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[Congressional Record Volume 141, Number 68 (Wednesday, April 26, 1995)]
[Senate]
[Pages S5689-S5694]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

          COMMONSENSE PRODUCT LIABIL- ITY AND LEGAL REFORM ACT

  The Senate continued with the consideration of the bill.
  Mr. BROWN addressed the Chair.
  The PRESIDING OFFICER (Mr. DeWine). The Senator from Colorado.
  Mr. BROWN. Parliamentary inquiry. What is the business before the 
Senate?
  The PRESIDING OFFICER. The pending business before the Senate is 
amendment No. 599.
  Mr. BROWN. Mr. President, I rise to advocate the adoption of the 
Brown amendment No. 599 that proposes to restore the sanctions against 
frivolous actions of the Federal Rules of Civil Procedure.
  Most Americans would be shocked, I believe, to find that the Congress 
has acted to gut the restrictions against bringing frivolous legal 
action. Many will ask in this Chamber, ``How is that possible? Who in 
this Chamber would possibly vote or even advocate doing away with 
restrictions on bringing frivolous actions in Federal courts?'' And the 
answer is that the previous Congress did it through neglect. The last 
Congress took what I believe most Americans will find to be an 
absolutely outrageous act by neglect, by refusing to consider the 
proposed changes to the Federal Rules of Civil Procedure. Proposed 
changes in the Federal Rules of Civil Procedure become effective 
automatically if Congress fails to act, and that is what Congress did--
fail to even consider them.
  There literally was not a bill brought up in the Judiciary Committee 
which allowed Congress to voice its concern about the proposed changes 
to the Federal Rules of Civil Procedure.
  To make matters worse, the changes to rule 11 eliminated the 
deterrence against frivolous lawsuits. Let me quote the dissent from 
the Supreme Court opinion with regard to this matter:

       It takes no expert to know that a measure which eliminates, 
     rather than strengthens, a deterrent to frivolous litigation 
     is not what the times demand.

  Mr. President, that is true, and what we attempt to do with this 
amendment is simply restore to the Federal Rules of Civil Procedure a 
form of sanctions and admonitions against bringing frivolous 
litigation. I intend to ask for a record vote on this, and it will be 
an opportunity for Members of the Senate to go on record: Do they favor 
our Federal courts being used to bring frivolous action, groundless 
action, or do they oppose it? It is a very clear vote. It is a very 
clear amendment. It is not complicated.
  I think a legitimate question at this point is how in the world could 
a change of this kind ever possibly have taken place without someone 
standing up and calling the attention of this body to it and making 
sure it did not happen?
  Let me address that because I think it is a relevant question and one 
to which Members deserve an answer.
  In transmitting the changes to the Federal Rules of Civil Procedure, 
Chief Justice Rehnquist, in his letter of April 22, 1993, said the 
following:

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

  For those in this Chamber who think the fact this was transmitted to 
us by the Supreme Court means they agreed with it, they need to take a 
look at the very transmittal document itself. The Chief Justice makes 
it clear that this does not involve, or necessarily indicate, the Court 
favors these changes.
  Mr. President, I think it is important to note that none other than 
Justice White issued a separate statement with regard to that, and I 
intend to go into his statements
 voicing his concern about the procedure, and the dissent was filed by 
Justices Scalia in which Justice Thomas joined and Justice Souter 
joined as well.

  I might mention that dissents with regard to changes in civil 
procedure are very unusual, and it is an exceptional case in which 
anyone ever dissents because, frankly, as Justice White points out, it 
is their view that there is some constraint on the Court through 
questions of constitutionality and of what role they should play in 
this activity, which is basically a form of legislation.
  Let me quote Justice White because I think he explains this process 
in a clear fashion:

       28 U.S.C. Section 2072 empowers the Supreme Court to 
     prescribe general rules of practice and procedure and rules 
     of evidence for cases in the Federal courts, including 
     proceedings before magistrates and the court of appeals. But 
     the Court does not itself draft and initially propose these 
     rules. Section 2073 directs the Judicial Conference to 
     prescribe the procedures for proposing rules mentioned in 
     section 2072. The Conference has been authorized to appoint 
     committees to propose such rules. These rules advisory 
     committees are to be made up of members of the professional 
     bar and trial and appellate judges. The Conference is also to 
     appoint a standing committee on rules of practice and 
     evidence to review recommendations of the advisory committees 
     and to recommend to the Conference such rules and amendments 
     to those rules as may be necessary to maintain consistency 
     and otherwise promote the interest of justice. Any rules 
     approved by the Conference were transmitted to the Supreme 
     Court which, in turn, transmits any rules prescribed pursuant 
     to section 2072 to the Congress.

