[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 917 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 917

         To establish procedures for product liability actions.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 13, 1995

  Mr. Oxley introduced the following bill; which was referred to the 
   Committee on the Judiciary and, in addition, to the Committee on 
Commerce, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
         To establish procedures for product liability actions.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Common Sense Product Liability 
Reform Act''.

SEC. 2. PREEMPTION.

    (a) General Rule.--This Act governs any product liability action 
brought in any State or Federal court against a manufacturer or product 
seller, on any theory, for harm caused by a product. A civil action 
brought against a manufacturer or product seller for commercial loss 
shall be governed only by applicable commercial or contract law.
    (b) State Law.--This Act supersedes State law only to the extent 
that State law applies to an issue covered by this Act. Any issue that 
is not covered by this Act shall be governed by otherwise applicable 
State or Federal law.
    (c) Construction.--Nothing in this Act shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any law,
            (2) supersede or affect any Federal law, except the Federal 
        Employees Compensation Act and the Longshoremen's and 
        Harborworker's Compensation Act,
            (3) waive or affect any defense of sovereign immunity 
        asserted by the United States,
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation,
            (5) 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
            (6) supersede any statute or common law which creates a 
        cause of action for civil damages or civil penalties, cleanup 
        costs, injunctions, restitution, cost recovery, punitive 
        damages, or any other form of relief for contamination or 
        pollution of the environment or the threat of such 
        contamination or pollution.
For purposes of paragraph (6), the term ``environment'' has the meaning 
given to such term in section 101(8) of the Comprehensive Environmental 
Response, Compensation, and Liability Act of 1980 (42 U.S.C. 9601(8)).
    (d) Vaccine Injury.--
            (1) General rule.--To the extent that title XXI of the 
        Public Health Service Act establishes a Federal rule of law 
        applicable to a civil action brought for a vaccine-related 
        injury or death--
                    (A) this Act does not affect the application of the 
                rule of law to such an action, and
                    (B) any rule of law prescribed by this Act in 
                conflict with a rule of law of such title XXI shall not 
                apply to such an action.
            (2) Applicability.--If there is an aspect of a civil action 
        brought for a vaccine-related injury or death to which a 
        Federal rule of law under title XXI of the Public Health 
        Service Act does not apply, then this Act or otherwise 
applicable law (as determined under this section) will apply to such 
aspect of such action.
    (e) Drugs and Devices.--
            (1) General rule.--A product liability action may not be 
        brought against a manufacturer or product seller of a drug (as 
        defined in section 201(g)(1) of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 321(g)(1)) or medical device (as 
        defined in section 201(h) of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. (h)) which caused the claimant's harm 
        where--
                    (A) such drug or device was subject to premarket 
                approval by the Food and Drug Administration with 
                respect to the safety of the formulation or performance 
                of the aspect of such drug or device which caused the 
                claimant's harm or the adequacy of the packaging or 
                labeling of such drug or device, and such drug was 
                approved by the Food and Drug Administration; or
                    (B) the drug is generally recognized as safe and 
                effective pursuant to conditions established by the 
                Food and Drug Administration and applicable 
                regulations, including packaging and labeling 
                regulations.
            (2) Exception.--Paragraph (1) shall not apply in any case 
        in which the defendant, before or after premarket approval of a 
        drug or device--
                    (A) intentionally and wrongfully withheld from or 
                misrepresented to the Food and Drug Administration 
                information concerning such drug or device required to 
                be submitted under the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 301 et seq.) or section 351 of the 
                Public Health Service Act (42 U.S.C. 262) that is 
                material and relevant to the harm suffered by the 
                claimant, or
                    (B) made an illegal payment to an official or 
                employee of the Food and Drug Administration for the 
                purpose of securing or maintaining approval of such 
                drug or device.

SEC. 3. PRODUCT SELLER LIABILITY.

    (a) General Rule.--Except as provided in subsection (b), in a 
product liability action, a product seller shall be liable to a 
claimant for harm 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,
            (2)(A) the product seller made an express warranty 
        applicable to the product which allegedly caused the harm 
        complained of, independent of any express warranty made by the 
        manufacturer as to the same product,
            (B) the product failed to conform to the warranty, and
            (C) the failure of the product to conform 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 a 
product based upon an alleged failure to inspect a product where there 
was no reasonable opportunity 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) Special Rule.--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 the State in which the claimant brings the 
        action, or
            (2) the court determines that the claimant would be unable 
        to enforce a judgment against the manufacturer.

SEC. 4. COMPLIANCE WITH FEDERAL AGENCY STANDARD.

