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[Congressional Record Volume 141, Number 66 (Monday, April 24, 1995)]
[Senate]
[Pages S5596-S5602]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

         COMMON SENSE PRODUCT LIABIL- ITY AND LEGAL REFORM ACT

  The Senate continued with the consideration of the bill.
  Mr. BREAUX. Mr. President and my colleagues, here we go again, back 
on the famous product liability reform bill. I think one of the things 
that Members do in an effort to try to get legislation passed, I would 
say sort of tongue in cheek, when they are uncertain about the merits, 
they label it ``reform.'' We have had the Tax Reform Act, we have had 
the Health Reform Act, we have had the Product Liability Reform Act, 
and no matter whether it is real reform or not, if you call it reform 
long enough and loud enough and enough people hear it, then a lot of 
constituents will start writing and saying, ``You have to be for that 
reform act that is pending in the Senate or pending in the House. I am 
not really sure what it does, but if it says that it is reform, it must 
be good and you had better vote for it if you ever want to come back 
and get reelected or speak with your constituents in any kind of 
civilized fashion.'' I say here we are again, because once again in 
this Congress, the Senate is going to be called upon to address what 
some have called a Product Liability Reform Act.
  I raise the question at this time as to why we need to be doing this 
because, in fact, I think this is something that, over the many 
decades, years and years of our country's history, has been an area 
that has been reserved to the States in order for the various State 
legislators to look at these issues and make decisions based on what is 
appropriate and proper when it comes to dealing with the personal 
injuries of the people who reside in their respective States.
  Now, there are some in this Congress who will say no, we are going to 
do it all from Washington, and we do not care how long the States have 
done it or how intense they have been in their efforts at laying out 
systems that make sense for the people of their respective States--no, 
we do not care about that. We are going to take it all here, here in 
Washington. We are going to do it all from Washington because we know 
best.
  I suggest just this. People in some parts of our Government here in 
Washington, and some parties here, are saying when it comes to some 
subjects like product liability reform--again, the word reform is 
attached to everything you want to change; let us reform it--they make 
the point that States are so backwards and so inefficient and so 
ineffective in handling personal injury cases, they would say that we 
are going to bring it all to Washington, but that with welfare reform, 
the Federal Government is so ignorant and so slow and so messed up that 
when it comes to welfare reform, we are going to send that to the 
States.
  They say we are going to block grant all the welfare programs and 
rules and regulations on welfare and send it to the various States--all 
50 States. Let each State decide what is best for the people of that 
State when it comes to welfare programs and how to reform it because 
the States know best and the Federal Government is really too slow and 
too ignorant to make the right decision. But when it comes to product 
liability, the States are so slow and so dumb and do not know what to 
do we are going to take that jurisdiction away from them and bring that 
jurisdiction to Washington because Washington will do a much better 
job. The inconsistency of those positions in my opinion is 
irreconcilable.
  I would suggest that in areas where the States have worked their will 
and where they have done a good job we should leave it alone. I would 
suggest that when it comes to product liability, the phrase ``if it 
ain't broke don't fix it'' applies. I would also suggest that those who 
say this is such a crisis of litigation that it threatens the very 
legal institutions by which we govern ourselves, look at the facts at 
what is happening out there. Is there an explosion of litigation? Ask 
anybody in this body who would be willing to answer this question of 
the amount of litigation that says we have to supercede what the States 
have done and bring it all here to Washington.
  I think the facts are clearly just the opposite. In all State courts 
in 1992, all tort cases or cases that people sued because of personal 
injury in civil courts amounted to just 9 percent of the total civil 
cases filed. And product liability suits, of which we are talking about 
today, accounted for only 4 percent of all the tort filings in all of 
the civil courts, in all of the State courts, in the Nation. That 
amounted to .0036 percent of the total civil case load of all of the 
State courts in the United States of America--.0036 percent.
  When we read those figures, one might ask the question. Why in the 
world does anybody think that there is a problem? Why does anybody 
think, if it is that small a number of lawsuits being filed that 
represent product liability suits, that it is such a mess that we would 
have to take it away from the States and we are going to do it in 
Washington, we are going to make it right in Washington because we in 
Washington know best what is best for the people of my State of 
Louisiana, or any other State in the Union, that we know so much more 
about how to solve this we are going to do it in Washington. People 
back in Louisiana say, ``Senator, are not you saying at the same time 
that we do such a lousy job on handling personal injury product 
liability legislation in my State that you are going to take it to 
Washington but when you talk about welfare reform, Washington does such 
a lousy job you want all the States to handle it?'' Why is it any 
different?
  We are talking about laws that affect the health and safety and the 
future of the people of a prospective State. When it comes to those 
areas I am a strong States rights Senator. I believe the rights of the 
States should not be trampled on. The rights of the States to govern 
what happens within their territorial boundaries should not be 
superseded by the Federal Government without a legitimate and an 
overriding mandate as to why we should do it on the Federal level.
  I would suggest that when only .0036 percent of all civil cases filed 
in State courts amount to cases filed dealing with product liability, 
that it is not a national problem, justifying jerking the rug out from 
under the States and say, no. Here in Washington we are going do it, 
and we are going to do it a lot better than you have been able to do it 
back home. I do not buy that.
  I will say to my colleagues in the Senate that my own State of 
Louisiana has addressed these problems, and they have handled it in the 
State legislative bodies. Interestingly enough, some people say, 
``Well, this is a big battle between business and plaintiffs. It is a 
big battle between the people who get sued and the people who do the 
suing. And there are too many people doing the suing. So we have to 
pass legislation in Washington to protect those who are getting sued.'' 
That is not so where I come from because I asked the Congressional 
Research Service to compare the legislation that is pending in the 
Senate, and legislation passed the House as well with the laws that we 
already have on the books in Louisiana. Do you know what they found? 
