alties, fines, or treble damages that are assessed or 
enforced by an agency of State or Federal govern-
ment pursuant to a State or Federal statute. 
(9) SMALL BUSINESS.— 
(A) IN GENERAL.—The term ‘‘small busi-
ness’’ means any unincorporated business, or 
any partnership, corporation, association, unit 
of local government, or organization that has 
fewer than 50 full-time employees as deter-
mined on the date the civil action involving the 
small business is filed. 
(B) CALCULATION
OF
NUMBER
OF
EM-
PLOYEES.—For purposes of subparagraph (A), 
the number of employees of a subsidiary of a 
wholly owned corporation includes the employ-
ees of— 
(i) a parent corporation; and 
(ii) any other subsidiary corporation 
of that parent corporation. 
(10) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Northern Mariana Is-
lands, any other territory or possession of the 
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United States, or any political subdivision of any 
such State, commonwealth, territory, or possession. 
SEC. 4. LIMITATION ON PUNITIVE DAMAGES FOR SMALL 
BUSINESSES. 
Except as provided in section 6, in any civil action 
against a small business, punitive damages may, to the 
extent permitted by applicable Federal or State law, be 
awarded against the small business only if the claimant 
establishes by clear and convincing evidence that conduct 
carried out by that defendant with a conscious, flagrant 
indifference to the rights or safety of others was the proxi-
mate cause of the harm that is the subject of the action. 
SEC. 5. LIMITATION ON JOINT AND SEVERAL LIABILITY 
FOR NONECONOMIC LOSS FOR SMALL BUSI-
NESSES. 
(a) GENERAL RULE.—Except as provided in section 
6, in any civil action against a small business, the liability 
of each defendant that is a small business, or the agent 
of a small business, for noneconomic loss shall be deter-
mined in accordance with subsection (b). 
(b) AMOUNT OF LIABILITY.— 
(1) IN GENERAL.—In any civil action described 
in subsection (a)— 
(A) each defendant described in that sub-
section shall be liable only for the amount of 
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noneconomic loss allocated to that defendant in 
direct proportion to the percentage of responsi-
bility of that defendant (determined in accord-
ance with paragraph (2)) for the harm to the 
claimant with respect to which that defendant 
is liable; and 
(B) the court shall render a separate judg-
ment against each defendant described in that 
subsection in an amount determined under sub-
paragraph (A). 
(2) PERCENTAGE
OF
RESPONSIBILITY.—For 
purposes of determining the amount of noneconomic 
loss allocated to a defendant under this section, the 
trier of fact shall determine the percentage of re-
sponsibility of each person responsible for the harm 
to the claimant, regardless of whether or not the 
person is a party to the action. 
SEC. 6. EXCEPTIONS TO LIMITATIONS ON LIABILITY. 
The limitations on liability under sections 4 and 5 
do not apply— 
(1) to any defendant whose misconduct— 
(A) constitutes— 
(i) a crime of violence; or 
(ii) an act of international terrorism; 
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(B) results in liability for damages relating 
to the injury to, destruction of, loss of, or loss 
of use of, natural resources described in— 
(i) section 1002(b)(2)(A) of the Oil 
Pollution 
Act 
of 
1990 
(33 
U.S.C. 
2702(b)(2)(A)); or 
(ii) section 107(a)(4)(C) of the Com-
prehensive Environmental Response, Com-
pensation, and Liability Act of 1980 (42 
U.S.C. 9607(a)(4)(C)); 
(C) involves— 
(i) a sexual offense, as defined by ap-
plicable State law; or 
(ii) a violation of a Federal or State 
civil rights law; 
(D) occurred at the time the defendant 
was under the influence (as determined under 
applicable State law) of intoxicating alcohol or 
a drug, and the fact that the defendant was 
under the influence was the cause of any harm 
alleged by the plaintiff in the subject action; or 
(2) to any cause of action which is brought 
under the provisions of title 31, United States Code, 
relating to false claims (31 U.S.C. 3729–3733) or to 
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any other cause of action brought by the United 
States relating to fraud or false statements. 
SEC. 7. PREEMPTION AND ELECTION OF STATE NON-
APPLICABILITY. 
(a) PREEMPTION.—Subject to subsection (b), this 
title preempts the laws of any State to the extent that 
State laws are inconsistent with this title. 
(b) ELECTION OF STATE REGARDING NONAPPLICA-
BILITY.—This title does not apply to any action in a State 
court against a small business in which all parties are citi-
zens of the State, if the State enacts a statute— 
(1) citing the authority of this subsection; 
(2) declaring the election of such State that this 
title does not apply as of a date certain to such ac-
tions in the State; and 
(3) containing no other provision. 
SEC. 8. EFFECTIVE DATE. 
This Act shall take effect with respect to any civil 
action commenced after the date of the enactment of this 
Act without regard to whether the harm that is the subject 
of the action occurred before such date. 
Æ 
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