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[Congressional Record Volume 141, Number 66 (Monday, April 24, 1995)]
[Senate]
[Pages S5592-S5595]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

           COMMONSENSE PRODUCT LIABILITY AND LEGAL REFORM ACT

  The Senate continued with the consideration of the bill.
  Mr. McCONNELL. Mr. President, I am pleased that the Senate is 
considering the Product Liability Fairness Act this week. The time for 
legal reform is long overdue. I am anxious, as one Senator, to get this 
debate underway. I particularly want to congratulate the bill's chief 
sponsors, Senator Gorton and Senator Rockefeller, for guiding the bill 
swiftly through the Commerce Committee, and I applaud Senator Dole's 
leadership in bringing the issue promptly to the floor.
  I might say, having been involved in this issue for now 11 years, 
going back to a prior period of Republican majority as chairman of the 
Court Subcommittee of the Judiciary Committee, we listened to lots of 
hearings and 
[[Page S5593]] lots of talk, and I am glad we may finally have a 
realistic shot at civil litigation reform in this country.
  Mr. President, while I am a cosponsor of S. 565, I also support the 
effort that will be made this week to broaden the scope of this bill. 
The American people are frustrated with our legal system. Everywhere I 
turn, I read and hear about terrible experiences people have when they 
find themselves inside the liability maze. People with real injuries 
too often do not get fairly treated. Meanwhile, too many frivolous 
cases clog the courts. The truth is the litigation system is like a day 
in Las Vegas or Atlantic City: Sometimes you can win big, but more 
often the house--that is the system, the lawyers and the courts--win 
the biggest profits. And the money that goes to the lawyers and the 
court system is significantly more than the money received by the 
injured parties. According to the Rand Corp., a full 57 cents of every 
dollar spent in the liability system is eaten up by the system itself. 
The injured get less than half, only 43 cents, Mr. President, of every 
dollar.
  What does this mean for the American people? It means they pay more 
for the goods and services they buy in the economy, and it also means 
that businesses develop fewer new products, pursue less innovation and 
create fewer jobs.
  The tort tax, Mr. President, is real, and reforming our legal system 
would mean a real tax break for the American people, a tax cut that 
will not require an offset and will not risk the Social Security System 
trust fund. One firm, Tillinghast, estimates that the litigation system 
costs every individual in our Nation $1,200 annually.
  In a recent study, the Rand Corp. looked at the overuse and abuse of 
our health care system which is driven by the litigation system. In 
examining only the auto tort system--just for automobiles, Mr. 
President--Rand found that excess medical claiming, driven by the 
prospect of reaping a windfall from the legal system, consumed $4 
billion worth of health care resources in 1993 alone. That is the same 
year Mrs. Clinton's task force proposed a restructuring of our health 
care system. Evidently, the real answer is right here in our legal 
system. That same Rand study estimated consumers paid in 1993, $13 
billion to $18 billion in excess auto insurance premiums because of the 
litigation craze.
  So, make no mistake about it. This debate is about the economy and it 
is about taxes. If we are serious about tax relief for the middle-class 
family, let us reform our legal system. Let us cut the cost of an 8-
foot ladder by 20 percent or the doctor's fee for a tonsillectomy by 33 
percent. We can do it by reforming the legal system.
  The American people want us to change our civil justice system. 
Survey after survey show the frustration of the American people with 
our legal system. For example, a couple months ago, U.S. News & World 
Report wrote that 69 percent of Americans find that lawyers are only 
sometimes or not often honest. Can you imagine? Honesty in the legal 
profession is not seen as normative behavior. As a lawyer myself, I 
have to say that I am horrified that such a huge majority of the 
American people have reached that conclusion. Yet, the organized bar 
resists any serious or meaningful changes to the legal system.
  Last month, the Luntz Research Group found that an overwhelming 83 
percent of the American people think our liability lawsuit system has 
major problems and needs serious improvement. Sixty-four percent of the 
people believe the liability system is out of control, costing everyone 
a lot of money and doing a whole lot of damage to our economy. And 79 
percent to 83 percent of Americans support specific reforms, such as 
reasonable limits on punitive damages, abolishing joint liability for 
noneconomic damages, and loser pays where the judge finds the case to 
be completely frivolous.