Here is the concluding paragraph. This ought to knock somebody's socks 
off who is saying we should be doing what some have suggested.
  Conclusion: H.R. 956, which I understand is the pending bill, the 
House passed product liability bill. H.R. 956 would be more favorable 
to the plaintiffs than is Louisiana law with respect to product seller 
liability.
  I repeat that again. The bill before the Senate would be more 
favorable to plaintiffs than is Louisiana law with respect to product 
seller liability. This is from the Congressional Research Service dated 
March 17, 1995. Therefore, if businesses say we get sued too much, we 
know we need changes in the law and we want more protection, my 
goodness. The bill that we have pending before us today on the Federal 
level is more favorable to the plaintiffs than what Louisiana has 
already done to limit product liability suits and to make it more 
difficult to prove damages and to recover. Louisiana has already 
drafted legislation. It is on the books. It is the law of the land in 
my State.
  [[Page S5597]] Therefore, I argue not whether we should be benefiting 
plaintiffs or whether we should be benefiting those who make defective 
products. My argument is that we should not be taking this jurisdiction 
away from the States who have had to address these issues, for 
countless numbers of years. The States know the needs of people and 
they know the needs of the companies that produce products that operate 
in their respective States. The question is; and I will ask it until 
someone can give me a good answer. Why is it necessary to usurp the 
jurisdiction of the States and make the argument that some things the 
Federal Government knows best and we are going to handle it here in 
Washington?
  When I was in law school they used to call it forum shopping. They 
used to say you pick the district where you want to file the suit 
depending on the type of judge you have, and you file it where you have 
the best judge for your particular cause. If you are a defendant or a 
plaintiff, you forum shop. I would suggest that the companies that are 
concerned about defective products that they may have produced, say in 
some States we get a good deal but I bet we can get a better deal if we 
bring it to Washington. So let us forum shop. Let us see if the U.S. 
Congress can take away all the jurisdiction from the States and bring 
it all to Washington because big brother in Washington knows better 
than the people of our respective States.
  I just cannot get passed the point argued by some people. On welfare 
reform, the Federal Government is so dumb we are going to give it all 
to the States. But on product liability the States are so dumb we will 
give it to the Federal Government. That is forum shopping. Pick the 
issue and find where you are going to handle it, pick the best forum, 
the best results on a particular issue.
  The point I am trying to make here today is the States have in fact 
addressed product liability. For my State, as the CRS has concluded, 
the Federal bill is better for plaintiffs than our State law. But I 
side with the States. I side with my legislatures who have looked over 
Louisiana and said this is what the people of my State want. This is 
what is best for our State. They passed it by majority vote. The laws 
have been signed into law by the Governor of our State, and it is the 
law of the land. For the life of me I cannot decide why that should be 
changed and have everything sent to Washington for a change.
  In addition to that, I am concerned about the fairness of this 
legislation. I do think it is one-sided. I do think on the Federal bill 
we do not treat people who are injured with the same rights and the 
same standards as we do the people who have made defective products. 
That is not fair. If there is anything we ought to be following as our 
guideline on legislation that affects human health and safety, it is 
fairness. It is how people are treated, both who make the products that 
are defective and that cause injuries and how we treat people who are 
injured by those defective products. Nobody should have an advantage. 
We should speak of fairness. We should speak of a level playing field. 
Everybody should be treated equally.
  But I will assure you that my reading of the legislation S. 565 does 
not provide any basic system of standard of fairness. Let me give you 
an example. The bill S. 565 provides a series of hurdles and 
limitations on the ability of people who are injured, that they have to 
cross over in order to be able to recover from manufacturers who make 
defective products. But it expressly exempts business from many of the 
same requirements that we put on individuals who are injured, many of 
them quite seriously by defective products. The standards, in other 
words, for the people who are injured and what they have to show and 
what they have to prove in order to get recovery from their bodily 
injury is different from the standards that this bill places on 
business, when they have injuries that are economic injuries caused by 
the same defective products.
  I would suggest that is wrong; that is not fair; that is not 
balanced; that is not a level playing field. Let me give you an 
example. If company A, for instance, purchased a piece of equipment 
from company B, and that piece of equipment was defective and one day 
explodes, company A that bought it could sue company B that 
manufactured for the economic injury they suffered. They could sue for 
the loss of profits they would have made if that piece of equipment had 
not broken or exploded. They could sue the company that sold them that 
product for all of their lost profits caused by the disruption of that 
accident.
  On the other hand, let us take the family of the poor worker who was 
operating that machinery which exploded in the same factory. When he or 
she brings their case to the courts of the land under this legislation, 
they must face limitations and hurdles in order for them to recover.
  To make matters even worse, under the Senate Commerce Committee's 
version of the bill, if that machinery, for instance, had been in place 
for 20 years or more, the injured person in the family could not even 
bring litigation to recover any of their losses for their injuries 
while the business would not be restricted in any way.
  Why is it all right for the business to be able to sue for lost 
economic profits because of a piece of defective equipment but the 
individual who may be injured physically by this same piece of 
defective equipment is somehow prohibited from bringing a case against 
the company merely because it had been in place for maybe 20 years?
  What is fair about that? Why should they not both be prohibited from 
bringing the case or both allowed to bring a cause of action for 
defective equipment? How can you say this is fair?
  I talked a little bit about punitive damages. It is really 
interesting; remember when I talked about Louisiana, that we have 
already addressed this? In Louisiana, there are no punitive damages, 
period--none--for product liability. You cannot get punitive damages 
for a product liability case in Louisiana. That is what the legislature 
said. That is the law of our land. This bill allows it. This bill says 
we can have punitive damages limited to $250,000 or three times 
economic losses of the person who is injured.
