S6330 CONGRESSIONAL RECORD — SENATE May 9, 1995

both of those cases the courts held

there was no duty to warn where the

dangers are of common knowledge.

Mr. MCCONNELL. This basic principle is part of case law and it is also

set forth in the Restatement of Torts,

at section 402A, which I would like to

include in the RECORD. The relevant

part provides that defendants

Are not required to warn with respect to

products, or ingredients in them, which are

only dangerous, or potentially so, when

consumed in excessive quantity, or over a

long period of time, when the danger, or potentiality of danger, is generally known and

recognized. Again the dangers of alcoholic

beverages, are an example, as are also those

foods containing such substances as saturated fats, which may over a period of time

have a deleterious effect upon the human

heart.

I thank my colleague for responding

to my inquiries.

Mr. GORTON. I am glad we clarified

the meaning of section 106.

Mr. HOLLINGS. Mr. President, I

have been at the Budget Committee all

afternoon, and so I have not been able

to monitor all the nuances, but we are

now hearing that reasoned objections

need not be given to this provision because the distinguished Senators say

that they are going to take care of this

issue in conference.

That could be. I have served on many

a conference committee and I have

learned that you are never able really

to control it. Each Senator is given a

vote, along with the House Members.

Be that as it may, I will not give the

reasons why I am concerned about this

provision at this particular time, other

than to say that I am also honestly objecting. I am courteously objecting. I

do not know how to say it any better

than that.

When the proponents make a request,

a unanimous-consent request, and assume that theirs is the only honest request, courteous request, and sincere

request, and how they can be more

honest, then that constrains me to

stand and say that I am just as courteously objecting and honestly objecting as I know how to object. And I object.

Mr. DOLE addressed the Chair.

The PRESIDING OFFICER. The majority leader is recognized.

UNANIMOUS CONSENT

AGREEMENTS

fMr. DOLE. Mr. President, I ask unanimous consent that notwithstanding

rule XXII, that the following amendments be the only remaining amendments in order to H.R. 956, and not be

in order after the hour of 11 o’clock

a.m. on Wednesday: Harkin, punitive

damages; Boxer, harm to women; Dorgan, punitive cap; Heflin-Shelby, Alabama wrongful death cases; Heflin, punitive damage insurance.

I ask unanimous consent that the

vote occur in relation to the ShelbyHeflin amendment number 693 at 9:45

a.m. on Wednesday, to be followed by a

vote on or in relation to the Harkin

amendment.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. DOLE. I further ask that following the disposition of the above listed

votes, if no other Senator on the list is

seeking recognition to offer their

amendment, the Senate proceed to the

adoption of the Coverdell-Dole substitute, as amended, the Gorton substitute, and the bill be advanced to

third reading without any intervening

action or debate.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. DOLE. I further ask that following third reading, the following Members be recognized for the following allotted times, to be followed immediately by a vote on H.R. 956, as amended:

Senator HEFLIN, followed by Senator

ROCKEFELLER, 15 minutes each; followed by Senator GORTON, 15 minutes;

followed by Senator HOLLINGS, 15 minutes; and followed by Senator LEVIN, 10

minutes.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. DOLE. Mr. President, I ask unanORDER TO PROCEED TO S. 534

fimous consent, and this has been

cleared by the Democratic leader, at 12

noon on Wednesday, May 10, the Senate

proceed to calendar 74, S. 534, the Solid

Waste Disposal Act.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. DOLE. Mr. President, I think

Senator HARKIN plans to offer his

amendment in about 20 minutes, at 7

o’clock. I am not certain whether the

amendments by Senator BOXER or DORGAN will be offered.

We have the agreement, in any event.

I want to thank my colleagues on both

sides of the aisle. This means no more

votes tonight. We can alert our colleagues but there will be debate on the

Harkin amendment, and I assume other

amendments if they want to be called

up. I thank the Chair.

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. ABRAHAM. Mr. President, I ask

unanimous consent that the order for

the quorum call be rescinded.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. ABRAHAM. I thank the Chair.

Mr. President, I rise this evening in

support of the product liability reform

bill now under consideration, and I

would like to just preface my remarks

by offering my compliments to the

bill’s managers for their tenacity in

sticking with this process as we have

moved through all the various perspectives to find a point of common agreement between 60 Members of the Senate. I think both Senator ROCKEFELLER

and Senator GORTON worked very effectively on this product liability reform

effort.

I believe the bill represents an excellent start at reforming our civil justice

system, a system that eats up over $300

billion a year in legal and court costs,

awards, and litigants’ lost time, not to

mention the loss to consumers and the

economy from higher prices for products, innovations and improvements

not on the market, and unnecessarily

high insurance costs.

By placing reasonable limitations on

punitive damages in product liability

suits, this legislation will begin the

process of reforming our litigation lottery without harming anyone’s right to

recover for damages suffered.

I am especially pleased that the bill

now includes a special provision limiting punitive damages for individuals

with assets of less than $500,000 and for

small businesses with fewer than 25

employees. This provision is modeled

on a proposal that Senator DEWINE and

I cosponsored and provides that the

maximum award against such individuals or entities is the lesser of $250,000

or twice compensatory damages.