  Mr. President, what he has outlined quite clearly is that these 
changes in the rules, while transmitted through the Supreme Court, do 
not necessarily represent the views of the Court--a view echoed by the 
Chief Justice.
  Further, Justice White states:

       The Justices have hardly ever refused to transmit the rules 
     submitted by the Judicial Conference. And the fact that aside 
     from Justices Black and Douglas it has been quite rare for 
     any Justice to dissent from transmitting such rules suggests 
     that a sizable majority of the 21 justices who sat during 
     this period concluded that Congress intended them to have a 
     rather limited role in the rulemaking process. The vast 
     majority, including myself, obviously have not explicitly 
     subscribed to the Black-Douglas view that many of the rules 
     proposed dealt with substantive matters the Constitution 
     reserved to Congress, and that in any event were prohibited 
     by 2072 in injunctions against abridging, enlarging, or 
     modifying substantive rights.

  Mr. President, I mention this because I think it is critical as 
Members consider this subject to ask themselves whether or not the 
changes that went into effect automatically carried with them an aura 
that we should respect and honor and not question or even review. 
Justice White concludes in his opinion that was transmitted stating 
this:

       In conclusion, I suggest it would be a mistake for the 
     bench, the bar, or the Congress, to assume that we are 
     duplicating the functions performed by the standing committee 
     of the Judicial Conference with respect to changes in the 
     various rules which come to us for transmittal.

  Mr. President, I believe the record is quite clear. It is a mistake 
for anyone to come before this body and to suggest that the fact that 
the Supreme Court transmitted these proposed rules changes means that 
they think they are good rules changes. I think the statement of 
Justice White, and particularly the dissent of the three Justices, 
which is almost unprecedented, 
[[Page S5690]] indicates very clearly that the Court itself has serious 
concerns.
  Mr. President, the reality is this: Congress has the power in the 
Constitution to enact statutes. Congress did not perform its function 
because no vehicle was allowed to be considered. That is why I think it 
is important that we provide for the consideration of these changes 
right now. Let me state quite clearly, I would like to go back to the 
old rules. I think the old rules were not only far superior to the 
changes that happened by default, but I think they were much stronger. 
But the amendment before you is a version that is somewhere between the 
old rules and the new rules. The amendment adopts or accepts many of 
the changes that seemed to have articulable support behind them or for 
which the Trial Lawyers Association could come forward with reasonable 
arguments. So this amendment does not go as far as I would like it to. 
It does not restore the old rules. But it does restore a portion of the 
old rules in areas where I felt there was literally no reasonable 
justification for accepting the gutting changes proposed by the 
Judicial Conference.
  Mr. President, rule 11 is one of the most important tools courts have 
to fight frivolous, baseless, and harassing suits. This amendment gives 
Members a chance to go on record on that question. Do you want 
frivolous actions brought? Do you want baseless and harassing suits 
cluttering up our courts or not? That is what this amendment is all 
about.
  Swift action against frivolous lawsuits and claims save time and 
money and taxpayers' dollars and promotes public respect for the 
integrity of the Federal court. I think that may be the most single 
important question raised by this amendment and those rule changes. 
Shouldn't our Federal courts require integrity in their process and 
substance in the allegations? Those who want to gut rule 11 will say, 
no, we should not have any restrictions in this area. But I believe 
maintaining the integrity of the Federal court system is important, and 
that is why this amendment is brought before the Senate.
  The new version of rule 11, which was changed upon the recommendation 
of the Judicial Conference, eviscerates the deterrent value of rule 11. 
That is not just my opinion. It is the opinion of attorneys and judges 
who have reviewed the action and who share my concern about our turning 
our backs on ensuring the integrity of the Court.
  The December 1, 1993, version of rule 11 allows frivolous lawsuits to 
go forward. It allows baseless lawsuits. It actually allows attorneys 
to file allegations without knowing them to be true. Let me repeat that 
because I think it is the core of what we are talking about. It allows 
attorneys to go into court and to file allegations without knowing them 
to be true.
  How can anyone come before this body and say that makes sense? How 
can anyone come before the American people and say we are going to set 
up a court system in which you are going to have filings in which even 
the paid advocate of the cause does not know to be true? Mr. President, 
the rules allow attorneys to make assertions without any factual basis 
and before they have done their research. Let me repeat that. It allows 
attorneys to literally make assertions without having any factual basis 
for those assertions. It is scandalous to suggest that our courts are 
going to be used for hearings on allegations that have no factual basis 
