[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




                  LAWSUIT ABUSE REDUCTION ACT OF 2015

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON THE CONSTITUTION
                   
                           AND CIVIL JUSTICE

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                       
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                                   ON

                                H.R. 758

                               __________

                             MARCH 17, 2015

                               __________

                           Serial No. 114-15

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov
      
            
                                      ______
 
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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
LAMAR S. SMITH, Texas                ZOE LOFGREN, California
STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa                       Georgia
TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas                 JUDY CHU, California
JIM JORDAN, Ohio                     TED DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho                 HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas              DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia                SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

           Subcommittee on the Constitution and Civil Justice

                    TRENT FRANKS, Arizona, Chairman

                  RON DeSANTIS, Florida, Vice-Chairman

STEVE KING, Iowa                     STEVE COHEN, Tennessee
LOUIE GOHMERT, Texas                 JERROLD NADLER, New York
JIM JORDAN, Ohio                     TED DEUTCH, Florida

                     Paul B. Taylor, Chief Counsel

                    James J. Park, Minority Counsel
                    
                    
                            C O N T E N T S

                              ----------                              

                             MARCH 17, 2015

                                                                   Page

                                THE BILL

H.R. 758, the ``Lawsuit Abuse Reduction Act......................     3

                           OPENING STATEMENTS

The Honorable Trent Franks, a Representative in Congress from the 
  State of Arizona, and Chairman, Subcommittee on the 
  Constitution and Civil Justice.................................     1
The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Ranking Member, Subcommittee on the 
  Constitution and Civil Justice.................................     5
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary     9

                               WITNESSES

Elizabeth Milito, Senior Executive Counsel, NFIB Small Business 
  Legal Center
  Oral Testimony.................................................    11
  Prepared Statement.............................................    13
Robert S. Peck, President, Center for Constitutional Litigation, 
  PC
  Oral Testimony.................................................    23
  Prepared Statement.............................................    25
Cary Silverman, Partner, Shook, Hardy & Bacon LLP
  Oral Testimony.................................................    44
  Prepared Statement.............................................    46

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by the Honorable Steve Cohen, a Representative 
  in Congress from the State of Tennessee, and Ranking Member, 
  Subcommittee on the Constitution and Civil Justice.............     7
Material submitted by the Honorable Ted Deutch, a Representative 
  in Congress from the State of Florida, and Member, Subcommittee 
  on the Constitution and Civil Justice..........................    66

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of Ralph Nader................................    95
Letter from the American Bar Association (ABA)...................    96
Response to Questions for the Record from Robert S. Peck, 
  President, Center for Constitutional Litigation, PC............   100

 
                  LAWSUIT ABUSE REDUCTION ACT OF 2015

                              ----------                              


                        TUESDAY, MARCH 17, 2015

                        House of Representatives

                   Subcommittee on the Constitution 
                           and Civil Justice

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 10:06 a.m., in 
room 2141, Rayburn Office Building, the Honorable Trent Franks, 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Franks, Goodlatte, Gohmert, Cohen, 
Nadler, and Deutch.
    Staff Present: (Majority) Paul Taylor, Subcommittee Chief 
Counsel; Tricia White, Clerk; (Minority) James Park, Minority 
Counsel; and Veronica Eligan, Professional Staff Member.
    Mr. Franks. The Subcommittee on the Constitution and Civil 
Justice will come to order. Without objection, the Chair is 
authorized to declare recesses of the Committee at any time. 
Good morning.
    Currently, Rule 11 of the Federal Rules of Civil Procedure 
sets out one of the most basic requirements for litigation in 
Federal court, that papers filed with a Federal district court 
must be based on both the facts and the law.
    That is to say, anytime a litigant signs a filing in 
Federal court, they are certifying that ``to the best of the 
person's knowledge, information, and belief'' the filing is 
accurate, based on the law or reasonable interpretation of the 
law, and is brought for a legitimate purpose.
    Now, this is a simple requirement, one that both sides to a 
lawsuit must abide by, if we are to properly have a functional 
Federal court system. However, under the current Federal 
procedure rules, there is no requirement that a failure to 
comply with Rule 11 results in sanctions for the party that 
filed that frivolous lawsuit. The fact that litigants can 
violate Rule 11 without penalty significantly reduces the 
deterrent effect of Rule 11.
    This harms the integrity of the Federal courts and forces 
both plaintiffs and defendants to spend money to respond to 
frivolous claims and arguments with no guarantee of 
compensation when the claims against them are found frivolous 
by a Federal judge.
    The Lawsuit Abuse Reduction Act corrects this flaw by 
requiring that Federal district court judges impose sanctions 
when Rule 11 is violated. It will relieve litigants from the 
financial burden of having to response to frivolous claims by 
requiring those who violate Rule 11 to reimburse the opposing 
party reasonable expenses incurred as a direct result of the 
violation.
    Furthermore, the legislation eliminates Rule 11's 21-day 
safe harbor provision, which currently gives litigants a free 
pass to make frivolous claims so long as they withdraw those 
claims if the opposing side objects within 21 days. As Justice 
Scalia correctly pointed out when Rule 11 was gutted in 1933, 
``Those who file frivolous suits and pleadings should have no 
safe harbor. Parties will be able to file thoughtless, 
reckless, and harassing pleadings, secure in the knowledge that 
they have nothing to lose. If objection is raised, they can 
retreat without penalty.''
    Now although this legislation makes changes to Rule 11, it 
is important to recognize that nothing in this legislation 
changes the standard by which courts determine whether a 
pleading or a filing violates Rule 11. Courts will apply the 
same legal standard they currently apply to determine if a 
filing is frivolous under the rule.
    So in the end, all this legislation really does is make the 
technical and conforming changes to Rule 11 necessary to make 
sanctions mandatory rather than discretionary. Victims of 
frivolous lawsuits are just as deserving of compensation as any 
other victim, and there is no reason those who are the victims 
of frivolous lawsuits in Federal court should be the only 
litigants to go without compensation when they prove their 
injuries in court.
    According to Federal Rules of Civil Procedure, the goal of 
the rules is to ensure that every action and proceeding in 
Federal court be determined in a ``just, speedy, and 
inexpensive'' manner. That goal is best served through 
mandatory sanctions for violating the simple requirements of 
Rule 11 that every filing be based on both the law and the 
facts.
    And finally, this bill has been introduced in the House and 
Senate in previous Congresses. This Congress is different. For 
the first time, this bill has been introduced in the Senate by 
the Chairman of the Senate Judiciary Committee himself, Senator 
Charles Grassley, who is a leading advocate for the rights of 
victims, including the victims of frivolous lawsuits.
    With that, I look forward to hearing from all of our 
witnesses today, and I would now recognize the Ranking Member 
of the Subcommittee, Mr. Cohen from Tennessee, for his opening 
statement.
    [The bill, H.R. 758, follows:]
    
