[Senate Hearing 108-446] [From the U.S. Government Publishing Office] S. Hrg. 108-446 COMMON SENSE CONSUMPTION: SUPER-SIZING VERSUS PERSONAL RESPONSIBILITY ======================================================================= HEARING before the SUBCOMMITTEE ON ADMINISTRATIVE OVERSIGHT AND THE COURTS of the COMMITTEE ON THE JUDICIARY UNITED STATES SENATE ONE HUNDRED EIGHTH CONGRESS FIRST SESSION __________ OCTOBER 16, 2003 __________ Serial No. J-108-45 __________ Printed for the use of the Committee on the Judiciary 93-314 U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 2003 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 COMMITTEE ON THE JUDICIARY ORRIN G. HATCH, Utah, Chairman CHARLES E. GRASSLEY, Iowa PATRICK J. LEAHY, Vermont ARLEN SPECTER, Pennsylvania EDWARD M. KENNEDY, Massachusetts JON KYL, Arizona JOSEPH R. BIDEN, Jr., Delaware MIKE DeWINE, Ohio HERBERT KOHL, Wisconsin JEFF SESSIONS, Alabama DIANNE FEINSTEIN, California LINDSEY O. GRAHAM, South Carolina RUSSELL D. FEINGOLD, Wisconsin LARRY E. CRAIG, Idaho CHARLES E. SCHUMER, New York SAXBY CHAMBLISS, Georgia RICHARD J. DURBIN, Illinois JOHN CORNYN, Texas JOHN EDWARDS, North Carolina Bruce Artim, Chief Counsel and Staff Director Bruce A. Cohen, Democratic Chief Counsel and Staff Director ------ Subcommittee on Administrative Oversight and the Courts JEFF SESSIONS, Alabama, Chairman CHARLES E. GRASSLEY, Iowa CHARLES E. SCHUMER, New York ARLEN SPECTER, Pennsylvania PATRICK J. LEAHY, Vermont LARRY E. CRAIG, Idaho RUSSELL D. FEINGOLD, Wisconsin JOHN CORNYN, Texas RICHARD J. DURBIN, Illinois William Smith, Majority Chief Counsel Jeff Berman, Democratic Chief Counsel C O N T E N T S ---------- STATEMENTS OF COMMITTEE MEMBERS Page Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama.... 1 prepared statement........................................... 151 WITNESSES McConnell, Hon. Mitch, a U.S. Senator from the State of Kentucky. 8 Musante, Gerard J., Founder and Chief Executive Officer, Structure House, Durham, North Carolina........................ 20 Reaves, Wayne, President, Manna Enterprises, Inc., on behalf of the National Restaurant Association, Anniston, Alabama......... 18 Schwartz, Victor E., Shook, Hardy and Bacon, LLP, Washington, D.C............................................................ 4 Sutter, Russel L., Principal, Towers Perrin, St. Louis, Missouri. 11 SUBMISSIONS FOR THE RECORD American Council on Science and Health, Ruth Kava, Director of Nutrition, New York, New York, letter and attachment........... 30 Barnard, Neal D., M.D., President, Physicians Committee for Responsible Medicine, Washington, D.C., letter................. 33 Buchholz, Todd G., U.S. Chamber Institute for Legal Reform, Washington, D.C., study........................................ 36 Center for Legal Policy at the Manhattan Institute: Trial Lawyers, Inc., New York, New York, Study....................... 62 Center for Science in the Public Interest, Michael F. Jacobson, Executive Director, Washington, D.C., letter................... 94 Chamber of Commerce, Josten R. Bruce, Executive Vice President Government Affairs, Washington, D.C., letter................... 96 Corn Refiners Association, Inc., and National Corn Growers Association, Washington, D.C., letter.......................... 97 DecisionQuest and DRI, Nicole Quigley, News Advisory, Washington, D.C., article.................................................. 98 Five Spot Restaurant, Seattle, Washington, release form.......... 109 Gallup Organization, Lydia Saad, Princeton, New Jersey, poll analyses....................................................... 111 The Hill, July 22, 2003, Washington, D.C. article................ 160 McConnell, Hon. Mitch, a U.S. Senator from the State of Kentucky, prepared statement............................................. 112 Musante, Gerard J., Founder and Chief Executive Officer, Structure House, Durham, North Carolina........................ 119 National Food Processors Accociation, Washington, D.C., news release........................................................ 123 National Restaurant Association, Wayne Reaves, President, Manna Enterprises, Inc., Anniston, Alabama........................... 125 Schwartz, Victor E., Shook, Hardy and Bacon, LLP, Washington, D.C., statement and attachment................................. 129 Sutter, Russel L., Principal, Towers Perrin, St. Louis, Missouri, prepared statement............................................. 155 Wall Street Journal, July 23, 2003, article...................... 160 Zurich London, London, United Kingdom, article................... 161 COMMON SENSE CONSUMPTION: SUPER-SIZING VERSUS PERSONAL RESPONSIBILITY ---------- THURSDAY, OCTOBER 16, 2003 United States Senate, Subcommittee on Administrative Oversight and the Courts, Committee on the Judiciary, Washington, DC. The Subcommittee met, pursuant to notice, at 2:04 p.m., in Room SD-226, Dirksen Senate Office Building, Hon. Jeff Sessions, Chairman of the Subcommittee, presiding. Present: Senator Sessions. OPENING STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE OF ALABAMA Chairman Sessions. This Committee hearing will come to order. Because of the huge impact that litigation has on our economy, it is imperative that we examine the novel and expanded legal theories that are arising in our country. For instance, we need to examine issues such as whether gun manufacturers should be liable for the illegal actions of third party individual gun users rather than for defective products they may produce. The potential detrimental effect of runaway verdicts has been well known and well discussed, but there are huge costs that arise from the defense of unjustified lawsuits, as well. Indeed, such lawsuits, no matter how unfounded, can hurt a company by extracting huge costs from it and can also depress its stock and cause people to lose confidence in a company that is otherwise acting legally. I emphasize, however, that our utmost duty as Congress, as a lawmaking body, is to take no step that would provide immunity for any deceptive practices or known defects that harm consumers. Our legal system serves as a great safeguard for individuals who are damaged by negligent and bad acts and we need to preserve that. So our inquiry today examines whether legislation, such as that filed by Senator Mitch McConnell, to provide certain statutory defenses to food companies and restaurants who may be sued for obesity claims by people who ate their products, is justified. Our legal system is based on our laws, which are, in significant part, based on the actions of Congress. Every day, lawyers take what we pass and take court interpretations of those laws and file lawsuits based on them. Congress has every right, I believe, to monitor what is going on in the legal system of our country and has a duty to fix areas of the law where abuses are occurring. With that said, Senator McConnell's Common Sense Consumption Act would limit the liability of food retailers where the underlying premise for the litigation is not that the food was defective or prepared unlawfully. In fact, the Act deals with situations in which the food may be said to be too good; so good that the plaintiff consumed too much of it and suffers from obesity or weight gain because of that. The allegations have been transformed from traditional types of complaints, such as that the food seller cheated the customer by providing smaller portions than promised, to complaints that the promised portions are too large. The question we examine today is whether this type of litigation is so legally unsound and detrimental to lawful commerce that it should be constrained by legislation. First, is litigation like this legally sound? Professor Schwartz, who is, I guess, the nation's leading expert on tort law will testify later. Under classical tort law, in addition to a person having an underlying injury, a plaintiff in a lawsuit is required to prove causation. That is, but for the action of the defendant, the plaintiff would not have suffered an injury. To hold a defendant financially liable and require them to pay for damages to another, we must, at least until recent years, have clear standards. For example, but for Wal-Mart placing a product on the shelf, the plaintiff would not be able to purchase the product. Is Wal-Mart liable for obesity? Wal-Mart has provided great benefits to the poor by providing large containers of food you can buy at low prices. Does this act by Wal-Mart give rise to an action for obesity by a customer? But for Internet advertising, the plaintiff would be unaware of the product's availability, perhaps. Is the ad firm liable? Is AOL? This makes me think about the case that everyone learned about in law school, Palsgraf v. Long Island Railroad Company. The case started innocently with two individuals running to catch the train. One of the individuals happened to be carrying a package of fireworks. When the railroad guards helped the individual as he leaped for the train, the fireworks package was dislodged. The fireworks hit the ground and exploded. It happened that Mrs. Palsgraf, who was waiting for another train at the opposite end of the platform and happened to be standing near some scales, was injured when the firework explosion caused the scales to fall. Mrs. Palsgraf sued the railroad company, essentially under the ``but for'' theory. But for the railroad guard helping the passenger as he leaped on the train, the package would not have been dislodged, the fireworks would not have gone off, the scales would not have fallen, and, therefore, she would not have been injured. The great Judge Benjamin Cardozo wrote the opinion and refused to allow liability to go that far. It was a classic case of tort law. Just as the Court decided that it was unreasonable to hold the railroad company responsible for Mrs. Palsgraf's injuries, it seems unreasonable to me and to most Americans to hold sellers of food or any other individual entity responsible for a plaintiff's obesity. To blame someone else for problems of my own causing is contrary, I believe, to the great American philosophy of individual responsibility. But we must admit that there are some olympians in our legal system and plaintiff's lawyers who are quick to use any legal tools that are available, and they have been able to, in recent years, erode the expectation of personal responsibility. Second, are these lawsuits economically sound? For the lawyers, there is no doubt about that. In a recent study by the Tillinghast-Towers Perrin group, it was demonstrated that in 2001, trial lawyers made $39 billion in revenues while Microsoft made only $26 billion and Coca-Cola $17 billion. That has a great impact on the economy. That income to trial lawyers came from other businesses. But the costs don't end there. The defendant company must hire expensive defense attorneys and have its employees spend countless hours responding to lawyers and pay their court costs and expert witness fees. In addition, companies are required to purchase liability insurance, which takes away funds necessary for research, expansion, and creating jobs. No other nation must compete in the world marketplace carrying such a heavy litigation cost. Eventually, these costs are passed on to the consumer. Product prices increase and the availability of products becomes scarce. Finally, what is good public policy? Do consumers benefit when sellers of food are on the brink? Should we shift the country's obesity crisis to restaurants? What are the factors that contribute to obesity, which is a very serious health problem in America today that I do not mean to denigrate in the slightest. Isn't it our sedentary lifestyles, our overeating, and our snacking between meals? Some argue that genetics are at