and before any research is done. That is ludicrous, it is shameful, and 
it is why it is so important for us to move ahead and to correct what 
is clearly an abuse by and neglect of previous Congresses.
  In short, the December 1, 1993, version encourages the kind of 
baseless suits and claims which rule 11 was literally enacted to 
prevent. The new rule 11 says, ``Sue first and ask questions later.''
  Mr. President, that is not an exaggeration. That is literally what 
rule 11 allows in its current form. Sue first and do research later.
  What this amendment does is put teeth back into rule 11. It does so 
by making sanctions for frivolous suits mandatory, as they once were.
  Mr. President, I want to take a few minutes and go through 
specifically what this amendment does, how it compares with the old 
rule, and how it compares with the new rule.
  I think it is important for Members to know and understand that what 
is before them is a very moderate version. The amendment adopts many of 
the changes the Judicial Conference wanted. But it does not adopt the 
concept that we will gut rule 11 and threaten the integrity of the 
court system.
  How can anyone looking at our Federal court system want to allow 
courts to be cluttered up with frivolous actions? The facts are these: 
In 1990, over 10 percent of the Federal district court cases were over 
3 years old. Mr. President, we have such a huge backlog that we 
literally have more than 10 percent of the cases who, after 3 years, 
have not been resolved.
  The current trend of more and more cases filed in Federal court 
continues. In 1992, over 226,000 cases were filed, and literally, under 
the current trends, the number of cases will double every 14 years. In 
the face of eviscerating rule 11, Congress did not act to save the one 
effective tool that deters frivolous litigation. Congress allowed a new 
rule to be adopted that weakens the process despite evidence and 
opinions of judges and lawyers.
  Mr. President, I want to go into those opinions because the judges 
and lawyers that work with this are alarmed at the changes in rule 11. 
Someone will say, well, now, wait a minute, at least there was a 
committee, there are some people who admit they like these changes, and 
that is the Judicial Conference Committee that dealt with this. Take a 
look at the attitudes of the bar in general, because one should not 
assume that the fact that the Judicial Conference or, more 
specifically, a committee of that conference, made the recommendations, 
that they speak for attorneys and judges across this country.
  Here are the facts: In a recent study by the Federal Judicial Center, 
they found that a strong majority of Federal judges support the old 
rule 11, not new rule 11, but the old rule 11. The study found that 95 
percent of Federal judges who responded believed that rule 11 does not 
impede the development of law. They found that 71.9 percent believe 
that the benefits of rule 11 outweighed any additional requirement of 
judicial time. They found that 80.9 percent believe the old version of 
rule 11 had a positive effect on litigation in the report. Mr. 
President, let me repeat that: Over 80 percent of the judges felt the 
old version of rule 11 had a positive impact on litigation in the 
Federal courts. The proponents of the new form of rule 11 that come to 
this body and claim this somehow has the blessing of the legal 
community have not looked at the facts. This had the blessing of a 
group of insiders, of a committee, but it did not have the blessing of 
the bar as a whole. Over 80 percent believe the old rule 11 should be 
retained in its current form.
  Mr. FORD. Mr. President, would the distinguished Senator from 
Colorado take a question?
  Mr. BROWN. I would be happy to take a question at the completion of 
my remarks.
  Mr. FORD. I wanted to insert because the Senator said ``of those 
judges responding,'' and I did not know whether half responded, 25 
percent responded--the Senator is using the 80 percent--or whether 100 
percent responded and the Senator is using 80 percent. ``Of those who 
responded,'' I wonder if it was a large number or a small number.
  Mr. BROWN. I appreciate the question of the distinguished Senator. I 
think he may not have heard in my remarks I quoted the 1990 study of 
the Federal Judiciary Center, and I will be happy to supply the Senator 
with the study.
  It might also be noted that rule 11 issues were raised in only 2 to 3 
percent of all cases; that they concluded that rule 11 imposes only 
modest burdens on Federal judges and that rule 11 sanctions have 
typically been taken in the form of monetary charges payable to the 
injured party.
  Mr. President, I want to turn now to the rules changes themselves. I 
will, of necessity, deal and focus particularly on three of them. There 
are additional nuances, but I think these three are the most important 
and at the heart of the amendment that is before this body.
  Mr. President, the first one that we want to look at is the old rule, 
which required that the attorney or the party 
[[Page S5691]] must sign the pleading of the motion and indicate that 
the facts designated therein represent the best of the signer's 
knowledge and that they are based on information and belief formed 
after a reasonable inquiry that is well grounded in fact and that is 
not interposed for improper purposes such as to harass or cause 
unnecessary delay or needlessly increase the cost.
  Mr. President, the new rule guts those provisions that are meant to 
ensure integrity in the process. Here is how it reads:

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

  The option which then controls is ``or likely to have support, if 
investigated.'' In other words, they do not have to certify any longer 
that they are true or that they have investigated them. They are 
literally saying we can bring filings in the court that have not been 
investigated and which a person does not know are true.
  Here is what we do with the version that is presented in this bill. 
We say, ``by presenting to court, an attorney is certifying the 
allegations and other factual contentions have evidentiary support or 
are grounded in fact.'' It is less severe than the old rule. I would 
like to go back to the old rule. But at least this amendment requires 
that the allegations are grounded in fact or have evidentiary support.
  Now, that is a clear question. Should filings in Federal court be 
grounded in fact? Should they have evidentiary support? Or should a 
person be allowed to find anything they want without a requirement of 
knowing that it is true? Or even having been required to investigate it 
before it is filed? It is a very clear question. It is one I think 
Members will be anxious to cast their vote on and let citizens know how 
they feel.
  The second change deals with an additional question. Let me read the 
old rule:

       If a pleading, motion or other paper is signed in violation 
     of this court rule, the court, upon motion or upon its own 
     initiative, shall impose upon the person who signed it, a 
     represented party or both, an appropriate sanction.

  In other words, if a person is guilty of violating the rules, that 
person will get sanctioned. That must not sound very unusual for 
observers. Why would we want to change that?
  The new rule does a couple of things. What it says is that if a 
person is guilty, if they violate the rules, a person does not have to 
be sanctioned.
 In other words, an opposing counsel can point out that this was done 
without any background, and when the attorney--who has made an 
inaccurate filing, when an attorney who has violated the rules--is 
caught, the new rules say that even though you are guilty, even though 
you have been caught, even though you have caused the other party harm, 
you can get off scot-free. That is not my idea of justice and I do not 
think it is the American people's idea of justice.

  Here is what we do. We restore that portion of the old rules that 
says if you are guilty you are going to get sanctioned. It leaves it up 
to the court to decide what the appropriate sanction is, but at least 
we say if you are guilty of violating the rules and it is shown to the 
court, you will be sanctioned. Those who want violators to get away 
without being sanctioned will want to vote against this amendment. But 
those who think if you are guilty you ought to be sanctioned will want 
to vote for it.
  The third one I want to summarize is one that I think Members will 
find hard to imagine that the committee recommended. The new rule says 
that if you are guilty of violating the rules, and even though under 
their changes you do not have to be sanctioned, but if you are 
sanctioned even though you do not have to be sanctioned, then they say 
the penalty for this misbehavior can be paid to the court and not to 
the injured party. Talk about rigging the rules. They are saying: First 
of all, we are going to dilute what is impermissible behavior; but if 
you are found guilty of impermissible behavior even under the diluted 
rules, you do not have to be sanctioned; and even if under the diluted 
rules you are found guilty and you are sanctioned, the money does not 
go to the injured party. In other words, they pull the rug out from 
under any incentive of the injured party to seek redress.
  The amendment addresses the third area in a pretty basic and simple 
way. It restores the preference that if you are guilty and if you are 
sanctioned, the awards first go back to the injured party, not to the 
court. The amendment reads as follows:

       A sanction imposed for violation of this rule may consist 
     of reasonable attorneys' fees and other expenses incurred as 
     a result of the violation, directives of a nonmonetary 
     nature, or an order to pay penalty into court or to a party.

