[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for the quorum call be rescinded.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.
____________________