    (a) In General.--If a product liability action is brought against a 
manufacturer for harm caused by a product of the manufacturer, the 
manufacturer shall have a complete defense to such action if the 
manufacturer can show that as produced by the manufacturer the product 
complied with a product standard established by a Federal agency or 
that the label on such product complied with a labeling requirement of 
a Federal agency, except that if the plaintiff in such action can show 
that the manufacturer withheld information which directly relates to 
the harm caused by the product, compliance with such label requirement 
shall not be a defense for the manufacturer.
    (b) Voluntary Standards.--If a product liability action is brought 
against a manufacturer for harm caused by a product of the 
manufacturer, the manufacturer shall have a complete defense to such 
action if the manufacturer can show that as produced by the 
manufacturer the product complied with a voluntary product standard 
established by a Federal agency unless the plaintiff in the action can 
show that the harm was caused by the gross negligence or maliciousness 
of the manufacturer.

SEC. 5. STANDARDS OF LIABILITY.

    (a) Strict Liability.--A manufacturer or product seller may be held 
liable in a product liability action for harm caused by a product only 
if the manufacturer or product seller was at fault in connection with 
such harm.
    (b) Liability Defenses.--In a product liability action the defenses 
of contributory negligence, comparative negligence, assumption of risk, 
and product alteration or misuse shall be available to the defendant to 
the action.
    (c) Several Liability for Noneconomic Damages.--In any product 
liability action, the liability of each manufacturer or seller of the 
product involved in such action shall be several only and shall not be 
joint for noneconomic damages. Such manufacturer or seller shall be 
liable only for the amount of noneconomic damages allocated to such 
manufacturer or seller in direct proportion to such manufacturer's or 
such seller's percentage of responsibility as determined by the trier 
of fact.

SEC. 6. DAMAGES.

    (a) Non-Economic Damages.--In a product liability action the award 
of non-economic damages may not exceed the greater of $250,000 or an 
amount equal to twice the actual economic harm caused.
    (b) Installment Payment.--Damages awarded in a product liability 
action may be paid, at the request of the defendant and with the 
consent of the court, in installments not greater than 1 year apart. 
Such installment payments would cease if the plaintiff in the action 
dies leaving no dependents.
    (c) Punitive Damages.--
            (1) General limitation.--Punitive damages may, to the 
        extent permitted by applicable State law, be awarded against a 
        manufacturer or product seller in a product liability action if 
        the claimant establishes by clear and convincing evidence that 
        the harm suffered was the result of conduct manifesting actual 
        malice.
            (2) Limitation on amount.--The amount of punitive damages 
        that may be awarded for a claim in any civil action subject to 
        this section shall not exceed 3 times the amount awarded to the 
        claimant for the economic injury on which such claim is based, 
        or $250,000, whichever is greater.
            (3) Fund.--If punitive damages are awarded in a product 
        liability action, 85 percent of such damages shall be 
        deposited--
                    (A) if the action was brought in a Federal court, 
                in a fund in the United States Treasury available for 
                product liability actions brought in Federal courts, or
                    (B) if the action was brought in a State court, in 
                the treasury of the State in which the product harm 
                involved in such action occurred.

SEC. 7. ALCOHOL AND DRUG DEFENSE.

    (a) General Rule.--In any product liability action, it shall be a 
complete defense to such action that--
            (1) the claimant was intoxicated or was under the influence 
        of intoxicating alcohol or any drug, and
            (2) the claimant as a result of such intoxication or the 
        influence of the alcohol or drug was more than 50 percent 
        responsible for causing the accident or event which resulted in 
        such claimant's harm.
    (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 applicable State law, and
            (2) the term ``drug'' means any controlled substance 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. 8. TIME LIMITATIONS ON LIABILITY.

    (a) Statute of Limitations.--A product liability action shall be 
brought within 2 years after the time the individual who would be the 
claimant in such action discovered, or in the exercise of reasonable 
diligence attained the age of 18 and should have discovered, the harm 
and its cause, except that any such action of a person under legal 
disability may be filed within 2 years after the disability ceases. If 
the commencement of such an action is stayed or enjoined, the running 
of the statute of limitations under this section shall be suspended for 
the period of the stay or injunction.
    (b) Statute of Repose for Capital Goods.--A product liability 
action for harm caused by a product which is a capital good shall be 
barred unless the complaint is served and filed within 15 years of the 
date of delivery of the product to its first purchaser or lessee who 
was not engaged in the business of selling or leasing the product or of 
using the product as a component in the manufacture of another product. 
This subsection shall apply only if--
            (1) the court determines that the claimant has received or 
        would be eligible to receive compensation under any State or 
        Federal worker's compensation law for harm caused by the 
        product, and
            (2) the harm caused by the product did not include chronic 
        illness.