Mr. President, no one benefits when

businesses go bankrupt because of arbitrary punitive damage awards. Small

businesses are particularly susceptible

to such problems as are the millions of

Americans employed by them.

The bill will also eliminate joint liability for noneconomic damages in

product liability cases. Thus the bill

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 are somehow judgment proof.

The bill would replace the outmoded

joint liability doctrine with proportionate fault in which each defendant

would have to pay only the amount

necessary to cover the damage for

which he or she was responsible.

The bill also creates some important

limitations on the liability of sellers of

products generally as well as on the liability of suppliers of raw materials

critical to the production of lifesaving

medical devices.

These provisions go a good way toward restoring individual responsibility as the cornerstone of tort law. They

also recognize an important fact about

our legal system. Ultimately, in its

current form, it is profoundly

anticonsumer. By raising the prices of

many important goods, our legal system makes them unavailable to poor

individuals who cannot afford them

when an exorbitant tort tax has been

added. And in extreme cases our legal

system can literally lead to death or

misery by driving off the market drugs

that, if properly used, can cure terrible

but rare diseases or medical devices for

which raw materials are unavailable on

account of liability risks.

These are important reforms, Mr.

President; reforms that will increase

product availability, decrease prices

and save jobs.
May 9, 1995 CONGRESSIONAL RECORD — SENATE S6331

When we allow our tort system to

stifle production and innovation the

real losers are consumers—who must

pay higher prices and choose between

fewer and less advanced goods—and

workers—whose job opportunities disappear.

By eating up 4.5 percent of our Gross

Domestic Product, the tort system

costs jobs. Besides causing companies

to discontinue or not introduce products, it also hurts American businesses

overall by making them less competitive in the world market.

A 1994 Business Roundtable survey of

20 major U.S. corporations reveals that

they receive 55 percent of their revenue

from inside our country, but incur 88

percent of their total legal costs here.

Clearly such discrepancies in legal

costs put our companies at a disadvantage in the world marketplace.

It is no secret that I wish we had

gone farther with this bill, to protect

the nonprofit organizations, the towns

and villages and the ordinary Americans who remain victims of our current

broken legal system. I hope that Members of this body who support this legislation but at this time do not want to

apply its reforms more broadly will on

further reflection see their way clear

to taking the next step; to enact similar reforms to assist homeowners, accountants, farmers, volunteer groups,

charitable organizations, all small

businesses, State and local governments, architects, engineers, doctors

and patients, employers and employees. But I feel strongly that the legislation under consideration, even limited

to its present scope, is an important

step toward making our civil justice

system fair and efficient and improving

the lives of our citizens. I urge its

prompt final passage.

I urge its prompt final passage.

Mr. President, as I say, I hope that

we will go further in the days ahead,

whether in the form of independent legislation or as part of further discussions of legal reform that may come

before the Senate in the context of securities litigation or some other issue

before us, because I think that we need

an overall and comprehensive reform of

the system.

I know that I speak for a number of

the Senators who are active and working on this bill in saying that we are

delighted with the progress we have

made so far and, while we may not

think we are yet close to our final destination, we have taken a good first

step. And, most importantly, I can say

that, at least for this Senator, I am

dedicated and committed to continuing

the fight to keeping this whole issue of

reforming our legal system before the

Senate and I remain hopeful that we

will enact more reforms in the months

ahead.

Mr. President, I yield the floor, and

suggest the absence of a quorum.

The PRESIDING OFFICER. The

clerk will call the roll.

The legislative clerk proceeded to

call the roll.

Mr. HARKIN. Mr. President, I ask

unanimous consent that the order for

the quorum call be rescinded.

The PRESIDING OFFICER (Mr.

ABRAHAM). Without objection, it is so

ordered.

Mr. HARKIN. Mr. President, I ask

unanimous consent that the pending

amendment be set aside.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. HARKIN. Mr. President, I ask

unanimous consent that the amendment I am about to send to the desk be

made in order.

The PRESIDING OFFICER. Without

objection, it is so ordered.

AMENDMENT NO. 749 TO AMENDMENT NO. 690

(Purpose: To adjust the limitations on punitive damages that may be awarded against

certain defendants)

Mr. HARKIN. Mr. President, I send

an amendment to the desk and ask for

its immediate consideration.

The PRESIDING OFFICER. The

clerk will report.

The assistant legislative clerk read

as follows:

The Senator from Iowa [Mr. HARKIN] proposes an amendment numbered 749 to amendment No. 690.

Mr. HARKIN. Mr. President, I ask

unanimous consent that the reading of

the amendment be dispensed with.

The PRESIDING OFFICER. Without

objection, it is so ordered.

The amendment is as follows:

In section 107(b) of the amendment as

amended by amendment No. 709 insert the

following:

‘‘(6)(i) Notwithstanding paragraph (1), the

amount of punitive damages that may be

awarded in any product liability action that

is subject to this title against an owner of an

unincorporated business, or any partnership,

corporation, unit of local government, or organization that has 25 or more full-time employees shall be the greater of—

‘‘(I) an amount determined under paragraph (1); or

‘‘(II) 2 times the average value of the annual compensation of the chief executive officer (or the equivalent employee) of such entity during the 3 full fiscal years of the entity immediately preceding the date on

which the award of punitive damages is

made.

