SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Common Sense Legal
Standards Reform Act of 1995’’.
TITLE I—PRODUCT LIABILITY
REFORM
SECTION 101. SHORT TITLE.
This title may be cited as the ‘‘Common Sense Product
Liability Reform Act of 1995’’.
SEC. 102. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that—
(1) the manufacture and distribution of goods in
interstate commerce is to a large extent a national ac-
tivity which affects national interests in a variety of
important ways;
(2) in recent years, the free flow of products in
interstate commerce has been increasingly burdened
by product liability law;
(3) as a result of this burden, consumers have
been adversely affected through the withdrawal of
products and producers from the national market,
and from excessive liability costs passed on to them
through higher prices;
(4) the rules of product liability law in recent
years have evolved rapidly and inconsistently within
and among the several States, such that the body of
product liability law prevailing in this nation today
is complex, contradictory, and uncertain;
(5) the unpredictability of product liability
awards and doctrines are inequitable to both plain-
tiffs and defendants and have added considerably to
the high cost of liability insurance, making it difficult
for producers and insurers to protect their liability
with any degree of confidence;
(6) the recent explosive growth in product liabil-
ity actions and punitive damage awards jeopardizes
the financial well-being of many industries, and is a
particular threat to the viability of the nation’s small
businesses;
(7) the extraordinary costs of the product liabil-
ity system undermine the ability of American indus-
try to compete internationally, and is costing the loss
of jobs and productive capital; and
(8) because of the national scope of the manufac-
ture and distribution of most products, it is not pos-
sible for the individual states to enact laws that fully
and effectively respond to these problems.
(b) PURPOSES.—Based upon the powers contained in
Article I, clause 3 of the United States Constitution, the
purposes of this title are to promote the free flow of goods
in interstate commerce—
(1) by establishing certain uniform legal prin-
ciples which provide a fair balance between the inter-
ests of product users, manufacturers, and product
sellers,
(2) by placing reasonable limits on product li-
ability law,
(3) by ensuring that product liability law oper-
ates to compensate persons injured by the wrongdoing
of others,
(4) by reducing the unacceptable transactions
costs and delays which harm both plaintiffs and de-
fendants,
(5) by allocating responsibility for harm to those
in the best position to prevent such harm, and
(6) by establishing greater predictability in
product liability actions.
SEC. 103. FEDERAL CAUSE OF ACTION PRECLUDED.
The district courts of the United States shall not have
jurisdiction pursuant to this title based on section 1331 or
1337 of title 28, United States Code.
SEC. 104. APPLICABILITY AND PREEMPTION.
(a) PREEMPTION.—This title governs any product li-
ability action brought in any State or Federal court, on
any theory for harm caused by a product. A civil action
brought for commercial loss shall be governed only by appli-
cable commercial or contract law.
(b) RELATIONSHIP TO STATE LAW.—This title super-
sedes State law only to the extent that State law applies
to an issue covered by this title. Any issue that is not gov-
erned by this title shall be governed by otherwise applicable
State or Federal law.
SEC. 105. LIABILITY RULES APPLICABLE TO PRODUCT SELL-
ERS.
(a) GENERAL RULE.—Except as provided in sub-
section (b), in any product liability action, a product seller
other than a manufacturer shall be liable to a claimant only
if the claimant establishes that—
(1)(A) the product which allegedly caused the
harm complained of was sold by the product seller;
(B) the product seller failed to exercise reasonable
care with respect to the product; and (C) such failure
to exercise reasonable care was a proximate cause of
the claimant’s harm; or
(2)(A) the product seller made an express war-
ranty applicable to the product which allegedly
caused the harm complained of, independent of any
express warranty made by a manufacturer as to the
same product; (B) the product failed to conform to the
warranty; and (C) the failure of the product to con-
form to the warranty caused the claimant’s harm; or
(3) the product seller engaged in intentional
wrongdoing as determined under applicable State law
and such intentional wrongdoing was a proximate
cause of the harm complained of by the claimant.