  In other words, we eliminate the priority that the sanction go to the 
court and give the court discretion in that area. That is basically 
what we are talking about in this amendment. We restore to the rules 
some of the integrity of the process. We indicate that there will be 
sanctions if you are guilty, and we eliminate the favored status of 
having the penalty, if it is imposed, go to the court and allow it to 
go to the injured party if they wish.
  This does not solve all the problems with frivolous litigation. I 
wish it did. But it does restore some of the integrity to rule 11 and 
some of its effectiveness.
  I want to quote the dissent signed by three Justices of the Supreme 
Court when they forwarded these. It is very unusual for dissents to be 
written in these transmittals, but I think the words speak for 
themselves.

       In my view, the sanctions in the new rule are not strong 
     enough; thus, the new rule eliminates a significant and 
     necessary deterrent to frivolous litigation . . . and perhaps 
     worst of all introduce into the trial process an element that 
     is contrary to the nature of our adversary system.

  That is what this is all about. Will we eliminate a deterrent to 
frivolous litigation? Will we burden the district courts? That is 
really what this is all about. I think a reasonable question could be 
raised at this point and that reasonable question would be simply this: 
Do lawyers, do attorneys behave differently if these sanctions, 
monetary sanctions exist? If there are mandatory sanctions for 
violating the rules, does it affect the behavior of attorneys? That is 
the assumption this process is based on anyway, that by having a rule 
that prohibits frivolous litigation and provides mandatory sanctions, 
that counsel will behave differently; they will behave different if 
they have to pay a mandatory penalty than they will if they do not.
  There is some evidence on that. There is some evidence because before 
1983 you did not have mandatory sanctions and after 1983 and before 
this recent change you did have monetary sanctions. So there was a 
study done. It is known as the Nelken study, by Melissa L. Nelken. She 
did a study of rule 11 and she considered the impact on the Federal 
practices of both lawyers and judges in the northern district of 
California. It is confined to that area. It was part of the ninth 
circuit.
  The survey questionnaire was sent to some 17 judges, 7 magistrates, 
and 107 attorneys. All of these individuals had been involved in rule 
11 proceedings. That was done to make sure the survey was conducted 
among people who had some knowledge of the process and some experience 
with it. Mr. President, 68 attorneys, 64 percent of them, responded; 12 
judges or magistrates, or 50 percent of those, responded to the survey. 
Here is what it showed.
  The question was, ``Has amended rule 11 changed your practice, if 
any, in the following areas?''
  The change they are talking about is the change of making sanctions 
mandatory in 1983. Mr. President, 46 percent of the respondents 
indicated that they had engaged in additional prefiling factual 
inquiry. What we are literally seeing is 46 percent of those attorneys, 
those practitioners, those on the line, had said when sanctions are 
mandatory they engaged in more prefiling factual inquiry than they did 
when they were not mandatory. I think that is a plus. I think that 
improves the integrity of the system.
  Mr. President, 33 percent indicated additional prefiling legal 
inquiry; that is, when sanctions were mandatory, 33 percent indicated--
admitted that they had done additional prefiling legal inquiry over and 
above what they did when sanctions were not mandatory.
  This is only one study. It is a limited area. But I think it is real 
proof of 
[[Page S5692]] what our common sense would tell us. When sanctions are 
required there is more work that goes into making sure the filings are 
correct than when there is no sanction.
  I want to take one more quote out of the opinion of the Supreme Court 
accompanying the recommended changes in 1993. This is at the conclusion 
of the dissent. It says as follows:

       It takes no expert to know that a measure which eliminates 
     rather than strengthens a deterrent to frivolous litigation 
     is not what the times demand.

