomic damages allocated to a 
     defendant under this section, the trier of fact shall 
     determine the percentage of responsibility of each person, 
     including the claimant, responsible for the claimant's harm, 
     whether or not such person is a party to the action.
       (d) Applicability.--Nothing in this section shall be 
     construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by the United States, or by any State, under any 
     law;
       (2) give rise to any claim for joint liability;
       (3) supersede or alter any Federal law;
       [[Page S6069]] (4) preempt, supersede, or alter any State 
     law to the extent that such law would further limit the 
     applicability of joint liability to any kind of damages;
       (5) affect the applicability of any provision of chapter 97 
     of title 28, United States Code;
       (6) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or of a citizen of a 
     foreign nation; or
       (7) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum.
       (e) Federal Court Jurisdiction Not Established.--Nothing in 
     this section shall be construed to establish any jurisdiction 
     in the district courts of the United States on the basis of 
     section 1331 or 1337 of title 28, United States Code.
       (f) Definitions.--For purposes of this section:
       (1) The term ``claimant'' means any person who brings a 
     civil action and any person on whose behalf such an action is 
     brought. If such action is brought through or on behalf of an 
     estate, the term includes the decedent. If such action is 
     brought through or on behalf of a minor or incompetent, the 
     term includes the legal guardian of the minor or incompetent.
       (2) The term ``commerce'' means commerce between or among 
     the several States, or with foreign nations.
       (3)(A) The term ``economic damages'' means any objectively 
     verifiable monetary losses resulting from the harm suffered, 
     including past and future medical expenses, loss of past and 
     future earnings, burial costs, costs of repair or 
     replacement, costs of obtaining replacement services in the 
     home (including, without limitation, child care, 
     transportation, food preparation, and household care), costs 
     of making reasonable accommodations to a personal residence, 
     loss of employment, and loss of business or employment 
     opportunities, to the extent recovery for such losses is 
     allowed under applicable State law.
       (B) The term ``economic damages'' shall not include 
     noneconomic damages.
       (4) The term ``harm'' means any legally cognizable wrong or 
     injury for which damages may be imposed.
       (5)(A) The term ``noneconomic damages'' means subjective, 
     nonmonetary loss resulting from harm, including pain, 
     suffering, inconvenience, mental suffering, emotional 
     distress, loss of society and companionship, loss of 
     consortium, injury to reputation, and humiliation.
       (B) The term ``noneconomic damages'' shall not include 
     economic damages or punitive damages.
       (6) The term ``punitive damages'' means damages awarded 
     against any person or entity to punish such persons or entity 
     or to deter such person or entity, or others, from engaging 
     in similar behavior in the future.
       (7) The term ``State'' means any State of the United 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Northern Mariana Islands, the Virgin Islands, Guam, 
     American Samoa, and any other territory or possession of the 
     United States, or any political subdivision of any of the 
     foregoing.
  Mr. ABRAHAM. Mr. President, the amendment I have proposed with my 
esteemed colleague from Kentucky would extend the joint liability 
reforms of S. 565 to all cases whose subject matter affects interstate 
commerce. This extension is necessary, in our view, to realize the 
basic goals of the bill.
  In its traditional form, the doctrine of joint liability allows the 
plaintiff to collect the entire amount of a judgment from any defendant 
found to be at least partially responsible for the plaintiff's damages.
  Thus, for example, a defendant found to be 1 percent responsible for 
the plaintiff's damages could be forced to pay 100 percent of the 
plaintiff's judgment.
  This example is not merely theoretical. In the case of Walt Disney 
World versus Wood, the plaintiff sought recovery of damages resulting 
from a collision between her go-kart and another driven by her fiancee. 
The jury found the plaintiff 14 percent responsible, and her fiancee 85 
percent responsible, for the plaintiff's damages. Thus, between them, 
the plaintiff and her fiancee were 99 percent responsible for her 
damages.
  Unfortunately for Disney, however, the jury found it 1 percent 
responsible for the plaintiff's damages and, under the doctrine of 
joint liability, Disney was forced to pay 86 percent of the plaintiff's 
judgment.
  The Disney case underscores the fact that unreformed joint liability 
forces defendants to pay judgments on the basis of their resources, not 
their responsibility. Thus, a largely blameless defendant can be 
punished for the actions of a truly culpable defendant simply because 
the former defendant has greater assets than the latter.
  This unfairness is aggravated when noneconomic damages are awarded.
  Noneconomic damages are awarded to compensate plaintiffs for 
subjective harm, like pain and suffering, emotional distress, and 
humiliation. Since noneconomic damages are not based on tangible 
losses, however, there are no objective criteria for calculating their 
amount. As a result, the size of these awards often depends more on the 
luck of the draw, in terms of the jury, than on the rule of law.
  Thus, when defendants are held jointly liable for noneconomic 
damages--as they are under the unreformed version of joint liability--
they can be forced to pay enormous sums for unverifiable damages they 
did not cause.
  Apparently forgotten amid all this is the old idea that the law is 
supposed to yield predictable, fair, and equitable results.
  In cases where the doctrine of joint liability is applied, then, we 
depart from the fundamental concept, rooted in simple justice, that 
tort law liability should be based on fault. This departure yields a 
number of undesirable consequences.
  First, determining liability on a basis other than fault often leaves 
people with an overwhelming sense of helplessness. No matter how 
careful they might be, actors are no longer masters of their own fate 
with regard to the extent of their exposure to liability.
  For example, one of my cousins operates a baseball batting cage. 
Patrons of the cage pay money to swing at pitches hurled by a pitching 
machine. Obviously, a fast-pitched baseball can cause injury, so the 
small business posted warnings that the cage should only be used by 
experienced batters, and that only one person should be in the batter's 
box at a time. On one occasion, however, two patrons squeezed into the 
batter's box, including one who had never hit a fast-pitched baseball 
before. The inexperienced batter was struck by the ball and injured. 
The business was sued for this injury, although the plaintiff and her 
accomplice were largely responsible for it.
  Thus, because of joint liability, and despite their best efforts to 
act responsibly, my cousin's business faced the prospect of paying for 
all the plaintiff's damages.
  A second and related point is that basing liability on criteria other 
than fault erodes incentives for responsible behavior.
  As Karyn Hicks has explained in a leading law review article,

       [u]nder joint and several liability, whether the actor is 1 
     percent responsible or 100 percent responsible for an injury, 
     his actual cost potential for involvement in the activity 
     will always be the same. He will, therefore, have little 
     incentive to expend his resources in accident avoidance 
     behavior, such as equipment maintenance or taking the time to 
     act carefully, if * * * he will still have to pay the same as 
     he would if he had made no expenditure to avoid the accident 
     in the first place.