‘‘(ii) For the purposes of this subparagraph,

the term ‘compensation’ includes the value

of any salary, benefit, bonus, grant, stock

option, insurance policy, club membership,

or any other matter having pecuniary

value.’’.

Mr. HARKIN. Mr. President, this is a

very straightforward amendment. It

simply provides that the caps on punitive damages that are in the amendment will not apply in cases where a

business is sued and the chief executive

officer’s salary over the previous 3

years is greater than the total compensatory damages in the case for businesses with 25 or more employees.

This is less than 13 percent of all

businesses, according to the Census Bureau. In those instances, the cap on punitive damages, in my amendment,

would be raised to twice the compensation of the chief executive officer for 1

year averaged over the last 3 years.

Again, let me try to put it in plain

English. What my amendment provides

is that if a corporation is sued and it

has over 25 employees, then the cap on

punitive damages that is in the Gorton

substitute amendment will not apply.

The formula to be used would be that

punitive damages would be capped at

twice—just twice—the annual compensation of the chief executive officer

of that corporation and that annual

compensation would be determined by

averaging the last 3 years.

Mr. President, we all agree that punitive damages that are paid should not

be disproportionate, but proportionate

to what? This legislation basically says

that a multibillion-dollar corporation

can consciously and flagrantly disregard the safety of others and have

that conduct proven, not just by a preponderance of the evidence but by clear

and convincing evidence. So what this

means is that the legislation before us

says this multibillion-dollar corporation can consciously, flagrantly disregard the safety of others, be sued and

go to court, have it proven that they

consciously and flagrantly disregarded

the safety of others by clear and convincing evidence, and the maximum

punitive damages for this kind of heinous conduct is only twice the compensatory damages of the plaintiff, even if

those damages are such a small

amount that they are only a tiny proportion of the company’s profits and

assets.

I believe the more important comparison in punitive damage cases is the

proportion of the damages to the size

and the financial strength of the business.

The compensation package of the

CEO of a company with at least 25 employees, as my amendment provides, is

inevitably going to be a reasonably fair

proportion of the total cash flow of the

company. Now, I have chosen to have it

apply to only those businesses that

have 25 or more employees so that a

small business, a sole proprietor, who

retains all of the profits of the company as his or her compensation is not

affected.

There is only one purpose for punitive damages, and that is deterrence.

That is the only purpose of punitive

damages, to deter that flagrant, irresponsible action, that disregard from

the safety of others, from happening in

the future. Yet, who believes that a punitive damages award of a few hundred

thousand dollars is going to have a significant impact on a company the size

of, say, a major motor company, a

multibillion-dollar corporation?

The CEO’s of some companies make

$250,000 a week. So how great of a deterrent will it be to a big corporation if

their total punitive damages is

$250,000? That is what they pay their

CEO for 1 week.

So why did I choose the compensation packages of the CEO’s of these

large companies? Because I believe

that unless executive compensation is
S6332 CONGRESSIONAL RECORD — SENATE May 9, 1995

ruinously disproportionate to the resources of the company—and that is

seldom the case—twice that compensation package will not be so large that

it will cause the company to close. No

one can argue that a multibillion-dollar corporation that pays its CEO, say,

$5 million a year is going to close its

doors because a punitive damage award

comes to $10 million or 2 years’ salary.

The other reason I have chosen executive compensation is because it is

something that is entirely within the

control and discretion of the company’s management. And it also takes

into account the cash flow of the company. It is, therefore, more fair than a

system based on the total assets of the

company which may be fixed productive resources.

Mr. President, let me read a few examples of the compensation packages

in a few of the major corporations.

This is from the recent issue of Forbes

Magazine in the May 22 issue. The

cover says ‘‘Pigging it up: Corporate

management who subdues their directors into submission.’’ In this issue it

says 800 chief executives are paid $1.3

million per year. That would be one of

the lower ones. Some of them are extremely high. I am just going to read a

few. These are some of the companies

that may be involved in the potential

lawsuit we are talking about here.

Here is the compensation of the CEO

of General Electric: $8.6 million per

year. Let us see now; that would come

out to be about $300,000 every 2 weeks,

or about $600,000 a month. So you can

see, if General Electric were to make a

product that they knew consciously,

flagrantly disregarded the safety of

others—and this was proven in a court

of law by clear and convincing evidence

—under the bill before us, they get

$250,000, or twice the compensatory

damages. Well, as I showed you, the

CEO makes almost $250,000 a week. So

what kind of a deterrent is that going

to be?

Here is Trinity Industries. The CEO

there makes $6.2 million a year. That is

about $250,000 every couple of weeks.

Here is Morton International, where

the CEO makes $7.5 million a year.

Here is Chrysler, where the CEO, Mr.

Eaton, makes $6.2 million a year.

Here is Premark International. I do

not even know what they do. They pay

their CEO $12.121 million a year. Well,

let us see, that is a million dollars a

month. That is $250,000 a week, I guess.

