[Congressional Record Volume 140, Number 84 (Tuesday, June 28, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 28, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                     PRODUCT LIABILITY FAIRNESS ACT

  The Senate continued with the consideration of the bill.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Washington [Mr. Gorton].
  Mr. GORTON. Mr. President, one of the subjects discussed at some 
length this morning was joint and several liability and its impact or 
possible impact on claimants.
  In this connection, again we can speak from actual practice rather 
than from theory because the provisions on joint and several liability 
in the bill follow a California law on that subject. That provision was 
enacted by the people of the State of California in 1986, 8 years ago, 
by a vote of more than 60 percent.
  Since then, there has been no effort on the part of any major 
interest group to repeal the California law. In spite of that fact, 
opponents argue that the provision is antiwomen because their economic 
damages may be lower than those of men and, for that reason, women 
depend more on noneconomic or so-called pain and suffering damages.
  There is no showing in 8 years in California, which is both a large 
State and a litigious one, that this is true. In general, pain and 
suffering damages are found by juries to be proportionate to 
noneconomic damages, so that if there is a limit on noneconomic 
damages, its effect can be greater on a male than on a female. The key 
point is there has been no demonstration that the California approach 
discriminates against either gender or group.
  According to testimony give on S. 687 by Suzelle Smith, an 
experienced California trial attorney who represents both victims and 
defendants in appellate work, the California law has been of help to 
all claimants and helped reach a fair result.
  Under prior California law, where there was full joint and several 
liability for both economic and noneconomic damages, juries 
understanding that fact and understanding that finding a defendant 
liable in a small degree could nonetheless result in their having 
imposed on them a huge verdict--that is to say, a defendant who is 5 
percent at fault in a $1 million case having to pay the entire $1 
million instead of $50,000--those juries tended to shy away from 
imposing liability at all in such situations.
  Under the current system, where juries appreciate the defendant less 
at fault will not be responsible for paying an award totally 
disproportionate to his responsibility, liability is more likely to be 
found.
  The California approach is also the approach of Nebraska, with the 
same results.
  At this point, Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Texas.
  Mrs. HUTCHISON. Thank you, Mr. President, and I thank Senator 
Hollings very much.
  Mr. President, I rise today as a cosponsor and supporter of S. 687, 
the Product Liability Reform Act. Congress has considered product 
liability reform legislation for almost 15 years, a decade and a half 
of thorough hearings, careful analysis, negotiations, compromises, and 
refinements by both the House and the Senate.
  During that time, the need for product liability has only increased. 
Courts have expanded the scope of product liability law, and the number 
of product liability cases has exploded.
  There is a great deal of unpredictability in the tort system which 
stems from the varying product liability laws and court opinions in the 
different States.
  It is important to keep in mind that when citizens in one State, such 
as my home State of Texas, are injured by products, they may bring a 
lawsuit in Texas and the court will apply Texas law. But Texas' product 
liability laws have a limited effect on the State's businesses, because 
Texas manufacturers sell over 51 percent of their products in other 
States and they are sued in those other States. They are subject to 
unpredictable rules in many of these States that really prevents 
manufacturers from assessing their liability risks and jeopardizes 
rational business planning.
  I believe that the legislation before us today is the right bill at 
the right time. It is a balanced and modest approach that provides 
substantial predictability for manufacturers and claimants by carefully 
targeting several areas of product liability law that would most 
benefit from national uniformity. These reforms will succeed in 
breaking gridlock in our courts, administering swift and just 
compensation to victims, punishing negligent manufacturers while 
protecting those that are not, enhancing product innovation, and 
increasing U.S. competitiveness.
  I firmly believe that product liability lawsuits are the only means 
for allocating responsibility of harm caused by unsafe products. 
Consumers must be able to rely upon the tort system to receive swift, 
suitable and predictable compensation for their injuries. My concern, 
however, is that the current system of legal accountability for 
injuries due to unsafe products does not benefit consumers and, far 
from making them whole, subjects claimants to interminable delay in 
receiving rightfully owed compensation. Furthermore, the system exacts 
unacceptable transaction costs from a claimant's recovery. Claimants in 
the unreformed product liability system find themselves playing a game 
of legal roulette where a few lucky ones win big and everyone else goes 
home worse off.
  The General Accounting Office reports that the average product 
liability case takes 2\1/2\ years to move from filing to a court 
verdict. Furthermore, those with the most severe injuries wait the 
longest and receive the least compensation. More than 62 percent of the 
most severely injured claimants wait more than 3 years for payment. At 
the same time, it appears that less seriously injured claimants are 
substantially over-compensated for their losses while those with the 
most serious losses are under-compensated. One study indicates that a 
claimant with damages of $1,000 generally recovers 859 percent of their 
losses, while those who legitimately suffer losses of over $1 million 
received on average 15 percent of their losses.
  Delay results in under-compensation of claimants, particularly those 
with serious injuries. These victims generally have inadequate 
resources to pay for their medical and rehabilitation expenses, and 
they are forced to settle for far less than their full losses in order 
to get some payment because they cannot afford to wait for their 
compensation. The alternative dispute settlement mechanism contained in 
this bill create incentives to quickly resolve disputes and provide 
appropriate compensation.
  Our Nation's manufacturing sector--and thereby our international 
competitiveness--is also a big loser in an unreformed product liability 
system. The unpredictability, inefficiency and high cost of our tort 
system handicaps the U.S. industrial sector. The enormous costs that 
the tort system imposes on business without reform impedes the creation 
of jobs. In Texas alone, the current liability system cost the State of 
Texas over $89 billion and 79,000 jobs in 1988, according to a Baylor 
University study.
  These costs hinder our powerful manufacturing sector's efforts to be 
the world leader in design, construction and marketing of the next 
generation of high quality, high value-added products. Liability costs 
in the United States are 15 times greater than in Japan and 20 times 
greater than in Europe. Europeans have recognized the important impact 
of product liability reform on competitiveness and have implemented 
uniform product liability laws.
  The expense of litigation claims and the high cost of liability 
insurance divert resources and research and productivity. Over the last 
40 years, general liability insurance costs have increased at over four 
times the rate of growth of the national economy. A recent study found 
that between 1950 and 1988 liability insurance costs increased from 
$1.7 to $75 billion. Product manufacturers in some cases have witnessed 
as much as a 1,500 percent increase in their liability insurance costs.
  These costs have consequences. They are either passed on to the 
consumer, where companies find themselves unable to pass them on, they 
are a leading reason for business failure. This is particularly true of 
small businesses, especially those involved in advanced technology--in 
other words, the innovators and job creators.
  General consumers also lose in the legal lottery that is our product 
liability system. They ultimately pay for the cost of liability 
insurance, big ticket legal awards and--possibly most importantly--for 
forgone life-saving devices and procedures which never teach them 
because of unacceptable product liability costs.
  According to the Rand Institute, product liability can 
``substantially decrease incentives to innovate in product areas for 
which large liability costs seem plausible or financial disaster from 
liability is believed to be even a slight possibility.'' In other 
words, innovation is being held hostage to the possibility of product 
liability claims. This is particularly prevalent and disturbing in the 
development of medical technologies.
  A recent report by the American Medical Association states that 
innovative new products are not being developed or are being withheld 
from the market because of liability concerns or inability to obtain 
adequate insurance.
  Rational business decisions to refrain from innovation or remove 
important medical devices from the market due to liability costs have a 
profound human cost. Recently, Mark Reilly and his 9-year-old son 
Thomas traveled from Houston to appear before a Senate subcommittee at 
a hearing on the impact of the product liability system on health care. 
Mr. Reilly told the subcommittee that an unreformed product liability 
system will result in the destruction of thousands of lives which are 
dependent on implanted medical devices in order to live. Thomas Reilly 
depends on a shunt tube, made of a pliable plastic material called 
silastic, to drain fluid buildup from his brain. Thomas will rely on 
this miraculous technology for the rest of his life, yet his parents 
are concerned that the biomaterial used in this device may not be 
readily available in the future. Stories similar to Thomas--involving 
pace makers, mechanical heart valves, bone and joint implants, vaccines 
and other miracles of modern medicine--are repeated thousands of times 
every day in this country.
  I would like to say in closing that I have heard several of my 
colleagues raise concerns that this legislation disadvantages women 
claimants. In particular, there is concern about section 203(b), which 
provides that manufacturers of drugs or medical devices that have been 
approved by the Food and Drug Administration shall not be subject to 
punitive damages in product liability litigation, except under certain 
conditions. The provision does not apply if FDA approval was achieved 
as a result of bribery or if any relevant information required to be 
submitted was withheld before or after approval. The defense only 
applies if the manufacturer has complied fully with FDA requirements 
after the product is approved.
  Opponents have stated that this provision will shield numerous 
products used by women, such as the Dalkon shield, DES, and silicone 
gel breast implants, from punitive damages. To the contrary, none of 
these products would benefit from the FDA defense because they have not 
been approved by the FDA. This provision will not provide a defense to 
punitive damages for those manufacturers who have not complied fully 
with FDA requirements. Furthermore, this legislation does not in any 
way impede a woman claimant's award of economic and noneconomic 
damages. In fact, the liberal discovery rule contained in this bill 
benefits female plaintiffs in such cases.
  Manufacturers of products like silicone gel breast implants and other 
medical devices used by women will continue to have strong incentives 
to avoid placing defective products on the market because they will 
remain fully liable for all harm.
  Furthermore, this provision provides additional powerful incentives 
for manufacturers to comply with FDA regulatory requirements and it 
improves the likelihood that FDA can effectively police dangerous drugs 
and devices. It effectively strengthens FDA's regulation of these 
products.
  Mr. President, I believe we can and should enact uniform product 
liability legislation. I do not take legislation to preempt State law 
lightly. Neither does the National Governors Association and they, too, 
support this legislation because they are on the frontline and they see 
the harmful effects to the businesses and consumers in their States of 
not doing this. This legislation will benefit consumers, injured 
parties, and manufacturers that act in a responsible manner.
  I am supporting S. 687 and I urge my colleagues to join me in voting 
for cloture.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from South 
Carolina, [Mr. Hollings].


                amendment no. 1940 to amendment No. 1938

    (Purpose: To provide for product liability insurance reporting)

  Mr. HOLLINGS. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from South Carolina [Mr. Hollings] proposes an 
     amendment numbered 1940 to amendment No. 1938.

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

       At the end of the amendment, add the following new section:

     SEC.   . PRODUCT LIABILITY INSURANCE REPORTING.

       (a) Report to Congress.--The Secretary of Commerce 
     (hereafter in this section referred to as the ``Secretary'') 
     shall provide to the Congress before June 30 of each year 
     after the date of enactment of this Act a report analyzing 
     the impact of this Act on insurers which issue product 
     liability insurance either separately or in conjunction with 
     other insurance; and on self-insurers, captive insurers, and 
     risk retention groups.
       (b) Collection of Data.--To carry out the purposes of this 
     section, the Secretary shall collect from each insurer all 
     data considered necessary by the Secretary to present and 
     analyze fully the impact of this Act on such insurers.
       (c) Regulations.--Within 120 days after the date of 
     enactment of this Act, the Secretary shall issue such 
     regulations as may be necessary to implement the purposes, 
     and carry out the provisions, of this section. Such 
     regulations shall be promulgated in accordance with section 
     553 of title 5, United States Code. Such regulations shall--
       (1) require the reporting of information sufficiently 
     comprehensive to make possible a full evaluation of the 
     impact of this Act on such insurers;
       (2) specify the information to be provided by such insurers 
     and the format of such information, taking into account 
     methods to minimize the paperwork and cost burdens on such 
     insurers and the Federal Government; and
       (3) provide, to the maximum extent practicable, that such 
     information is obtained from existing sources, including, but 
     not limited to, State insurance commissioners, recognized 
     insurance statistical agencies, the Administrative Office of 
     the United States Courts, and the National Center for State 
     Courts.
       (d) Subpoena.--The Secretary may subpoena witnesses and 
     records related to the report required under this section 
     from anyplace in the United States. If a witness disobeys 
     such a subpoena, the Secretary may petition any district 
     court of the United States to enforce such subpoena. The 
     court may punish a refusal to obey an order of the court to 
     comply with such a subpoena as a contempt of court.

  Mr. HOLLINGS. Mr. President, this amendment, for my colleagues' 
information, requires that the Secretary of Commerce annually report 
the effect of this particular legislation on insurance rates. We have 
had study after study, and invariably, whether you cite the Rand Corp. 
study or the GAO report, they complain, ``We cannot get the 
information. We do not have the information.'' I can tell you 
firsthand, as the chairman of the Commerce Committee that has 
considered this over the past 17 years, that we have not been able to 
get the information.
  One way to get the information is to federalize insurance. I happen 
to be an old States rights Senator and I have always favored the States 
regulating. However, I now see changes with the fiscal responsibility 
provisions as introduced by the distinguished Senator from Ohio on this 
side of the Capitol, or several bills on the House side, to abolish the 
McCarran-Ferguson exemption for the fixing of rates and in federalizing 
insurance. Now we have Members in the health reform debate saying look, 
we are not going to get a health care bill but we are going to get 
insurance reform.
  Now, to return more specifically to the amendment at hand, we have 
tried and tried to achieve this objective, to the frustration of none 
other than the distinguished author of the bill, Senator Rockefeller of 
West Virginia.
  In the 99th Congress, Senator Rockefeller did two things. With the 
distinguished Senator from Illinois, Senator Simon, Senator Rockefeller 
introduced a bill, S. 2497, the Insurance Trends Forecasting Act of 
1986. The two Senators jointly introduced the bill and also they 
introduced the amendment at the time that we considered product 
liability. I hope Senator Rockefeller will accept my current amendment 
because I put it up as a second-degree amendment to Senator 
Lieberman's. I am prepared to vote for Senator Lieberman's amendment. I 
am not trying to frustrate Senator Lieberman's amendment at all, but I 
think it can be strengthened with this provision, as is stated by none 
other than Senator Rockefeller to myself. Let me read what Senator 
Rockefeller stated at a Commerce Committee markup on product liability 
on June 26, 1986.

       Mr. Chairman, to enact tort reform without a means to 
     measure what its impact might be on insurance and insurance 
     rates would not do the job. One of the goals that has often 
     been stated for product liability reform is to increase the 
     affordability of liability insurance. Yet the way this bill 
     stands at this moment, we will have no idea today, 5 years 
     from today, 10 years from today, what the impact of this 
     legislation will be on insurance practices.

  So as a result of that motion made by him as an amendment, he had 
gotten together with the distinguished Senator from Kentucky, Senator 
Ford, who is very knowledgeable on this score. They had worked to make 
sure that the amendment was not burdensome or extra costly or would not 
impede business in any way. None of us wanted to do that. We simply 
wanted to correlate the statistics as best we could. Then at the end of 
each year, we would have an idea of exactly what was going on.
  Some information is already reported. It is available at the 
Insurance Statistical Agency for insurance companies and the courts, 
although it is not in a report form routinely made available to the 
Government. In those cases, the Commerce Department, of course, would 
just collect the data and put it together in a useful form for the 
Congress. However, there is crucial data that is not currently 
available, such as information about claims for companies that are 
self-insured, the use of captive insurers, or risk retention groups--
categories encompassing some 30 percent of the cost average in product 
liability.
  This amendment is not intended to frustrate the intent of this bill. 
It has nothing to do with the Food and Drug Administration. It has 
nothing to do with, for example, what they entitle the ``negligent 
entrustment provisions,'' in which area Senator Lieberman wants to make 
sure that the State laws apply. It has nothing to do with the 
alternative dispute resolution procedures. It has nothing to do with 
the settlement provisions. It just says overall, let us report these 
facts and figures so we will all know. We keep talking on the floor as 
though we were experts, when we will all have to agree on both sides of 
this measure that we are totally inexpert.
  We heard from the National Federation of Independent Businesses, when 
somebody brought up the fact that these proposed data collection 
requirements might be a detriment to small business. This is what NFIB 
said.