  Thus, by reducing or eliminating an actor's reward for acting 
carefully, we likewise reduce or eliminate the incentive for 
shouldering the extra costs associated with careful conduct. The 
result, of course, is more accidents and injuries.
  In truth, Mr. President, to the extent that joint liability requires 
parties to provide compensation for harms they did not cause, it acts 
like an accident insurance system. But this system is remarkably 
inefficient. Less than half of every dollar paid out in damage awards 
goes to the injured party--the remainder goes to court costs and 
attorney fees.
  Of course, the costs imposed on defendants by unreformed joint 
liability are not limited to damage awards. In case after case, deep 
pockets organizations and individuals are made defendants for no reason 
other than their financial resources. For example, George McGovern 
operated a country inn that was sued by a man who got into a fistfight 
in its parking lot.
  Mr. McGovern had a security man on duty at the time, and he managed 
to win the case. But he only did so after, in his words, ``the 
expenditure of a great deal of time, effort and money.''
  In another case, a McDonald's restaurant was sued by a driver whose 
car was struck by a car driven by a drive-in patron of the restaurant.
  The plaintiff argued that McDonald's had been negligent by failing to 
warn its patron of the dangers of eating while driving. The case was a 
patent 
[[Page S6070]] attempt to extort a settlement from McDonald's by means 
of the threat of joint liability, but McDonald's prevailed only after 3 
years of costly litigation.
  Although not reflected in any damage award, the costs of these two 
cases should be attributed to the lure of joint liability because, 
absent that doctrine, the cases almost certainly would not have been 
brought.
  Now, some may ask why we should reform a doctrine that has been 
around as long as joint liability. That is a fair question, but it has 
a ready answer.
  Joint liability was designed for a fundamentally different body of 
law than that in place today. As Ms. Hicks explains, ``the evolution of 
joint liability took place at a time when the contributory negligence 
of the plaintiff was a complete defense to any negligence action.'' But 
the vast majority of States have now abolished contributory negligence 
as a complete defense.
  By failing to reform joint liability as well, we have moved, as Ms. 
Hicks explains, ``from a situation where a wrongdoer compensated an 
innocent victim to one in which an actor responsible to a degree as 
minute as one percent * * * may, in fact, be confronted with paying the 
entire damage costs to a plaintiff who may have been considerably more 
responsible and in a far better position of cost avoidance than was 
he.'' Thus, Mr. President, joint liability reform is necessary to bring 
the doctrine into alignment with the reforms made to related, 
background principles of law.
  S. 565 would reform joint liability in the product liability context 
by allowing it to be imposed for economic damages only, so that a 
defendant could be forced to pay for only his proportionate share of 
noneconomic damages. As a result, plaintiffs would be fully compensated 
for their out-of-pocket losses, while defendants would be better able 
to predict and verify the amount of damages they would be forced to 
pay. This reform thus would address the most pressing concerns of 
plaintiffs and defendants alike.
  But this reform needs to be extended beyond the product liability 
context, because entities other than manufacturers and sellers are 
among those hardest hit by unreformed joint liability.
  The impact of our current system on nonprofits and local governments, 
for example, is well-documented: Individual Little League Baseball 
leagues have seen their liability insurance premiums soar 1,000 percent 
over the past 5 years alone; the city of New York now pays out almost 
$270 million in tort awards each year, which is double the amount of 
funding for city libraries; and well-grounded fears of liability thwart 
the recruitment efforts of volunteer organizations.
  Extending this bill's joint liability reforms beyond the product 
liability context is also critical to the bill's goals of enhancing 
economic growth and competitiveness.
  Small businesses are the engine of that growth, generating 2 of every 
3 new net jobs in our economy since the early 1970's. To a significant 
extent, however, small businesses are forced to direct their resources 
not to job creation, but to costs associated with lawsuits.
  Liability insurance premiums paid by American businesses, for 
example, are now 20 to 50 times higher than those paid by foreign 
firms.
  But the bill as currently written fails to pare these costs 
adequately because many if not most of the lawsuits involving small 
businesses do not concern product liability.
  Instead, small businesses are routinely ensnared in suits for slip 
and fall, misconduct by employees, patrons, and the like. Since a 
majority of small business owners take home less than $50,000 per year 
a determination of joint liability in even one such lawsuit can cripple 
a small business or force it to close its doors. To be serious about 
enhancing economic growth, we have to address that threat.
  Mr. President, it is clear that the American people, men and women 
alike, demand joint liability reform. According to a recent poll 
conducted by the Luntz Research Co., 71 percent of Americans believe 
that joint liability reforms should be extended to all lawsuits, not 
just product liability cases.
  In summary, Mr. President, we can no longer afford to overlook the 
heavy burden that unreformed joint liability imposes on our society. I 
say our society, rather than simply ``defendants,'' because we all know 
that the costs of our current system are passed on to all of society, 
rich and poor alike, in the form of lost jobs, higher taxes, reduced 
community services, and rising prices. Without our amendment, we can 
address only a small fraction of those costs. With it, we can make a 
difference in the lives of all Americans.
  Mr. President, I yield the floor.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The 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.
  Mr. GORTON. Mr. President, this is merely in the nature of an 
announcement to confirm what I had said earlier. At approximately 5:45 
I will ask for regular order at the direction of the majority leader 
and move to table the Thompson amendment. And I am certain there will 
be a rollcall on that motion.
  So I would urge Members who wish to speak to the Thompson amendment, 
or for that matter the Abraham and McConnell amendment, to do so. The 
majority leader is working with the Democratic leader with respect to 
what will happen after that time and for tomorrow. But for the 
attention of all Members, at approximately 5:45 there will be a vote on 
the Thompson amendment.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HEFLIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HEFLIN. Mr. President, I have just read a copy of the Abraham-
McConnell-Kyl amendment. I would like to discuss some of the language 
that I find in here.
  Basically it says: Notwithstanding any other section of this act, in 
any civil action whose subject matter affects commerce brought in a 
Federal or a State court on any theory that liability of each defendant 
for economic damages shall be several only and shall not be joined.
  So this is a much broadening of the issue than what was in the 
underlying product liability bill. It says in any civil action whose 
subject matter affects commerce--it does not say ``interstate 
commerce,'' it says ``commerce''--brought under any theory. I want to 
include that in my discussions with Senator Thompson on what is a civil 
action. We concluded that any action which is not a criminal action is 
a civil action.
  This in effect preempts State law. State laws have many aspects that 
affect noneconomic damages. Noneconomic damages are defined herein as 
meaning subjective nonmonetary damages resulting from harm, including 
pain, suffering, inconvenience, mental suffering, emotional distress, 
loss of society companionship, loss of consortium, injury to 
reputation, and humiliation. That would mean, for example, that all 
suits that we might be talking about that are nonmonetary, including 
libel, defamation, slander, etc.
  If there is one or more publication by a writer or contributing 
writer, all of those, then under this amendment you would have to pick 
the percentage of harm or the percentage of fault on each defendant. It 
would also mean that in the punitive damages in calculating the Snowe 
amendment, which is now a part of the underlying bill, you would have 
to consider this. And you would have to pick out each defendant. There 
is also the provision that does not allow for you to introduce any 
evidence of punitive damage or wrongdoing in a case at chief.
  So I gave the illustration this morning of the truck company that 
knows that the driver has had four drunk driving charges, two reckless 
driving charges, and, therefore, you could not 
[[Page S6071]] prove that evidence because that would be punitive as to 
the driver and as to the owner of the trucking company, and all that 
might be the owner of the trucking company, in calculating the damages. 
You would not be able to do it. It might well be that they say, ``Well, 
the truck owner has just 5 percent of the damage,'' because the jury 
did not know anything about the fact that he had knowledge of those 
four convictions, and, therefore, it can affect it in a lot of 
different ways.
  But I want to get also into what this includes. I just read it. I 
have not had time to do adequate research. But I do have questions, and 
I think they ought to be answered. Does this include noneconomic 
damages such as pain and suffering, or the emotional distress that 
could occur to an American with a disability or a State law that has 
certain disability acts? Does this apply to those States that have laws 
against sexual harassment? Sexual harassment is not a type of injury 
that you show in economic terms. It is a subjective damage that you 
have to evaluate. The discrimination cases that come up in employment, 
sometimes you may be able to prove monetary damages on that. But there 
are other elements of emotional distress, pain and suffering, and 
humiliation.
  Then I also wonder what about antitrust litigation under a State law? 
There are so many unanswered questions about how this would apply. You 
wonder to what extent it would go. This amendment particularly seems to 
be, as it was under the product liability underlying bill, directed 
toward the non-wage earner, the retired person, the elderly who are 
going to spend, hopefully, their days in their retirement, their sunset 
years in life with emotional peace and enjoyment.
 And yet they are deprived of that, and you have someone over here that 
you cannot even prove the gross negligence or the recklessness or the 
wanton conduct in a trial in chief in trying to calculate whatever the 
noneconomic damages might be.