play here as well. The American people certainly do not support the idea that overweight individuals should be able to sue the companies that provided the customers what they asked for. In a recent Gallup poll, nearly nine out of ten people rejected holding the fast food industry legally responsible for the diet-related health problems of people who eat fast food on a regular basis. This, I believe, is common sense. If the practices are deceptive or the products adulterated, and the consumer is not on due notice, then liability may and should lie, perhaps. But we need to be careful about holding sellers of food liable for products that do not break any laws or violate any regulations but, in fact, comply with laws and regulations. We need to think really hard before we hold sellers of food responsible because consumers eat too much. We need to address how far the pendulum should swing. Is a grocer liable for simply placing the Oreo cookies on the shelf? Is your mom liable for her good cooking? I hope not. Or are parents liable for not making their children exercise? I tell you, if this litigation continues, we will find a number of people lining up to sue Krispy Kreme, no doubt. I know too many people who can't resist stopping for that ``Hot Doughnuts Now'' sign, as I did recently coming back after a nice supper. I just couldn't resist stopping and went in and got some in my hometown of Mobile. If the sign is on, you get a discount when you buy a dozen doughnuts. Does that add to liability? We have some outstanding restaurants in Alabama. Dreamland BBQ is one that you have probably heard of that is associated with the University of Alabama and is part of the heritage of a football game weekend. You would be hard-pressed to find a better slab of ribs than those. And don't forget about the Dirksen South Buffet right downstairs, providing an all-you- can-eat situation for Senators and their staff. We may see them become the target of suits, too. Well, we laugh. People do advertise in jest, I suppose in jest. A restaurant in Seattle requires customers to sign a waiver before eating one of their desserts called ``The Bulge.'' While this may be more of a publicity stunt than a true attempt to prevent legal action, it is no laughing matter and obesity is no laughing matter. Eroding the legal system is no laughing matter. And doing harm to the economy is no laughing matter. So we might see some humor in this hearing. Some of these lawsuits are laughable. But in the end, our focus must be on protecting the integrity of the legal system, the right of plaintiffs to sue for legitimate harm, and the safety of the economy. I look forward to hearing our testimony today. Senator McConnell, I know was tied up in a meeting. I expected him to be the first witness, so I think I will give him a chance to arrive before we start. I think I will start off at this point and take this opportunity to introduce our panel. We have some superb witnesses. First, Mr. Victor Schwartz is a partner in the Washington office of the law firm of Shook, Hardy and Bacon and chairs the firm's public policy group. Mr. Schwartz obtained his A.B. from Boston University, his Juris Doctorate degree from Columbia Law School. He was formerly a professor and dean at the University of Cincinnati's College of Law and is co-author of the most widely used tort case book in the United States. That is the Prosser, the legacy of Prosser, one I am familiar with. He also sits on many committees, including the American Law Institute, which really does important work on law in America, and the Advisory Committee to the Restatement of Torts, which is probably one of the finest forums of thoughtful people in looking at tort law in America. Next, Russel Sutter is a consulting actuary for the Tillinghast-Towers Perrin in its St. Louis office. He is a fellow of the Casualty Actuarial Society and a member of the American Academy of Actuaries. He is also a member of the firm's Professional Standards Committee. Mr. Sutter is the primary author of Tillinghast's tort costs study. This study analyzes tort costs in the United States since 1950. The most recent study was published in February of 2002 and was cited in the National Underwriter and Business Insurance, among other publications. Mr. Schwartz, we are delighted to have you here. We thank you for your long service both as a scholar and as a practitioner and a student of litigation in America. We would be glad to hear your remarks at this time. STATEMENT OF VICTOR E. SCHWARTZ, SHOOK, HARDY AND BACON, LLP, WASHINGTON, D.C. Mr. Schwartz. Thank you, Mr. Chairman, and I appreciate your holding this hearing. It is an important topic. You stated my background, so I won't go into that. I will just go to the core of why we are here. American tort law has dealt with food for 240 years, and recently, the restatement which you mentioned, Mr. Chairman, decided to restate the law once again of food, and it is very simple. If something is in food that is not supposed to be there, if there is a nail in the mashed potatoes that you have in a restaurant, the defendant is liable. There are no excuses. It is super-strict liability. And if a food seller knows that there is an allergen in the food, like peanuts, and doesn't warn about it, they are going to be liable. There is no question about that. And if they violate a health and safety regulation--there was a case a few years ago out West where hamburgers were not cooked to 160 degrees and people got sick, and they violated a health regulation and because of that somebody becomes sick, they are liable. In fact, when we did the restatement, the only issue that we really discussed was about natural things that occur in food and when is somebody liable. If you have a chicken sandwich, there could be a chicken bone in it. Is the defendant liable or not? And we came down with a ruling about what people might expect, and they are not going to expect a six-inch chicken bone in a sandwich and they will be liable if such a bone were present. But that was it. So--and that is the law of torts. Law professors will take 16 weeks sometimes to say, what do you think? and well, you don't know what it is, but that is basically it. The reason I think that this hearing is justified is because there are some folks that don't see tort law in its traditional way, which is to compensate somebody who is injured. They see tort law as an engine to do what regulators or legislators do, to change people's behavior in very broad ways, to regulate but there are judges who are willing to do it, and juries to, they literally change our lives. Now, when judges decide cases, and you have argued so many cases before courts, you know this, basically, there are two lawyers there. But you can hold hearings with all sorts of folks, bring them back, ask them questions, and you are in a position to make broad public policy judgments. But when judges do it--a former Secretary of Labor under President Clinton, Robert Reich, called that regulation through litigation. The purpose is not to compensate a victim. The purpose is to change behavior. Now, that has occurred with tobacco. It has occurred with guns. Some attempts are being made with lead paint. But now the focus has been on food and sellers of food. There is a problem in this country, as you have said, Mr. Chairman, with obesity, and if people consistently eat too much and they don't exercise to burn off calories, they are going to be overweight, and obesity can lead to very serious diseases-- heart disease, diabetes, other very, very serious things, premature death. But the tort system is not there to correct it. Senator McConnell has done great work on this issue and you asked a very, very important question about the role of this body, for legislators to work in this area. This is your domain in terms of what to do about obesity. In California, there is a regulation, State, where they decided, a regulatory body decided that soft drinks shouldn't be sold in schools. Now, we may agree with that or we may disagree with it, but it was done by the right people. It was not done by a court, it was done by a regulatory body and one that is responsive to the electorate. People in California showed something a few weeks ago. If they don't like something in the law, they know how to toss it out. But if a judge makes a ruling, the as elected Representatives, electorate can't do anything about it, but they can with you. And the policy that we are going to have in this Nation with regard to what food is available, what choices we have is--the appropriate place to consider that is here in Congress. One judge in one court can change everything. A court in Illinois a few years ago said, in effect, that insurance companies can't provide non-original equipment. So now throughout the whole country, with every insurance policy, if we have a fender-bender, we have to have original equipment. The cost of the fender bender accidents has gone up close to 600 percent because of that one judge making that one determination of a $1.7 billion verdict. The biggest argument I have heard against doing anything on food is that there is no crisis and there is no problem. I mean, that is the best argument that I have heard. There has been, and you know, a large case brought against McDonald's. The judge's opinion came in two parts. The first part was over 80 pages and he gave room to the plaintiffs to try again. The second part was 36 pages. Now, if something was utter nonsense and a Federal judge didn't think it was important, you know from your practice, and I know, too, that the judge can write a three- or four- or five-page opinion and discuss the case. We have over 100 pages written just about this problem. That says to me that some other judge, some other place, at some other time can let cases through. And one reason that is going to help that is that symposiums are being held to teach lawyers how to bring these lawsuits. One was held up at Northeastern. I wanted to go. I was told I couldn't go because I wouldn't sign a pledge that I was interested in suing food companies. I asked if some people in the investment community could go, who analyze food for one of our large investment banking houses. He was told no because he would not sign a pledge that he would sue an industry. I am not going to say it was like al Qaeda up there, but it was certainly limited to who could participate and these people were being trained to bring obesity lawsuits and how to overcome the existing problems. There are problems. First, you have to show normally in tort law that it was the defendant's product that injured you, and there are many causes for obesity other than food. Second, you have to show it was this specific product, and we all eat in different places. That is a hurdle to overcome and that is serious. And finally, you have to show that the product is defective. Now, you know sugar is not defective because it causes tooth decay. They have to overcome that hurdle in the law. But when-- Chairman Sessions. Well, you know that and I know that and usually the legal system seems to know that sugar is not a cause of liability, but we are drifting, aren't we, in court rulings that leave these matters hanging? Classical rules are being fudged. Mr. Schwartz. Mr. Chairman, you are absolutely right. I won't, because of time limits, give you all the rules that we thought were in stone that then crumbled into dust. When an industry becomes unpopular rules are change. The people who supported tobacco suits, be they right or wrong, Professor Banzhaf and Professor Daynard, very, very strong advocates, have said, well. We did guns and tobacco. We are going to use the same tactics, and I am quoting, against the food industry. Ralph Nader has called the double