       Data are used by both sides to make their respective cases. 
     Different assumptions and subjective economic views are 
     interwoven in the respective analyses, but neither seems to 
     have an overwhelming credibility in providing objective data. 
     We know that in our competitive economy there must be a 
     connection for insurance firms between their costs of 
     providing coverage and the amount they charge for the 
     premium. The National Federation of Independent Businesses 
     believes that the opposing parties in this debate will not be 
     able to resolve their statistical differences. And in order 
     to resolve this debate on the effect of tort reform on 
     premiums, we need to have better data and objective analysis 
     of that data. That is the rationale for the National 
     Federation of Independent Businesses' support for data 
     collection by the Commerce Department.

  I could at random present scare pictures. I do not mind people making 
a profit.
  We have right here, for example, one report of what we call the 
Insurance Information Institute. In an update as of May of this year, 
they report that for 1992 net after-tax income was $5.8 billion. But in 
1993 net income went up to $18.5 billion, for a 219-percent improvement 
of business; 1993 over 1992.
  We know they are doing good. We know it is not any major expense. But 
we need to have a correlation. They talk about the difficulty of 
lawyers in 50 States bringing 50 different causes of action. They do 
not complain, Mr. President, about filing their policies. I have been 
involved in this field for many decades. As Governor of South Carolina, 
I reformed the insurance department. I put in a blue ribbon commission. 
The vice president of one of the best and largest banks volunteered to 
serve as chairman. We veritably cleaned up insurance in my own State.
  That has not occurred in all 50 States, and we need that nationally 
in my opinion. With the so-called insurance reform on the health end 
and fiscal responsibility on another end, the fixing of prices under 
McCarran-Ferguson, we keep nibbling around and around. Likewise, we 
willingly federalize a wide variety of crimes. But we will not 
federalize product liability.
  They will not give the distinguished Presiding Officer the 
information that he sought on a very balanced amendment to try to cut 
out the shield of secrecy surrounding judges--judges who are quite 
impressed, of course, by the insurance lawyers.
  Now comes another amendment. It is their own Rockefeller amendment 
brough back to life. And, of course, I would expect perhaps the 
distinguished Senator from West Virginia would want to accept this 
amendment because it is word for word his amendment that at one time 
was unanimously approved by the Commerce Committee. That is why I 
worded it exactly as he worded it, exactly as it was worked out on both 
sides with the interest that it not be a detraction or financial burden 
or otherwise. I bring it up now for no other reason than to find 
accurate information so we can make sound policy. I bring it up now 
with the support of the National Federation of Independent Businesses.
  I yield the floor.
  Mr. HEFLIN addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Alabama 
[Mr. Heflin].
  Mr. HEFLIN. I had some questions of Senator Lieberman on his 
amendment.
  Senator Lieberman is the author of the amendment. I really need to 
ask him some questions to clarify some matters.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes Senator Gorton.
  Mr. GORTON. If the distinguished Senator from Alabama would state 
what his questions are, I will attempt to find the Senator from 
Connecticut and attempt to determine answers to them and give those 
answers as promptly as possible.
  Mr. HEFLIN. Basically, as I understand the Lieberman amendment, it 
says:

       A civil action for negligent entrustment is not subject to 
     this Act and shall be governed by applicable State law. For 
     purposes of the preceding sentence, the term ``negligent 
     entrustment'' means causes of action under applicable State 
     law that subject product sellers to liability for their 
     failure to meet the applicable standard of care under State 
     law in selling a product to a person who, because of his 
     youth, inexperience, or otherwise, is likely to handle the 
     product in a manner to cause harm to himself or others.

  Now, it is my understanding this was largely directed toward the dram 
act. The dram act is almost universally adopted in the States where a 
tavernkeeper or a seller of alcoholic beverages sells whiskey or beer 
or wine or whatever it might be to a person who is obviously 
intoxicated and that person who is obviously intoxicated goes out and 
he causes harm to himself or to others such as in driving an 
automobile. Or, on the other hand, the dram act in some of the States 
is to the effect that the keeper of a tavern sells it to a person under 
age, where it is a violation of the law to sell to a person under the 
age such as 18 years, and that therefore that develops into harm that 
is caused, and that therefore this negligent entrustment amendment that 
Senator Lieberman has, as I understand it, is an attempt to reinstate--
or if the bill were to pass, to allow it to say you go by the State law 
relative to this and that this bill would not preempt that.
  Now, the Mothers Against Drunk Driving have expressed serious 
opposition to this bill, and part of it is on the basis of this dram 
act and the preemption that would take place relative to that matter 
which I have mentioned.
  There are other aspects pertaining to this that I am sure the Mothers 
Against Drunk Driving oppose such as the provision on 50 percent of the 
harm being caused relative to a person from intoxication or drugs, 
which I think is wrong in the way that they have written this. And I 
think that Mothers Against Drunk Driving will, regardless of this, 
continue to oppose the bill.
  But I have some other questions. This language is very poorly 
drafted, at least in my judgment, and it was directed in some way 
towards not to allow the Federal law to apply in certain cases such as 
those per se cases where a person by automatically selling it--you do 
not have to prove their incapacity or negligence involved in it--might 
not go far enough.
  But it also has, in my trying to read this--and this is why I wish to 
ask Senator Lieberman--it has the language here that ``negligent 
entrustment for this section means causes of action under applicable 
State law that subject product sellers to liability for their failure 
to meet the applicable standards of care under State law in selling a 
product to a person who because of his youth, inexperience, or 
otherwise''--it does not say ``intoxication.'' It just says 
``otherwise.'' I wish to be sure that, No. 1, it includes intoxication 
and the dram act because it does not talk about incapacity or 
intoxication. It speaks of youth and inexperience or otherwise.
  Now, I do not know what he intends to mean by ``otherwise.'' But the 
language also appears to me, as it is drafted, to go beyond. Suppose he 
sells a product which is cigarettes to someone who, because of his 
youth--maybe there is a law that you cannot sell cigarettes in a State 
below a certain level, that because of his youth he is likely to handle 
the product in a manner to cause harm to himself or to others.

  I think on the one hand this language does not go far enough. Then on 
the other hand, I think it goes to the extent that it is far beyond 
what it was intended and is subject to that interpretation.
  Let us use another example. He sells a product which is gasoline. The 
filling station operator or the service station operator sells gasoline 
to someone who is underage--youth--and is likely to handle the product 
in a manner to cause harm to himself or to others. Does this mean that 
negligent entrustment is to be extended under some applicable State law 
to mean by this to include a lot of people that may and may not be--I 
would think that the selling of gasoline by a filling station operator 
could well be since it is an underage person--underage to drive beyond 
16 under the applicable State law? I just raise some question.
  Maybe Senator Lieberman can help me answer some of these questions. 
It seems to me that it is not broad enough to cover the dram laws. But 
the other hand it is too broad in regard to other possibilities.
  Mr. GORTON. Mr. President, will the Senator yield?
  Mr. HEFLIN. Yes.
  Mr. GORTON. In behalf of Senator Lieberman, Senator Rockefeller, and 
myself, I should like to answer the question of the distinguished 
Senator from Alabama, and make a proposal.
  First, it is the position of the sponsors, the proponents, of this 
bill that the bill does not affect causes of action for negligent 
entrustment under State law at all in its present form. We are quite 
convinced that is the case. But legitimate questions have been raised 
on that subject, particularly by the authors of the first-degree 
amendment which was offered this morning in response to that request on 
their part.
  Since this morning, in connection with one of the questions which the 
Senator from Alabama has asked, they have asked us to make a further 
clarification which we are willing to do. But let me answer the second 
set of questions of the Senator from Alabama before I get back to that.
  His question perhaps does not go far enough because maybe it does not 
cover what we have called dram shot laws. On the other hand, perhaps it 
goes too far, and he brings up the question of the sale of cigarettes 
to a minor, or the sale of gasoline to a minor. But if the 
distinguished Senator from Alabama would simply look at the first 
sentence of the first-degree amendment, it says a ``civil action for 
negligent entrustment is not subject to this act and shall be governed 
by applicable State law.''
  Nothing could be clearer than the fact that it does not create new 
substantive Federal law. There is not the remotest possibility that it 
could be applied in the way the Senator guesses to cigarettes or to 
gasoline or the like unless some State passes a negligent entrustment 
statute to that effect. And, of course, if the State passes such a 
statute, the State ought to be allowed to pass such a statute.
  So the second concern of the Senator that somehow or another this 
causes an extension of current law is an appropriate concern to raise. 
But there is no possibility under this clear language that it could. 
This just says negligent entrustment is not a subject of this act at 
all, one way or another, either for restricting or for expanding such 
State laws. States can conclude those as they will.
  As I said, we think very clearly a dram shot law is a negligent 
entrustment law. But we have an additional sentence here which reads as 
follows. I will read it to the Senator. That would go ahead of the 
proposed first-degree amendment which reads:

       A civil action seeking recovery under a dram shot law, or a 
     statute for seeking a recovery from the seller of alcohol 
     products, based on the theory of common law negligence where 
     the seller of the product knew or reasonably should have 
     known that the person receiving the alcohol was intoxicated 
     or not of legal age to purchase the product is not subject to 
     this act.

  There was an additional request of the Mothers Against Drunk Drivers.
  Mr. HEFLIN. You read a little fast. You have it written down.
  Mr. GORTON. We will get the Senator a copy of it.
  As I say, this came in after the Lieberman first-degree amendment, 
and then there was prepared and submitted a request by Mothers Against 
Drunk Driving.
  I think it totally answers that. We think the present amendment takes 
care of the issue. But certainly this additional sentence does so.
  We will hand a copy of it to the Senator in a moment. I will simply 
ask unanimous consent that the first-degree amendment read in the 
fashion that I have read to the Senator.
  The next two sentences, the two sentences of the Lieberman amendment 
as they stand, would remain unchanged and are identical to what has 
been requested of us by Mothers Against Drunk Drivers.
  Mr. HEFLIN. In response to what the Senator said, let me say this: 
You say it is not a civil action, and negligent entrustment is not 
subject to this act.
  Other than the dram act, the cause of action of negligent entrustment 
is not generally--other than the dram act--is not legislatively 
creative. It has been created by common law in a State, and it can vary 
from one to the other. But it seems to me that what you are doing here 
is defining negligent entrustment, and for States to mean causes of 
action. Then you say under the applicable State law, that subjects, 
product sellers are liable for their failure to meet the applicable 
standard of care under the State law in selling a product. This is in 
selling a product. This is in a definition that you are giving to the 
States in selling a product to a person who because of his youth, 
inexperience and otherwise is likely to handle the product in a manner 
to cause harm to himself or others.
  That is a confusion that could be possibly clarified with better 
language. But in my judgment there is the possibility of having--
through legislative enactments--judicial determinations of what is 
negligent entrustment, and that negligent entrustment therefore is 
being guided by this language that is here.
  Maybe the Senator, the author of the amendment, might clarify that. I 
do not know whether he was here when I raised the issue that this would 
be a situation in which a product--we will say gasoline--is sold to a 
person who is underage or inexperienced. That would be an awful hard 
thing for a filling station operator to determine whether or not the 
person is inexperienced by driving up and buying gasoline for a car at 
a pump; is likely to handle the matter in a manner to cause harm to 
himself or otherwise.
  So I raise this issue of tobacco being sold as likely to cause harm.
  I just had not seen this other language that is clarifying. I want to 
look at this a little bit further. But on the one hand, it appears to 
me maybe you did not go far enough and maybe this clarifies it in 
regard to the dram acts. I have read it. But I have not fully 
comprehended, on the other hand, whether it goes far beyond what was 
intended but may include others. That is a problem that I am having 
with this.
  Mr. LIEBERMAN. Mr. President, in response to the Senator from 
Alabama, the Senator from Washington as I have heard the debate has 
answered as I would have the intention--
  Let me step back a little bit. As I believe the Senator knows, in the 
underlying bill, S. 687, there is a limitation on liability for sellers 
of products. If you run a hardware store, for instance, and you sell a 
hammer that is defective because of negligent manufacture, even though 
you had no way of knowing it, had nothing to do with the manufacturer, 
you can actually be held liable. We attempt to limit or exclude that 
liability where the seller, the owner of the hardware store, has no 
reason, in any exercise of reasonable care, to have known that the item 
was negligent. The liability should be on the manufacturer.
  Some concerns were raised that inadvertently, unintentionally, that 
section may excuse other sellers from other kinds of liability under 
State law. For instance, some said: What about the liability of a 
seller of a gun, who breaks the law by selling it to a minor, or the 
dram shop action which puts some liability on an owner of a bar or 
liquor store for selling to a person that showed signs of being 
inebriated already.
  Of course, those two situations, the gun selling and the alcohol 
selling, were totally out of the contemplation of those of us who 
fashioned S. 687. This amendment was intended to reassure everybody. 
That is not the intention at all. It is more directly to say that State 
law remains as it is. We do not mean to interrupt it in this whole host 
of other areas.
  As always, legislative drafting is probably more an art than it is a 
science. I want to do two things: One, to assure my friend from Alabama 
that our intention is as stated; and, two, I will be glad to work with 
him to clarify that, and I hope that the clarifying amendment that the 
Senator from Washington shared with him will reassure him.
  (Mrs. FEINSTEIN assumed the Chair.)
  Mr. GORTON. Madam President, simply to reiterate the points made by 
the Senator from Connecticut, this is not just a matter of intent. This 
is a matter of plain language. The plain language of the Lieberman 
amendment does not create and cannot possibly be construed to create a 
cause of action. It preserves State law, whether that State law comes 
from statute or from common law, or from a combination of the two. In 
the parade of horribles or examples the Senator from Alabama has set 
out, if some say the legislature wants to pass such a law, it is not 
going to be affected by this amendment one way or another. The State 
retains that right. If no State passed one to this point, I am not sure 
there is any real likelihood that it will do so.
  But the Lieberman amendment itself preserves causes of action; it 
does not create causes of action. I do not think in any reasonable way 
it can be construed to do so. So as soon as the Senator from Alabama 
has had a chance to look at the new first sentence, which is on dram 
shop laws alone, I will ask unanimous consent that it be included in 
the first-degree amendment. Before we do that, I should like to speak 
briefly to the second-degree amendment of the Senator from South 
Carolina.
  The Senator from South Carolina may very well have done so in his 
opening statement, but I point out that some time ago in committee, the 
Senator from Washington voted for the provision which the Senator from 
South Carolina has proposed here. The Senator from Washington does not 
think that it is of an overwhelming degree of use, but we are, as 
managers, I think prepared to accept the second-degree amendment.
  I want to, in my own book here, go through not so much objections as 
concerns, and simply to ask the Senator from South Carolina whether or 
not he has reflected on those concerns in the way in which he has 
drafted the amendment. If he has, that is fine. As I have said, the 
bottom line is that we are prepared to accept the amendment.
  Mr. HOLLINGS. In response to the distinguished Senator's question, 
the answer is yes. It certainly does not have any real difference with 
respect to those who are always concerned about too much reporting, 
bureaucracy, and impossible tasks, and those kinds of things, layering 
on requirements, regulations. In fact, you and I voted for it when we 
were trying to deregulate everything at that particular time. This was 
worked out, as I pointed out, by the distinguished Senator from 
Kentucky and Senator Rockefeller, and some of us debated back and forth 
and had other ideas, refinements, and burdens, and I told the staff to 
let us take the amendment forward so there would be no 
misunderstanding. We have it completely across the board--independent 
business and other organizations. The answer is yes, I have taken into 
consideration all of those concerns and never changed a word.
  Mr. GORTON. Let me go through the very specifics on it, if I can. If 
the Senator from South Carolina would be good enough to grace the 
Record with his answers, we can go forward. The four points that were 
raised as reservations, rather than as objections to the bill, were, 
first, that originally it came up when we were dealing with a product 
liability bill that actually had damage caps on it which already 
certainly would have reduced insurance costs. I would like the 
Senator's response to that question.
  The second, he really already answered, and that was the question 
about just more reports and more paperwork that nobody ever looks at. 
The Senator has said he thinks this would be valuable paperwork that 
people would look at.
  I guess the other consideration, the fact of simply getting reports 
from insurance companies falls a long way from determining the costs of 
product liability litigation, because, of course, many businesses self 
insure, and others are part of risk retention groups and reserves that 
often are going way, way out into the future, and reserves reported 
this year may not have much relationship to ultimate costs. If the 
Senator could comment on each of those, this Senator would appreciate 
it.
  Mr. HOLLINGS. This is directed at 30 percent of the business. We 
debated this. And so the claims for companies that are self-insured and 
the use of captive insurance, the risk retention groups, the three 
categories, accomplish 30 percent of the product liability coverage. 
That information is needed, and that is the idea to try to get that. 
The companies do not have that information. Others do.
  Some States have attempted to collect this data, but it has not been 
collected in a consistent fashion or analyzed in the way that a sound 
understanding of the product liability system could be gained from it. 
So the secretary would gather that information in the most cost-
effective way. The relative data is not collected anywhere in a 
coherent fashion, and this amendment would require that the complete 
package of data be available in one report.
  That is the whole idea. I think that would satisfy the distinguished 
Senator's concern.
  Mr. GORTON. Pardon me. Did the Senator address the Senator from 
Washington with a question?
  Mr. HOLLINGS. I think I have answered the Senator's question. The 
risk retention groups, self-insurer groups, comprise 30 percent. Some 
States do get that information, but they do not do it in a consistent 
fashion. Others States do not. The secretary would not only get it from 
all, but would put it into one document so we could all look at its 
effects.
  Mr. GORTON. From the perspective of this Senator at least, the 
answers of my distinguished chairman are adequate answers. We are 
prepared to accept the second-degree amendment.
  I would like to ask unanimous consent to modify our first-degree 
amendment in the method that I outlined.
  Mr. HOLLINGS. It suits me on the modification. I listened to the 
dialog between the distinguished Senator from Alabama and the 
distinguished Senator from Washington. The distinguished Senator from 
Alabama is not here.
  Mr. GORTON. Yes, he is.
  Mr. HOLLINGS. Then the Senator has my approval, and I would join in 
his request. But let us see what the Senator from Alabama says. But it 
is now my amendment accepted in the second degree.
  Mr. GORTON. I simply want to get the answer to that question and then 
I will accept it.
  Will the Senator from Alabama accept the unanimous-consent to modify 
the first-degree amendment?
  Mr. HEFLIN. Under the dram acts in some States, it covers straw men 
where you have straw people who go in and attempt to buy for someone 
else.
  This is sometimes true in regards to guns and there have been cases. 
For example, in a case a Virginia jury found Guns Unlimited of Norfolk 
liable for $100,000 in damages for selling a 9-millimeter MAC assault 
pistol to a 15-year-old under a straw purchaser. The teen used the gun 
on a shooting rampage at a private school in which he killed one 
teacher and wounded another. The award was made to the husband of the 
murdered teacher. That is the example there.
  The per se aspect of it in some States has it where with the 
Senator's language you would have to show that he knew or should have 
reasonably known the person receiving the alcohol was intoxicated and 
not of legal age; in other words, that he was not of legal age; that 
the burden to find out whether he was of legal age or was not of legal 
age should be placed upon the seller of alcoholic beverages.
  I am not sure that this covers enough on this thing. My opinion is 
that the Senator has offered to work on it. Maybe we could do some work 
in regard to Senator Lieberman and see if we could work out some 
language on this.
  I think overall what the Senator is trying to do is admirable and 
what we want to do, and I certainly agree with the Mothers Against 
Drunk Drivers that this sort of thing ought to be done. But I am just 
feeling that the language here is inadequate to accomplish the purpose, 
and then in some instances I am still worried about the situation that 
this may extend and go to filling station operators, go to tobacco 
salesmen, and others who are involved in such as this.
  If the Senator wants to withdraw his amendment--and we can get 
together later and work on it--I would be glad to do that. I think we 
could work something out on it because the concept is good, but I am 
fearful that the language does not accomplish it.
  The PRESIDING OFFICER (Mr. PRYOR). The Senator from Washington.
  Mr. GORTON. Mr. President, I am informed informally by the 
Parliamentarian that as the sponsor I have a right to modify the first-
degree amendment.
  I ask unanimous consent for it. I do not mean by doing it in that way 
to say that that necessarily means that the Senator from Alabama has to 
be for it. I would just like to perfect it under these sets of 
circumstances.
  I have listened to the objections of the Senator from Alabama. I do 
not think we can do this in a clearer fashion.
  What I would really like to do, because there are many important 
matters in this bill to be discussed, I would like to accept the 
second-degree amendment of the Senator from South Carolina; I would 
like to modify and have accepted the first-degree amendment of this 
Senator and go on with other subjects.
  In any event, I am prepared right now to have a vote and to accept 
the second-degree amendment of the Senator from South Carolina. I will 
then just exercise my right to modify the first-degree amendment.
  Mr. HEFLIN. Is it not right now the offer made with Senator Lieberman 
that we get together and work this thing out?
  Mr. GORTON. If there is something else we can do----
  Mr. HEFLIN. When I file the language, I would like to modify it in 
the manner in which it covers the intent of what we are trying to 
achieve here and not to be as broad as wherever it is. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. GORTON. There is not that much to object to. I said I am willing 
to accept the second-degree amendment of the Senator from South 
Carolina and then exercise my right to modify the first-degree 
amendment; that is, not to pass the first-degree amendment. I do not 
want to pass it.
  Mr. HEFLIN. I object to him modifying his first-degree amendment.
  The PRESIDING OFFICER. The Chair will state the offeror of the first-
degree amendment still retains his right to offer a modification to his 
amendment.
  Mr. GORTON. Does that right exist even after the second-degree 
amendment has been accepted?
  The PRESIDING OFFICER. Once the second-amendment is agreed to, the 
offeror would no longer have the right to modify.
  Mr. GORTON. Then 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. LIEBERMAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  Mr. HEFLIN. I object.
  The PRESIDING OFFICER. Objection is heard.
  The clerk will call the roll.
  The bill clerk continued 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.


