[Congressional Record Volume 140, Number 83 (Monday, June 27, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 27, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                     PRODUCT LIABILITY FAIRNESS ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 687, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 687) to regulate interstate commerce by 
     providing for a uniform product liability law, and for other 
     purposes.

  The Senate resumed consideration of the bill.
  Mr. HOLLINGS. Mr. President, our distinguished colleague, Senator 
Rockefeller, will lead for the committee majority as the primary 
sponsor of this product liability measure. I happen, as chairman, to be 
among the minority. The distinguished Senator from Missouri, the 
ranking member, is with the Senator from West Virginia on this 
particular matter. I did not want to preempt his presentation and was 
awaiting his attendance here on this particular matter. The committee 
is ready.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HOLLINGS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HOLLINGS. Mr. President, I understand my distinguished colleague 
is momentarily on his way and could be delayed. So to save a little 
time, I will begin.
  With regard to product liability, I would quote former President 
Ronald Reagan in a different context: ``Here we go again.''
  Some 17 years ago, Mr. President, the Senator from Kansas, Senator 
Pearson, a standing member of our Commerce Committee, presented a 
product liability measure, and it was referred for study. Incidentally, 
when we say ``referred,'' we have had over 50-some hearings in both the 
House and the Senate. We have had over 28 hearings, 20 bills of one 
kind or another, in 17 years. Of course, a bill has never been on the 
floor seriously on the House side. We never have received a bill from 
the House side. It has been received and heard over 28 times between 
the Committees on Commerce and Judiciary on this side of the Capitol. 
It has been turned back on four different occasions here on the floor.
  The bill has been changed somewhat, but its general thrust remains 
the same, Mr. President. It seeks to raise the hurdles for the injured 
party who seeks to take his case to court, to prove his case. Numerous 
burdens are imposed.
  In the original instance--to give you a feel for this particular 
measure--it was totally unconstitutional. It has been very interesting 
to watch the development of the bill, because after Senator Pearson 
first proposed it, after President Carter with a special commission 
made his report on product liability for the States to model their 
changes, and after another 17 years, 43 States have changed their laws 
one way or the other.
  And now there is no--none whatsoever--Federal problem whatever with 
respect to product liability.
  They have politically gained commitments over the years on this 
particular measure. They originally argued, back in the late seventies 
and early eighties, that this bill was needed because you could not get 
insurance. The argument, then, was that there was a tremendous crisis, 
whereby Little League playgrounds were being closed down, hospitals 
were being closed; you could not obtain product liability insurance. Of 
course, that line of argument was fabricated out of the whole cloth. It 
was not the case whatsoever. Insurance companies were in trouble at 
that time, much the same as in the 1980's, when the S&L's that had 
invested in real estate ran into financial difficulties. But the cause 
was not product liability.
  Proponents of this bill then changed their tune. Now they argued that 
their bill was needed because the Nation was in the midst of a 
litigation explosion, with everybody suing or being sued. Vice 
President Quayle said there were 100 million cases, with 70 percent of 
them involving product liability. That, too, was fabricated totally out 
of the whole cloth. Only 10 percent of people injured from a defective 
product ever make a claim, and less than 1 percent of the 10 percent 
ever get to court. So there was not a litigation explosion.
  We cooled the tempers and politics momentarily in the mideighties 
with the help of a GAO inquiry. The General Accounting Office concluded 
that there was not a litigation explosion.
  Then proponents shifted to the argument of competitiveness, 
competitiveness. You remember when that disease hit and everybody was 
going to be competitive and every bill around had the word 
``competitive'' in the title, everything to make America more 
competitive.
  They were trying to cite, at that particular time, the European 
Economic Community. We found that, to the contrary, the European 
Economic Community was following the United States' example with 
respect to strict liability and punitive damages. And these are the 
measures adopted in EC-92.
  The best proof, of course, for this particular Senator, has been in 
the role of product liability laws in attracting the blue chip 
corporations of America and of attracting foreign investment. I never, 
in my 40 years of work in this particular field, ever had any of the 
blue chip corporations come and say, Senator--or, Governor at that 
particular time--we are worried about product liability laws, their 
effect and impact on our competitiveness.
  I remember when the distinguished Emperor of Japan came down the 
gangway last week in my hometown of Charleston. We rolled out the red 
carpet. South Carolina has 48 Japanese plants. We have over 100 German 
plants in little South Carolina.
  I never heard a single one of those foreign entities say, wait a 
minute, we cannot relocate to your State on account of your product 
liability laws. We are protected in Europe, but we do not get the 
protection here.
  The Rand Corp. finally got the executives together, 287 of them. Of 
the 287, the risk managers for those corporations, the vice president 
and chairman of this particular endeavor, found that the costs of 
product liability amounted to less than 1 percent of their sales; it 
was not a problem.
  So, they then abandoned the competitiveness argument and went to the 
uniformity argument. It was their last-ditch argument. In this bill, S. 
687, you will see it in black and white, because we said at the time 
that if you really want uniformity, make it a Federal cause of action. 
Every other day we are on the floor of the Congress making this or that 
crime a Federal offense.
  When the Supreme Court justices came before the subcommittee of 
State, Justice, and Commerce on appropriations asking for their 1995 
budget, the cry was, Senators, for Heaven's sake cool down. You are 
making everything a Federal crime, everything a Federal offense, and 
you are turning the U.S. Supreme Court into a police court. We just 
cannot handle the volume. We are having a tough enough time with 
respect to uniformity with our own circuit courts of appeals, the 
interim courts of appeals on the way up to the U.S. Supreme Court. But 
for Heaven's sake everybody who is trying to get reelected or identify 
with a cause wants to make this, that, and the next thing, a Federal 
offense.
  You would think in 17 years, Mr. President, they would have said 
there is here, by a finding by the Congress, a need that we create a 
Federal cause of action, and that would end it. And you would not have 
the discombobulation of S. 687.
  Some people never have read the bill. We will go through it. But it 
is not that long a bill. I do not read it to kill time. I read it to 
show the discombobulation, the contradictions.
  You have 50 States interpreting Federal guidelines to be appealed to 
their own supreme courts; legal language that has been interpreted many 
years now under the common law and the various product liability 
statutes. These are to be thrown out the window now and States must 
take these particular words.
  If you want to see real confusion, look to the Association of State 
Supreme Court Justices. The Chief Justice of the Supreme Court comes to 
the Government and says, for Heaven's sake, kill this bill. The 
National Association of Attorneys General from the different States 
come and say, for Heaven's sake, kill this bill. It is not needed. It 
is in the wrong direction. It is just political. That is why the 
National Conference of State Legislators comes and says, kill this 
bill. That is why law professors say kill this bill, and they are good 
at picking out this and picking out that. They were picking out real 
hurdles in this bill, and they said this is bad law and kill this bill.
  You begin to understand, Mr. President, why we have been on it 17 
years. The only thing driving this bill now is the politics, because 
they finally come now not because of the inaccessibility of insurance, 
not on account of a litigation explosion, not on account of 
competitiveness, not on account of uniformity, which if there were any 
uniformity it has been totally destroyed now. But now they come after 
lawyers. They are on to what, reading political polls, they know is a 
great hot-button issue, red meat. They have a bill against lawyers.
  I have an editorial--they know how to put them out when they want 
them--entitled ``Lawyer Heaven'' in the Washington Post of last week. 
We are going to show you that particular one because I am sure my 
friend from West Virginia will be showing it. But if we can get to the 
lawyers, and not to the facts of the case, they tie into this thing, we 
will just vote it and go on and get it through, get it passed, and 
really destroy any uniformity, and put in these insurmountable hurdles 
for an injured party. And corporate America will sit back and smile to 
themselves and say, well, we really have them now because it just will 
not pay to sue.
  With the workmen's compensation provisions in here, we have pitted 
the employer against the employee. We have the employer's lawyer on the 
side of the insurance company's lawyer, so the employee has two lawyers 
bearing down, and the pressure is being brought on him to settle, 
settle, settle; get out of this. And he says, ``Well, I'm not taking 
care of my injury, but I want to keep my job. I guess I had better go 
ahead and settle this thing.''
  I mean, it is just outrageous when you come right down to it.
  Let us see what American industry looks like today in Business Week, 
the July 4 issue. Here is what the business community reads, their 
bible, so to speak. In the economic trends lead article, there is 
nothing at all on product liability. I think this ought to be read 
because it is good. Listening to debate here in Congress, you would 
think like Chicken Little that the sky is falling. Instead, the 
headline reads, ``American Industry Looks Like It's Boosting 
Capacity''; the sky is up and blue.
  And I quote from Business Week:

       Don't look now, but there are growing signs that the U.S. 
     manufacturing sector may finally be starting to raise its 
     capacity at a more rapid pace.
       Over the past eight quarters, capital investment has 
     accounted for some 36 percent of the economy's growth, and 
     capital spending plans for 1994 remain strong.

  Mr. President, the article goes on to paint an exceptionally rosy 
picture. And I just emphasize that there is no reference at all to any 
need to change product liability laws. If we need anything, we need, as 
we all agree, the strengthening of the dollar. We are all watching that 
very closely.
  But all the different rationales and subterfuges of nonaccessibility, 
of litigation explosion, of uniformity, of competitiveness, of lawyer 
bashing and the rest, none of that is the case. The States are handling 
it well and, as a result, we are prepared, I take it, to move on.
  My distinguished colleague here, the author of the bill, is present, 
and I yield the floor.
  Mr. DANFORTH addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Missouri 
[Mr. Danforth].
  Mr. DANFORTH. Mr. President, the issue of product liability has been 
lingering in the Senate for many, many years. I had not realized the 
long history described by the Senator from South Carolina, our 
chairman, until he stated it. But I did know that, certainly, since I 
arrived in the Senate, it has been an issue which has been around for a 
very long period of time without anything significant happening to it.
  Since 1981, the Senate Commerce Committee has held 21 days of 
hearings on product liability and it has reported six product liability 
reform bills to the floor of the Senate. So it has been a matter that 
has been contentious. It has been a matter that has been exhaustively 
considered.
  The bill that is now before us is bare-bones legislation, but at 
least it is something; at least it is a start. My hope would be that 
the Senate could pass this legislation and we could at least do 
something with respect to the present system that exists on product 
liability.
  I do not understand any group in the country that is benefiting from 
the present state of affairs, except for the trial lawyers. Even the 
plaintiffs are not benefiting from this situation. It is estimated by 
the General Accounting Office that it takes today 3 years to resolve a 
product liability lawsuit--3 years. And, of course, some of them go 
much longer than that.
  But anytime you have a wrong--a tort--and it takes 3 years to make 
that wrong right, that in itself is a miscarriage of justice. Justice 
delayed is justice denied. The problem is that when there is a long 
period of time between an occurrence and when it is resolved in court, 
the people who are the most vulnerable, the most severely injured 
people, are the ones who have to have a resolution and, therefore, they 
are liable to settle for anything. And that, in fact, is what the facts 
show. If a person is severely injured and has great losses and medical 
expenses and lost employment opportunities and is in very desperate 
condition, that person settles, and settles quickly, and settles for an 
estimated 15 percent of his losses.
  It is the people that are not so seriously injured that turn it into 
a lottery. They can afford to wait. They do not have to have an instant 
resolution. The people with relatively minor injuries who can wait 
around can enter what has been referred to as the product liability 
lottery and they can strike it rich. The Insurance Services Office says 
that the victim of a product liabilit related injury can expect to 
receive nearly nine times his losses if his injuries are minor--nine 
times your losses if you have had minor injuries; 15 percent of your 
losses if it is a major injury. What is right with that? What is good 
about that from the standpoint of plaintiffs?
  This is not simply a matter that pertains to employers or 
manufacturers or people who develop new products and are worried about 
developing new products. Even if the debate pertained only to injured 
people, only to plaintiffs and lawsuits, the present state of affairs 
is unfair. It rewards those who are not injured much and it penalizes 
those who are injured a lot, and it creates such unpredictability that 
it is hard to know what is going to happen.
  There was a famous case a few years ago of a 70-year-old man who lost 
the eyesight in his left eye. Now, the loss of eyesight in one eye is 
not a minor matter. But what is the just result of a 70-year-old man 
losing the eyesight in one eye? What is the reasonable compensation 
that such an individual should receive? Should it be in the thousands 
of dollars? In the tens of thousands? The hundreds of thousands? Should 
it be in the millions of dollars?
  This person filed a lawsuit, a product liability case, against the 
Upjohn Co. and his recovery was $127 million. A quirky case; yes, it 
was a quirky case. But the fact of the matter is that quirky cases are 
what drive insurance rates.
  We are having a major debate right now--in fact Senator Rockefeller 
and I are both on the Finance Committee and it is meeting right now on 
the question of health care and health care reform, the cost of health 
care. One of the issues there is medical malpractice. But when you 
consider the cost of health care--one of the components of the cost of 
health care is the 70-year-old man who lost the sight of one eye. And 
he recovered $127 million. It is quirky, it is unpredictable, and 
clearly it has negative effects on America's competitiveness.
  The U.S. machine tool industry says that it has lost nearly 25 
percent of its market share to foreign competitors in recent years due, 
in its opinion, mainly to excessive product liability costs.
  Forty-seven percent of the companies surveyed in 1988 by The 
Conference Board indicated that they had discontinued product lines; 16 
percent have laid off workers; and 21 percent have discontinued 
research and development. They will not even bring products to the 
market, and they will not even proceed with research. One company in my 
State spent years developing a product line and the chief executive 
officer of the company--at the 11th hour, just before the product was 
to be brought into the marketplace, without any doubts at all on the 
part of the company about the efficacy of the product or the safety of 
the product--the chief executive officer made his own decision not to 
bring the product to the market because, he said, it was just too 
risky. There would be lawsuits.
  People are shellshocked by litigiousness. They are shellshocked. They 
are afraid to act, afraid to bring new products to the marketplace. I 
do not know that this legislation does enough, but at least it is a 
start. At least it is a recognition of the fact that the product 
liability system does not serve the interests of justice, it does not 
serve the interests of people who are injured, and it does not serve 
the interests of manufacturers to continue with the same product 
liability system that we have today.
  One study says defending a product liability claim costs 70 cents for 
every $1 of compensation paid. That is the cost to the defendant alone. 
Add to that the cost of the plaintiffs in a typical contingent fee case 
and the cost to litigate the matter is already over the amount paid out 
in damages. It cannot be in the interest of justice to have such high 
transaction costs as we have today.
  Then we consider the fact that people we do not even know are 
suffering from the present system. One of the great disasters--
scourges, really, of modern times is the scourge of AIDS. People are 
frantic about it, desperate--where is the cure going to be for AIDS? 
What are we doing to develop a cure? The chief executive officer of a 
company called Biogen testified before the Commerce Committee last year 
that Biogen canceled plans to develop an AIDS vaccine because he was 
unwilling to, in his words, ``bet the future of Biogen on the random 
lottery of the American product liability system.'' He would not 
develop an AIDS vaccine because he would not bet the future of his 
company on it, despite the fact that the whole reason for the Food and 
Drug Administration is to test vaccines, drugs, and medical devices to 
see whether they work or not and to determine whether they are safe or 
not. I do not know of anybody who has criticized the Food and Drug 
Administration for not being careful enough in what it does. It takes a 
long time to get products cleared by the FDA.
  One of the things this legislation does is to say if your product is 
approved by the FDA, you have some measure of protection so long as you 
did not proceed fraudulently or hide information from the FDA. But 
under the present state of the product liability law, it does not 
matter if you have been cleared by the FDA or not. If you have 
conducted your own research and presented the evidence of that research 
to the Food and Drug Administration and the Food and Drug 
Administration has analyzed and cleared it, that is no protection 
today. Some lawyer will take you to court.
  So the Biogen company says it is not even going to proceed to develop 
an AIDS vaccine because it is frightened of lawyers. Is that not a 
state of affairs? To be frightened of lawyers? I am a lawyer. When I 
went to law school I thought the purpose of my profession was to serve 
people, serve their interests. Not to scare them to death. Not to 
create a system which is described as a lottery. Not to keep products 
off the market, even though they have been cleared by the Food and Drug 
Administration. Not to deny seriously injured people their just 
compensation and to overcompensate those who have not been seriously 
injured. That is not the purpose of the legal profession.
  So I congratulate Senator Rockefeller and Senator Gorton and all 
those who have worked on this legislation so hard for such a long 
period of time. It is an idea whose time came a long time ago.
  My hope is that this legislation is going to be enacted into law.
  The PRESIDING OFFICER (Mr. Ford). Who seeks recognition?
  Mr. ROCKEFELLER addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. ROCKEFELLER. Mr. President, today the Senate has been given 
another chance to debate whether to make changes designed to improve a 
very important aspect of our legal system--or alternatively, whether to 
leave it alone entirely, with all of its problems that hurt America's 
consumers, workers, and businesses. We have, happily, at least the next 
2 days to consider this legislation--which is interesting. It has 
grabbed the attention of a lot of people. It is Senate bill 687, the 
Product Liability Fairness Act, and it was introduced March 31, 1993, 
by myself, by Senators Gorton, Lieberman, Danforth, and Dodd.
  This particular quintet of Senators does not find itself working this 
closely together very often on a single piece of legislation. But 
because we do share a common view that reform is urgently needed and a 
collective commitment to a balanced system, we have pursued this 
legislation together every single step of the long way.

  I must say, I regret the fact that even before debate began on this 
bill, which it now just has, it was made obvious that it might wreak 
havoc with the Senate's ability to get to other important business. For 
those of us who have pushed for product liability reform, we are more 
than used to finding ourselves on the Senate floor when there is too 
little time to deal with this issue and far too many important issues 
waiting in the wings. That is why we accepted the limited time 
available for consideration of this bill.
  I want to say that, basically, Mr. President, so that colleagues and 
people who work for my colleagues on both sides of the aisle understand 
that it was not our desire to have just 2 days. We were hoping we could 
have more, but that is the way it had to work out.
  It is also why I hope Senators will resist the temptation to pursue 
issues or amendments that have nothing to do with our product liability 
system during this short period of time. The problems of the system as 
they affect or hurt American consumers, businesses, workers and injured 
people are serious enough, and they have earned our undivided 
attention. So let us keep our focus on them.
  As Senator Danforth just said, the time has finally come when this 
body in a bipartisan way should demonstrate its intent to actually do 
something about these problems. Well, there is that old adjective: ``If 
it ain't broke, don't fix it.'' Mr. President, the product liability 
system is most definitely broke.
  We present Senate bill 687 as our blueprint for making some of the 
most obvious repairs. Our goals are to make the system more fair, more 
responsive and more predictable to everyone whom it is designed to 
serve. We believe that it will promote the development of a safer, even 
life-saving range of products; that it will reduce or stabilize legal 
costs that are the great sponge of the current system; it will speed up 
compensation to injured men, women, and children, who are now waiting 
years for justice.
  One can argue, was it 3, 4, or 5 years? But if you have a mangled 
hand, what difference does it make if you have no recompense for your 
injury and that is the situation now. We want to bring recompense to 
those injured more quickly and also that it will curb one of the 
biggest disadvantages that saddle American industries and workers in 
trying to survive rather than compete in the global marketplace against 
foreign companies and those foreign companies' foreign workers.
  It should be noted that since 1981, the Senate Commerce Committee has 
favorably reported six product liability reform bills to the full 
Senate. Over these 13 years, interested Senators have worked together 
to make many changes to the legislation in response to input, advice 
and new information and criticisms of the legislation.
  In the last Congress, which was the 102d, the bill began to kind of 
pick up steam, pick up support and finally won time on a very crowded 
Senate agenda in the final weeks of the session. Even in these 
circumstances, with no possibility of further result, 58 Senators were 
recorded through a cloture vote in favor of considering the bill. 
Though, once again, we continue to face the challenge of jumping a 
hurdle called a cloture vote, another effort to block the very 
possibility of dealing with the problems of our product liability 
system, I want to emphasize that a great deal has changed.
  This time, most Senators have demonstrated that they recognize the 
need or obligation, or both, to pay close attention to the issues 
involved with the current form of product liability. It really has hit 
our radar screen. People understand something does have to be done. An 
enormous amount of education has taken place through hearings and two 
committees in this body over the past year and a half, through contact 
from constituents and advocacy groups, through meetings among 
Senators--a lot of those--and through discussions of every conceivable 
form.
  The bill itself is different from earlier versions. To somebody who 
is stuck with this process now for 8 years, I believe it is the most 
balanced reform proposal we have ever had before us. Each provision is 
carefully targeted and, frankly, is very carefully thought through. It 
also includes six major changes to the version of the previous 
Congress, all in direct response to constructive input, some very 
specifically designed to make our system even more responsive to 
consumers and injured people.
  And in November, this bill was approved in the Senate Commerce 
Committee by a vote, Mr. President, of 16 to 4, which is not 
inconsequential. Now a total of 45 Senators are now signed on as 
cosponsors of the bill.
  I regret, obviously, very much that our very distinguished chairman 
of the Commerce Committee still has not been persuaded by our arguments 
and proposal, but he has not been. I do want to emphasize we have 
pursued this effort openly through the regular legislative process and 
have gained increasing support as we have gone along. I want to thank 
the chairman of the Commerce Committee, Senator Hollings, for his 
cooperation and even temper in dealing with this issue once again.
  But I want to suggest that it does not make sense any longer to use 
procedural means to stifle or to thwart this effort with the hope that 
it will disappear into thin air. We, the sponsors of this bill, are not 
responsible for the problems that we are trying to solve. We are simply 
trying to fix them. We believe the problems are real--that is our view; 
it is sincerely held--and that they affect and even harm in different 
ways American consumers, business, workers, injured women, men, and 
children.
  As legislators, we feel a very strong obligation to deal with these 
problems and feel we absolutely must attempt to make whatever changes 
are possible to serve the objectives of justice and fairness.
  In fact, here is where I want to say something about my own coming at 
this matter, my own commitment to this issue. The explanation is really 
very simple. As somebody who has served in different elected offices in 
behalf of West Virginia and, like the Presiding Officer, served as a 
Governor, I always have been bothered by situations when the system 
stops serving the people for which it is designed. I do not like that. 
I am extremely familiar with the arguments against trying to change a 
system and keep the existing rules of bureaucracy or patterns just the 
way they have always been. But let me give you an example.
  I was first sworn in for Governor on one of the coldest days in the 
history of this continent on the steps of the Capitol in Charleston, 
WV, in 1977. I made the inaugural address which was listened to by 
several very cold people, but I made only four points in my inaugural 
address. You would think I would kind of lay out the plan. I did not. I 
stuck to four points. You can guess roads, education, and jobs were 
three of them. What you might not guess is that the third one was 
something I was passionately committed to then and was totally 
frustrated by because at that time it took an injured worker in West 
Virginia 77 days on average to receive compensation for an injury that 
he or she had received in the workplace. I pledged in my inaugural 
address, as sort of a basic tenet of what my administration was going 
to serve for, that I would reduce that time from 77 days down to 4 
days. And to the Presiding Officer and a former fellow Governor, I am 
very proud to say that I was able to do that, and it is one of the 
proud achievements of my life.