So if Premark consciously, flagrantly

made a product in disregard of the

health and safety of others and were

sued and taken to court, and that was

proved by clear and convincing evidence, one of the highest standards,

they could have their damages capped

for a figure as low as what their CEO

makes in 1 week.

Do you think that is a deterrent?

That is not a deterrent at all. They

would laugh that off.

Here is Colgate-Palmolive. Mr. Mark

makes $13.460 million a year as the

CEO. I think you get the picture.

Here is Mattel Toys. Their CEO

makes $7.6 million per year. Yet, we

are going to say that some kid who got

injured by a toy, permanently disabled

for life—and again, let us think again;

is it just some kid who got hurt by a

toy because they were misusing it? No,

they have to go to court and prove that

the company flagrantly and consciously disregarded the safety of that

child in making that toy. It has to be

not by a preponderance of the evidence

but by clear and convincing evidence, a

higher standard. After all that, we will

slap their hands and cap the punitive

damages at a small fraction of their

company’s worth.

So, again, I think, Mr. President, you

get the picture. There are 800 companies here. I am not going to run

through them all. Again, I am not mentioning these companies because I want

to cast aspersion on these companies. I

have nothing against them. In fact,

they are probably pretty decent, good

companies. I have had dealings with

some of them before. I am sure they

want to be good citizens and want to

employ people, and they want to make

our country great. I am not saying

these companies are bad. I am just

using this as an example of the kinds of

compensation they pay their CEOs.

Again, my amendment says that if

you go through all of these hoops and

you get punitive damages, we are going

to cap it just at twice the annual compensation of the CEO. Mr. President,

here is an article from the Tampa,

Florida, Tribune, April 13th. I want to

read the first couple of paragraphs. It

says:

The Nation’s corporate chief executives

find their jobs an enriching experience these

days. ‘‘Greed clearly is back in style,’’ says

Robert Mongs, a principal of Lenz, Inc., an

activist investment fund in Washington.

‘‘There is almost a feeling among CEO’s

that the money is there to be taken.’’

If these companies want to pay their

CEO’s $12 million a year, or $7 million

a year, that is their business. I believe

it is our business as lawmakers charged

with responsibility to provide for the

general welfare of our people.

Now, Mr. President, the word ‘‘welfare’’ appears twice in the Constitution

of the United States. Most people do

not know that. It first appears in the

Preamble of the Constitution, which is

part of the Constitution, where it lays

out the reasons for the Constitution.

One of the reasons is to promote the

general welfare. It does not say stand

back and let the States do it. It

charges Congress with promoting the

general welfare of our people.

Then in article I, section 8, which

lays out the duties and responsibilities

of Congress to lay and impose duties

and customs, to regulate the Army and

Navy—it has a whole list—to regulate

commerce, a whole list of things that

Congress is specifically charged to do,

in article I, section 8.

One of those is to provide for the

common welfare of the people. That is

our responsibility. We are charged by

that when we raise our hand and swear

our oath to uphold and defend the Constitution.

The Constitution says clearly that

we are to provide for the general welfare. In providing for the general welfare, we want to make sure that people—average citizens of this country—

have the assurance that when they buy

a product, consume a product, or use a

product, when they travel on our highways, that they can be reasonably certain that what they are using, what

they are buying, what they are consuming, is not going to harm them.

That is our responsibility.

That is why we pass safety and

health laws. That is why we put stoplights on our intersections. Now a stoplight, Mr. President, restricts my freedom. I want to go down that street. I

do not want to stop at a stoplight but

that stoplight restricts my freedom of

movement. We have decided for the

public safety that we will regulate the

flow of traffic and we put up stoplights.

That is why we have food inspection

laws. That is why we have all kinds of

safety laws. And that is another reason

why we have left untouched in our

country for these 200-plus years the

common law that we inherited from

Great Britain that goes back over 600

years, the concept of tort feasor, the

concept that someone must take due

care and concern that his actions do

not harm others. If those actions do

harm others, I am held accountable

and responsible.

I believe it promotes responsibility.

It makes people think twice about

their actions and about what we make,

how we act, and what we do. That is

why I find this bill before the Senate so

out of step with what we have been

doing for 600 years and so out of line

with what we in our offices and in our

speeches say we want. We want people

to act responsibly. We say if someone

is not responsible we want them held

accountable.

In the bill as it is, a corporation

could make something, hurt somebody.

As I pointed out, they could be maimed

for life. How are they held accountable

in terms of deterrence and punitive

damages if we have these low caps?

I believe that is a modest amendment. It is not going to bust any company. There is no company—no company in this magazine, not one company—could say that if they had to

give up 2 years of their CEO’s compensation, that they will go broke. If

they are, their board of directors will

fire everybody running that company.

I believe that at least 2 years of compensation of what a CEO makes could

be a deterrent to that company in

terms of their future actions. Certainly, $250,000 is not a deterrent.

Does any person think that a company with the resources to pay one person $12 million a year would flinch

from paying even $1 million in punitive

damages? Some of the individuals

make as much money as the salaries of
May 9, 1995 CONGRESSIONAL RECORD — SENATE S6333

all the United States Senators combined, and no one thinks we are

undercompensated here.