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                               __________
                               
    Mr. Cohen. Thank you, Mr. Chair.
    Today, we consider H.R. 758, titled the ``Lawsuit Abuse 
Reduction Act of 2015.'' It is substantially identical to bills 
we considered in the 112th and 113th Congresses, and we have 
considered even earlier versions of this bill going back at 
least a decade. Given this fact, I have this Bill-Murray-like 
feeling of being here before in Groundhog Day.
    H.R. 758, like its predecessors, is a solution in search of 
a problem that would threaten to do more harm than good, if 
enacted. H.R. 758 would restore the 1983 version of Rule 11 of 
the Federal Rules of Civil Procedure by making sanctions for 
Rule 11 mandatory and eliminating the current safe-harbor 
provision that allows a party to withdraw or correct any 
allegedly offending submission to the court within 21 days 
after service of submission.
    Safe harbor is important. The Chair in his opening remarks 
said it just guarantees that people have recourse. Well, they 
have recourse, but it is up to the judge's determination, and 
it is important that the judge have that discretion, I think.
    Moreover, the bill would go beyond the 1983 rule by 
requiring the court to award these reasonable attorney's fees 
and costs. I am all in favor of Rule 11, and sanctioning 
attorneys that violate such with frivolous lawsuits. But right 
now, they are discretionary, in the court's discretion. And we 
have judges for a reason, and they have more intimate knowledge 
of the facts and the circumstances and the attorneys involved 
in the safe-harbor option.
    No empirical evidence suggests there is a need, really, to 
change Rule 11. In fact, there were good reasons why the 
Judicial Conference of the United States amended the 1983 Rule 
11. And for these same reasons, H.R. 758 is ill-advised.
    The 1983 rule caused excessive litigation. Many civil cases 
had a parallel track of litigation, referred to as satellite 
litigation, over Rule 11 violations, because having mandatory 
sanctions and no safe harbor provisions caused parties on both 
sides to litigate the Rule 11 matter to the bitter end, so 
courts become more loaded with crowded dockets.
    The dramatic increase in litigation spawned by the 1983 
rule not only resulted in delays in resolving the underlying 
case, it increased costs for the litigants, but also strained 
our judicial resources. It is clear H.R. 758 will result in 
more, not less, litigation and impose a greater burden on the 
judiciary.
    Ultimately, the type of Rule 11 sanctions regime that H.R. 
758 envisions will only favor those with the money and 
resources to fight expensive and drawn-out litigation battles. 
H.R. 758 also threatens judicial independence by removing that 
discretion that judges presently have in determining whether or 
not to impose sanctions. It circumvents the painstakingly 
thorough rules-enabling act process by recklessly attempting to 
amend the rules directly, even over the Judicial Conference's 
objections.
    I would like each of our witnesses to tell me a precedent 
where rather than our process being that the courts recommend 
and propose rules and we approve or disapprove, where we in the 
Congress have in the past changed the rules by legislation 
without the courts submitting rules. It is definitely a 
deviation in the process of the judiciary making the rules, 
with the check and balance of the legislature approving or 
disapproving. We can disapprove a rule or recommend, but I 
believe it is extremely rare.
    And I look forward to our experts telling me where the 
legislature has specifically made a law that changed a rule 
without the judiciary coming forth on that.
    We know the 1983 rule had a disproportionally chilling 
impact on civil rights cases, and that is most concerning to me 
and to others. And there is no reason to think H.R. 758 will 
not have such a similar chilling effect.
    We just came through the reenactment of the Selma march. We 
have seen so many failures in our legislative and political 
system, to where we haven't moved forward on civil rights; we 
moved backward. And what happened in Selma, we need to see that 
we have vigorous enforcement of civil rights and voting rights. 
And this could be a chilling effect on civil rights cases that 
depend sometimes on novel arguments for the extension, 
modification, or reversal of existing laws that have brought us 
into the 21st century.
    Not surprisingly, the Federal Judicial Center found that 
the incidence of Rule 11 motions was higher in civil rights 
cases than other type of cases when the 1983 rule was in place, 
notwithstanding the fact that the 1983 rule was neutral on its 
face.
    Even a landmark case like the Brown v. Board of Education 
argument may have been delayed or may not have been pursued to 
its conclusion had our H.R. 758 changes to Rule 11 been in 
effect at the time. Certainly, the legal arguments in that case 
were novel and not based on existing law. At a minimum, 
defendants could have used Rule 11, as amended by H.R. 758, as 
a weapon to dissuade the plaintiffs or weaken their resolve.
    The Judicial Conference of the United States, the 
policymaking arm of the Federal judiciary, opposed legislation 
substantially identical to H.R. 758 last conference. Similarly, 
the American Bar Association in the past, and a coalition of 
groups concerned about justice--the Alliance for Justice, 
Consumer Federation of America, the National Consumer Law 
Center, and the National Employment Lawyers--previously opposed 
the measure.
    I ask unanimous consent to add a letter in opposition sent 
to the Subcommittee by Public Citizen dated March 16 be 
submitted into the record, and I appreciate that.
    Mr. Franks. Without objection.
    [The information referred to follows:]
    