  But I was furious that a bureaucracy--in this case a State 
bureaucracy--and a system--in this case a State system--could do that. 
I wanted it changed.
  Then, Mr. President, when I joined the Senate, I was horrified to 
learn of the backlogs that were keeping people suffering from black 
lung waiting for months and even years, as the Presiding Officer knows 
even better than I do. I helped to force the Department of Labor to 
change its rules and hire the necessary judges to speed up that system. 
And ever since I have been in the Senate I have tried to convince every 
part of our health care system that it is in our collective interest to 
make major reforms.
  Soon after coming to the Senate, I began running into a steady slew 
of complaints and reports about the impact of the current product 
liability system. What I heard from the manufacturers of West Virginia 
was a catalyst for me. Like the experience of the McJunkin Co. in 
Charleston, WV, which is our State capital, that had to close a 
manufacturing facility when it could not handle its liability costs. 
Was the victim a high-paid CEO or a huge corporation? No, of course, 
not. The losers were the 25 men and women, not great in number but in 
their lives very great in significance, 25 men and women in West 
Virginia who lost their jobs--and they were good-paying ones--after the 
plant closed down as a result of the costs of a broken tort system.
  Now, this story and many like it led me to dig in much harder. It led 
me to try to figure out why, Mr. President, a patchwork system of 55 
State and territorial product liability laws, with confusing and 
conflicting signals to American manufacturers, should be defended.
  When 70 percent of U.S. products are in fact sold outside of the 
State where they were made, one begins to understand why even the 
National Governors Association endorses the idea of making the rules 
more uniform, predictable and consistent by federalizing them. The 
Governors have been on record in so saying. In fact, I believe--I am 
not entirely sure of this--our President, as a Governor, twice voted 
for uniform product liability reform as a Member of the National 
Governors Association.
  The status quo is not the friend of consumers, Mr. President, or 
victims, whether they be men, women or children. We now have studies, 
testimony, and specific examples endlessly that tell of companies 
dropping or fleeing the pursuit of new drugs, new drugs that we need, 
perhaps safer products, and the parts needed for medical devices 
because of the excessive costs of the system or the fear that they will 
get hammered by any one of the system's capricious rules. The status 
quo is what keeps people, men and women, waiting for years to get 
justice in the form of compensation for their injuries. And as the 
Senator from Missouri said, justice delayed is justice denied.
  Also, this system allows lawyers on both sides--you will not find 
this Senator speaking of trial lawyers or defense lawyers; I talk about 
lawyers on both sides--lawyers who eat up more money themselves than 
whatever eventually gets to successful plaintiffs, the ones who are 
injured. Yes, that is true. Lawyers get more money from this system 
than do the people that they are defending who are injured. That is 
true. That has been true. That always will be true until we change the 
system.
  These are the reasons that we want to take a hard look at the current 
system and consider the modest changes in the bill that has evolved 
over many, many years and built such strong, as it appears now, 
support. Sometimes reform can help everybody affected by a system, or 
institution. And I think that this is one of those times.
  As a result, now outside this body S. 687 enjoys widespread public 
support and the endorsement of leading academics who have studied the 
bill and who know what they are talking about, such as Cornell Law 
School Professor James Henderson, a noted tort law scholar and reporter 
for the American Law Institute's Project on Products Liability; the 
American Legislative Exchange Counsel; and, as I mentioned, the 
Governors Association, groups that are usually fiercely protective of 
States rights, who are against Federal intervention. But these groups 
are saying endorse Federal product liability reform, do something about 
it, federalize some of it, not all of it, not the majority of it, but 
just where you have to.
  The idea of this bill is to remove some of what is unfair and 
arbitrary in the law and substitute reasonable and uniform, nationwide 
rules in a few more areas within our product liability system. A 
reading of S. 687 should convince even the most skeptical observer that 
this bill will not impose confusing or widespread changes in the 
product liability laws of the States or affect the ability of litigants 
to obtain full recovery for damages in anything but the frivolous or 
rare case.
  Our legislation is intended, Mr. President, to also promote long-term 
economic growth. We do not base our case on this, but it is a factor. 
We want to protect U.S. competitiveness. Some people call this a jobs 
bill. Our legislation will encourage the development and distribution 
of innovative new products from protective sporting goods equipment to 
lifesaving drugs and medical devices, among countless others, without 
depriving injured persons of redress for their harms. And that is why I 
call it a consumers bill.
  I wish to emphasize again there is nothing in this bill anywhere but 
pure daylight between any clause in the bill and the right of a jury 
trial--clear daylight. Numerous examples exist of safe and effective 
products that go unmarketed, Mr. President, or withdrawn from the 
market because of liability concerns. Senator Danforth gave one. I will 
give one. Last July, for example, Abbott Laboratories announced that 
because of liability fears, it was dropping plans for human trials of a 
drug to prevent HIV-infected mothers from transmitting the deadly virus 
to their unborn children. Similar explanations have been reported by 
the American Medical Association and the Brookings Institution, the 
National Academy of Sciences, the New England Journal of Medicine, and 
many others. S. 687 seeks to benefit consumers in additional ways--not 
defendants I am talking about but consumers, plaintiffs.
  We include a proplaintiff discovery rule, a statute of limitations 
that will apply in all product liability actions in every State. An 
example: In Virginia today--I believe in Virginia; in Arkansas it is 3 
years, in Virginia I think it is 2 years--you only have 2 years from 
the date of your injury in Virginia to bring a case.
  What if your injury is something that comes from medicine, or some 
drug, or something that you are breathing, and you do not know about 
your injury for a long period of time? The cause may have started at a 
certain time, but you do not know that you were injured or what the 
cause was of your injury until much, much later. We, therefore, wrote 
this bill so that people will have that ability. We say that you can 
now have 2 years to bring a case from the time that you found out about 
your injury, and knew the cause of your injury. From that point, the 2-
year statute of limitation runs. That is very, very significant.
  More generally, the bill will remove the product liability tax now 
incorporated into the price of many products, making them more 
affordable. Employees will benefit from the provision intended to 
encourage employers to maintain safe workplaces.
  Some have suggested that the legislation to help business is, by 
definition, harmful to the public; just the fact that a bill might have 
in it some parts which help business means that the bill is 
automatically against the interests of the consumer; victims, so to 
speak. I think this is untrue. Of course, it could be true if one set 
out to do that. But I think it is very untrue in this case. And I think 
we should, frankly, reject that kind of what I call blanket cynicism. 
If the system is unfair to business, that unfairness is what is wrong, 
not the fact that somebody runs or works for a business.
  Study the bill, I say to my colleagues. Know the bill. You will see 
that each of the proposed reforms is clear, reasonable, and carefully 
targeted. The bill does not repeal the doctrine of strict liability. It 
does not abolish or impose caps on punitive damages or caps on anything 
else. And it does not abolish or impose caps on noneconomic damages. 
There are some who would like to do that. And I consistently have said 
no, as I will when we get to medical malpractice.
  Fixing a broken system can--and under S. 687 will--be a win-win 
proposition, a victory for our Nation's businesses and for its 
consumers. It was 1978 when the Federal Interagency Task Force 
suggested the need to stabilize our product liability law. It was in 
1981 when Congress began to develop uniform product liability law. The 
Europeans began around the same time, and they already have uniform 
product liability standards--not in just their provinces or their 
states, but they have uniform liability laws for all 13 countries.
  This is what we will be competing against in the future if we do not 
make adjustments to help our workers. It is time to separate the 
suspicion and cynicism from reality and the willingness to try to solve 
difficult problems.
  The reality is that S. 687 will reduce legal costs. Will it end them? 
No. Will it reduce them? Yes--through a push for alternative dispute 
resolution, and something called expedited settlement procedures. We 
can discuss those later.
  This bill will place incentives for injury prevention on employers 
when necessary, on manufacturers when necessary, on wholesalers when 
necessary, on people who use products when they are drunk or subject to 
illegal drugs. It will not let wrongdoers off the hook. It will not let 
manufacturers of drugs or medical devices who fail to comply with law 
escape punishment; full punishment. It will create positive incentives 
for the manufacture of good and useful drugs, medical devices and other 
products.
  I urge my colleagues to take a hard look at the actual contents of 
this legislation. I am not a lawyer. But I went through and I read the 
bill. It does not take very long. It is all right there. Except for a 
few clauses, I understood it. So it is available. I urge my colleagues 
to actually look at this legislation and not the deceptive labels that 
are being slapped on by others to mask what we are sincerely trying to 
fix and sincerely trying to improve.
  There were press conferences held in this city last week saying that 
DES, the Dalkon shield, and breast implants would no longer be subject 
to punitive damages under this bill. All of that is untrue, Mr. 
President; absolutely untrue. But it was said by responsible people at 
public press conferences, and some of our colleagues heard that and 
believed that.
  I can understand that because these were so-called responsible people 
saying that, people who are lawyers. They were saying something that 
was not true: That somebody who had DES, or problems with the Dalkon 
shield, or breast implants--jell or otherwise--could not sue the 
manufacturer for punitive damages. Under this bill, one could and 
should sue for punitive damages.
  I also make a plea to all of my colleagues to help avoid the bill 
becoming an avenue for issues that have not been considered in 
connection with this particular legislation which we have been 
considering for well over a decade.
  So I hope that there are amendments that will be germane and on 
point. We do not have a lot of time. This is the Senate's opportunity 
to make a clear and coherent statement to the American people as 
consumers, as workers, and manufacturers, and to our trading partners 
throughout the world. We stand for fairness in product liability by 
passing S. 687, the Product Liability Fairness Act.
  Mr. President, I thank the Presiding Officer, and I yield the floor.
  Mr. METZENBAUM addressed the Chair.
  The PRESIDING OFFICER (Mr. Reid). The Senator from Ohio.
  Mr. METZENBAUM. Mr. President, there are few Members of this body for 
whom I have greater respect than my colleague from West Virginia. It is 
only fair to say that I do not think that this bill is quite as good as 
he would represent it to be. In fact I rise in opposition to S. 687, 
the so-called Product Liability Fairness Act. The bill is anything but 
fair, and the Senator should not move forward with this legislation.
  Proponents of this bill attempt to characterize it as a moderate 
bill, as a watered-down version of draconian measures rejected by the 
Senate year in and year out. They say that because it is less draconian 
than it was, we should accept it now. They even had the audacity to 
proclaim that it is somehow proconsumer.
  Let me set the record straight. This bill has gotten better. It has 
gone from horrible to very bad. No matter how hard proponents try to 
justify this bill as needed to stem supposedly out-of-control insurance 
rates, out-of-control litigation, out-of-control legal fees, or to 
prevent the decline of American competitiveness, there is no hiding the 
fact that it is nothing but a base attempt by manufacturers and product 
sellers to escape liability for defective products that injure or kill 
innocent Americans.
  No matter how far proponents stretch to characterize this bill as 
proconsumer, it is still the most comprehensive anticonsumer piece of 
legislation that has been or will be considered in this Congress. Let 
no one be fooled about that.
  This bill is opposed by every major consumer protection organization 
in this country. It is opposed by dozens of leading groups representing 
senior citizens, labor, the environment, and victims of defective 
products. It is opposed by the AFL-CIO; the American Bar Association; 
the American Association of Retired Persons; the Conference of State 
Chief Justices; the National Conference of State Legislatures opposes 
this bill; the American Public Health Association opposes this bill; 
and 100 law professors around the country. This is a bad piece of 
legislation.
  Who is on the other side supporting this bill? The corporate world--
big and small. This alignment should tell you a lot. This legislation 
intrudes upon an area of law that, for over 200 years, has been 
reserved to the States, and suddenly those who always talk about States 
rights are now coming here to the Congress and saying that we should 
intrude upon those States rights. That is why the Conference of State 
Chief Justices and the National Conference of State Legislatures oppose 
this bill.
  I am not saying the Federal Government should never preempt State 
law, but the changes proposed in S. 687 represent an unjustified and 
unprecedented usurpation of the States long-established authority over 
tort law. If we do it here, where else do we move in? The former 
candidate of the States Rights Party of the United States, who ran as 
their Presidential candidate, will oppose this bill. What a 
contradiction in terms to run as a candidate of the States rights 
people in this country and then support this bill, which intrudes upon 
those very same States rights.
  This bill is being driven by myths and anecdotes and wornout scare 
tactics. The original justification for this bill was that it was 
necessary to forestall an insurance crisis and to prevent an alarming 
increase in insurance costs. But that argument went out the window 
after the insurance industry publicly testified that the bill would 
have virtually no effect on insurance costs, and evidence showed that 
the availability of affordable insurance is governed by insurance 
companies' underwriting practices rather than product liability. That 
should have put that argument to bed. But you still hear proponents 
resorting to it.
  Another justification traditionally offered for this bill is that 
there is an ``explosion'' of product liability suits. That simply is 
not true. That is not in accord with the facts. Proponents focus on 
increases in product liability claims between 1980 and 1988, but there 
was a specific reason for that. That was due to the cases filed by 
reason of asbestos claims, Dalkon Shield, and Copper-7 IUD legislation. 
What they ignore is the fact that the number of product liability cases 
in Federal courts, other than asbestos cases, has been shrinking 
steadily in recent years. The 1991 annual report for the National 
Center for State Courts reports that the number of tort filings fell by 
1 percent between 1990 and 1991.
  If proponents were really concerned with an increase in suits, they 
would be acting against commercial litigation. Business-against-
business suits have increased in recent years. Businesses suing 
businesses in contract disputes accounted for nearly half of all the 
Federal court cases between 1985 and 1991. In State courts, such suits 
accounted for 14 percent of filings, while product liability suits 
accounted for less than 4 percent of filings in 1991.
  But business has craftily exempted itself from this bill. This means 
that if a defective machine explodes in a factory, a worker who was 
killed or injured would be forced to sue under the severe constraints 
of this bill, while the employer could sue completely free of any such 
restrictions. The worker would not even be able to recover a penny if 
the machine was more than 25 years old, because the bill cuts off the 
right of consumers--but not businesses--to recover for 25-year-old 
capital goods.
  So businesses want to preserve their suits against each other; they 
just do not want injured consumers to sue them.
  It is the little guy who is left out. It is the average individual 
person who is precluded from going forward with his litigation. But the 
businesses are still left in a position to sue one another.
  Yet, another traditional justification for this bill has been that 
jury awards are erratic and excessive, giving windfalls to undeserving 
plaintiffs. Again, the facts show otherwise. In fact, under our current 
system, injured people absorb and pay for much, if not most, of their 
injuries themselves. A recent Rand Corp. study found that only 1 out of 
every 10 Americans that are injured due to product hazards ever seeks 
compensation through the tort system. Of these cases, two-thirds 
involve motor vehicle accidents. In addition, injured Americans recover 
only about 60 percent of their costs of nonfatal injuries through 
public and private sources. They, the individuals, must shoulder the 
remaining 40 percent out of their own pockets. The 1992 report by the 
National Insurance Consumer Organization showed that the average 
payment to victims of all claims closed during the previous decade was 
$3,767.
  Punitive damages are not out of control, as proponents of this bill 
would have you believe. There have been only 355 punitive damages 
verdicts in State and Federal product liability cases since 1965. Did 
you hear that? Only 355 punitive damage awards since 1965--almost 30 
years ago.
  Would the proponents think that the punitive award of $5 million for 
the death of a family member was excessive? Or $1 million for the 
permanent loss of sight or fertility? What if it were your mother, or 
your sister, or your brother, or your father, or your child?
  Over one-quarter of these punitive award cases involved asbestos. 
Asbestos aside, that means there have only been 266 cases in which 
punitive damages have been awarded in a product liability case in 
nearly 30 years. With the exception of asbestos, the number of punitive 
verdicts in product liability cases has been declining in the last 6 
years.
  Another holdover theme from the Bush administration shifts blame away 
from manufacturers of defective products and onto lawyers. This amounts 
to little more than lawyer bashing. The 1992 report by the National 
Insurance Consumer Organization estimated the average fee paid to 
victims' attorneys for all product liability claims during the previous 
decade at $1,256. That is the average fee.
  The bill's proponents claim that S. 687 will create a nationwide 
uniform product liability law. It will do nothing of the kind. The 
provisions of S. 687 would be grafted onto the different product 
liability laws and standards in the 50 States. The result will be a 
hodgepodge of State and Federal standards which will create new 
uncertainties for tort litigation in State courts and diminish the 
authority of State judicial systems to define and enforce their own 
rules governing product liability
  Mr. President, there is much more that I have to say about this 
particular piece of legislation. I think there are others waiting to be 
heard. I do not wish to assume up to myself all of the time that is 
available, and I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Mr. President, there are a few things that should be 
clarified.
  One, with respect to the claim made by my distinguished colleague to 
the effect that punitive damages do not have any cap. Oh, no, they are 
indirectly capped.
  If you look at the particular bill as introduced, you will find two 
things with respect to punitive damages--and they know exactly what 
they are. Incidentally, this is a point that should be remembered. On 
page 18, line 11 of the bill, ``punitive damages may, if otherwise 
permitted by applicable law, be awarded.''
  Here they are talking about uniformity. That in and of itself ``if 
otherwise applicable.'' In some States there are punitives but in other 
States there are not. There is no uniformity. There is no intent to be 
uniform here.
  But when you come down to the caps, here is what they put in lieu 
thereof. They say that, first, the harm suffered by the claimants must 
be proved as a result of conduct manifesting a manufacturer's or 
product seller's conscious, flagrant indifference to the safety of 
those persons who might be harmed--product seller's conscious, flagrant 
indifference to safety.
  And how should that be proved? Not by the greater preponderance of 
the evidence but rather by clear and convincing evidence.
  So they have raised the hurdles. They have raised the barriers. They 
have increased the burdens, and that should be recognized throughout 
the comments made.
  I was somewhat amused by the remarks concerning a lottery, by the 
distinguished Senator from Missouri, joining in support of product 
liability. I have never found that. I have three on staff looking for 
it. I do not know about any lottery that they get into that they make a 
lot of money.
  I can tell you and explain firsthand why the conclusion was made that 
perhaps plaintiffs are compensated more for slight injuries and not 
sufficient compensation, let us say, for serious injuries.
  I practiced, and I must qualify now, Mr. President, on a personal 
basis of having tried cases on both sides of the aisle. I have 
represented plaintiffs. I have represented defendants. I have organized 
the State Life Insurance Co., the Equity Life Insurance Co. I came to 
Washington with Guaranty Insurance Trust and before the Securities and 
Exchange Commission set an all-time record of 13 days of wanting a 
corporation. No water, no monkeyshines, no options, and all of those 
things that go into one of these prospectuses.
  On the contrary, it was clean and went through the Securities and 
Exchange Commission in 19 days an insurance company, and I was the 
general counsel for that particular company.
  So I represented on both sides, and I know the lawyers on both sides. 
And I became the lawyer for the local power company at one time. I had 
been suing them on personal injury cases, and a good friend of mine who 
was a professor at the law school came to me, and talking friend to 
friend, I said, ``Well, the reason you lose is your crowd is so lazy.''
  He said, ``What do you mean?''
  I said, ``You won't try the cases. You know, that stuffed shirt 
crowd. They are up with the big offices with the big mahogany desk and 
oriental rugs and secretaries running to an fro. They do not like to 
get out in the field and investigate a case and if the adjuster had not 
investigated, they just blame it on him, and when it comes to actually 
going to court to try the case, they are not about to do that. They are 
a lazy bunch.''
  And he said, ``Why don't you try them?''
  It was an unfortunate moment for me, because I said, ``I could save 
you millions of dollars if I started trying the case.''
  To cut the story short, I did. And we got what we called the 
Christmas Club. At that time, just after Thanksgiving everybody starts 
falling down and slipping down in the bus. They get their arms caught 
in the door. I call it the Christmas Club for the local bus company. 
You just could not get a bus down the streets without everybody 
falling, slipping, tripping over the step, the driver was closing the 
door on them, and everything was going wrong. And they had all these 
cases backed up, and heretofore where they had settled them all out and 
that is the blame not of the plaintiff's lawyer or the poor injured 
party, that is the blame of the defense attorneys.
  I saved millions of dollars. That is a matter of record in my own 
hometown.
  So I know exactly what he is talking about. And when he is not 
receiving enough, heaven's above, that is like the famous couplet: ``A 
politician makes his own little laws and sits in attendance to his own 
applause.''
  That is this crowd; it is the defendant lawyers, not the plaintiff 
lawyers, who are responsible for that.
  That goes right to the heart, Mr. President, to this article, Robert 
J. Samuelson's ``Lawyer Heaven.'' You see that is the advertisement to 
get the votes for this bill. Robert J. Samuelson does not know from 
sic'um about law cases, but he is a good economist and we give him 
credit for that. I read this first little paragraph:

       Seventy percent of manufactured products are sold outside 
     the State where they are made. If interstate commerce means 
     anything, this fact alone warrants a national product 
     liability law to govern defective and dangerous products. 
     Instead companies can be sued under a bewildering array of 
     State laws. In 1992, there were an estimated 40,000 such 
     suits. Congress may now curb this chaos by adopting a 
     national law. The Senate takes up a proposal this week and if 
     it passes, the House may do likewise.

  Do they get a national law? He obviously had not read the bill. He 
could not have read it here because it does not leave any doubt, and 
there are 20-some laws like this submitted over the years now in the 
17-year period.
  They used to have a little debate as to whether we had a national 
law, whether there was a Federal cause of action. But now we can look 
right here on page 11 at the top of the page, section 5, ``Jurisdiction 
of Federal Courts.''

       The district courts of the United States shall not have 
     jurisdiction over any civil action pursuant to this Act based 
     on section 1331 or 1337 of title 28, United States Code.

  Now, Mr. President, where do you get a national law when you have, as 
I have explained to the distinguished colleagues here and their staffs, 
hopefully, and anyone else within the sound of my voice, heaven's 
above, they say specifically affirmatively no chance of this being a 
national law. All they had to do was institute a Federal cause of 
action. If they had done that, we would not have had all this 
gobbledygook back and forth. They intentionally do not form a national 
cause of action.
  Now, Mr. President, I speak as chairman of the Committee on Commerce, 
Science, and Transportation which has jurisdiction over what? 
Insurance--insurance.
  President after President, company after company have come to this 
Senator as the committee chairman, and said, ``Don't let them 
federalize insurance. We don't want to get under the Federal system.''
  Oh, when they have to try their cases, ``Senator, really, now, they 
have got a multiplicity here.'' As this gentleman says here, 40,000 
such suits in 50 States.
  Well, how many policies do you think they have to register and get 
approved, like trying a case in the 50 States? Literally hundreds of 
different fire, casualty, property and life policies, but they all 
come. They have their lawyers hired. They keep them down at the State 
insurance. In fact, they control them too much.
  I found that out in the State of South Carolina. And that is one 
thing, as Governor, I was known for of having cleaned that one up.
  We had, I say to the Senator, 38,000 life insurance agents licensed 
to sell insurance. The State of New York, substantially larger, had 
only 32,000. If you were on skid row, if you were down and out, if you 
were in the gutter, you could do one thing: You could still be licensed 
for insurance in South Carolina. In fact, when I was there, I had to 
start cleaning it up with a blue ribbon commission.
  But this crowd, they say they want uniformity. On, no, they keep 
coming to me and say, ``Don't give me no uniformity. I don't want any 
Federal law.''
  Now, over here, they have all kinds of provisions. I hear all the 
debate on health insurance, I say to the Senator. They say, ``No, we 
are not going to get President Clinton's bill for national health 
insurance to cover everybody. We are going to get insurance reform.'' 
Insurance reform. So they have all kinds of requirements about 
portability, about preexisting conditions. They have everything, but no 
Federal law.
  They have had the initiatives over on the House side with respect to 
the fiscal responsibility and the investments. The Senator from Ohio 
had that bill. There have been nibblings all around the edges. Every 
time a nibble, they come running to the chairman of Commerce, Science, 
and Transportation, and they say, ``Look, we don't want a Federal 
insurance thing.'' We will have to do something about this fiscal 
responsibility when all of them are going broke. ``We don't want to do 
this. We don't want to do that.''
  In fact, the Senator from West Virginia--and I have got a little 
amendment I take it he will accept, with respect to making the records 
available. We never could find out. They would give you a bunch of 
papers. You could not make heads or tails about it. We did not want to 
get into any expenses or anything else. It is the famous Rockefeller 
amendment, where they ask the insurance companies to please come and 
report their data so we can know the effect of this particular bill.
  But I can tell you here and now from hard experience that it is the 
defendant's lawyers, they are the ones who are responsible for the high 
transaction costs.
  Permit me to read from a May 25, 1990 letter from the General 
Accounting Office:

       Specific factors that make these cases time-consuming are 
     the steps required in the legal process. In the vast majority 
     of cases we reviewed, we noted that defendants often used the 
     maximum amount of time legally required. Delays caused by 
     defendants were also common. In most cases manufacturers have 
     little incentive to settle cases, as we said in response to 
     the first question, although some may be concerned about 
     adverse publicity regarding their products. In the typical 
     case in our review, the defense was first granted 30 days to 
     respond to a petition. The defense typically argued at the 
     end of the 30-day period that the plaintiff did not use the 
     product or that negligence was the cause, at least in part, 
     of the harm. Thus began the legal process known as discovery 
     in which the burden was on the plaintiff to build a record by 
     collecting data on product design, specifications, and other 
     often proprietary information from defendants. The 
     preparation of interrogatories, testimonial evidence from 
     eyewitnesses, expert witnesses, and others was another 
     lengthy process needed for the record. We also found frequent 
     motions to extend and delay late court dates.