We all agree with the Dole proportionality of punitive damages award. It

ought to be apportioned to the damages caused and the pain and suffering

and the injury to the person. It also

ought to be apportioned to the resources of the person or the company

that caused that injury. This goal of

proportionality has been served for

centuries by the jury system, under the

watchful eye of a judge.

Mr. President, I must also say that

this bill surprises me. Many of the proponents of the bill keep talking about

returning power to the local level. It

does not get any more local than putting a decision in the hands of a jury of

one’s peers. These are not people who

ran for office. These are not people who

went through years of law school or

other special training for their jobs.

The people who the proponents of

this bill apparently think can apparently no longer be trusted to come up

with fair verdicts are good citizens, the

ones who serve on juries, pay their

taxes, and go to the polls.

Now we are being told by the proponents of this bill, ‘‘We cannot trust

you.’’ Well, considering that everyone

here was put here by those same citizens who sit on the juries, how can we

now doubt their wisdom? Juries, by and

large, are fair and come up with reasonable verdicts. And they have been

doing it since the dawn of our democracy.

What is it about juries that now

makes them constantly make these socalled foolish decisions that the bill’s

proponents have been reading? Will the

proponents of this bill say that the

people who serve on juries are ignorant? If so, stand up and say so. Will

the proponents of this bill say that the

people who serve on juries are easily

misled? If so, let them stand up and say

so. Do the proponents of this bill say

that the people who serve on juries

lack common sense or they have no

sense of fairness? If so, let them get up

and say so. Do the proponents of this

bill say that a jury cannot look at a

person who has had a serious injury

and then go on to decide that the product that was involved was not negligently manufactured? Do the proponents say that? If they believe so, let

them get up and say it.

The facts are just the opposite. In

fact, juries decide against plaintiffs

about half the time. Juries have had a

long track record in dispensing wisdom, a record about three or four times

as long as the U.S. Senate.

I find it very interesting that the

proponents of this legislation, some of

them are the strongest voices about returning government to the local level,

giving power back to the local level.

There is nothing more local than a jury

of your peers. Now the proponents of

this bill are saying, ‘‘We cannot trust

you to make these kind of decisions.

We will take it out of your hands.’’

As far as I know, there is nothing

more fair, there is nothing that dispenses wisdom and justice more evenly,

than juries of our peers. I may not

agree with every jury verdict. Sometimes I believe a jury makes a mistake.

But I was not sitting there. I did not

listen to all the testimony. I was not

able to weigh all the pros and cons.

So what I read in the paper may

upset me. I can honestly say that there

are times when I have heard of jury decisions that make me mad. But then

after I dig into it, find out about it,

and read more about it, then I find out

why the jury reached the decision they

did.

So juries are not ignorant. Juries are

our neighbors, our relatives, our

friends, the people who put Members in

this body in the first place.

All I say, Mr. President, is that I

have opposed caps on damages, but if

we are going to have a cap, and this

bill says we are going to have a cap, let

it at least be high enough that punitive

damages can serve their purpose to

deter truly heinous actions by the largest companies in this country.

We should not make it so that they

would be so high as to bankrupt a company. We should not make it so that it

would put small businesses out. That is

why I have exempted those businesses

of less than 25 employees.

I believe that the amendment I have

offered accomplishes that fine balance

and the balance of deterrence, punitive

damages high enough to really deter

that kind of action in the future. Not

high enough to bankrupt the company.

And not so low as in this bill as to

where companies will just laugh it off.

Just laugh it off—$250,000.

Now, I know the proponents of the

bill will say, well, the judge can raise

the $250,000 if he wants. True. But then

the defendant can say, well, I do not

like it. I want to go back to another

trial and go right back to the process

again. And again these multibilliondollar corporations will get to write

off, of course, all the attorney’s fees

and expenses as an ordinary business

expense, and we taxpayers pick that

up. They go right back through the

process again. Thus, the cycle just

keeps going. So really what we really

have in this bill is a $250,000 cap. That

is not enough to be a deterrence.

I believe this amendment will be a

deterrence, I believe it is fair, and I believe it is reasonable.

Mr. President, I ask for the yeas and

nays on the amendment.

The PRESIDING OFFICER. Is there a

sufficient second?

There is a sufficient second.

The yeas and nays were ordered.

Mr. GORTON addressed the Chair.

The PRESIDING OFFICER. The Senator from Washington.

Mr. GORTON. Mr. President, the

Senator from Iowa assumes the question of deterrence, misconstrues the

actual impact of punitive damages, and

totally misstates the provision that he

purports to amend. There is no $250,000

punitive damage cap. In the case of serious injuries, for anything other than

the small business, which is exempted

both in the bill and in the amendment

of the Senator from Iowa, for anything

other than a small business, the cap is

$250,000 only if the damages to the

plaintiff are minimal. In the cases repeatedly cited by the Senator from

Iowa, the individual maimed for life—

that was the last quotation I remember—it is obvious that the economic

damages to that individual together

with the award for pain and suffering,

unlimited by any feature of this bill,

added together and multiplied by two

is infinitely greater than $250,000.