                      Unanimous-Consent Agreement

  Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that the 
cloture vote scheduled to occur at 7 p.m. this evening occur at 6 p.m. 
and Senators have until the time of the vote to file second-degree 
amendments.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The vote will occur at 6 p.m.
  Who yields time or who seeks recognition?
  The Senator from Connecticut.


                    amendment no. 1938, as modified

  Mr. LIEBERMAN. Mr. President, as the initial offerer of the 
underlying amendment being considered, I send language to the desk to 
modify that amendment.
  The PRESIDING OFFICER. The Senator has that right and the amendment 
will be so modified.
  The amendment, as modified, is as follows:

       On page 8, line 20, after the period insert the following: 
     ``A civil action for negligent entrustment is not subject to 
     this Act and shall be governed by applicable State law. For 
     purposes of the preceding sentence, the term ``negligent 
     entrustment'' means causes of action under applicable State 
     law that subject product sellers to liability for their 
     failure to meet the applicable standard of care under State 
     law in selling a product to a person who, because of his 
     youth, inexperience, or otherwise, is likely to handle the 
     product in a manner to cause harm to himself or others.

  Mr. LIEBERMAN. I thank the Chair.
  The modification is exactly the one described by the Senator from 
Washington. It is to clarify the intention of the law.
  This modification was particularly suggested to us by the Mothers 
Against Drunk Driving group and obviously is aimed at clarifying the 
sections of the underlying bill that limit the liability of sellers of 
alcohol, and that they in no way affect State law which puts liability 
on the sellers of alcohol who act negligently.


                           Amendment No. 1940

  Mr. LIEBERMAN. Mr. President, if there is no further debate, I ask 
for the adoption of the second-degree amendment, which I believe is the 
first in order.
  Mr. HEFLIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. HEFLIN. I think the thing is not drafted properly, but maybe in 
the meantime we can do some work on it and see what we can come up 
with.
  I know that Senator Lieberman has offered to work and see what we can 
do, so I am not going to object at this time. I will let it go ahead. 
But I would like to see if we cannot come up with the result that was 
intended and that you want to accomplish by this. I have some real 
questions.
  I think it also opens up an area that is subject to judicial 
interpretation of what negligent entrustment is. I think this language 
restricts or, on the other hand, opens up the concept of negligent 
entrustment. But, anyway, at this time I do not have any objection.
  Mr. LIEBERMAN. Mr. President, I appreciate the consent of the Senator 
from Alabama. I look forward to working with him as the process goes on 
to see if we can further clarify this to his satisfaction.
  I would then restate my request to agree to the second-degree 
amendment offered by the Senator from South Carolina.
  The PRESIDING OFFICER. Is there further debate on the Hollings 
amendment, amendment No. 1940? If not, the question is on agreeing to 
the amendment.
  The amendment (No. 1940) was agreed to.
  Mr. HOLLINGS. Mr. President, I move to reconsider the vote by which 
the amendment was agreed to.
  Mr. LIEBERMAN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


              Amendment No. 1938, As Modified, As Amended

  Mr. LIEBERMAN. Mr. President, I would then ask for the adoption of 
the underlying amendment, as amended.
  The PRESIDING OFFICER. Is there further debate on the amendment 
offered by the Senator from Connecticut, amendment No. 1938, as 
modified and amended?
  If not, the question is on agreeing to the amendment, as modified, as 
amended.
  The amendment (No. 1938), as modified, as amended, was agreed to.
  Mr. LIEBERMAN. Mr. President, I move to reconsider the vote by which 
the amendment was agreed to.
  Mr. HOLLINGS. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. GORTON. Mr. President, 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. HEFLIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  Mr. LIEBERMAN. I object.
  The PRESIDING OFFICER. Objection is heard.
  The clerk will continue to call the roll.
  The bill clerk continued to call the roll.
  Mr. HEFLIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Is there objection?
  Mr. GORTON. I object.
  The PRESIDING OFFICER. Objection is heard.
  The clerk will continue to call the roll.
  The bill clerk continued to call the roll.
  Several Senators addressed the Chair.
  Mr. HEFLIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Several SENATORS addressed the Chair.
  The PRESIDING OFFICER. Does the Senator from Washington object?
  Mr. GORTON. No, the Senator from Washington seeks recognition.
  The PRESIDING OFFICER. The Senator from Alabama is recognized.
  Mr. HEFLIN. Mr. President, I do not want to speak long on this matter 
right here, but there was an interesting article by Robert Kuttner that 
appeared in the Washington Post on June 24, 1994. He says,

       According to promoters of ``reform,'' product liability 
     cases cost American business $100 billion a year. The actual 
     figure, according to the National Association of Insurance 
     Commissioners, is about $4 billion. That includes all 
     insurance premiums paid by business to cover possible 
     damages, all actual damages collected by injured consumers 
     and all legal fees.
       To put that figure in perspective, $4 billion is less than 
     what Americans spend annually on dog food. It is one-fifth of 
     one percent of retail sales. It is less than corporations 
     spend suing each other for commercial infringements.
       Supposedly, runaway juries are increasingly siding with 
     consumers. In fact, according to a new authoritative study by 
     Jury Verdict Research of Horsham, Pa., the proportion of 
     personal injury cases won by plaintiffs dropped from 63 
     percent in 1989 to 52 percent in 1992. The average damage 
     award has hardly changed.
       Supposedly, too, such cases are clogging the courts. In 
     reality, according to the Conference of Chief Justices (of 
     state courts), product liability suits are just three-tenths 
     of one percent of all civil cases.

  There have been those who try to say that America has 70 percent of 
the world's lawyers, but the fact is the United States has only 9 
percent of the world's lawyers.
  A handful of lawyers do reap large windfalls from a small number of 
spectacular damage awards. We might want to limit the percentage that 
lawyers can take as fees. But to achieve that reform, it is not 
necessary to undermine the citizen's right to collect damages for an 
injury he or she received.
  The contingent fee system has allowed people, who have not been 
otherwise able to recover, to have access to the civil justice system. 
I think this issue must be looked at very carefully. Quoting further 
from an article by Mr. Robert Kuttner, he says:

       Some of the most infamous injuries inflicted on consumers 
     were exposed and remedied mainly through lawsuits, not 
     regulatory action. These included the Dalkon Shield, a 
     contraceptive which rendered thousands of women infertile; 
     the Pinto's exploding gas tank; the high absorbency tampons 
     linked to toxic-shock syndrome; the damage to workers exposed 
     to asbestos, and innumerable lesser-known cases.
       Foes of regulation say the common law is superior to 
     government intervention. But, hypocritically, when juries 
     impose damage awards, the same critics want Congress to 
     change the rules--hence this bill.

  I ask unanimous consent this article by Robert Kuttner, appearing in 
the Washington Post of June 24, be printed in its entirety in the 
Record and I yield the floor.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                        Phony Litigation Crisis

                          (By Robert Kuttner)

       One of the epic corporate public relations ploys of our 
     time is now pending before the U.S. Senate. And it could well 
     succeed.
       This is the crusade by organized business to make it harder 
     for citizens to win damages when they are maimed by dangerous 
     products or by negligent doctors.
       This crusade calls itself ``product liability reform'' or 
     ``tort reform.'' Under the common law, a tort is a wrongful 
     act that allows a plaintiff to sue for damages.
       For more than a decade, America's biggest businesses have 
     painted a lurid picture of an overlawyered, overlitigated 
     economy. Supposedly, an explosion of lawsuits has rendered 
     American industry less competitive, has lined the pockets of 
     trial lawyers and has inflated health costs.
       Since the early 1980s the business lobbies have been 
     promoting legislation--this year's version is called the 
     ``Product Liability Fairness Act''--to make it harder for 
     people to collect damages. The highly technical bill would 
     preempt a number of long-standing principles of common law.
       But this supposed crisis in product-liability cases is 
     based on several trumped-up claims.
       According to promoters of ``reform,'' product liability 
     cases cost American business $100 billion a year. The actual 
     figure, according to the National Association of Insurance 
     Commissioners, is about $4 billion. That includes all 
     insurance premiums paid by business to cover possible 
     damages, all actual damages collected by injured consumers 
     and all legal fees.
       To put that figure in perspective, $4 billion is less than 
     what Americans spend annually on dog food. It is one-fifth of 
     one percent of retail sales. It is less than corporations 
     spend suing each other for commercial infringements. As for 
     medical malpractice, damage awards account for half of one 
     percent of U.S. health outlays.
       Supposedly, runaway juries are increasingly siding with 
     consumers. In fact, according to a new authoritative study by 
     Jury Verdict Research of Horsham, Pa., the proportion of 
     personal injury cases won by plaintiffs dropped from 63 
     percent in 1989 to 52 percent in 1992. The average damage 
     award has hardly changed.
       Supposedly, too, such cases are clogging the courts. In 
     reality, according to the Conference of Chief Justices (of 
     state courts), product liability suits are just three-
     tenths of one percent of all civil cases.
       Former vice president Dan Quayle is a highly visible 
     spokesman for this crusade. In his speech to the 1992 
     Republican National Convention, he railed against trial 
     lawyers, darkly insinuating that liberals and Democrats 
     supported consumer protection laws because they were 
     bankrolled by trial lawyers.
       In an overheated speech to the American Bar Association, 
     Quayle asked rhetorically whether America really needed ``70 
     percent of the world's lawyers.'' No, Dan, we don't. But the 
     fact is, the United States has 9 percent of the world's 
     lawyers.
       A handful of lawyers do reap large windfalls from a small 
     number of spectacular damage awards. We might want to limit 
     the percentage that lawyers can take as fees. But to achieve 
     that reform, it's not necessary to undermine the citizen's 
     right to collect damages.
       Proponents also argue that it's neither necessary nor fair 
     to expose industry to expensive litigation, since citizens 
     are already protected by regulation. Don't the Food and Drug 
     Administration and the Consumer Product Safety Commission 
     provide adequate seals of approval?
       Consumer regulation doubtless prevents a lot of injuries 
     and deaths. But regulatory agencies are not clairvoyant. And 
     the limitations on their budgets and powers are often the 
     result of lobbying by the same industries that oppose 
     consumer litigation.
       Some of the most infamous injuries inflicted on consumers 
     were exposed and remedied mainly through lawsuits, not 
     regulatory action. These included the Dalkon Shield, a 
     contraceptive which rendered thousands of women infertile; 
     the Pinto's exploding gas tank; the high absorbency tampons 
     linked to toxic-shock syndrome; the damage to workers exposed 
     to asbestos, and innumerable lesser-known cases. The crusade 
     to limit corporate liability is especially ill-timed, given 
     what we are belatedly learning about the tobacco companies.
       Foes of regulation say the common law is superior to 
     government intervention. But, hypocritically, when juries 
     impose damage awards, the same critics want Congress to 
     change the rules--hence this bill.
       The Senate is closely divided on this bill. A vote could 
     come as early as Tuesday. It's all too understandable why 
     large businesses would want to evade responsibility for the 
     injuries they inflict. Its harder to understand why a 
     majority of the Senate would go along.