  Now, I do not know why there is a huge rush to do this in the first 
place. My State has done it. I wish they had not done it. I disagree 
with it. But this bill says punitive damages--which are intended to say 
to a manufacturer, you have done wrong; do not do it again; you will be 
penalized--will be limited to $250,000 or three times the economic 
damages. That sounds like an awful lot if it is a mom and pop product 
manufacturer, but if it is an international business? Does it mean a 
lot to them, when they may make more than that in profits in an hour? 
Is it really a deterrent to say you are only going to be able to have 
punitive damages of $250,000 or three times economic losses? If I was a 
big international manufacturer and I saw that my punitive damages were 
going to be limited, why worry about it. That is just the cost of doing 
business. I am going to make the product, sell a lot of it and if 
somebody litigates this and takes 4 or 5 years to finally get a 
judgment against me, I will just pay the judgment and if the punitive 
damage is so low, why worry about it?
  This is the point I wish to make here. I do not know why people think 
there is such a rush of litigation that provides for punitive damages 
that we need to change the law. The statistics I have show only 355 
punitive damage awards in product suits occurred from 1965 to 1990. 
That is in the Nation. Only 355 cases between the years 1965 and 1990 
ever awarded punitive damages, and half of these awards were reduced or 
overturned on appeal. And in three fourths of these cases the 
defendants took steps to improve the safety of their product. Of 
course, that is the point of having punitive damages. They say to a 
manufacturer of a product that they knew was defective or likely to be, 
we want you to make some changes; we want you to do things differently. 
The threat, even a small threat of punitive damages for detective 
products makes a great deal of sense and should not be changed.
  This portion of the bill, quite frankly, discriminates against low 
and middle income people. I think it discriminates against women, 
infants and children by limiting the damages to three times the 
economic injury or $250,000.
  I give you an example. The same type of lawsuit for a defective 
product against company A. The product causes 
[[Page S5598]] injury to an insurance executive or a businessman who is 
making $1 million a year and doing very well in society. Now, compare 
that with the same injury from the same product to perhaps an ordinary 
housewife who is not employed except within the home, is not employed 
as a salaried person. If the injury causes the executive to miss 1 year 
of work and causes the housewife to miss 1 year of work, the executive 
would be able to receive $3 million in punitive damages--three times 
his economic loss. And, for the same conduct, the housewife would only 
receive a very small amount, $250,000, for the same type of injury, in 
the same case, with the same defective product. I do not think that is 
fair.
  So I will conclude. We will have a lot of time to debate this over 
the period of time that is allotted for us to consider this 
legislation. But the two points I have tried to make today are quite 
simple. No. 1, the States are already doing this. And to all Members of 
Congress who have stood in the Chambers of the House and Senate over 
the years and said I am for States rights, the Federal Government 
should not interfere where it is not necessary, the Federal Government 
does not always know best--the people of the States know what is best 
as communicated through their State legislatures--I say that we should 
not be yanking the rug out from under the States. We should not be 
usurping the power of the States to handle personal injury legislation 
affecting the people of that State concerning products that injure 
them.
  Point No. 2 I think is equally simple and not difficult to 
understand. The legislation that is before the Senate at this time is 
simply not fair. It is simply a piece of legislation that discriminates 
against those who have and those who do not have. The goal of this 
legislation should not be for us to try to make it better for one 
category of Americans over another category of Americans; that the goal 
should be to create a system of balance, a level playing field, and a 
system of fairness for all of our citizens, whether they be businesses 
that make products or people who use those products. It should not be a 
guiding light for us to say we are going to do everything we can to 
help those who make the products but discriminate against those who use 
the products.
  I think in the couple of cases that I have tried to cite this bill 
does not provide the fairness that we as Members of this body should be 
striving to accomplish through this legislation.
  Mr. President, I will have more to say on this legislation as the 
debate continues but at this point I yield the floor.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. I thank the Chair.
  Mr. President, I have sought recognition to comment preliminarily on 
the pending legislation, and it is my view that some reform would be 
useful--illustratively, the alternative dispute resolution or perhaps 
the collateral source rule which would limit a recovery where the 
plaintiff has already been compensated by insurance proceeds.
  It is true, as to the collateral source rule, that the plaintiffs 
contend they should not be foreclosed because they have paid for the 
insurance, but there are valid considerations I think in such a 
situation where having been compensated there should not be a double 
recovery.
  In looking at this legislation, it is my view that we must exercise 
care in what we do here and that we must proceed with a scalpel and not 
a meat ax, and that, as the Founding Fathers declared it, the Senate 
should function as the saucer to cool the tea which has come from the 
House of Representatives.
  As a practicing lawyer, I represented both plaintiffs and defendants 
in personal injury cases, represented both sides in security act cases. 
In my early days in the practice of the law with the Philadelphia firm 
Barnes, Dechert, Crassmeier and Rhoads, which later became Dechert, 
Price and Rhoads, I represented the Pennsylvania Railroad in the 
defense of personal injury cases.
 I represented a plaintiff in a widely noted product liability case.

  In the course of that activity in the practice of law and having been 
on the Judiciary Committee for the past 14 years-plus, it is my view 
that the Congress should proceed with caution in altering the decisions 
of the courts which have been built up over many years, many decades, 
really many centuries.
  As was pointed out in the treatise on the American Law of Torts by 
Stewart M. Speiser, Charles F. Krause, and Alfred W. Gans, tort law has 
been used to control behavior for over 2,000 years. As Prosser and 
Keeton on the law of torts point out, the tort rules, including product 
liability, are evolutionary accretions, and the decisions on which they 
are based have been handed down by the courts in a very methodical way 
with extraordinary analysis over long periods of time.