  I do not think it could be said any clearer. Should we eliminate 
deterrence to frivolous litigation? That is what this amendment is all 
about. If you favor deterring frivolous litigation, you will want to 
vote yes. If you do not want to deter frivolous litigation, then you 
will vote no.
  It boils down to these substantive changes in the rules--to efforts 
to restore these basic rules: First, should filings be grounded in 
fact? I think they should.
  Second, should sanctions be required if you file frivolous actions? 
If you are found guilty of filling frivolous actions, should sanctions 
be required? I think they should.
  Third, should the injured party have a standing for compensation, or 
more particularly should the priority of the court be to have a 
sanction for someone who is guilty, and should the priority be for that 
money to go to the court, or should it be the priority or at least the 
option for that money to go to the injured party? I think the injured 
party should not be shortchanged in this process.
  These are moderate changes in rule 11. Again, they do not go back to 
the old rule 11 which I would like to. They do adopt some of the 
changes proposed by the conference. But, Mr. President, this is an 
important matter because this is an effort to restore the integrity to 
the legal process. It is an effort to restore integrity to our courts 
and discourage frivolous actions by restoring rule 11. I think it is 
appropriate for this bill. I do not think the amendment could be more 
appropriate because at the heart of addressing the problems with the 
litigation system in the United States--at the heart of it--is to 
restore integrity to the system. That is what this amendment is 
intending to do.
  Mr. GORTON. Mr. President, I would like to comment very briefly on 
the eloquent remarks of my friend from Colorado. His remarks are 
equally and highly thoughtful and persuasive. There is no question but 
that this Senator strongly supports his judgments with respect to rule 
11 and the desirability of a return to a much more fair and balanced 
such rule.
  At the same time, Mr. President, I must say that rule 11 has little 
if anything to do with the subject before the Senate, the product 
liability bill, which almost universally will apply to litigation 
brought in State courts and, therefore, whether or not it is 
appropriate to be included with this bill is a question which I think 
relates primarily to the attitude of Members of the body itself.
  This is an extremely controversial bill. Should this strengthen its 
chances for passage, it would be welcome. If it weakens the chance for 
passage of something as important as product liability, I hope at some 
point or another the bill would be withdrawn and dealt with at a more 
appropriate time.
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. ABRAHAM. Mr. President, I rise today in support of the Product 
Liability Fairness Act which I consider to be a very important piece of 
legislation. I believe it is the principal first step in reforming our 
increasingly irrational, often unfair and very costly civil justice 
system. This system is burdening our economy, it is burdening America's 
consumers and its middle class; ultimately it is weighing down the 
community institutions and organizations that help us live together as 
friends and neighbors. By enacting product liability reform, we can 
begin reinvigorating our economy, giving consumers a choice of products 
and decreasing the expense and unpredictability of our tort system.
  This bill makes a number of much-needed reforms. First, it caps 
punitive damages in product liability suits. This reform does not limit 
anybody's right to recover in full for any damages suffered. That right 
remains intact even if the recovery runs into the millions. Rather, it 
merely limits the punitive damages that can be awarded over and above 
what is needed to compensate those injured by defective products.
  These punitive damages are supposed to function as a punishment for 
the defendant. But because they are awarded to claimants, their 
potential availability attracts lawsuits whenever somebody thinks he or 
she might get lucky and hit the jackpot.
  Capping these damages will place a real limit on windfall profits in 
product liability lawsuits and thus lead to fewer frivolous claims 
being filed and less unnecessary extension of lawsuits which could be 
settled.
  In addition, the bill would eliminate joint liability for noneconomic 
damages in product cases, and replace it with proportionate liability. 
It thus would end the costly and unjust practice of making a company 
pay for all damages when it is only responsible for, say, 20 percent, 
just because the other defendants already have gone bankrupt. Instead 
each defendant would have to pay only for the noneconomic damage he or 
she actually caused.
  The bill also establishes important limits to the liability of 
product sellers, as well as suppliers of raw materials critical to the 
production of life-saving medical devices. Generally speaking, the bill 
makes clear that these sellers and suppliers can be held liable only 
for their own misconduct in connection with the product. If, for 
example, the purchaser misuses the product, then that purchaser is 
responsible to the extent he or she is injured on account of his or her 
own misuse.
  These provisions go a good way toward restoring individual 
responsibility as the cornerstone of tort law. They also recognize an 
important problem with our legal system: Ultimately, in its current 
form the system is profoundly anticonsumer.
  The tort tax imposed by our legal system raises prices on many 
important goods, rendering them unavailable to poor people. And in 
extreme cases, our legal system can literally bring death or misery; it 
does so by driving off the market drugs that can cure terrible but rare 
diseases, or medical devices for which raw materials are unavailable on 
account of liability risks.
  Mr. President, this is not mere hyperbole. There are some 5,000 
diseases that affect small numbers of Americans. Many of these 
diseases, such as cystinosis, a fatal kidney disease, and leprosy, are 
extremely serious. But a number of them go untreated. Pharmaceutical 
companies cannot afford to market drugs to treat these diseases because 
the cost of liability insurance is prohibitive.
  To give just one example: A West German chemical company 
at one time supplied Americans with botchyoulinum. If 
properly used this drug, otherwise a paralytic poison, can control a 
rare but incapacitating disease, characterized by uncontrollable 
twitching of the eye muscles. Unfortunately the company cut off 
American supplies to avoid the risk of being held liable should people 
misuse its product.
  And this is no isolated instance. A recent Gallup survey found that 
one out of every five small businesses decides not to introduce a new 
product, or not to improve an existing one, out of fear of lawsuits. 
And, according to a Conference Board survey, 47 percent of firms 
withdraw products from the market, 25 percent discontinue some form of 
research, and 8 percent lay off employees, all out of fear of lawsuits.
  Mr. President, this bill takes important steps to address these 
problems. The reforms I have specifically noted, as well as others in 
the bill, will help consumers. They will help our economy. And they 
will help our legal system. I pledge my full support for this well-
considered legislation.
  However, I would also like to take this opportunity to urge my 
colleagues to go further. And I mean go further in two respects. First, 
the reforms under consideration apply only to product liability. That 
is, they affect only suits involving manufacturers' and sellers' 
liability for defects in manufacturing and handling products. And 
second, the reforms do not address certain key flaws in our civil 
justice system.
  The problems with our current system are deep and pervasive. They are 