  The PRESIDING OFFICER. Has the Senator from Alabama yielded the 
floor?
  Mr. HEFLIN. Yes.


                           Amendment No. 1941

 (Purpose: To regulate interstate commerce by providing for a uniform 
             product liability law, and for other purposes)

  Mr. GORTON. Mr. President, I send an amendment to the desk on behalf 
of Senators Lieberman and Feinstein and ask for its immediate 
consideration.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Washington [Mr. Gorton], for himself, Mr. 
     Lieberman and Mrs. Feinstein, proposes an amendment numbered 
     1941.

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

       On page 19, beginning with line 7, strike out through line 
     16 on page 20 and insert the following:
       (b) Limitation Concerning Certain Drugs and Medical 
     Devices.--
       (1) A manufacturer or product seller of a drug (as defined 
     in section 201(g)(1) of the Federal Food, Drug, and Cosmetic 
     Act; 21 U.S.C. 321(g)(1)) or medical device (as defined in 
     section 201(h) of the Federal Food, Drug, and Cosmetic Act; 
     21 U.S.C. 321(h)) which caused the claimant's harm has not 
     engaged in conduct manifesting conscious, flagrant 
     indifference to the safety of those persons who might be 
     harmed by the product, and shall not be subject to an award 
     of punitive damages pursuant to this section, where--
       (A) such drug or device was subject to pre-market approval 
     by the Food and Drug Administration pursuant to section 505 
     (as amended by the New Drug Amendments of 1962, P.L. 87-781), 
     506, 507, 512, or 515 of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 355, 356, 357, 360b, or 360e) or section 351 
     of the Public Health Service Act (42 U.S.C. 262) with respect 
     to the safety of the formulation or performance of the aspect 
     of such drug or device which caused the claimant's harm or 
     the adequacy of the packaging of labeling of such drug or 
     device, and such drug or device was actually approved by the 
     Food and Drug Administration; or
       (B) the drug or device is generally recognized as safe and 
     effective pursuant to conditions established by the Food and 
     Drug Administration and applicable regulations, including 
     packaging and labeling regulations.
       (2) The provisions of paragraph (1) shall not apply in any 
     case in which the claimant proves by a preponderance of 
     evidence that--
       (A)(i) the defendant, before or after pre-market approval 
     of a drug or device, failed to submit or misrepresented to 
     the Food and Drug Administration or any other agency or 
     official of the Federal government required information, 
     including required information regarding any death or other 
     adverse experience associated with use of the drug or device, 
     and (ii) the information that defendant failed to submit or 
     misrepresented is material and relevant to the performance of 
     such drug or device and is causally related to the harm which 
     the claimant allegedly suffered; or
       (B) the defendant made an illegal payment to an official of 
     the Food and Drug Administration for the purpose of either 
     securing or maintaining approval of such drug or device; or
       (C) the Food and Drug Administration has determined in a 
     formal administrative proceeding (by a final order not 
     subject to further review) or a court has determined in an 
     action brought by the United States (by a final judgment not 
     subject to further review) that the drug or device failed to 
     conform to conditions of the Food and Drug Administration for 
     approval (except for changes permitted without prior approval 
     under applicable law, including Food and Drug Administration 
     regulations), and such failure is causally related to the 
     harm which the claimant allegedly suffered.
       (3) The provisions of paragraph (1) shall not apply with 
     respect to a claim for punitive damages based on a defect in 
     manufacturing which causes the drug or device to depart from 
     its intended design.


                Amendment No. 1942 to Amendment No. 1941

 (Purpose: To regulate interstate commerce by providing for a uniform 
             product liability law, and for other purposes)

  Mr. ROCKEFELLER. Mr. President, on behalf of Senator Feinstein I send 
an amendment to the desk and ask for its immediate consideration.
  The PRESIDING OFFICER. Is the amendment in the second degree?
  Mr. ROCKEFELLER. That is correct.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from West Virginia [Mr. Rockefeller] for Mrs. 
     Feinstein, proposes an amendment numbered 1942 to amendment 
     No. 1941.

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

       Insert in the appropriate place:
       (a) Any corporation, or person who is a manager with 
     respect to a product, facility, equipment, or process, is 
     guilty of a criminal offense punishable by imprisonment for a 
     term not exceeding three years or by a fine not exceeding 
     twenty-five thousand dollars both ($25,000), or by both that 
     fine and imprisonment; but if the defendant is a corporation 
     the fine shall not exceed one million dollars ($1,000,000), 
     if that corporation or person does all of the following:
       (1) Has actual knowledge of a serious concealed danger that 
     is subject to the regulatory authority of a state or federal 
     agency and is associated with that product or a component of 
     that product or business practice.
       (2) Knowingly fails during the period ending 15 days after 
     the actual knowledge is acquired, or if there is imminent 
     risk of great bodily harm or death, immediately, to do both 
     of the following.
       (A) Inform the appropriate government agency in writing, 
     unless the corporation or manager has actual knowledge that 
     the division has been so informed.
       Where the concealed danger reported pursuant to this 
     paragraph is subject to the regulatory authority of an agency 
     other than the agency to which it was reported, it shall be 
     the responsibility of the agency which has received the 
     information, within 24 hours of receipt of the information, 
     to telephonically notify the appropriate government agency of 
     the hazard, and promptly forward any written notification 
     received.
       (B) Warn its affected employees in writing, unless the 
     corporation or manager has actual knowledge that the 
     employees have been so warned.
       The requirement for disclosure is not applicable if the 
     hazard is abated within the time prescribed for reporting, 
     unless the appropriate regulatory agency nonetheless requires 
     disclosure by regulation.
       Where the appropriate government agency was not notified, 
     but the corporation or manager reasonably and in good faith 
     believed that they were complying with the notification 
     requirements of this section by notifying another government 
     agency, as listed in paragraph (8), no penalties shall apply.
       (b) As used in this section:
       (1) ``Manager'' means a person having both of the 
     following:
       (A) Management authority in or as a business entity.
       (B) Significant responsibility for any aspect of a business 
     which includes actual authority for the safety of a product 
     or business practice or for the conduct of research or 
     testing in connection with a product or business practice.
       (2) ``Product'' means an article of trade or commerce or 
     other item of merchandise which is a tangible or an 
     intangible good, and includes services.
       (3) ``Actual knowledge,'' used with respect to a seriously 
     concealed danger, means has information that would convince a 
     reasonable person in the circumstances in which the manager 
     is situated that the serious concealed danger exists.
       (4) ``Serious concealed danger,'' used with respect to a 
     product or business practice, means that the normal or 
     reasonably foreseeable use of, or the exposure of an 
     individual to, the product or business practice creates a 
     substantial probability of death, great bodily harm, or 
     serious exposure to an individual, and the danger is not 
     readily apparent to an individual who is likely to be 
     exposed.
       (5) ``Great bodily harm'' means a significant or 
     substantial physical injury.
       (6) ``Serious exposure'' mans any exposure to a hazardous 
     substance, when the exposure occurs as a result of an 
     incident or exposure over time and to a degree or in an 
     amount sufficient to create a substantial probability that 
     death or great bodily harm in the future would result from 
     the exposure.
       (7) ``Warn its affected employees'' means give sufficient 
     description of the serious concealed danger to all 
     individuals working for or in the business entity who are 
     likely to be subject to the serious concealed danger in the 
     course of the work to make those individuals aware of that 
     danger.
       (8) ``Appropriate government agency'' means any state or 
     federal agency, including but not limited to those on the 
     following list, that has regulatory authority with respect to 
     the product or business practice and serious concealed 
     dangers of the sort discovered:
       (A) The U.S. Department of Health and Human Services.
       (B) The U.S. Department of Agriculture.
       (C) The U.S. Consumer Product Safety Commission.
       (D) The United States Food and Drug Administration.
       (E) The United States Environmental Protection Agency.
       (F) The National Highway Traffic Safety Administration.
       (G) The Federal Trade Commission.
       (H) The Nuclear Regulatory Commission.
       (I) The Federal Aviation Administration.
       (J) The Federal Mine Safety and Health Review Commission.
       (C) Notification received pursuant to and in compliance 
     with this section shall not be used against any manager in 
     any criminal case, except in a prosecution for perjury or for 
     giving a false statement.

  The PRESIDING OFFICER. The Senator from California is recognized.
  Mrs. FEINSTEIN. Mr. President, I would like to explain what the 
second-degree amendment does and then touch on the first-degree 
amendment and then also touch on the bill, if I may.
  What this amendment does is impose criminal liability on corporations 
and their managers for knowingly concealing serious dangers about 
consumer product defects from regulatory authorities. It would 
establish a criminal offense punishable by 3 years in prison and/or a 
$25,000 fine or up to $1 million for corporations.
  Second, it would require corporations to notify the appropriate 
Government agency of any serious concealed danger within 15 days of 
having knowledge of it.
  A classic example of how ineffective current laws are in deterring 
corporate crimes related to product safety is the now-infamous Ford 
Pinto case. I ask unanimous consent at the appropriate place to have 
printed in the Record the entire Ford Motor Co. internal memo entitled, 
``Fatalities Associated With Crash-Induced Fuel Leakage and Fires.''
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mrs. FEINSTEIN. Mr. President, the Pinto had a serious design defect. 
If the car was hit from behind by another car traveling 20 miles per 
hour or more, the gas tank would rupture. Ford Motor Co. knew of this 
defect as early as 1971. It had filmed crash tests showing the test 
dummy being bathed in gasoline.
  The company chose to conceal this defect because a coverup would save 
the company millions of dollars. Ford calculated that it would cost the 
company $11 per vehicle, or about $137 million, to recall and repair 
all of its defective Pinto's. If Ford did nothing, waiting for people 
to die or become injured, and then paid the necessary legal fees and 
settlements it estimated its costs at only $50 million. Ford based its 
decisions solely on cost, without respect for community values, the 
law, or human life.
  According to a 1985 report by a George Washington University 
professor, roughly two-thirds of America's 500 largest companies were 
involved to some extent in illegal activities over the prior 10 years. 
California has already taken a lead on this important issue. The 
legislation that is introduced here today is very similar to 
legislation now in place in California since 1990.


                           Amendment No. 1941

  Mrs. FEINSTEIN. If I may, on the first-degree amendment, Mr. 
President. There has been much confusion and alarm about whether 
section 203 could potentially immunize manufacturers of some products 
of the past and the future, such as DES, the Dalkon Shield, IUD's, 
silicone gel breast implants. This amendment's most important feature 
and would clarify that confusion by setting out more specifically the 
regulatory compliance required of drug and medical device manufacturers 
in order for the FDA defense to be available.
  First, it amends section 203 by setting out what is meant by 
premarket approval, citing the relevant FDA statutory provisions as 
improved by the new drug amendments in 1962, medical device amendments 
in 1976, and further improved by FDA regulations in 1985.
  Among other requirements, this revamped and rigorous process would 
require that the manufacturer demonstrate by substantial evidence that 
its product is both safe and effective, and to submit adverse reaction 
reports to the FDA within 15 days of the initial receipt of the 
information, and to report any significant increase in the frequency of 
such adverse reactions.
  Unlike the FDA, which approved DES, the current premarket approval 
process requires the FDA to determine affirmatively that the product is 
safe and effective, and can be marketed.
  Prior to 1962, the FDA only required that the manufacturer submit 
information on the safety of a product, and if the FDA did not 
otherwise notify the company, 60 days later they could proceed to the 
market.
  This bill makes it clear that manufacturers cannot sit back after 
approval, especially if their products are causing serious injury or 
death. They cannot act in disregard of the public health and then raise 
in court that they received FDA premarket approval as a defense. 
Rather, they must continuously report in a timely and complete way in 
order to receive the benefit of the FDA defense.
  Section 203, the FDA defense, as revised by this amendment, can be 
invoked only where the drug or device manufacturer abided by all the 
reporting requirements, submitted in a timely manner, any information 
about adverse reactions both before and after approval. And I stress 
that. Frankly, Mr. President, I would strongly support giving subpoena 
rights to the FDA in order to compel manufacturers to fulfill these 
requirements.
  Let me comment for a moment on the bill itself.
  I would like to read into the Record on behalf of California 
advocates of this product liability bill the following statement:

       The current unpredictable State-by-State system of product 
     liability laws is a problem for all of California citizens. 
     There are several reasons for this fact. First, most States 
     have no statutory law on key issues. The rules are constantly 
     changing through retroactive decisions made by judges. This 
     uncertainty of product liability rules makes future liability 
     risks difficult to predict and contributes to the high cost 
     of liability insurance and higher prices of products. 
     California consumers pay for the cost of these unreasonable 
     and unstable rules in other States.
       Second, when California manufacturers drop product lines or 
     close plants because of product liability problems in other 
     States, jobs are at risk for California workers.
       Third, California manufacturers whose products are sold 
     primarily in the United States are operating in a matrix of 
     51 sets of ever-changing and conflicting rules, and this puts 
     them at a disadvantage in competing with foreign 
     manufacturers. Their European and Australian counterparts do 
     not face the same confusion and uncertainty at home because 
     the European Economic Community and Australia have already 
     adopted a directive which implements uniform product 
     liability laws.

  So we are at a disadvantage competitively because of the unevenness 
of product liability laws throughout the United States.
  In order for a product liability statute to fully benefit California 
manufacturers and consumers, balanced product liability rules must 
exist on a uniform basis through the States.
  This bill imposes a 2-year statute of limitations from the time the 
injury and its cause are discovered for a plaintiff to bring a lawsuit. 
This is a year longer than that provided under California's statute of 
limitations. An injured person would have the opportunity to bring suit 
up to 2 years after they discover the injury or the illness, such as 
cancer, and the cause, such as asbestos.
  It would impose a 25-year statute of repose--an outer time limit--on 
litigation involving workplace capital goods.
  It would eliminate product seller's liability for a manufacturer's 
error unless the seller modified the product or provided additional 
warranties. Why should a seller for a boxed product be liable for that 
product when in fact it is the manufacturer that has put it together 
and boxed it?
  Fourth, it preserves a plaintiff's power to sue one defendant, 
theoretically the deep pocket, for the full amount of the economic 
damages but eliminates such joint and several liability for noneconomic 
damages. Therefore, one becomes responsible, according to one's degree 
of fault for the harm. This applies only to noneconomic damages.
  It would encourage settlements by alternative dispute resolution by 
penalizing parties that refuse to settle or negotiate and then do worse 
at trial. That helps, I believe, a plaintiff rather than hinders that 
plaintiff.
  It bars recovery of a plaintiff who is more than 50 percent 
responsible for causing the accident due to intoxication from alcohol 
or any drug.
  In my opinion, the above-mentioned provisions of this bill are 
helpful to California consumers and product users, as well as to those 
who, unfortunately, become disabled as a result of a faulty product.
  With reference to the FDA provisions, I must say, I will vote for 
this section. I will also vote for a motion to strike the entire 
section. It is clear to me that this section is not clear. I believe 
that the amendment that I have submitted clearly documents the 
responsibilities that a manufacturer would have to meet by clarifying 
what is meant by ``premarket approval,'' by citing relevant provisions 
of the Food, Drug and Cosmetic Act, and clarify those circumstances 
when a medical device or drug manufacturer would lose protection from 
punitive damages where that manufacturer fails to fulfill the relevant 
reporting requirements.
  In addition to clarification, I spoke earlier on our amendment, which 
adds a provision that withdraws any protection against punitive damages 
for any drug or device which the FDA has determined has failed to 
conform with the FDA's conditions or approval. And it narrows the scope 
of the protection by excluding actions based on manufacturing defects 
and assembly line error rather than defects in designs or warnings.
  It also excludes from the scope of the FDA defense provisions, drugs 
approved prior to the passage of the more rigorous premarket approval 
process for drugs and medical devices.
  Further, it clarifies that devices allowed on the market, because 
they were substantially equivalent to the devices that were on the 
market when Congress enacted medical device regulation in 1976, cannot 
be considered to have received premarket approval. This would clearly 
exclude the Dalkon shield, silicone gel breast implants, and super 
absorbency tampons from the scope of the protection.
  I urge adoption of these amendments.
  I thank you, Mr. President.
  I yield the floor.