cheeseburger a weapon of mass destruction. This is the prelude to try to get courts to change laws. Senator McConnell has approached this issue in a very modest way. He has left the common law alone. He has left judges ample room to develop the common law. But he has said, in one core area, we are going to say as the Congress of the United States, you cannot bring a successful lawsuit, that relates to food causing obesity, or sugar causing tooth decay, natural things that occur, if people consistently overeat or fail to exercise. And his bill is sound in that regard. The only suggestion I would make, and I mention it briefly in my written statement, is that with cases like that, it is good to have some block on discovery fishing episodes because that can cost people hundreds and sometimes millions of dollars, where they are going to win in the end, but the plaintiff knows that the defense costs are very high and that it may be cheaper to settle the case than it is to go through those costs, and so even though the law does not allow a claim, practical real life causes companies to have to settle cases that are unjustified. I thank you for the time you have given me today. I would be very pleased to help on this issue. It is one I believe in, and I do believe this body can act. Congress has acted on ?? veteran, Congress acted to help the aviation industry in 1994 with the General Aviation Recovery Act. That has led to 25,000 jobs in an industry that was going under. This body has acted with the Biomaterials Assurance Access Act. Companies that were making medical products couldn't buy raw materials. You acted and now they can. So there are cases where there have been success in limited areas with specific problems that have a national interest. The McConnell bill and this area has all three. Thank you, sir. Chairman Sessions. Thank you very much for your comments. They are very valuable, and I think your insight into the whole concept of tort law is very valuable. I remember the year I became a lawyer in Alabama was the year they eliminated common law pleading, which is, as you know, a complex, historical procedure. I think Alabama and Massachusetts were the last two to have it, you had to plead specifically what your theories were and what your damages were. Well, you can file your lawsuit on a napkin now. But it has led to, I think, some muddled thinking, and the clarity that the former legal system gave us on what really is an actionable case and a non-actionable case has been eroded. Maybe we can talk about that more. [The prepared statement of Mr. Schwartz appears as a submission for the record.] Chairman Sessions. Senator McConnell, we thank you for your concern about litigation in America. As I noted, we know that litigation drains our economy. If it is just, we believe in it. If it goes beyond our traditions, it can be damaging to our legal system. Thank you for your leadership over a number of years in dealing with this. The legislation you have offered, I think is worthy of our consideration. So, I would be glad to recognize you at this time for any comments you may have. STATEMENT OF HON. MITCH MCCONNELL, A U.S. SENATOR FROM THE STATE OF KENTUCKY Senator McConnell. Thank you very much, Mr. Chairman. Let me begin by saying I see that Victor Schwartz is providing testimony today. I first met Victor Schwartz when I was Chairman of this very Subcommittee many years ago, and it was during that period that I became interested in, and convinced, that legal reform was extremely important to the future prosperity of America. I must say, after 18 years, that I don't have much to show for it. I have introduced bills on a variety of different types of legal reform including, Auto Choice, comprehensive legal reform, and medical liability reform. Regretfully, not much tort reform has been achieved. I think the securities litigation bill, which we passed a few years ago over the veto of President Clinton, is one of the few we could point to that addresses a very serious problem in our society. But your hearing today, Mr. Chairman, and I want to thank you very much for holding it, focuses on a narrow portion of the growing industry of plaintiffs' lawyers going after particular businesses. We saw that in the case of the tobacco litigation and it is pretty clear that the next effort is going to be to go after the food industry. The bill upon which you are having a hearing today is the Commonsense Consumption Act. This is another effort to get at at least some reform of our Nation's legal system. As I indicated earlier, it has been a long road with not many successes to point to. But that doesn't mean that the need is not great or that we ought not continue to try. I think this area that you are focusing on today and the sheer absurdity of these lawsuits should make this bill something that we could all support. I recognize that obesity is a serious problem in America. No one denies that. We need only to look around to see that many, many Americans are overweight. The issue before us, however, is who is responsible for that. Who is responsible for that extra weight? Incredibly, some plaintiffs' lawyers believe the person selling the food--the person selling the food--should be held responsible for a person's weight gain. But I and most of America believe it is the person eating the food, not the person selling the food, who bears responsibility. Obesity suits against food companies are premised on blaming the food seller for how much food the food buyer chooses to consume. This is patently absurd. But overzealous lawyers are filing these suits anyway, and they have already cost companies plenty in legal fees. We all know who ultimately pays the tab when businesses have to defend costly suits, and, of course, that is the consumer. That is why we need to stop these abusive suits before they drain more resources from an industry that employs millions and millions of people nationwide. Every dollar a business owner spends defending or settling a frivolous lawsuit is a dollar not invested in creating jobs and building the business. I am not suggesting in any way that all tort claims against all defendants should be prohibited. I am merely arguing for a little sanity to the system, a little common sense, if you will. My bill, the Commonsense Consumption Act, is short and very easy to understand. The bill simply prohibits lawsuits against food producers or sellers in State or Federal court for claims of injury resulting from a person's weight gain, obesity, or health condition related to weight gain or obesity. I want to emphasize that the bill does not provide in any way blanket immunity to the food industry. In fact, I expressly exclude from protection traditional claims like breach of contract, breach of warranty, claims for adulterated food, and violations of Federal and State statutes. In the simplest terms, this bill provides protection from abusive suits by people seeking to blame someone else for their poor eating habits. Pundits love to discuss the erosion of personal responsibility in America. Many argue that we have become a nation of hapless victims. These obesity lawsuits certainly support that observation. Can there be any better indication that we have reached rock bottom than when we begin blaming others for what and how much we choose to put in our own mouths? There has to be some measure of personal responsibility for the choices we make in life. Yet these lawsuits say, in essence, that people have no free will, that they lack the power to stop eating, and that someone else made them do it. Someone else made them do it. Do we really think that someone forces us to eat more than we want to eat? Do we really think that people do not know that cake and ice cream aren't as healthy as fruit and vegetables? The logic of these suits is ridiculous. If we keep this up, it will not be long until we sue car dealers when we get speeding tickets. After all, it is not my fault that I exceeded the speed limit. It is the fault of the guy who sold me the car. They should know better than to sell cars that go fast. When it comes to assigning responsibility for what we eat, the American public points its finger at itself. Shortly after I introduced my bill, the Gallup organization conducted a poll about America's views on obesity and who is to blame. That poll indicated that 89 percent of Americans oppose holding the food industry legally responsible for diet-related health problems. The same survey shows that even those people who describe themselves as overweight oppose these lawsuits by the same percentage, 89 percent. Obviously, most people think these suits are ridiculous. Unfortunately, some activists and greedy lawyers have different ideas. There seems to always be a group of activists out there running around telling us how bad everything is in America. The food police are now sounding the alarm and saying that the rise in obesity corresponds to the increased availability of, quote, ``fast food.'' What they want you to believe is that the food sellers are causing--are causing-- obesity. That is ridiculous. You know what? The rise in obesity also corresponds to the rise in household income, the rise in educational levels, and the rise in life expectancy. Does that mean that we have the capability to earn more, learn more, and live more, yet we have no control over what we put in our mouths? Mr. Chairman, obesity is a problem in America, but suing the people who produce and sell food is not going to solve the problem. Lining the pockets of personal injury lawyers will not help those people lose weight. Bankrupting the people who make and sell fast food or forcing them to settle ridiculous suits because it is cheaper than taking your chances with a jury, is not going to help anybody lose weight. We must take action to stop these abusive, irresponsible and costly lawsuits, and passing the Commonsense Consumption Act is a good first step. I want to thank you, Mr. Chairman, for holding the hearing and for giving me and others an opportunity to testify. I have some letters in support of the bill from the National Food Processors Association, the U.S. Chamber of Commerce, and the Corn Refiners Association and the National Corn Growers Association, which I would like to have appear in the record at this point if that is possible. Chairman Sessions. They will be made a part of the record. Thank you very much. Senator McConnell. And I thank you so much, Mr. Chairman, for exploring this. You are going to hear from some great witnesses here. [The prepared statement of Senator McConnell appears as a submission for the record.] Chairman Sessions. Senator McConnell, just before you go, it seems to me that it is appropriate for a legislative body to examine how our legal system is working, whether we think it is working and lawyers are doing what the law and the courts allow them to do. If we find that the legal system is developing in a way that is not good for American society, Congress is not invading the judicial province, is it, by to passing legislation? Senator McConnell. No, sir. You know, when you and I were in law school, the notion that this kind of litigation would have been brought was absurd on its face, and it is not at all inappropriate for the nation's legislative body, seeing a condition develop, to pass laws to prevent that from going forward. We do that every week around here. The legal system needs adjustments. It is embarrassing. In my view, second only to the sorry state of elementary and secondary education in America, our next biggest problem that we could do something about are these new trends in litigation. I think the carrying cost for civil justice in America is just too high, just too high. So there is nothing at all inappropriate