For purposes of paragraph (1)(B), a product seller shall
not be considered to have failed to exercise reasonable care
with respect to the product based upon an alleged failure
to inspect a product where there was no reasonable oppor-
tunity to inspect the product in a manner which would,
in the exercise of reasonable care, have revealed the aspect
of the product which allegedly caused the claimant’s harm.
(b) EXCEPTION.—In a product liability action, a
product seller shall be liable for harm to the claimant
caused by such product as if the product seller were the
manufacturer of such product if—
(1) the manufacturer is not subject to service of
process under the laws of any State in which the ac-
tion might have been brought; or
(2) at any point before or after entry of judg-
ment, the court determines that the claimant would be
unable to enforce a judgment against the manufac-
turer.
SEC. 106. DEFENSE BASED ON CLAIMANT’S USE OF INTOXI-
CATING ALCOHOL OR DRUGS.
(a) GENERAL RULE.—In any product liability action,
it shall be a complete defense to such action if—
(1) the claimant was intoxicated or was under
the influence of intoxicating alcohol or any drug when
the accident or other event which resulted in such
claimant’s harm occurred; and
(2) the claimant, as a result of the influence of
the alcohol or drug, was more than 50 percent respon-
sible for such accident or other event.
(b) CONSTRUCTION.—For purposes of subsection (a)—
(1) the determination of whether a person was
intoxicated or was under the influence of intoxicating
alcohol or any drug shall be made pursuant to appli-
cable State law; and
(2) the term ‘‘drug’’ means any controlled sub-
stance as defined in the Controlled Substances Act (21
U.S.C. 802(6)) that has been taken by the claimant
other than in accordance with the terms of a lawfully
issued prescription.
SEC. 107. MISUSE OR ALTERATION.
(a) GENERAL RULE.—Except as provided in sub-
section (c), in a product liability action, the damages for
which a manufacturer or product seller is otherwise liable
under State law shall be reduced by the percentage of re-
sponsibility for the claimant’s harm attributable to misuse
or alteration of a product by any person if the manufac-
turer or product seller establishes by a preponderance of the
evidence that such percentage of the claimant’s harm was
proximately caused by—
(1) a use or alteration of a product in violation
of, or contrary to, the manufacturer’s or product sell-
er’s express warnings or instructions if the warnings
or instructions are adequate as determined pursuant
to applicable State law, or
(2) a use or alteration of a product involving a
risk of harm which was known or should have been
known by the ordinary person who uses or consumes
the product with the knowledge common to the class
of persons who used or would be reasonably antici-
pated to use the product.
(b) STATE LAW.—Notwithstanding section 104(b) of
this Act, subsection (a) supersedes State law concerning
misuse or alteration of a product only to the extent that
State law is inconsistent.
(c) WORKPLACE INJURY.—Notwithstanding subsection
(a), the damage for which a manufacturer or product seller
is otherwise liable under State law shall not be reduced by
the percentage of responsibility for the claimant’s harm at-
tributable to misuse or alteration of the product by the
claimant’s employer or any co-employee who is immune
from suit by the claimant pursuant to the State law appli-
cable to workplace injuries.
SEC. 108. SEVERAL LIABILITY FOR NONECONOMIC LOSS.
In any product liability action, the liability of each
defendant for noneconomic loss shall be several only and
shall not be joint. Each defendant shall be liable only for
the amount of noneconomic loss attributable to such defend-
ant in direct proportion to such defendant’s proportionate
share of fault or responsibility for the claimant’s harm, as
determined by the trier of fact.
SEC. 109. STATUTE OF REPOSE.
A product liability action shall be barred unless the
complaint is served and filed within 15 years after the time
of delivery of the product. For the purposes of this section,
the term ‘‘time of delivery’’ means the time when a product
is delivered to its first purchaser or lessee who was not in-
volved in the business of manufacturing or selling such
product or using it as a component part of another product
to be sold. This section applies only if the harm caused by
a product did not include chronic illness. This section does
not affect the limitations period established by the General
Aviation Revitalization Act of 1994. This section does not
bar a product liability action involving a manufacturer or
product seller who made an express warranty in writing
as to the safety of the specific product involved which was
longer than 15 years.
SEC. 110. FOREIGN-MADE PRODUCTS.