                               Exhibit L

    Fatalities Associated With Crash Induced Fuel Leakage and Fires

                    (By E.S. Grush and C.S. Saunby)


                         purpose and background

       The NHTSA has issued Notice 2 of Docket 70-20 and Notice 1 
     of Docket 73-20, both regarding fuel system integrity. In 
     this study, information has been developed concerning two of 
     the issues raised in the Notices: the frequency of fire-
     related fatalities and the distribution and likelihood of 
     fuel spillage by impact direction and type.


                               conclusion

       The NHTSA estimate of 2000 to 3500 fatalities yearly in 
     fire-involved motor vehicle crashes appears to overstate the 
     seriousness of the fire problem. Examination of in-depth 
     accident data sources indicates that most fatalities in fire-
     accompanied crashes die from injuries not associated with the 
     fire itself. Thus the National Safety Council estimate of 600 
     to 700 fire deaths each year is probably more appropriate 
     than the higher NHTSA figure.
       The actual number of fuel leakage incidents is relatively 
     evenly distributed into four basic crash types: frontal, 
     side, rear, and rollover. However, the likelihood of a given 
     crash resulting in fuel spillage is much higher for rear 
     impacts (26 percent with spillage in the sample studied) than 
     for other crash types, such as frontals (3.5 percent 
     spillage).
       The cost of implementing the rollover portion of the 
     amended Standard has been calculated to be almost three times 
     the expected benefit, even using very favorable benefit 
     assumptions. The yearly benefits of compliance were estimated 
     at just under $50 million, with an associated customer cost 
     of $137 million. Analyses of other portions of the proposed 
     regulation would also be expected to yield poor benefit-to-
     cost ratios.

 TABLE 1.--DISTRIBUTION AND LIKELIHOOD BY IMPACT TYPE OF IMPACT-INDUCED 
  FUEL SPILLAGE FOR PASSENGER CARS IN RURAL INJURY-PRODUCING ACCIDENTS  
------------------------------------------------------------------------
                                         Number  Percent   Likelihood of
           Impact direction             of fuel  of fuel   fuel leak by 
                                         leaks    leaks      percent    
------------------------------------------------------------------------
Front.................................       33     25.8      35/933=3.5
Side, front half of car...............        8      6.2       8/169=4.7
Side, rear half of car................       23     18.0     23/160=14.8
Rear..................................       37     28.9     37/140=26.4
Rollover..............................       27     21.1     27/333=8.1 
                                       ---------------------------------
    Total.............................      128    100.0    128/1735=7.3
------------------------------------------------------------------------
Source.--Calspan report No. VJ-2839-K, dated April, 1970.               
Note.--Accident cases in this file are significantly biased toward high 
  severity collisions; they are all rural, and to qualify for filing, an
  injury had to occur. But injuries are not nearly so frequent in rear- 
  end crashes, in general. As a result, the proportion of fuel leaks in 
  rear-end crashes reported here, 29%, cannot be the nationwide average.
  Rather, in 29% of rural rear-end collisions sufficiently severe to    
  cause an injury, fuel leaks occur.                                    

       The proportion of fuel leaks which occur in rollovers is 
     indicated in Table 1 to be slightly less than one-fourth.\1\ 
     If this proposition is applied to the fire numbers 
     themselves, the consequences of fire in rollovers can be 
     estimated as 180 deaths, 180 non-fatal injuries, and 2100 
     other fire crashes. These values are predicated upon two 
     postulations: rollover fuel leaks result in fire just as 
     often as other fuel leaks, and rollover fires are just as 
     likely to result in burns as other fires.
---------------------------------------------------------------------------
     \1\That is, the 21.1% associated with rollovers from Table 2. 
     In this and subsequent calculations, figures have been 
     rounded upward. In that way, not only are the statistical 
     assumptions in a conservative direction, but also the 
     arithmetic.
---------------------------------------------------------------------------


benefits and costs relating to fuel leakage assocaited with the static 
                   rollover test portion of fmvss 208

     Benefits:
       Savings--180 burn deaths, 180 serious burn injuries, 2100 
     burned vehicles.
       Unit Cost--$200,000 per death, $67,000 per injury, $700 per 
     vehicle.
       Total Benefit--180x ($200,000) +180x ($76,000) +2100x 
     ($700) = $49.5 million.
     Costs:
       Sales--11 million cars, 1.5 million light trucks.
       Unit Cost--$11 per car, $11 per truck.
       Total Cost--11,000,000x ($11) +1,500,000x ($11) = $137 
     million.
       This analysis assumes that all these fires and the 
     resultant casualties can be eliminated entirely through 
     compliance with the rollover requirement. In addition, it is 
     assumed that vehicle modifications designed to ensure 
     compliance with non-rollover portions of the Standard will 
     not reduce at all the number of rollover fires. The extent to 
     which either of these assumptions is not completely accurate 
     represents a measure of the extent to which benefits derived 
     here are overestimates of the true values.
       To compare the benefits of eliminating the consequences of 
     these rollover fires with the requisite costs, the benefits 
     and costs must be expressed in terms of some common measure. 
     The measure typically chosen is dollars; this requires, then, 
     converting the casualty losses to this metric. The casualty 
     to dollars conversion factors used in this study were the 
     societal cost values prepared by the NHTSA (6). These values 
     are generally higher than similarly-defined costs from other 
     sources, and their use does not signify that Ford accepts or 
     concurs in the values. Rather, the NHTSA figures are used 
     only to be consistent with the attempt not to understate the 
     relevant benefits.
       The NHTSA has calculated a value of $200,000 for each 
     fatality. While the major portion of this amount relates to 
     lost future wages, the total also includes some consideration 
     for property damage. The NHTSA average loss for all injuries 
     was about $7,000. Burn injuries which do occur tend to be 
     quite serious, however, as discussed above. Thus a higher 
     value of $67,000, which is the NHTSA estimate of partial 
     disability injuries, was used for each of the 180 non-fatal 
     burn injuries. The $700 property damage per vehicle is the 
     NHTSA estimate of vehicle property damage costs in non-
     disabling injury crashes.


                                 costs

       The Retail Price Equivalent (the customer sticker price 
     with no provision for Ford profit) of vehicle modifications 
     necessary to assure compliance with the static rollover 
     portion of the proposed Standard has been determined by Ford 
     to be an average of $11 per passenger car and $11 per light 
     truck. While these are Ford costs, they have been applied 
     across the industry in this analysis. Total yearly sales 
     estimates of 11 million passenger cars and 1.5 million light 
     trucks (under 6,000 lbs GVW) were used in conjunction with 
     the unit cost determinations.


                      benefit and cost comparison

       The total benefit is shown in Table 3 to be just under $50 
     million, while the associated cost is $137 million. Thus the 
     cost is almost three times the benefits, even using a number 
     of highly favorable benefit assumptions. As better estimates 
     of the parameters used in the benefit analysis become 
     available, they could be inserted into the general analysis 
     framework. It does not appear likely, however, that such 
     alternate estimates could lead to the substantial benefit 
     estimate increase which would be required to make compliance 
     with the rollover requirement cost effective.