  So here they come and they talk about the lawyers' heaven. It is the 
defendant's lawyers' heaven. He has got his office, he has got his rent 
paid for, he has his light and water bill paid for. He has all his 
investigators paid, he has his oriental rug and his mahogany desk and 
his clubs paid for. He does not ever see any injured parties, any 
investigators or anything. It is always done for him.
  The poor rascal that gets run into and injured, or take one of these 
defective product cases, the poor female victims in the case of Dalkon 
Shield, Copper 7, breast implants, and so on. But the poor person who 
gets injured due to a defective product, they do not have a lawyer. 
They sit there hurt and injured. And then when it comes down to the 
case itself, they have got to find a lawyer. They do not have the money 
for a lawyer or the office or the investigators or anything else. And 
they are finally so bad off they get to a plaintiff's lawyer long after 
the case has been investigated by the corporate defendant with all of 
their adjustors and interrogatories and everything, and they finally 
get to that lawyer.
  Let me cite a GAO report which concluded that over half of drugs 
approved by FDA still contained various defects. I quote:

       In studying the frequency and seriousness of risks 
     identified after approval, GAO found that of the 198 drugs 
     approved by the FDA between 1976 and 1985 for which data were 
     available, 102 had serious postapproval risks, as evidenced 
     by labeling changes or withdrawal from the market.

  Now of the 198 approved by the FDA, 102, that is over 50 percent, had 
serious postapproval risk.
  So we know and understand that they are not approved. But here we go 
again with that defendant's attorney who is trying to delay.
  Now if you are injured and do not have a lawyer and are trying to get 
money; if you are self-employed, for example, you are out of an income 
or any source to keep the family going, you are lucky to get a lawyer 
who will take the risk.
  And, incidentally, they have a provision realted to in here about 
fees. As someone recently suggested, perhaps we ought to adopt the 
British system that would assess the cost against the party that did 
not win the case.
  Of course, that is the case now, as a plaintiff's lawyer. I hope the 
lawyers and Members around understand law practice. As a plaintiff's 
lawyer on a contingent fee basis, you accept the case on the 
contingency of winning. That means that the client puts up nothing. You 
are taking care of all the costs of investigation, the costs of 
discovery, the costs of interrogatories, the court costs, all the costs 
of the trial, the printing of briefs--and, of course, the cost of your 
time. It's not like these Washington lawyers paid by the hour. How many 
dollars an hour? Every time we look around we have the President, he is 
paying one law firm $450 a hour and another lawyer $500 an hour, 
whatever it is.
  No hourly fee. I practiced 20 years and never got any hourly fee. I 
had to win the case. Or if I did not, I had to eat the expenses and the 
costs and go back home and say, ``I am sorry, kids, we just lost that 
one. We have to try to work harder next time.''
  But that is the case today. And that is the crowd, the plaintiffs' 
lawyers, who want to hurry it up, get to trial, get a settlement. They 
are the ones who pay for delay, where witnesses disappear, persons get 
sick, others die and what have you. The defense lawyers are the ones 
who have to delay here. That is the lawyers' heaven that they talk 
about.
  They say here, ``It is about time. The Carter administration first 
suggested standards in 1978.'' Well, that is true. And 43 States have 
followed. He says, ``Nothing happened since.'' Well, no Federal law has 
been passed since. We do not have a Federal cause of action here. That 
is the whole point that the gentleman does not understand.
  He then talks about the power of the 60,000 trial lawyers. In the 
previous paragraph he said 40,000 suits. We know a lot of those are 
Dalkon shield, breast implant, particularly asbestos. Those are the 
ones that have been going up. So there are not 40,000; at best there 
are 30,000. But if you have 60,000 lawyers, we have half the trial 
lawyers on welfare. They are not trying any of these product liability 
cases. I do not know what they are doing because they have 60,000 
lawyers and according to his figures only 40,000 cases. So I guess 
these trial lawyers are sure not making it on product liability. That 
is pretty good proof to me.
  He says, ``What has been preserved is a system whose main 
beneficiaries are the lawyers who live off of it.'' Amen--the 
defendants' lawyers. Not the plaintiffs' lawyers. Of course, the thrust 
here is that it is the plaintiffs' lawyers, but the lawyers who live 
off of this are the defendants' lawyers.
  The defendants' lawyers establish every kind of hurdle you can 
possibly think of. For one thing, if you read this bill, you find the 
settlement provision. The first thing under settlements is they require 
a settlement offer. That is not required under the present law today.
  If you come to me and you have been injured by a defective article, I 
hope to get a settlement. In fact, I am duty bound as an officer of the 
court and as your attorney, if they have made an offer--if I want you 
to refuse it, I can tell you--but if I do not tell you about the offer, 
I can be sued for malpractice. That is coming about already. Lawyers 
are suing lawyers. In fact, in California, lawyers are suing ministers. 
The ministers tell them to go home and pray, and they are suing the 
ministers for malpractice. No, instead they should have told them to 
see a psychiatrist. So those are the lawyers.
  And, incidentally, those are mostly company lawyers. I will get to 
the company lawyers in a minute. I want to stick to the idea of what 
has been so cleared up. The first thing they do is bring the employer 
against the employee if he is employed. If you are employed, then I can 
tell you the employer has to be notified when you bring the claim of 
how much and whatever else it is. Then he has to be in lockstep with 
the injured party. Of course, you know the employer, with workmen's 
comp that is, is paying insurance premiums. His thrust is not to help 
the employee, but to keep his workmen's comp costs down. So he buddies 
up with the others, the injured company's insurance carrier. Those two 
get together and bring the pressure on the employee. That is the first 
step in the wrong direction, as a hurdle.
  Then, if the offer is made and the verdict is less, $1 less, even 
though the plaintiff won the case--if it is $1 less, the winner loses 
all collateral benefits. If you have health insurance--if you have 
disability insurance, my suggestion to the Senator from Montana, if 
this bill passes, is scrap it, scratch it. Because if you do and you 
get hurt, you are going to have to pay for it all or you are going to 
lose everything by getting it, so there is no use to pay the premium 
because all the collateral benefits are gone. So that is the two 
companies working together.
  Then, of course, the attorneys' fees, that is another one where they 
have capped it off for the defendants' attorneys but they do not do 
that on the plaintiff's side.
  With respect to punitive damages, as I cited before, you have to have 
proof of conscious, flagrant indifference and you have to prove it by 
clear, convincing evidence. They shortened the statute in my State from 
3 years to 2 years, and they put the burden on plaintiff to prove 
separate culpability of each defendant, in the provision with respect 
to joint and several liability. So you have to prove it on each one of 
them.
  I am sitting in my office and the injured party from a defective 
product comes in and I shake my head. I say, ``I have to see a case 
where they must have made some substantial offer to you. I have to see 
a good case. I just cannot afford it. I hope you can go down to Legal 
Services.''
  We never used to do that. We used to take them all. We did not have 
any Legal Services. But I will say I guess you will have to do it 
because I just have so much time.
  That is the way all these lawyers talk now. ``I have only so much 
time and time is money in the bank to me. And I cannot take a year and 
a half, as they say, or 2 years carrying you.'' I have to have a bank 
account to keep going. If I have 5 or 10 product liability cases, I 
have to have $200,000 or $300,000 in the bank just as carrying, hoping 
to win later on. I can tell you right now, this is not an easy thing 
whatsoever.
  But let us go to where the violation and the abuse really is. The 
abuse is with respect to contract cases. You go to the contract cases 
and you go to punitive damages. Just in the year 1993, the largest 
verdicts, Melridge, Inc., securities litigation in Oregon, a jury award 
of $88 million. American Carriers Inc. versus Westinghouse Credit Corp, 
a jury award of $70 million.
  That is not runaway awards on behalf of a poor little injured party. 
That is just the corporate crowd suing each other.
  Exxon Chemical Patents Co. versus the Lubrizol Corp., $66 million. 
They do not have any bill in here that says you cannot get any punitive 
damages on these corporations. It is only for the injured parties, 
because they have runaway juries with injured parties, supposedly, but 
not runaway juries with corporate America.
  Data General versus Grumman Systems Support Corp., a jury award for 
$52 million.
  Sullivan versus the National Football League, $51 million. Litton 
Systems versus Honeywell, a $1.2 billion verdict. Rubicon Petroleum 
versus Amoco, a jury award of $500 million with $250 million in 
punitive damages.
  They have no bill in here for the last 17 years to cut back on this, 
not corporate America. Weller versus Deloitte & Touche, jury awarded 
$77 million in punitive damages and $112 million in compensatory 
damages--$77 million in punitive damages, malpractice.
  Amoco Chemical Co. versus Certain Underwriters at Lloyds of London, 
jury award of $425 million with $341 million in punitive damages.
  Avia Development Group DFW Inc. versus American General Realty 
Investment, $309 million; only $47 million in actual compensatory 
damages with $262 million in punitive damages.
  Arntz Contracting Co. versus Saint Paul Fire and Marine Insurance 
Co., $127 million; only $16 million in compensatory but $100 million in 
punitive.
  Mr. President, where is the national problem, if there is one, on 
punitive damages? There is the record. That is just last year. And this 
is the crowd now that they want to put you in the hands of with respect 
to corporate America.
  I read their actions. I have never seen cases of $200 million and 
$300 million and $42 million. I was just looking, over the weekend, at 
the record with regard to defense companies.
  This is just in the last 18 months, and this is entitled ``Examples 
of Major Indictments, Convictions, or Recoveries Obtained by the 
Department of Defense Criminal Investigative Organizations.'' I will 
read that again. I want everybody to listen to this. This is the crowd 
that you are going to turn over everything to and put up all the 
hurdles for the poor little independent fellow that does not even have 
a lawyer. Here is how they act: ``Examples of Major Indictments, 
Convictions, or Recoveries Obtained by the Department of Defense 
Criminal Investigative Organizations'':
  Maryland Assemblies, Inc., racketeering;
  Sooner Defense of Florida, false claims;
  Surety Bond Services, surety bond fraud;
  Teledyne Electronics, $5 million civil settlement, $5 million in 
repairs for false testing;
  Natel Engineering, $1.1 million criminal fine, $1.2 million in civil 
settlement, false certifications;
  McDonnell Douglas Helicopter, defective pricing, $1.4 million civil 
settlement;
  Robinson Laboratories, $250,000 in civil and criminal penalties for 
false testing;
  Atlas Grinding and Machine, $150,000 criminal fine for false testing;
  Donco Industries, company fined $10,000, environmental crimes;
  The purchasing agent for GE and Martin Marietta. The agent got 39 
months imprisonment, $329,500 criminal fine; Martin Marietta and GE 
paid $179,000 in reimbursements.
  Health One Transportation Services, health care fraud, $2.9 million 
civil settlement;
  Bicoastal Corp., former Singer Co., $1 million fine; false 
certification.
  AEL Defense Corp., $2.2 million civil settlement for defective 
pricing;
  Phillips Components, $9.6 million restitution for product 
substitution;
  SPS Technologies, $2.5 million civil settlement for product 
substitution;
  Lucas Aerospace Power Equipment, $850,000 settlement for cost 
mischarging;
  Martin Marietta, labor mischarging, $1.12 million civil settlement;
  National Airmotive Corp., false claims, $1.25 million criminal fine, 
$1.75 million civil penalty;
  National Technology Associates for labor mischarging, $250,000 
settlement;
  Clark Surgical for bribery and false claims, $3 million civil 
settlement.
  Buffalo Pumps, a $750,000 settlement for product substitution;
  Teledyne Industries, false claims, $1.5 million criminal fine.
  Creutz Plating, environmental crime, convicted and ordered to pay 
$165,000;
  Preston Dairy, antitrust, $200,000 criminal fine;
  Mountain Oil, criminal antitrust, $100,000 criminal fine;
  Medley Tool and Model Co., defective pricing;
  Hughes Aircraft Co., $3.5 million criminal fine;
  Teledyne Relays, Inc., product substitution;
  Battenfield Grease and Oil Co., product substitution;
  Systems Engineering, 46-count indictment, not disposed of;
  Milspec Fasteners Corp., product substitution, company fined 
$250,000;
  Goodyear Tire and Rubber, defective pricing, $9.1 million, civil 
settlement;
  Westinghouse Electric Corp., manager, kickbacks and money laundering, 
56-count indictment, awaiting trial;
  Tura Machine Co., kickbacks in gratuities, company fined $800,000;
  Former purchasing agent for United Technologies, kickbacks, 
purchasing agent for GE, pled guilty to 39-count indictment, 
environmental crimes
  Plas-Chem Coatings, indicted for environmental crimes;
  Delta Pride Catfish, price fixing, $1 million criminal fine;
  Chemical Waste Management, environmental crimes, $11 million criminal 
fines, penalties, restitution, and civil settlement;
  Bartley Construction, environmental crimes, fined;
  Teledyne--here we go again--false claims testing, $2.2 million civil 
settlement;
  National Health Laboratories, false claims, company fined a million 
bucks.
  Owner of the Brussel Steel American Company, Buy American Act 
violation;
  Blue Cross/Blue Shield of Mississippi, $690,000 civil settlement;
  Ultrasonic Research and Testing Laboratory, falsified test reports, 
$300,000 fine;
  LTV Aerospace and Defense, reduced contract prices by $100,000;
  Score Construction, false claims, false statements, convicted;
  United Technical Electronics, product substitution, company pleaded 
guilty to conspiracy and mail fraud;
  Monroe Wire and Cable, product substitution, $532,000 civil 
settlement;
  Computer Tape Source, $146,000 civil settlement;
  Raytheon Co., defective pricing, $3.7 million civil settlement;
  Raymond Engineering Co., defective pricing, $265,000 civil 
settlement;
  Exxon Chemical, false claims, $3 million fine;
  Hyde, Inc., false claims, $1 million in fines;
  Laurel Optical Systems, $595,000 administrative settlement;
  DOT Systems, false statements, company debarred for 3 years and on.
  Aikin Advance Systems, Inc., false statements.
  Environmental crimes by Martin Electronics, 3 years probation, 
$175,000 fine;
  Martin Marietta, cost mischarging, $6.7 million civil settlements;
  AGF Food, cost mischarging, $776,000 administrative settlement;
  Lieberscope, $1.5 million in damages and civil penalty;
  Lockheed, $1.5 million civil settlement for cost mischarging --on and 
on and on.
  John P. O'Brien, CEO of Grumman Corp., Operation Upwind, pleaded 
guilty. Grumman agreed to pay $20 million settlement;
  Litton Systems, operation Ill Will, $1.5 million criminal fine. I 
better go over and get that ill wind.
  When this Congress talks about the Pentagon and Pentagon 
appropriations in defense, you can see it is a veritable ``open 
sesame'' of corporate America on our defense institution in this 
country. That struck me just reading the papers.
  I have been in law work, like I said. I represented defendants and 
insurance companies. I represented injured parties. But I have never 
seen a heyday of legal work around here--fines and penalties and 
violations such as those coming for defense work for our best of the 
best, our Armed Forces. That is cases covering just 18 months; I just 
pulled them. I said: Just go over and pull the file that is official. I 
do not want to spread any rumors.
  These are the companies; this is corporate America that they are 
talking about that is so belabored that now, oh, they want to cut out 
the multiplicity and the time consuming litigation and so on. That is 
exactly what they want. They have Workmen's Comp matters in here; they 
have the adjudication of cases, settlement controversy in here; they 
have different burdens of proof; they have that all interpreted by 50 
States and the U.S. Supreme Court, and you can go on and on and on.
  There is no question, in my mind, that what we are doing is falling 
into a trap that is easily discerned by those in the profession. Ask 
the American Bar Association. I can tell you, trial lawyers usually go 
to ATLA. They do not go out to the American Bar.
  I used to do both. I can tell you the railroad companies would give 
you a pass. I had one friend who later ended up Chief Justice of our 
Supreme Court--we used to ride to the legislature, but his retainer was 
the railroad car card, and he and his wife could get on the railroad 
train any time in the world and ride free, get up in that Pullman and 
eat all of those good meals. He was the happiest fellow in Charleston, 
SC. And, of course, when they had the American Bar he would get the 
train and go West all the way out to San Francisco. When they had it in 
Reno, or Las Vegas, they would take the train and go on out that way.
  The corporate utility lawyers with their club dues, yacht clubs, and 
country clubs and everything else like that, now they are coming. They 
are the ones who go to the American Bar, I can tell you. I was a friend 
of the head of the division there of bonds and securities, none other 
than the former Attorney General of the United States. That is where I 
met him, when he was the chairman of the bond division, John Mitchell, 
of Caldwell, Trimble and Mitchell. But they are the lawyers--he was 
head of the Chase Club down there, where you go way up to the roof to 
get your martini and talk about settling cases. That is what they do.
  And they want to get on a poor little plaintiff's lawyer who has all 
these burdens, and he has to get all 12 jurors. All you have to do as a 
defendant's lawyer is convince one juror and you are home free. You 
have to get all 12 on that jury, Mr. President, and it is not easy, and 
you have to be clear and convincing. You have to have a mighty strong 
case.
  And then you can find that the juries now, they know all about 
insurance, as is now reported just last week in the New York Times on 
the front page, ``U.S. Juries Grow Tougher on Plaintiffs in Lawsuits.''
  Well, they have done that long ago. The New York Times, I am glad 
they are catching up maybe in New York because they are caught up in 
the State of South Carolina. We have tough juries.
  The lottery, I never heard of such nonsense in my life as to get into 
the product liability lottery. I just never heard it until we got here 
this morning, about getting into a lottery. The research shows awards 
have leveled off. And even then they say of all the defective products 
less than 10 percent actually bring a case and only 1 percent of those 
go to court. And if you take that figure, it is still less again that 
actually receive a recovery.
  So, Mr. President, this is not a national problem whatever.
  Proponents of the bill claim that product liability laws are the 
reason we don't yet have an AIDS vaccine. Absolutely false. This is a 
letter from Project Inform. Founding Director, Project Inform, Mark 
Delaney.

       To whom it may concern:
       Some groups have suggested that product liability laws are 
     the principal reason we don't yet have a vaccine for AIDS. In 
     response, they suggest that greatly relaxing such laws would 
     result in quick or immediate marketing approval of such a 
     vaccine. This is simply not the case. The principal reason 
     that we don't yet have an approved AIDS vaccine is that no 
     such vaccine has demonstrated the ability to protect humans 
     against the normal routes of infection by HIV, the virus 
     which causes AIDS, and no vaccine has yet been proven to be 
     completely safe. No vaccine has yet reached the stage of 
     testing where product liability issues are even a significant 
     concern.
       Instead, the committee voted against approval of wide scale 
     testing primarily because the vaccines hadn't shown 
     sufficient evidence of efficacy in initial trials, and 
     secondarily because some safety questions remain, principally 
     the question of whether such a vaccine might accelerate the 
     course of the disease in someone who became infected despite 
     vaccination.
       Product liability concerns are not presently an obstacle to 
     such testing.

  That is June 22, 1994. I ask unanimous consent the letter in its 
entirety be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                               Project Inform,

                                                 San Francisco, CA
       To whom it may concern: Some groups have suggested that 
     product liability laws are the principal reason we don't yet 
     have a vaccine for AIDS. In response, they suggest that 
     greatly relaxing such laws would result in quick or immediate 
     marketing approval of a such vaccine. This is simply not the 
     case. The principal reason that we don't yet have an approved 
     AIDS vaccine is that no such vaccine has demonstrated the 
     ability to protect humans against the normal routes of 
     infection by HIV, the virus which causes AIDS, and no vaccine 
     has yet been proven to be completely safe. No vaccine has yet 
     reached the stage of testing where product liability issues 
     are even a significant concern.
       Last week, as a member of the NIAID AIDS Research Advisory 
     Committee, I voted against initiating widescale human testing 
     of two proposed vaccines for AIDS, products of Genentech and 
     Biocene, a division of Chiron Corporation. Liability issues 
     never once entered the discussion. Instead, the committee 
     voted against approval of wide scale testing primarily 
     because the vaccines hadn't shown sufficient evidence of 
     efficacy in initial trials, and secondarily because some 
     safety questions remain, prinically the question of whether 
     such a vaccine might accelerate the course of disease in 
     someone who because infected despite vaccination. Because 
     these concerns remain unanswered, and because of the 
     financial and human resources costs of the proposed trials, 
     it was felt that the public interest would be best served by 
     waiting for the availability of additional promising vaccine 
     candidates which might be tested comparatively. These two 
     vaccines, despite their weaknesses, are the products in the 
     most advanced stage of testing and development for AIDS. 
     Questions of safety and efficacy are thus larger still for 
     any other vaccine candidates, which have not yet had even the 
     level of human testing of these two.
       There are many possible ways to build a vaccine for AIDS 
     and I am no position to argue that one approach is inherently 
     better than another. Only a graduated, step-by-step testing 
     process can determine which is the safest and most effective 
     approach. Product liability concerns are not presently an 
     obstacle to such testing, which must precede any marketing 
     approval of a vaccine. Regardless of product liability 
     concerns, the availability of a vaccine for AIDS is many 
     years away.
                                                     Mark Delaney,
                                                Founding Director.