  The woman who is deprived of the right to bear children comes under 
noneconomic damages--whether or not it occurs from a product or whether 
it would occur from the automobile accident or any type of cause of 
action that might arise pertaining to this amendment.
  This is a very broad, sweeping amendment that covers so many aspects 
of the tort laws of the States, and we have had, I suppose, no hearings 
on this, as far as I know. I do not know whether this amendment was 
ever the subject of a hearing beyond the scope of the underlying 
product liability bill. I would like to ask the distinguished chairman 
of the Commerce Committee, were there any hearings ever held outside of 
product liability as to the effect of eliminating joint and several 
liability for noneconomic damages for all civil actions?
  Mr. HOLLINGS. On behalf of the distinguished chairman of the Commerce 
Committee, Senator Pressler, the answer is no.
  Mr. HEFLIN. I still refer to the Senator as my chairman, but I 
realize that all of a sudden we have had change.
  So no hearings have been held in regards to the sweep of this. I 
would like to also ask the ranking member, have any hearings been held 
as to the broad sweep and the encompassing aspects of all civil actions 
pertaining to punitive damages outside of the field of product 
liability?
  Mr. HOLLINGS. No. What is particularly disturbing, in the accelerated 
hearings--I say accelerated--actual markup took place, when and even 
before, unbeknownst, I would say, to most members of the committee they 
added on the matter of rental cars, they added on the matter of 
component parts, and a lot of other things. And it has been like a 
sheep dog with the taste of blood, gobble up anything. Anything you can 
think of, put it on. We have had no hearings on any of this.
  Mr. HEFLIN. In other words, we have an expansion to all civil actions 
on any theory as to changes in the area of punitive damages and the 
elimination of joint and several liability. And the amendment does not 
limit its application to interstate commerce. We as a deliberate body, 
the U.S. Senate, are going to attach our stamp of approval to language 
that has such a far-reaching, encompassing aspect without having a 
single witness or law professor or defense lawyer, or anybody to advise 
us as to its potential effect.
  I do not know where and how it affects Americans under the 
Disabilities Act or a State law that has a disability act. I do not 
know how it affects--and from this one cannot tell--what it does 
pertaining to all of the various State laws dealing with the 
environment. There are some States that have had Superfund-type cleanup 
laws. What happens where there are numerous parties which might have 
contaminated the environment?
  It certainly seems to me that these things ought to be subject to 
some hearings and some investigations rather than coming here without 
having really any great knowledge as to its ultimate impact.
  Now, it seems to me that this matter of rendering a separate judgment 
against each defendant as to the amount to be determined, pursuant to 
the preceding sentence, which is that they be in direct proportion to 
the percentage of responsibility of the defendant.
  Now, in a trial of a case where you might have 10, 15, or more 
defendants, there are really no standards, no real directions that are 
given as to how you, in effect, will determine the placing of damages, 
no real instructions or standards, or various criteria to be used.
  There are just so many unanswered questions, it seems to me that the 
Senate ought to give certainly a lot of careful thought to this 
amendment before we move forward.
  The overall concept in the past has been that the wrongdoers, if a 
judgment is obtained, do the apportionment of the damages amongst 
themselves. Some States have what they call contribution among joint 
tort feasors. This has not been a real problem that I have heard of any 
great consequence--and I practiced law for 25 years--where there were 
those who really suffered as a result of joint tort feasor action. 
There may be some illustrations and there may be some instances to be 
pointed out, but I think they would be rare, indeed. Of course, if a 
person does not have any money, and the person who is injured only has 
a judgment against somebody that does not have any money, he cannot 
collect. The injured party is left holding the bag. He is the one who 
is really suffering. In other words, what you are doing with this 
amendment is benefiting the wrongdoer.
  Now, under the underlying bill, you also have this matter of 
determining the percentage of fault. You have the situation of the 
employer's responsibility, co-employee's responsibility, and in the 
underlying bill, which is designed and it seems to be for such an 
advantage, that the harm can be placed against a nonparty. He does not 
have to be a defendant. You come up with somebody. And there are a lot 
of people you cannot sue. They are in bankruptcy, and so therefore, if 
they are in bankruptcy they have no money. Everybody wants to put all 
the fault off on him, on the person that might be in bankruptcy. 
Sometimes you cannot get service on someone in order to file a suit. So 
there are all sorts of considerations that should given to the impact 
of this far reaching amendment.
  This underlying bill, seemingly, in determining the fault of the 
employer and the co-employee, is designed to give a particular emphasis 
to that. And it has language in the bill which says the last issue that 
shall be presented to the jury is the issue of the amount of fault that 
falls on the co-employee or the employer.
  So you, therefore, try to have that fresh in the minds of the jury 
rather than somebody being able to present the case in a manner which 
they consider to be the proper way to do it. It ends up that you are 
required to try to emphasize and put the emphasis on the employer's 
fault, the coemployee's fault. And in most States you cannot sue the 
coemployee, who cannot be a party to the lawsuit because the employer 
is protected by workmen's compensation and the coemployee is protected 
by workmen's compensation.
  So, all of these things are involved in this amendment which to me 
raises many questions. It just seems to me that it is already faulted 
with the fact that we have got that in the underlying 
[[Page S6072]] bill. But to add it to all civil actions under any 
theory is grossly, in my judgment, unfair.
  I yield the floor.
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER (Ms. Snowe). The Senator from Michigan.
  Mr. ABRAHAM. Thank you, Madam President.
  I would like to try to answer several of the questions that were 
raised by the distinguished Senator from Alabama in his comments a 
moment ago. I was out of the Chamber for a minute, so I am trying to 
recapitulate all of his remarks. But I will go to the ones I think I 
understand.
  One question that has been raised is the issue of whether the Senate 
has had an opportunity to consider some of the arguments that are 
involved in this effort to expand the underlying bill, the substitute 
bill, through such things as hearings and so on.
  I would just say that I think there have been several efforts to do 
that. It is my understanding that in the Commerce Committee the notion 
of broadening legislation in that regard was discussed at least by one 
of the witnesses. A Mr. Ted Olson discussed the notion of broadening.
  Also, obviously the principles of changing from the joint and several 
system that has preexisted were discussed in the context of the 
underlying bill itself. We discussed to some degree the same issues in 
a hearing that was held in the Judiciary Committee on punitive damages 
as well as in a subcommittee hearing that was conducted yesterday by 
Senator Grassley on the cost of the legal system. To my knowledge, 
those are at least several venues in which these discussions have been 
the subject of hearings.
  In addition, I guess I would just point out to the Chair that these 
are certainly not new issues. I believe the notion of reforming the 
legal system has been, as I understand it, at least before the Senate 
on previous occasions in various committees. So I think that we have 
had previous discussions as well.
  Another point I want to address is the question that was raised as to 
whether the amendment we are proposing would apply to such things as 
the Civil Rights Act and so on. This amendment expressly does not alter 
or supersede Federal law. So in the case of any Federal law, whether it 
is the Civil Rights Act or others, I guess, that were referenced, I was 
out of the Chamber at that time, where provision for joint and several 
liability is provided, this amendment would not supersede. Those 
provisions would remain in place.
  Let me just comment a little more broadly on some of the other points 
that were touched on by the Senator from Alabama in his remarks.
  As far as noneconomic damages go, he, I think, did a very good job of 
outlining the broad definition of what constitutes noneconomic damages. 
And there is no intent on the part of our amendment to change that 
definition or to confine in any way the types of noneconomic damages 
which people might be able to recover.
  The purpose of our amendment is to say that, while you may recover 
noneconomic damages, you should only recover them from a defendant to 
the extent the defendant is responsible for those noneconomic damages. 
And in the sense that so many of the noneconomic damages that were 
referenced tend to be in areas that are very subjective in terms of 
calculation, very hard to discern, it strikes me at least to be a 
fundamental principle of fairness that we not hold defendants who are 
not responsible for the negligence involved for damages over which it 
is very difficult, if not impossible, to calculate. As a sense of 
fairness, I think the type of amendment we are offering is responsive.
  I would close with one final thought. We heard, I thought, a good 
point made with respect to some of the people who could conceivably be 
plaintiffs in actions of this sort; references to the elderly who might 
be injured and be seeking a form of recovery and not be somehow able to 
because we assign damages on the basis of responsibility.
  But it seems to me that it is equally possible that the type of 
elderly individual referenced by the Senator from Alabama could be a 
defendant--an elderly individual who has saved his or her entire life 
for his or her retirement, who has a certain amount of fixed assets 
unlikely to get greater because of the fact that they have stopped 
working, who, because of joint and several liability, finds themselves, 
unhappily, the deep pocket in some type of multiple defendant situation 
and, consequently, even though they have only participated in a small 
degree in terms of the responsibility for an injury, end up holding the 
bag for the entire amount of the injury because the other defendants, 
even though more blameworthy, are judgment proof.
  In short, I think you can see it from both perspectives.
  The notion of our amendment is to try to place responsibility for 
resolving noneconomic damages on the shoulders of those who are most 
responsible for the damages in the first place, on the basis of their 
apportioned share of negligence.
  So, for those reasons, I think our amendment is a sensible expansion 
of the underlying legislation. As I said earlier, I strongly hope that 
Members of the Senate will support it.
  Madam President, I yield the floor.
  Mr. HEFLIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. HEFLIN. Madam President, I was interested in what the 
distinguished Senator from Michigan had to say, particularly with 
regard to the reversal of where he made the elderly individual the 
defendant.
  Most elderly persons in our country over the years, at least, I think 
the biggest majority of them, believed in having a home and buying a 
home and paying for their home by the time they reach retirement age. 
Most of them have what the insurance industry calls a homeowner's 
policy.
  Now, how does that affect the illustration that he gave of the 
elderly defendant?
  Practically every homeowner's policy has a provision known as the 
comprehensive liability provision. And those comprehensive liability 
provisions which insurance companies have sold over the years are 
indeed very comprehensive. I commend the insurance industry for the way 
they have sold these policies and their breadth. They cover pretty well 
any type of action that might be brought, unless it is specifically 
excluded.
  The elderly individual probably in almost every case will have 
insurance to protect them from any liability that they might incur. 
Certainly, if they are driving an automobile, they carry insurance.
  So I think the opportunity of saying the reversal--if you leave out 
the element of insurance--most of them are insured relative to this 
matter.
  I just wanted to point that out in regard to this.
  I have talked a lot about the Snowe amendment and severability and 
provisions on punitive damages in the underlying bill. Since Senator 
Snowe is in the chair, it might be of interest to her, and I will 
recite it again.
  Under the provisions of the underlying bill, if a person brings a 
suit and demands punitive damages, there is a provision that says if 
you demand it, either party can demand a separate hearing for punitive 
damages. I think that increases transaction costs, but that is not the 
point I want to bring here.
  In that separate hearing, there is other language in the underlying 
bill which says that a party cannot introduce evidence of the conduct 
which would be admissible under a punitive damage trial, but in the 
suit for compensatory damages. So, therefore, a person who might be 
really, under several liability involved in this, 85 percent at fault 
but could not present the evidence of conduct which would constitute 
conduct recoverable under punitive damages in the trial in chief, you 
might have a situation where that person is 85 percent at fault really 
but because of this protection ends up with only about 5 percent in the 
noneconomic damage aspect of it.
  So when you attempt to double that, you have a problem. That language 
pertaining to the fact that you cannot introduce in the compensatory 
damages part of a trial, the conduct of a defendant who is willful or 
conscious and flagrantly indifferent, but who could come under the 
punitive damage portion of a trial, prohibits such evidence from being 
introduced in the trial in chief. Therefore, the severability aspect of 
this comes into play, and it can well be that the defendant who is the 
[[Page S6073]] greatest at fault and, therefore, you would have the 
severability as it would apply to the noneconomic damages, would be, in 
effect, able to escape relative to these matters.
  So it is something she might want to look into as this bill goes 
forward. I feel like there is a major problem that might be there. I 
just mention that again.
  I think I will yield the floor at this time.
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. ABRAHAM. Madam President, I just wanted to add a couple more 
points to my opening remarks on this amendment, because I think they 
elaborate a little more fully on some of the concerns I raised at that 
time.
  As I mentioned in my comments, the need, in my judgment, for 
expanding the underlying substitute is based on my belief that there is 
a need to provide the same sort of protections to nonprofit 
organizations and civic organizations, and so on, that we are trying to 
provide to product manufacturers. I just wanted to enter into the 
Record a couple of examples that have been brought to my attention in 
recent days in the context of this debate.
  The first is a case of a battered women's shelter in Evanston, IL. A 
few years ago, the Junior League of Evanston sought to establish such a 
shelter. An exhaustive search of liability insurance coverage revealed 
that no insurance company would provide coverage until the shelter 
operated for 3 years without being sued. No one was willing to serve on 
the shelter board unless it had liability insurance. So the shelter was 
never established.
  That is the kind of, I think, unhappy outcome which the current 
system with respect to joint and several liability has created.
  A similar incident involving the Cincinnati Symphony Orchestra 
illuminates the problem as well. A situation occurred recently where 
traffic was backed up on the exit ramp leading to the Cincinnati 
Symphony Orchestra's facility prior to a recent performance. A drunk 
driver, speeding above posted limits, rear ended a car in the traffic 
jam injuring the driver of that car. The injured driver filed a lawsuit 
and made the orchestra a defendant only after learning that the drunk 
driver was uninsured. The owner of the land on which the facility was 
situated was also made a defendant.
  The plaintiff argued that the orchestra and the landowner were 
negligent in allowing the traffic jam to occur. After litigating the 
case all the way through trial, the orchestra and landowner were found 
to be 20 percent at fault between them. However, through the 
application of joint liability, the orchestra and the landowner were 
made responsible for all the plaintiff's damages, even though, by any 
commonsense measure, they had done little or nothing to cause them.
  This is really the principle that caused me to bring this amendment 
in to expand the underlying substitute, because I think we have 
instance after instance where these types of outcomes are produced and, 
as I said in my opening statement, they happen regardless of the extent 
to which the defendant may have tried to protect against injury. We 
know that no situation is without its risks. Nobody who operates a 
business can operate it risk free. They can and should have as much 
incentive as possible to minimize the risks that they create.
  Under a joint/several liability approach, however, there is not as 
much incentive to limit risk because, as I stated in my earlier 
comments, no matter how successfully one insulates themselves, even to 
exclude certain risks and possibilities of liability from happening, 
they still may be found responsible and pay the entire damages involved 
in an injury simply because of joint and several liability.
  I do not think that is the kind of incentive system we want, and I 
think that set of incentives ought to apply across the board. 
Therefore, I believe the expansion of the legislation through my 
amendment from the product area exclusively to other areas, as 
indicated in the amendment, is a sensible and wise addition to this 
bill.
  Madam President, I yield the floor.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Madam President, once again, we are back now to the 
joint and several question with the Abraham amendment. I remember a few 
years ago this issue of competitiveness in Europe, for example, that 
they did not have this and we pointed out at that particular time, and 
I read again article V of the Directive of the Official Journal of the 
European Community:

       Where, as a result of the provisions of this directive, two 
     or more persons are liable for the same damage, they shall be 
     liable jointly and severally, without prejudice to the 
     provisions of national law concerning the rights of 
     contribution or recourse.

  So if they get on to the matter of competitiveness, I wanted to 
answer that in the first question, because the trend for joint and 
several without competitors is just that. The United States gives 
overwhelmingly predominant treatment--and in fact they call it fair 
treatment with respect to economic loss. Let us not misunderstand here. 
They characterize in the majority report what is fair. They use that 
word--and you can use--in the majority language of the report of the 
committee.

       Section 109 introduces fairness and uniformity to the law 
     concerning joint and several liability and product liability 
     actions by adopting the California rule, which holds that 
     defendants are responsible only for their fair share of a 
     claimant's subjective nonmonetary losses, including pain and 
     suffering awards.

  Well, is that fair? It was on an initiative, Madam President--
proposition 51. That State of California is as goofy as it can come. 
They had, I remember, proposition 13 on property tax and wrecked the 
State. They can sell anything out there, mostly. They get a lot of 
money and a lot of advertising and a lot of TV and get a temper up and 
everything else like that. So they are ruining a magnificent school 
system. You could not get a license to build down in the capital, in 
Pasadena and Sacramento. I remember many instances, from friends out 
there, that it never has been the same since. They removed property tax 
support for general government and rolled it back, and now they have 
gone to an 8 percent sales tax and they have gone to a special gas tax 
for highways and everything else, and they have been struggling ever 
since with multibillion dollar deficits. They call it fair, the 
California rule. It is not the usual rule in the several States of 
America. It is the unusual rule, in this Senator's opinion, the unfair 
one.
  Why did we say that it is unfair? We go right to the idea as to 
economic loss. It should be joint and several. Now, that is a 
hypothesis; that is the premise of the amendment of the distinguished 
Senator from Michigan. He agrees that is sound. In fact, the majority 
of the committee agrees that is sound. In fact, the major sponsors, the 
Senators from West Virginia and Washington, the principal sponsors here 
of product liability, all agree that joint and several is sound and 
fair. But only for economic damages.
  What they are really doing is savaging the women and family 
population, savaging the women and family population of our country. 
That crowd that came to town with the family bill got a contract, and 
they are going to build a family. The majority of women, thank heavens, 
are the builders of the family, producing the family, caring for the 
family, and all without a salary--noneconomic loss, all with no 
compensation, so no compensatory situation. The family. Everybody I 
know down in my backyard, they have the big movement, the religious 
right and everything else. But they all say, ``I am for the family, the 
family, the family.'' But I can tell you here and now that they are 
gutting the family.
  Let us see what Professor Finley said with respect to the 
distinctions between economic loss and noneconomic loss damages harming 
women:

       Provisions that make distinctions between economic loss and 
     noneconomic loss, favoring the former and disfavoring the 
     latter, disadvantage women for several reasons. Noneconomic 
     loss damages, which include compensation for loss of 
     reproductive capacity, impairment of sexual function, harm to 
     dignity and self-esteem, and emotional or psychic harm, are 
     crucial category of damages for women, because many injuries 
     that primarily or especially affect women are compensated 
     largely, if at all, through noneconomic loss damages. For 
     example, reproductive harm, including pregnancy loss, or 
     [[Page S6074]] infertility, is compensated primarily through 
     noneconomic loss damages, because the greatest impact of 
     these sorts of injuries is not on the ability to earn a 
     paycheck, but rather on the ability to be a whole, fully 
     functional female. Sexual harassment, sexual assault, sexual 
     improprieties by health care providers are also examples of 
     injuries that have profound impacts but are compensated 
     primarily through noneconomic loss damages.
       Noneconomic loss damages are especially crucial to women in 
     the area of drugs and medical devices. Unfortunately, far too 
     many of the modern health and product liability disasters in 
     the drug and device area involve products designed to be used 
     in women's bodies, usually in connection with reproduction or 
     sexuality: The anti-nausea drug thalidomide, which produced 
     horrifying birth defects; the ineffective anti-miscarriage 
     drug DES, which causes cervical cancer and infertility; the 
     Dalkon Shield and Copper-7 IUDs, which caused sometimes fatal 
     or sterilizing pelvic inflammatory disease and uterine 
     perforations; silicone breast implants, which can cause 
     debilitating autoimmune diseases and permanent disfigurement; 
     the acne treatment drug Accutane, which if taken during the 
     early stages of pregnancy causes serious birth defects; the 
     drug Ritodine, which is prescribed to prevent premature 
     labor, but has proven fatal to some women; the contraceptive 
     Norplant, which is turning out to have serious side effects 
     and to require expensive and dangerous invasive surgery to 
     remove. The greatest extent of injuries caused by these 
     products is to reproductive capacity, to the ability to bear 
     a whole and healthy child, to intimacy and normal sexual 
     functioning, to self esteem and dignity--all aspects of 
     injury which are compensated by noneconomic loss damages. 
     Studies also demonstrate that the prospect of liability can 
     be a factor to encourage drug companies to more adequately 
     include women in clinical trials of drugs and to perform more 
     extensive testing of drugs and devices to be used in women's 
     bodies.

  If you go with this Abraham amendment, I can tell you here and now, 
you have cut off clinical trials of women in this drug field, because 
there is no loss there. They have written that off now as a care in 
this society--the family crowd that has come to town wanting a family 
bill, a family tax cut, and a family this and that, and they want to 
savage the family here with this joint and several prohibition, or 
noneconomic damages.
  Going further with Professor Finley--and to make it absolutely clear, 
she is an outstanding professor. Lucinda M. Finley is her complete 
name. She says:

       Noneconomic loss damages are also of particular importance 
     to women because a growing body of empirical research 
     demonstrates that women recover far less than men for 
     economic loss damages,
      and it is primarily thanks to the noneconomic loss category 
     that women's tort recoveries move closer to the average 
     for men. Women recover less under the economic loss 
     category because on the whole they earn less than men; 
     because their household labor, while recognized, is valued 
     very low; because economic loss damages are often 
     calculated using tables that presume that women earn less 
     and will stop work earlier; and because so many injuries 
     that happen to women have low economic loss value and 
     injure primarily in noneconomic ways.

  These inequities in economic loss damages are also true for other 
social groups that earn little or less on average than white men: The 
elderly and retired, blacks, and Hispanics. Noneconomic loss damages 
can also make the tort recoveries of these economically less well off 
social groups more commensurate with what white men receive for similar 
injuries.
  Indeed, the nonpecuniary loss aspects of damages may be even more 
crucial for the elderly person or for the poorly paid minority clerical 
or domestic worker, because they are less likely than high wage earners 
to have disability and health insurance, a pension plan, or investments 
that can provide a security net in the event of catastrophic injury.
  For all these reasons, full recognition of noneconomic loss damages 
is of fundamental importance to ensuring that the tort system provides 
adequate compensation to women for reproductive and sexual harm, and to 
the elderly and lower paid or impoverished members of society.
  Madam President, I think it is clear cut. I could go on. There is no 
question in my mind what the intent here is. Again, the manufacturers 
bill is not for consumers. We have to have Senators on the floor 
saying, ``Oh, I am worried about the consumers.'' The manufacturers 
bill, again, limits their liability and limits their cost so they can 
make more money and safety can decline in the United States.
  What do we do when we provide for that several proof in noneconomic 
loss and the degree thereof? I read again from Professor Finley:

       Joint liability does not mean that part of the injury was 
     caused by the independent actions of one defendant, while 
     another part of the indivisible injury was caused by another 
     defendant's actions. In many product cases, the injuries are 
     an indivisible whole, and cannot meaningfully be parceled out 
     in this way. For example, when a defective IUD causes an 
     infection that renders a woman permanently infertile, one 
     cannot meaningfully ascertain that the manufacturer's failure 
     to test the tail string caused half the infertility, while 
     the failure of the manufacturer of the copper or string 
     filament to test its effects when introduced into the uterus 
     caused the other half of the infection.

  Now, here is an initiative to simplify the uniformity for less 
bureaucracy, causing what? If they want to know why there are so many 
lawyers, I can say now, having tried cases, that is going to put 
another 2 days of trial on my case, and we will spend more time and 
there will be more dispute and there will be more bureaucracy and there 
will be more cost.
  That is all in the name of, really, punishing the poor, the minority, 
the women in our society, particularly family members. I think it ought 
to be rejected out of hand. They do not reject it. They adopt it with 
the word ``fair'' for economic loss.
  It is not 1 percent in economic loss who has only 1 percent 
contributing, we will say, to the wrongful act or injury and the other 
99 percent having gone bankrupt, and I only had 1 percent contribution 
to the particular verdict and finding of that jury. Yes, if it is only 
1 percent for economic, then let the 1 percent pay the 100 percent. Let 
the 1 percent pay the 100 percent. They adopt that with the word 
``fair.'' They think that is fair, joint and several, for that. That is 
fair.
  When it comes to the injuries for the women in our society, the aged 
in our society, the minorities in our society, the nonbreadwinners in 
our society, if they cannot prove economic loss, then what do they do? 
They list it out.
  They want to make absolutely sure in that particular amendment--if I 
could find my copy of that Abraham amendment, they talk and they decide 
exactly what they do not want to pay for. They find, yes, joint and 
several for everything else, but the term ``noneconomic damages'' means 
``subjective, nonmonetary loss resulting from harm, including pain, 
including suffering, including inconvenience, including mental 
suffering, emotional distress, loss to society and companionship, loss 
of consortium, injury to reputation, and humiliation.''
  Throw all of that out under this amendment. Forget it. We will not be 
able to prove the several. And we have to start proving that while, at 
the same time, there has been proof by the greater weight of the 
preponderance of evidence that there has been wrongdoing and that there 
has been injury and the burden now is the injured party is to be 
injured further with the Abraham amendment. They are really putting the 
burden on here, and they come in the same breath and say, ``We are 
interested in the injured parties--namely, consumers.''
  Now, if anybody believes that, well, I see we are getting around the 
time when we can vote and others want to speak, but I hope that Members 
will study this amendment very, very carefully and understand that it 
is not the California rule, like something is wonderful. I run in the 
other direction when I hear about the California rule.
  If a person wants some liberal things happening and everything else 
of that kind, go to the State of California. I have many, many friends 
out there and they have a big time, but to bring this into rule of the 
United States of America and to reverse the majority State laws in our 
Nation and not to reverse it on joint and several for economic loss, 
which they term ``fair'' and sound but only for noneconomic loss, these 
particular people in our society, particularly families and those who 
produce and build the families and say that they are for families, they 
are caught off base on this. I hope they vote against their own 
amendment.

                 Amendment No. 681 to Amendment No. 596

     (Purpose: To make improvements concerning alternative dispute 
                              resolution)

  Mr. KYL. Madam President, I am simply going to make a unanimous- 
[[Page S6075]] consent request. I ask unanimous consent to lay aside 
the pending amendment and offer an amendment, which I send to the desk 
and ask for its immediate consideration.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arizona [Mr. Kyl] proposes an amendment 
     numbered 681 to amendment No. 596.

  The amendment is as follows:

       In section 103, strike all after subsection (a) through the 
     end of the section.