Every week in the United States we

have compensatory damage awards

well up into the millions of dollars, and

in each of those cases, except for the

very, very small business, the maximum award of punitive damages on the

part of the jury under the bill as it exists now is twice whatever those damages are. The $250,000 figure was only

put back into this proposal to say that

you could go that high in case of a jury

award for actual damages that was extremely small. And, Mr. President, if a

claimant goes all the way through a

trial and proves that his or her damages are only $10,000, why should we

allow a $4 million punitive damage

award? That is, of course, the essence

of what this debate is about.

Moreover, even the figure twice the

sum of economic and noneconomic or

pain and suffering damages contained

in the bill has an exception pursuant to

which the judge can increase that

award, if the judge finds the conduct of

the defendant to be as egregious as the

description propounded to us by the

Senator from Iowa. The Senator from

West Virginia and I have said that this

bill in its final form will not contain

any automatic new trial right for a defendant in any such cases.

So, Mr. President, the present bill

that we are being asked to vote on does

not have any ultimate cap at all on punitive damages in that extraordinarily

rare case in which a judge felt that a

very, very high such award was appropriate. So the Senator from Iowa is

wrong that a badly injured, maimed individual is not going to have a $250,000

cap on punitive damages when an injury was caused by the deliberate acts

or the outrageous acts of the large corporation. In fact, that individual is not

going to be subject to any cap at all if

he or she can prove the kind of case

which was given us here as this horror

story. But what we are doing in this

bill is to provide some remote connection between the actual losses an individual suffers and how much can be

added to that amount by a jury acting

without any rules or instructions whatsoever. It is neither more nor less than

that.

We should not have the legal system

of the United States of America as a

national lottery where, under certain

circumstances with a handful of juries
S6334 CONGRESSIONAL RECORD — SENATE May 9, 1995

in modest cases with almost no damages, the lottery can create a bonanza

partly for an individual but basically,

this is what the debate is all about—for

the lawyer class in this country who

find these actions to bring.

More fundamentally, and we have not

gotten back to this point recently in

this debate, and I speak not just of the

remarks of the Senator from Iowa but

of all of the opponents of this bill, none

has shown that their slogans about deterrence have any true meaning. No

single study has ever shown that punitive damages, the lottery of a huge punitive damage award, has any real effect on deterrence or on safety.

I am astounded that a Member of this

body who believes so firmly in the presence of government in our life and of

its regulatory capacities has so little

faith in the ability of all of the statutes of the United States and of all of

the statutes of the States dealing with

safety in the production of products to

cause them actually to be safe. We

passed measures on automobile safety,

on toy safety, and on all other kinds of

product safety, and on the way in

which we license drugs and the way in

which we build airplanes to see to it

that they are safe and effective. Yet,

apparently, according to the opponents

of this bill, nothing would be safe in

America if we did not have unlimited

punitive damages. That is the only way

we can see to it that corporations behave, that we can have a reasonable society.

Mr. President, retired Justice Powell

said—and I paraphrase him but I agree

with him—the jury system of litigation

taken as a whole is the most irrational

method of business regulation imaginable.

It is not a criticism of a particular

jury to say so, Mr. President. That jury

deals with a single instance. It does not

know what other instances there are in

many cases. The Congress of the United States, the legislatures of the several States, when they determine on

regulation, determine it on the basis of

all of the evidence, of all of the weighing of how much we want to encourage

certain kinds of production and what

kind of cautions we put on them. This

is the way in which the job is done.

No study shows that punitive damages do anything other than have an

utterly irrational impact of telling

many companies it is not worthwhile

going into a new line of business—it is

not worthwhile, as one of our major

companies has said, to try to go into

the business of finding a new drug

which helps AIDS. We cannot make

enough money on it to risk that lottery that some lawyer someplace will

persuade some jury to whack us with a

$25 million punitive damage award.

So we have had dozens of companies

get out of the business of producing the

vaccine against whooping cough. Is

that a triumph of the American system, that the cost of whooping cough

vaccine has gone up 500 percent and

only one or two companies are even

willing to make it?

Is it a triumph of the American system that 18 of the 20 companies that

used to manufacture football helmets

are not in the business anymore because it just simply is not worthwhile?

Is it a vindication of the American system that a large company which produces plastic piping for heart implants,

on which it might possibly make $1

million in a several-year period, has

paid close to 40 times that in defending

successfully product liability actions,

and looks at the bottom line and says,

what in the world are we doing this

for? Why should we produce this particular product? Those legal fees adhere to defendants who win just as

much as they do to those who lose. And

when the company says it is just costing us too much, we will abandon this

line of research; we will abandon this

product; the American people are not

benefited. Who is benefited? A tiny

handful of lucky players and a larger

group of trial lawyers.

So what we do in this bill, much

more modestly than I would prefer, is

to say at least in the great bulk of

cases there ought to be some relationship to how badly the plaintiff or

claimant is actually damaged and what

the maximum punitive damages are.

Let there be a ratio. If in fact the individual is maimed for life, then they are

going to be entitled to huge punitive

damages. But if in fact they are damaged $10,000 or $500, why should they

win the lottery when there is no evidence that this does anything but to

constrict our economy?