SEC. 9. WORKERS' COMPENSATION OFFSET.

    (a) General Rule.--
            (1) Subrogation.--If a product liability action has been 
        brought pursuant to this Act for harm caused to an employee by 
        a product, the employer of such employee or the workers' 
        compensation insurer of such employer shall have a right of 
        subrogation against the manufacturer of such product or the 
        product seller to recover the sum of the amount of workers' 
        compensation benefits to which such employee is or would be 
        entitled as determined by the appropriate workers' compensation 
        authority. To assert such a right of subrogation, an employer 
        or workers' compensation insurer of an employer shall provide 
        written notice that it is asserting a right of subrogation to 
        the court in which such product liability action has been 
        brought. The employer or workers' compensation insurer of such 
employer shall not be required to be a necessary and proper party to 
such product liability action.
            (2) Right of subrogation against a payment.--In any product 
        liability action brought by an employee against a manufacturer 
        of a product or a product seller or in any settlement of such 
        an action, the employer of such employee or the workers' 
        compensation insurer of such employer shall have an opportunity 
        to participate in such action and to assert a right of 
        subrogation upon any payment made by such manufacturer or 
        product seller in satisfaction of a judgment in such action, in 
        connection with a settlement of such action, as consideration 
        for a covenant not to sue, or otherwise. Such employee shall 
        not make any settlement of such an action with, or accept any 
        payment from, such manufacturer or product seller without the 
        written consent of such employee's employer. No release to or 
        agreement with such manufacturer or product seller made by such 
        employee shall be valid or enforceable for any purpose without 
        such consent unless such employer or workers' compensation 
        insurer of such employer is made whole for all workers' 
        compensation benefits paid to such employee.
            (3) Claimant's harm.--In a product liability action brought 
        for harm from a product by an employee, the manufacturer of 
        such product or a product seller may allege to the trier of 
        fact that the claimant's harm was caused by the fault of the 
        claimant's employer or a coemployee of the claimant. If the 
        manufacturer of a product or a product seller makes such an 
        allegation, the manufacturer or product seller shall provide 
        written notice to the employer involved in such allegation. 
        Such employer shall have the right to appear in such product 
        liability action, to be represented, to introduce evidence, to 
        cross-examine adverse witnesses, and to argue to the trier of 
        fact on such allegation as though such employer were a party to 
        such product liability action. The issue of the cause of the 
        claimant's harm shall be the last issue submitted to the trier 
        of fact in such product liability action. If the trier of fact 
        finds by clear and convincing evidence that the claimant's harm 
        was caused by the fault of the claimant's employer or a 
        coemployee of such claimant, the court shall reduce the damages 
        awarded against such manufacturer or product seller and, except 
        as provided in the last sentence, correspondingly the 
        subrogation lien of such employer by the sum of the amount paid 
        as workers' compensation benefits to such employee and the 
        present value of all workers' compensation benefits to which 
        such employee is or would be entitled for such harm as 
        determined by the appropriate workers' compensation authority. 
        Such manufacturer or product seller shall have no further 
        right, by way of contribution or otherwise, against such 
        employer with respect to such harm. Such employer shall not 
        lose its right of subrogation if the employee's harm was the 
        result of an intentional tort committed against the claimant by 
        a coemployee of the claimant or for acts committed by such 
        coemployee outside the scope of normal work practices.
            (4) Reimbursement.--If in a product liability action 
        brought by an employee for harm from a product the judgment is 
        that the claimant's harm was not caused by the fault of the 
        claimant's employer or a coemployee of the claimant, the 
        manufacturer of such product or product seller shall reimburse 
        such employer or workers' compensation insurer of such employer 
        for reasonable attorney's fees and court costs, as determined 
        by the court, incurred in the resolution of the subrogation 
        claim.
    (b) Third Party Tortfeasor.--In any product liability action 
brought by an employee in which damages are sought for harm for which 
the person injured is or would have been entitled to receive 
compensation under any State or Federal workers' compensation law, no 
third party tortfeasor may maintain any action for implied indemnity or 
contribution against such employee's employer, any coemployee of such 
employee, or the exclusive representative of such employee.
    (c) Construction.--Nothing in this Act shall be construed to affect 
any provision of a State or Federal workers' compensation law--
            (1) which prohibits--
                    (A) a person who is or would have been entitled to 
                receive compensation under such law, or
                    (B) any other person whose claim for benefits under 
                such law would have been derivative from the claim of 
                the person described in subparagraph (A),
        from recovering for harm caused by a product in any product 
        liability action other than a workers' compensation claim 
        against a present or former employer or workers' compensation 
        insurer of such an employer, any coemployee, or the exclusive 
        representative of the person who is injured, or
            (2) which permits recovery based on a claim of an 
        intentional tort by an employer or any coemployee if the 
        claimant's harm was caused by such a tort.
    (d) Stay Pending Compensation Determination.--In any product 
liability action brought by an employee in which damages are sought for 
harm for which the person injured is or would have been entitled to 
receive compensation under any State or Federal workers' compensation 
law, such action shall, on application of the claimant made at the 
claimant's sole election, be stayed until such time as the full amount 
payable as workers' compensation benefits has been finally determined 
under such workers' compensation law. If the claimant elects to bring a 
product liability action and not stay the claimant's action until the 
full amount of such benefits has been finally determined by the 
appropriate workers' compensation authority, the court shall determine 
the amount of workers' compensation benefits that has been or would be 
payable if the amount had been determined by such an authority.
    (e) Effect of Verdict.--The verdict of any court in a product 
liability action shall not be used as evidence in any proceeding 
relating to workers' compensation.
    (f) Written Notice.--A claimant in a product liability action who 
is or may be eligible to receive compensation under any State or 
Federal workers' compensation law shall provide written notice of the 
filing of the product liability action to the claimant's employer 
within 30 days of such filing. The written notice shall include 
information regarding the date and court in which the product liability 
action was filed, the names and addresses of all plaintiffs and 
defendants appearing on the complaint, the court docket number if 
available, and a copy of the complaint which was filed in the product 
liability action.