about us legislating in this area and I certainly hope we will. Chairman Sessions. Well, I certainly agree with that. There seems to be a feeling that Congress shouldn't stick their nose in the Court's business. What a cause of action is and how it is created is determined by our legislative elected body. Judges weren't elected to set public policy. They were elected to adjudicate disputes. Senator McConnell. I say to my friend from Alabama, one of the pieces of legislation that I introduced a while back that didn't go very far would have required a litigation impact statement of legislation. Congress is busily at work creating new causes of action around here all the time. So if we can create new causes of action, why can't we act to stem causes of action? There is nothing more inappropriate about reducing the number of lawsuits then there is in increasing them, which we do on almost a routine basis around here every year. I thank you so much for your interest in this, and hopefully, we can push it forward. Chairman Sessions. Thank you, Senator McConnell, for your steadfast commitment and concern for the legal system. It is a concern I share. I love the rule of law. I love the courts. I practiced in them all my life. But judges read the statutes and they rule on motions questioning whether a lawsuit or criminal case is legitimate based on the laws Congress writes, and we think they don't second-guess these laws. If we create a cause of action, courts allow it to go forward. If causes of action are going forward that are not justified, it is our burden to change the law. I thank you for that. I know you have a lot to do on the floor, Mr. Assistant Leader-- Senator McConnell. Thank you. Chairman Sessions. --and we appreciate your service. Thank you very much. Senator McConnell. Thank you very much. Chairman Sessions. Mr. Sutter, we are delighted to have you here. Thank you for coming, and we would be delighted to hear your comments at this time. STATEMENT OF RUSSEL L. SUTTER, PRINCIPAL, TOWERS PERRIN, ST. LOUIS, MISSOURI Mr. Sutter. Thank you, Mr. Chairman. My testimony does not include specific comments on Senator McConnell's bill. Rather, my testimony provides background on the costs of the U.S. tort system, trends in those costs, and a comparison of costs in the U.S. to those in other countries. Our current research on U.S. tort costs shows the following. First, the cost of the U.S. tort system was $233 billion in 2002. This represents 2.2 percent of the U.S. gross domestic product, or GDP. Second, in 2002, U.S. tort system costs increased by 13.3 percent over 2001. Costs in 2001 increased 14.4 percent over costs in 2000. This total 2-year change of 29.6 percent was the highest since 1986-1987. This is in contrast to the 5-year period from 1995 to 2000 during which tort costs increased by an average of 2.6 percent per year. Three, since 1950, tort costs have increased an average of 9.8 percent per year, compared to an average GDP growth of 7.1 percent per year. Our analysis uses GDP on a nominal basis before adjusting for inflation. Fourth, U.S. tort costs were $809 per citizen in 2002. In 1950, tort costs were $12 per citizen before adjusting for inflation, and $89 per citizen after adjusting for inflation. Chairman Sessions. Wait a minute. That is $809 per citizen per year? Mr. Sutter. Yes. Chairman Sessions. So that is close to $60 a month? Mr. Sutter. Closer to $70, actually. Chairman Sessions. Seventy dollars a month? Mr. Sutter. Yes. Chairman Sessions. That is a significant amount of money. Excuse me. Mr. Sutter. It also implies that real tort costs per citizen have increased by more than 800 percent since 1950. Five, while not part of our current study, 2 years ago, we did a study comparing tort costs in the U.S. to those of 11 other countries. The 11 other countries included eight from Western Europe, along with Canada, Japan, and Australia. That comparison was based on 1998 data. At that time, the ratio of tort costs to GDP in the U.S. was 1.9 percent. The other 11 countries had ratios of tort costs to GDP ranging from 0.4 percent to 1.7 percent, with an average of 1.0 percent. In other words, tort costs in the U.S. were approximately twice as high as in the other countries. Six, we attribute the significant increase in costs in 2001 and 2002 to several factors, including asbestos claims, other class action litigation, higher awards in medical malpractice cases, an increase in the number and size of lawsuits against directors and officers of publicly traded companies, and an increase in medical cost inflation. The charts attached to my written testimony provide details behind some of these findings. In closing, I would like to point out three items regarding our analysis. First, this study was not paid for or commissioned by any organization. The study is self-funded by Tillinghast. Second, the study does not attempt to quantify any of the indirect benefits of the tort system, such as acting as a deterrent to unsafe practices and products, or any of the indirect costs of the tort system, such as duplicate or unnecessary medical tests ordered mainly as a defense against possible malpractice allegations. And third, the purpose of the study is not to support any particular viewpoint on tort costs. The study's purpose is to quantify tort costs and the trends in those costs. We do not take any position on whether the costs are too high or too low. Mr. Chairman, thank you for the opportunity to present this testimony. I will be happy to answer any questions the Committee may have. Chairman Sessions. Mr. Sutter, I thank you for that report. I suppose I would note that there have been health and other benefits that have resulted from litigation. But you also note that there have been additional costs because of defensive medical practices and other actions by companies out of fear of being sued. I don't know if they balance one another out, and you haven't expressed an opinion on that, have you? Mr. Sutter. That is correct. We haven't expressed an opinion. Chairman Sessions. I don't think all the results of litigation are bad, but there are some costs to litigation that go beyond just the amount of money paid out in the lawyer fees. Defendants may adopt policies that run up business or medical costs that really don't provide a net benefit to the consumer or patient. [The prepared statement of Mr. Sutter appears as a submission for the record.] Chairman Sessions. Mr. Schwartz, with regard to the testimony of Mr. Sutter and the point I raised earlier about the lack of clarity in litigation, it seems to me that what we are attempting to do, or what Senator McConnell is attempting to do in this legislation is to say, if you file this kind of a lawsuit, it is going to be dismissed. This is not a lawsuit that should be filed. We have set policy on that. We made a policy decision that companies that provide food shouldn't be liable for health problems incurred by those who voluntarily and knowingly accept that food. Is that one way to reduce health care costs in America that have been going up, as Mr. Sutter said? Mr. Schwartz. Well, it will reduce costs in many, many sectors. Certainly, money that is now going into the legal system is less likely to be going into helpful things that will assist people for example getting good information about health costs and addressing health needs. One area that I want to say that it will help a lot is the uncertainty that this litigation creates in our marketplace. I have received reports from Merrill Lynch, J.P. Morgan, and others. They are a quarter of an inch thick about this food litigation because the threat of this litigation, the specter of it directly affects the price of common stock of very legitimate companies who are doing legitimate business. They are not engaging in any wrongdoing. So this legislation draws a line and says to Wall Street investors, that you no longer have to worry about baseless lawsuits that are using obesity as a claim. I think that is going to be one of the most significant economic impacts of this legislation, to get rid of the uncertainty that hovers over the restaurant and food industry right now because people look to the past and they can see things where everybody thought the litigation wasn't possible actually occured. It just takes one or two Judges somewhere to--provides a claim. Then you go into the settlement phase, as you know from a very experienced career, the costs can be enormous. This overall industry is an industry that is perceived to have some money, and that attracts a continuing knock at the door unless legislation says, this is an area where you can't go and this case will be dismissed. Chairman Sessions. Now, I think that is a very interesting point. Let us take asbestos. Do you think that the insurance companies and reinsurance companies, both of which get paid for the insuring that they do, have been impressed? Do you think the lesson of asbestos has not yet been lost on them, I assume, and the specter of food lawsuits could or perhaps has driven up insurance costs for food companies? Mr. Schwartz. Well, I can't go into the--because I don't have enough knowledge to say exactly what they would or would not do. But certainly, they have seen some areas that people thought were safe change. Asbestos had a unique profile in a way, because the companies, some of the companies that sold it, knew there was danger and that people who used it didn't know, and that is very different from food, where anyone knows if you consistently overeat, you are going to gain weight. So I don't think there is a real direct analogy between asbestos and obesity lawsuits. However, people in the investment community appreciate that there right now are no barriers, and while there is no successful suit today, if a moderate Federal judge takes over 80 pages to dismiss a case the first time and over 36 pages the second time, that there is going to be a third and fourth and fifth time until they break through. And insurers in setting rates and premiums cannot here look soley to the past. If they do, they may not have adequate reserves. They have to look to possibilities that occur in the future. And unless there is something at a national level that says, you can't go there, they have to price their products based on speculation that some of this litigation could be successful in the future. Chairman Sessions. Regulation by litigation--you mentioned the lawsuit filed in Illinois? Mr. Schwartz. Yes, sir. Chairman Sessions. It is true under our current legal system that a judgment rendered in a single county in a single State can become binding throughout America? Mr. Schwartz. Well, there was one decision, a $1.7 billion--I may be off a million or two when the figures get up there--and it wasn't binding anywhere else, but it created a fear that if an auto insurer continued to sell parts that were not original equipment, they might be subject to equal billion- dollar lawsuits. So they changed their behavior, even though insurance regulators, the men and women who are in charge of this very thing, in some States said you must supply the non- original equipment so that there is competition in the area and it was perfectly legal and legitimate in every State. So you had a court through the threat of litigation, not that they could bind people by law, but that threat changed behavior, and similar things can occur in food. If there were a lawsuit that would be successful against a fast food company because they didn't have signs that were this high, six inches high, showing how much fat was in a particular piece of food they were selling, then restaurants are not bound by that, but they are saying, my God, there was a verdict here. We are going to have to change our behavior. Or