  Mr. HOLLINGS. I yield the floor.
  Mr. SHELBY addressed the Chair.
  The PRESIDING OFFICER (Mr. Mathews). The Senator from Alabama.
  Mr. SHELBY. Mr. President, first of all, I want to commend the 
distinguished Senator from South Carolina [Mr. Hollings], for his 
defense of what I say is people's access to court in America. He has 
worked on the Senate floor for many years before I even came to the 
Senate, and I commend him for his steadfast service.
  Mr. President, I rise today in strong opposition to S. 687, the so-
called product liability fairness bill. Listen to the label--product 
liability fairness bill. This bill not only has nothing to do with 
fairness, Mr. President, but represents what I view as Washington's 
standard surgical prescription for the common cold that we hear every 
day. Indeed, S. 687 is the product of a growing and I believe a 
dangerous trend in Washington to force Federal solutions to every 
purported problem no matter how big or how small, how real or how 
tenuous.
  Mr. President, this bill carefully selects out and subjects certain 
product liability suits historically governed by State law for 200 
years under our constitutional scheme to a uniform Federal law--
something that is unprecedented in America.
  One of the justifications given for this drastic encroachment on 
States rights is that product liability is responsible for hampering 
U.S. innovation and competitiveness.
  Now, Mr. President, aside from a wealth of studies and evidence 
refuting any such causal link, it remains beyond me and many other 
Senators how the Federal Government believes that by cutting off 
individual rights in America it is somehow going to resolve these 
problems. It is deceiving to characterize the creation of uniform 
product liability laws as beneficial and fair to consumers, workers, 
and citizens in America. It is deceiving because it not only 
misconceives the tradeoffs being made but it presumes the need for such 
a tradeoff in the first place.
  Are State and individual rights valued so little in this Senate? Why 
should the first response always be to federalize the system, 
particularly when there is so little evidence to suggest that 
federalizing State product liability laws will have any beneficial 
impact on either competitiveness or innovation, much less solve the so-
called insurance crisis that we hear about. In fact, according to the 
American Insurance Association, commenting on a similar bill to 
federalize product liability law, ``The bill is likely to have little 
or no beneficial impact on the frequency or severity of product 
liability claims. It is not likely to reduce insurance claims or 
improve the insurance market.''
  Mr. President, in 1990, the Office of Technology Assessment found 
that four factors--four factors--were most responsible for influencing 
U.S. competitiveness. They are capital cost, the quality of human 
resources, technology transfer, and technology diffusion. No mention 
was made of litigation costs, much less product liability litigation. 
The fact is that these costs are only a small percentage of the overall 
costs that businesses bear in this country.
  If we are concerned with U.S. innovation and competitiveness--which 
we are--why not, Mr. President, start first by relieving the economy 
and the American businesses of Federal regulatory burden and compliance 
costs, or lowering the costs of capital by cutting capital gains taxes 
rather than stripping individuals of their day in court?
  Mr. President, these are all factors that the Federal Government can 
positively effect without taking the unfounded, unprecedented steps of 
depriving American citizens of their indispensable civil right to seek 
full and fair redress in court?
  Mr. President, this bill promises so little for taking so much away 
from our citizens and our democratic system. It sets a bad precedent, 
and leaves everyone more vulnerable and less protected under the law. 
All litigation imposes some costs on society. So why stop at product 
liability law if you are going to do this? Why not federalize all 
personal injury suits, or would this be the first step? Mr. President, 
tort law could not be more firmly grounded in our State law and 
prerogative thereto, and yet with so little fanfare we could convert it 
to Federal purposes.
  Whenever the Federal Government steps in and strips the States of 
their role in the Federal system by preempting State law, the Federal 
Government has diminished the civil liberties of every citizen in a 
real and a substantial way.
  Mr. President, before we undertake to overturn 200 years of carefully 
crafted State tort law, let us be sure the cure is not more deadly than 
the disease. More and more, Mr. President, the States are being 
deprived of their ability to protect their citizens. More and more the 
role of State legislatures and State courts are trivialized by Federal 
preemption, and more and more, Mr. President, citizens are being told 
that Washington knows best. I wish we could be so sure.
  I oppose Senate bill 687, and I urge my colleagues to do likewise.
  Mr. BURNS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BURNS. Mr. President, we heard today the opening arguments on S. 
687. As one who does not have a law degree, I would take a look at this 
and hear both of these arguments. Both of them are very compelling. I 
support this legislation. It is my hope that after 14 years of 
consideration this important reform measure can be enacted into law.
  I first want to thank Senator Rockefeller of West Virginia for his 
leadership on this issue. No one has been more diligent than he has in 
seeking this reform. There is a reason for it. Firsthand, he knows 
about the formation of new products and new technologies. He is my 
chairman on the Science, Technology, and Space Subcommittee of the 
Commerce Committee. We had testimony on the development of new 
technologies with particular interest in new materials, new composites, 
new ways of doing business, and new technologies that would further 
this country and put us in a better competitive position.
  We see firsthand, and we hear firsthand, testimony about how product 
liability is a deterrent, not only in the decision to make the 
investment in new technologies but also can we get it into the 
marketplace without the fear of litigation.
  So I support this fairness act because it does not bar anybody from 
the courts. It does not infringe on any rights. With the patchwork of 
laws across the States, I believe that Congress needs to act now to 
remove some of the barriers that are infringing upon the economic 
growth in this country. The economy has rebounded some on its own. But 
the need for Congress to take action has not diminished.
  The first time I walked into these Halls of the Senate in 1989, this 
was being discussed--almost 6 years ago, and still no action. The fact 
is the need for reform of our product liability system becomes more 
urgent every day as new products are being developed. The current 
system drives up costs in nearly every sector of our economy, and does 
very little to improve the quality or to increase safety.
  This is a competitiveness issue. And when you talk about competition, 
both in the domestic market and on the international market, it most 
definitely is a jobs issue. Currently, the typical American 
manufacturer faces product liability costs that are 20 to 50 times 
higher than its foreign competitors. These just are not figures that 
are pulled out of the air. The additional cost makes American companies 
less competitive, and they lose market share to foreign competition. So 
they raise prices, lay off workers, which in aggregate--as they say, a 
cumulative effect--spells recession for the American economy. In 
effect, small business is just as vulnerable to this as so-called big 
businesses. In my State of Montana, we are all small business. We try 
to attract small manufacturers, and have small manufacturers in my 
State. They are affected too. So it is just not confined to the big 
corporations or America's big business. It affects all of them.
  There was an 1,100 percent rise in the number of Federal product 
liability cases in the 1970's and the 1980's, which has driven up the 
cost of liability insurance. The burden of this increased cost is 
proportionately much greater for small businesses than it is for big 
corporations. It can be a make-or-break issue for the small 
manufacturer. The development of the high-technology communities in 
Montana to deal with biochemistry and the new technology is just now 
starting to grow. They do it on a shoestring with very, very limited 
access to investment capital. So it is a make or break for my State of 
Montana.
  The issues have been presented here today, this is a consumer issue. 
They say if you are for product liability reform then you cannot be for 
the consumer. Well, that is not the way I interpret this law. Nobody is 
denied if they are harmed. Consumers do not benefit when the business 
community has to protect itself from runaway lawsuits. They are for it. 
That is our money. The additional costs are passed on to the consumer. 
The people who benefit most from this current system, and you guessed 
it, are the lawyers.
  The General Accounting Office recently noted that more than half of 
the jury awards in the product liability trials go to attorneys. Other 
studies say that 50 to 70 cents of each dollar of jury awards to an 
injured person goes to--you guessed it--the attorneys. So it hardly 
seems like a system that benefits the consumer.
  I would also echo and associate myself with the words of my colleague 
from Alabama. My chairman of the Commerce Committee has been the 
champion of the entree of every citizen into the courts of the United 
States of America. But there is a time when the system itself has to be 
more regarding of all facets of it. We must protect people from the 
careless manufacturers and defective products. This bill does not 
compromise that objective. It just ensures that we do it in a fashion 
that still allows American business to compete and grow in a global 
economy.
  I hope that now when Congress once again is given the opportunity to 
reform this product liability system, we will do it. There are those 
who would say that we do not want to be in a global economy, we do not 
want to compete with other countries around the world. But those are 
folks who are living in a dream world, because there have been three 
inventions that cast us into that arena, whether we wanted to be a part 
of it or not. And if we have to do certain things to keep us 
competitive in that market, then we should do so.
  So, for 14 years, maybe Congress, given this opportunity, will now 
pass this legislation, which I think--and this is a blue-collar 
thought--is not a draconian change from the system we are now using in 
product liability.
  I thank the Chair and yield the floor.
  Mr. REID addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nevada [Mr. Reid], is 
recognized.
  Mr. REID. Mr. President, I rise in opposition to this so-called 
Product Liability Fairness Act, and I will vote against cloture. We 
have seen this legislation before. It is really just the latest version 
of a piece of special-interest legislation. A group of chemical 
companies, drug firms, and other manufacturers in the drug industry 
have been trying to push it through this body for many, many years.
  It is often the case that one can best understand the impact of 
proposed legislation by looking at who supports the legislation and who 
opposes the legislation. Well, the greatest supporters of this 
legislation are a handful of very large anticonsumer corporate 
entities. What has been distorted in all of the memoranda circulating 
in this legislation is the opposition. I listened to the chairman of 
the Commerce Committee lay out in some detail this afternoon the myth 
regarding the litigation and who it is that benefits from the 
litigation.
  Who really is opposed to this legislation? In the State of Nevada, 
Mr. President, it is the consumer groups. It is groups of people who 
feel they will not be treated right in the future if this legislation 
passes--especially women's groups and consumer groups. Also opposed, 
Mr. President, is the National Conference of State Legislatures and 
over 70 law professors from around the country. As I indicated, almost 
all the women's rights groups--and, in fact, every major consumer 
rights organization--are opposed to this legislation. It is a diverse 
but formidable opposition that seeks to protect the rights of people 
injured by defective products. What the opponents of this legislation 
do not have is the ability to control advertising and public relations 
by paying high-paid media people to put out propaganda about how bad 
the product liability problem is in this country. This is a myth. It is 
also those who oppose this legislation that are dedicated to ensuring 
that the products we use are safe and practicable.
  Mr. President, prior to coming here, I was an attorney. I tried 
lawsuits, over 100 jury trials. I represented insurance companies for 
the first decade, and, thereafter, I represented plaintiffs. So I have 
seen both sides of this type of litigation. I can say that there are 
very few product liability cases filed, for the reasons outlined by the 
chairman of the Commerce Committee. They are extremely difficult and 
very expensive. The plaintiffs' attorneys normally cannot handle the 
costs associated with them. I can remember one case where I sued a 
major oil company when I was a new attorney out of law school and 
thought I knew the law, which I did fairly well. But what I did not 
know is how it worked practically. I could not handle all the 
depositions, all the discovery that they did just to bill the hours. I 
was being paid on a contingent figure, and I could not handle that. 
Even though I had a case of merit, the case did not wind up that way. I 
had to settle the case for almost nothing because I could not handle 
the costs. My client had no money to advance the costs.
  It is a big myth that product liability litigation is clogging the 
courts. There are a lot of things we need to do to streamline what goes 
on in courts. One thing we could do is get rid of all the prisoner 
litigation in our Federal court system. In Nevada, about 40 percent of 
all the cases that our Federal judges initially deal with are cases 
filed by prisoners. We could really do something to streamline that. I 
ask all the people who have said they are supporting product liability 
legislation as a remedy for unclogging the courts to join with me on 
legislation I am going to soon introduce to speed up the process of 
prisoner litigation by setting up an administrative tribunal to handle 
those.
  Mr. President, this institution--the Senate--rightly or wrongly, is 
often accused of favoring corporate and other special interests at the 
expense and concerns of ordinary Americans. Thus, the true opponents of 
this bill are our constituents, the hard-working Americans and families 
who make up the consuming public. Everyone should understand that those 
people in this body who are opposing this legislation are not 
supporting corporate interests or special interests, that we are 
supporting the small guy who cannot afford to handle litigation against 
these massive corporations.
  The legislation pending before the Senate today is anticonsumer. 
Product liability law is the cornerstone of consumer protection in 
America. Since the industrial revolution, our laws have moved steadily 
forward to protect the rights of victims in our industrial and retail 
economy. The common law of the 50 States was developed to reflect the 
customs and values of our society. That is the true value of the common 
law.
  What is the common law? The common law is a body of law that was 
developed originally in England, primarily from judicial decisions, 
based on custom and precedent. They were unwritten, as far as statutes. 
And judges would go back and say, well, this court decided this way, 
and that is the law of the land here, and we might change it a little 
bit, but we are going to base our decisions on those made by previous 
courts. When we formed as a country, we had all of the foundations of 
the English judicial system, and we brought that over here. We have our 
own common law, the foundation of which came from England and has been 
developed here for over 200 years. Product liability has also developed 
within the common law. We have based a lot of what we do in the courts 
on precedent set by other courts. That is the true value of following 
common law.
  In Nevada, in the State and local courts, just like in every other 
State, the common law has developed over time, reflecting the 
sentiments and values of the communities of the State of Nevada as they 
have evolved over time. We have a set of laws in the State of Nevada 
that has taken into consideration product liability that has developed 
in Nevada. We believe that we in Nevada have followed the right system. 
We have product liability that is not like in the State of South 
Carolina, that is not like in the States of Tennessee or West Virginia. 
Our system has developed since 1864, since we have been a State, and we 
want to keep it that way. We do not think the Federal Government should 
step in and say, ``You should handle your product liability litigation 
the way we think you should do it in the District of Columbia.''
  So we like the way we have done things in the State of Nevada. But 
despite the way we like it in the State of Nevada, the proposed law, 
the bill in this instance, says to the State of Nevada and every other 
Senator's State, that we in the Senate know better than they do. It 
preempts long-established laws that reflect the beliefs and sentiments 
of our States and local communities.
  It undermines the legal values that have developed in our States over 
time. In short, it subverts State rights to such an extent that I must 
oppose it.
  As I indicated, I practiced law before I came here. I appreciate the 
value of Nevada's product liability precedents, the laws, and I 
honestly believe if there is a need to reform this body of law, it 
should be done in the Nevada State Legislature, not by the Congress of 
the United States.
  Aside from the Federal preemption issue, this bill severely weakens 
the product liability law and threatens to expose consumers to a more 
dangerous marketplace and an unfair legal system.
  There are a number of anticonsumer provisions that I find 
particularly disturbing in this legislation. It restricts compensation 
for pain and suffering. The bill eliminates joint and several liability 
for pain and suffering awards. The arguments in favor of eliminating 
these awards seem to assume, or suggest, that noneconomic losses are 
some sort of fuzzy or unreal damages not worthy of strict legal 
protection.
  A lot of things have changed in this country since we became a 
country 200 years ago, but one thing that has not changed is the basic 
makeup of our jury system. As I indicated, I tried lots of cases. 
Juries did not always arrive at the right decision, but the vast, vast 
majority of the time they did. As I say, they almost always arrived at 
the right decision, not always for the right reason, but juries have 
the sense of right and wrong, and that is why our justice system allows 
noneconomic losses, and rightfully so, because it protects the small 
person.
  One of the more pernicious provisions of this bill is section 206. It 
is offensive because it denies the reality of, and is completely 
without sympathy for, the pain and suffering that can accompany a 
product-related injury.
  I agree that pain and discomfort are not easily quantified.
  But just as certain as pain and suffering is hard to quantify, pain 
and suffering is a real problem, and it is very real to an injured 
victim.
  The case must be made for noneconomic losses. I think one of the more 
eloquent statements made on behalf of noneconomic losses came in a 
legal opinion from the California Supreme Court in the case of Fein 
versus Permanente, which I think was an insurance company. There the 
court said:

       For a child who has been paralyzed from the neck down, the 
     only compensation for a lifetime without play comes from non-
     economic losses. Similarly, a person who has been hideously 
     disfigured receives only non-economic damages to ameliorate 
     the resulting humiliation and embarrassment. Pain and 
     suffering are afflictions shared by all human beings, 
     regardless of economic status. For poor plaintiffs, non-
     economic damages can provide the principle source of 
     compensation for reduced life-span or loss of physical 
     capacity * * *. Often these plaintiffs may be unable to prove 
     substantial loss of future earnings or other economic 
     damages.

  That says just about all of it.
  So, by making joint and several liability unavailable for noneconomic 
damages, it is those victims with the worst injuries that would end up 
being undercompensated. In order to receive full compensation, such 
victims would be forced to pursue each party who had been responsible 
for their injury. It is clear that this provision would have a 
disproportionate impact on the poorest victims, as indicated in the 
example I gave to the chairman of the Commerce Committee involving one 
of my early lawsuits as a young attorney in Las Vegas. Really, what 
this provision attempts to do is shift costs from the strongest and 
wealthiest corporations to the poorest and weakest of our society.
  Another provision of this bill which unfairly shortchanges the 
consumer is the virtual elimination of punitive damages. Here again, 
the consumer is the one who loses. There is no doubt that this bill 
makes it more difficult to recover punitive damages from manufacturers 
who recklessly and knowingly market unsafe products.
  Mr. President, punitive damages are necessary to punish and deter 
manufacturers who consciously or recklessly market a dangerous product.
  Mr. President, I remember the first verdict I got for punitive 
damages. I can still remember the woman's name. I can still remember 
the name of the case. It was against Safeway Stores. This woman was 
working as a cocktail waitress in one of the hotels in Las Vegas. The 
police came, arrested her off the floor in her little costume that she 
was wearing, and took her to jail, charging her with writing bad 
checks.
  I was able to show that Safeway was willfully negligent. They had 
recklessly arrested this woman. How do you stop Safeway Stores from 
doing this? To stop Safeway from doing this, the jury assessed Safeway 
punitive damages. In those days, it was a lot of money--hundreds of 
thousands of dollars. Safeway Stores stopped doing their bad check 
processing the way they did. The effect of this case, the name of which 
was Marganus versus Safeway Stores, is they stopped processing their 
bad check cases this way. They, in effect, did it differently. They 
would not pick some innocent person off their job. But for these 
punitive damages in this Safeway account they would be arresting other 
people just the way they arrested her. It is no more because of 
punitive damages. Punitive damages have the ability to set a social 
standard. That is what they are there to do.
  They are necessary to punish and deter those who consciously or 
recklessly, in this instance, this litigation marketed a dangerous 
product and in the instance of Safeway Stores stop doing business the 
way they did. The logic and importance of punitive damages are quite 
simple. Without the threat of punitive damages, and the uncertain 
financial costs associated with them, manufacturers would be able to 
factor in as a cost of doing business the compensation to be paid for 
death and injury caused by their products.
  This was the disturbing lesson that this country should have learned 
in the case of Ford Motor Co.'s marketing of the Pinto automobile. This 
bill, however, shows that we did not learn that lesson or we did not 
learn it well enough. In the Pinto case, Ford's own engineers 
determined that a lethal defect in the Pinto's gas tank would cause the 
car to ignite in a low impact rear end collision. However, Ford 
officials, doing a cold cost/benefit analysis, decided not to invest 
the $11 per car that it would have taken to make the Pinto safe. 
Instead, Ford executives calculated that the cost of compensating 
injured and killed Pinto victims would be less than the price of fixing 
the defect. The Pintos were recalled only after a jury awarded stiff 
punitive damages to one victim's family. What is clear from this awful 
tragedy is that punitive damages literally save lives by preventing 
future injury and death.
  Now, in the case I indicated about Safeway Stores, there was no death 
involved, but there was injury that needed to be compensated. And it is 
the same principle as the Pinto case.
  Section 203 of the bill, which will result in a near prohibition of 
punitive damages, is really only a surreptitious way of shifting costs 
to consumer and worker victims.
  Section 203(c) and (d) of the bill are no different. This section 
provides blanket immunity even for knowing and willful marketing of 
dangerous products so long as the products in question comply with 
relevant government standards. Unless overt fraud is involved, 
manufacturers of Government approved drugs, medical devices, and 
aircraft are given an absolute shield against punitive damages.
  This overly broad protection is simply unfair to consumers. 
Government approval of a product should not give a manufacturer the 
license to recklessly market a product which it knows is unsafe or 
defective.
  Why? At best, Government standards can become outdated, can become 
under-protective, and often do not reflect the state of knowledge of 
experts concerning safety.
  One of my responsibilities in the Senate is chairman of a 
subcommittee on environment and public works. We have worked now for a 
couple of years. We are having some more hearings this month and next 
month. We have been working with TOSCA. TOSCA, as we know around here, 
is a shortened name about a law that was passed here to deal with 
chemicals that go into the marketplace.
  Well, if we went by Government standards in approving those 
chemicals, it would give comfort where it should not be given. The 
Government's standards in TOSCA are not very good standards. So at 
best, Government standards can become outdated, can become 
underprotective, as with TOSCA, and often do not reflect the state of 
knowledge of experts concerning safety. Government agencies often lack 
the resources, as with this TOSCA legislation, or the capability to 
respond in a timely manner to report the safety defects.
  And, at worst, government agencies are overly susceptible to the 
pressures of corporate lobbyists who will now have even greater 
incentive to achieve agency blessings for their clients products. The 
government approval standard is simply too blunt an instrument. For 
instance, there are many examples of FDA approved products causing 
injury. A recent GAO report found that approximately one-half of the 
drugs approved by the FDA had ``serious postal-approval risks.''
  I do not mean to suggest that the FDA is not doing its job. It is 
doing the best it can. Rather, that we are faced with a system that is 
not meant to accomplish what this bill asks it to do. The process of 
approving drugs is difficult and time consuming. The Government is 
often under enormous pressure to put drugs on the market and is not 
always the first to know when problems begin to appear with a 
particular product.
  The Government standards defense will encourage manufacturers to take 
an approach to safety which focuses only on Government approval. There 
will be too little incentive to pursue safety measures beyond that 
level.
  Punitive damages as I have tried to illustrate, Mr. President, serve 
important societal interests. These interests achieve the dual goals of 
punishment of specific faulty parties and creation of industry wide 
deterrents against future misconduct. In short, they create incentives 
to upgrade the quality of goods and services.
  Even corporations themselves have recognized the important role of 
punitive damages. In 1987, the Conference Board surveyed risk managers 
of 232 major U.S. manufacturing, trade, and service corporations about 
the affect of product liability on their companies. In report No. 893, 
the corporate risk managers admitted that as a result of the impact of 
punitive damages and the tort system, ``products have become safer, 
manufacturing procedures have been improved, and labels and use 
instructions have become more explicit.'' That is pretty good.
  Mr. President, the proponents of this bill argue that without reform 
we will never be able to curtail the alleged products liability 
``litigation explosion.'' Here is where I want to talk a little more 
about what the chairman of the Commerce Committee said. While our 
courts are saddled with many lawsuits, I question the existence of a 
products liability litigation explosion. And, notwithstanding the facts 
proving otherwise, even if you are in favor of reducing litigation, you 
have to ask yourself whether trading away the rights of consumer and 
worker victims is the best solution.
  As I said, however, I believe that the facts evidence that we are not 
experiencing an explosion of product liability cases. In fact, the 
number of nonasbestos related product liability cases in this country 
is actually declining. Prof. Mark Galanter of the University of 
Wisconsin School of Law recently conducted a comprehensive review of 
statistics for the Federal courts. He found that if asbestos cases are 
excluded, the number of product liability cases in the Federal courts 
has declined in the last 5 years from 8,268 cases in 1985 to 4,992 
cases in 1991, a 40-percent decrease.
  Similarly, the National Center for State Courts recently published 
statistics showing that in the State court system there have not been 
dramatic increases in tort cases. The statistics show that tort filings 
make up less than 1 percent of all cases filed in State courts and less 
than 10 percent of most States civil case load. Of course, product 
liability cases, which are only a subset of all tort cases, would make 
up an even smaller percentage of this total.
  If any kind of litigation explosion does exist, perhaps it is the 
fault of internecine corporate battles. Professor Galanter's--the man 
from the University of Wisconsin who I previously quoted--found that 
the real increase in litigation in recent years has been business suing 
business, the corporate free-for-alls. And is it not interesting, as 
the chairman of the Commerce Committee pointed out, this legislation 
covers everybody but them. They want to still be able to have their 
corporate free-for-alls. The chairman of the Commerce Committee ran out 
of breath trying to relate all the numbers of dollars that corporations 
have been paying each other.
  Disputes involving contract filings in the Federal courts increased 
by 232 percent between 1960 and 1988. And in 1988, that was the largest 
category of all civil cases in the Federal courts. Perhaps the 
corporate proponents of this bill need to shift costs to consumers in 
order to pay their lawyers while they sue each other.
  Advocates of the bill say the current system unfairly benefits 
plaintiffs in product liability cases. A recent study by Cornell Law 
School Professors James Henderson and Theodore Eisenburg proves 
otherwise.
  Mr. President, what we are talking about here are empirical studies. 
One done by the University of Wisconsin and this one I am going to talk 
about from professors at Cornel. After examining all product liability 
cases, this study found that product liability lawsuits clearly favor 
the defendants, favors the corporations.
  They found that from 1976 through 1983, defendants benefited in 
roughly 51 percent of product liability cases. By 1988, the figure had 
increased to almost 65 percent. It keeps getting better for the 
corporate defendants, Mr. President.
  The other argument made by the proponents of this legislation is that 
we ought to sacrifice the rights of consumer and worker victims in 
order to eliminate what are purported to be erratic and excessive 
awards. However, studies have shown that the total awards for 
compensatory damages bear a strong relationship to the severity of the 
injury and the underlying economic loss. That does not sound too bad to 
me--the worse the damages, the more the award. That sounds fair.