This title shall not apply to a product liability action
involving a product or component part of a product, manu-
factured outside the United States, unless the manufacturer
of such product or component part has appointed an agent
in the United States for service of process from anywhere
in the United States.
SEC. 111. DEFINITIONS.
As used in this title:
(1) The term ‘‘claimant’’ means any person who
brings a product liability action and any person on
whose behalf such an action is brought. If such an ac-
tion is brought through or on behalf of an estate, the
term includes the claimant’s decedent. If such action
is brought through or on behalf of a minor or incom-
petent, the term includes the claimant’s legal guard-
ian.
(2) The term ‘‘commercial loss’’ means any loss
of or damage to a product itself incurred in the course
of the ongoing business enterprise consisting of pro-
viding goods or services for compensation.
(3) The term ‘‘economic loss’’ means any pecu-
niary loss resulting from harm (including the loss of
earnings, medical expense loss, replacement services
loss, loss due to death, burial costs, and loss of busi-
ness or employment opportunities) to the extent recov-
ery for such loss is allowed under applicable State
law.
(4) The term ‘‘harm’’ means any physical in-
jury, illness, disease, or death or damage to property
caused by a product. The term does not include com-
mercial loss, or loss or damage to a product itself.
(5) The term ‘‘manufacturer’’ means—
(A) any person who is engaged in a busi-
ness to produce, create, make, or construct any
product (or component part of a product) and
who (i) designs or formulates the product (or
component part of the product), (ii) has engaged
another person to design or formulate the prod-
uct (or component part of the product), or (iii)
uses the design or formulation of the product de-
veloped by another person;
(B) a product seller, but only with respect
to those aspects of a product (or component part
of a product) which are created or affected when,
before placing the product in the stream of com-
merce, the product seller produces, creates,
makes, or constructs and designs or formulates,
or has engaged another person to design or for-
mulate, an aspect of a product (or component
part of a product) made by another; or
(C) any product seller not described in sub-
paragraph (B) which holds itself out as a manu-
facturer to the user of the product.
(6) The term ‘‘noneconomic loss’’ means subjec-
tive, nonmonetary loss resulting from harm, including
pain, suffering, inconvenience, mental suffering, emo-
tional distress, loss of society and companionship, loss
of consortium, injury to reputation, and humiliation.
(7) The term ‘‘person’’ means any individual,
corporation, company, association, firm, partnership,
society, joint stock company, or any other entity (in-
cluding any governmental entity).
(8)(A) The term ‘‘product’’ means any object,
substance, mixture, or raw material in a gaseous, liq-
uid, or solid state—
(i) which is capable of delivery itself or as
an assembled whole, in a mixed or combined
state, or as a component part or ingredient;
(ii) which is produced for introduction into
trade or commerce;
(iii) which has intrinsic economic value;
and
(iv) which is intended for sale or lease to
persons for commercial or personal use.
(B) The term does not include—
(i) human tissue, human organs, human
blood, and human blood products; or
(ii) electricity, water delivered by a utility,
natural gas, or steam.
(9) The term ‘‘product liability action’’ means a
civil action brought on any theory for harm caused
by a product or product use.
(10) The term ‘‘product seller’’ means a person
who, in the course of a business conducted for that
purpose, sells, distributes, rents, leases, prepares,
blends, packages, labels a product or is otherwise in-
volved in placing a product in the stream of com-
merce, or who installs, repairs, or maintains the
harm-causing aspect of a product. The term does not
include—
(A) a seller or lessor of real property;
(B) a provider of professional services in
any case in which the sale or use of a product
is incidental to the transaction and the essence
of the transaction is the furnishing of judgment,
skill, or services; or
(C) any person who—
(i) acts in only a financial capacity
with respect to the sale of a product; or
(ii) leases a product under a lease ar-
rangement in which the selection, posses-
sion, maintenance, and operation of the
product are controlled by a person other
than the lessor.
(11) The term ‘‘State’’ means any State of the
United States, the District of Columbia, Puerto Rico,
the Northern Mariana Islands, the Virgin Islands,
Guam, American Samoa, and any other territory or
possession of the United States, or any political sub-
division of any of the foregoing.