there was a legal theory suggesting that you must have several alternative menus. Then somebody going into business has to decide whether he or she wants to have that or not. So it doesn't happen by law. It happens by the threat of very, very large verdicts and people's fear that unless they behave in a certain way, they can be eclipsed by those verdicts. Chairman Sessions. I think that is certainly true. You have made that very clear. With regard to regulations, they are ultimately a province of the State legislatures and the United States legislature, the Congress, are they not? I mean, if we choose to require bigger disclosure statements and more nutrition information and other things, I suppose we could even go further in regulating the food industry. That would be a decision we should debate out in public, make our case to the American people if they are unhappy, and vote on it. They can vote us out of office if they don't like it. But it seems to me that it is anti-democratic if people that nobody even knows, a group of lawyers and a judge, start setting public policy on a number of different issues. One of those issues could be food. Mr. Schwartz. Mr. Chairman, you are absolutely right. That is the line between your responsibilities as a legislator and courts. You can do things that courts can't do. You are one of the few who have served in this body, but also you were an Attorney General. You knew how the court system works. A judge has a limited amount of information in front of him or her. There are basically two lawyers speaking and briefs. Courts are not in a position to set nationwide policy about what should be disclosed in food, what the size of signs are, what foods should be prohibited, what foods should be allowed. That is this body, because you can have hearings, you can call witnesses back. You are in the position to do it. You also, when you make your rules, make them prospective. You know from the common law this fiction that they are always discovering the common law. So when courts make rules, they are retroactive. It is changing the speed sign after you have driven. So this is the right body and State legislatures are the right body to make rules of this kind. Why I believe this particular issue is best handled by Congress is because an individual State cannot set nationwide policy. A nationwide policy should be set on obesity saying the responsibility for dealing with this issue is with the Congress and the State legislatures, not an arbitrary decision by one particular court. Chairman Sessions. How would you respond to some members of this body who may say, well, I think that is good, but it should be done by the State and not the Federal Government. We don't have any business telling a restaurant in Alabama or Texas how to prepare do their food. How do you justify a Federal action as opposed to individual State actions? Mr. Schwartz. That is a very, very good question because we can't have the Congress of the United States rewriting American tort law. It is only when something is truly national in scope that this body should act. Our food industry has become a national industry. Policies set by chains, by other restaurants, is nationwide. But one court in one State that isn't looking at our Nation's interest, is not looking at the financial interests of our Nation, can upset the apple cart with this particular industry. This particular industry is woven in interstate commerce. Our food chains and food supplies go across State lines. So having and leaving this to an individual State is a non-answer because one State or two States alone cannot set those rules. And there is another more technical point and I will just make it for the record. In some States, the courts are so restrained on their legislatures. They want to control the tort system that they hold actions by State legislatures that attempt to make reforms to the tort system unconstitutional under State Constitutions. There is no review that is provided by the Supreme Court of the United States because it is done under a State Constitution, and some State Courts have, in 97 decisions, thwarted attempts by States to do this. So if you have a true national problem, and I believe that this is because our food supply, our investment in food companies is a nationwide problem, it is best addressed at this level if and when people raise the States' rights issue. Chairman Sessions. And under the Commerce Clause and under the Diversity Clause in the Constitution, there is no legal problem? Mr. Schwartz. I will submit for the record, we wrote an article in the Harvard Journal of Legislation addressing when Congress can act and when there are limits. It deals with what the powers are specifically under the Commerce Clause, not pushing the Commerce Clause to the edge, because people who are conservative don't want to do that. But a mainstream Commerce Clause approach allows action in this area. There is concern sometimes raised about the Tenth Amendment because the Tenth Amendment strongly protects States' rights and some actions by this body have been held unconstitutional under the Tenth Amendment. But the Supreme Court has been absolutely clear, and I will submit papers on this, too, that the Tenth Amendment does not affect your right in a situation precisely like this to implement the goal of having flow of interstate commerce. This is our Nation's food industry. The data that can be given to you by the National Restaurant Association and others show it is a nationwide industry regulated by Congress and could be adversely affected by one or two States, or more, one or two courts in individual States. Chairman Sessions. Mr. Sutter, can you express an opinion about what would happen if we eliminate some of these lawsuits in the fashion that is done here? Can that affect litigation costs in America? Mr. Sutter. Mr. Chairman, we think that the costs of litigation will continue to rise faster than GDP as it has over the last 50 years, by an average of three points a year. I guess the way I would look at it is if this type of litigation grows, we would expect that gap to increase from perhaps three points to four or five points. And so I think what this legislation does is remove that threat of a widening gap. But I don't think this legislation would take that gap down to zero. There is just too much going on out there. Chairman Sessions. I see it more as a single step, but these are the kinds of litigation costs that are components of the numbers that are surging upward that you described, are they not? Mr. Sutter. Yes, they are. Chairman Sessions. Do you have anything you would like to add, Mr. Sutter, to this discussion we have had so far? Mr. Sutter. Nothing further, Mr. Chairman. Chairman Sessions. It is a very, very interesting study you have put forth. The size of the litigation industry at 2.2 percent of the GDP is just a stunning event. I remember when we looked at the tobacco litigation when the tobacco companies collapsed and all of that went forward. Plaintiff's lawyers went from receiving fees of hundreds of millions of dollars to billions of dollars. Maybe a plaintiff's firm of ten or 20 lawyers would be entitled to a fee of $1 billion. In Maryland, I believe, it came in at close to $2 billion. In Texas, around $4 billion. So these are huge, huge costs, even by U.S. Government terms, and I think Congress has a right to look at that. We ask ourselves, is the legal system furthering our public policy in a healthy way; if not we study and make sure we are acting legally and constitutionally, and, if necessary, take steps to reform it. Mr. Schwartz, do you have any further insight into this subject you would like to add? Mr. Schwartz. No. I feel you have really gotten in the record very, very important things. The fact that the legislation is needed, that it is constitutional, that it represents sound public policy, and it is an area where, I think if Congress acts in this area, it puts a marker down to say there are certain places where courts should not make law. Senator McConnell mentioned automobiles. Well, lawsuits have not been successful yet, but an automobile can go 90 miles an hour. The same type of thesis would hold the car company liable for a car that went 90 miles an hour, not the driver's choice to drive that fast, would also hold a food company responsible for somebody who consistently overeats. I think it is a good message. There was other testimony that I read and that you will hear that is brilliant because it says these lawsuits really give the wrong signal, my final point, to people, that the blame is external. It is not on themselves, it is because of the seller of food. It is not my responsibility for my own choice. This legislation puts the right signal out saying individuals do have a responsibility to exercise and have control over their diet. I appreciate your time on this issue. Chairman Sessions. Thank you. I am glad that you are participating and writing textbooks for America's law schools. I remember when I was in law school, a professor said when someone is wrong, there is a lawsuit. There is a cause of action. You just have to find it. And I think that is the mentality, that if somebody has in some way been damaged or has damaged themselves or whatever, the mentality is to look for a way to get them compensation. But that begins to muddle the principles of liability and fault in America. I just think that we need to recapture that sense, and I believe the Congress is going to have to play a larger role than we have in the past. I thank you for your leadership, Mr. Sutter. Thank you very much for your valuable information. Mr. Sutter. Thank you, Mr. Chairman. Chairman Sessions. Our next witness is Mr. Wayne Reaves. He is the President of Manna Enterprises, located in Anniston, Alabama. Mr. Reaves owns seven quick-service restaurant establishments known as Jack's Family Restaurants. His businesses employ 180 individuals. He is a member of the Board of Directors of the Spirit of Anniston, a commercial development board in Anniston, Alabama. Mr. Reaves is a current board member of the National Restaurant Association. He is also a past president of the Alabama Restaurant Association. In 1996, he was named Alabama Restaurateur of the Year. Dr. Gerard Musante is the founder of Structure House, a residential weight loss center in Durham, North Carolina. He is a clinical psychologist who specializes in adapting the principles of behavior modification to the eating habits of significantly overweight people and food abusers. He received his professional training from New York University, the University of Tennessee, Duke University Medical Center, and Temple University Medical School. He is a member of the American Psychological Association and the Association for the Advancement of Behavior Therapy. He has served on the editorial board of Addicted Behavior and as a consultant to the National Board of Medical Examiners. He continues to serve Duke University as an adjunct professor. Mr. Reaves, it is a delight to have you here. I know you are in the real world every day, working hard to provide a product and make a living and pay the salary of your workers. We would be delighted to hear your perspective on the issue before us today. STATEMENT OF WAYNE REAVES, PRESIDENT, MANNA ENTERPRISES, INC., ANNISTON, ALABAMA, ON BEHALF OF THE NATIONAL RESTAURANT ASSOCIATION Mr. Reaves. Thank you, Mr. Chairman. Chairman Sessions, my name is Wayne Reaves. I am the owner of Manna Enterprises, Incorporated, in Anniston, Alabama. I own and operate seven quick-service restaurants operating in the region as Jack's Family Restaurants. I am testifying here today on behalf of the National Restaurant Association, which is the leading business association