  In other words, our jury system works as it should: The greatest 
damages are awarded to the victims with the greatest losses.
  That is the common law system that I have talked about here today, 
carried across the ocean when the colonists came here--mostly from 
England--and then developed in the last 200 years that we have been a 
country.
  A 1989 General Accounting Office report on product liability 
confirmed this. The General Accounting Office found that the size of 
compensatory awards varied by type and severity of injury in a manner 
consistent with the underlying economic loss. GAO concluded that 
compensatory awards were neither erratic nor excessive. Even in the 
case of punitive damages, the GAO study found that the amount of 
punitive damages awarded was correlated very highly with the size of 
compensatory damages.
  Mr. President, it is important that further light be shed on some of 
the buzzwords being thrown around by the proponents of this bill. These 
corporations advocate the passage of this legislation because it will 
increase ``competitiveness'' and ``innovation.'' These corporations 
have developed these buzzwords in the backrooms and in their public 
relations shops. The fact of the matter is, their theory is, ``The best 
defense is a good offense,'' and they can pretty well get by with this 
because they have the corporate bucks to spread this propaganda around. 
People, who have benefited from the imposition of significant damages, 
like the woman at Safeway, they are not able to get their message out 
like the corporate moguls of this country.
  Passage of this bill will do nothing to make American business more 
competitive. In 1990, the Office of Technology Assessment issued a 
report on the competitiveness of the U.S. manufacturing sector. The 
Office of Technology Assessment was developed in the Congress by 
bipartisan support--principally, Senators Hatch, Kennedy, and Stevens--
to give Congress the ability to have an independent watchdog to handle 
the advance of technology that is taking place in this country. OTA was 
called upon to talk about competitiveness. They found that the four 
major factors influencing U.S. manufacturing competitiveness were, 
first, capital costs; second, the quality of human resources; third, 
technology transfer; and fourth, technology diffusion.
  Beyond these four factors, OTA listed a host of other contributing 
factors. Conspicuously absent from their list and their report was any 
finding that the U.S. product liability system played any role in 
harming U.S. competitiveness--any role. It seems simply incredible to 
me to assert that a system that condemns products produced in a grossly 
negligent, fraudulent, or dangerous manner could be called destructive 
to the competitive posture of our great country.
  The allegation that product liability law-stifled innovation is 
equally groundless and self-serving. Proponents of this bill cite the 
pharmaceutical industry as an industry in which product liability 
lawsuits have hindered the development of new products. However, 
argument in this regard is undermined by the Pharmaceutical 
Manufacturing Association itself and their claims. The Pharmaceutical 
Manufacturing Association has recently run a national advertising 
campaign, touting its world leadership in research and development. 
Their ad boasts the ``* * * pharmaceutical industry leads America's R&D 
efforts.''
  They cannot have it both ways. But, however, they have it, they 
certainly do not say that they cannot produce and do medical research.
  I believe current liability laws promote innovation and 
competitiveness and benefit the consuming public. It spurs innovations 
in safe products by deterring the production of harmful products. How 
can it be to the interests of competitiveness to discourage innovations 
and safety?
  If that is their idea of competitiveness, then that is not the kind 
of competitiveness that America needs. I ask my colleagues to join me 
not only in opposing this clearly anticonsumer piece of legislation, 
but to join me in not invoking cloture.
  The PRESIDING OFFICER (Mr. Hollings). The Senator from Wisconsin.


                           Amendment No. 1930

    (Purpose: To amend chapter 111 of title 28, United States Code, 
    relating to protective orders, sealing of cases, disclosures of 
    discovery information in civil actions, and for other purposes)

  Mr. KOHL. Mr. President, on behalf of myself, Senator Cohen, and 
Senator Murray, I rise to offer an amendment to S. 687. This is an 
amendment that will help protect public health and safety; the 
amendment gives balance to the product liability bill, which I support 
and intend to vote for. As I begin, I would like to commend Senators 
Rockefeller, Danforth, and Lieberman for their diligent and positive 
efforts to reform our Nation's tort system.
  The amendment I know turn to addresses the troubling use of court 
secrecy. Far too often, the court system allows vital information that 
is discovered in litigation--and which directly bears on public health 
and safety--to be covered-up: to be shielded from mothers, fathers, and 
children whose lives are potentially at stake, and also from the public 
officials we have appointed to protect our health and safety. That is 
not only wrong, Mr. President, I believe it is unacceptable.
  This happens because of the use of so-called protective orders which 
are really gag orders issued by courts designed to keep information 
discovered in the course of litigation secret and undisclosed. 
Typically, injured victims agree to a defendant's request to keep 
lawsuit information secret. They are because defendants threaten that 
without secrecy, they will refuse to pay a settlement. And victims 
understandingly cannot afford to take such chances. While courts in 
these situations actually have the legal authority to deny requests for 
secrecy, typically they do not--because both sides have agreed, and 
judges have other matters they feel they must attend to.
  To respond to this problem, we drafted anti-secrecy legislation last 
year. I note, however, that today's amendment differs from that 
original bill. Working closely with all sides on this issue--including 
the business community--we have modified the original legislation so 
that it is more responsive to the needs of defendants in court cases.
  The amendment we offer is simple, effective, and straightforward. In 
cases that do not affect public health and safety, existing practice 
would continue, and courts could still issue protective orders as they 
do today. But in cases affecting public health and safety, courts would 
apply a balancing test: they could permit secrecy only if the need for 
privacy outweighs the public's need to know about potential health or 
safety hazards. Moreover, courts could not under this amendment, issue 
protective orders that would prevent disclosures to regulatory 
agencies.
  In this way, our amendment will bring crucial information out of the 
darkness and into the light.
  The need for change is clear. As we speak, the details of a $4 
billion breast implant litigation settlement are being ironed out. Most 
Americans do not know that studies indicating the hazards of breast 
implants were uncovered as early as 1984 in litigation; but the sad 
truth is that because of a protective order that was issued when that 
case was settled, this critical knowledge remained buried, hidden from 
public view, and from the FDA.
  Ultimately, it was not until 1992--more than 7 years and literally 
tens of thousands of victims later--that the real story about silicon 
implants came out. How can anyone tell the countless thousands of 
breast implant victims that court secrecy isn't a real problem that 
demands our attention?
  And the breast implant case is not the only one in which protective 
orders have operated to the detriment of public health and safety.
  For over a decade, Miracle Recreation, a U.S. playground equipment 
company, marketed a merry-go-round that cause serious injuries to 
scores of small children--including severed fingers and feet. Lawsuits 
brought against the manufacturer were confidentially settled, 
preventing the public and the Consumer Products Safety Commission from 
learning about the hazard. It took more than a decade for regulators to 
discover the hazard and for the company to recall the merry-go-round.
  There are yet more cases like these. In 1973, General Motors began 
marketing vehicles with dangerously placed fuel tanks that tended to 
rupture, burn, and explode on impact more frequently than regular 
tanks. Soon after these vehicles hit the American road, tragic 
accidents began occurring, and lawsuits were filed. More than 150 
lawsuits were settled confidentially by GM.
  For years, this secrecy prevented the public from learning of the 
dangers of these vehicles. It was not until a trial in 1993 that the 
public began learning of the alleged dangers of GM sidesaddle gas tanks 
and the GM crash test data which demonstrated these dangers.
  Another case involves Fred Barbee, a Wisconsin resident whose wife, 
Carol, died because of a defective heart valve.
  We learned in a Judiciary Committee hearing from Mr. Barbee that 
months and years before his wife died, the valve manufacturer had 
quietly, without public knowledge, settled dozens of lawsuits in which 
the valve's defects were demonstrated. When Mrs. Barbee's valve 
malfunctioned, she rushed to a health clinic in Spooner, WI, thinking, 
as did her doctors, that she was suffering from a heart attack. As a 
result of this misdiagnosis, Mrs. Barbee was treated incorrectly and 
died. To this day, Mr. Barbee believes that but for the secret 
settlement of heart valve lawsuits, he and his wife would have been 
aware of the valve defect, and his wife would be alive today.
  We could go on to list more examples. But perhaps the more troubling 
question is, what other secrets are currently held under lock and key 
which could be saving lives if they were made public? Having said all 
this, we must in fairness recognize that there is another side to this 
problem. Privacy is a cherished possession, and business information is 
an important commodity. For this reason, the courts must, in some 
cases, keep trade secrets and other business information confidential.
  However, in my opinion, today's balance of these interests is 
entirely inadequate. This amendment will ensure that courts do not 
carelessly and automatically sanction secrecy when the health and 
safety of the American public is at stake. At the same time, it will 
still allow defendants to obtain secrecy orders when the need for 
privacy is significant and substantial.
  To attack the problem of excessive court secrecy is not to attack the 
business community. Most of the time, businesses seek and get 
protective orders for legitimate reasons.
  And although a few opponents of product liability reform may dispute 
that businesses care about public health and safety, as a former 
businessman, let me tell you that they do care. Business people want to 
know about dangerous and defective products, and they want regulatory 
agencies to have the information necessary to protect the public. So 
this amendment is in no way anti-business.
  Before closing, Mr. President, let me briefly address a claim that 
may be made regarding our amendment. Some may say that this amendment 
somehow kills S. 687. With all due respect such an allegation is not 
true. The amendment does not, in any way, modify or restrict S. 687, 
and it does not conflict with the broader aims of tort reform, which I 
strongly support.
  It simply says that we must protect not only the rights and interests 
of product liability defendants, but the interests of all Americans who 
are subject to health and safety hazards.
  Indeed, it is perfectly reasonable and consistent to recognize both 
that the tort system needs fixing, and that the public and regulators 
need to be better informed about health and safety hazards. In fact, 
this amendment belongs on the product liability bill. S. 687 is about 
product safety and striking the right balance between consumers and 
manufacturers. And that is exactly what our court secrecy amendment is 
intended to do.
  In closing, Mr. President, let me say that we in this country take 
pride in our judicial system for many good reasons. Our courts are 
among the finest, and the fairest in the world. But the time has come 
for us to ask: fair to whom?
  Of course, the courts must be fair to defendants, and S. 687 helps 
move us in this direction. But because the courts are public 
institutions, and because justice is a public good, our court system 
must also do its part to help protect the public when necessary, and 
not just individual plaintiffs and defendants.
  My amendment takes a step toward achieving this important goal--it 
helps ensure that the public and regulators will learn about hazardous 
and defective products.
  So the bottom line is this: a vote against this amendment is a vote 
in favor of darkness and secrecy, and ignoring health and safety 
hazards, while a vote for this amendment is a vote for public safety 
and the public's right to know. And so I urge my colleagues to support 
this proposal on behalf of myself, Senator Cohen, and Senator Murray.
  At this point, Mr. President, I send this amendment to the desk.
  The PRESIDING OFFICER (Mr. Mathews). The clerk will report the 
amendment.
  The bill clerk read as follows:

       The Senator from Wisconsin [Mr. Kohl], for himself, Mr. 
     Cohen, and Mrs. Murray, proposes an amendment numbered 1930.

  Mr. KOHL. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place add the following new title:

    TITLE   --PROTECTIVE ORDERS AND SEALING OR CASES AND SETTLEMENT 
                  RELATING TO PUBLIC HEALTH OR SAFETY

     SEC.   . PROTECTIVE ORDERS AND SEALING OF CASES AND 
                   SETTLEMENTS RELATING TO PUBLIC HEALTH OR 
                   SAFETY.

       (a) Short Title.--This title may be cited as the ``Sunshine 
     in Litigation Act of 1994''.
       (b) Protective Orders and Sealing of Cases and Settlements 
     Relating to Public Health or Safety.--Chapter 111 of title 
     28, United States Code, is amended by adding at the end 
     thereof the following new section:

     ``Sec. 1659. Protective orders and sealing of cases and 
       settlements relating to public health or safety

       ``(a)(1) A court shall enter an order under rule 26(c) of 
     the Federal Rules of Civil Procedure restricting the 
     disclosure of information obtained through discovery or an 
     order restricting access to court records in a civil case 
     only after making particularized findings of fact that--
       ``(A) such order would not restrict the disclosure of 
     information which is relevant to the protection of public 
     health or safety; or
       ``(B)(i) the public interest in disclosure of potential 
     health or safety hazards is clearly outweighed by a specific 
     and substantial interest in maintaining the confidentiality 
     of the information or records in question; and
       ``(ii) the requested protective order is no broader than 
     necessary to protect the privacy interest asserted.
       ``(2) No order entered in accordance with the provisions of 
     paragraph (1) shall continue in effect after the entry of 
     final judgment, unless at or after such entry the court makes 
     a separate particularized finding of fact that the 
     requirements of paragraph (1) (A) or (B) have been met.
       ``(b) The party who is the proponent for the entry of an 
     order, as provided under this section, shall have the burden 
     of proof in obtaining such an order.
       ``(c)(1) No agreement between or among parties in a civil 
     action filed in a court of the United States may contain a 
     provision that prohibits or otherwise restricts a party from 
     disclosing any information relevant to such civil action to 
     any Federal or State agency with authority to enforce laws 
     regulating an activity relating to such information.
       ``(2) Any disclosure of information to a Federal or State 
     agency as described under paragraph (1) shall be confidential 
     to the extent provided by law.''.
       (c) Technical and Conforming Amendment.--The table of 
     sections for chapter 111 of title 28, United States Code, is 
     amended by adding after the item relating to section 1658 the 
     following:

``1659. Protective orders and sealing of cases and settlements relating 
              to public health or safety.''.
       (d) Effective Date.--The amendments made by this title 
     shall take effect 30 days after the date of the enactment of 
     this Act and shall apply only to orders entered in civil 
     actions or agreements entered into on or after such date.

  Mr. KOHL. I yield the floor. I thank the Senator from West Virginia.
  Mr. ROCKEFELLER. Mr. President, the Senator from Iowa, Senator 
Grassley, is currently on his way to the floor to engage in discussion 
of the amendment of the Senator from Wisconsin. Until he arrives, I 
suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DANFORTH. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DANFORTH. Mr. President, in working out litigation, protective 
orders are an important part of the entire picture because they are 
necessary in order to provide that litigants are protected from, for 
example, making proprietary information public or making very personal 
matters public where it is not necessary to resolving the matter in 
litigation.
  The issue of protective orders is dealt with in rule 26 of the 
Federal Rules of Civil Procedure, and this amendment is an effort to 
amend the Federal Rules of Civil Procedure on the floor of the Senate.
  There is a process for taking up questions of whether or not the 
Federal Rules of Civil Procedure are to be amended. The process is that 
the Committee on Rules of Practice and Procedure of the Judicial 
Conference analyzes the proposed change or the need for changes to 
rules, then makes recommendations to the U.S. Supreme Court. If the 
Supreme Court approves the change, then the proposal is sent to 
Congress and the Congress has 7 months to modify or reject the 
proposal.
  So there is this established process of addressing the question of 
whether or not to change the Federal Rules of Civil Procedure.
  In fact, the precise subject that is brought up in this proposed 
amendment is a matter that at this very minute is being analyzed by the 
Judicial Conference.
  For that reason, even if a Senator were convinced that this is a 
meritorious amendment--that would be debatable, but even if a Senator 
were convinced of that fact--still it would be a circumvention of the 
established process which has the judicial conference and the U.S. 
Supreme Court being part of the picture of when and whether and how to 
change the Federal Rules of Civil Procedure.
  This issue has been raised in connection with legislation that has 
been introduced in the Senate, S. 1404, and the administration has 
taken a position in opposition to the legislation. I would like to read 
from a letter dated April 18, 1994, from Sheila F. Anthony, assistant 
attorney general, to Senator Heflin.

       Dear Mr. Chairman: In anticipation of the hearing the 
     subcommittee has scheduled for April 20 regarding S. 1404, 
     the ``Sunshine in Litigation Act of 1993,'' this letter 
     proffers the views of the Department of Justice on the bill.
       This bill would restrict the ability of Federal courts to 
     craft appropriate protective orders in the course of 
     litigation pending before them. Because the Department is 
     currently considering protective orders in the context of a 
     comprehensive civil justice reform study, we request that the 
     subcommittee consider deferring further action on S. 1404 
     pending completion of our work during the summer of this 
     year. However, we would be pleased to work with the Congress 
     on this proposal and similar proposals in the interest of 
     forging an equitable approach to the use of protective 
     orders.
       In addition, we note that the Civil Rules Advisory 
     Committee currently is considering changes in the Federal 
     rule of civil procedure regarding protective orders. The 
     Committee on Rules of Practice and Procedure of the Judicial 
     Conference of the United States has circulated for comment a 
     proposed change to Rule 26(c) and will hold public hearings 
     in late April on that and other proposed rule changes. The 
     Department of Justice has supported the use of the judicial 
     rulemaking process to address such issues, rather than the 
     introduction of legislation.

  So, Mr. President, I think the real issue that is raised at least for 
the moment before the Senate is the issue of process, the correct way 
of addressing proposed rules changes to the Federal Rules of Civil 
Procedure, and for that reason it is my hope that this amendment will 
be defeated.
  Mr. KOHL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. KOHL. In response to Senator Danforth, who suggested we should 
leave the problem to the Judicial Conference, while that conference has 
been studying this issue since at least way back in 1990, which is when 
we first convened a hearing on this subject, it has failed so far to 
propose any changes that seriously tackle the problem.
  So the question I think is legitimately asked: How many more years 
must we wait for the Judicial Conference to wake up to this problem 
before it becomes appropriate for Congress to act? The rules enabling 
act does not stop Congress from making needed changes in the law. We 
have not given that power away, nor should we.
  With respect to the judges conference, some people say that it is 
even slower getting things done than the Clinton administration is in 
making its appointments. I believe the bottom line is that this issue 
is fundamentally about the health and safety of the American people, 
and health and safety issues are for the Congress to decide, not for a 
small group of unelected judges and academics who concern themselves 
with technical procedural changes to the law. And even judges have made 
this comment. Judge Abner Mikva, for example, has testified that ``this 
problem is too important to leave simply to rule changes.''
  With respect to my colleague's second point, I am surprised that the 
Justice Department has sent a letter asking us to go slow. In fact, 
Attorney General Reno has told me privately that she supports our 
effort, and so I am not sure why the letter asks us to go slow when it 
comes to protecting public health and safety and facilitating our 
Government's regulatory responsibilities. Maybe the Justice Department 
is simply trying to get its ducks in order. It seems as if the 
Department of Justice is forgetting that its ultimate responsibility is 
to protect the public.
  So I think it is time that we act. We have waited for the judges 
conference to act now for 4 years. They have not. I am afraid that when 
they do act, it will be too little too late, and it will not take into 
consideration what we are charged to do here in the Senate, which is to 
protect the public health and the public safety. That is what this 
amendment is intended to do, and so I feel very strongly that we in the 
Senate should support this amendment.
  Mr. SIMON. Mr. President, I am pleased to rise in support of this 
amendment offered by my colleague from Wisconsin. This amendment is a 
good illustration of why Herb Kohl is such a valuable Member of this 
body. He is speaking up for the public interest. The public interest is 
very clear on this.
  Let me give you an illustration. There is a company called Miracle 
Recreation that built a playground piece of equipment--the pages would 
have a good word for it--called Bounce Around the World. One little 
girl lost three fingers. Several people had their legs cut and their 
bones crushed. Seventy-five people at the ages of 4 and 5 suffered 
serious injury. The Consumer Product Safety Commission heard about only 
one case and tried to check it out, but they did not know about the 
other cases because of court secrecy.
  We were not protecting the public as we should have been protecting 
the public. Whom were we protecting? Well, we were protecting a company 
that is manufacturing something, and as long as that product is 
manufactured, if it is safe for the public, fine. But the public is 
entitled to know when something is not safe.
  Just as a general rule, Mr. President--and you have been in 
Government, forgive me, quite a few years, as have I--when there is a 
marginal question about whether something should be kept secret or not, 
inform the public and the public will be well served. I believe that, 
whether it is foreign policy, military, or whether we are talking about 
the kind of thing from which Senator Kohl is trying to protect the 
public.
  The public is entitled to know what is going on unless there is a 
major reason for not knowing. That major reason should be more than 
just protecting the hide of some company that has a product which is 
injurious to the public.
  Senator Kohl is doing this body and this Nation a favor through this 
amendment. I hope it will pass and pass resoundingly, Mr. President.
  I yield the floor.
  Mr. GRASSLEY. Mr. President, I would like to speak in opposition to 
the amendment by the Senator from Wisconsin. He is dealing with a very 
technical area of the law. I wish to congratulate him for tackling it. 
However, I must oppose him. It is just as technical for me as it is for 
him, and probably this is something that two lawyers ought to be 
arguing about instead of having a businessman on his side and a farmer 
on this side speaking about these technical issues of the law.
  But, regardless, he has proposed to take on this very technical area, 
and as a member of the Judiciary Committee, I am well aware of the 
process that is in place to take care of it.
  It has already been mentioned by two previous speakers. I think it is 
important that process be preserved.
  I would like to urge the Senator from Wisconsin to think of some way 
on the floor of this body that we could help him make the points that 
he wants to make without short-circuiting the process that has been in 
place for 60 years.
  I know that Senator Kohl is very sincere about making important 
information about health and safety hazards available. But there is 
another process in place which will address this issue.
   Sixty years ago Congress enacted the Rules Enabling Act. That is a 
law that governs the process for making changes to the various Federal 
Rules of Procedure which operate in the Federal courts.
  As Judge Patrick Higginbotham explained when he was speaking before a 
hearing that we had on this bill, I would like to quote the judge:

       The act establishes a partnership between the courts and 
     the Congress designed to handle the daily business of the 
     courts which matters are concerned to all the branches of 
     government.