  The seminal case was the decision in England in Winterbottom versus 
Wright, where the broad language of Lord Amiger laid down the first 
rule that the original seller of goods was not liable for damages 
caused by their defects to anyone except his immediate buyer or one in 
privity with him. That rule stood for a very long period of time until 
the celebrated case of McPherson versus Buick Motor Co., where Judge 
Cardozo of the New York Court of Appeals, the highest appellate court 
in New York, later Justice Cardozo, ruled that a manufacturer was 
liable for negligence to the buyer of an automobile, a rule that now 
seems strange that it had to be a change in the law to say that the 
manufacturer would be liable to the person who ultimately bought the 
automobile as opposed to limiting the claim of the buyer of the 
automobile to a company which sold him the car and then leaving it up 
to that company to go back to the manufacturer.
  Early in my own legal career, I had an occasion to litigate in some 
depth a product liability case captioned Thompson versus Reidman and 
General Motors. That case achieved some note, having been reviewed in 
law review articles because it established a new rule which enabled a 
passenger in an automobile to sue the seller of the automobile, Reidman 
Chevrolet Co., and also the manufacturer, General Motors.
  It seems that such a decision back in 1961, when it was cited as one 
of the important cases in the law of the development of product 
liability in the law of torts by Prosser and Keeton that by the 
hindsight of the intervening years seems strange that there would be 
any question about the standing of a passenger in an automobile to sue 
the seller of the automobile, Reidman Motor Co., and the manufacturer. 
But it was. And it is an indication of the kind of accretion, or what I 
call encrustation, of the common law that I studied in great depth in 
the course of bringing that litigation as a plaintiff's lawyer. When I 
represented the passenger, a man named Pete J. Thompson, against the 
driver of the automobile, William Gray, who was a sergeant in the 
military, and did not learn until some 2 years and 9 months after the 
incident that the cause was a stuck accelerator pedal and then found 
that the statute of limitations, 2 years in the State of Pennsylvania, 
had expired. Then I took a look at the Uniform Commercial Code, which 
had a 4-year statute of limitations, and sought to sue on behalf of the 
passenger against Reidman, which sold the car, and General Motors, the 
manufacturer. I faced a motion to dismiss. And the prevailing law at 
that time was that a passenger could not collect because the passenger 
was not in privity. And that is the legal term where the individual did 
not have a contract with the seller of the automobile, Reidman Motor 
Co., as did the buyer, William Gray. And there was no privity that the 
passenger had with General Motors.
  I argued that the court ought to create an exception to the privity 
rule because it was an analogy to the guest in a household. The Uniform 
Commercial Code had established a standing of a guest in a household to 
sue the seller of a product, like a toaster or an oven, or the 
manufacture of the product. The U.S. District Court for the Eastern 
District of Pennsylvania decided in my favor.
  As I say, the case was noted in some of the law reviews. And then, a 
plaintiff in Allegheny County noted it and filed a lawsuit out of 
privity and the case went to the State supreme court which decided that 
privity was necessary as a matter of Pennsylvania 
[[Page S5599]] law. The rule is that on substantive decisions, under 
Erie versus Tompkins, it is the State law which governs. Then General 
Motors and Reidman Chevrolet Motor Co. came back to the eastern 
district court and moved to dismiss and the judge reversed himself and 
my case was thrown out of court, as the expression goes.
  In the course of that litigation, it was quite an extensive research 
job that I undertook to give me some substantial appreciation of how we 
come to these rules of law.
  While not directly relevant from the point of view of product 
liability, I then found an exception to the statute of limitations 
under the Soldiers and Sailors Civil Relief Act of 1940, even though 
this was many years later, and was able to press the claim in tort and 
ultimately took the case to trial and after several days of trial 
received a settlement in the case.
  But I refer to the decision at some length because of the insights 
which I gained from that decision. And as I sit through the markups in 
the various committees--and the markup, for those who may be listening 
on C-SPAN and are not familiar with precisely what we do, is where we 
take a bill in a committee and decide how we ought to change the law or 
what law we ought to make as a matter of public policy. These markups, 
where we write the legislation which later comes to the floor, follow 
hearings where very frequently, although there are maybe 18 members of 
the committee, as, for example, on the Judiciary Committee, there are 
only one or two present. It has been my observation that our markups do 
not necessarily reflect the epitome of reason and experience as we do 
the best we can.
  So that, by contrast, to the way the encrustations occurred in the 
judicial decisions since 1842, when these issues were considered, 
through the 1916 case in Buick versus McPherson and the 1961 decision 
that I personally participated in in Thompson versus Reidman and 
General Motors, I approach the field of legislative changes in tort 
liability with some substantial concern.
  The issues which we are considering were considered, to a substantial 
extent, in a law review article which I think is worthy of some 
reference by Prof. Gary T. Schwartz from the UCLA law school, as 
published in the Georgia Law Review in the spring of 1992. And the 
point that Professor Schwartz makes, which I think is worth noting 
here, is the way that the courts have responded in a rational, case-by-
case, stare decisis way to important public policy considerations.
  Professor Schwartz points out at page 697 of the Georgia Law Review, 
volume 26, as follows:

       Consider the New Jersey Supreme Court which had voted 
     unanimously in favor of hindsight liability in failure to 
     warn cases in Chadha and then voted again unanimously against 
     hindsight liability in Feldman 2 years later. In explaining 
     the turnabout in Feldman, the court acknowledged the heavy 
     criticism that the Chadha case had provoked in the law 
     reviews.

  Then Professor Schwartz goes on to point to other changes when he 
notes the evolution of the views of the distinguished supreme court 
justice of California's highest court, Justice Stanley Mosk. He says:

       As a member of the California court in the 1960's and 
     1970's, Justice Mosk was deeply involved in the fashioning of 
     the strict products liability doctrine. In 1978, the court 
     majority, in a somewhat conservative vein, ruled the 
     principles of comparative negligence can reduce the 
     plaintiff's recovery in a strict products liability action. 