TITLE II—PUNITIVE DAMAGES
REFORM
SEC. 201. PUNITIVE DAMAGES.
(a) GENERAL RULE.—Punitive damages may, to the
extent permitted by applicable State law, be awarded in
any civil action for harm in any Federal or State court
against a defendant if the claimant establishes by clear and
convincing evidence that the harm suffered was result of
conduct—
(1) specifically intended to cause harm, or
(2) conduct manifesting a conscious, flagrant in-
difference to the rights of others.
(b) PROPORTIONAL AWARDS.—The amount of punitive
damages that may be awarded to a claimant in any civil
action subject to this title shall not exceed 3 times the
amount of damages awarded to the claimant for the eco-
nomic loss on which the claimant’s action is based, or
$250,000, whichever is greater. The requirements of this
subsection shall be applied by the court and shall not be
disclosed to the jury.
(c) APPLICABILITY AND PREEMPTION.—Except as pro-
vided in section 301, this title shall apply to any civil ac-
tion brought in any Federal or State court on any theory
where punitive damages are sought. This title does not cre-
ate a cause of action for punitive damages in any jurisdic-
tion that does not authorize such actions.
(d) BIFURCATION AT EITHER PARTY’S REQUEST.—At
the request of either party, the trier of fact shall consider
in a separate proceeding whether punitive damages are to
be awarded and the amount of such award. If a separate
proceeding is requested, evidence relevant only to the claim
of punitive damages, as determined by applicable State law,
shall be inadmissible in any proceeding to determine wheth-
er compensatory damages are to be awarded.
SEC. 202. DEFINITIONS.
As used in this title:
(1) The term ‘‘claimant’’ means any person who
brings a civil action and any person on whose behalf
such an action is brought; if such action is brought
through or on behalf of an estate, the term includes
the claimant’s decedent and if such action is brought
through or on behalf of a minor or incompetent, the
term includes the claimant’s legal guardian.
(2) The term ‘‘clear and convincing evidence’’ is
that measure or degree of proof that will produce in
the mind of the trier of fact a firm belief or conviction
as to the truth of the allegations sought to be estab-
lished. The level of proof required to satisfy such
standard is more than that required under preponder-
ance of the evidence, but less than that required for
proof beyond a reasonable doubt.
(3) The term ‘‘economic loss’’ means any pecu-
niary loss resulting from harm (including the loss of
earnings, medical expense loss, replacement services
loss, loss due to death, burial costs, and loss of busi-
ness or employment opportunities), to the extent re-
covery for such loss is allowed under applicable State
law.
(4) The term ‘‘harm’’ means any legally cog-
nizable wrong or injury for which punitive damages
may be imposed.
(5) The term ‘‘punitive damages’’ means dam-
ages awarded against any person or entity to punish
or deter such person or entity, or others, from engag-
ing in similar behavior in the future.
(6) The term ‘‘State’’ means any State of the
United States, the District of Columbia, Puerto Rico,
the Northern Mariana Islands, the Virgin Islands,
Guam, American Samoa, and any other territory or
possession of the United States, or any political sub-
division of any of the foregoing.
TITLE III—EFFECT ON OTHER
LAW; EFFECTIVE DATE
SEC. 301. EFFECT ON OTHER LAW.
Nothing in title I or II shall be construed to—
(1) waive or affect any defense of sovereign im-
munity asserted by any State under any law;
(2) supersede any Federal law;
(3) waive or affect any defense of sovereign im-
munity asserted by the United States;
(4) affect the applicability of any provision of
chapter 97 of title 28, United States Code;
(5) preempt State choice-of-law rules with re-
spect to claims brought by a foreign nation or a citi-
zen of a foreign nation;
(6) affect the right of any court to transfer venue
or to apply the law of a foreign nation or to dismiss
a claim of a foreign nation or of a citizen of a foreign
nation on the ground of inconvenient forum; or
(7) supersede any Federal law that prescribes a
specific regimen for punitive damages.
SEC. 302. EFFECTIVE DATE.
Titles I and II shall apply with respect to actions
which are commenced after the date of the enactment of this
Act.
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