  Congress delegated to the judiciary the drafting of proposed changes 
to these Federal Rules of Procedure. The Judicial Conference publishes 
the proposed changes and it solicits comments from the public.
  After the public hearings--and there can even be some revisions after 
the public hearings--then the proposed rules are transmitted to the 
Supreme Court for the Supreme Court's review. And then Congress has 6 
months in which to disapprove any proposed rule changes. It is only 
under those circumstances that changes become effective.
  Senator Kohl's amendment has the effect--I am sure he knows this--of 
short-circuiting that process. He would have Congress legislate this 
matter right now, and avoid the process of careful consideration by the 
judges. He would have us go around the careful process of public 
hearings that are involved and consideration by the Supreme Court and 
then Congress. I think this would have the effect of undermining the 
Rules Enabling Act.
  If Congress wants the responsibility for monitoring the effectiveness 
of the Federal rules, then I think we should abolish the Rules Enabling 
Act. Otherwise, we should not be engaged in reviewing the rules on a 
piecemeal, case-by-case basis.
  In fact, the Judicial Conference is reviewing the issue of protective 
orders under the Federal rules. I think Senator Danforth mentioned 
this. It is very likely that later this year the Judicial Conference 
will issue a proposed change to the Federal rule. It would then be 
transmitted to Congress, and at that time, Senator Kohl will have an 
opportunity to offer changes if he does not like the way the Judicial 
Conference handles this issue.
  I want to at the end of my remarks put a May 12, 1994, letter from 
Judge Patrick Higginbotham to Senator Kohl explaining the Judicial 
Conference process and have that printed at the end of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GRASSLEY. Mr. President, it is also important to know that the 
Justice Department opposes Senator Kohl's bill now before the Judiciary 
Committee. I heard Senator Kohl speak about Attorney General Reno's 
voicing support to him about his legislation. But the official 
communications we have had is the opposite; that his amendment is 
contrary to the official position. Most of their position is based upon 
the proposition that they believe in the rule enabling process.
  In April, just before our hearing on Senator Kohl's bill, the same 
hearing that Judge Higginbotham spoke and addressed, Assistant Attorney 
General Sheila Anthony sent out to our subcommittee a letter opposing 
Senator Kohl's bill for two reasons.
  First, in this letter, Ms. Anthony stated that the Department of 
Justice is working on a major civil justice reform initiative that will 
address the issue of protective orders.
  And, second, Ms. Anthony wrote in support of the process underway 
within the Judicial Conference to address the issues raised in the Kohl 
bill. In other words, it sounds to me like she is backing up the 
position I just took that we should not short-circuit that process 
through the Judicial Conference.
  Just 2 weeks ago, Ms. Anthony wrote to Congressman Hughes explaining 
the administration's opposition to his bill, meaning Congressman 
Hughes' bill, but which bill is similar to Senator Kohl's bill before 
us now. The Hughes bill, as I understand it, addresses disclosure in 
settlements and would prohibit sealed or confidential settlement 
agreements where the health and safety is at issue. Ms. Anthony wrote:

       We oppose H.R. 3138 because the bill is an unwarranted 
     restriction of the power of the Federal courts to enter non-
     disclosure orders when the balance of interests, including 
     the public interest, support entry of such an order.

  In her letter she also noted that court involvement in the 
settlements ``could well result in significant burden on the Federal 
courts.''
  Everybody knows that we should not be doing anything that is going to 
burden our courts to any greater extent.
  I would also like to place in the Record following my remarks the 
letters that I just referred to from Ms. Anthony.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 2.)
  Mr. GRASSLEY. Mr. President, I hope it is clear, now that there are 
two branches of Government, the executive branch and the judicial 
branch, that are asking Senator Kohl to wait on this matter. They are 
not making any judgment on the worthiness of his suggestions, but, 
rather, respect for the process, and that process would preclude our 
acting at this particular time.
  I have four issues that I would like to discuss in regard to Senator 
Kohl's amendment so I can state on a substantive basis my opposition to 
it as opposed to the procedural basis that I just stated which is also 
a basis for my opposition.
  First, there is no crisis in court secrecy.
  Second, this amendment will lead to more unnecessary litigation.
  Third, it will impede settlements.
  Fourth, we should learn from State experimentation.
  In regard to the fact that there is no crisis in secrecy, Senator 
Kohl says that we cannot wait for the rules change to work its way 
through the cumbersome system. He argues that there is too much secrecy 
in the Federal court system. I respectfully disagree. I was a member of 
the Federal Court Study Committee appointed by Justice Rehnquist. 
Senator Heflin also served on that committee. That was set up for the 
years 1989 and 1990, to study the court system--the first time there 
was any study of it in the entire 200-year history of the judiciary.
  Among the issues that the Federal Court Study Committee looked at--
there were only four members of Congress on there, and there were 16 
judges, lawyers, et cetera on there in addition to us. But among the 
issues that we looked at was that of protective orders.
  Quite frankly, to my colleagues on the floor here, we did not find a 
crisis in secrecy. We cautioned in that report against legislative 
proposals called sunshine laws, finding they ``would distort the 
discovery process and disregard the legitimate, privacy interests of 
the parties.'' We are talking about sunshine laws as they apply to the 
courts, not sunshine laws as they apply to the executive branch and the 
congressional branch. Those are two different issues entirely.
  The leading scholarly work in this area has been done by Harvard 
Prof. Arthur Miller in regard to whether or not there is too much 
secrecy in our courts.
  He testified at the court subcommittee hearing in 1990, and he has 
written very extensively on the issues. In a 1991 ABA Journal article, 
Professor Miller warned:

       Allowing public access or public interest in litigation to 
     assume an importance greater than the interests of the 
     private litigants skews the traditional balance, transforming 
     the courts into something other than dispute-resolution 
     agencies.

  The fact is the overwhelming majority of the public health and safety 
litigation is already out in the public domain. First, all pleadings--
that is the complaints, answers, motions and briefs--are on the public 
record. Second, the news media follow these issues very closely, and 
information about defective products is accessible to the public, of 
course, through the newspaper articles and through investigative 
television programs.
  Second is the issue of whether or not we need more unnecessary 
litigation. Senator Kohl has tried to tailor his amendment in a very 
narrow fashion. I share the concern about public health and safety 
hazards, but allow me to explain the complications his amendment will 
cause for Federal judges and the burden it will add to the already 
backlogged Federal courts. Under current Federal Rules of Civil 
Procedure, 26(c), a Federal judge can enter a protective order ``which 
justice requires to protect a party * * * from annoyance, 
embarrassment, oppression, or undue burden or expense * * *.''
  Protective orders in discovery, then, are fundamental to our judicial 
system. In the discovery phase of a case, parties are required to 
exchange information relevant to the lawsuit. But that information, Mr. 
President, is not always admissible in the trial under the Rules of 
Evidence. Protective orders help move a case along while respecting the 
privacy rights of the parties. As Professor Arthur Miller has noted; 
parties do not lose their rights to privacy when they are subjected to 
the jurisdiction of a Federal court.
  Senator Kohl would require that before a judge enter a protective 
order, he or she have a separate hearing and decide that the protective 
order ``would not restrict the disclosure of information which is 
relevant to the protection of public health and safety.''
  Alternatively, Senator Kohl would allow a Federal judge to balance 
the potential health and safety hazards with the need for 
confidentiality. This is a very broad standard, Mr. President. It has a 
potential to generate volumes of additional litigation. I wish we had a 
chance to have the benefit of a judicial impact statement from the 
Administrative Office of the U.S. Courts so Congress could be fully 
informed as to the new litigation that we would be creating for our 
Federal judiciary.
  The examples Senator Kohl has raised and the witnesses who have 
appeared at our hearings, of course, are very moving and very 
compelling. But this language would apply to much more than these 
forceful personal stories. Every patent or every trademark case which 
involved trade secrets or confidential commercial information would 
have a separate hearing on the issue of health or safety. In addition, 
confidential, personal records in a case of sex or race discrimination 
or harassment could wind up as public information under this language. 
And contract dispute cases in the construction of a power plant would 
fall within Senator Kohl's amendment.
  Finally, defendants who are brought into a lawsuit and who might 
willingly comply with discovery requests if it is done under a 
protective order, may be more likely to fight every discovery request 
with all of the resources that are available to them.
  The result, then, will be more rancor. There will be more hostility 
to this process. And for a needy plaintiff, it might be extra years of 
litigation with no compensation for injury. Elizabeth Du Fresne of the 
Miami law firm of Steel, Hector, Davis, testified to these possible 
scenarios at our April hearing. She stated in her answers to the 
written questions:

       Among the biggest losers, if protective orders are limited, 
     will be those members of the public in the long line awaiting 
     entree to the chambers of justice. Already overburdened 
     judges will have to divert more judicial resources to 
     hearings on discovery motions and will have less time 
     available to consider the growing backlog of cases.

  I think it will also impede settlements. Senator Kohl's amendment 
also prohibits settlements from being kept confidential. This will 
directly impede and will directly interfere with settlements at a time 
when Federal judges, with the blessing of Congress--and that was 
through Senator Biden's 1990 Civil Justice Reform Act--are trying to 
encourage settlements. What will be the incentive for a company to 
terminate litigation and settle a case if the company has to make the 
settlement agreement public?
  As Professor Miller wrote in his 1991 ABA Journal piece:

       The settlement process would be impaired if the parties 
     could not rely on the assurance of confidentiality reached 
     voluntarily in the settlement agreement. In fact, the greater 
     incentive to litigate, simply to postpone or avoid public 
     access to confidential information, would work to the 
     disadvantage of poorer litigants.

  Thus, Senator Kohl's amendment is likely to hurt precisely the people 
he seeks to help. Corporations have the resources to fight a case 
through the legal system. Often a plaintiff does not and could put the 
money achieved in a settlement to good use.
  Let me give an example. In April, the Roman Catholic archdiocese in 
Cincinnati settled a case of alleged sexual abuse. The terms of the 
settlement are confidential, although the fact of the settlement was 
reported in the April 19, 1994, Washington Post. I believe that sexual 
abuse is a public health and safety hazard. But is there really a 
public need to know about the terms of that settlement agreement? I do 
not believe so.
  Senator Kohl's amendment, although well-intentioned, really would 
change the nature of our legal system. Judges would be more involved 
than ever in two aspects that were designed to operate without judicial 
supervision: discovery and settlement. This will breed enormous amounts 
of satellite litigation and unfairly burden our Federal judges at a 
time when the number of cases and backlogs are mounting anyway.
  Lastly, I would like to point out that this type of provision that we 
are talking about here is in three States: Texas, Washington, and 
Florida. It has been rejected in many others, including California, 
Louisiana, and Rhode Island. At our April hearing, Ms. Du Fresne 
testified to the difficulties of the Florida provision. Texas State 
Judge J. Michael Bradford has written about all of the unanswered 
questions the Texas sunshine provision has raised and the extra 
litigation that will take place to clarify the Texas rule.
  In fact, the Texas Civil Justice League, in 1992, wrote to the State 
of Washington Bar Association cautioning against adopting a similar 
rule.
  This is quoting from that letter to the Washington Bar Association.

       In light of the confusion, expense and delay that rule 76a 
     has caused litigants and courts here in Texas, and the 
     significant risks that such a rule poses to those involved in 
     litigation, we feel compelled to advise you of our experience 
     under the law and to caution you against the adoption of CR 
     26.

  This, I might add, is from a State that has awarded some of the 
highest damage amounts to plaintiffs and is not shy about the activism 
of its courts.
  In sum, Mr. President, Congress should not stick its nose where it 
does not belong. I am not saying we do not have a right to consider 
this, but we have another process. We ought to let that process work. 
We have an opportunity at that point if we do not like that process to 
amend those rules that come to us from the Supreme Court.
  So, this kind of rule change is better left then to the Federal 
judges in the first instance, and then to our modification and our 
alteration or any suggestions that we have at that particular time when 
it comes to us. It is premature for the Senate to act today.

                               Exhibit 1

         Committee on Rules of Practice and Procedure of the 
           Judicial Conference of the United States,
                                     Washington, DC, May 12, 1994.
     Senator Herb Kohl,
     Juvenile Justice Subcommittee, Senate Hart Office Building, 
         Washington, DC.
     Attn: Jack Chorowsky.
       Dear Senator Kohl: As I explained in my letter of April 27, 
     1994, I deferred until after the Advisory Committee meeting 
     full response to your letter of April 25, 1994, regarding the 
     proposed amendments to Civil Rule 26(c) on protective orders. 
     I now respond and also answer the additional questions 
     submitted after the hearing before your committee.
       At its meeting in Washington, D.C. on April 28-29, 1994, 
     the Advisory Committee discussed at length the public 
     comments submitted on the proposed amendments to Rule 26(c), 
     including the comments in your letter. Every public comment 
     had been sent to each committee member prior to the meeting 
     for careful consideration. At the meeting, the committee also 
     heard the testimony of a witness in favor of the proposed 
     amendments. A member of your staff, Jack Chorowsky, also 
     attended the meeting and ably responded the concerns 
     expressed in your letter.
       The Advisory Committee decided to defer taking action on 
     the proposed amendments to Rule 26(c) until its next meeting 
     on October 20-22, 1994. The committee wanted to study 
     further: (1) recommendations that a court consider additional 
     factors in modifying or dissolving a protective order, (2) 
     other suggestions for clarifying the rule or present 
     practice, and (3) suggestions that more empirical data be 
     sought on the use of protective orders.
       The committee shares your concerns about the risks of 
     sealing information, recognizing the considerable public 
     interest both in privacy and disclosure. We must respond 
     appropriately to any mischief worked by discovery protective 
     orders. As we see it, the issue is one of adjustment, 
     balance, and proportion. Relatedly, we recognize important 
     distinctions between Rule 26(c), which involves the 
     disclosure of discovery material, and sealing orders that 
     control the disclosure of information submitted to the court 
     on motion or at trial. Much of the anecdotal evidence of 
     abuse appears to involve sealing orders and not discovery 
     protective orders.
       The Advisory Committee tentatively believes that this 
     matter should be addressed not by changing the standards in 
     Rule 26(c) for granting protective orders, but by adding 
     explicit language regarding the alteration or dissolution of 
     such orders. The committee was persuaded that, although the 
     basic concept underlying the proposed amendment remains 
     valid, more empirical data should be obtained on the actual 
     use and possible abuse of protective orders, as suggested in 
     your letter. And it found very useful the preliminary data 
     supplied by the Federal Judicial Center in its overview of 
     the use of protective orders in the District of Columbia.
       At the committee's request, the Federal Judicial Center has 
     now agreed to enlarge its preliminary study. It will survey 
     the dockets of several federal district courts to examine the 
     number and resolution of motions for protective orders. The 
     study should be completed in time for the committee to 
     consider it at its October meeting. The committee also 
     welcomed the offer of Jack Chorowsky to assist with 
     documented examples of discovery orders concealing 
     information affecting public health and safety.
       The goal of the rulemaking process, as prescribed under the 
     Rules Enabling Act, is to evaluate the need for a rule change 
     and then to produce the very best rule possible. The process 
     is neither easy nor swift. But all persons affected by a 
     proposed rule, and other interested persons and 
     organizations, are ensured ample opportunity to express their 
     views for the consideration of the rules committees, the 
     Judicial Conference, the Supreme Court, and Congress.
       The proposed amendments to Rule 26(c) affect substantial 
     competing interests among claims of privacy, public interest, 
     and efficiency. Continuing the dialogue between Congress and 
     the judiciary on this important matter can only lead to a 
     fuller understanding of all the issues. I appreciate your 
     spirit of shared concern, and I look forward to working with 
     you and other members of Congress on this matter.
           Sincerely,
                                          Patrick E. Higginbotham.
                                 ______


                               Exhibit 2

                                       U.S. Department of Justice,


                                Office of Legislative Affairs,

                                    Washington, DC, June 15, 1994.
     Hon. William J. Hughes,
     Chairman, Subcommittee on Intellectual Property and Judicial 
         Administration, Committee on the Judiciary, House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman, this provides the views of the 
     Department of Justice on H.R. 3138, the Federal Court 
     Settlements Sunshine Act of 1993. For the reasons set forth 
     below, the Department of Justice recommends against enactment 
     of this legislation.
       Subsection 2(a) of H.R. 3138 would bar any settlement made 
     in a civil action to which the United States or its agencies 
     are a party from being sealed and require that each 
     settlement shall be available for public inspection, unless 
     the court determines that there is clear and convincing 
     evidence of a compelling ``public interest'' in limiting such 
     availability. Thus, the provisions of a settlement that name 
     a child that has been molested, a person who has tested HIV 
     positive or who has contracted AIDS, or a settlement of great 
     concern to private parties to litigation to which the United 
     States or its agencies may also be a party, could not be 
     withheld from public disclosure unless there was clear and 
     compelling evidence of a ``compelling public interest in 
     limiting such availability.'' There is no apparent 
     justification for restricting federal courts' authority in 
     this extreme manner. Indeed, the proposed legislation 
     articulates such a high standard for sealing a settlement 
     agreement, it is difficult to imagine how a court could ever 
     make the requisite finding to seal records.
       We are not aware that a significant problem has been 
     presented by the courts' exercise of their discretion to 
     restrict access to settlements when a showing has been made 
     warranting the entry of an order limiting access to a 
     settlement in litigation in which the United States is a 
     party. The United States clearly has an interest in 
     protecting the confidentiality of sensitive personnel 
     matters, law enforcement undercover operations and other 
     substantial national security and related interests; private 
     persons likewise often have important interests implicated in 
     litigation to which the United States is a party. However, 
     any outline of interests cannot serve as a complete catalog 
     of the many different kinds of litigation to which the 
     United States has been, or might be, a party. H.R. 3135 
     does not take into account the broad spectrum of 
     litigation involving the United States. This militates 
     against enactment because section 2(a) would apply across-
     the-board to all litigation, so long as the government is 
     a party.
       To be sure, the United States does not generally seek to 
     seal settlements to which it is a party. In some instances, 
     such as settlements pursuant to 15 U.S.C. Sec. 16(b)-(h), 
     involving the Antitrust Division of the Department of 
     Justice, and proposed consent judgments regarding discharge 
     of pollutants into the environment (28 C.F.R. Sec. 50.7), the 
     government actively ensures that there is wide dissemination 
     of the terms of the proposed settlements or consent 
     judgments. Thus, we do not oppose H.R. 3138 because we 
     dispute the notion that most settlements and judgments to 
     which the United States is a party should be public. We 
     oppose H.R. 3138 because the bill is an unwarranted 
     restriction of the power of federal courts to enter non-
     disclosure orders when the balance of interests, including 
     the public interest, supports entry of an order.
       Subsection 2(b) would bar dismissal without a court order 
     of cases to which the United States or any agency is a party. 
     This provision would prevent the application of Rule 41(a) of 
     the Federal Rules of Civil Procedure to cause dismissal of 
     cases by agreement of the parties without a court order as to 
     cases (and only those cases) to which the government is a 
     party. We do not believe that the courts should be encumbered 
     with additional ministerial work. If the provision is 
     intended to encompass more substantive review by the courts, 
     we question whether the additional workload imposed upon the 
     judiciary is warranted by any perceived benefit attendant to 
     this extraordinary limitation on voluntary termination or 
     litigation. Since voluntary dismissal of civil actions is a 
     very common means of resolving cases, the change in procedure 
     could well result in significant burdens on federal courts.
       In addition, the mandate that a court order approve any 
     dismissal necessarily would delay termination of litigation. 
     In cases dismissed pursuant to settlement agreements, one 
     affect of the delay would be to lengthen the time from the 
     date of the settlement agreement to the receipt of check or 
     other benefits of the settlement. Such a delay does not seem 
     to be a fair result, especially since private litigation 
     would not be subject to a comparable delay, regardless of 
     whether the government is the plaintiff or the defendant in a 
     particular case.
       For the foregoing reasons, we oppose enactment of H.R. 
     3138. The Office of Management and Budget has advised this 
     Department that there is no objection to the submission of 
     this report from the standpoint of the Administration's 
     program.
           Sincerely,
                                                Sheila F. Anthony,
                                       Assistant Attorney General.
                                 ______


                               Exhibit 3


                                Office of Legislative Affairs,

                                   Washington, DC, April 18, 1994.
     Hon. Howell Heflin,
     Chairman, Subcommittee on Courts, and Administrative 
         Practice, Committee on the Judiciary, U.S. Senate, 
         Washington, DC.
       Dear Mr. Chairman, In anticipation of the hearing the 
     Subcommittee has scheduled for April 20 regarding S. 1404, 
     the ``Sunshine in Litigation Act of 1993,'' this letter 
     proffers the views of the Department of Justice on the bill.
       This bill would restrict the ability of federal courts to 
     craft appropriate protective orders in the course of 
     litigation pending before them. Because the Department is 
     currently considering protective orders in the context of a 
     comprehensive civil justice reform study, we request that the 
     Subcommittee consider deferring further action on S. 1404 
     pending completion of our work during the summer of this 
     year. However, we would be pleased to work with Congress on 
     this proposal and similar proposals in the interest of 
     forging an equitable approach to the use of protective 
     orders.
       In addition, we noted that the Civil Rules Advisory 
     Committee currently is considering changes to the Federal 
     Rule of Civil Procedures regarding protective orders. The 
     Committee on Rules of Practice and Procedure of the Judicial 
     Conference of the United States has circulated for comment a 
     proposed change to Rule 26(c) and will hold public hearings 
     in late April on that and other proposed Rule changes. The 
     Department of Justice has supported the use of the judicial 
     rulemaking process to address such issues, rather than the 
     introduction of legislation.
       The Office of Management and Budget has advised this 
     Department that there is no objection to the submission of 
     this report from the standpoint of the Administration's 
     program.
           Sincerely,
                                                Sheila F. Anthony,
                                       Assistant Attorney General.

  Mr. GRASSLEY. I yield the floor.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. KOHL. Mr. President, I wish to respond briefly to my colleague 
from Iowa.
  I want to point out again that the judicial conference has been 
considering this matter now for 4 years and it has failed to act, 
failed to recommend any change. We are told now that they are about to 
consider making a recommendation. Why have they waited for 4 years? 
When it comes to public health and safety not anybody, not the Senator 
from Iowa, or the Senator from Missouri, has suggested that the 
Congress does not have the perfect right to act to enhance and preserve 
public health and safety, as suggesting we ought to let the conference 
act, but nobody is suggesting that the Congress does not have the right 
to act.
  What this amendment of mine and Senator Cohen and Senator Murray is 
saying that when it comes to a secrecy, a court secrecy proceeding, 
before the judge can allow that to occur, he simply has to balance the 
competing interests of the defendant who has a trade secret or 
information that is important to that company to balance that off 
against the public interest and the public's right to know. If in fact 
we are dealing with a defective product that could have wide 
ramification across the broad spectrum of the American public and the 
judge would make a decision. He would be required to consider the 
competing interests and then to make an appropriate decision.
  The Senator from Iowa says that it would cause all kinds of problems, 
backlogs. Who knows how long this would take to add more judges?
  I do not know the answers to those questions, but what is a court 
except a public institution that must serve among competing interests, 
must serve the public interests or it is not a public court.
  In closing, I would just like to read a comment from Federal Chief 
Judge Abner Mikva. He said recently:

       I side with Senator Kohl in believing there is excess of 
     court secrecy in civil litigation, and that it presents a 
     serious problem for the health and safety of our population * 
     * *.
       I think that many scholars, and lawyers, and even judges 
     forget that the courts are public institutions. They talk 
     about privacy interests as if the only two parties in 
     interest in the court system are the parties to the lawsuit. 
     I have never been able to understand how we can justify the 
     heavy expenditure of public funds and resources on the courts 
     if the only interest to be served is that of the litigants * 
     * *.
       Courts are public institutions and any effort to close up 
     the matters that occur in these institutions ought to be 
     reviewed with a hefty jaundice. I hope that Congress can act.