     Justice Mosk's dissenting opinion began with the complaint 
     that ``this will be remembered as a dark day when this court, 
     which heroically took the lead in originating the doctrine of 
     products liability, beat a hasty retreat almost to square 
     one. The pure concept of products liability so pridefully 
     fashioned and nurtured by this court is reduced to a 
     shambles.

  Professor Schwartz continues:

       Ten years later, however, Justice Mosk authored the 
     California court's opinion in Brown versus Superior Court 
     ruling that negligence principles, rather than hindsight 
     strict liability, apply in a prescription drug case. Three 
     years after Brown, however, Justice Mosk concurred in the 
     court's ruling in Anderson versus Owens-Corning Fiberglas 
     Corp. that a hindsight analysis should be rejected in all 
     cases involving a failure to warn even when the product is 
     asbestos. Indeed, Justice Mosk's concurring opinion suggests 
     that the entire doctrine of failure to warn in products 
     liability should probably be reclassified under the heading 
     of negligence. In this concurrence, Justice Mosk quotes his 
     own pure concept of products liability words from the Daily 
     and then goes on, in essence, to eat his words.

  I do not expect the casual listener to be able to follow the details 
of this kind of commentary on this very complex, opaque, and difficult-
to-understand products liability matter. But for those who are 
conversant in the field, it shows the evolution of a very learned and 
very thoughtful supreme court justice as he works through the rules.
  I would suggest that when the Congress of the United States seeks to 
make changes on this very carefully calibrated law, which is a matter 
of accretion, as Professors Prosser and Keeton articulated, or 
incrustation, as others have, that there ought to be very great care 
exercised by the Congress in the procedures we undertake. Especially in 
the context where we are functioning now in response to a mandate from 
last November, that we ought to in this body exercise the Senate's 
traditional prerogative of the saucer which cools the tea which comes 
from the House of Representatives.
  Without going on at much greater length than what Professor Schwartz 
had to say, I will quote his comments at page 702 of the Georgia Law 
Review to this effect, citing how there are modifications in the 
judicial decisions:

       The last decade has witnessed a number of judicial rulings. 
     Thus, New Jersey has reversed itself on manufacturer's 
     liability on unknowable hazards, Illinois has engaged in an 
     interesting effort to abrogate the traditional tort of 
     attorneys' malpractice, the fifth circuit has essentially 
     overruled its presumption of causation for inherent risk-
     warning cases, Tennessee has eliminated joint and several 
     liability, and Maryland has overturned precedents in reducing 
     the availability of punitive damages. Still, for the most 
     part in recent years, we have seen the marking by courts' 
     unwillingness to extend precedent and by their resolution of 
     open legal questions in a liability-restraining way.

  When you take a look at some of the provisions of the current 
legislation where we exonerate the seller from responsibility but leave 
the purchaser to the manufacturer, how problemsome may that be in cases 
where the manufacturer may turn out to be insolvent. That determination 
may not be made until long after the statute of limitations has expired 
as to the seller or provisions under the workmen's compensation 
sections where the employer may be entitled to greater compensation 
than he has actually paid out.
  It may be that useful attention may be directed to the question of 
service or process of foreign manufacturers who come to the United 
States to sell, but inordinately complex rules limit the ability of 
buyers in the United States to bring in those foreign sellers or 
changes in the rule where the issue arises as to the collection from 
foreign sellers.
  The issue of joint and several liability is a very complex one, and 
it may be that there is some intermediate ground which will not subject 
someone liable for a tiny fraction, a percent or two, which is decided 
for the entire award where all others are judgment-proof. That is 
something which I think has to be very carefully considered as we work 
through the amendments on the pending legislation.
  Also, the issue of damages as to what will occur where you have a 
case like the one involving the tragic death of our late colleague 
Senator John Heinz where there were tragic deaths and injury on the 
ground when the plane in which Senator Heinz was flying had a landing 
gear which apparently was not going down and a helicopter from Sun Oil 
came to try to help out. There was a collision, and the plane fell to 
the ground in a school yard in suburban Philadelphia--tragic deaths, 
tragic burning injuries which would not have been compensated as this 
bill would limit joint liability, a liability which has been eliminated 
in some States but something which I think we have to very, very 
carefully consider.
  There are a series of cases which have illustrated the very dastardly 
conduct--searching for a right word not to be overly condemnatory--
where you have the Ford Pinto case where there would be a classic case 
for the imposition of punitive damages if ever one existed.
  It was brought to light in litigation where the defendant had the 
matter brought to light in a letter which was sent by Ford's chief 
safety officer to 
[[Page S5600]] the National Highway Traffic Safety Administration. It 
was noted in that case that Ford had sought to avoid liability or 
responsibility to make changes in its fuel system which was located too 
close to the rear bumper and lacked critical safeguards
 where minor collisions caused the car to burst into flames upon 
impact.

  This letter, which contained a remarkable cost analysis saying that 
there ought not to be a change in the fuel system because the savings 
from 180 burn deaths and 180 serious burn injuries and 2,100 burn 
vehicles would cost $49.5 million, evaluating the deaths at $200,000 
per death and the injuries at $67,000 per injury, and the vehicles at 
$700 per vehicle, contrasted with the cost of what the National Highway 
Traffic Safety Administration wanted done to change 11 million cars and 
a million and a half light trucks at $11 million per car and trucks 
which would cost $137 million.