for the restaurant industry, to offer my support for S. 1428, the Common Sense Consumption Act of 2003. I am a current member of the Board of Directors of the Association and I have submitted my written copies of my full remarks for the record. Mr. Chairman, I would like to start by giving you a very brief background on my business. I proudly have spent my entire professional career working in the restaurant industry with Jack's Family Restaurants. Jack's is a quick-service concept that serves breakfast, lunch, and dinner, with a wide variety of options on the menu. I started out working in Jack's as a cook back in high school and became general manager of the store shortly after I graduated. While out of high school, I was drafted and served in the Army before returning to Jack's, where I worked my way up the management ladder. Today, as the only Jack's franchisee, I own and operate seven restaurants, and while I am certainly not the only one to work their way up in our industry, it is gratifying to have done so within the same concept for over three decades. The restaurant industry has been very good to me and I hope 1 day to pass my business on to my son so that he can hopefully share the same experiences, rewards, and challenges that I have. However, one of the challenges that the restaurant and food service industry has been confronted with recently is the string of frivolous lawsuits being filed against our industry, claiming that they are the cause of some individuals' overweight and obesity-related health conditions. These senseless and baseless attempts by representatives of the trial bar are nothing more than a distraction from finding sensible solutions to this very complex issue and are a clear abuse of the judicial system. The American public also sees through the trial bar's misguided approach and understands the frivolousness of these irresponsible lawsuits. And I am pleased to share the good news that personal responsibility remains a strong American value. It has already been mentioned that in a Gallup poll conducted in July, 89 percent of Americans indicated that the food industry should not be blamed for issues of obesity and overweight. We are also fortunate that common sense has prevailed in the ruling in September by Judge Robert Sweet in New York, dismissing the most recent lawsuit against a restaurant chain claiming it caused obesity among some Americans. There is no doubt in my mind that trial attorneys will persist in trying to file other similar lawsuits, as they made no secret of their intentions to continue their efforts. As you already know, this past June, members of the trial bar community convened a three-day workshop in Boston entitled, ``Legal Approaches to the Obesity Epidemic.'' Some of the same individuals who were associated with the tobacco litigation played significant roles in the workshop. Mr. Chairman, in the simplest terms, this type of legal action, if permitted to go forward, could be very costly to my business. It would only take one lawsuit of this nature to potentially put me out of business and take away all that I have worked for. As a businessman who employs now 196 individuals, that is a grave concern of mine. For more than half of my employees, the job I provide them serves as their primary source of income for their family. Beyond the risk to my business, you asked Mr. Schwartz earlier about the effect of the obesity litigation and what it could have on the insurance costs. Beyond the risk to my business, the mere threat of such a suit can have an impact on the cost of insuring my business. Insurance companies have acknowledged that they are watching these lawsuits very closely and they recognize that this litigation may impact how they price future liability products for food companies. One very respected insurance industry publication has even coined the phrase ``food fright'' in discussing this recent legal phenomenon and its potential repercussions in the insurance markets. The food service industry accounts for four percent of the nation's GDP. If this type of litigation is not kept in check, there could not only be a negative consequence for the food service industry, but for our Nation's economy. In the restaurant industry, clearly, the customer comes first. However, the thought that an individual can file a lawsuit based in part on the voluntary choice he or she made regarding where and what to eat is disturbing. Perhaps no other industry offers a greater variety of choices to consumers than restaurants. In any one of our Nation's 870,000 restaurants, consumers have the opportunity, the flexibility, and the freedom to choose among a variety of high-quality, safe, healthy, and enjoyable types of cuisine. The lawsuits we are discussing this afternoon not only fail to acknowledge the voluntary nature of the choices customers make, they also do not address the fundamental issue of personal responsibility. I believe it is important to recognize that personal responsibility, moderation, and physical activity are all key ingredients to a healthy lifestyle. If these lawsuits are permitted to go forward, they could jeopardize my livelihood, my employees, and my customers, whose freedom of choice would be infringed upon. Additionally, I fear for the industry and the impact these lawsuits could have on the economy. Mr. Chairman, thank you again for this opportunity to appear before you. Chairman Sessions. Thank you very much, Mr. Reaves. It is great to have you here. [The prepared statement of Mr. Reaves appears as a submission for the record.] Chairman Sessions. Do we have much time on that vote? Five minutes? We have got two votes back to back. I will get down at the end of the first one and cast a vote and try to be one of the first votes in the second and will be able to come back in probably ten to 15 minutes. Sorry to interrupt this at this point, but I will be right back. Thank you so much. [Recess.] Chairman Sessions. We will return to session. I apologize for the interruption, the votes that we had. We are in the Defense Supplemental War Act and some important matters and we just have to be here. We have troops in the field at risk and if we have to stay here until midnight and all weekend to get it done, we need to do that, as far as I am concerned, and I intend to work toward that end. Dr. Gerard Musante, we are delighted you are here. Obesity is a real problem in America. I would like to hear your take on it as a person professionally engaged in those issues and we are delighted that you could come. We will hear your statement at this time. STATEMENT OF GERARD J. MUSANTE, FOUNDER AND CHIEF EXECUTIVE OFFICER, STRUCTURE HOUSE, DURHAM, NORTH CAROLINA Mr. Musante. Good afternoon, Mr. Chairman. I am Dr. Gerard J. Musante. I appreciate the opportunity to appear before you today. I have been called here to share my expertise and educated opinion on the importance of personal responsibility in food consumption in the United States. This lesson is one I have been learning about and teaching for more than 30 years to those who battle moderate to morbid obesity, a lesson that emphasizes the criticality of taking responsibility for one's own food choices. I am testifying before you today because I am concerned about the direction in which today's obesity discourse is headed. We cannot continue to blame any one industry or any one restaurant for the nation's obesity epidemic. Instead, we must work together as a nation to address this complex issue, and the first step is to put the responsibility back into the hands of the individuals. As a clinical psychologist with training at Duke University Medical Center and the University of Tennessee, I have worked for more than 30 years with thousands of obese patients. I have dedicated my career to helping Americans fight obesity. My personal road, which included the loss and maintenance of 50 of my own pounds, began when I undertook the study of obesity as a faculty member in the Department of Psychiatry at Duke University Medical Center. There, I began to develop an evidence-based, cognitive behavioral approach to weight loss and lifestyle change. I continue to serve Duke University Medical Center as a consulting professor in the Department of Psychiatry. Since the early 1970's, I have published research studies on obesity and have made presentations at conferences regarding obesity and the psychological aspects of weight management. Today, I continue my work at Structure House, a residential weight loss facility in Durham, North Carolina, where participants come from around the world and the country to learn about managing their relationship with food. Participants lose significant amounts of weight while both improving various medical parameters and learning how to control and take responsibility for their food choices. Our significant experience at Structure House has provided us with a unique understanding of the national obesity epidemic. Some of the lessons I teach my patients are examples of how we can encourage Americans to take personal responsibility for health and weight maintenance. As I tell my participants, managing a healthy lifestyle and a healthy weight certainly are not easy to do. Controlling an obesity or weight problem takes steadfast dedication, training, and self-awareness. Therefore, I give my patients the tools they need to eventually make healthy food choices as we best know it. Nutrition classes, psychological understanding of their relationship with food, physical fitness training, and education are tools that Structure House participants learn, enabling them to make sensible food choices. As you know, the obesity rates in this country are alarming. The Centers for Disease Control and Prevention have recognized obesity and general lack of physical fitness as the nation's fastest growing health threat. Approximately 127 million adults in the United States are overweight, 60 million are obese, and nine million are severely obese. The country's childhood obesity rates are on a similar course to its adult rates, as well as increases in type II diabetes. Fortunately, Americans are finally recognizing the problem. Unfortunately, many are taking the wrong approaches to combatting this issue. Lawsuits are pointing fingers at the food industry in an attempt to curve the nation's obesity epidemic. These lawsuits do nothing but enable consumers to feel powerless in a battle for maintaining one's own personal health. The truth is, we as consumers have control over the food choices we make and we must issue our better judgment when making these decisions. Negative lifestyle choices cause obesity, not a trip to a fast food restaurant or a cookie high in trans fat. Certainly, we live in a litigious society. Our understanding of psychological issues tells us that when people feel frustrated and powerless, they lash out and seek reasons for their perceived failure. They feel the victim and look for the deep pockets to pay. Unfortunately, this has become part of our culture. The issue is far too comprehensive to lay blame on any single food market or manufacturer. These industries should not be demonized for providing goods and services demanded by our society. Rather than assigning blame, we need to work together towards dealing effectively with obesity on a national level. Furthermore, if we were to start with one industry, where would we stop? For example, a recent article in the Harvard Law Review suggests that there is a link between obesity and preference manipulation, which means advertising. Should we consider suing the field of advertising next? Should we do away with all advertising and all food commercials at halftime? We need to understand that this is a multi-faceted problem and there are many influences that play a