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                               __________
    Mr. Cohen. H.R. 758 takes away judicial discretion, which 
is so needed, and would result in more litigation rather than 
less.
    I urge my colleagues to oppose and yield back the balance 
of nonexistent balance of time.
    Mr. Franks. And I thank the gentleman.
    And I now yield to the Chairman of the Committee, Mr. 
Goodlatte of Virginia.
    Mr. Goodlatte. Well, thank you, Mr. Chairman.
    H.R. 758, the ``Lawsuit Abuse Reduction Act OF 2015,'' 
would restore mandatory sanctions for frivolous lawsuits filed 
in Federal court. Many Americans may not realize it, but today, 
under what is called Rule 11 of the Federal Rules of Civil 
Procedure, there is no requirement that those who file 
frivolous lawsuits pay for the unjustified legal costs they 
impose on their victims, even when those victims prove to a 
judge the lawsuit was without any basis in law or fact.
    As a result, the current Rule 11 goes largely unenforced, 
because the victims of frivolous lawsuits have little incentive 
to pursue additional litigation to have the case declared 
frivolous when there is no guarantee of compensation at the end 
of the day.
    H.R. 758 would finally provide light at the end of the 
tunnel for the victims of frivolous lawsuits by requiring 
sanctions against the filers of frivolous lawsuits, sanctions 
which include paying back victims for the full costs of their 
reasonable expenses incurred as a direct result of the Rule 11 
violation, including attorneys' fees.
    The bill also strikes the current provisions in Rule 11 
that allow lawyers to avoid sanctions for making frivolous 
claims and demands by simply withdrawing them within 21 days. 
This change eliminates the free pass lawyers now have to file 
frivolous lawsuits in Federal court.
    The lack of mandatory sanctions leads to the regular filing 
of lawsuits that are clearly baseless. For example, a man sued 
a small-business owner for violations of Federal regulations in 
a parking lot he doesn't own or lease. A woman had her car 
repossessed and then filed a $5 million Federal lawsuit for the 
half tank of gas she had left in the car. A high school teacher 
sued a school district, claiming it discriminated against her 
because she has a phobia, a fear of young children. Her case 
was dismissed by the Equal Employment Opportunity Commission, 
but that didn't prevent her from filing a Federal lawsuit.
    These real yet absurd cases have real-life consequences for 
their victims. But the victims of lawsuit abuse are not just 
those who are actually sued. Rather, we all suffer under a 
system in which innocent Americans everywhere live under the 
constant fear of a potentially bankrupting frivolous lawsuit.
    As the former chairman of The Home Depot company has 
written, an unpredictable legal system casts a shadow over 
every plan and investment. It is devastating for startups. The 
cost of even one ill-timed abusive lawsuit can bankrupt a 
growing company and cost hundreds of thousands of jobs.
    The prevalence of frivolous lawsuits in America is 
reflected in the absurd warning labels companies must place on 
their products to limit their exposure to frivolous claims. A 
5-inch brass fishing lure with three hooks is labeled ``harmful 
if swallowed.'' In a warning label on a baby stroller, the 
caution is ``remove child before folding.'' A sticker on a 13-
inch wheel on a wheelbarrow warns, ``not intended for highway 
use.'' A household iron contains the warning, ``never iron 
clothes while they are being worn.'' And a cardboard car sun 
shield that keeps sun off the dashboard warns, ``do not drive 
with sun shield in place.''
    In his 2011 State of the Union address, President Obama 
said, quote, ``I am willing to look at other ideas to rein in 
frivolous lawsuits.'' Mr. President, here it is, a one-page 
bill that would significantly reduce the burden of frivolous 
litigation on innocent Americans.
    I thank the former Chairman of this Committee, Lamar Smith, 
for introducing this simple, common-sense legislation that 
would do so much to prevent lawsuit abuse and restore 
Americans' confidence in the legal system.
    I look forward to hearing the testimony of our witnesses, 
and I yield back.
    Thank you, Mr. Chairman.
    Mr. Franks. And I thank the gentleman.
    And without objection, other Members' opening statements 
will be made part of the record.
    So let me now introduce our witnesses. Good morning to all 
of you.
    Our first witness is Elizabeth Milito, the senior executive 
counsel with the National Federation of Independent Business' 
Small Business Legal Center. Previously, she has worked for the 
U.S. Department of Veterans Affairs where she focused on 
employment and labor matters, a former editor of Notes and 
Comments for the Maryland Law Review, and a graduate of the 
University of Maryland's School of Law. Ms. Milito is 
responsible for managing cases and legal work for the NFIB 
Small Business Legal Center and working on labor and employment 
policy.
    Glad to have you here.
    Our second witness is Robert Peck, president of the Center 
for Constitutional Litigation. Mr. Peck has taught 
constitutional law and State constitutional law at the George 
Washington University Law School and American University 
Washington College of Law as a member of adjunct faculty. He is 
a co-chair of the Lawyers Committee of the National Center for 
State Courts, and a delegate in the American Bar Association's 
House of Delegates.
    Welcome, sir.
    Our third witness is Cary Silverman, a partner at the 
Shook, Hardy & Bacon Law firm in Washington, D.C. Mr. 
Silverman's public policy work focuses on civil justice reform, 
and he has published over 25 articles in prominent law 
journals. He is a recipient of the Burton Award for Excellence 
in Legal Writing, and an adjunct professor at the George 
Washington University Law School, where he earned his J.D. and 
master's of public administration.
    Welcome, sir.
    Each of the witnesses' written statements will be entered 
into the record in its entirety, so I would ask that each of 
you summarize his or her testimony in 5 minutes or less. And to 
help you stay within that time, there is a timing light in 
front of you. The light will switch from green to yellow, 
indicating that you have 1 minute to conclude your testimony. 
When the light turns red, it indicates that the witness's 5 
minutes have expired.
    And before I recognize the witness, it is the tradition of 
the Subcommittee that they be sworn, so if you would please 
stand and be sworn.
    Do you solemnly swear that the testimony that you are about 
to give will be the truth, the whole truth, and nothing but the 
truth, so help you God?
    You may be seated.
    Let the record reflect that the witnesses answered in the 
affirmative.
    So I would now recognize our first witness, Ms. Milito. 
And, Ms. Milito, if you would make sure you turn that 
microphone on before speaking.