  Two generations ago, lawyers acted as statesmen who moderated their 
clients' behavior. In that bygone era of the 1950's, there was 1 lawyer 
for every 695 people. Today, there is 1 lawyer for every 290 people; 
and since lawyers thrive on conflict, they operate as gladiator-
litigators, ``ransack[ing] the legal cupboard for nostrums to rectify 
every wrong, to ward off every risk and to cure every social and 
economic ill,'' as Harvard Professor Mary Ann Glendon has written in 
her new book, ``A Nation Under Lawyers: How the Crisis in the Legal 
Profession Is Transforming American Society.''
  The result is a sue-happy America, destructive to our democratic 
culture of debate, persuasion, accommodation, and tolerance.
  So, make no mistake about it. We have embarked on a fundamental 
debate about the nature of American society. The legal system, and law 
in general, is too pervasive a force in people's lives. The reforms 
debated this week will be about returning the legal system to its 
appropriate place and to restoring fairness and certainty to the 
liability system.
  The product liability arena is a good place to start. This bill will 
give some relief to those who sell goods but have no role in their 
manufacture.
  The injured party will be able to recover, but only from the company 
that caused the injury, that is, the company that made the product. 
Sellers will only be liable for those warranties they make, or if they 
commit some act of negligence regarding the product, or in the rare 
situation that the manufacturer cannot be sued or has no money to pay 
the damages.
  This bill also relieves defendants of liability where the plaintiff 
was primarily responsible for his or her own injuries due to the use of 
alcohol or drugs. And, the manufacturer will have limited liability if 
the plaintiff has misused or altered the product. The bill also 
restores the element of punishment to punitive damages, by linking them 
to the economic harm caused.
  And, it will eliminate the deep pocket lawsuits, where a defendant 
with a remote connection to the injuring event is held responsible for 
all the harm caused. For noneconomic damages, the bill provides for 
several, not joint, liability.
  This bill also includes an important title on biomaterials access, an 
issue championed by Senator Lieberman and one which we included in our 
medical malpractice reform bill.
  Excessive litigation is causing important suppliers of raw materials 
used in medical devices to withdraw their raw materials from the 
marketplace. The result is that individuals with rare medical disorders 
find themselves without access to lifesaving medical implants.
  The bill will shield these raw materials suppliers from liability, 
where they can establish they had no involvement in the design or 
production of the medical device. Without this reform, the litigation 
system will bear the responsibility for the death and injuries of 
countless Americans. We cannot allow our runaway liability system to 
harm innocent people.
  So, this is a good place to start the debate. We will have a number 
of amendments, including the addition of medical malpractice reform to 
this bill, as well as amendments to broaden the punitive damages and 
joint and several liability provisions, and some provisions from a bill 
I introduced earlier this session with Senator Abraham, on attorneys' 
fees and an early offer or rapid recovery mechanism.
  This will be a watershed debate in the Senate. There will be many 
accusations thrown at the reformers this week. The opponents will 
charge that we reformers just want to deprive injured people of fair 
compensation. Nothing could be further from the truth. The proponents 
of reform want to give the American people what they deserve: a legal 
system that is rational and fair, one that is available when they need 
it to resolve disputes, and that has some predictability and certainty 
to it, affording the injured in our society fair and adequate 
compensation, and holding those truly responsible for the injuries 
properly accountable.
  The American people will be watching us and waiting for results.
  Again, Mr. President, I want to commend the Senator from Washington, 
Senator Gorton, the Senator from West Virginia, Senator Rockefeller, my 
colleague from Michigan, Senator Abraham, who has also been heavily 
involved in this issue and thank them for the contributions that they 
have made and to say I look forward with great anticipation to the 
week's debate on this most important subject.
  I yield the floor, and I suggest the absence of a quorum.
  [[Page S5594]] The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Kyl). Without objection, it is so ordered.
  Mr. ROCKEFELLER. Mr. President, the issue of product liability reform 
is very well known now to Senators after many years. I look forward to 
the debate that we begin today and in these coming days, because I 
believe the bill we are going to be considering, S. 565, Product 
Liability Fairness Act, builds upon past deliberations of this body to 
achieve reform in the moderate, bipartisan fashion which has been the 
nature in which we have approached this problem.