part. While our parents, our environment, social and psychological factors all impact our food choices, can we blame them for our own poor decisions as it relates to our personal health and weight? For example, a recent study presented at the American Psychological Association Conference showed that when parents change how the family eats and offer children wholesome rewards for not being couch potatoes, obese children shed pounds quickly. Should we bring lawsuits against parents that don't provide the proper direction? Similarly, Brigham and Women's Hospital in Boston recently reported in Pediatrics Magazine that children who diet may actually gain weight in the long run, perhaps because of metabolic changes, but also likely because they resort to binge eating as a result of the dieting. Do we sue the parent for permitting their children to diet? From an environmental standpoint, there are still more outside influences that could erroneously be blamed for the nation's obesity epidemic. The Centers for Disease Control has found that there is a direct correlation between television watching and obesity among children. The more TV watched, the more likely the children will be obese. Should we sue the television industry, the networks, the cable, the television manufacturers, or the parents that permit this? Now we have Internet surfing and computer games. Where does it stop? School systems are eliminating required physical education. Are we also to sue the school systems that do not require these courses? Throw social influences into the mix and we have a whole new set of causes for obesity. Another recent study in Appetite Journal indicated that social norms can affect quantitative ratings of internal states such as hunger. This means that other people's hunger levels around us can affect our own eating habits. Are we to blame the individuals who are eating in our presence for our own weight problems? As evidenced in these studies, we cannot blame any one influencing factor for the obesity epidemic that plagues our Nation. Through working with obese patients, I have learned that the worst thing one can do is to blame an outside force to get themselves off the hook, to say it is not their fault, that they are a victim. To do this can bring about feelings of helplessness and then resignation. Directing blame or causality outside of oneself allows the individual not to accept responsibility and perhaps even to feel helpless and hopeless. ``The dog ate my homework,'' and ``The devil made me do it'' are statements that allow the individual not to take serious steps towards correction when they believe that these steps are not within their power. We must take personal responsibility for our choices. What does it mean to take personal responsibility for food consumption? It means making food choices that are not detrimental to your health and not blaming others for the choices we make. Ultimately, Americans generally become obese by taking in more calories than they expend, but certainly there are an increasing number of reasons why Americans are doing so, producing rising obesity rates. Some individuals lack self- awareness and over-indulge in food ever more so because of psychological reasons. Others do not devote enough time to physical activity, which becomes increasingly difficult to do in our society. Others lack education or awareness as it relates to nutrition and physical activity, particularly in view of lessened exposure to this information. And still others may have a more efficient metabolism or hormonal deficiencies. In short, there is yet much to learn about this problem. Congress has rightly recognized the danger of allowing Americans to continue blaming others for the obesity epidemic. It is imperative that we prevent lawsuits from being filed against any industry for answering consumer demands. The fact that we are addressing the issue here today is a step in the right direction. No industry is to blame and none should be charged with solving America's obesity problem. Rather than pointing fingers, we should be working together on a national level to address the importance of personal responsibility in food consumption. The people who come to Structure House have the unique opportunity to learn these lessons, but they are only a select few. These lessons need to be encouraged on a national level from an early age in schools, homes, and through national legislation that prevents passing this responsibility on to the food or related industries. In closing, I would like to highlight the fact that personal responsibility is one of the key components that I teach my patients in their battle against obesity. This approach has allowed me to empower more than 10,000 Americans to embrace improved health. I urge you to consider how this type of approach could affect the obesity epidemic on a national level by encouraging Americans to take personal responsibility for their health. By eliminating frivolous lawsuits against the food industry, we can put the power back into the hands of the consumers. This is a critical first step on the road towards addressing our Nation's complex obesity epidemic. For years, I have seen Presidents call for economic summits. I urge that we consider an obesity summit. Let me suggest, instead of demonizing industries, that we bring everyone to the table, representatives in the health care, industry, advertising, restaurants, Hollywood, school systems, parent groups, the soft drink industry, the bottling industry. Instead of squandering resources and defending needless lawsuits by pointing fingers, let us make everyone part of the solution. Let us encourage a national obesity summit where all the players are asked to come to the table and pledge their considerable resources towards creating a national mindset aimed at solving this problem. That would be in the interest of the American people. I feel privileged to be part of the Subcommittee's efforts. I want to thank you for allowing me to testify here before you today and I will be glad to answer any questions. Chairman Sessions. Thank you very much, Dr. Musante. Your personal experience with thousands of people who are overweight gives real authority, I think, to your testimony and we appreciate that. [The prepared statement of Mr. Musante appears as a submission for the record.] Chairman Sessions. Mr. Reaves, as I understand it, the restaurants do have health care requirements placed on them. They are required to have available for view the nutrition contents of a product and are required to meet other Federal and State standards in order to maintain an operational license. Would you agree that these standards are real and required by law? They are not haphazardly complied with, but fully complied with by most of the businesses in the fast food industry. Mr. Reaves. You are talking about the health regulations? Chairman Sessions. Yes. Mr. Reaves. Yes, sir. They are not only complied with, but they are strictly enforced by the State health departments and the local county health departments, more so the county, very strictly. Chairman Sessions. And you do have to provide calorie content and fat content information on foods you serve in your restaurants? Mr. Reaves. No, sir. Chairman Sessions. That is-- Mr. Reaves. That is not required. Chairman Sessions. What restaurants is that required for, none? Mr. Reaves. Mandatory, none that I am aware of. Chairman Sessions. Would you accept that as something that would be beneficial to the process of weight gain evaluation by customers? Mr. Reaves. Well, the restaurant industry is an industry of accommodation and choices. If customers have a question about our menu, we are more than happy to answer any questions that they have. A lot of companies now are providing information in the form of brochures and on the websites they have that information available, so-- Chairman Sessions. When a lawsuit is filed, that lawsuit results in your having to hire an attorney. If you have insurance, and I suspect you do-- Mr. Reaves. Yes. Chairman Sessions. --does the insurance company provide that attorney or do you have to have one of your own to watch the insurance company? Mr. Reaves. Well, I have liability, obviously, insurance, and I do have to pay a deductible. But they do supply the attorney. But I do have limits. Chairman Sessions. And you do have limits. Mr. Reaves. And once those limits are exceeded, then I am on my own. Chairman Sessions. Have you noticed any changes in your insurance premiums over the last decade or so? Mr. Reaves. Oh, yes sir. I mean-- Chairman Sessions. What can you tell us in your personal experience, if you recall? Mr. Reaves. I don't have the percentage, but it is basically a steady increase. Now, you remember a time in Alabama when we went through an insurance crisis, and that abated a little bit. But basically, it is you just anticipate an annual increase in the insurance rates. This past year, I believe my number was 23 percent, which was a high year for us, if I am not mistaken. Chairman Sessions. A 23 percent increase? Mr. Reaves. Yes if I am not mistaken. The year before, I had a good insurance policy. This year, it was time to pay the piper, but I did have an increase, yes. Chairman Sessions. Of course, insurance costs are pulled from your business' resources, making them unavailable for salaries, or bonuses, or expansion os stores and restaurants, is that correct? Mr. Reaves. That is correct. That is exactly correct. And one of the problems and the concerns that I have with this obesity issue is the insurance industry that I mentioned earlier and the article, ``Food Fright,'' one of the things that they say in this article, they comment that ``when you have an emerging issue, you look at what could be the potential financial impact and what are the things you could do to mitigate that impact. We could introduce a special endorsement that may limit the impact of these types of lawsuits, or there may be particular risks'' we wouldn't want to take. ``Nothing happens to change coverage until there is a precedent-setting lawsuit--I mean, judgment or settlement'', and this is out of their own, the insurance industry's magazine, and they have gone on to say, ``insurers haven't backed away from writing liability policies for restaurants yet. . . They aren't likely to do so until an obesity case is successful in winning a judgment or settlement against a restaurant'', and if that was to happen, I can't imagine what would happen to the rates. Would there be any restaurants or groups of restaurants or segments of the restaurant industry that the insurance industry would just say, we are not interested in insuring. The risk is too high. Chairman Sessions. Well, the theory is there. I have represented a plaintiff in an asbestos case and the legal theories are such that should cause stores to be concerned and restaurants to be concerned. For example, if you have asbestos damage and you have been made ill as a result and 100 different companies had asbestos at the plant where you were working, you can sue all 100 without any regard for how much one company contributed, or whether that company's fibers actually got into your lungs or not. Would it cause you concern as a small business person that to the extent of your deep pocket, however deep it is, you could be liable for the full amount of damage to any one plaintiff? Mr. Reaves. Yes, it very definitely bothers me. And think about the restaurant industry. Seventy percent of our 870,000 restaurants nationwide are individually owned. They wouldn't have the deep pockets. Many of those are local delis or a family that has put together a Chicken Finger restaurant. They wouldn't have the deep pockets to start with. I shudder to think what would happen again