  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Mr. President, the distinguished Senator from Iowa 
referred to the diocese of Cincinnati and the settlement of a sexual 
harassment case and said that secrecy was appropriate, I do not know 
anything about the sexual harassment cases in the Cincinnati diocese. I 
liken it to the time when the cardinal himself, Cardinal Joseph 
Bernadine of Chicago was charged and he took the exact opposite tack. 
He said, ``I want an immediate trial. I want public disclosure of the 
facts.''
  And it was upon that that the plaintiff's so-called repressed memory 
was found to be no memory at all and the charges were withdrawn.
  The cardinal, as a preacher and a pastor for his flock, prayed for 
the person who charged him.
  But I disagree very strongly with the distinguished Senator from Iowa 
in that regard.
  Incidentally, the Senator from Iowa says there is no crisis in 
secrecy. If you have secrecy in the first place how do you manufacture 
a crisis in it?
  Well, I will make a stab at it, and it goes right to the issue of 
those who cannot bring their cases. We need to remove secrecy to help 
people bring their cases.
  I never heard so much distorted logic on the floor of the U.S. Senate 
as we have this afternoon.
  Let me give an example:

       Two police officers were killed in Florida when their small 
     traffic-control airplane crashed. Both of their widows sued 
     the aircraft manufacturer. The manufacturer settled one of 
     the lawsuits, then used the confidential settlement agreement 
     to deny essential information about the crash to the second 
     widow, who needed it to prove her case.
       Both widows alleged that the design of the airplane's fuel 
     system allowed water contamination of the fuel, and so caused 
     the crash. The first widow's case was settled under a 
     confidential agreement which sealed all documents in her 
     case, including reports of destructive testing of airplane 
     wreckage, which had permanently changed the evidence of 
     product failure. These reports were the only existing 
     evidence of any defect in the airplane.
       The second widow requested copies of the test reports. The 
     manufacturer claimed that it could not produce the reports 
     because of the secret settlement agreement! The second widow 
     was forced to litigate her case for six years, going to an 
     appellate court in one instance. During that time the plane 
     manufacturer worked to get her case dismissed on grounds that 
     she had not been able to show that there was any defect in 
     the airplane--this despite the fact that the manufacturer 
     held the only existing evidence of the cause of her husband's 
     death!
       When the courts finally agreed that the second widow had a 
     right to the reports, the airplane manufacturer admitted that 
     it was liable in the case and offered a settlement, thus 
     making the reports irrelevant to her case and continuing to 
     protect them from public disclosure.
       The reports, and what they show about alleged 
     susceptibility to fuel contamination of this aircraft type, 
     are still secret. The aircraft type is still flying.

  There you are, Mr. President, with respect to that one.
  That one swallow does not make a spring; let us go on.
  Here is a second example:

       Michael McClenon, 8, McDill Air Force Base, Florida, became 
     a paraplegic when the family car in which he was riding was 
     involved in a collision in Liberty, Florida on June 13, 1987. 
     His sister, Shenique, 12, died in the crash. The Nissan 
     automobile was not equipped with rear shoulder harness seat 
     belts. The manufacturer has repeatedly employed court secrecy 
     practices to make it difficult or impossible for attorneys 
     litigating Nissan restraint system cases to share information 
     about their cases.
       In the course of investigating the case and conducting 
     discovery, their attorney learned of similar cases which had 
     been settled in Texas and Hawaii. However, when he contacted 
     the attorneys involved in those cases to see what they had 
     learned about the alleged Nissan seat belt problem, he was 
     told that they could not share their information with him 
     because of protective orders entered in their cases. After 
     the McClenon case began, a protective order was also entered 
     in it and, because of it, the McClenons' attorney is 
     prohibited from sharing his information with other attorneys 
     handling identical cases.
       The cars in question have not been recalled for 
     retrofitting of shoulder harness restraints. Legal secrecy is 
     impeding justice and public safety.

  Another case:
  Rhonda Bustamonte, a 21-year-old single mother, was horribly burned 
when her Chevette's fuel tank exploded as a result of a collision in 
her home State of Virginia in 1989. She survived the fire, but suffered 
massive scarring. Hundreds of thousands of Chevettes are still on the 
road. And many are equipped with the same fuel system used in Rhonda's 
car. But widespread scrutiny of the safety problem continues to be 
limited by court secrecy practices.
  Rhonda's car was a 1980 Chevrolet Chevette, first produced in 1975 
with a design similar to that of the Ford Pinto. Since the late 1970's, 
a series of suits against General Motors have alleged that the fuel 
system used in GM cars designed and built before the early 1980's was 
dangerous because of the location of the fuel tank, the type of fuel 
filler neck used, and the tendency of the doors to jam in rear-end 
collisions. In 1985, the Alabama Supreme Court upheld a jury's finding 
that a 1980 Chevette with that design, the same model as Rhonda's, was 
defective.
  In defending Chevette fuel tank fire suits, GM systematically 
obtained protective orders that kept internal documents on the fuel 
system from public scrutiny. An attorney who has handled several 
Chevette cases states that all of his cases have involved protective 
orders which require secrecy about the settlements and return of all 
documents, and which bar sharing information with any other attorneys. 
Most other attorneys representing Chevette fire victims have had to 
conduct discovery from scratch as he did initially, and typically GM 
insists on, and gets, similar protective orders in those cases.
  The Chevette is no longer produced. But its fuel-fed fires continue 
to occur and court-sanctioned secrecy continues to conceal the hazard.
  Still another case:
  Fred Barbee of Minong, WI, believes that his wife Carol would be 
alive today were it not for secrecy practices allowed by the courts. He 
believes that the process of court secrecy kept thousands of artificial 
heart valve patients, their doctors, and the news media from learning 
about a deadly defect in the valves.
  The defective valves were manufactured by Shiley, Inc., a subsidiary 
of Pfizer, Inc. Barbee says that, in 1988, well after Pfizer began 
settling cases involving the valves and requiring promises of 
confidentiality in return, his wife's heart valve failed and she died 
as a result. He states that they had no notice of the problem with the 
heart valves and that, had they known there was a problem, they would 
have sought medical advice as to whether to have the valve replaced or 
what to do should it fail.
  According to Pfizer's own statements, nearly 250 deaths have been 
caused by defective heart valves manufactured by Shiley. Pfizer has 
paid millions of dollars to settle numerous lawsuits in return for 
secrecy agreements. The company's heart valves are still implanted in 
some 50,000 people, through they were withdrawn from further use in 
1986. A 1985 report on the defective heart valve has been withheld from 
the medical community and the public because of protective orders.
  The Pfizer heart valve tragedy is still news. Another Pfizer heart 
valve case is presently pending in Houston, TX, with a major contest 
over disclosure of documents. The case is Lauterbach versus Pfizer. 
ATLA appeared as amicus curiae in the case in March 1990, urging the 
court to make heart valve documents public so that heart valve 
patients, medical personnel, and scientists will have access to 
critical information.
  Litigation was filed in Federal court in Florida against Pfizer, 
Inc., the manufacturer of a widely-prescribed anti-inflammatory drug, 
Feldene, alleging that the drug caused internal bleeding and that 
Pfizer failed to warn of that side effect. One of the plaintiff's 
principal allegations was that Pfizer withheld information about side 
effects from the FDA. But Judge William Zloch entered a protective 
order which prohibited the plaintiff's attorney from disclosing any 
information obtained from Pfizer to any governmental agency, including 
the FDA!
  The case was later settled. But the FDA cannot have access to 
knowledge acquired by the plaintiff's attorney.
  One further case:
  Devra Davis, Ph.D., of Washington, DC., suffered a near-fatal 
allergic reaction to the painkiller Zomax in 1983. Davis required 
emergency room treatment for her anaphylactic reaction--a side effect 
not disclosed in the drug's package insert or in the then-current 
Physician's Desk Reference. Zomax was removed from the market about 2 
months after Dr. Davis' reaction.
  Davis is a toxicologist and epidemiologist who is presently Scholar 
in Residence at the National Academy of Sciences. She says that, 
following her own allergic reaction, she learned that the drug's 
producer, McNeil Pharmaceutical, had known for some time that fatal 
allergic reactions to the drug had occurred. But, she says, the company 
has used judicially sanctioned secrecy to keep this information from 
the public.
  Davis states that secrecy orders and confidential settlements of 
litigation resulting from Zomax reactions have, in effect, severely 
hindered scientific research about Zomax's dangers. Scientists have no 
access to the buried information. Yet Zomax differs by just one 
molecule from Tolectin-DS, currently one of the most widely prescribed 
pain medications in the United States.
  We could go on, Mr. President, but my frustration is that we have 
presented good sources and professional support for the defeat of this 
bill, from the American Bar Association, from all the legal councils, 
the retired persons organizations, the State Association of Attorneys 
General, the State Association of National Legislative Conference, and 
even the Conference on Chief Justices of the State Supreme Courts.
  Yet, now, proponents of S. 687 come and plead on the floor, ``Wait a 
minute, wait a minute, now. You have the Federal judicial conference 
that we want you to give sanctified regard, and we cannot even discuss 
it here and we should not even have this antisecrecy amendment up. It 
should be defeated on account of that conference.''
  But then, when the very same Conference of Chief Justices of the 
State Supreme Courts oppose Federal product liability, and they say we 
are handling product liability just fine at the State level and please 
do not start taking away the rights of injured parties with this 
discombobulated S. 687, then they don't want to follow the advice of 
the Conference of Chief Justices and say, ``Oh, no, that is all right. 
What we have got is a crisis.''
  They cannot have it both ways. They cannot ask us to regard in any 
sense the position of the Conference of Chief Justices with respect to 
this amendment, but not with respect to the bill itself!
  Yes, Mr. President, there is a crisis, but it is in secrecy, if there 
could be such a thing, not a crisis with respect to product liability.
  I think the distinguished Senator from Wisconsin has done a great 
service for the U.S. Senate and injured parties in America in bringing 
this amendment to the floor.
  I yield the floor.
  Mr. HEFLIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. HEFLIN. Mr. President, what we are talking about here are the 
settlement provisions under section 101 of S. 687.
  I have read this bill carefully and it has language in it about an 
expedited process for settlement; but this bill really is a deterrent 
for settlements.
  This bill has language, for example, that you cannot settle a case 
without having the consent of your employer; that means his insurance 
company. There are certain, proven statistics which show that a 
claimant wins slightly over 50 percent of those cases that go to court 
and are tried before a jury.
  So, therefore, there is a question as to whether a claimant should 
seek to settle. So a claimant negotiates a settlement but finds out 
that he cannot settle because of the language on page 26, line 22.

       The employee shall not make any settlement with or accept 
     any payment from the manufacturer or product seller without 
     the written consent of the employer and no release to or 
     agreement with the plaintiff or product seller shall be valid 
     or enforceable for any purpose without such consent. However, 
     the preceding sentence shall not apply if the employer or 
     workers' compensation insurer of the employer is made whole 
     for all benefits paid in workers' compensation benefits.

  So a claimant is forced to settle on the basis of 50 cents on the 
dollar. But the employer--or, rather, his insurance company--under this 
law is entitled to be made whole, 100 percent, for all benefits. 
Fairness? A deterrent towards settlement?
  Then let us look at the language of the bill and how it has been 
written. The proponents call it fairness. In the expedited settlement 
provision they say that either party can make an offer of settlement 
and it is filed in court. If the other party does not accept it, the 
case goes to trial. In the event that the plaintiff gets less than the 
offer of settlement, there is a penalty. What is that penalty? That 
penalty calls for the defendant to pay a reasonable attorney's fee, not 
to exceed $50,000. Then it says, a final judgment, and this is done by 
the court, not the jury, ``* * * a final judgment is entered in an 
amount less than the specific dollar amount of such offer of judgment, 
the court shall reduce the amount of the final judgment in such action 
by that portion of the judgment that is allocated to economic loss for 
which the claimant has received or is entitled to receive collateral 
benefits.''
  That is nice, good language. But what is the definition of collateral 
benefits in this so-called fairness bill? One of the provisions of a 
collateral benefit is a person's life insurance. The injured person has 
been paying on his life insurance for 30 years. Then what happens? 
Under this bill, the amount of the life insurance that he has paid for 
during all his life--in the event that he is killed as a result of this 
accident--can be deducted from the amount of the judgment.
  What about health insurance? An injured party will have doctor bills 
and hospital bills. Suppose, before he dies from his injuries, and is 
in a hospital for a month and incurs $100,000 worth of bills. So we 
will say, therefore, if he had a $200,000 life insurance policy and 
paid the premiums on them; however he cannot collect them; they go to 
the benefit of the defendant, the manufacturer. Talking about fairness, 
this is a misnomer if there ever was one.
  Fairness? Let us read a little bit in this language of the bill and 
let us see if what is good for the goose is good for the gander:

       A civil action brought against a manufacturer or product 
     seller for loss or damage to a product it sells or for 
     commercial loss is not subject to this act and shall be 
     governed by applicable commercial or contract law.

  A defective piece of machinery, sold to a factory, causes an 
explosion. Under this law the plaintiff, the owner of the factory, is 
entitled to receive all that commercial law allows under existing and 
applicable commercial and contract law, and this bill would not apply 
to him. But if an individual is injured or killed, he would be subject 
to this bill. If that factory blows up, under this bill's exclusion, 
the company would be entitled to a replacement of the factory, 
including damages to replace the equipment, and all loss of profits.
  The business people do not want to come under this bill. The 
manufacturers do not want to come under this bill. They want to sue 
under existing law. And what do we see? That they are allowed to do so 
by excluding themselves from the provisions of this bill.
  What is good for the goose is good for the gander. What is good for 
the gander is good for the goose. If it is so desperately needed, where 
have all of the tremendous judgments occurred? They have not occurred 
in the personal injury law. They have occurred in commercial law. The 
$11 billion judgment that Penzoil got against Texaco did not involve 
one bit of personal injury or any death. It was a commercial case 
involving punitive damages and that has attracted attention.
  I think of further aspects of fairness that I want to refer to, as we 
go along, but I just wanted to mention this in the beginning. I think 
we ought to carefully read this bill and see all of these exclusions, 
all of these advantages, all of this fine print that is made for 
somebody's advantage. And it is certainly not the injured party's 
advantage. The advantage is to the insurance company, to the 
manufacturer, and other defendants who might have a suit brought 
against them in regard to personal injury.
  I will be speaking about this later. I ask unanimous consent as many 
times as I might talk, that it be considered one speech.
  The PRESIDING OFFICER (Mr. Rockefeller). Without objection, it is so 
ordered.
  Mr. HEFLIN. I yield the floor.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. GORTON. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GORTON. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GORTON. Mr. President, today the Senate will begin consideration 
of S. 687, the Product Liability Fairness Act. We must reform the 
product liability system because it fails to provide injured persons 
adequate compensation in a timely fashion. In addition, the inordinate 
costs of the product liability system are a major burden on the 
competitiveness of American industry, and the unpredictable patchwork 
of inconsistent laws deters the development of innovative products.
  I will deal with each of these three separate rationales for the 
passage of this bill later.
  Since 1981, the Commerce Committee has reported six product liability 
reform bills. S. 687 takes a moderate, sensible approach to product 
liability reform, and it has strong bipartisan support with a total of 
45 sponsors.
  Product liability reform is essential because the current product 
liability system is inefficient and unfair. The tort system should 
award fair compensation in a timely fashion, but it does not do so. 
Cases can drag on for years. More than 20 percent of seriously injured 
persons receive no compensation for 5 years. A 1989 GAO study indicates 
that the average case takes nearly 3 years to resolve, longer if there 
is an appeal. When compensation is awarded, too much money goes to pay 
transaction costs, such as attorneys' fees, rather than to the injured 
persons. Former Commerce Secretary Robert Mosbacher testified that as 
much as 75 percent of the costs of the system go to transaction costs. 
This bill would provide both plaintiffs and defendants with meaningful 
incentives to settle product liability suits.
  Not only does the present product liability system generate excessive 
costs and delays, it does not compensate injured persons in proportion 
to their losses. An injured person can expect to receive a windfall of 
nearly nine times his losses if his injuries are minor. Yet, if his 
injuries are severe, however, he can ordinarily expect to receive only 
15 percent of those losses. A severely injured person cannot afford to 
gamble on the outcome of lengthy litigation. As a result, many are 
forced to settle for amounts far less than their injuries merit.
  Product liability litigation arising out of workplace injuries 
demonstrates how costly litigation is and how little actually goes to 
injured persons. According to a 1994 survey by the Association of 
Manufacturing Technology, the average 100 claims filed against its 
members result in outlays of $4.45 million in defense costs and $3 
million in subrogation paid to employers or their insurers. Claimants 
receive only $3.35 million, which after the standard contingent fee of 
one-third, is reduced to only $2.2 million. Thus, injured persons in 
these cases receive $2.2 million, while total transaction costs exceed 
$8.6 million, almost four times as much.
  Injured persons are not the only ones who are treated unfairly by the 
tort system. It imposes inordinate costs on U.S. businesses and the 
entire American economy. Consider the case of just one company that 
wrote me last month. Lamb-Grays Harbor Co. of Hoquiam, WA, 
manufacturers materials handling equipment that is used in the pulp and 
paper industry. It employs 260 people in a very depressed county that 
has been devastated by the crisis in the timber and fishing industries. 
But the Lamb Co. carries a larger financial burden for product 
liability insurance than it does for taxes. As David Lamb said, ``at 
least taxes require profits.'' The Lamb-Grays Harbor Co. has never been 
found to have designed or built defective equipment yet it is forced to 
settle rather than risk corporate death at trial. Fully 85 percent of 
the claims against the company for product liability involve equipment 
installed more than 30 years ago. As Mr. Lamb stated,

       The system is broken. The effect is that honest 
     manufacturers bear a crushing financial burden that diverts 
     funds from investment in development. Unscrupulous companies 
     fold and reappear to avoid the expense. Injured individuals 
     pay huge legal expenses on awards or get nothing. Everyone 
     benefits from rational reform.

  Mr. Lamb, I could not agree with you more. Mr. Lamb's experiences are 
not unique; his story is one that we hear over and over again and is 
one of the principal reasons that we must pass the bill.
  The total cost of the American tort system is exorbitant. According 
to a 1989 study by the Tillinghast insurance consulting firm, total 
tort costs in 1987 were $117 billion. This represents 2.5 percent of 
GNP. According to Prof. Robert Tollision of George Mason University, 
this figure is nearly double the level of U.S. net national savings and 
one-fourth the amount of gross private investment. A study by John 
Sophocleus and David Labano of Clemson University found that each new 
lawyer today in the United States reduces GNP by $2.6 million. They 
reason that the work of such lawyers causes businesses to divert to 
transaction costs resources from undertakings that generate wealth and 
create jobs.
  The excessive costs of the tort system put U.S. companies at a 
competitive disadvantage in world markets. According to a study 
conducted for the Department of Commerce, domestic manufacturers may 
face product liability costs up to 20 to 50 times higher than those 
paid by foreign competitors. Harold Mathers, president of Mathers 
Controls, Inc., of Burlington, WA, informed me that product liability 
insurance costs for his firm, which manufactures pilothouse controls 
for boats, are 10 times higher for products sold in the United States 
than they are for those sold overseas.
  Important sectors of our domestic economy are losing substantial 
market shares to foreign competitors because the excessive costs of the 
product liability system put American enterprises at a competitive 
disadvantage in world markets. For example, the Association of 
Manufacturing Technology estimates that it has lost nearly 25 percent 
of its market share to foreign competitors in recent years. Much of 
this loss is attributed to the excessive costs of the current product 
liability system, which takes resources from and inhibits the 
development and marketing of innovative products. The U.S. machine tool 
industry spends seven times more on product liability costs than on 
research and development. Seven times more, Mr. President, on product 
liability costs than on research and development.
  Higher prices are just one aspect of our competitiveness problem. The 
current product liability system often leads manufacturer to decide not 
to market new products at all. The problem is particularly pronounced 
in the area of medical products and technology. The American Medical 
Association stated in 1988: ``Innovative new products are not being 
developed or are being withheld from the market because of liability 
concerns or inability to obtain adequate insurance.'' More recently, 
James Vincent, chief executive officer of Biogen, Inc., testified 
before the Commerce Committee that he canceled development of an AIDS 
vaccine because of liability concerns. The conference board found in a 
survey of chief executive officers that nearly half of the firms in the 
survey have discontinued products as a result of the product liability 
system. In addition, 39 percent had decided not to introduce new 
product lines, and 25 percent had discontinued product research as a 
result of the system. Prof. Michael Porter of the Harvard Business 
School, author of a recently published book entitled ``The Competitive 
Advantage of Nations,'' told the Commerce Committee: ``American 
liability law as it is now structured causes companies to slow the rate 
of innovation.'' With a patchwork of 50 State laws, manufacturers often 
do not know what legal standards will be applied by a court in an 
economy where more than 70 percent of manufactured products move in 
interstate commerce.

  The uncertainty of the current system extends beyond product 
manufacturing and into the scientific community. It stifles the 
scientific research that is essential for the development of innovative 
products. Dr. Malcolm Skolnick, a professor of biophysics at the 
University of Texas Health Science Center, who is also a lawyer, told 
the Commerce Committee at a April 5, 1990 hearing on product liability:

       Scientific inquiry is stifled. Ideas in areas where 
     litigation has occurred will not receive support for 
     exploration and development. Producers fearful of possible 
     suit will discourage additional investigation which can be 
     used against them in future claims.