               benefits and costs for other impact modes

       The analysis discussed above concerns only rollover 
     consequences and costs. Similar analysis for other impact 
     modes would be expected to yield comparable results, with the 
     implementation costs far outweighing the expected benefits.
     E.S. Grush,
       Impact Factors.
     C.S. Saunby,
       Impact Factors.
       Concurred By:
       J.D. Hromi, Principal Staff Engineer.
       R.B. MacLean, Impact Factors Manager.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Mr. GORTON. Mr. President, the distinguished Senator from California 
has eloquently explained the rationale behind her second-degree 
amendment. This Senator intends to support it. I would like to speak 
briefly on the first-degree amendment and the general subject matter of 
the so-called FDA events.
  The Feinstein-Lieberman amendment--that is to say, the underlying 
first-degree amendment here--clarifies exactly what is meant by 
premarket approval. The amendment adds language specifically to exclude 
from the scope of section 203(b) drugs such as DES that were allowed on 
the market before the passage of the new drug amendments of 1962. The 
amendment also makes clear that class 3 medical devices that are 
allowed on the market because they are substantially equivalent to the 
devices that were on the market when Congress enacted the medical 
device regulation in 1976 cannot be considered to have received 
premarket approval.
  The Feinstein-Lieberman amendment clearly excludes the DES, Dalkon 
shield, silicon gel breast implants, and super absorbency tampons from 
the scope of section 203(b). The Feinstein-Lieberman amendment further 
clarifies that a manufacturer will remove any protection against 
punitive damages if the manufacturer fails to submit information 
required by the FDA, and that information is material and relevant to 
the performance of the drug or device and causally related to the 
claimant's harm. This change makes absolutely clear that there is no 
requirement for claimants to show that a manufacturer actually knew it 
should have supplied the information to the FDA.
  The Feinstein-Lieberman amendment also adds a provision that 
withdraws any protection against punitive damages for any drug or 
device for which the FDA has determined that the drug or device failed 
to conform with FDA conditions for approval.
  Finally, the Feinstein-Lieberman amendment narrows the scope of 
section 203(b) to exclude actions based on manufacturing defects rather 
than defects in designs or warnings. This change conforms to the scope 
of section 203(b) to the types of issues considered by FDA in approving 
a new drug for service.
  In other words, Mr. President, these amendments made clear many of 
the objections which have been raised on the emotional level to this 
bill which were not intended to be covered by this bill and now are 
explicitly excluded from it by the Feinstein-Lieberman amendment.
  I think it is very, very important to make a number of points about 
the overall bill. S. 687 does not change any of the bases for 
compensatory liabilities that exist under current law. Under S. 687 
existing State law continues to define whether a drug or medical device 
is defectively designed, defectively manufactured, or has sufficient 
warnings. If the manufacturer of a drug or medical device can be 
successfully sued today, it can be successfully sued after the 
enactment of S. 687.
  S. 687 does not affect recovery of noneconomic damages like pain and 
suffering in the vast majority of drug and medical device product 
liability cases. In that vast majority only one entity, the 
manufacturer, was allegedly responsible for the claimant's harm and 
only one entity is sued. When the judgment is against only one 
defendant and only one defendant is responsible for causing the harm, 
joint and several liability as a concept is inapplicable and 
irrelevant.
  S. 687's punitive damages provisions do not shield manufacturers of 
products that did not actually receive formal FDA premarket approval 
unless the product was generally recognized as safe and effective.
  S. 687 does not provide any punitive damage protection to 
manufacturers who do not submit required information to the FDA where 
such information was relevant and material to the claimant's harm--
products, as I have already said, which allegedly withheld information, 
DES, Dalkon shield, silicon breast implant, Bjork-Shiley heart valve, 
CR catheters, Copper-7 IUD.
  Moreover, S. 687 does not allow manufacturers to sit back after 
approval even when their products are causing serious injury or death. 
FDA regulations require medical device manufacturers to report any 
death or serious injury within 15 working days and drug manufacturers 
to report any death or serious, unexpected, and adverse reactions 
within 15 working days. And in order to continue to qualify for the 
defense against punitive damages, manufacturers must continue to adhere 
to FDA requirements to supply this information.
  But, fundamentally, when we get beyond these details, the real 
question here is whether or not S. 687 will enhance the health of the 
American people, male and female combined, or undercut particularly 
with respect to the FDA defense. It is the position of those of us who 
are sponsors of this bill that it will clearly enhance the health of 
the American people because it will encourage in a way in which it has 
discouraged research and development of new and improved drugs, medical 
devices, and other forms of treatment.
  Only if we were to adopt the proposition that medical science has 
reached its ultimate and final goal that there is nothing more to be 
discovered would it be appropriate to continue the current status of 
the law. The current status of the law may give to a tiny handful of 
plaintiffs--and not at all, incidentally, to their lawyers--windfall 
verdicts, lottery-type verdicts of huge amounts of money for punitive 
damages to that tiny handful. But a continuation of the present state 
of the law will penalize untold thousands and millions of people who 
will not benefit from the development of new drugs and new devices 
because the developers and researchers simply do not believe it 
worthwhile to subject themselves to the lottery of our present court 
system.
  So in this case, a vote for the FDA exemption for the bill is a vote 
for a continued development in the health and protection of the 
American people.
  Mr. LIEBERMAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. LIEBERMAN. Mr. President, I thank the Chair.
  I rise to support both the second-degree amendment offered by my 
friend and colleague from California and the first-degree amendment 
which she and I have proposed together.
  These are both attempts to clarify and, if I may say so, reassure 
those who may be concerned about the intention or in this case more 
likely the impact the various sections of this underlying bill, and 
particularly section 203 which makes clear that manufacturers of drugs 
and medical devices who have their products go through the full FDA 
premarket approval--that means they have to be approved by FDA before 
they can go out on the market and be sold--or whose products are 
generally recognized as safe and effective.
  That is not just general language. That is specific from the statute, 
and it has a particular and rather precise and demanding meaning. In 
fact, I believe that not even aspirin at this point has formally been 
classified under the statute as generally recognized as safe and 
effective.
  So it is a tough standard. Those who have passed those hurdles will 
not be held to have engaged in conscious, flagrant indifference to 
public safety which is the standard in the bill for not being liable 
for punitive damages. To me, this is obvious and self-evident--that, if 
you go through the entire FDA process to get a drug or a medical device 
approved, you cannot be guilty of conscious, flagrant indifference to 
public safety.
  It is possible that there still may be negligence, but not negligence 
deserving of punishment, punitive damages; and that is what section 203 
will protect--not only the manufacturers of medical devices and of 
drugs, which we depend on, as the Senator from Washington has made 
clear, for improving health, but it will protect the rest of us who 
pay--let us not kid ourselves--the costs of these product liability 
settlements and verdicts in increased costs of the products we buy.
  I know there is a lot of concern about the impact of 203, this FDA 
provision, and I understand the sincerity of the concern. But I do 
think two things: One is that most of it, respectfully, does not relate 
to the literal wording of section 203 of the underlying bill. And, two, 
in the amendment that I have the privilege to cosponsor with the 
Senator from California, there is clarification. There is, in some 
cases, modification to make it clear to people who are concerned about 
cases such as the Dalkon Shield and the breast implants that this 
provision 203, the superabsorbency of tampons--this provision in 203 
will not prohibit and would not have prohibited lawsuits, claims, and 
recovery, because those products would not fall within the rather 
strict requirements of this provision.
  Mr. President, in evaluating section 203(b) and whether it is 
proconsumer or not, I think it is important to remember or to point out 
what I suppose is obvious, but what we sometimes take for granted, 
which is that drugs and medical devices are intended to heal us or 
improve the standard of living and the quality of life of a person with 
a disease or medical condition. New drugs and medical devices present 
tremendous benefits for us. In fact, some of the most remarkable, 
miraculous discoveries of our age have to do with drugs that have 
limited or cured illness, and medical devices that have allowed people 
to continue to live who would have either been severely constricted in 
their life or died at an earlier time.
  The fact is, though, that new drugs and devices also do carry some 
degree of risk. Many are dangerous if taken in the wrong quantities, 
for instance, or at the wrong time. Drugs and devices that are 
thoroughly tested in clinical trials may have problems that do not 
serve us in truly detectable numbers until they have been put on the 
market. So to weigh those risks from the benefits availability from a 
new treatment, Congress established the Food and Drug Administration 
and gave it the responsibility of attempting to strike that balance, 
based on available scientific evidence.
  The FDA approval process involves very difficult scientific 
judgments. In fact, the length of the process--an average of 9 years--
for new drugs, reflects the seriousness of these decisions.
  Mr. President, I want to give you an example of the life-saving, 
life-enhancing benefits of these products. In doing so, I want to point 
out that lives and livelihoods are at stake when a manufacturer, or the 
FDA, denies patients access to potentially beneficial life-saving or 
life-enhancing treatments--in the case of a manufacturer, by refusing 
to produce something that will be good for people. At a recent hearing 
of the Governmental Affairs Subcommittee that I am privileged to chair, 
Mark Reily of Houston, father of a 9-year-old boy with hydrocephalus--
water on the brain, as we know it--testified. Mark Reily's son Thomas 
was with him, an adorable 9-year-old, and he is alive today, his father 
testified, because of a small rubber shunt that has been placed in his 
head, allowing the fluid to drain out of his brain into his stomach. 
Without that shunt, Thomas Reily would slip into a coma and probably 
die. His father, Mark, came before the subcommittee because he learned 
that fear of product liability claims has led the supplier of the 
rubber that goes into that shunt to decide to stop selling the rubber 
for use in medical implants.
  Some of the opponents of S. 687, having heard of this case, have said 
that some people may have a reaction to the rubber used in the shunts. 
Of course, that is not surprising because there are lots of people 
around the country who have allergies or other sensitivities to any 
specific products. But the point here is, in striking a balance, that 
simply because some people may have a reaction to these shunts, does 
not mean the product is unsafe or defective when compared with its 
benefits. I am sure that the vast majority of parents of hydrocephalic 
children would be willing to take the risk that there might be some 
reaction to the rubber in the shunt in return for the ability of their 
child to live a normal life. That is the type of cost and benefit 
analysis that we have established the FDA to perform.
  Unfortunately, the costs imposed on manufacturers are not evenhanded. 
A manufacturer cannot get sued, for example, if it fails to invest in 
the development of a new AIDS vaccine. But the people who might have 
been saved if that manufacturer had worked to develop that vaccine have 
lost as surely as if they had been given a vaccine that did not work.
  So what I am saying is that our liability system overemphasizes costs 
of injury, as constructed, but underemphasizes the benefits of new 
treatments, and it is to strike a balance to lessen the bias against 
developing new cures and treatments. And section 203(b) tells 
manufacturers that if you go through this regulatory process in good 
faith and comply with all of the FDA's rules, you are not going to be 
deemed to have engaged in a conscious, flagrant indifference to safety, 
and therefore you are not going to be subject to punitive damages. If 
there is negligence, you are still going to be subject to paying any 
out-of-pocket costs, health care, lost wages, et cetera, et cetera, and 
you will be subject to paying the relatively unlimited element of 
noneconomic damages. That is what a jury, for instance, would determine 
is the pain and suffering caused by your negligence. So you are not 
going to get away scot-free. But at least for going through this 9-year 
process, you should be saved from punitive damage.
  Mr. President, last October the Rand Institute for Civil Justice 
released a study of product liability and the economic impact of 
pharmaceuticals and medical devices in our current law. They similarly 
recommended in that study that FDA compliance be a complete defense to 
product liability actions.
  I think the Rand study, which is an independent study, is 
particularly relevant to the debate today because its findings directly 
respond to some of the concerns of the opponents of section 203(b).
  Some of the opponents argue that 203(b) should be stricken because 
punitive damages are essential to ensuring that drugs and medical 
devices are safely designed and adequately tested.
  But Rand concluded that ``liability induced changes in the chemical 
compositions of drugs are likely to be the exception, not the rule'' 
and ``It is doubtful that product liability often leads firms to test 
drugs or extensively regulated devices more than already required by 
the FDA * * *.''
  Second, those who are concerned about section 203, the FDA provision, 
deny that product liability has any effect on the development of 
beneficial new drugs and treatments.
  However, Rand concluded, ``liability is likely to deter development 
efforts for socially valuable products whose profit potential is viewed 
as more limited.'' That is in some of the cases, and two examples they 
give are contraceptives and vaccines. That is where the profit 
potential may be less. When comparing that to the risk of liability 
lawsuits, they decide not to go ahead.
  Then, third, some of the opponents, those who are concerned about 
this section 203 argue that the reason defective drugs or devices are 
sometimes put on the market is that FDA is too lax in its approval 
process. But here again Rand concluded that ``for drugs and extensively 
regulated devices, it seems that safety shortfalls are most often 
attributable to failure to comply with FDA regulations rather than 
inefficiently low FDA safety standards.''
  (Mrs. BOXER assumed the chair.)
  Mr. LIEBERMAN. Madam President, the requirement of actual approval 
under a premarket approval system excludes many products, and I do want 
to stress here, for example, that DES and all other drugs that went on 
the market prior to 1962 did not receive actual approval by the FDA. 
Therefore, as the amendment which the Senator from California and I 
have introduced makes clear, lawsuits related to DES will not be 
affected at all by this legislation.
  Likewise, Dalkon shield and silicone gel breast inplants first went 
on the market prior to enactment of medical device regulation in 1976. 
Because they were already on the market, they were exempt from that new 
law unless and until FDA took action to require demonstration of safety 
and efficacy.
  Similarly, premarket approval under the medical device laws is only 
required for class 3 medical devices that are not exempted. Class 1 and 
2 medical devices do not receive premarket approval prior to marketing.
  Put plainly, DES, Dalkon shield, silicone gel breast implants, and 
super absorbency tampons are not covered and, therefore, not affected 
by section 203(b). I repeat, the rights of parties injured by any of 
these devices and treatments are not limited one iota by this bill.
  Madam President, the underlying amendment that the Senator from 
California and I put in is meant to clarify all of this. We have added, 
for instance, a provision that makes it clear by narrowing the scope of 
section 302(b) to exclude actions based on manufacturing defects rather 
than defects in design or warnings. That conforms to the scope of 
section 203(b) to the types of issues considered by FDA in approving a 
new drug or a device.
  The amendment in the second degree offered by the senior Senator from 
California I think similarly acts to reassure people about what will 
happen, hereby adopting in substantial part on a national level a law 
that is in effect in California. It says that those who are responsible 
for concealing a known product defect are subject to criminal 
penalties. Someone who has actual knowledge of a serious concealed 
danger that is subject to the regulatory authority of the FDA or FAA, 
which are the two agencies covered by section 203 and associated with 
that product or a component of that product or business practice, is 
subject to substantial criminal penalties, as they ought to be.
  So, Madam President, I state, in conclusion, that 203(b) to me seems 
fair. In fact, it seems self-evident. It will not deny rights to sue to 
anyone, most assuredly not those concerned about some of the most 
controversial and discussed claims that I have mentioned, such as the 
DES and Dalkon shield.
  But even for everything else, even for drugs that do get approved by 
FDA, there is no limitation on the right to sue for economic damages. 
There is no limitation on the right to sue for pain and suffering. The 
only limitation is to ask for damages that are essentially punishment, 
and those are damages that too often escalate the cost of litigation, 
that force manufacturers to settle rather than going to trial, and that 
often force manufacturers not to begin to develop drugs or medical 
devices in the first place that we and our families want and need for 
our well-being.
  As Mark Reily wants with his 9-year-old son, Tom, from Houston, the 
suppliers of raw materials for the shunt in Tom Reily's heart, for 
defibrilators that keep people alive, pacemakers, for jaw implants, for 
hip replacements, for the whole range of miraculous developments of our 
age, the raw material suppliers have told the manufacturers after 2 
more years, we cannot afford to give you this stuff; we do not make 
enough money on it to justify what it costs us.
  Du Pont has supplied a nickel's worth of Teflon for a jaw implant, 
supplied it according to the specifications of the manufacturer. A lot 
of suits were filed by people who felt that that jaw implant was 
negligently put together. A lot of people sued du Pont because it is 
the so-called deep pocket. They spent by their statement to our 
subcommittee $8 million a year for the last 3 years, won every one but 
1 case out of 250. But it is because of that relating $24 million to a 
nickel that they made for every piece of Teflon in that jaw implant 
that they simply said in the exercise of reasonable judgment we cannot 
afford to do this anymore.
  I could tell more and more stories. One woman who heads a medical 
device company losing the supply of material. I believe in that case it 
was a heart valve, which has a polyester fabric around it that is used 
that keeps so many people alive these days, again notified that the 
supplier no longer will supply the polyester fabric. She went to look 
abroad and found 15 manufacturers of polyester fabric willing to sell 
her until they found out that this was going to be on the market of 
America and, therefore, subject to American product liability law, and 
every one of them said they will do it.
  So, we all have visions in our mind when we think of the change 
involved here, and I say this respectfully, but the vision in my mind 
is of a 9-year-old Thomas Reily who, as his dad says, wants to make 
sure when this rubberized shunt wears out and it is time to replace it 
that there is a material supplier who will have supplied that small 
piece of rubber to the manufacturer of the shunt to keep 9-year-old 
Thomas alive.
  I hope that our colleagues will look clearly at all sides of what is 
involved here, and I hope that they will accept the underlying 
amendment in the second degree as matters of reassurance of the 
intention and the effect of this bill. I think it is really good for 
consumers and most assuredly good for public health.
  I thank the Chair and I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. Thank you, Madam President.
  I know my colleague from North Dakota is standing here and I am going 
to be relatively brief.
  Madam President, it has been kind of an interesting experience for me 
because I do not like to vote against cloture.
  I do not think I have voted against cloture--probably very few times 
have I voted against cloture since I have been here in the Senate.
  I made it clear to all groups, organizations, and people that have 
been involved in this issue that I simply, on substance, respectfully 
disagree with some of my colleagues, my colleagues from West Virginia 
and Connecticut. But the issue for me was more on the cloture vote. So 
what I ended up having to do, so many phone calls were coming in, was 
just simply to say to people, ``Just don't call. I mean, just please 
step back from me and let me make this decision within myself,'' which 
I think is the way we ultimately should make that decision.
  On the one hand, you listen to all sorts of people. You are not 
arrogant, especially to people from your own State, but ultimately you 
have to decide what is the right vote, the right thing to do.
  Madam President, I guess that what I have done and will continue to 
do in the Senate is set a very stringent test on these cloture votes. I 
will not vote against cloture unless I believe that the particular 
proposal will have a truly egregious effect on people, on people's 
lives.
  I have reached a conclusion that this product liability reform will 
do so. I feel, in all due respect to my colleagues, that one of the 
only access points we have for corporate accountability in this 
country, given, in part, the history of the 1980's, is that citizens, 
ordinary people, consumers, can seek redress of grievances in the 
court. I really think it is one of the very few access points we have.
  Second, I really feel like this ``reform''--and put that in quotes; 
and it is just a profound and honest disagreement with colleagues--ends 
up sticking it to victims. I really think it is very bad for consumers. 
I think this bill is profoundly mistaken and that the small percentage 
of people who are able to go to the courts really in many ways have 
less representation.
  Finally, on the preemption of States, I just think this legislation 
puts a national cap on safety.
  And so, I reach very different conclusions from my colleagues. What I 
have really been focusing on more is this cloture vote. I just do not 
like to see people over and over and over again voting against cloture. 
I do not like the filibuster. I think, therefore, all of us have to 
have a very stringent test that has to be met when we vote on this. 
Then I think we have to be accountable for our votes.
  Very few times have I voted against cloture. I doubt whether there 
will be very many times I will in the future. But on this particular 
reform initiative, I have decided today--I said to Judge Heflin earlier 
today that I finally decided that I was going to vote against cloture. 
I did on this piece of legislation before. We did not even have any 
debate at all. I think it is important we have this debate.
  I was seriously considering not voting against cloture, but I have 
heard the debate. I have heard what my colleagues have had to say. And 
to my own mind, this particular reform would have really serious 
negative effects on people that I feel it is my responsibility to 
represent. That is my honest view.
  We need more corporate accountability, not less. We need more support 
for victims, not less. And we certainly do not need to have some kind 
of a national cap on States which preempts States from moving forward 
with even stronger measures.
  So I am going to vote against cloture.
  I yield the floor.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Madam President, this is an interesting debate. And, as 
is often the case with very significant issues, it seems to me the 
facts would lead to a conclusion somewhere in the middle of the various 
positions taken in this Chamber.
  I would like to briefly describe my thoughts about some of these 
matters.
  In the Commerce Committee, on which I serve, we reported out this 
piece of legislation last fall. I voted to report it out of the 
Commerce Committee and said at the time to my friend, Senator 
Rockefeller, that I wanted to advance this general issue, although I 
had some difficulty with the bill. I said that I had great difficulty 
with section 203 of the bill, which sets up a test with respect to 
punitive damage awards and FDA and FAA approval. I said I would vote to 
advance this bill out of the Commerce Committee but, unless we are able 
to resolve section 203, I will not vote to advance it further. I said 
that I would vote against cloture, and would offer an amendment, to 
strike section 203. Well, that is where we are.
  The fact is, Madam President, we have too many lawyers and too many 
lawsuits in this country. We have folks around here who say, ``Well, 
now, this is just people exercising their rights.''
  Yes, people ought to be able to exercise their rights. But the fact 
is, we are training too many lawyers and we are choking this country 
full of lawsuits.
  But while we, I think, should find ways to create alternative dispute 
resolutions and back away from some of these suits if we can, I do not 
think we ought to do anything, as the Senator from Minnesota said, that 
would injure the rights of those in this country who are aggrieved and 
who want to seek redress in the courts. They have a constitutional 
right to do that, and we ought to do nothing in this Chamber to injure 
that right.
  I would like to speak just for a moment about the section of the bill 
that gives me great difficulty, section 203. Section 203 of this bill 
sets up a new test. It says that those who are marketing pharmaceutical 
drugs or medical devices, if they get approval for their drug or their 
device from the FDA, then they are shielded from punitive damage 
awards.
  What this still does is it sets up a shield and it says, if you are a 
manufacturer and you got yourself FDA approval, you are set; you are 
not going to get hit with a punitive damage suit, because we have 
created another step that someone is going to have to jump up on top of 
in order to seek punitive damages. They have done the same with the FAA 
approval.
  Let me stay with the FDA issue just for a few minutes.
  Examples are legion of products and medical devices approved by the 
FDA that have come to the market with approval and are later found to 
be very, very troublesome and ultimately recalled from the market.
  Some of those examples have been mentioned on the floor of the 
Senate. I could mention others. The silicone breast implants, the 
Copper-7 IUD's, Albuteral, the Bjork-Shiley heart valve, Zomax, Versed, 
Accutane. We will have a debate about a number of these things in 
greater detail.
  But my point is simply that for someone to say that the FDA is 
capable of, by approving a drug, creating a test that says this drug 
will cause no harm, they do not understand, apparently, what is going 
on at the FDA.
  In fact, the FDA has indicated in published reports that they do not 
have the capability of determining whether someone is submitting 
information to them that is complete, that is accurate, that contains 
all of the information. They do not have that capability.
  I just think it makes no sense at all in this piece of legislation to 
create a new test, a new barrier that says to someone out there who has 
been injured, ``We are going to build a little higher fence for you to 
get over at some point in order to seek to redress your rights.''
  For that reason, I am going to offer, with my colleague, Senator 
Moseley-Braun, an amendment that is very simple. It strikes the FDA and 
FAA defense provisions in section 203. If that amendment is successful, 
I intend to vote for this bill. Why? Because I think there is merit in 
this legislation. There is not merit in this legislation if it advances 
with this section in it, and I will not support it.
  Now, I want to say in a gentle way that the amendment we are now 
debating should not be construed by anyone to improve this section, 
section 203, sufficient that they think that they have corrected all 
the mistakes. It does not and it will not.
  And if this amendment is agreed to, and if we are not able to strip 
section 203, I do not intend to vote for this legislation. And until we 
resolve this section, I do not intend to vote to invoke cloture.
  We will, I expect, have a lengthy debate in the remaining hours today 
and perhaps in the morning, about this specific section, why it is 
there, what exactly does it do. Some will assert that it does nowhere 
near the harm that I and others would allege. We would assert that this 
is a terrible, terrible way to legislate, by establishing, just ad 
hominem today, that the FDA is now capable of deciding that this drug 
is fine and is going to cause no ill effects, and they have seen all 
the information and they can assert--sufficient to abrogate the 
potential future rights of some consumer out there--that they have done 
all the investigative work necessary.
  Do you know the FDA does not even have subpoena power? I can describe 
who does. It is a long list but the FDA does not. This is an 
organization that is not capable--nowhere near capable of doing the 
investigative research to be capable of saying to us, yes, we have done 
all there is to do and we can assert this medical device, this drug 
meets all the tests. And we are not going to find out later it does 
not.
  When those who are opposed to the position Senator Moseley-Braun and 
I are taking on this amendment--when those who are opposed cite all of 
these examples--and they do repeatedly--silicone breast implants, or 
DES, the list goes on and on--they make our case. All of them at one 
time or another were approved by the FDA--all of them. It simply 
demonstrates again that this is not the agency we should establish as 
being capable of setting up this standard. Or, in effect an agency in 
which we will create a shield beyond which it is going to make it more 
difficult for a consumer who was injured to move.
  So we will, I think in the next hour or so, or tomorrow morning--when 
appropriate--offer our amendment to strike section 203. But I did want 
to alert my colleagues that no one should believe if we vote for the 
underlying amendment, we have done anything to improve or anything to 
polish, in a significant way, the problems that exist in this section 
of the bill. We have not. We can pass it right now by voice vote, I 
guess--if that was the course on the Senate floor--but it would not 
mean anything as far as I am concerned. It does nothing to resolve the 
abiding problems that exist as long as this section is in the law.
  I think it is very important that we have a full and complete debate 
on what does this section mean. What does it mean to people out there 
who in the future may find injury to themselves or to those they love 
as a result of using a medical device or a drug? And then they try to 
seek redress from the courts--what does it mean to them? What kind of 
impediment? What kind of shield? What kind of additional barrier does 
this impose to those in the American public who find themselves in that 
circumstance?
  Madam President, I will yield the floor but I again want to 
reemphasize, this amendment is not about stripping section 203. This 
amendment is about tinkering with 203 and making a few adjustments. I 
have no quarrel with those who want to tinker with it. But we can 
tinker from now until the end of 1998 and it is not going to change 
section 203. This is a bad proposal and ought to be stripped from this 
bill. When it is stripped from the bill I will support the bill because 
I think there is merit to the bill beyond this. If it is not stripped 
from the bill I intend to vote against cloture and I intend to vote 
against the bill.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Madam President, I am pleased to follow on the words of 
the Senator from North Dakota because I rise to express some serious 
criticism towards this second-degree amendment as well, and really the 
entire piece of legislation, which I do not think will have its 
essential character changed by this attempted second-degree amendment. 
I am opposed to S. 687. I think it is a bill which is neither fair nor 
necessary.
  The proponents of the bill have declared that it will actually 
benefit consumers and the victims of product liability accidents. I 
just do not think this is credible at all that this is a bill that 
benefits consumers. Every major consumer group in the United States 
opposes it. So do groups which represent the working people of our 
Nation, groups like the AFL-CIO, and organizations that represent our 
country's elderly such as the AARP.
  For me there are several reasons why I oppose the bill. One reason is 
that I do not think we should overturn the work of our State 
legislatures and courts by enacting a quick fix Federal legislative 
response to an area of law that I still think is best kept in the hands 
of State policymakers and courts. These are the same hands that have 
handled these issues for over two centuries.
  I do not think the importance of States' rights in this area can be 
overstated. This area of tort law is best left in the domain of the 
courts and the State legislatures which can best react to the changing 
circumstances which dominate tort law in a more fluid manner.
  Here we cannot help but go back to the famous words of Justice 
Brandeis, in his oft-quoted dissenting opinion in the State of New 
State Ice Cream Co. versus Lieberman. The Justice said:

       To stay experimentation in things social and economic is a 
     grave responsibility. Denial of the right to experiment may 
     be fraught with serious consequences to the Nation. It is one 
     of the happy incidents of the Federal system that a single 
     courageous State may, if its citizens choose, serve as a 
     laboratory, and, try novel social and economic experiments 
     without risk to the rest of the country.

  In my view, Madam President, this is one the National Conference of 
State Legislatures, the American Bar Association, the Conference of 
Chief Justices of the States, and at least 100 law professors 
throughout our Nation's law schools, also oppose this measure.
  Why should we preempt the States in this area of the law? The 
proponents of the bill say the number of product liability lawsuits and 
the ensuing damage awards handed out by juries have dramatically risen. 
They have gotten out of hand, wreaking havoc on America's ability to 
compete globally and develop innovative products. The proponents of 
this bill also claim the cost for insurance for American businesses has 
actually skyrocketed as a result of the so-called litigation explosion 
involving product liability lawsuits.
  As we have heard mentioned on the floor earlier today these arguments 
have sort of changed over time. I think they have served merely as the 
justifications du jour in order to rationalize the need for and promote 
the passage of this bill.
  I may not have been a Member of this distinguished body during the 
last few debates on this subject but I did serve in one of the State 
legislatures that this bill is designed to circumvent. I was serving 
there during several of these debates. One opportunity I had in that 
capacity was to defeat one of the chief proponents of this legislation 
in order to serve here in the U.S. Senate. So I am not exactly 
completely new to this debate or the arguments that are made in favor 
of this kind of law.
  Supporters of Federal tort reform have stated that America's 
competitive edge is at stake. Yet the recently completed OTA study on 
the competitiveness of U.S. manufacturers did not even include the 
creation of Federal product liability law in its recommendations for 
Government activities to address the competitiveness problem. Instead, 
the OTA listed a number of recommendations. They said we should lower 
the cost of capital; improve the quality of human resources through 
education and the quality of the work force. They said we should 
improve the diffusion of manufacturing technology out to small- and 
medium-sized businesses. And they also suggested providing Government 
funding for risky but promising long-term research and development. But 
they did not recommend--despite all of this attention to the issue of 
competitiveness--none of them recommended the need for Federal product 
liability legislation of this kind.
  Madam President, also a Rand Corp. study found that only a small 
percentage of U.S. manufacturers are even named as defendants in 
product liability litigation. In 1986, for example, only 0.9, less than 
1 percent of all manufacturing concerns in the United States were even 
named as defendants in product liability lawsuits.
  The proponents of Federal tort reform have also claimed that product 
liability litigation has made the cost of business insurance completely 
unaffordable. Yet the evidence has shown the lack of 
affordable and adequate business insurance for business is not due to 
these lawsuits. It is the result of the insurance companies' own 
underwriting practices.
  As for the litigation explosion that we always hear about and the 
claims that jurors and juries are running amok, recent data suggest 
that the current system is actually balancing the competing interests 
of victims and consumers with those of manufacturers.
  Let me read a headline from a very recent article printed in the New 
York Times. It reads, ``U.S. Juries Grow Tougher on Plaintiffs in 
Lawsuits.'' According to this article, juries nationwide have become 
markedly tougher. This conclusion was based on research conducted by 
the legal publishing firm Jury Verdict Research, which found that 
during the 3-year period from 1989 to 1992, plaintiffs have prevailed 
11 percent less frequently in all forms of personal injury cases. The 
data compiled for product liability cases showed that a plaintiff's 
chance of winning a trial has dropped 18 percent, over that 3-year 
period.
  Madam President, these findings support other studies which have 
questioned the assertion of a product liability litigation crisis. The 
most recent review of statistics from the Federal courts, which was 
conducted at our own University of Wisconsin Law School in Madison by 
Prof. Mark Galanter, found that if you remove the asbestos cases from 
the analysis the number of product liability cases in the Federal 
courts has declined in the last 5 years. And it has declined 
dramatically. It has declined from 8,268 cases in 1985 to only 4,992 
cases in 1991. That is a huge, 40 percent decrease in these kinds of 
cases.

  At the State court level, the National Center for State Courts 
recently published updated statistics from State courts that reviewed 
civil court filings in 13 different general jurisdiction State court 
systems from 1984 to 1989, and they concluded that the most dramatic 
increases in the civil caseload tended to be for real property rights 
cases or contract cases--not tort cases, the subject of this bill, but 
real property rights cases or contract cases. These same studies showed 
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 caseloads, 
and since product liability actions are only a subset of all tort 
cases, these cases that this bill tries to address make up an even 
smaller fraction of the total.
  What all of this says, Madam President, is that the advocates of this 
legislation have failed to make the case for the need for this bill on 
any grounds. After listening to the debate so far, I think it is safe 
to say that the proponents of the bill have not met the clear and 
convincing evidentiary standard that they would impose on all 50 States 
in order to prove punitive damages. They could not meet their own 
standard. In fact, I do not think they even come close.
  I find it especially troubling that the proponents of this bill would 
override our Nation's tort law system, a system which has taken our 
Nation's State courts and legislatures over two centuries to develop. 
The present system in which victims of accidents resulting from 
defective products are able to seek redress may not be perfect, no 
system can be or ever will be, but some of this bill's quick fix, 
draconian measures remind me of someone trying to fix a wristwatch with 
a sledgehammer and a pickax.
  The best illustration of this, Madam President, is the most egregious 
section of the bill, section 203(B), which would potentially harm all 
consumers and women in particular by shielding manufacturers of drugs 
and medical devices from liability for punitive damages as long as the 
products have been approved by the FDA and there was not fraud 
involved. I think this is a horrible provision. I recognize that this 
second-degree amendment at least purports to address it. I have not had 
a chance to thoroughly review the pending amendment, which the 
proponents contend would clarify 203(B), but it would not, in my view, 
shield manufacturers of dangerous products such as DES, Dalkon shields, 
and silicone gel breast implants, from punitive damage liability.
  That is the claim. However, after reading through it for the first 
time, I would have to say that the only thing it really clarifies, in 
fact makes clearer, is that section 203(B) is still very flawed even 
with this change and is unacceptable.
  The underlying amendment still relies on the FDA as a safety shield. 
The underlying amendment--the second-degree amendment would still place 
the evidentiary burden on the victim or the claimant to prove that the 
manufacturer has not engaged in ``conduct manifesting conscious, 
flagrant indifference to the safety of those persons who might be 
harmed by the product.''
  That is still an extremely difficult standard, and I do not think it 
changes the essential dangerous character of 203(B).
  The flaws and dangers contained in this provision have been discussed 
and demonstrated throughout this debate. I think it is clear by now, 
Madam President, that the FDA simply is not equipped to adequately 
protect the public. It is underfunded. It is understaffed. We all know 
that many Government requirements are outdated and do not adequately 
protect the public health and often do not reflect the most up-to-date, 
scientific knowledge. For me, Government regulations only function as a 
minimum standard of conduct. They should not give a manufacturer a 
license to market a product that it knows to be unsafe or defective.
  No example better illustrates the inadequacies of Government 
regulations than the FDA's failure for over 20 years to protect women 
from the dangers of silicone gel breast implants. And no example better 
exemplifies the critical role that punitive damages play in protecting 
the public. The FDA allowed Dow Corning to sell these silicone gel 
breast implants in spite of mounting evidence that the devices could 
cause serious illnesses and even death. The availability of the 
implants was only curtailed after one victim was awarded over $6 
million in punitive damages because of what one court described as Dow 
Corning's ``despicable conduct.''
  Yet this bill, S. 687, would immunize manufacturers of such products 
as long as the product met premarket approval. One only has to be 
reminded of the FDA's history and the countless horror stories 
resulting from the harm that was inflicted on women by such products as 
the Dalkon shield intrauterine device, DES, and the Copper-7 
intrauterine contraceptive device, to realize the dangers involved in 
this provision.
  The bill would also eliminate joint and several liability for 
noneconomic damages.
  Section 206 of the bill states in general that in any civil action 
subject to this act the liability of each defendant for noneconomic 
loss shall be several only and shall not be joint.
  The rest of the provision elaborates on that. What does this mean? 
What can be some of the consequences for consumers and victims of 
defective products if this provision is made the law of the entire 
country?
  Madam President, the elimination of joint and several liability for 
noneconomic damages such as pain and suffering would simply result in 
many individuals receiving less than their full damages whenever 
wrongdoers are immune from suit whether it be for insolvency, being 
uninsured, underinsured or for whatever reason not subject to a court's 
jurisdiction.
  The joint and several liability doctrine applies to situations where 
there are multiple wrongdoers who act in concert to cause an injury to 
a victim, and they cause an injury that cannot be easily divided among 
them in a logical fashion. If multiple parties are jointly and 
severally liable, the victim still has the possibility of recovering in 
full from many of the wrongdoers.
  This doctrine was developed to help ensure that victims injured by 
more than one wrongdoer would still receive the full and fair 
compensation they deserve. S. 687 would restrict the rights of 
individuals to obtain perfectly legitimate damages by shifting to the 
victim the risk of undercompensation.
  Now, what exactly are noneconomic losses? S. 687 currently defines 
them as a subjective nonmonetary loss resulting from harm including but 
not limited to pain, suffering, inconvenience, mental suffering, 
emotional distress, loss of societal companionship, loss of consortium, 
injury to reputation, and humiliation. The term does not include 
economic loss.
  Madam President, whose rights will be restricted by eliminating joint 
and several liability for these types of losses? Unfortunately, it 
would the rights of the most seriously injured victim who often relies 
on pain and suffering damages, people like quadriplegics, persons 
suffering from brain damage, burn victims. These are the people whose 
rights would be most restricted.
  Studies indicate that the seriously injured victims often recover 
less than their out-of-pocket expenses in product liability cases, and 
eliminating joint and several liability for these victims would further 
reduce their recovery. Moreover, poor individuals who are injured by 
defective products generally pay for their cost of litigation out of 
the awards they receive. By reducing the amount the poor can recover, 
the elimination of joint and several liability for pain and suffering 
damages would decrease their potential access to the court.
  Also, Madam President, excluding noneconomic damages from the joint 
and several liability protections is also disturbing in that 
reproductive harm such as loss of fertility is considered a noneconomic 
loss and therefore those kinds of injuries would not be protected, 
would not be compensable under the joint and several liability doctrine 
if this bill, this bill before us, is enacted into law.
  It is not as if joint and several liability has broad and unwarranted 
impact. A recent study of verdicts handed down by juries in my home 
State of Wisconsin found that of 834 verdicts rendered in the 2-year 
period study, only 1.5 percent, or 13 verdicts, were affected by the 
Wisconsin rule of joint and several liability. Again, if we really 
examine the facts, if we really see what the statistics show about the 
litigation in this area, we see there is really no need for this form 
of reform that is being proposed today.
  Madam President, I would like to share in my concluding remarks one 
real-life example which can better sum up the problems with doing away 
with joint and several liability than anything I could concoct. This 
tragedy involved a young woman, age 15, from Beloit, WI, a city just a 
few miles south of where I grew up in Rock County, WI.
  This young woman was, unfortunately, riding in the back seat of a 
Gremlin, a car which was made at the time by American Motors Corp. And 
she was in the car at the time when a drunken driver struck the Gremlin 
from behind and the Gremlin burst into flames burning and maiming this 
young woman and killing another passenger.
  The young woman suffered severe scars on her face, chest, arms, and 
legs, and has stubs for all but one finger. She has had several 
operations to attempt to repair the hands, eyelids and nose.
  The problem with the design of the Gremlin, the jury was told and 
shown, was that its fuel system was dangerously defective. The young 
woman's attorney successfully demonstrated that the Gremlin's fuel 
system filler neck included a rubber hose that American Motors ran 
through the car's interior and was separated from the gasoline hose 
only by a plastic plate. This particular crash cut the hose and sprayed 
gasoline inside the car, which subsequently ignited.
  Despite this dangerous design flaw, the jury apportioned liability by 
finding the drunken driver 67 percent negligent, American Motors 30 
percent negligent, and the victim 3 percent negligent. I have been told 
that this type of apportionment is typical when an accident involves a 
drunken driver, even though the primary injuries--the burns--were the 
result of the flawed design of the fuel system. In other words, just 
like the horror stories involving the Pinto gasoline tank design which 
we know all too well, the Gremlin's fuel system design were the but for 
cause of the primary injuries. Without that, this woman would not have 
been injured. Now what does this mean to a victim of such a tragic 
accident?
  First of all, this particular jury awarded $787,170 of damages to the 
victim, a large proportion of it in the form of pain and suffering 
noneconomic damages. Unfortunately, the drunken driver was forced to 
file bankruptcy and became insolvent. Factoring in the above liability 
apportionment, that means that the young woman would have received a 
total award of $236,151 and she would have received roughly $158,222, 
that is if she could have retained an attorney, which would be unlikely 
since the attorney's one-third contingency fee would be $77,930, 
roughly half of what it cost her attorney to try the case.
  You see, we have to discuss the cost of preparing the case. The 
attorney handling the case has stated that it cost roughly $150,000 to 
prepare and try the case, with expenses including hiring expert 
witnesses and buying three cars, one of which was cut apart to show the 
jury the defective fuel system.
  Now some of those damages were for medical expenses and economic 
losses, but you get the picture. This young woman who suffered 
irreparable physical harm, would not be able to recover her entire 
damages from a defendant which designed such a fuel system which was a 
primary cause of her injuries under the provisions contained if this 
bill passes.
  I would like to conclude my remarks by urging my colleagues to oppose 
S. 687 and to vote against involving cloture this evening. Make no 
mistake about it, this bill is inherently flawed and will have a 
detrimental impact on the health of and the ability of victims of 
accidents involving defective products. If we are so inclined as a body 
to rush into enacting such sweeping changes to our current tort law 
system, cannot we at least wait until we fix and shape up our Nation's 
ailing health care system, so at the very least, we can be assured that 
the victims of accidents will have a better opportunity to have their 
medical needs met? Voting against cloture would allow us to first take 
up health care before we override our State legislatures and jury 
system and embark on such a drastic remedy. I yield the floor.
  Mr. HEFLIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. HEFLIN. Madam President, I will only speak briefly here about the 
provisions in this amendment, the Lieberman-Feinstein amendment.
  In my judgment, this is a worse amendment than the one that was in 
the original bill. It is designed to make some exceptions in punitive 
damages. Punitive damages are not recoverable if there is premarket 
approval by the Food and Drug Administration. Then it has in the 
original bill a section that says the provisions of that ``shall not 
apply in any case in which the claimant proves by preponderance of the 
evidence,'' and then it lists (a) and (b). There is nothing in the 
existing bill as it was and as it is, and subject before this amendment 
might be adopted, that says that the FDA can withdraw the premarket 
approval for failure to comply or for other reasons.
  Now we see (c) is added. What does (c) require in order to say that 
you will not be subject to this provision on premarket approval? It 
says that the FDA must go through what? That the FDA, where it could 
have withdrawn its premarket approval and said that it does no longer 
fit, now the Food and Drug Administration has to go through a formal 
administrative procedure by a final order not subject to further 
review, or on the other hand, that a court has determined in an action 
brought by who? Brought by the U.S. Government by a final judgment not 
subject to further review that the drug or device fails to conform to 
conditions of the Food and Drug Administration for approval.
  That makes it more difficult to get around this matter pertaining to 
exclusion from punitive damage on premarket approval.
  Then we look at section (d). There are three provisions therein. The 
provisions of paragraph 1 shall not apply with respect to a claim for 
punitive damages based on a defect in manufacturing which causes the 
drug or device to depart from its intended design.
  You look over in definition, and they use ``as opposed to 
manufacturing formulation.'' Then they speak of the words ``formula and 
design.''
  This appears to me to mean that you get a drug--this would not apply 
to a device, but this would apply to a drug that is manufactured--there 
are not many drugs that are manufactured, but rather they are 
formulated--and departs from their intended design or formula. The way 
that word is written and the way this language is written, it would 
have a very plausible interpretation; that it does not apply to a drug 
unless the drug is manufactured and unless the drug departs from its 
intended design. If it departs from its formula, it does not mean 
anything.
  The other change that is involved in this deals with required 
information. It changed a little bit here, but they put obstacles in 
the language.
  It is required information, if it ``fails to submit''--I think the 
original language was ``to withhold.'' I do not know whether there is a 
difference between ``failure to submit'' and ``to withhold,'' but there 
may be. For some reason, they wanted to put that in there--``required 
information.'' We must rely on FDA regulations to require all the 
necessary data and information. And then they put two other hurdles in 
it--that the information that the defendant failed to submit or 
misrepresented is material and relevant. And then there is the 
additional hurdle that they must be causally related to the harm.