I say once again, the State immediately adjacent to the State of the

Senator from Iowa, Nebraska, like my

own State of Washington, just does not

have punitive damages in the kind of

cases we are talking about here. It does

not allow them at all. Why? Because

the Constitution of the United States

protects anyone accused of a crime.

They have fifth amendment rights. The

case against them has to be proven beyond a reasonable doubt. There is a

maximum sentence. But those who uphold those constitutional protections

as fundamental to our system of justice say, oh, no, but a civil jury can

punish without any limitation or without any guidelines whatsoever, rationally or totally or temporarily. There

just is no connection between those

two.

Moreover, there is also no relationship at all between the responsibility

of business enterprises, the safety with

which they build their products, that is

related to whether or not they operate

in a State which has punitive damages

or one which bans punitive damages.

Not a scintilla of evidence, not any instance has been imparted to this body

that oh, boy, we better keep punitive

damages because look at how irresponsible companies are that operate in Nebraska or Washington or one of the

other States. Not a peep, Mr. President, about that.

The bottom line is we are dealing

with a system that is a great system

for a handful of lawyers in this country. They and their sidekicks get 60

percent of all of the money that goes

into this product liability system.

Claimants get 40 percent of it. We want

to make it a little bit more rational.

The Harkin amendment does not

make it more rational. The Harkin

amendment does not even recognize

the nature of the $250,000 cap, which

does not apply to anything he talked

about, or the fact that there is no cap

at all when the judge finds that the

conduct of the defendant has been particularly egregious, and the Harkin

amendment should therefore be rejected.

Mr. ROCKEFELLER addressed the

Chair.

The PRESIDING OFFICER (Mr.

ASHCROFT). The Senator from West Virginia.

Mr. ROCKEFELLER. Mr. President,

not only do I agree with everything

that my able colleague from the State

of Washington has said, the Harkin

amendment adds a new section to the

bill for setting punitive damages

against businesses with 25 or more employees. It has to be greater than the

amount recorded or using a formula

laid out in the compromise bill which

is twice compensatory damages or

$250,000, whichever is greater, or twice

the value of annual compensation of

the business’ chief executive officer.

Well, that last one obviously is an

eye-catcher, ear-catcher. It sounds innocent enough—and fun. It is kind of

fun, cute. But we are on a deadly serious bill. The people who voted today to

make sure that we would continue to

discuss and amend product liability reform were not trying to have fun with

this.

We have been on this bill for several

weeks now. I have been doing this for 9

years. I am sure the Senator from the

State of Washington has been doing it

for longer than that. There is nothing

in any of my efforts to sort of do something to amuse myself, enjoy myself. I

am trying to make America better. I

am trying to help defendants who cannot get their claims in time. I am helping to make things more predictable

for businesses so we can strike a balance between consumers and business.

One thing this is not is just kind of

fun. When I say it is deadly serious, I

mean deadly serious because I truly believe there are products not being developed today which could save lives,

and that people are dying because that

is not happening.

There are a couple of facts which I

think are relevant. There is not a

$250,000 cap in the Gorton-Rockefeller

compromise on product liability reform, as suggested by the Senator from

Iowa. There is not that cap.

I suggest to those who do read the

bill, in product liability cases, if the

jury agrees that the punitive damages

should be awarded, the jury can, and

under the bill punitive damages will,
May 9, 1995 CONGRESSIONAL RECORD — SENATE S6335

set an alternative ceiling of $250,000, or

twice the amount of compensatory

damages. And then the judge, under

the additur provision, decides if that is

not enough, to take it up. So there is

no floor.

We are not talking about treating

people unfairly. In fact, I think we are

trying to talk, for the first time in a

long time, about treating people fairly.

To highlight some more information

about the suggestion of the Senator

from Iowa that there is any sort of special protection for businesses which are

tempted to make defective or unsafe

products, everybody needs to remember

that juries under our bill can award

compensatory damages in amounts

that span from hundreds of dollars to

millions and millions of dollars.

I have made this point several times,

but I will make it again and I will give

you a few more examples this time. I

have already talked about the State of

the Senator from Washington, not even

considering punitive damages at all,

and within the last 5 or 6 weeks there

was an award of $40 million. I have no

idea what the circumstances were. But

that was economic plus noneconomic—

compensatory damages, $40 million.

You do not need punitive damages to

get a big award. I am for the punitive

damages, but you do not need them to

get major awards.

There was a $70 million compensatory award, again, not even considering punitive, to the family of a woman

who died when a defective helicopter

crashed—in, as it turns out, Missouri.

But that did not stop the jury from

awarding $70 million. So we are not

kidding here. We are not doing anything fun here.

There was a $15 million compensatory award—again, not even considering punitive damages; but a compensatory award—to a boy in a case involving a defective seat belt. Now, I do

not know the circumstances. This was

in Los Angeles County, 1993. I do not

know the circumstances, but this is

just compensatory award.