  Mr. KYL. Madam President, just a moment to explain what this 
amendment is. I know we are getting close to the time to vote, and the 
Senator from Connecticut wishes to speak, as well.
  This section 103 is titled ``Alternative Dispute Resolution 
Procedures.'' It establishes that in a jurisdiction where an 
alternative dispute resolution procedure is provided for, that either 
the claimants or the defendant may utilize such procedure. That is 
point one. Of course, that does not change anything or add anything to 
existing law.
  The second part of this provides how the procedure shall be utilized. 
Again, that adds nothing to the existing law.
  The third part of section 103 establishes that if the defendant 
refuses to go along with or to accept the plaintiff's request and 
certain other conditions are satisfied, then the defendant shall be 
found liable for attorney's fees and costs. That is, in effect, the 
British rule, the loser pays. But there is no such provision for 
plaintiffs.
  I thought this was merely an oversight. Obviously both parties to a 
litigation should be accorded the same rights under the rules of 
procedure. But it is not an oversight. I am told that certain Members 
of the body require this dichotomy in the rules in order to vote in 
favor of the bill.
  Madam President, if that is what it takes we should not be doing it. 
This is grossly unfair. It would be an absolute and total departure 
from everything that our legal system stands for. All parties to 
litigation plead their cases, defend their cases, prosecute their cases 
under the same set of rules. We do not have rules that apply to one 
side but that do not apply to another; particularly where we are trying 
to avoid litigation in the first place by providing for alternative 
dispute resolution.
  So, where a State has such a procedure we ought to be encouraging 
both parties to go through such a procedure. If there is to be a 
penalty attached, then that penalty should be the same for either 
party. If there is not, that is the business of the State jurisdiction. 
But the Federal Government should not be interceding and saying if a 
State has such a procedure it only applies to the defendant; plaintiff 
is under no obligation to go through with it if requested by the 
defendant.
  So, Madam President, we will talk more about this tomorrow but I 
wanted my colleagues to know that this gross unfairness does need to be 
corrected in the bill. It is a very simple amendment, but I will be 
asking my colleagues to support this amendment tomorrow.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Madam President, I wanted to send an amendment to desk 
to get in line here. I ask unanimous consent to temporarily lay aside 
the pending amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                 Amendment No. 682 To Amendment No. 596

    (Purpose: To provide for product liability insurance reporting)

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

       The Senator from South Carolina [Mr. Hollings] proposes an 
     amendment numbered 682 to amendment No. 596.

  Mr. HOLLINGS. Madam President, I ask unanimous consent that reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

     SEC.   . PRODUCT LIABILITY INSURANCE REPORTING.

       (a) Report to Congress.--The Secretary of Commerce 
     (hereafter in this section referred to as the ``Secretary'') 
     shall provide to the Congress before June 30 of each year 
     after the date of enactment of this Act a report analyzing 
     the impact of this Act on insurers which issue product 
     liability insurance either separately or in conjunction with 
     other insurance; and on self-insurers, captive insurers, and 
     risk retention groups.
       (b) Collection of Data.--To carry out the purposes of this 
     section, the Secretary shall collect from each insurer all 
     data considered necessary by the Secretary to present and 
     analyze fully the impact of this Act on such insurers.
       (c) Regulations.--Within 120 days after the date of 
     enactment of this Act, the Secretary shall issue such 
     regulations as may be necessary to implement the purposes, 
     and carry out the provisions, of this section. Such 
     regulations shall be promulgated in accordance with section 
     553 of title 5, United States Code. Such regulations shall--
       (1) require the reporting of information sufficiently 
     comprehensive to make possible a full evaluation of the 
     impact of this Act on such insurers;
       (2) specify the information to be provided by such insurers 
     and the format of such information, taking into account 
     methods to minimize the paperwork and cost burdens on such 
     insurers and the Federal Government; and
       (3) provide, to the maximum extent practicable, that such 
     information is obtained from existing sources, including, but 
     not limited to, State insurance commissioners, recognized 
     insurance statistical agencies, the Administrative Office of 
     the United States Courts, and the National Center for State 
     Courts.
       (d) Subpoena.--The Secretary may subpoena witnesses and 
     records related to the report required under this section 
     from any place in the United States. If a witness disobeys 
     such a subpoena, the Secretary may petition any district 
     court of the United States to enforce such subpoena. The 
     court may punish a refusal to obey an order of the court to 
     comply with such a subpoena as a contempt of court.

  Mr. HOLLINGS. Madam President, this is simply the amendment we had on 
previous product liability bills. It was actually proposed by the 
distinguished colleague, Senator Rockefeller from West Virginia. It has 
to do with product liability insurance reporting.
  Not to delay the Senator from Washington or the Senator from 
Connecticut, both of whom I thank very much for yielding, I will debate 
it later on.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Washington.

                 Amendment No. 618 to Amendment No. 596

  Mr. GORTON. Madam President, I had earlier announced I would move to 
table the Thompson amendment at 5:45. I do see on the floor my 
distinguished colleague and cosponsor, the Senator from Connecticut, 
who has not spoken on any of these issues today.
  I ask him if he would like to do so? I am going to certainly defer my 
motion to table.
  Mr. LIEBERMAN. Madam President, replying to my friend and colleague 
from Washington, I would appreciate the opportunity to speak for just 4 
or 5 minutes, if I may at this time, on the Thompson amendment.
  Madam President, we have proceeded, now, for several days on the 
topic of product liability reform. Those of us who have sponsored the 
underlying bill, a bipartisan group, have argued that the current 
system of product liability litigation is costly, it is unfair, too 
much of the money put into the system goes to those who are operating 
it instead of the victims of actual negligence.
  We have proceeded and brought several important issues to votes, not 
only on product liability but on the general topic of medical 
malpractice, punitive damages--a creative approach offered and accepted 
by more than 60 of our colleagues, by the occupant of the chair, the 
distinguished Senator from Maine.
  I think we have a consistent pattern in which a majority of Members 
of the Chamber, of this Senate, have spoken in favor of reform, 
acknowledging that the status quo in the civil justice system, when it 
comes to tort law, is just not working as it should. It is not working 
in the interests of the American people. It is not working in the 
interests of the American consumer who is paying too much and getting 
too little. It is certainly not working in the interests of American 
business and American workers because it is denying us products. It is 
making us less competitive. It is denying employment opportunities. I 
say all of that as a preface to saying just a few brief words about the 
amendment offered by the 
[[Page S6076]] Senator from Tennessee, Mr. Thompson, joined also by 
Senators Simon and Cochran.
  With all respect to my three colleagues, the record will note that 
they have not been, generally speaking, among those who have voted for 
the reform effort, the tort reform effort. I would say, respectfully 
again, that a vote for this amendment will have the effect of making 
hollow the effort to achieve genuine product liability reform--genuine 
tort reform. It would make it hollow in taking unto itself the banner 
of federalism and States rights, as it were--but it does so in a way 
that is not true to the actual content of the bill before us and is not 
really true to federalism either.
  The fact is, the underlying bill leaves almost all of the fundamental 
questions of liability still with the States but it acknowledges that 
this area of our law has national implications. It is a national 
problem and it requires a national solution. By restricting the impact 
of these reforms to the Federal courts, this amendment essentially 
eviscerates--it guts the bill. It will not any longer be true reform.
  There are some who have described the underlying bill as too weak. We 
like to say it is moderate. It is balanced--I believe it is. It is the 
way it ought to go forward. But if this amendment is agreed to, there 
will be very little left and it will be much less than moderate.
  Madam President, let me just say specifically that the impact of this 
amendment would be to enable attorneys, plaintiff's attorneys, to shop 
for appropriate jurisdictions in which to, even more than under the 
current law, file their suits in State courts. But more significant and 
perhaps a point that has not been mentioned enough, plaintiff's 
attorneys here will be motivated to immediately add resident defendants 
to the complaint so as to avoid removal to Federal court. Under current 
legal practice, under current law, any time there is a defendant in a 
suit from the same State as plaintiff, diversity of jurisdiction, which 
is a prerequisite to obtaining Federal court jurisdiction, is defeated. 
Thus, plaintiffs can easily control here whether Federal law will apply 
and can frustrate the attempt to finally, after 18 years of attempts in 
this Senate, in this Congress, to reform. They can frustrate that 
attempt. It also means that more people will be sued, more small 
businesses will be sued, that lawsuits will cost even more.
  So we are trying to achieve a modest level of uniformity in the 
underlying amendment in an effort to reform the inequitable, costly, 
slow system we now have. The amendment offered by the Senator from 
Tennessee will doom any effort to achieve those moderate results, and, 
therefore, I strongly urge my colleagues, again a majority of whom have 
expressed their clear desire for reform, to be consistent with that 
expressed desire for reform and to vote against the amendment offered 
by the Senator from Tennessee.
  I thank the Chair and I yield the floor.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Madam President, almost 6 years ago the U.S. Supreme 
Court decision named Erie Railroad versus Tompkins did all it possibly 
could to consolidate and rationalize the law relating to actions 
brought or removed to Federal courts under diversity of jurisdiction by 
ruling that Federal courts were required to follow State law in such 
cases. So that it would cut back on forum shopping by lawyers who were 
looking for a more favorable law than within their own State by 
choosing between State or Federal courts.
  For almost 60 years that has been the law and it has worked well. 
This bill is designed to reduce further the lack of uniformity, 
shopping among the various States.
  The Thompson amendment instead of having 50 different jurisdictions 
and rules with respect to product liability litigation would result in 
100 because the rule of the Federal court in Connecticut would be 
different from the rule in the State court in Connecticut. The rule in 
the Federal court in West Virginia would be different than the rule in 
the State court in West Virginia or Washington or Maine. So we would 
have more confusion, more forum shopping, and less uniformity.
  That is why primarily the Thompson amendment should be defeated 
ending this debate.
  Madam President, I ask for the regular order.
  The PRESIDING OFFICER. The regular order is the amendment offered by 
the Senator from Tennessee.
  Mr. GORTON. I move to table the Thompson amendment and 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.
  The PRESIDING OFFICER. The question is on agreeing to the motion of 
the Senator from Washington to lay on the table the amendment of the 
Senator from Tennessee. On this question, the yeas and nays have been 
ordered, and the clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. FORD. I announce that the Senator from Rhode Island [Mr. Pell] is 
necessarily absent.
  The PRESIDING OFFICER (Mr. Bennett). Are there any other Senators in 
the Chamber who desire to vote?
  The result was announced--yeas 58, nays 41, as follows:

                      [Rollcall Vote No. 147 Leg.]