if it got to that point. Chairman Sessions. Mr. Reaves, to what extent do you worry about lawsuits, some of which might be legitimate or some of which might be fraudulent? In other words, someone comes in the store and slips and falls, or maybe somehow in the food system an error was made and an unhealthy product was delivered to the customer. Is that something that a business person in your line of work actually worries about on a daily basis, or is it something you just worry about when you hear about it? Mr. Reaves. No, it is absolutely something that I worry about. I keep an eye on my coverages to, make sure that I have got proper coverages, because I see and I get the industry publications. I see where people are sued, and I have been sued a number of times, never, as far as I am concerned, never legitimately, for legitimate reasons, rather. But yes, it is very definitely a concern. Chairman Sessions. But you-- Mr. Reaves. And if for any individual that is not a concern, it should be. Chairman Sessions. Dr. Musante, as I understand your testimony, you are saying that we are creating harmful conditions for people who are overweight by telling them it is somebody else's fault. It hurts them rather than helps them. Mr. Musante. Senator, that really is at the heart of my testimony. It is misleading. It really talks to causality and all this. Once people begin to feel powerless, they begin to feel that there is nothing they can do and then they are going to look around for someone to blame, and that is at the heart of all this. One of the things that we always have found out clinically with working with our patients, that in reality, when people have become obese, they will tell us that the majority of their calories are consumed privately. You do not see people publicly eating large amounts of food on a regular basis to be able to gain the kind of weight that required to acquire such high BMI (Body Mass Index,) figures. So this kind of private use of food is very much, from our experience, is at the heart of their obesity. And to begin to say that you can have no control over this overeating because of some industry would, I think, create an even worse situation in this country. It would lead obesity rates to increase more quickly. And again, it would sap the resources that could potentially be applied to a reasonable solution to this problem. Chairman Sessions. We recently had in the Joint Economic Committee, of which I am a member, a hearing chaired by Senator Bennett on obesity and the economic impact on the economy. We discussed a number of things. Do you have any thoughts about what we could do for young people, particularly to educate them in a realistic and effective way to assume responsibility for their diet and to avoid obesity-- Mr. Musante. Oh, yes, there is no question about it. Children really begin to develop their eating patterns from their parents, early on in life, and in fact, there is some data that indicates that at approximately, two to 5 years of age, many of the eating patterns can be laid down. Of course, that is about the same time that children learn to walk, and I know they are not walking to fast food restaurants at that age. So they have learned patterns from their parents at home that have might set them out on the wrong course. Certainly, this is something we should be concerned about because of the increases of obesity among children, increasing instances of type II diabetes among children. For example, type II diabetes traditionally has been called adult-onset diabetes. That term really needs to be changed, and it is being changed now. For example, in the State of Texas, there are more adolescents who are type II diabetics than there are adults. That is a serious, serious situation. From what we have seen, these early experiences come on early in life. They go into the school system where now any education about nutrition or physical fitness has really been taken out of the situation, and they are given a food program very often that is determined by the Federal Government until they get to their middle school years. I can tell you that in my hometown of Durham, the superintendent of the schools has said that the minute those children have an opportunity to eat on their own, the foods they tend to go for are french fries and pizza. This is very indicative of the fact that even though these children might have been given a proper experience by the kinds of foods that the Federal Government has indicated they should be eating over grade school, they have learned these negative food patterns elsewhere, and the patterns are really learned again, from the parents in the household. There are programs, an experimental research program for study that was done in Minnesota. The researchers there went into the school system to alter the choices that children made in the cafeteria. It was a junior high school where this joint project got the vendors together, the soft drink people together, the schools together, the parents together, and as a group, they worked on this, and they really did affect the amount of food or the quality of the foods that children were eating as a result of a broader-based educational program. So I would really urge something that is done early on in life that includes the parents and really allows these children to learn while they are going through school, the proper way in which they can balance their food intake and their energy expenditure and not to be saddled with this problem for the rest of their life and endanger their health. Chairman Sessions. Now, do I get an optimistic or pessimistic note here; that if a school takes strong steps to provide good advice on nutrition, that that will impact the child? Mr. Musante. The early results are showing, yes, it would. And in fact-- Chairman Sessions. Though some children would go home and eat unhealthy products. Mr. Musante. Well, they might because of what is going on at home, and the extension of that study now, the same researchers in Minnesota are doing a pilot program with parents to try to get them to change things. Interestingly enough, and the group that they selected, the volunteer group of parents, didn't particularly have a high level of education or a high level of income, but they were all very concerned about this. Everybody knows about this problem now. In our own city of Durham, North Carolina, I am very pleased that we are going to be working with the public instruction, the county, the school system, and Duke Medical Center to really develop a program that is going to be aimed at helping the parents and the children in the schools to begin to alter their selections. This is the kind of a program that is needed, where we get groups of people together, all concerned about this problem, so that we are working together, not fighting in a courtroom. This serves no purpose. It is adversarial. I have never believed in that. I believe in bringing people together and recognizing the problem, then going out together to do something about it, and I think people are willing to do that. You just have to give them a chance, rather than fighting with them first. Chairman Sessions. And the people you have counseled, do you have success in having people take off weight? Mr. Musante. Oh, yes. We have folks that lose significant amounts of weight. Now, you have to understand, the people we work with can be anywhere from 20 pounds overweight to 200 pounds overweight, so we really run the gamut in terms of obesity and the like. But we have done follow-up studies a number of times in various ways. When you are working with a clinical population and you are working with people all over the country, that is always a complex problem in terms of tracking each particepant. We are also now tracking our success--but we have done that in various ways three times before. We are also doing it now with a cohort of people that left about five or 6 years ago and we are going to track them and we have a great deal of data on these individuals and the results are very encouraging. Generally, approximately half of our patients will go home, continue to lose weight or keep weight off over a considerable period of time, and that can be anywhere from six--when we have looked at it, anywhere from 6 months to 5 years. So the impacts can be made. You see people's lives that turn around. You see people whose lives have been saved, and they always come in, of course, and thank us for that, and I always say, ``Well, it is not us, it is you. You have done this. You have taken responsibility for this and look where you are now.'' So it really is an issue that has to be directed back to them. Having said that, there still are many issues to learn about this problem. We really are just scratching the surface. I just came back this week from our National conference. The North American Association for the Study of Obesity took place in Fort Lauderdale. We presented some of our research there. And this is a composition of folks from every discipline-- epidemiology, nutrition, surgeons, physicians, psychologists, basic medical sciences. And certainly, everybody is looking at every aspect of this problem. The feeling was, well, there is so much to be learned. No one could pinpoint any one thing. I have to say no one was really pointing any fingers at the food industry. As a matter of fact, the one finger that was pointed, I might add, was at the Federal Government for not providing enough research money. But other than that, there is an understanding that this is a multi-faceted problem and we have to approach it in that way. There are some things, however, we know as to what needs to be done now, and that is moving into the schools early on, working with the parents and getting them to set a course of action that is going to lead to good health and not obesity. Chairman Sessions. Thank you. I appreciate those comments. Mr. Reaves, I know that the groups are plotting how to file these lawsuits and they won't let Professor Schwartz participate in their discussions. We can expect that if we allow lawsuits to be filed on theories that are unjust and certainly contrary to our basic history of what liability should be for, then it is the Congress's fault. I find it hard to say lawyers shouldn't get together and see if they can figure out a way to file a lawsuit and be successful if the lawsuit is consistent with the law. I think a lot of this is Congress's responsibility. We are going to have to step up to the plate and deal with the litigation issue. Maybe we need to be spending more research money on obesity and what we can do and what we can tell schools and parents precisely to do to help themselves and their children contain weight gain. That is important. Do either of you have any further comments for the record or for the hearing today? Dr. Musante. Only to say that I applaud your efforts. I applaud your efforts for bringing this to people's attention and I do trust that our public discourse can be properly directed. Chairman Sessions. I thank you for that. I thank you for your excellent testimony. Mr. Reaves, you bring us the perspective of the person out trying to run a business and run a restaurant. Dr. Musante, we appreciate your testimony from the perspective of how people gain weight and what we can do to help them take that off. We will leave the record open for one week for follow-up questions, statements, or any other items that Senators would like to submit. This record, I think, is a pretty good record dealing with the issues raised by Senator McConnell's legislation. Using this, I think we can make a decision and possibly move forward toward reform in this area. We thank you very much. We are dismissed. 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