Almost $20 million, Mr. President, in

compensatory damages was awarded to

a man injured in some circumstances

in which a motorcycle spun around on

the ground during a turn. My eloquence cannot exceed that, unfortunately, because I do not know what it

was. But the man was injured by a motorcycle and got almost $20 million—I

say again, in compensatory damages

alone.

So there is no kind of joking around

here. We are trying to do the right

thing.

I might say, on the other side of it—

and I do not want to stretch this out—

that there are a lot of things that are

not happening in this country because

of the fact that our punitive damages

situation is scaring people away from

new products, new research, new improvements, or whatever.

I have used this case before and I will

use it again, because I think it is devastatingly powerful.

I care a lot about health care and I

have worked a lot on health care. I

have been into kidney dialysis clinics.

They are not a lot of fun to go into.

The former Governor of Missouri

knows what I am talking about, the

Presiding Officer. It is kind of dark and

people are lying back in chairs, and

their blood is being completely

changed. It is kind of depressing to be

there. I do not think they enjoy it

much. Nobody is talking to anybody

else. They cannot work. They are tied

into these huge machines which rise up

beside them and behind them.

This was carried a little step further

and they developed a dialysis machine

that you could take home with you so

that if you worked within 2 or 3 miles,

or 4 or 5 miles away, you could come

home to that dialysis machine, do it

yourself and then go back to work. It

was a tremendous improvement, because you could go back to work, if

your work was close enough so that

you could come back two or three

times to do that.

But then Union Carbide comes along

and really comes up with the answer.

They put the whole thing into a suitcase-sized dialysis machine that you

can take to your job with you and do

the dialysis on the job.

My 15-year-old son has one of his best

friends who, a couple of years ago, we

discovered had diabetes. That is not a

lot of fun for a young kid to find something like that out. I cannot get over

the way that young man, 12 years old

at the time, simply adjusted to his new

circumstances and was able to give

himself insulin; just disappear for a few

minutes and do it. His courage—he actually grew, grew in my eyes, and I

think he grew in his own realization in

the sense of mortality and what he

could do and how precious everything

was. He is a remarkable boy. In fact, I

think his aunt is Madeleine Albright,

our Ambassador to the United Nations—a wonderful boy.

But Union Carbide, when they came

up with this same kind of you-can-doit-right-on-the-spot kidney dialysis

machine, had to sell their business to a

foreign company where uniform product liability laws did not give the same

litigation potential because Union Carbide, an enormous company, determined that the potential liability risk

made the product uneconomical.

So I have to assume there are hundreds of thousands of people who need

these blood changes in this country

who are deprived of that now because

Union Carbide could not do that.

I have 20 examples. I will not give

them. It is late.

So I know that the amendment has

sort of a nice, populist ring to it—

CEO’s salary. But this is dead-serious

business that we are involved in.

Product liability reform is something

I have fought for as a nonlawyer because I want to see people’s lives get

better and I want to see products developed and I want to see—just on personal grounds, my mother spent years

dying from Alzheimer’s disease. There

is a cure out there, but somebody has

to put the money up to find that cure.

It is probably not going to be the Federal Government, because we are cutting back.

So all of this is deadly serious. This

is not a bill that should be used to beat

up on business. This is a bill that

should be used to beat up on a legal

system which is failing us and, as the

Senator from Washington said, in

which the lawyers get 50 to 70 percent

of the money. I do not respect that. I

do not like that. I want to change that.

And for that, among other reasons, I

oppose the amendment of the Senator

from Iowa.

I thank the Chair.

Mr. GORTON addressed the Chair.

The PRESIDING OFFICER. The Senator from Washington.

Mr. GORTON. Mr. President, I ask

MORNING BUSINESS

funanimous consent that there now be a

period for the transaction of morning

business, with Senators permitted to

speak for up to 5 minutes each.

The PRESIDING OFFICER. Without

objection, it is so ordered.

NOMINATION OF JOHN DEUTCH TO

BE DIRECTOR OF CENTRAL INfTELLIGENCE [DCI]

Mr. GLENN. Mr. President, I rise in

strong support of the nomination of

John Deutch to become Director of

Central Intelligence [DCI]. As a longtime member of the Senate Armed

Services Committee, I have enjoyed

working with him in his various roles

at the Department of Defense—and I

look forward to working with him as

DCI. Dr. Deutch has an extremely impressive re ́sume ́, and I ask unanimous

consent that a copy of his biography be

included in the RECORD at the conclusion of my remarks.

The PRESIDING OFFICER. Without

objection, it is so ordered.

(See exhibit 1.)

Mr. GLENN. Mr. President, his background and training clearly indicates

that Dr. Deutch brings a broad background to the DCI position. His scientific background makes him particularly prepared to deal with the many,

formidable technical issues confronting

the Intelligence Community from satellites to signals intelligence [SIGINT].

Dr. Deutch also brings significant administrative and national security expertise to the DCI job from his past and

current senior management experiences at the Defense Department. His

toughness in making difficult decisions

and his knowledge of, and experience

in, national security matters will make

him a very capable manager of the U.S.

Intelligence Community.

I have been especially pleased with

the principal purposes Dr. Deutch has

articulated for the Intelligence Community: Striving to assure that the

President and other national leaders