SEC. 10. DEFINITIONS.

    For purposes of this Act--
            (1) the term ``claimant'' means any person who brings a 
        product liability action and any person on whose behalf such an 
        action is brought, including such person's decedent if such an 
        action is brought through or on behalf of an estate or such 
        person's legal representative if it is brought through or on 
        behalf of a minor or incompetent,
            (2) the term ``malice'' means conduct that is either--
                    (A) specifically intended to cause serious personal 
                injury, or
                    (B) carried out with both a flagrant indifference 
                to the rights of the claimant and an awareness that 
                such conduct is likely to result in serious personal 
                injury,
            (3) with respect to a product, the term ``manufacturer'' 
        means--
                    (A) any person who is engaged in a business to 
                produce, create, make, or construct the product and who 
                designs or formulates the product or has engaged 
                another person to design or formulate the product,
                    (B) a product seller of the product who, before 
                placing the product in the stream of commerce--
                            (i) designs or formulates or has engaged 
                        another person to design or formulate an aspect 
                        of the product after the product was initially 
                        made by another, and
                            (ii) produces, creates, makes, or 
                        constructs such aspect of the product, or
                    (C) any product seller not described in 
                subparagraph (B) which holds itself out as a 
                manufacturer to the user of the product,
            (4) the term ``product''--
                    (A) means any object, substance, mixture, or raw 
                material in a gaseous, liquid, or solid state--
                            (i) which is capable of delivery itself, 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, and
                    (B) 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,
            (5) the term ``product seller''--
                    (A) means a person--
                            (i) who sells, distributes, leases, 
                        prepares, blends, packages, or labels a product 
                        or is otherwise involved in placing a product 
                        in the stream of commerce, or
                            (ii) who installs, repairs, or maintains 
                        the harm-causing aspect of a product, and
                    (B) does not include--
                            (i) a manufacturer,
                            (ii) a seller or lessor of real property,
                            (iii) 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,
                            (iv) any person who acts only in a 
                        financial capacity with respect to the sale of 
                        a product, or
                            (v) any person who leases a product under a 
                        lease arrangement in which the selection, 
                        possession, maintenance, and operation of the 
                        product are controlled by a person other than 
                        the lessor,
            (6) the term `punitive damages' means damages in addition 
        to compensation for actual injury suffered, for purposes of 
        imposing punishment for conduct engaged in with malice and to 
        deter similar future conduct, but such term does not include 
        compensation for actual injury, and
            (7) the term ``State'' means any State of the United 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the Northern 
        Mariana Islands, the Trust Territory of the Pacific Islands, 
        and any other territory or possession of the United States, or 
        any political subdivision thereof.

SEC. 11. EFFECTIVE DATE.

    This Act shall apply with respect to product liability actions 
which are brought after the date of the enactment of this Act.
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