 TESTIMONY OF ELIZABETH MILITO, SENIOR EXECUTIVE COUNSEL, NFIB 
                  SMALL BUSINESS LEGAL CENTER

    Ms. Milito. Thank you, Mr. Chairman, and distinguished 
Subcommittee Members for inviting me to provide testimony 
regarding the impact lawsuits, and particularly frivolous 
lawsuits, have on small businesses.
    While specific stories of lawsuit abuse vary from business 
to business, there is one reoccurring theme: This country's 
legal climate hinders economic growth and hurts job creation.
    Due to this, NFIB's members and small-business owners 
throughout the country are fed up with the inability to pass 
meaningful legal reform. When it comes to lawsuits and small 
business, today I wish to highlight four things.
    First, small businesses are easy targets for frivolous 
lawsuits. Sophisticated attorneys do not sue NFIB members. 
Instead, small businesses are more likely to be sued by 
smalltime lawyers, who threaten cookie-cutter lawsuits that are 
expected to be settled immediately.
    One of the most prevalent forms of lawsuit abuse occurs 
when plaintiffs or their attorneys are merely trolling for 
cases. A plaintiff or an attorney will travel from business to 
business, looking for violations of a particular law. In such 
cases, the plaintiff is generally not as concerned with 
correcting the problem as she is with extracting a settlement 
from a small-business owner. In many instances, the plaintiff's 
attorney will initiate the claim, not with a lawsuit, but with 
a demand letter, requesting immediate settlement.
    In California, attorneys have been known to rake in several 
million dollars a year fleecing small-business owners with 
these sorts of schemes. Ann Kinner, who owns Seabreeze Books & 
Charts in Point Loma, California, is one such small-business 
owner and an NFIB member who has been targeted by frivolous 
litigation.
    Kinner's store has been sued twice for ADA violations. She 
went to court, fought, and won both these lawsuits. But the 
defense has cost her $10,000, money she could have used, in her 
words, to pay a new employee for half a year. In Kinner's 
words, ``The only people who win in these cases are the 
lawyers.''
    Two, small businesses settle and avoid going to court. When 
a conflict arises, small businesses or the insurer on their 
behalf will likely pay rather than fight a claim, whether there 
is a meritorious defense or not. Calculating attorneys know 
that they can extort settlements from small businesses by 
threatening to sue. Small businesses simply cannot absorb the 
costs of a legal battle as easily as larger businesses or, for 
that matter, the cost of paying damages if they should lose in 
the end.
    This means that, in many cases, the small-business owner 
may be risking financial ruin if the owner refuses to settle. 
Since there is no guarantee that, at the end of the fight, the 
defendant will prevail, small-business owners often rationally 
opt to avoid the costs of litigation by agreeing to settle 
claims that they believe to be without merit. Indeed, they will 
rationally decide to settle cases where they realize that the 
probable cost of litigation will exceed the benefit of winning 
in court.
    Three, small businesses pay more to fight frivolous claims. 
While NFIB members are loath to write a check to settle what 
they perceive to be a frivolous claim, they express as much, if 
not more, frustration with the time spent defending against a 
lawsuit. In the end, of course, time is money to a small-
business owner.
    Once the suit is settled, however, the small-business owner 
will pay with higher insurance premiums. Typically, it is a 
fact that the small-business owner settled a case, for any 
amount, which drives up the insurance rates. It does not matter 
if the business owner was ultimately found liable.
    Many small-business owners understand this dynamic and, as 
a result, will settle claims without notifying their insurance 
carrier. As such, small businesses annually pay over $35 
billion out of pocket to settle these claims.
    Four, small businesses support common-sense legal reform 
like H.R. 758. In crafting solutions here, we must acknowledge 
the practical circumstances of the small-business owner 
threatened with protracted legal battle. Regardless of whether 
the plaintiff's claims are meritorious, the small-business 
owner faces a difficult, and often impossible, dilemma: Settle 
or risk everything.
    For this reason, NFIB has championed the Lawsuit Abuse 
Reduction Act, which focuses on tightening sanctions for 
frivolous lawsuits. This is the best reform, to date, to rein 
in the bottom feeders that target small business.
    Simply put, NFIB believes that this bill will help 
disincentive both plaintiff and defense attorneys from taking 
brash and cavalier legal positions that result in frivolous and 
protracted litigation.
    We are hopeful through your deliberations you can strike 
the appropriate balance to protect those who are truly harmed 
and the many unreported victims of our Nation's civil justice--
America's small businesses.
    Thank you very much, and I look forward to answering any 
questions you might have.
    [The prepared statement of Ms. Milito follows:]
    
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                               __________
    Mr. Franks. Thank you, Ms. Milito.
    And I now recognize our second witness, Mr. Peck. Please 
turn on your microphone, sir, before speaking.

            TESTIMONY OF ROBERT S. PECK, PRESIDENT, 
            CENTER FOR CONSTITUTIONAL LITIGATION, PC

    Mr. Peck. Thank you, Mr. Chair.
    The 1983 rule was a failed experiment that caused some of 
the strongest judicial advocates of mandatory sanctions to 
reverse course and support its internment. Judge William 
Schwarzer, who also served as head of the Federal Judicial 
Center, originally supported the changes but later saw that it 
was used for tactical purposes, multiplied proceedings, caused 
waste and delay, and increased tensions between the parties. It 
made the job of judges harder.
    The Judicial Conference, which opposes this legislation, 
has told this Committee that the 1983 experiment spawned a 
cottage industry of tremendously wasteful satellite litigation 
that was all about strategic gamesmanship. It is a typical 
defense tactic to take a case away from the substance of the 
dispute, delay resolution, and outwait the patience and 
resources of the injured party who is desperate to be 
compensated for his or her injuries.
    The mandatory nature of the 1983 version encouraged this. 
The discretionary nature of the current rule caused much of 
that churning to evaporate.
    Many lawsuits have multiple counts. Success on any one of 
them is success. The 1983 version of Rule 11 had the perverse 
effect of causing post hoc review of the counts that did not 
succeed, resulting in sanctions against the prevailing parties. 
A discretionary approach to sanctions allows a judge to 
separate the wheat from the chaff and only sanction when 
warranted.
    Sometimes a novel but difficult cause of action fails, but 
helps illuminate the merits of a sister cause of action pleaded 
together. As I stated in my written testimony, both Brown v. 
Board of Education and National Federation of Independent 
Business v. Sebelius, the Obamacare challenge of 2012, would 
likely have faced Rule 11 motions under the 1983 regime, but 
not under the current approach.
    The switch to the 1993 rule did not cause frivolous 
lawsuits to be filed. Judges have reported that little changed 
in filings, and, in fact, they may have improved.
    Truly frivolous cases are still sanctioned. Judges have the 
same authority that this bill would require of them, and the 
requirement of making it mandatory sort of indicates that 
judges, who really have very little patience for someone who 
wastes their time and are ready to invoke sanctions, are 
basically not trusted to act with the discretion that the 
current rule allows. They have that authority, and they can 
award attorneys' fees and costs under the current regime.
    Sanctions are not always the best result. The distrust I 
mentioned is exacerbated by the distrust of the process set out 
by the Rule's Enabling Act. Rather than allow the courts to 
determine how to govern their own proceedings, H.R. 758 would 
directly amend Rule 11, cutting the judiciary out of the 
process altogether. It is not hard to imagine the protests that 
this body would make if the judiciary did the same as to how 
Congress conducted its own proceedings.
    Despite claims that civil rights cases, in particular, were 
not adversely affected once judges got the hang of the 1983 
rule, the devastating impact on civil rights cases was 
palpable. The drop off could be explained by fewer cases, only 
the slam-dunks being filed, because of fear of sanctions.
    Even if advocates are right, that judges eventually are 
going to be less harsh on civil rights cases, we have a new 
generation of judges now who would go through the same growing 
pains that the 1983 version had, thereby harming the 
constitutional right of access to the courts.
    The safe harbor language in H.R. 758 for civil rights in 
statuary-based claims does nothing to alleviate the problem. It 
merely repeats the same standard that applies to all cases, 
regardless of how the lawsuit is filed.
    I suggest that today's Iqbal and Twombly standard for 
pleadings sufficiently protects against ill-considered 
lawsuits, making the comparisons between 1983 and 1993 
academic. The plausibility standard basically supercharges the 
1993 rule.
    I urge the Committee to reject this proposal, which seeks 
to return to what Professor Stephen Burbank accurately 
described as an irresponsible experiment with court access. Its 
enactment will only expose Americans to more harmful products 
and misconduct by diminishing the opportunity to hold those 
responsible accountable.
    We would not know about the ignition switch defect in GM 
vehicles that took lives if the 1983 rule, the rule that this 
bill would re-establish, was in effect, because the case was 
filed on a theory that there was a problem with the steering 
wheel. Compulsory discovery unearthed the ignition switch 
problem.
    In addition, this legislation would add to the cost of 
litigation, not lower it, as the vast number of cases affected 
will not be sanctionable.
    The double counting, wildly inaccurate figures this 
Committee received that purport to reflect the cost of the tort 
system instead reflect the cost to maintain the insurance 
system plus the money that goes into it. It does not provide 
helpful or relevant information.
    Judges and attorneys overwhelmingly, plaintiff and defense, 
support the rule as it is written today. I urge you not to 
alter it.
    [The prepared statement of Mr. Peck follows:]
    
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    __________
    Mr. Franks. Thank you, Mr. Peck.
    And I would now recognize our third and final witness, Mr. 
Silverman.
    And, sir, if you would make sure that microphone is on.

