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[Congressional Record Volume 141, Number 76 (Tuesday, May 9, 1995)]
[Senate]
[Pages S6330-S6335]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                       ORDER TO PROCEED TO S. 534

  Mr. DOLE. Mr. President, I ask unanimous 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for the quorum call be rescinded.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.
   [[Page 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 
 [[Page S6332]]  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 
 [[Page 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 so-
called 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 multibillion-dollar 
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 
 [[Page S6334]]  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, 
 [[Page 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-
do-it-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.

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