[[Page S5693]] not limited to product liability. They affect 
homeowners, accountants, farmers, volunteer groups, charitable 
organizations, small businesses, State and local governments, 
architects, engineers, doctors and patients, employers and employees. 
In short, they affect all of us.
  We need to repair our system for all Americans. And doing that will 
require reforms that go beyond the field of products liability. We must 
replace our litigation lottery with a civil justice system that is less 
costly, more predictable, and ultimately more fair to everybody. And we 
must replace the current incentives to sue with incentives to settle 
disputes before they get into court.
  This is why in the course of the next few days I intend, along with 
others, to offer and support amendments that would broaden the 
legislation currently under consideration.
  These amendments fall in two classes. The first class takes valuable 
reforms currently in the current product liability reform bill and 
applies them to other kinds of cases. Thus I will be leading an effort 
to broaden application of this bill's joint and several liability 
reform and supporting an effort to broaden application of this bill's 
punitive damages reform.
  The other category of amendment I am supporting would reorient our 
current system's distorted incentives. Today, Mr. President, our tort 
system encourages people to spend money on lawyers and litigation 
rather than on resolving disputes quickly and compensating deserving 
claimants.
  The right to know and rapid recovery amendments I have introduced 
with my colleague from Kentucky will promote speedy compensation for 
claimants, save attorney's fees, greatly reduce the cost of liability 
insurance and change our culture of litigation, which brings me to my 
last point, Mr. President. A broad approach to legal reform will help 
our communities. Our current system discourages the voluntarism and 
civic participation that hold our towns and neighborhoods together. A 
Gallup survey found that 8 percent of nonprofit organizations had 
volunteers resign over liability concerns; 16 percent reported 
volunteers withholding their services due to fear of liability, and 49 
percent reported seeing fewer volunteers willing to serve in leadership 
positions.
  This is disastrous, Mr. President. When almost half our nonprofit 
organizations are finding it more difficult to get people to serve in 
leadership positions, we are in trouble. When our citizens are afraid 
to serve their neighbors out of fear of being sued, we are in danger of 
losing that sense of common cause and mutual reliance that is at the 
heart of any community.
  We have been hearing a good deal lately about the breakdown of our 
communities. And it is a real problem. This problem arises in part from 
peoples' understandable fear of local bullies and strangers who prey on 
them in their streets and homes.
  But today our law-abiding citizens suffer from another even more 
debilitating fear: a fear of each other.
  Too many Americans are afraid to get involved with their local little 
league or Girl Scouts or volunteer fire department because they 
seriously believe that if they make an honest mistake they will be sued 
and lose everything they have merely for trying to help.
  So long as Americans see one another as potential plaintiffs, they 
cannot see one another as neighbors. So long as we encourage lawsuits 
rather than personal responsibility and early dispute resolution our 
citizens will fear even those they know well--and come to see them as 
strangers whom they themselves will sue at the slightest provocation.
  Neighbors no longer trust one another enough to look out for each 
other, and each others' children. The result is a breakdown of mutual 
support and pride in the community, leaving it easy prey for other 
social ills like crime and delinquency.
  We must break this destructive cycle, Mr. President, for the sake of 
our families and our children. We must begin to rebuild our communities 
by restoring the sense that we can count on one another's good will and 
forgiveness for innocent mistakes. We must restore trust among our 
citizens, and health and vigor to our economy, by remaking our civil 
justice system to reward neighborliness rather than stubborn greed.
  Mr. President, we must reform our tort system so that we encourage 
people to come together on their own to settle disputes before they end 
up in court, costing time, money, and bad feelings.
  The result will be a reinvigorated economy, more jobs and necessary 
products for us all, and a revival of that civility and common feeling 
some of us remember with regret from an era not too long ago; an era in 
which Americans thought of one another not as potential plaintiffs and 
defendants but as neighbors trying to help each other in making their 
community a better place.
  Mr. President, I yield the floor.
  Mr. BURNS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BURNS. I thank the Chair.
  I am starting my seventh year in the Senate, and every year it seems 
as if we always come up with a product liability bill. I have served on 
the Commerce Committee under the leadership of Senator Hollings and 
under the leadership also of Senator Danforth, who was a great champion 
of product liability reform.
  I want to thank Senator Gorton, who has picked up the traces, so to 
speak, and especially to Senator Rockefeller who through all of the 
years I have been here, starting the seventh year, has also played a 
very strong part in leadership on this issue, diligently trying to seek 
reform.
  I have supported product liability reform primarily because I believe 
it is time now for Congress to act on what some would term barriers to 
economic growth in this country. And the need to reform our product 
liability system is no less urgent now while the economy is seemingly 
healthy than if we would experience economic downturn.
  The current system drives up costs in nearly every sector of the 
economy and does very little to improve our quality of life and does 
very little to increase safety at the workplace. In the last 30 years, 
the number of cases filed in Federal courts has more than tripled, to 
over 250,000 a year.
  Now, this issue, yes, is a jobs issue; it is a competitiveness issue, 
and some would term it even a moral issue. Currently, the typical 
American manufacturer faces product liability costs that are 20 to 50 
times higher than that of his or her foreign competitor. This 
additional cost makes American companies less competitive; they lose 
market share to foreign competition.
  So what do they do? They raise prices and they lay off workers. The 
costs of runaway litigation are felt by American companies, workers 
and, yes, consumers alike. It is not just a big business issue either. 
It affects small businesses as much if not more than our large 
businesses.
  The 1,100-percent rise in the number of Federal product liability 
cases in the 1970's and 1980's has driven up the cost of liability 
insurance to astronomical amounts. The burden of this increased cost is 
proportionately much greater for small business and in some cases it is 
the element that is a ``make or break'' issue for them.
  This issue is most often presented as a consumer issue, Mr. 
President. I disagree with those who say that if you are for product 
liability reform, you are against the consumer. I reject that argument. 
Consumers do not benefit when the business community has to protect 
itself from runaway lawsuits. They pay for it. As we have often been 
told, it just goes into the operating costs; that companies and 
corporations do not pay taxes either. People pay taxes.
 And the threat of lawsuits keeps the vital consumer products from the 
market and discourages safety and other improvements that would make it 
a better product. Moreover, liability stifles research and development 
for new consumer and medical products.