             TESTIMONY OF CARY SILVERMAN, PARTNER, 
                    SHOOK, HARDY & BACON LLP

    Mr. Silverman. Good morning, Mr. Chairman, Ranking Member 
Cohen, and Members of the distinguished Subcommittee. Thank you 
for the opportunity to present testimony today on behalf of the 
U.S. Chamber's Institute for Legal Reform.
    The civil justice system is established to provide a remedy 
to a person who was wrongfully injured, to make that person 
whole. But what happens when the system is misused to harm 
someone, when it is transformed from righting a wrong to 
inflicting one? This happens when a person files a lawsuit to 
harass or extort someone, ``I'll sue you.'' It also happens 
when a lawyer takes a reckless or cavalier attitude, deciding 
to sue first and then research the law or investigate what 
actually occurred later.
    Now victims of frivolous lawsuits have no meaningful 
remedy. They are not made whole for the very real losses that 
they incur as a result of a wrongful act. It is a problem that 
stems from the Federal rules.
    The simple act of filing a short, plain statement of the 
claim, all that is needed to file a complaint, compels the 
person on the receiving end to respond. For an ordinary person 
or a small business, as Ms. Milito has shown, that means 
quickly hiring a lawyer and finding the money to pay the lawyer 
for his services. Lawyers are expensive. Dealing with the 
lawsuit means time away from work and lost income. It is 
stressful.
    Most of your constituents would be shocked to learn that, 
if they are hit with a lawsuit that has no basis whatsoever in 
law or fact, they have near zero chance of recovering a penny 
of their expenses, even if they can prove to a judge that the 
case was baseless or brought in bad faith, even if the case is 
certain to be thrown out.
    This is how Rule 11 works in practice. You can be the judge 
of its fairness.
    Let us say John Small is served with a $100,000 lawsuit by 
a tourist who claims that while visiting D.C. 2 years earlier, 
he tripped and fell in the 5th and N Street market. John has no 
recollection of this person or anyone else falling in his 
store. John now needs to hire an attorney to defend his family 
and his business from the lawsuit. The attorney quickly 
discovers that the plaintiff visited a store across town at 5th 
and N Northeast, not John's store at 5th and N Northwest.
    Nevertheless, the plaintiff's lawyer will not drop the 
claim. ``Let the court sort it out,'' he says. John's attorney 
tells his client that he should be able to get the case 
dismissed.
    Best-case scenario, John is looking at about $12,000 in 
legal fees for the cost of the initial investigation, preparing 
an answer, preparing a motion to dismiss, and appearing at any 
status conferences and hearings.
    The only way to seek recovery of his expenses is to file a 
motion for sanctions. This seems worthwhile to John until he 
learns three facts about Federal Rule 11.
    First, his attorney must draft a motion for sanctions, 
separate from the motion to dismiss, and share it with the 
plaintiff's lawyer before he can file it. This is more lawyer 
time and money, maybe about $5,000.
    Once the plaintiff's attorney receives the motion, he can 
then choose to withdraw the lawsuit. A judge will never see the 
motion. John will not have his day in court to ask for 
reimbursement. The plaintiff's lawyer walks away without 
consequence. The motion and money spent goes in the trash.
    Second, even if the plaintiff's attorney continues to 
pursue the lawsuit and the judge actually finds the case 
frivolous, the court may choose not to impose any sanction at 
all.
    Third, if the court does find a sanction appropriate, the 
rule prohibits the judge--we were talking about discretion 
here--the rule prohibits the judge from using sanctions for the 
purpose of reimbursing John's legal expenses. The court could 
simply require the plaintiff's lawyer to pay a small penalty to 
the court to deter future misconduct. That is what the rule 
says.
    The plaintiff's lawyer has asked for $10,000 to make the 
case go away, an amount just under the cost of litigation. 
John's attorney will give him three options. Option one, let us 
try to settle this case for $5,000 without incurring more costs 
for you, and you can move on with your life and your business. 
Option two, let us fight this lawsuit and be vindicated, but 
you will have to pay at least $12,000 in unrecoverable legal 
fees to get it dismissed. Third, let us seek dismissal and 
sanctions. You will incur closer to $20,000 in legal fees but 
you will have a very small chance of recovering some of them.
    Individuals, business owners, and their insurers routinely 
face this choice. Most settle and cut their losses. Some fight 
for dismissal on principle. Very few seek sanctions today.
    What choice would your constituents make?
    LARA restores a remedy for victims of lawsuit abuse and 
ensures that judges have an opportunity to consider whether 
claims and defenses are frivolous.
    Thank you.
    [The prepared statement of Mr. Silverman follows:]
    
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                         __________
                         