  When this effort was brought to light, it showed in as clear a way as 
you can conceive the necessity for a liability which would exceed the 
kind which is talked about here under punitive damages. Or if you deal 
with the Dalkon shield IUD case or the asbestos cases, where in the 
face of known damage the manufacturing was done again and again and 
again; or in the Playtex case of tampons causing toxic shock syndrome, 
or the flammable pajamas case, or the Dalkon shield. These instances 
have to be very carefully considered when this body is undertaking a 
review of the punitive damage issue.
  There are several relatively recent decisions by the Supreme Court of 
the United States in this field, including one captioned TXO Production 
Corp. versus Alliance Resources Corp., decided by the Supreme Court in 
1993, and another case is captioned Pacific Mutual Life Insurance Co. 
versus Haislip. Both of these decisions have opinions written by 
Justice Scalia, who is noted for his conservatism. While these cases 
involve the constitutional issues regarding punitive damages, they have 
some bearing on a public policy analysis which, as we know, when the 
Supreme Court of the United States takes up constitutional issues, they 
very frequently move over into being a super legislature. Some of those 
matters, I think, are worthy of our analysis.
  So, Mr. President, I make these preliminary observations as we move 
to open debate on this product liability legislation, saying as I did 
at the outset that some reform would be appropriate, but urging my 
colleagues to subject this legislation to very, very careful analysis, 
because we are looking at tort law developed over some 2,000 years to 
influence human conduct and a stream of product liability cases 
originating in Great Britain in 1842, subject to very, very intensive 
litigation in the United States; product liability, which is not made 
by the plaintiff's bar or the defense bar but made by the courts of the 
United States, and issues on punitive damages which have reached the 
Supreme Court of the United States, which have been upheld in the 
constitutional context by justices like Justice Scalia.
  I think the debate will prove useful. There are many issues to be 
considered. And as has been said earlier, I look forward to the debate 
and to an opportunity to participate extensively as we move through 
consideration of this important legislation.
  Mr. President, I thank the Chair and yield the floor.
  Mr. KYL addressed the Chair.
  The PRESIDING OFFICER (Mr. Frist). The Senator from Arizona is 
recognized.
  Mr. KYL. Mr. President, I, too, wish to address Senate bill 565, the 
Gorton-Rockefeller Product Liability Fairness Act of 1995. As the 
Senator from Pennsylvania has just mentioned, today marks the beginning 
of a historic debate in the Senate on the need for civil justice 
reform, because more than ever in recent years there appears to be an 
opportunity for us to make some real changes in law. For the first time 
in more than two decades, the House of Representatives has debated and 
passed comprehensive legal reform legislation, including product 
liability reform, as part of its Contract With America.
  According to a Luntz Research Co. survey, ``83 percent of Americans 
continue to believe that our liability lawsuit system has major 
problems and needs serious improvements.''
  Now the Senate, I suggest, must do its part to make meaningful legal 
reform a reality to respond to this concern on the part of the American 
people.
  I want to begin by commending my colleagues from Washington and West 
Virginia for their 15-year effort to bring needed reform to the 
Nation's product liability laws.
  I also agreed with the comments of the Senator from Pennsylvania who 
noted that it is important for us to be careful in the process of 
changing this law, because our States have different versions of 
product liability laws and because the law has built up expectations 
over the years. I also note, however, that the roughly 2,000-year 
development of this law, as the Senator from Pennsylvania mentioned, 
has changed rather dramatically just in the time since I attended law 
school, and that was not that long ago, Mr. President. In fact, the law 
was quite stable until about that time.
  So I think that because of the changes in the law and the dramatic 
impact that those changes have had on our economy and on our society, 
it is time to reexamine what might be done and that it is important for 
the Congress to enact reasonable reforms to protect our Nation's 
manufacturing base from unreasonable litigation.
  Historically, of course, America's strength has been in 
manufacturing, where much of the wealth of our Nation has been created. 
Although product liability law is but a small area of tort law 
generally, it is also a critical area in which America is losing its 
competitive edge. I noted, Mr. President, that this law has changed 
dramatically since I was in law school. The year was 1964 when I began 
law school. Some important decisions came down, starting with decisions 
from the State of California, which created a new concept called 
``liability without fault.'' It is a concept that some Americans might 
have difficulty in understanding. I myself still have difficulty 
understanding why someone who is not at fault can be held liable for 
literally millions of dollars in damages. That is what the doctrine is 
called, liability without fault.
  Why is the doctrine called liability without fault? Because a 
plaintiff who is injured has the right now to bring an action against a 
manufacturer for a defective product, even though it is impossible to 
prove that there was any negligence in the creation of that defect. In 
other words, Mr. President, a manufacturer cannot have exerted every 
bit of care possible, has been as careful as one could be in developing 
the plans and hiring the people to produce the product, and they could 
have been as careful as possible; yet, notwithstanding all of the care 
exercised in the creation of the product, as happens, we all know it is 
part of life, a mistake is made, a defect is created and someone is 
injured as a result. Because of that injury, and only because there was 
an injury, in this one limited area of our law the manufacturer can be 
held liable for an unlimited amount of dollar damage because of the 
defect, even though there was no negligence.
  Mr. President, I said Americans might find this difficult to 
understand because of the historic notion in our tort law that you can 
recover against someone who is negligent, who was not careful, as a 
result of which you were injured and sustained damage. That has been 
the law for 2,000 years, until 20 years ago, or 25 years ago, when the 
notion began to be accepted that the status of the victim was the most 
important thing and that it did not really matter what the consequences 
were to the manufacture of a product or to our society as a result of 
holding manufacturers of products to this standard of liability without 
fault.
  In other words, it did not matter with respect to the financial 
status of a business; it did not matter whether or not it puts the 
United States at a great competitive disadvantage; it does not matter 
that all due care was exercised. The only thing that mattered was that 
someone who was hurt had to be able to recover against someone.