  I want to pause for a moment to thank my remarkable colleague and 
friend, Slade Gorton, for all of his efforts and counsel in crafting 
this bill and for setting a feeling about it which is efficient, 
temperate, wise, unemotional and lends itself to the collection of 
votes.
  In addition, Senator Lieberman, Senator Dodd, Senator Hatch, Senator 
McConnell, have played really critical roles in rating this legislation 
and bringing us to this point in our deliberation. The Senate has 
considered the topic of product liability reform for over 14 years. And 
six times the Commerce Committee has reported bills favorably to the 
floor. Most recently, the committee reported out the current bill, S. 
565, by a vote of 13 to 6 on April 6. We have persisted in our efforts 
to reform the laws governing product liability because we believe that 
the current system is broken and that we can make changes that will 
benefit both consumers and makers of products. We have tried and, I 
think, succeeded, in achieving balance in our effort to streamline the 
law along these lines. We have simultaneously reduced costs and delays 
for both plaintiffs and defendants.
  In 1985, when I first came to the Senate--that was my first year in 
the Senate--and joined the Commerce Committee, I in fact voted against 
a product liability reform measure pending at that time. The committee 
vote, because of my vote, was tied and the vote, therefore, failed. I 
felt strongly that the version of the bill then being considered aided 
manufacturers at the expense of safe products for American consumers. 
That was my view.
  Since then, the product liability effort has changed 180 degrees. The 
legislation has evolved gradually into an evenhanded, moderate approach 
that we are considering here today. Senator Gorton and I have worked 
diligently over recent months to hone the bill that we are looking at 
today to ensure that it strikes the right balance between the interests 
of both consumers and business, and we do mean that. Adjustments were 
made to reflect substantive and other concerns which we concluded were 
obstacles to the enactment of this bill. We believe we have 
significantly improved the legislation from earlier drafts and have 
been responsive to the issues which prevented earlier enactment of this 
legislation.
  Let me draw my colleagues' attention to the substantive changes made 
in this year's bill compared with the version introduced in the last 
Congress. The most significant change addresses concerns that have been 
raised about excessive punitive damages, damages that are awarded to 
punish and to deter wrongdoing. This year's bill establishes a standard 
for awarding punitive damages that is essentially unchanged from last 
year's bill. We have, however, added a provision that requires punitive 
damages to be awarded in proportion to the harm caused, at a ratio of 
three times the claimant's economic loss, or $250,000, whichever is 
greater. I might say that this approach to punitive damages is well 
within the construct of the law in many areas. Our rationale for this 
ratio is the goal of bringing to punitive damages some relationship 
between the size of the harm and the punishment, a goal supported by 
the American Bar Association, the American College of Trial Lawyers, 
the American Law Institute and, in fact, the U.S. Supreme Court.
  Also concerning punitive damages, we eliminated the Government 
standards defenses in last year's bill, referred to as the FDA and FAA 
defenses, which would have prevented punitive damages for instances in 
which certain classes of products such as drugs, medical devices, or 
certain types of aircraft had been certified by the Federal Government 
as safe. While I remain supportive of the concept of a Government 
standards defense, nevertheless, a number of Senators expressed 
reservation during last year's debate about this provision, and we have 
accommodated those concerns by removing the provision.
  Another change in this year's legislation concerns the statute of 
repose which we have slightly modified to include a category of 
products known as durable goods used in the workplace. Last year's bill 
was restricted to workplace capital goods, a slightly narrower 
category. Workplace durable goods are defined as having an economic 
lifespan of 3 years, or being depreciable under the Tax Code. The 
workplace distinction, identical to last year's bill, preserves the 
intent of increasing incentives for employers to maintain the safety of 
equipment used in the place of employment, rather than shifting that 
responsibility off to a manufacturer even after the useful life of the 
product in question has expired. In addition, we have moved the statute 
of repose period to 20 years. Last year it was 25 years. People will 
say, well, that is 5 years less. Well, it may be, but it is still 
longer than any State statute of repose anywhere in the Nation by at 
least 5 years. I think the average is around 10 to 12 years. One State 
has 15 years. Ours is 20 years. We think that is trying to lean a 
little bit toward the consumer.