    Mr. Franks. Thank you all for your testimony. We will now 
proceed under the 5-minute rule with questions, and I will 
begin by recognizing myself for 5 minutes.
    Ms. Milito, we hear anecdotal stories of small businesses 
being forced to settle lawsuits for $5,000 or $10,000, not 
because there is any merit to the plaintiff's case, but because 
it is simply cheaper to settle than to defend against a 
lawsuit.
    In your experience, in addition to your testimony, can you 
elaborate? Does this occur? And if so, will the Lawsuit Abuse 
Reduction Act change this reality for at least some cases 
brought in or removed to Federal court?
    Ms. Milito. Thank you for that question, Mr. Chairman, and 
yes, absolutely.
    The passage of the bill would benefit small-business owners 
in many ways, and I want to go back to actually your word in 
your opening statement about the deterrent effect of the bill, 
and that is really so important. The business owners whom I 
represent and speak with on a near daily basis don't want to be 
in court, period. They don't want to be threatened with a 
lawsuit, but they don't want to be in court, period.
    And the simplicity of this bill is just that it is going to 
force attorneys, again both plaintiff attorneys and defense 
attorneys, to do their homework, and, as you said, before they 
file a paper in court, ensure that it is based on facts and 
law.
    I think it will really do a lot to deter these kinds of 
frivolous claims that might lead to a lawsuit, and deter 
attorneys from making these settlement demands, because of 
knowing that they can't file a suit afterwards, a frivolous 
claim afterwards. So I think it will have a very big impact on 
small businesses.
    Mr. Franks. Thank you.
    Mr. Silverman, recently, a prominent consumer advocate, 
Ralph Nader, described the Lawsuit Abuse Reduction Act as, 
quote, ``evenhanded,'' in that it would apply sanctions to both 
plaintiffs and defendants when they make frivolous claims or 
defenses.
    Can you help me understand why a gentleman with the 
perspective of Ralph Nader would describe this bill as, quote, 
``evenhanded''?
    Mr. Silverman. Well, Mr. Chairman, I think that even very 
knowledgeable people sometimes have the misconception that Rule 
11 only applies to frivolous claims brought by plaintiffs. But 
Rule 11 is actually an extremely balanced rule.
    If you look at its text, it applies to victims of frivolous 
litigation on both sides. It applies to any pleading, written 
motion, or other paper, whether it is filed by a plaintiff or a 
defendant. And a plaintiff's factual contentions must have 
evidentiary support, just as a defendant's claims of denial of 
facts must be based on evidence. Claims and defenses must be 
warranted by existing law.
    Plaintiffs can't file lawsuits to harass others, just as 
defendants cannot use delay tactics for purposes of litigation. 
That is all covered by Rule 11, and I think if you look at the 
case law between 1983 and 1993, you will see many cases, many 
Rule 11 sanctions, brought against defendants, as well.
    Mr. Franks. Thank you, sir. Let me just follow up.
    One of the concerns raised by mandatory sanctions is that 
they will potentially chill plaintiffs from being able to bring 
legitimate cases. Isn't the bar fairly high, in terms of what 
the courts would consider a frivolous claim? I mean, a 
frivolous claim isn't frivolous simply because the plaintiff 
loses. Can you elaborate on that?
    Mr. Silverman. Thank you, Mr. Chairman. Yes, that is 
correct.
    Plaintiffs with legitimate claims really should have no 
concern about LARA. Rule 11 sets a very high standard for a 
violation. It is not simply losing on a motion to dismiss. 
There has to be either an improper purpose shown--harassment or 
delay. There has to be no basis in fact, or no basis even after 
a legitimate chance for discovery, and no basis in the law or a 
reasonable argument for a change in the law.
    And judges have significant discretion under the current 
rule and under LARA to decide whether those standards apply. 
Judges are lawyers, too, and they are very reluctant to impose 
sanctions on a party's lawyer for not meeting these standards. 
They take a very hard look and take the responsibility very 
seriously.
    Mr. Franks. Well, thank you. And I will now yield 5 minutes 
to Mr. Cohen for questions.
    Mr. Cohen. Thank you, Mr. Chair.
    First, I asked each of you to consider telling me when 
there had been another instance where the Congress had 
initiated a law, a rule, without the courts requesting it.
    Ms. Milito, can you give me an example?
    Ms. Milito. I cannot and I would be happy to----
    Mr. Cohen. Mr. Silverman, can you give me an example?
    Mr. Silverman. Well, Mr. Cohen, there are examples----
    Mr. Cohen. What are they?
    Mr. Silverman [continuing]. Of situations where Congress 
has intervened when they found that fee shifting is supported 
by public policy. And those are not in the rules themselves, 
but they are in the statutes.
    Mr. Cohen. The answer is no. The answer is no. You know of 
no rule that has been passed this way.
    Mr. Silverman. No rule.
    Mr. Cohen. Mr. Peck?
    Mr. Peck. The only time that Congress has ever suggested 
any kind of procedural change is when it is intermingled with a 
new substantive cause of action. No general rules.
    Mr. Cohen. Thank you, sir.
    Ms. Milito, in your statement, you said, quote, unquote, 
``Smalltime lawyers bring these cases.'' As a self-practicing 
attorney, and I know lots of them, how do you define 
``smalltime lawyer''?
    Ms. Milito. I am talking about the lawyers that are 
printing out form complaints and maybe only changing the 
business name. Lawyers that are not doing their homework before 
they file a----
    Mr. Cohen. I would submit to you, that is--I don't know 
what you meant, but ``smalltime lawyer'' I find offensive to 
many lawyers who have small practices, who are smalltime 
businesspeople. They are small-business people and they work 
hard, and they work by the rules, and they bring cases, and 
they don't boilerplate. I would submit that you should try to 
find a better term than ``smalltime lawyers.''
    Ms. Milito. My intent was not to offend any attorneys. We, 
certainly, have many members at NFIB who are attorneys, and we 
have members at NFIB who----
    Mr. Cohen. Thank you. Thank you very much.
    Ms. Milito [continuing]. Practice plaintiff----
    Mr. Cohen. Mr. Peck or anybody else here, are you all 
familiar with the examples that the Chair gave about an ironing 
board warning that you shouldn't iron while clothes are on? And 
a fishing lure that you shouldn't ingest it? Or a wheelbarrow 
shouldn't be on the highway? Did the courts order that, because 
of a smalltime lawyer or some other lawyer that went into court 
and got some kind of a judgment? Or is that just a manufacturer 
being overboard?
    Mr. Peck. I am not aware of any case where liability was 
assessed for the failure to provide a warning of that nature.
    What we have found in studies that have been published in 
various law reviews is that often when these warnings appear, 
they are the result of in-house counsel making a suggestion to 
their company, saying, ``Let's use something like this so that 
there is no chance anyone can get it wrong.'' This is, of 
course, over-lawyering.
    Mr. Cohen. Mr. Silverman, the American Bar Association and 
the Federal Judicial Conference both oppose LARA. Neither are 
known to be great apologists for trial lawyers or smalltime 
lawyers. In the 2005 Federal Judicial Center, more than 80 
percent of judges who responded agreed that Rule 11 is just 
right in its current form. Only 5 percent favored the 1983 
revision.
    Why should Congress not defer to the judgment of the 
judiciary?
    Mr. Silverman. Mr. Cohen, Rule 11 is different, and LARA is 
different than other Federal rules. Unlike other rules that 
deal with changing the number of days for filing a complaint or 
an answer, how many interrogatories you can have, time limits, 
et cetera, it is not a purely procedural rule. This is a rule 
that deals with providing rights and remedies of people. It is 
something that Congress does----
    Mr. Cohen. I know what Rule 11 is, but the courts are all 
against it. If the Judicial Conference is against it, and the 
Bar Association is against it, why should we go against the 
expert logic and come up with something that----
    Mr. Silverman. They weren't against it when the rule was in 
effect. If you look back, there was a 1990 study where 95 
percent of judges said, and this was a survey of all of the 
judges, and 75 percent actually responded. Ninety-five percent 
said it did not impede development of the law. Three-quarters 
said that the benefit in deterring frivolous lawsuits and 
compensating those who are harmed outweighed the use of 
judicial time to decide the motions. And 4 out of 5 said it had 
a positive effect on litigation.
    Now, there are other studies, which others have cited here, 
and those are later. They are small----
    Mr. Cohen. And the Judicial Conference 3 years later 
recommended a change.
    Mr. Silverman. They did recommend the change----
    Mr. Cohen. But they don't recommend a change now. But you 
are submitting we should go against the Judicial Conference 
now?
    Mr. Silverman. The Judicial Conference knows a lot about 
the procedures, the mechanics of the courts, but this is an 
area that involves rights and remedies. And it is a good 
place----
    Mr. Cohen. This is an area where we should forget the 
courts and appeal to the thoughts of the public that think all 
judges are bad, that all government is bad, and we should kill 
the judges. This is what you are saying, that we shouldn't 
listen to the judges on this; we should listen to the public 
that says the judges are bad, the lawyers go first, and all 
that.
    Mr. Silverman. That is--that is----
    Mr. Franks. Mr. Silverman, you didn't say anything about 
killing the judges, did you?
    Mr. Silverman. I certainly did not.
    Mr. Franks. I just wanted to----
    Mr. Cohen. Shakespeare did that.
    Mr. Silverman. In fact, I would like more discretion than 
they have today to look at these cases.
    Mr. Cohen. Ms. Milito, small business said this is a very 
minor problem they have. They rated it, in surveys, the lower 
three or four out of 75 problems that they had with business. 
Cost and frequency of lawsuits, threatened lawsuits, was 71st 
out of a possible 75 in a survey taken in 2012 by the NFIB.
    Why is it such an important issue when it is 71st out of 
75?