  Former Secretary Mosbacher told the Commerce Committee that the 
unpredictability of the current system discourages research 
universities from licensing patents to business firms for fear of being 
sued as a ``deep pocket.''
  This bill will restore fairness to the product liability system. It 
encourages the settlement of lawsuits without litigation based on rule 
68 of the Federal Rules of Civil Procedure and through the use of 
Alternative Dispute Resolution procedures already on the books under 
current State law. Such procedures will help injured persons receive 
compensation for their losses quickly without incurring substantial 
legal fees. These provisions do not in any way restrict an individual's 
right to a jury trial.
  The bill also modifies the rule of joint and several liability with 
respect to noneconomic damages. This provision limits a defendant's 
liability to his percentage of fault for damages such as pain and 
suffering and emotional distress.
  The bill changes the standard of proof for awarding punitive damages 
based on the recommendation of the American College of Trial Lawyers 
and the American Bar Association. The bill also provides for a separate 
proceeding on punitive damages, reflecting the fact that they are a 
quasicriminal type of penalty.
  Mr. President, I have long supported efforts to reform the product 
liability system. I have opposed, however, earlier bills which I 
considered to be anticonsumer and too extreme. S. 687 is a modest 
proposal. It bears minimal resemblance to the pro-defendant product 
liability bills initially supported by business groups in the early 
1980s. Very significant changes have been made over the years. Prof. 
James Henderson of Cornell Law School, a leading product liability 
scholar testified that S. 640, the predecessor legislation was a 
balanced, pro-consumer proposal.
  Let me briefly mention the principal changes which have been made in 
this bill over the years that lead me to claim that this is a moderate 
bill.
  It does not restore negligence as the basis of liability for 
manufacturers. In fact, it no longer preempts State law standards of 
liability for manufacturers. Those standards are left to the State and 
are developed in accordance with State statutes and the common law.
  This bill does not create a ``state-of-the-art'' defense for 
manufacturers.
  It does not create a defense for manufacturers of products that are 
inherently dangerous or unavoidably unsafe.
  It does not modify or eliminate the doctrine of offensive collateral 
estoppel, a doctrine that permits a new plaintiff to utilize a result 
against a defendant from a prior case the defendant lost.
  It does not require the claimant to identify the manufacturer of the 
product that injured him or her.
  It does not contain any caps on damage awards.
  It does not create a defense against liability for compensatory 
damages for products that comply with government standards.
  It does not preclude courts from allowing evidence about product 
improvements to be admitted in cases.
  It does not limit the amount of punitive damages awards, does not 
limit multiple punitive damage awards from being imposed on a 
manufacturer for the same product, and it does not take away the jury's 
right to decide punitive damage awards.
  It does not contain a broad statute of repose for consumer products.
  It is important for me to intercede here, Mr. President, in saying 
that while a number of those provisions in earlier bills were ones with 
which I disagreed as being too anticonsumer, there are a number of 
these provisions which I would have included in the bill had it been up 
to me and up to me alone.
  What that shows is that the distinguished acting President, this 
Senator and other proponents of the bill have listened very carefully 
to those who have objected to certain provisions in original proposals 
and have a truly modest and moderate proposal which may well not go as 
far as many of the proponents of legislation of this sort would like to 
do in an ideal world.
  The proposal before the Senate today contains an extremely important 
provision that was included at the request of consumer groups. A 
discovery rule statute of limitations was added that will preserve a 
claimant's right to sue until he knows, or through reasonable diligence 
should know, both that he has been harmed and the cause of the harm. 
The provision would apply in both personal injury and wrongful death 
cases. In wrongful death cases, many states today automatically cut off 
a survivor's right to sue 1 or 2 years after the death occurred. The 
bill will preserve the survivor's right to sue until 2 years after the 
cause of death is discovered.
  Mr. President, this bill allocates responsibility for injuries 
equitably. The current system does not do so. The current system is a 
lottery. A severely injured plaintiff is required to take a chance on 
the lottery in order to be compensated. Too often it is the victim who 
loses when this unpredictable system produces an unfair result. The 
system should encourage quick settlements that allocate responsibility 
equitably. This legislation accomplishes that. Moreover, by reducing 
transaction costs, this legislation should improve our manufacturers' 
competitive position in world markets. It is these excessive costs that 
pose an undue burden on manufacturers and discourage the development of 
innovative products.
  I urge my colleagues to support this legislation.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Simon). Without objection, it is so 
ordered.
  Mr. ROCKEFELLER. Mr. President, there is no person in this body for 
whom I have greater personal affection and, I guess more importantly, 
respect than Senator Herb Kohl from Wisconsin. He and I agree on most 
issues. There is this kind of an automatic understanding between the 
two of us as we pass in the hall, almost kind of like talking without 
having to talk.
  He has an amendment this afternoon on protective orders. I am not a 
lawyer. I am not an expert on that subject. But I do know this: There 
will come a time tomorrow morning when I will have to very reluctantly 
move to table his amendment to which the distinguished Presiding 
Officer also spoke. I want to just very briefly explain why because I 
do not wish to have to do that. I will not enjoy it. I will not like 
it. And it will not please me in any way.
  But I will have to do it for a couple of reasons. One is because, if 
it were to pass--and I want my colleagues, those who might be here at 
this late hour or more probably their very able associates, to hear 
this very clearly--if it were to pass, if the Kohl amendment were to 
pass, it would in fact, for a variety of reasons, have an extremely bad 
effect on the prospects of the overall legislation, S. 687, passing.
  It is just sort of a fact under the current law that the basis of 
settlements between litigants is often kept private. Often litigants 
want that to be the case because they do not want to open themselves to 
other potential suits, and they will feel very strongly about it. I 
mean a settlement is a rather personal matter. I suppose if it were 
taking place between giant corporations, one could feel differently. 
But many of these are very personal, and people have those feelings 
about it. It is also interesting that judges--I am not in a position to 
speak on the wisdom of judges, but judges are judges--very much want to 
be able to keep discretion as to this matter of protective orders, 
discretion of sealed appeals.
  Having said that, that is not really the reason that I would move to 
table the amendment--which I will have to do at an unpleasant moment 
tomorrow--of my very good friend, Senator Kohl, from the State of 
Wisconsin. The primary reason is that his amendment simply is not 
related at all to the substance and the problems that a very careful 
coalition of Democrats and Republicans have worked for a very long time 
to put together, which is S. 687. It is a fragile balance that we have 
tried to strike.
  I spoke earlier about the anger inside of me, even going back to my 
first inaugural address when I was Governor back in 1977, when people 
who are due money because they are injured--in this case State workers' 
compensation--do not get that money. They do not get it for a long 
period of time. So that their injury, their pain and suffering, and 
their economic loss or their lack of being able to go to a job, their 
lack of being able to take care of their family, is simply unspoken to 
in terms of financial reward that they are deserving of because of the 
system. I spoke about that.
  I am equally dismayed that, depending upon whom you talk to--and it 
is interesting that figures can vary in all of this--that litigants, 
victims, who sue under our current product liability laws will wait 
maybe 2\1/2\, 3, 4, 5 years or longer, but they will wait a very long 
time before they have any judgment that returns to them money. What is 
money to them? Money is healing. It is almost ludicrous to make this 
argument, but if somebody mangles his or her hand in a machine and 4 
years later they are rewarded in compensation, of course, it means 
nothing. They have lost the use of their hand. It is academic, it is 
cruel, and it is the status quo; it is the system we have. It makes me 
very, very angry.
  Another thing that makes both the distinguished Senator from 
Washington and myself very angry is the fact--and I would think this 
would make all Senators angry and upset, and at the very least 
contemplative, sharply, on the subject--that lawyers on both sides make 
more money than the victims do. That is a natural consequence of there 
being so much time taken to settle these cases, or if they ever go on--
as 4 percent do--to juries, it takes so long. Lawyers make a lot of 
money and injured people make much less. That sounds like it might 
apply to a Third World country and not to the United States of America, 
but it is true.
  So what a number of us have tried to do on both sides of the aisle in 
this legislation, in a very delicate balance which has been worked out 
through a period of 7 or 8 years--this being really the first time we 
have ever had a chance to discuss it on the floor the Senate over a 
period of 13 years--is to try and shorten that time. Looking at the 
Presiding Officer, I can speak freely and easily about coal mines, 
because the Presiding Officer is very familiar with them. I can 
remember in my own State of West Virginia, in the 1970's and 1960's, 
there were constantly things called temporary restraining orders, 
because there would be a dispute between management and labor about a 
work rule or something within the mine. There was an automatic mindset 
that you just went right to the courts to get a temporary restraining 
order, and strikes would occur and ill feeling would grow even deeper, 
and nothing would be worked out, and lawyers would set to work and time 
would pass. It was ridiculous.
  A number of us were involved in working out a system which we called 
settling the problem at the face of the mine--in the mine, where the 
dispute would happen. Because both union and management bought into 
this, during the period of the 1980's, Mr. President, it was quite 
wonderful, and even the late 1970's, because there were no temporary 
restraining orders. Problems were settled at the face. What would 
normally take 2 or 3 years of litigation to settle would be settled in 
2 hours or 2 days. That seems like a small thing but, of course, it is 
an enormous thing.
  That is what the Senator from Washington, the Senator from 
Connecticut, myself, and others, are trying to change. We are dealing 
with very serious problems. It is a delicate balance we have struck. We 
must be honest about this. Not all manufacturers and businesses are 
happy about this bill. Those who oppose us would give the impression 
that this is a special interest bill. Well, it is not. I know from 
personal experience that there has been a long period of time when 
business, so to speak, was not happy with this compromise because it 
did not go far enough. I was insistent, as was the Senator from the 
State of Washington; I did not want to see a cap on punitive damages, 
and I was not going to vote for that-- not on any kind of damages. I 
did not want to see any kind of denial of the jury process.
  We have something called alternative dispute resolution. I have read 
some testimony or discussion of where alternative dispute resolutions 
were used in States and problems were settled in 2 days--2 days versus 
4 years--and the effect on an injured person receiving compensation for 
a mangled hand. It is extraordinary what can happen if we pass this 
bill.
  But if the amendment of the Senator from Wisconsin, which I as a 
nonlawyer cannot comment on--and as I listened to the Senator from 
Wisconsin and indeed the Senator from Illinois discuss it, there were 
many things that seemed attractive about it. I know very well that it 
would have a terrible effect on the result of this bill. I say that 
clearly and loudly, and I hope as many people in their offices hear 
that as possible. The Clinton administration, for example, which has 
remained silent on the bill, is very much against this amendment. The 
judicial conference, which has spent a long time already in discussing 
this matter--and the Senator from Wisconsin made reference to that, 
saying already for 4 years they have worked on that. I discussed that 
with some lawyers, and they said actually 4 years is not that long. 
Sometimes these things can take 8 or 9 years. I was not happy with that 
answer. But then I suggested that perhaps we could have a sense-of-the-
Senate resolution in which the Senate would go on record encouraging 
the judicial conference and those attending to sort of hurry it up and 
give a series of reasons why.
  The Senator from Wisconsin, I think, wisely declined to do that, 
because he said I would like to have an up-or-down vote on my 
amendment.
  That reminds me that I promised the Senator from Wisconsin--
therefore, I will not yield from this promise--that he would have 45 
minutes tomorrow morning before the vote to discuss this amendment 
further. I cannot instruct either the Chair, obviously, or anybody else 
to make that happen. But I want people listening to this to understand 
that it is very important to this Senator and the Senator from the 
State of Washington that this happen, that the Senator from Wisconsin 
come to the floor at 9 o'clock, or whatever the designated time would 
be; that he be there promptly at that time; and we will discuss his 
amendment further for a period of--I suggested 45 minutes, which was 
comfortable to him. I would like very much to see that happen. We could 
ask for a unanimous consent agreement, but we might not get it; I 
cannot guarantee that. But if he comes to the floor, I am sure he will 
have that time. I want him and his staff, and others listening to this, 
to understand that.
  If judges do feel that they want to have this discretion, and if 
litigants do feel they do not always want to have what has resulted 
from this process opened up to the public, then there would appear to 
be a legitimate argument on the other side. In any event, 
notwithstanding anything that I have said, it is nevertheless still 
true that were this amendment to pass, it would have a terrible effect 
on the passage of the bill. I can only say that, and plead with my 
colleagues and their associates who are listening as I talk that this 
is the case.
  There are so many things that we need to get done in this bill. I 
recognize not all support this bill, although I think a majority does, 
and more than a majority support this bill. Redressing some of the 
wrongs in our status quo is tremendously important to me. This is an 
act of deep conscience and sincerity on my part. I am not a lawyer, and 
I do not practice that craft. I do come from West Virginia, and I have 
seen justice denied and the effect of what happens when people who 
deserve do not get. That hurts. It hurts me personally, and it hurts--
much more importantly--them.
  So I just say at this point that I hope the associates of Senators 
who are listening will counsel their Senators that when this vote comes 
tomorrow, when I make the motion to table, that the motion to table be 
successful, and the judicial conference has a chance to work this out. 
And that, in any event, the amendment is not relevant to the product 
liability tort reform bill. That I can say in my knowledge with 
confidence.
  So having made that point, Mr. President, I would like to remind our 
colleagues--and I am sure I am joined by my very distinguished friend 
and Senator from the State of Washington--that we are here and that 
amendments are due. Amendments were filed this afternoon. There is 
nothing that of which I know that is particularly illegal or 
unconstitutional about someone coming to the floor and offering an 
amendment. That does not appear to be the case.
  The Senator from the State of Washington and myself and the 
distinguished Senator from Illinois in his captive position are the 
only three Senators on the floor, and we would welcome those who come 
and offer their amendments.
  This is a very, very important bill. A lot of work has gone into it 
over many, many years, and it has been deeply and profoundly 
misrepresented in public by consumer groups and it has been, frankly, 
stunningly misrepresented by speeches that I heard myself from other 
Senators on this very afternoon. But that is the way one battles on 
legislation and I understand that.
  In any event, if there are Senators who have amendments, I would wish 
that they would come to the floor and offer them. We are open for 
business, and with that less than Shakespearean pronouncement, I 
suggest the absence of a quorum.
  Mr. GORTON. No. Hold.
  Mr. ROCKEFELLER. I withhold that for a moment.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Mr. GORTON. Mr. President, my distinguished friend from West Virginia 
has spoken both to the Kohl amendment, which is before us at the 
present time, and more generally to some of the considerations in favor 
of the bill itself.
  I should like to take this opportunity to thank him for his 
absolutely dogged pursuit of this very, very important issue, under 
difficult circumstances, circumstances which have on a number of 
occasions separated him from some of his friends and allies in this 
body. But his feeling for the public interest in this reform and our 
litigation system is very much to be commended and is equally important 
to this country.
  The Senator from West Virginia spoke about transaction costs. Let us 
put that simply. When we have a system in the country pursuant to which 
people are to be compensated for injuries, in which 50 percent, two-
thirds, 75 percent of all of the money which funds the system goes to 
transaction costs, that is to say, mostly to lawyers, to investigators, 
to people surrounding the system itself, and as little as 25 percent to 
injured victims, something is broken that needs fixing. We should not 
have a system of justice in which the great bulk of the money goes into 
transaction costs rather than to victims.
  A number of major provisions in this bill are designed to lessen the 
amount of money which goes into the transaction costs and to increase 
the share that goes to victims themselves.
  The second principal reason for this bill is its impact on American 
competitiveness and on individual businesses. The record is now replete 
with stories that are much more than merely anecdotal with respect to 
the costs imposed on our American economic system of our particular 
form of product liability.
  Amounts of money, many times in excess of the amount of money we put 
into research and development, more money in many cases than comes to 
the Federal Government in taxes from the business enterprises at issue, 
tremendous amounts of money successfully defend against such 
litigation.
  We have already, in this body, passed a bill relating rather narrowly 
to private, primarily piston-driven aircraft in which it has been 
noted, without refutation, that close to 90 percent of all the 
employment in that industry has disappeared, closely to 90 percent of 
all of the production of aircraft in that industry has disappeared by 
reason of product liability litigation.
  I shared with my colleagues at the time of the debate on that bill 
figures which, as my memory serves me, of an average of $500,000 on the 
part of one manufacturer to defend each and every lawsuit brought 
against it based on a claim of product liability, not one of which was 
successful, not a single instance in litigation was successful, and yet 
at a cost to that company which has come very close to driving that 
company out of business.
  Manufacturing efficiency, manufacturing competitiveness is clearly 
harmed by the present state of product liability law in the United 
States. This bill is designed in part to rectify that inhibition to our 
competitiveness. Will it do it all the way? By no means. Is it going to 
be a drastic 180-degree turn? No, it will not be. But I believe it 
clear that it will increase American competitiveness.
  But perhaps more significant than either of these outlines is what it 
does to product development and particularly product development in the 
medical and the health care field.
  This Congress and predecessor Congresses are rightly pleased and 
satisfied with themselves by reason of their encouragement of our 
investment in the United States in research and development in the 
broadest sense of that term. It is an appropriate way in which to work 
our tax laws, for example.
  But when at the same time we permit a product liability system which 
may inhibit research and development more than any tax incentives we 
can provide will help, if we have our priorities mixed up, and when we 
have company after company telling us that it has cut back on research 
and development in certain areas, abandoned it in certain other areas, 
utilized it to the point at which a development decision needs to be 
made and then abandoned development in even other areas because of the 
fear because of the expense of product liability legislation, we cannot 
then but be troubled about our future both in technological development 
and in the development of expanded and better health care systems in 
the country.
  These are the three areas at which this legislation is aimed. It is 
not a perfect answer in any one of them but it is a step forward in 
each of them.
  Will it encourage more research and development? The answer is yes.
  Will it make us more competitive as a country? Yes.
  Will it see to it that a larger percentage of the money that does go 
into the product liability system actually gets to victims? The answer 
to that question is also yes.
  At this point, Mr. President, I join with my colleague from West 
Virginia in speaking against the amendment by the distinguished senior 
Senator from Wisconsin, Senator Kohl, in part of course because the 
amendment is not directly relevant to the legislation with which we are 
dealing here, in part because I think that its very theory is flawed 
and that it will be another step in encouraging more litigation rather 
than less which is the aim of this bill, but primarily because this is 
neither the time nor the place to deal with that subject of what 
happens to the records of civil litigation, whether that litigation has 
been concluded.
  This Congress, or a predecessor of this Congress, has given primary 
responsibility for the rules of civil procedure in Federal courts to 
the courts themselves and to the Judicial Conference. During a period 
of 4 years that Judicial Conference has been studying this issue, I 
think it is about ready to come up with recommendations in connection 
with it. I do not believe that that is an excessive period of time 
during which all of the ramifications of this kind of issue ought to be 
studied. But in any event, the degree of knowledge about the actual way 
in which this proposal will work is certainly greater among the judges 
and the lawyers who must deal with it every day that it is here in this 
body. And that is particularly the case when we are dealing with it as 
a floor amendment to another bill.

  A bill to do exactly this has been in the Committee on the Judiciary 
of this U.S. Senate for a considerable period of time and has not been 
acted upon. That in and of itself ought to warn us that perhaps there 
are considerations which cannot well be covered in a debate of a half a 
day on the subject.
  As a consequence, whatever the merits of this proposal, Mr. 
President, it ought to be dealt with at least in the normal course of 
business in the operation of this U.S. Senate, but most appropriately 
by the way in which the Congress of the United States over a period of 
years has dealt with changes in the Federal Rules of Civil Procedure.
  Mr. President, at this point, I have here a 3-page essay, both on the 
procedures involved in dealing with this amendment and on its merits, 
which was prepared in the form of a Senate speech by a Victor Schwartz, 
an attorney of great erudition and experience in this field who has 
been a great help to me and to my staff and, for that matter, all of 
the members of the Commerce Committee of the U.S. Senate.
  Rather than read it out and claim it as my own, I will simply state 
that I agree with everything that is included in it and I ask unanimous 
consent that that statement be printed in the Record at this point, 
with due credit to Mr. Schwartz.
  There being no objection, the statement was ordered to be printed in 
the Record, as follows:

       The proposal of the Senator from Wisconsin sounds 
     attractive at first blush, upon reflection, it will have 
     onerous, far-reaching consequences that neither the courts 
     nor the litigants can bear. At a time when the federal court 
     system is in crisis, when litigation costs have escalated 
     uncontrollably, this amendment would add a crushing new 
     burden to federal judges' dockets. Under the current system, 
     the vast majority of protective orders are agreed-to by the 
     parties--the judge merely signs off on the order. This 
     amendment, however, would require the judge to become fully 
     involved in every protective order in every case. It would 
     require that the federal district courts conduct, before 
     entering any protective order, an intensive factual review of 
     all material to be protected to ensure that the material does 
     not affect the public health or safety. Judges will have to 
     review every document (potentially thousands in any one 
     case), that would be subject to a protective order, even 
     where both sides have agreed to confidentiality between 
     themselves.
       What this means in practical terms is hundreds and 
     thousands of additional hours of review by federal judges, 
     often of extremely technical or scientific information. An 
     entire new level of the judiciary would need to be created in 
     order to conduct these inquires. Moreover, far from 
     encouraging the free flow of information among the parties, 
     the amendment will create a major disincentive for litigants 
     to provide sensitive information to each other since there is 
     no guarantee that it can be protected against public 
     disclosure.
       These problems with the amendment are not unrecognized. 
     Despite a 5 year campaign by the plaintiffs' lawyers to pass 
     similar protective order legislation in over 35 states, only 
     one has enacted restrictive legislation. Three state 
     Governors have vetoed protective order legislation because of 
     the adverse impact on the courts and their states' business 
     climate.
       I'd like to make the stakes clear. The drain on judicial 
     and private resources that this amendment will effect is a 
     certain outcome. In contrast, the benefits to be obtained 
     from the amendment are far from clear. The anecdotal evidence 
     proffered in support of the need for this amendment thus far 
     is just that--anecdotal. Not conclusive, not methodical, not 
     directly related to specific instances of abuse of protective 
     orders. These are tragic stories, but they do not demonstrate 
     any link between protective orders and the alleged 
     concealment of dangerous products. Further, there is no 
     evidence supporting the proposition that judicial review of 
     uncontested protective orders will create a more informed 
     consuming public--the courts are not information 
     clearinghouses.
       My disagreement with the amendment, however, goes beyond 
     its merits, for I am extremely troubled at the prospect of 
     the Senate considering this amendment at the same time at 
     which the Judicial Conference is in the midst of studying the 
     very same issue and proposing amendments to Federal Rule of 
     Civil Procedure 26, which governs the issuance and 
     dissolution of confidentiality agreements. Legislative action 
     on this amendment at this time would directly contravene the 
     rules amendment process established under the Rules Enabling 
     Act. Our action would be particularly inappropriate in light 
     of the express requests of both the Judicial Conference and 
     the Department of Justice that Congress not act on this 
     amendment until these organizations have finished their 
     respective studies of this issue and have formulated 
     recommendations for Congress' review.
       Both organizations have independently been studying this 
     issue for some time. The Advisory Committee on Civil Rules, 
     in response to the concerns expressed by supporters of this 
     amendment, is extending its empirical studies of protective 
     order to include five district courts. These studies will 
     augment the Committee's original empirical studies showing 
     that there is no need to change the federal rule relating to 
     the issuance of protective orders. The studies are expected 
     to be complete in time for the October meeting of the 
     Committee. Similarly, the Justice Department is studying the 
     use of protective orders as part of a comprehensive civil 
     justice reform study and has asked that action on the bill be 
     suspended until the Department has had an opportunity to 
     complete its study.
       It is folly for the Senate to act now, before these studies 
     are finished and before we have these expert agencies' 
     recommendations, which might be utterly inconsistent with 
     this amendment. I do not feel that we have enough 
     information, with regard to either the existence of a problem 
     or to its possible solutions to feel confident that this 
     amendment is the right thing to do. Especially in light of 
     the severe consequences that would result from adopting this 
     amendment, I believe the Senate should insist on waiting for 
     the results from the ongoing studies before we act.
       So, in deference to the Judicial Conference, the Justice 
     Department, and the Rules Enabling Act, I strongly urge that 
     the Senate not act at this time on Senator Kohl's amendment. 
     It is premature and it should be tabled. The consequences of 
     acting now are too grave and the benefits too tenuous to 
     justify anything more. I thank the Chair and yield the floor.

  Mr. GORTON. Mr. President, I yield the floor.
  Mr. ROCKEFELLER addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. ROCKEFELLER. Mr. President, some time ago, I suggested that 
Senators were free to come forward and offer amendments. As clear as my 
vision allows me to see, I do not see that phenomenon happening. I am 
not sure that there is an enormous amount of point for the three 
Senators on the floor, and, more importantly, the extremely hard 
working Senate staff on the floor, to wait here for the rest of the 
night. I would be happy to, but I am not sure that that will produce 
amendments.
  So, I will, for the moment, suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________