  It is so bad, Mr. President, that persons do not even have to recover 
just against the manufacturer of the product. It is enough to find 
someone in the case persons can sue and recover from.
  So we identify the manufacturer of the product, we identify the 
wholesaler 
[[Page S5601]] and we identify the retailer, just to make it a simple 
case, although there are more complex cases. And we then find that the 
manufacturer has gone out of business or does not have enough insurance 
to cover the loss. The wholesaler, too, has gone out of business or 
does not have adequate insurance.
  So despite the fact that the seller had nothing to do with this 
except that he unwrapped the box, put it on the shelf, and sold it to 
the consumer, who was then injured because of the defect, despite that 
fact, the seller can also be held responsible.
  In a case where we get a judgment against all three--the 
manufacturer, the wholesaler, and the retailer--there is what is called 
joint and several liability. They are each liable for all of the dollar 
damage, irrespective of the relative degree of their involvement. None 
of them, remember, were negligent, but one of them produced a product 
which turned out to have a defect in it that caused the damage. All of 
them can be held liable. The notion has been accepted that all of them 
can be liable for the entire amount, so that the retailer in this case, 
if that is the one that has the deepest pockets, as they say, the one 
that can afford to pay, ends up paying the bill.
  A lot of folks think that is wrong. I agree. That is why we have 
joint and several liability reform. But it does not go nearly far 
enough in this bill, as I will get to in a moment.
  The point of this little discourse in law is simply to note the fact 
that some things have happened to our law over the years that have, in 
my view, not been based on common sense, not been based upon sound 
principles of law, but rather have been based upon the overriding 
notion that no matter what, someone who is hurt must recover. Even if 
he cannot find anybody that did anything wrong, and even if the party 
you recover against did not do anything wrong, if persons can find 
somebody that has deep enough pockets and they have something to do 
with the incident, then nail them.
  That has resulted in a lot of people in our country deciding not to 
get into certain forms of business. Last year, fortunately, the 
Congress amended the law very slightly with respect to the manufacturer 
of airplanes because nobody was building airplanes in this country 
anymore. I am talking not about the big commercial jets, but the planes 
that a person would fly on the weekend, for example, or a small plane 
for business purposes.
  Companies have stopped making things and people have stopped selling 
things because of this potential liability. That is why it is important 
to reform the law of product liability and why this legislation is so 
important.
  I suggest, Mr. President, that we must ultimately go beyond product 
liability to comprehensively reform the entire civil justice system, 
and that this bill will be one of the ways in which we can do that.
  In effect, we must repeal the regressive tort tax, as someone called 
it, that depletes our economy, raises prices, destroys jobs, stifles 
innovation, and reduces exports, making America less competitive in the 
world. This tort tax creates a capricious legal lottery that stimulates 
the filing of lawsuits.
  One result, a very important result, is that it causes doctors to add 
billions to our national medical care costs each year because they must 
practice defensive medicine. They must order unnecessary tests or 
perform unnecessary procedures simply to cover the possibility that 
someone could claim that that last procedure or test was necessary to 
prevent some kind of harm to a patient; in other words, to do defensive 
medicine rather than the medicine that makes the most sense.
  In Arizona, my own State, Mr. President, medical malpractice premiums 
have increased by nearly 200 percent just in the last 14 years. That is 
obviously reflective of the cost of the medical care which we provide. 
It is one of the areas that requires specific attention as we reform 
health care in this country today.
  Attorney's fees and transaction costs are increasingly a large part 
of litigation expenses; in fact, approaching 50 percent. I think people 
would be interested to note, those who argue that we would be denying 
victims the right to recover, that, in fact, half of the money 
collected or nearly half of it goes to the lawyers--not to the victims.
  The U.S. Department of Commerce has estimated that only 40 cents of 
each dollar expended in product liability suits ultimately reaches the 
victims. A Rand Corp. study showed that 50 cents of each liability 
dollar does not go to victims but to attorney's fees and other 
transaction costs.
  Toward the goal of national legal reform, S. 565 represents a small 
but critical first step. This bill and the House bill, H.R. 956, 
contain many similar provisions.
  They are, very quickly, a product seller provision that extends 
coverage of the bill to rented and leased products as well; a drug and 
alcohol defense provision does not go far enough; a provision creating 
incentive for biomaterial suppliers to make available raw material for 
use in medical implant devices sponsored by my colleague from Arizona, 
John McCain, and a very important provision; and finally, a provision 
reducing judgment amounts where a product has been misused or altered.
  Beyond the provisions, the House bill is significantly broader in 
scope, and I support most of its additional provisions. It is my 
understanding this body will consider more comprehensive legal reform 
legislation later this year: Senator Hatch's Civil Justice Reform Act 
of 1995, and Senator McConnell's Lawsuit Reform Act of 1995, and I will 
support those efforts.
  I will plan to offer and support amendments to S. 565 that would 
broaden the legislative scope of this bill, more consistent with the 
House product. For example, I support expanding the scope of Senate 
bill 565, punitive damage reform provisions of three times a claimant's 
economic loss or $250,000, whichever is greater, now applicable only to 
product liability actions, to all civil actions.
  It is important in the medical malpractice arena, in particular, 
where we very seldom have a product that has created a problem, to 
limit the liability of the physician or hospital or other health care 
provider in order to contain the cost of health care.
  Second, I would support expanding the scope of S. 565, joint and 
several liability reform with respect to noneconomic damages for 
product liability actions to all civil actions, which I spoke to a 
moment ago. I will be offering an amendment to that effect.
  Third, expanding Senate bill 565's $250,000 limitation on noneconomic 
damages in product liability actions to medical malpractice actions, as 
well.