    Ms. Milito. I am going to start off with a quote Mr. 
Silverman used in his testimony. Judge Learned Hand said, ``I 
should dread a lawsuit beyond almost anything short of sickness 
and death.'' If today you were told you had a terminal illness, 
I bet it would become your number one problem and priority. And 
as with a lawsuit, most of the members I speak with don't even 
think of it until it is staring them in the face.
    Mr. Cohen. Well, Ms. Milito, I don't have cancer right now, 
but I am concerned about it, and I am frightened of it and the 
prospect in the future of all the illness. And I think if it 
was a major thing for small business because it could happen, 
it would rank higher than 71st out of 75th.
    And I yield back the balance of my time.
    Mr. Franks. And I thank the gentleman.
    I now recognize Mr. Nadler, the gentleman from New York, 
for 5 minutes.
    Mr. Nadler. I thank you.
    Mr. Peck, one of the points against LARA is that it makes 
sanctionable, arguably, the use of novel legal theories, which 
could be considered frivolous, and that implicates, in 
particular, civil rights lawsuits. The Committee report from 
last Congress cited the case Nicole ``Nikki'' Youngblood, who, 
``filed suit after her picture was left out of the school 
yearbook when she refused to wear a feminine drape instead of a 
shirt and tie as she wished,'' as an example of a frivolous 
claim.
    To date, there are 14 States with laws that address 
discrimination against students based on gender identity. While 
the majority clearly considered Nikki to be an example of a 
frivolous lawsuit, might this be an example of a valid civil 
rights claim worthy of judicial consideration? Doesn't this 
highlight the potential chilling effect on civil rights claims? 
And by the same token, might the claim in Loving v. Virginia on 
mixed-race marriages or, in fact, when the same-sex marriage 
case brought before the Supreme Court, I forget how many 
decades ago, was dismissed as absurd. And now the Supreme Court 
has ruled differently.
    Might all of these things be barred and sanctionable under 
LARA, under this bill?
    Mr. Peck. It is entirely possible that they would be. We 
often get fractured versions of the facts that underlie cases 
when they are used as examples like this. But let me give you 
two examples from my own experiences, two cases that I am 
currently working on.
    In one, I am representing the City of Miami in a Fair 
Housing Act case that it brought against various banks. Los 
Angeles has also brought similar cases. In Los Angeles, the 
cases are in Federal Court. The ruling was against the motion 
to dismiss and the cases are going to trial. In Miami, the 
judge found a precedent that not even the banks had cited and 
said that there is no basis for the city to have standing here 
and that this was a frivolous argument.
    If this rule was in effect, the City of Miami would have 
been sanctioned for bringing this suit, which is approved by a 
U.S. Supreme Court case, which upheld the standing of 
municipalities to bring these kinds of lawsuits. We are now in 
the 11th Circuit on that case.
    A second case that I want to bring up, on Saturday, I 
received a petition for certiorari. Actually, it was two 
petitions for certiorari filed by Walmart out of a Pennsylvania 
case. These are cases in which Walmart lost wage and hour class 
actions, but they are not sure whether they are supposed to be 
appealing from the Pennsylvania Supreme Court's decision or the 
Pennsylvania Superior Court, so they filed two petitions for 
certiorari and asked the court to sort out what they should do, 
in an abundance of caution.
    If LARA were in effect, it would seem mandatory that one of 
those petitions was frivolous.
    Mr. Nadler. Thank you. Let me just ask, before I switch to 
a different topic, such lawsuits as Citizens United v. Federal 
Election Commission, the District of Columbia v. Heller on the 
Second Amendment, Commonwealth of Virginia v. Sebelius that 
went to the Supreme Court on the Affordable Care Act, could not 
all these cases have been considered frivolous and 
sanctionable, given the novel legal theories underlying them? 
All these cases, of course--well, go ahead.
    Mr. Peck. Yes. And you know, in each of those instances, 
people made claims that the theory behind them was ridiculous, 
was frivolous. And as a result, even in the Obamacare case, you 
had law professors urging the government to seek sanctions.
    If this mandatory rule were in effect, they would seek 
sanctions, and we would have seen hearings on the sanctions 
rather than----
    Mr. Nadler. Okay, thank you. And talking about hearings on 
the sanctions, during the decade that the 1983 version of Rule 
11 was in effect, which this bill would seek to reinstate, at 
least a quarter of all cases of the Federal civil docket were 
burdened by Rule 11 proceedings that did not result in 
sanctions. Almost every case had two cases, a sanctions case as 
well as the underlying case.
    Based on our experience with the 1983 version of the rule, 
and for that matter with the 1993 revision, do you think that 
this bill, if enacted, God forbid, would lead to a lot more 
rather than less litigation?
    Mr. Peck. It is not only my judgment but it is the judgment 
of the Judicial Conference.
    Mr. Nadler. So the Judicial Conference judged that this 
would be increasing litigation, increasing court costs for all 
involved.
    Let me ask Mr. Silverman, on what basis are they wrong? And 
how are we making the whole system cheaper by increasing 
litigation, so that every lawsuit, a large majority of 
lawsuits, have Rule 11 hearings and litigation appended to 
them?
    Mr. Silverman. Mr. Nadler, thank you. It is a pleasure to 
be before you today as Brooklyn native, so I want to thank you 
for your service.
    Satellite litigation, there was a lot of concern about 
that. I understand those concerns. And some of it----
    Mr. Nadler. There was a reality to it, not just a concern.
    Mr. Silverman. Some of it stemmed from the change in the 
rule in 1983. It was very different before that.
    But there are a couple of factors I would ask you to 
consider. First, I think we have to look at why is a Rule 11 
motion different from other types of motions that the courts 
decide every day. If you look at any Federal court docket, 
there are going to be motions for summary judgment, for 
dismissal, for expert testimony, issues for venue, 
jurisdiction, what have you.
    Judges decide those motions in the routine course of 
business, and if they find that it lacks merit, as with a Rule 
11 motion, all they have to say is one word, ``denied,'' and 
they move on with it.
    I think we also should consider the alternatives to 
allowing the motion, which is a system where a person who 
believes they were harmed by a frivolous lawsuit or defense has 
no way of bringing that before the judge.
    In terms of the satellite litigation issue and the numbers 
I have seen, I know in Mr. Peck's testimony and I have seen it 
cited in other places, that there were something like 7,000 
sanctions motions in the period where the stronger rule was in 
effect. But you have to look at that in context. That was over 
a 10-year period. There were almost 700 Federal judges.
    Mr. Nadler. My time has expired. I want to say one sentence 
in response to what you said, and that is the reason it is 
different is that a motion to dismiss or motion for summary 
judgment is on the same underlying questions, whereas a Rule 11 
proceeding is an entirely different question than the 
underlying questions. So it is a whole different fact 
consideration.
    I yield back. Thank you.
    Mr. Franks. And I would, certainly, defer to the 
gentleman's expertise in novel legal theories.
    And I would now recognize gentleman from Florida, Mr. 
Deutch, for 5 minutes.
    Mr. Deutch. Thank you, Mr. Chairman.
    Mr. Peck, can we just back up for a second? When the Rules 
Advisory Committee amended Rule 11 in 1993, it gave courts 
discretion to impose sanctions, and noted that the purpose of 
the sanctions was to deter bad conduct, not to reward the other 
party.
    Why did the Rules Advisory Committee give courts this 
discretion, which this bill would take away? And why was the 
purpose deterrence rather than compensation?
    Mr. Peck. Well, first of all, the courts do not want 
frivolous filings, and so that is the reason for the deterrence 
factor. And what the Committee did was say, here the filing of 
these motions are something that we will determine but not 
every motion and every filing is necessarily of the same 
nature. They don't have the same qualities to it. They may be 
better remedied by instruction to the jury that they are 
allowed to infer something because of this filing. And that 
often can be more devastating to a case than not. So there is 
flexibility because different sanctions are appropriate for 
different types of filings.
    But second of all, the courts retain inherit power to shift 
costs, if they want to. So it didn't have to be in the rules, 
and courts continue to use that power.
    Mr. Deutch. And then looking ahead, Mr. Silverman, you had 
cited a survey to support the 1983 version, a survey from 1991. 
But obviously, at this point, we acknowledge that the Judicial 
Conference opposes restoring mandatory Rule 11 sanctions.
    Federal judges overwhelmingly support Rule 11 as it 
currently exists. Your study is from 1991, which you use to 
show that the old system worked. But in 2005, the Judicial 
Center issued a report entitled, ``Report of a Survey of U.S. 
District Judges' Experiences and Views Concerning Rule 11.'' 
More than 80 percent of the judges said that Rule 11 is needed 
as is, is just right, and is just right as it now stands. 
Eighty-seven percent of the judges who responded preferred the 
current version of Rule 11. And just 5 percent preferred the 
version of Rule 11 that existed between 1983 and 1993. And only 
4 percent preferred the version of Rule 11 as proposed in the 
Lawsuit Abuse Reduction Act.
    Ninety-one percent opposed the requirement that sanctions 
be imposed for every Rule 11 violation. And 84 percent 
disagreed with the proposition that an award of attorney's fees 
should be mandatory for every violation. Eighty-five percent 
believe that the amount of groundless civil litigation has not 
grown since the promulgation of the 1993 rule.
    Before getting to the question, Mr. Chairman, I ask for 
unanimous consent to submit the 2005 Federal Judicial Center 
report in the record.
    Mr. Franks. Without objection.
    [The information referred to follows:]
    