  The third significant change made prior to introduction of this 
year's bill concerns the addition of a provision that had been part of 
last year's House companion bill that requires a reduction of a 
claimant's award due to unforeseeable misuse or alteration of the 
product. For example, if someone purchases a hair dryer that has 
attached to it a large warning label stating ``please do not use this 
in the bath tub,'' and the purchaser immediately uses the hair dryer in 
the bath tub with probable adverse consequences, it does not make sense 
to hold the manufacturer liable for such misuse, and this provision 
would prevent that.
  In addition to the changes made prior to introduction, several 
substantive changes were made in the Commerce Committee markup of the 
bill itself. First, we incorporated a bill, S. 303, the Biomaterials 
Access Assurance Act, introduced by Senator Lieberman and Senator 
McCain, as title II of our committee-reported product liability bill. 
This title of the bill is designed to ensure that needed raw materials 
are available to the manufacturers of medical devices by limiting the 
liability for firms that supply biomaterials. The title only limits 
liability for suppliers who have done nothing wrong. The ability of 
consumers to recover from negligent device manufacturers is preserved.
  We made several other substantive changes in the committee markup. We 
modified our product seller provision to extend protection to blameless 
rental and leasing companies. This will address the fact that in 11 
States car rental companies can be forced to pay for damage caused by 
people who rent their cars, even though the car rental companies 
obviously did not make the car and did not do anything wrong. We made a 
change to the statute of repose that will ensure that manufacturers 
keep their promise by enabling injured workers to sue for damage caused 
by products over 20 years old if the manufacturers guaranteed their 
product's safety for a longer period.
  Finally, we modified our alternative dispute resolution provision 
which gives States an incentive to create proplaintiff, voluntary, 
nonbinding arbitration mechanisms.
  This provision contains a penalty for defendants who unreasonably 
refuse to participate in the arbitration. A criticism was raised during 
our committee hearings on the bill that greater specificity was needed 
for the definition of unreasonable refusal, so a set of factors was 
added to address that concern.
  Mr. President, I will have a lot more to say about the substance of 
the bill as this debate unfolds, but I know there is at least one other 
Senator who 
[[Page S5595]] wishes to speak, so I will keep my remarks brief. Let me 
conclude by stating the reasons we must pass product liability reform 
this year after all of these years.
  Under our current system, injured consumers often find it impossible 
to get just and prompt resolution. Just as frequently, blameless 
manufacturers are forced to spend thousands of dollars on baseless 
lawsuits. The system frequently allows negligent companies to avoid 
penalties and even rewards undeserving plaintiffs.
  Product liability law should deter wasteful suits and discipline 
culpable practices, but not foster hours of waste and endless, endless, 
endless litigation. The adverse effect of having a hodgepodge of rules 
is severe for everyone. In fact, is a rather major fact in American 
life, I might add.
  Injured persons and those who make products alike face a 55-unit 
roulette wheel when it comes to determining rights and 
responsibilities. The results hurt everyone.
  Injured persons have testified that they may be unable to obtain 
needed medical devices for their continued health and well-being, and 
there is a lot of very powerful testimony on that front. Manufacturers 
have indicated that good and useful products are not placed on the 
market. The Brookings Institution has documented many instances where 
safety improvements were not made because of fears about uncertainties 
in our legal system, which brings up the sort of fascinating concept 
that manufacturers will decline to improve a product for fear that that 
lends the implication that the product that they previously had was 
somehow insufficient.
  It is now a fact of life in many places where they simply, therefore, 
do not improve the product so as not to make themselves liable to that 
interpretation, all of which, of course, is absolutely ridiculous. 
Included in the Brookings discussion were, for example, built-in child 
seats and air bags.
  As I have studied this complex area, I found incentives for 
preventing accidents are often not in the right place. In formulating 
our bill, we have striven to place incentive on the person who can best 
prevent an injury. This is a matter that has not been given adequate 
attention during past debates, but given the opportunity to carefully 
study our bill, Senators, I believe, will see that care and thought has 
been invested to assure that no wrongdoer goes unpunished and that 
positive prosafety behavior is encouraged.
  For all of these reasons I very much look forward to our debate. I 
welcome the criticisms, the insights, and the suggestions for 
improvements that I am sure our colleagues will contribute during the 
process of this debate.
  I yield the floor.

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