  I will also support the amendment of my colleague from Michigan 
regarding attorney disclosure requirements which would require that 
attorneys appearing in Federal court fully disclose at the time of 
retention all of the clients options, including a clear statement of 
the terms of compensation, and to provide an itemized accounting at the 
termination of representation.
  I will be introducing an amendment that would preclude punitive 
damages from being awarded if the health care producer of a medical 
device or drug successfully completes the FDA approval process, unless 
there is a situation of fraud involved. I also believe that there may 
be three other amendments necessary to this bill in order to preclude 
it from, I would say, Mr. President, having fatal flaws.
  There is one provision which relates to alternative dispute 
resolution where the parties seek to resolve their dispute outside of 
the tort lawsuit, and try to shorten the time and reduce the expenses. 
There is a penalty involved for the defendant in one of those 
situations. I believe that those provisions should be fair, equal to 
both the plaintiffs and the defendant, and that if there is any penalty 
attached for not agreeing to participate in an alternative dispute 
resolution mechanism, that that penalty should be provided both equally 
to the plaintiffs and the defendant, rather than only being a penalty 
for defendants.
  Second, there is a good provision that says, where a plaintiff has 
been impaired by drug or alcohol use and is therefore more than 50 
percent culpable or responsible--in some States it is called 
contributory negligence, where plaintiff himself or herself is at least 
half responsible for the injuries--there could not be recovery. It 
seems to me that the principle is sound but the limitation is too 
restrictive. Whether it is because of drug or alcohol use or because of 
lack of care or 
[[Page S5602]] concern or negligence, if plaintiff is 50 percent 
responsible then either there should be comparative negligence or 
contributory negligence should preclude a recovery. It should not just 
be limited in that one situation. In fact, I can think of far more 
egregious actions on the part of the plaintiff than simply being drunk 
or under the influence of alcohol.
  Third, there is a provision that I spoke to earlier that says that, 
in a product liability case, the seller should not have to pay for the 
manufacturer's liability. It seems to me that should apply in any kind 
of situation. In no case should the seller be required to pay for the 
manufacturer's liability simply because you cannot find the 
manufacturer or the manufacturer does not have insurance to pay. If the 
seller was not responsible in any way, then the seller should not have 
to pay the damages.
  As I said, notwithstanding these areas in which I believe S. 565 
could be broadened, I think it is important we not allow the perfect to 
be the enemy of the good, and therefore we should support whatever 
reforms we can accomplish. In the last 5 years cloture motions have 
effectively barred votes on the merits of bills similar to this that 
were supported by a majority of the Senate. We should not allow this to 
happen again.
  So I would like to close by addressing one of the most frequently 
cited and most unpersuasive arguments employed by the opponents of the 
national legal reform, only one, but I think it is important to 
establish this right up front because it has the superficial sense of 
States rights about it and suggests that those of us who support this 
legislation do not trust the States.
  As someone who is a very strong States' rights supporter, who is very 
interested in allowing local decisionmaking, I want to make very clear 
our basis for supporting this legislation. This legislation would not 
prohibit a State from enacting more restrictive provisions so we are 
not saying the Federal Government should take over this area of law to 
the exclusion of the States at all. We are simply establishing a 
standard. If the States wish to be more restrictive they are entitled 
to do so.
  It is not appropriate to argue it would be an unconstitutional 
preemption of State authority if we were to act in this fashion. The 
commerce clause clearly grants the United States the authority to act. 
No individual State can solve the problems created by abusive 
litigation of the kind we have been discussing here and that is 
particularly true with product liability where a product may be 
manufactured in one State, sold in another State, and cause injury in a 
third State. In fact, Government figures establish that on average over 
70 percent of the goods manufactured in one State are shipped out of 
State for sale and use. So it is clear that a national solution is 
required and justified by the fundamental interstate character of 
produce commerce.
  The threat of disproportionate unpredictable punitive damages awards 
exerts an impact far beyond the borders of individual States, and this 
threat influences investment strategies, it dampens job creation and 
prevents new products from reaching the marketplace. In an increasingly 
integrated national and international economy, the confusing 
inconsistent patchwork of State liability awards has created a major 
obstacle to America's economic strength. And I think this is precisely 
the kind of problem the Framers gave Congress the power to address 
through the commerce clause of the U.S. Constitution. The Framers 
clearly realized the National Government needed the power to prevent 
the chaos that would result if every State could regulate interstate 
commerce. That is one of the reasons, as a matter of fact, that the 
Articles of Confederation were required to be amended.
  Opponents of legal reform profess concern about the preemption of 
State law and interference with States rights, but I note that many of 
these same interests are enthusiastic supporters of intrusive Federal 
regulations imposed on the States by OSHA, by the FDA, by the EPA, and 
other Federal regulators. In truth, States rights is not what is being 
defended here but rather the status quo or else.
  Why is the multimillion-dollar litigation industry the only segment 
of the economy that opponents of legal reform believe is beyond the 
reach of Federal law? Legal reform will not cause the creation of a 
single new Federal program or the expenditure of a single new 
appropriation. Legal reform will not impose new taxes or new 
regulations on our citizens. Legal reform will simply create clear, 
consistent legal standards covering civil actions brought in State and 
Federal court. It will enhance the essential principle of due process 
and, as the U.S. Supreme Court has said, due process, criminal and 
civil, is fundamental to our concept of ordered liberty.
  So, Mr. President, I hope we keep these thoughts in mind as we debate 
this important, and as I said at the beginning, historic legislation, 
and that in the end we will have found the wisdom and courage to make 
these reforms so we can pass them on to the President for his signature 
and begin the process of restoring more sensibility, more common sense, 
more fairness into the U.S. tort system.
  I yield the floor, Mr. President.
  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. KYL. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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