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                               __________
                               
    Mr. Deutch. I appreciate that.
    So other than your statement before that this is something 
you would like Congress to address, why should we consider the 
1991 results relevant when in 2005, with a lot of experience, 
the judges who actually deal with Rule 11 have determined that 
it works the way it is now?
    Mr. Silverman. I appreciate your question. I think it is 
important to look at the 1991 survey, not just because it was 
the most extensive of the surveys that had been conducted, but 
because these were judges who actually had several years' 
experience with the former rule.
    The 2005 survey, half of the judges that were included 
never actually were--they were appointed after the new rule, 
the current rule, was in effect. So they never saw how the 
rule----
    Mr. Deutch. They didn't know. The overwhelming majority of 
judges, 87 percent who prefer the current version, since some 
of them had only become judges since the rule changed, their 
opinions don't matter on this?
    Mr. Silverman. Actually, there are two areas where I think 
all of the surveys are consistent. I think they are consistent 
even if you look at the 2005 and the 1995 and the older one I 
cited, all the judges say that a compensatory function, 
compensatory----
    Mr. Deutch. Mr. Silverman, I am sorry. I am running out of 
time.
    But I just want to be clear. I am not looking for 
consistency in the surveys. I am trying to understand why we 
should discard the overwhelming support for the system the way 
it is now, moving forward.
    But let me just finish with Mr. Peck.
    Mr. Peck, you had raised some concerns about what this 
change would do to civil rights cases and you mentioned Brown 
v. Board of Education. Could you elaborate a bit on how that 
case, in particular, might have been impacted if this change 
had been in place then?
    Mr. Peck. As you know, the issue was whether separate was 
not really equal. And the evidence that was produced in the 
case showed that the Topeka, Kansas, schools were actually 
substantially equal, in facility, in quality of teachers, in 
the curriculum, in what they provided to both Black and White 
children. Robert Carter, who served as a Federal district court 
judge in New York for many years, was part of that litigation 
team.
    It was his judgment that if the 1983 version of it was in 
effect, Brown would have received sanctions. They would have 
been fearful of bringing the case and may have waited another 
10 years before it happened.
    Mr. Deutch. Right.
    And, Mr. Chairman, this country would look very different 
than it does today. I thank you, and I yield back.
    Mr. Franks. I thank the gentleman.
    And I thank all of you. And this would conclude today's 
hearing.
    Without objection, all Members will have 5 legislative days 
to submit additional written materials and written questions 
for the witnesses, or additional materials for the record.
    We would again thank the witnesses and the Members and the 
audience.
    With that, this hearing is adjourned.
    
    [Whereupon, at 11:02 a.m., the hearing was adjourned.]
    
                            A P P E N D I X

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               Material Submitted for the Hearing Record

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 Response to Questions for the Record from Robert S. Peck, President, 
                Center for Constitutional Litigation, PC
                
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