                                YEAS--58

     Abraham
     Ashcroft
     Bennett
     Bond
     Brown
     Burns
     Campbell
     Chafee
     Coats
     Conrad
     Coverdell
     Craig
     DeWine
     Dodd
     Dole
     Domenici
     Dorgan
     Exon
     Faircloth
     Feinstein
     Frist
     Glenn
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hatch
     Hatfield
     Helms
     Hutchison
     Inhofe
     Jeffords
     Kassebaum
     Kempthorne
     Kohl
     Kyl
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Mikulski
     Murkowski
     Nickles
     Nunn
     Pressler
     Pryor
     Robb
     Rockefeller
     Santorum
     Smith
     Snowe
     Stevens
     Thomas
     Thurmond
     Warner

                                NAYS--41

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Bradley
     Breaux
     Bryan
     Bumpers
     Byrd
     Cochran
     Cohen
     D'Amato
     Daschle
     Feingold
     Ford
     Graham
     Harkin
     Heflin
     Hollings
     Inouye
     Johnston
     Kennedy
     Kerrey
     Kerry
     Lautenberg
     Leahy
     Levin
     Moseley-Braun
     Moynihan
     Murray
     Packwood
     Reid
     Roth
     Sarbanes
     Shelby
     Simon
     Simpson
     Specter
     Thompson
     Wellstone

                             NOT VOTING--1

       
     Pell
       
  So the motion to lay on the table was agreed to.
  Mr. GORTON. Mr. President, I move to reconsider the vote by which the 
motion was agreed to.
  Mr. ROCKEFELLER. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. GORTON. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HEFLIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HEFLIN. Mr. President, I would like to address some of the 
underlying provisions in the product liability bill which I feel are 
unfair.
  No. 1 is that in the definition of claimant and person, the language 
brings within the purview of this bill a Government entity. This means 
cities, counties, State Government, the Federal Government. The statute 
of repose could be very important as we look at the United States Army 
relative to damages it might suffer.
  I think most of the vehicles in the Army we know are designed to last 
a long time--helicopters, NASA vehicles, and so forth. Why the 
proponents want to include a Government entity within the provisions of 
this statute raises a lot of questions to me.
  Now they pretty well exempt rental cars, lease property from product 
liability. I gave an illustration earlier that you might have a 
situation in which a recall is sent by the manufacturer, but the rental 
car agency decides to continue to lease the car with knowledge that 
there are dangers that might be in the car. I just mention that.
  [[Page S6077]] Also, in the calculation of several damages in the 
bill itself and in the Abraham amendment, there is language to the 
effect that in the several liability and the percentage of harm, that 
it does not have to be a party to the lawsuit. Therefore, you have 
situations where there could be companies in bankruptcy where you could 
not get jurisdiction. And then you could have a situation where, in the 
absence of service, you could not bring it; or it could be that the 
statute of limitations has run before someone recognizes that part of 
it is not to the lawsuit, to get service on, relative to that matter. 
Under most workman's compensation laws, it not only means that you 
cannot bring a lawsuit against your employer, but also against 
coemployees. Yet, you have the right under this, whether party to a 
lawsuit or not--the jury would be obligated to set a percentage of the 
fault against that party. And that party would not be there to defend 
themselves. They would not want to become involved in a lawsuit. They 
are the only ones who really know their defenses and the amount of 
their responsibility pertaining to the fault that might occur. So, in 
effect, therefore, they would gang up against a party who was not a 
defendant in the lawsuit.
  Then there is language in regard to misuse or alteration, which is a 
defense that reduces the damage. But, again, it is carefully worded for 
an advantage. It says, ``. . . misuse or alteration by any person, 
regardless of whether they are a defendant in the lawsuit.''
  And then you have, in this bill, to show you how it is worded, in the 
lawsuit if you have several defendants and they are not parties--the 
employer and the employee cannot be made--in most instances, the 
coemployee cannot be made a party to a lawsuit and is protected because 
of workman's compensation. Then it says that the last issue to be tried 
in the lawsuit is the percentage of the fault that falls on the 
employer or the coemployee.
  So they want it to be fresh in the minds of the jury as being the 
last issue that is tried. That is another slight advantage that they 
are always working in regard to this. The draftsmen of this are keen 
people who have represented defendants, and they are knowledgeable 
about defending lawsuits and are trying to get an advantage rather than 
trying to be fair to the injured party. And then it has the provision 
that you cannot settle without the insurance company or the workman's 
compensation agreement. If you want to settle for 75 cents on the 
dollar, the workman's compensation insurer will not let you do that 
because they want 100 percent. That is another example of the bill's 
unfairness.
  Now, there are a lot of lawsuits on asbestos injury. It would apply 
to asbestos, except there is some provision pertaining to the statute 
of repose relative to asbestos, calling it a ``toxic'' matter.
  The bill has a provision for businesses coming under the provisions 
of the Uniform Commercial Code regarding commercial loss, where 
businesses are therefore given an advantage. Well, under the uniform 
commercial code, it has generally, under warranties, a 4-year statute 
of limitations; whereas, under this bill, the injured worker has only 2 
years in a statute of limitations. That is another advantage that is 
put in there for the benefit of the manufacturer.
  Another aspect relates to implied warranty. The bill abolishes the 
concept of implied warranty as a cause of action. Implied warranty 
basically is a concept that says that the product is fit for the 
purpose for which it is sold. But under the language of the bill, there 
are several implied warranties. There is an implied warranty of 
merchantability, and other implied warranties are involved. Under this 
language, it allows the only warranty that you can, have a cause of 
action for or sue on is an express warranty.
  So, therefore, all a seller of goods has to do, if he has knowledge 
of defects, is to keep his mouth shut. He just does not say anything. 
Under the normal law, if he says nothing, but he has knowledge, then 
the implied warranty could be found. But unless a seller expressly 
warrants a product, he is exempt from liability. Then there could be an 
instance in regard to the Uniform Commercial Code relative to privity 
of contract. You have to have privity of contract, actual contractual 
relations; it would be a limited effect where it would come into play, 
but it is still an advantage the bill's proponents are seeking.
  I wanted to mention those. Of course, as the bill presently stands, 
the drug companies are almost completely immune from any lawsuit. 
Regarding pharmaceutical companies--drugs--there is just about an 
impossibility the way it is presently framed to recover against them. 
The biomaterial section is still one where they have written it in such 
a manner that it has language that is most unusual. They say that if a 
material comes in contact with bodily fluids or with tissue and remains 
for less than 30 days, less than 30 days could be 1 minute. It could be 
5 minutes. When it talks about less than 30 days, it says that that 
comes in contact through a surgical opening.
  What is a surgical opening? A surgical opening could be a needle that 
is stuck into you, a needle, a hypodermic device that goes in the body 
to draw blood or administer a drug or medicine. That is, in effect, a 
surgical opening. If it stays there 30 seconds, then it comes under the 
classification, the way this is written, of being an implant. And, 
therefore, if you are a component part of the implant under the 
biomaterials section that we have here, you have just about a complete 
immunity. The only way you could do it would be that you have to prove 
that the component part was not made by a different party but was made 
by the manufacturer, or that the component part was made by the 
seller--component parts, many times, are made by many and different 
people--or that it was according to specifications. A lot of times, 
there are defects relative to specifications on these.
  I point out that there are a lot more snakes, as I call them, 
involved in this. Every time you read it, you discover another one of 
these snakes wiggling in the grass. Each of them are big issues.
  I think we have concentrated too much relative to punitive damages, 
because there are so many other issues involved in this that are just 
as big in taking away the rights of injured persons. I wanted to point 
those out. I thought some others would be on the floor but, as usual, 
some will leave before too long. Maybe I made a point in that regard.
  I yield the floor.
  Mr. HOLLINGS. Mr. President, I am afraid the distinguished Senator 
and myself are probably running them off the floor.
  Mr. President, I have submitted an amendment which is presently at 
the desk. I understand from the managers of the bill that the intent 
now is to hear about these amendments this evening, and then in the 
morning, and it is up to the majority and minority leaders.
  As they have told me about it thus far, perhaps around 12:15, we 
would start voting on three amendments: The amendment of the 
distinguished Senator from Michigan, Senator Abraham; I think it is a 
second-degree amendment by the distinguished Senator from Arizona, 
Senator Kyl; and my amendment.
  With respect to my amendment, entitled Product Liability Insurance 
Reporting, it struck me at the time of the hearing, the official on 
behalf of the Government appeared, said that the National Governors' 
Association policies makes three major points about product liability. 
The first urges Congress to adopt a uniform product liability code; 
second, the Congress to assess and if necessary enhancing Federal 
consumer protection and product safety standards; third, calls for more 
effective oversight of the insurance industry. There is absolutely 
none.
  In fact, the attempts over the years to try to determine anything at 
all about casualty carriers, their costs, their rates, their losses, 
the availability of insurance and otherwise, has been a tremendous 
problem at the Federal level because we have left it generally to the 
States.
  Back 9 years ago in the hearings we were having at that time--because 
we only had cursory hearings on the bill this time--when we were having 
hearings in depth, it was a matter of unanimity out of our committee 
when Senators from Kentucky and West Virginia got together reaching a 
significant agreement.
  [[Page S6078]] I quote the Senator from West Virginia, Senator 
Rockefeller, the primary cosponsor with Senator Gorton of Washington of 
this particular bill that we now have before the Senate:

       The Senator from Kentucky and I have reached a significant 
     agreement which I think achieves a significant goal in an 
     eminently sensible manner. The amendment is before you and 
     ensures for the first time that the Secretary of Commerce 
     will collect--not ``may collect'' but ``will collect''--
     comprehensive product liability insurance data which will be 
     useful to us as policy makers at the Federal and State 
     levels.
       The amendment in effect makes it possible that should this 
     issue be revisited, Congress will in fact have the facts 
     before us. Okay. So what is in the amendment?
       The amendment would require the Secretary of Commerce to 
     report comprehensive information annually to the Congress on 
     the effect of this product liability tort reform bill, should 
     it pass, on those insurers, noninsurers, reinsurers, self-
     insurers, risk retention folks, who issue product liability 
     insurance.
       Now the Secretary of Commerce will collect data from these 
     folks, and he can collect data from existing insurance 
     statistical agencies. In other words, the bureaucracy factor 
     is minimized, Mr. Chairman, because he can collect it from 
     those who already produce it.
       However, a key component of my agreement with the 
     distinguished Senator from Kentucky provides that the 
     committee report--and we crafted our language carefully 
     here--will spell out for the Secretary what information is 
     needed for comprehensive understanding of the issue. For 
     example, insurers premiums and investment income, outlays, 
     overhead, legal expenses, reserves, as well as claims paid as 
     a result of settlement as opposed to claims paid as a result 
     of adjudication.
       Included in the report language will be a provision that 
     the National Association of Insurance Commissioners has a set 
     amount of time to work out an agreement with the Secretary of 
     Commerce to require that insurers report data on claims paid 
     out as a result of economic, noneconomic, and punitive 
     damages. That has been an elusive factor, and that 
     information in fact is not now available or at least it is 
     not broken out. As a result of this amendment, it will be, 
     and will be available to us.
       I believe, Mr. Chairman, it is a good amendment. I believe 
     it is a fair amendment. It is not the amendment which I had 
     originally suggested, but I believe that it is a reasonable 
     compromise that gets us the same information and in a 
     reasonable manner.

  Now, that was presented in the bill and accepted. Thereafter, year 
before last, when we had on the last occasion before the Senate product 
liability, that amendment, word for word, was presented and accepted. 
Presented by this Senator at that particular time as the chairman of 
the Commerce Committee and accepted by none other than the two 
distinguished leaders that we have, the cosponsors and managers of the 
bill, the distinguished Senator from West Virginia and the 
distinguished Senator from Washington.
  My hope, of course, that the amendment was accepted, it would be 
accepted again. Perhaps we will have to vote on it. However, it would 
nonplus this particular Senator that here we have what the managers 
themselves have not only promulgated but what they have accepted 
heretofore as a reasonable, proper, and necessary add on to the 
consideration of product liability and now rejected at this particular 
time. With that in mind, I yield the floor.

          Amendment No. 599, as modified, to Amendment No. 596

  Mr. HATCH. Mr. President, I ask unanimous consent that the pending 
amendment be set aside to call up this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Mr. President, I ask unanimous consent that amendment 
numbered 599, as previously agreed to, be modified with the language 
which I now send to the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 599), as modified, is as follows:

       At the appropriate place, insert the following new section:

     SEC.   . REPRESENTATIONS AND SANCTIONS UNDER RULE 11 FEDERAL 
                   RULES OF CIVIL PROCEDURE.

       (a) In General.--Rule 11 of the Federal Rules of Civil 
     Procedure is amended--
       (1) in subsection (b)(3) by striking out ``or, if 
     specifically so identified, are likely to have evidentiary 
     support after a reasonable opportunity for further 
     investigation or discovery'' and inserting in lieu thereof 
     ``or are well grounded in fact''; and
       (2) in subsection (c)--
       (A) in the first sentence by striking out ``may, subject to 
     the conditions stated below,'' and inserting in lieu thereof 
     ``may'';
       (B) in paragraph (2) by striking out the first and second 
     sentences and inserting in lieu thereof the following: ``A 
     sanction imposed for violation of this rule may consist of 
     reasonable attorneys' fees and other expenses incurred as a 
     result of the violation, directives of a nonmonetary nature, 
     or an order to pay penalty into court or to a party.''; and
       (C) in paragraph (2)(A) by inserting before the period ``, 
     although such sanctions may be awarded against a party's 
     attorneys''.
       (b) Effective Date.--The provisions of this section shall 
     take effect 30 days after the date of the enactment of this 
     Act.

  Mr. HATCH. Mr. President, this amendment was offered by Senator Brown 
and adopted by the Senate earlier this week. We have consulted with 
Senator Brown and he has agreed to our modification.
  Section (2)(A) of Senator Brown's amendment would make the imposition 
of sanctions for a violation of Federal Rule of Civil Procedure 11 
mandatory. The current Federal rule gives Federal judges discretion to 
award sanctions if a violation has occurred. This amendment simply 
restores discretion to our Federal judges to award sanctions in the 
appropriate cases.
                 Amendment No. 683 to Amendment No. 596

  (Purpose: To revise the rules regarding claimants who are employees)

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

       The Senator from Washington [Mr. Gorton] proposes an 
     amendment numbered 683 to amendment No. 596.

  Mr. GORTON. I ask unanimous consent further reading be dispensed.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 2, strike lines 4 through 14 and insert the 
     following:
       (2) Claimant's benefits.--The term ``claimant's benefits'' 
     means the amount paid to an employee as workers' compensation 
     benefits.
       On page 25, line 15, strike ``consent'' and insert 
     ``notification''.

     On page 25, beginning with ``subparagraph'' on line 16 strike 
     through line 25 and insert ``subparagraph (C), an employee 
     shall not make any settlement with or accept any payment from 
     the manufacturer or product seller without written 
     notification to the employer.''.

  Mr. GORTON. Mr. President, this is a corrective amendment with 
respect to the subrogation provisions of the workmen's compensation 
section. I have checked this out with the distinguished Senator from 
South Carolina. It is not controversial.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 683) was agreed to.

                 Amendment No. 684 to Amendment No. 596

      (Purpose: To modify the rented or leased products provision)

  Mr. GORTON. Mr. President, I send another amendment to the desk for 
immediate consideration, and I ask the pending amendment be set aside.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Washington [Mr. Gorton], proposes an 
     amendment numbered 684 to amendment No. 596.

  Mr. GORTON. I ask unanimous consent further reading be dispensed.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 16, line 21, after ``but'' insert ``any person 
     engaged in the business of renting or leasing a product''.

  Mr. GORTON. Mr. President, this falls under the same category, 
dealing with the definition of a rental.
  I have checked it out with Senator Hollings and it is acceptable and 
agreed to and not controversial.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 684) was agreed to.

                          ____________________
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