  This bill seeks to bring fairness to a system without taking away an 
injured person's right to a fair and speedy trial and, yes, just 
settlement. Right now the system fails to compensate those injured in 
proportion to their losses and it takes them far too long to receive 
the compensation.
  The people who benefit the most in the current system, let us face 
it, are the principals involved, the lawyers. Studies say that 50 to 70 
cents of every 
[[Page S5694]] dollar a jury awards to an injured person goes to the 
attorney. This hardly seems like a system that benefits the consumer.
  There is a tremendous amount of support for this liability lawsuit 
reform in my home State of Montana. In a recent poll, 89 percent of 
Montanans indicated that the current system has problems and it should 
be fixed. There is a growing awareness that the only winners in the 
lawsuit lottery game are the attorneys and the professional plaintiffs.
  S. 565 will reform the current system to make it more effective. We 
must protect people from careless manufacturers and defective products. 
This bill does not compromise that objective. It just ensures that we 
do so in a fashion that still allows American businesses to compete and 
grow in a global economy.
  Congress has the opportunity to reform our product liability system, 
and I hope that we do not miss this window of opportunity and that we 
take advantage of it. This bill must become law. I ask my colleagues to 
support it.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DOLE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Burns). Without objection, it is so 
ordered.
  Mr. DOLE. Mr. President, I want to signal my strong support for S. 
565, the Product Liability Fairness Act. My distinguished colleagues, 
Senators Gorton, Rockefeller, and Pressler, are to be commended for 
their leadership on this particular legislation.
  This legislation is needed for several reasons. Our present system of 
liability has been estimated to cost the American economy an astounding 
$117 billion. In addition to this tort tax, our system of liability 
stifles innovation and prevents better--often safer--products from 
reaching the marketplace. The present system of liability also 
undermines American competitiveness, both here and abroad.
  There has been a concerted effort to spread misinformation about 
these reforms--scare tactics--in order to hide the real issues. So let 
me be clear: The reforms contained in this bill, despite efforts to 
portray them otherwise, do not prevent persons who are harmed from 
recovering full compensation for their injuries. In fact, this 
legislation addresses abuses that undermine such compensation. Nor does 
this legislation alter civil rights and environmental laws in any way. 
In fact, the legislation explicitly excludes such Federal laws.
  What this legislation is about is fairness. Our legal system is one 
of the bedrocks of our free society. But over the last 25 years, it has 
succumbed to efforts to turn it away from American principles, 
individual responsibilities and justice. In many cases, our system of 
liability resembles a lottery, where damage awards become windfalls and 
often deserving plaintiffs do without.
  Thus, I strongly support the provisions of this bill that seek to 
rein in abusive punitive damages. Punitive damages are not intended to 
compensate victims, as the name suggests, they are intended to punish 
wrongdoing. But punitive damages have been widely abused in recent 
years, and the problem now affects every American.
  Mr. President, I plan to offer an amendment later today. As I 
understand, after a couple of votes and after disposition of the Brown 
amendment, I will be recognized to offer an amendment. That may be 
later tonight, 7 or 8 o'clock or it may be sometime tomorrow morning. 
In any event, I will offer the amendment later and expand on these 
protections at that time and what I believe the amendment does and does 
not do.
  But I am talking about protection for Little League players, the Girl 
Scouts, and small business. Groups like that are at risk from abusive 
lawsuits and overwhelming punitive damages. I hope to give you some 
examples of how this affects the Girl Scouts, Little League, and 
others--how many boxes of cookies they have to sell to protect 
themselves from frivolous lawsuits, in some cases.
  We cannot allow the threat of liability to keep hard-working 
Americans from volunteering their time to help. We must not allow the 
threat of liability to sink small businesses who often can barely keep 
their doors open.
  Although I support the Rockefeller-Gorton bill, I believe we cannot 
simply stop with reforms that help big business alone. We have to take 
a look at small business and some of the charitable groups and other 
groups that most American families have contact with. It is as much our 
responsibility to help the little guy, and that is what my amendment 
will achieve.
  This amendment leaves the underlying provisions on the measure of 
punitive damages intact. Thus, punitive damages would be limited to 
three times economic damages, or $250,000, whichever is greater.
  What my amendment would do is to take the same provision in the 
underlying bill and extend these protections to Americans who are often 
least able to cope with outrageous punitive damages.
  Thus, instead of limiting these protections to product liability 
actions, my amendment would extend them to ``any civil action affecting 
interstate commerce.''
  I emphasize again that this amendment in no way undermines full 
compensation to victims, nor does it alter Federal laws.
  Most of the issues raised by the Rockefeller-Gorton bill are well 
known. The Commerce Committee has considered similar legislation in the 
97th, 99th, 100th, 101st, and 102d Congresses, and a similar bill was 
considered on the floor in the 102d and 103d Congresses. We will have a 
reasonable time to debate these issues, but it is my hope we will not 
engage in dilatory tactics to distract the Senate from moving forward 
on this important legislation.
  Having said that, I hope we will complete action on this legislation 
sometime midweek next week. I know that on Friday of this week the 
Democrats have a conference outside the city and Republicans have a 
conference inside the city. But we will be in session late tonight and 
late, late tomorrow night and, hopefully, we can at that point see the 
end when we might complete action on the legislation.
  It would be my intention to file a cloture motion if it appears we 
cannot complete action in a timely fashion. I will say, as I have said 
before, the Senate has a lot of work to do to catch up with many things 
that have been sent to us from the House. My view is we will get it 
done. It will mean we will have fewer recesses in the Senate. It means 
we will be here many more days probably than the House will be in the 
next 100 days. It will mean long evenings. But I hope my colleagues on 
both sides of the aisle understand that we have a responsibility, that 
we all made statements to get here to the voters of the United States, 
and we intend to keep our word to the American voters, win, lose, or 
draw.
  So it is my hope we will have a very productive several weeks before 
the brief Memorial Day recess and that will be about the last recess, 
maybe with the exception of a couple of days July 4 and 5 before we 
decide what to do with the August recess. It is not a statutory recess. 
It can be changed by resolution and it may be if we cannot complete our 
work in time we might have to abbreviate the August recess. I hope that 
is not the case, because many of my colleagues have made plans to be 
with their families and made other plans. So we will do the best we can 
to accommodate people on both sides of the aisle.
  I do believe that we have a responsibility. We know it takes longer 
in the Senate. We know the Founding Fathers planned it that way. This 
was to be the deliberative body and we are deliberate, believe me. 
Sometimes it is almost too deliberate. Today is an exceptional day 
because many of our colleagues are attending services for former 
Senator John Stennis. I think 25 of our colleagues are in Mississippi 
today. So that necessarily means we may not accomplish much until they 
return about 5 o'clock.

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