[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 956 Reported in House (RH)]







104th CONGRESS
  1st Session
                                H. R. 956

                      [Report No. 104-64, Part 1]

   To establish legal standards and procedures for product liability 
                  litigation, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 15, 1995

  Mr. Hyde (for himself and Mr. Hoke) introduced the following bill; 
          which was referred to the Committee on the Judiciary

                             March 2, 1995

 Reported with an amendment and referred to the Committee on Commerce 
 for a period ending not later than March 7, 1995 for consideration of 
     such provisions of the bill and amendment as fall within the 
     jurisdiction of that committee pursuant to clause 1(e), rule X
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
    [For text of introduced bill, see copy of bill as introduced on 
                           February 15, 1995]

_______________________________________________________________________

                                 A BILL


 
   To establish legal standards and procedures for product liability 
                  litigation, and for other purposes.

    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 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 activity 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 plaintiffs 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 liability 
        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 liability system 
        undermine the ability of American industry to compete 
        internationally, and is costing the loss of jobs and productive 
        capital; and
            (8) because of the national scope of the manufacture and 
        distribution of most products, it is not possible 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 principles which 
        provide a fair balance between the interests of product users, 
        manufacturers, and product sellers,
            (2) by placing reasonable limits on product liability law,
            (3) by ensuring that product liability law operates to 
        compensate persons injured by the wrongdoing of others,
            (4) by reducing the unacceptable transactions costs and 
        delays which harm both plaintiffs and defendants,
            (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 liability 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 applicable commercial or contract law.
    (b) Relationship to State Law.--This title supersedes State law 
only to the extent that State law applies to an issue covered by this 
title. Any issue that is not governed by this title shall be governed 
by otherwise applicable State or Federal law.

SEC. 105. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS.

    (a) General Rule.--Except as provided in subsection (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 warranty 
        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 
        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 
the 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) 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 action might have been 
        brought; or
            (2) at any point before or after entry of judgment, the 
        court determines that the claimant would be unable to enforce a 
        judgment against the manufacturer.

SEC. 106. DEFENSE BASED ON CLAIMANT'S USE OF INTOXICATING 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 responsible 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 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. 107. MISUSE OR ALTERATION.

    (a) General Rule.--Except as provided in subsection (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 responsibility for the claimant's harm attributable 
to misuse or alteration of a product by any person if the manufacturer 
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 seller'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 
        anticipated 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 attributable 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 applicable 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 defendant 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 involved 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, manufactured 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 action 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 
        incompetent, the term includes the claimant's legal guardian.
            (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 providing goods or 
        services for compensation.
            (3) The term ``economic loss'' means any pecuniary loss 
        resulting from harm (including the loss of earnings, medical 
        expense loss, replacement services loss, loss due to death, 
        burial costs, and loss of business or employment opportunities) 
        to the extent recovery for such loss is allowed under 
        applicable State law.
            (4) The term ``harm'' means any physical injury, illness, 
        disease, or death or damage to property caused by a product. 
        The term does not include commercial loss, or loss or damage to 
        a product itself.
            (5) The term ``manufacturer'' means--
                    (A) any person who is engaged in a business 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 product (or component part of the 
                product), or (iii) uses the design or formulation of 
                the product developed 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 commerce, the 
                product seller produces, creates, makes, or constructs 
                and designs or formulates, or has engaged another 
                person to design or formulate, an aspect of a product 
                (or component part of a product) made by another; or
                    (C) any product seller not described in 
                subparagraph (B) which holds itself out as a 
                manufacturer to the user of the product.
            (6) The term ``noneconomic loss'' means subjective, 
        nonmonetary loss resulting from harm, including pain, 
        suffering, inconvenience, mental suffering, emotional 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 (including any governmental 
        entity).
            (8)(A) The term ``product'' means any object, substance, 
        mixture, or raw material in a gaseous, liquid, 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 involved in placing a product in the 
        stream of commerce, 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 
                        arrangement in which the selection, possession, 
                        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 subdivision 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 indifference 
        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 economic 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 provided in section 
301, this title shall apply to any civil action brought in any Federal 
or State court on any theory where punitive damages are sought. This 
title does not create a cause of action for punitive damages in any 
jurisdiction 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 whether 
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 established. The level of proof 
        required to satisfy such standard is more than that required 
        under preponderance of the evidence, but less than that 
        required for proof beyond a reasonable doubt.
            (3) The term ``economic loss'' means any pecuniary loss 
        resulting from harm (including the loss of earnings, medical 
        expense loss, replacement services loss, loss due to death, 
        burial costs, and loss of business or employment 
        opportunities), to the extent recovery for such loss is allowed 
        under applicable State law.
            (4) The term ``harm'' means any legally cognizable wrong or 
        injury for which punitive damages may be imposed.
            (5) The term ``punitive damages'' means damages awarded 
        against any person or entity to punish or deter such person or 
        entity, or others, from engaging 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 subdivision 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 immunity 
        asserted by any State under any law;
            (2) supersede any Federal law;
            (3) waive or affect any defense of sovereign immunity 
        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 respect to 
        claims brought by a foreign nation or a citizen 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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