  (Mrs. FEINSTEIN assumed the chair.)
  Mr. HEFLIN. This amendment does nothing, really, to cure the 
fundamental problems of the provision. This amendment unquestionably 
reduces the incentive of manufacturers to make safe products when all 
the evidence shows that there are too few incentives.
  Second, this amendment returns a greater number of difficult hurdles 
that a plaintiff must overcome. The effect is to ensure that a 
plaintiff will never get punitive damages. Here are the hurdles: First, 
they must show that there is a ``conscious, flagrant indifference to 
safety,'' which is an extremely high hurdle, a lot more than wantonness 
or willfulness or recklessness. Second, it shows that the defendant 
will not turn over the required information, or will fail to submit the 
required information, and only required information. It further shows 
that that information was relevant and shows that the information was 
material and shows that failure to turn over that information caused 
the harm.
  I do not think this is a fix. This, in my judgment, ends up with the 
fact that now, under this, there are hurdles that must be complied with 
relative to FDA withdrawing its premarket approval. They have to go 
through administrative procedure, or else the United States--the United 
States will not beat anybody except the FDA. They have to file a 
lawsuit before they can withdraw their premarket clearance. In my 
judgment, this is making it tougher than it was.
  The people who are drafting this--and there is nobody in the Senate 
here, and I do not believe the staff members of the Senate are doing 
it, but there are outside people--who have motives involved in the way 
they select the language, in trying to put loopholes or have a facade 
that has an appearance of fixing a problem when, in reality, they are 
making it much more difficult to get around that premarket clearance 
exception to punitive damage.
  Madam President, I ask unanimous consent that Bruce Leahy, of Senator 
Wellstone's staff, be allowed the privileges of the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts [Mr. Kerry] is 
recognized.
  Mr. KERRY. Madam President, the Senator from Alabama, who we fondly 
refer to as ``the Judge'' around here, is referred to as the Judge 
because he has made these decisions and has sat in a court of high 
consequence and understands the implications of the words in these 
kinds of amendments and this kind of legislation, perhaps better than 
most, and certainly as well as any in the U.S. Senate. The fears that 
he has expressed, the real dangers that are contained in the current 
definitions, should not be dismissed cavalierly by any Member of the 
Senate.
  I might say that I was greatly attracted to the notion that I wanted 
to vote for some kind of reform, and all of us, I think, are affected 
by the notion that if we can make companies more competitive, we 
obviously want to do so if we can reduce overhead, reduce costs. And if 
we can impact the effect of other forces on business expenditures, we 
want to try to do so. But I think we also want to try to do so 
reasonably and fairly, and we also have a responsibility to try to 
measure what the impact is on the vast array of citizens who are not 
necessarily represented in the same way that some of those in the 
amendment described by the Senator from Alabama are.
  I promised the Senator from West Virginia, who has been absolutely 
tenacious and open and extraordinarily decent in his efforts to try to 
work a compromise and come up with good legislation, that I would look 
hard at the changes he had made this year in an effort to try to see if 
we were indeed embracing a fair approach to the notion of compromise 
with respect to our uniform desires to reduce that nut on business and 
to try to impact competitiveness.
  So I looked at this bill hard and met with folks on both sides of the 
fence. I have concluded that despite an inherent notion which agrees 
with the premise that insurance is too expensive and that there is a 
certain restraint on startup companies because of the cost of insurance 
for some particular product--there is, and I accept that. But I do not 
accept the leap that automatically suggests that because that is true, 
this legislation is the remedy or a fair remedy. There is a distinction 
between those two parting points. While we may be able to agree on the 
definition that there may be some problem out there, the question is: 
Is this legislation the way to address that problem?
  Some of my colleagues have talked about McCarran-Ferguson and 
problems of insurance regulation, and I think we really have to measure 
what the industry itself said about this legislation and its impact. I 
personally, after looking at this issue again, remain unconvinced that 
this legislation, which focuses solely on national standards concerning 
certain aspects of product liability laws, is an adequate answer to the 
problem. I ask my colleagues to question whether we ought to be 
considering legislation that tries to solve the problem by focusing 
only on the cost of litigation, without in any way requiring insurers 
to step up to bat and measure up with any reform or with any 
requirements to lower the cost of insurance to small business.
  In testimony before the Commerce Committee, which the distinguished 
Senator from South Carolina chairs--and I think he shares this view--
the insurance industry stated to the members of that committee, in no 
uncertain terms, that this legislation will not provide businesses with 
cheaper rates.
  Madam President, if that is true, what are we doing here? If the 
insurance industry itself has the audacity to come in and say, ``Even 
if you pass this, it is not going to result in a broad-based rate 
cut,'' then we have a problem.
  Let me quote the American Insurance Association:

       The bill is likely to have little or no beneficial impact 
     on the frequency or severity of product liability claims. * * 
     * And it is not likely to reduce insurance claims or improve 
     the insurance market.

  There goes your competitiveness argument right out the window, 
because if the bill does not reduce liability claims or costs, it 
becomes very hard to argue that it is going to improve the 
competitiveness of startups and for small and high-tech businesses.
  As J. Robert Hunter, the president of the National Insurance Consumer 
Organization testified before the Commerce Committee ``Make no mistake 
about it, if insurance costs and availability are not improved, 
competitiveness is not affected.''
  So, Madam President, competitiveness is not affected. Insurance rates 
will not go down. What are we doing here?
  The GAO testified that this legislation will not even reduce 
transaction costs--that is for the cost of litigation--for businesses. 
In fact, and I quote the GAO:

       For cases that are litigated, the procedural features of 
     the tort system would not be changed by the bill. * * * If 
     the alternative dispute resolution mechanisms are not 
     binding, then they add to rather than substitute for 
     litigation. If that happened--

  I quote them.

     costs would actually increase.

  So what you are looking at here is the prospect you do not do 
anything for competitiveness, you do not, in fact, reduce the costs, 
but you may, in fact, add to the costs because you are adding a dispute 
resolution component which will add to the costs of liability 
litigation.
  Now, in addition to that, Madam President, this legislation has 
serious flaws because it does not accomplish what it, in fact, sets out 
to do.
  First, it only creates selective Federal preemption, without creating 
what is called Federal jurisdiction. That means that the State courts 
will have to interpret the new law in the State court system, and for 
years the result is going to be appeal after appeal after appeal, 
uncertainty, and different applications of the law in different 
States--which are the very consequences that this law tries to avoid. 
This law says we are going to have this great federalization and it 
somehow is going to create uniformity.
  I read a newspaper article the other day--I think it was by Robert 
Samuelson, who talked about the uniformity, but the fact is it is going 
to be interpreted State court by State court not a Federal cause of 
action created.
  Second, this has been much talked about. It creates a defense that is 
almost an absolute defense, as to the FDA and FAA approval. Senator 
Hollings has spoken to this eloquently and accurately, and he said:
       In effect, this section makes the FDA and the FAA the first 
     and last line of defense against manufacturer misconduct that 
     is harmful to consumers. These agencies were never created to 
     function in this manner, and there are numerous examples of 
     their inability to afford this kind of protection to 
     consumers.

  It is hard for me to believe, given the problems we have had with the 
FDA and the questions that have arisen about the FAA approvals, that we 
are willingly going to turn over to them an exemption at a defense that 
would prohibit consumers on their potential for mistake. With all of 
the business that they have coming in front of them, we are somehow 
going to trust them to look at every nook and cranny and make a 
decision that could forever bar someone with the one exception that 
they created, and I will look at the one exception in a minute.
  Third, rather than creating the uniformity among the States that I 
just talked about, this legislation is believed by the Conference of 
Chief Justices of the States to be actually likely to actually disrupt 
settled tort law, because the bill creates a Federal rule to be 
interpreted by the State courts, without creating a Federal cause of 
action to go with it. That means that every State's supreme court will 
wind up having to interpret a new and untested set of rules in 50 
different ways, with unpredictable, chaotic, and unstable results.
  As the chief judge of the Supreme Court of Arizona testified last 
year on behalf of the Conference of Chief Justices concerning this very 
legislation:

       If the primary goal of this legislation is to provide 
     consistency and uniformity in tort litigation, we are 
     concerned that its effect will be the opposite. Preempting 
     each State's existing tort law in favor of broad Federal 
     product liability law will create additional complexities and 
     unpredictability for tort litigation in both State and 
     Federal courts, while depriving victims of defective products 
     of carefully reasoned principles and procedures already 
     developed at the State level.

  I might add I continually hear companies say: Wait a minute. We do 
not know which State law to really follow.
  That is a lot of bunk, because any company that is prepared to sell 
nationally follows the strictest law. It is very simple. And that law 
has been defined. So if you are a company expecting to sell abroad or 
expecting to sell to the Nation's 50 States you take the strictest law 
and you go with that knowing that you are then immune to the 
possibility of suit in the rest of the courts of this country.
  So this is just a lot of folderol to suggest that they do not know 
what to do. They have known what to do, and they have sold products for 
years.
  We read this argument recently by Robert Samuelson that the bill 
would create uniformity, or one rule nationally. But I would say to you 
instead each court is going to be required to interpret the law at the 
trial level; each appellate court would have to interpret those 
rulings, and ultimately a series of cases would have to go up to the 
U.S. Supreme Court to achieve the national standard that is falsely 
being promised in this bill itself.
  While creating new procedural uncertainties at the State level, the 
bill will also downgrade the rights of injured consumers by reducing 
the financial incentives for manufacturers to produce safe products. 
Madam President, you just cannot avoid that reality.
  The Ford Pinto, the Dalkon Shield, flammable baby pajamas, and most 
recently, the silicone breast implant, are each cases in which 
businesses marketed products that lead to products liability 
litigation, precisely because the products were not safe. In the case 
of several of these products, the manufacturers had developed 
information which was withheld from the public demonstrating those 
products to be unsafe.
  Under this bill, manufacturers of dangerous drugs and medical devices 
are shielded from punitive damages if they are subject to premarket 
approval by the FDA with respect to the safety of the formulation or 
performance of the drug or device. Obviously, in cases where the FDA 
makes a mistake, what have we done? A victim who has actually been 
injured is not able to sue for punitive damages against the 
manufacturer unless that victim can show that the manufacturer withheld 
information from the FDA.
  I mean, we are about to take poor old average citizens of this 
country who is subject to these goods being thrust at them through 
advertising and tell them they will have no recourse unless they can 
prove some elusive standard similar to the standard we public officials 
have to prove about libel and defamation, the malice, and that is about 
how tough the standard is about to be made. You have to show that they 
withheld the information and otherwise nothing punitive.
  I believe, Madam President, that before we adopt that kind of a 
broad, Federal preemption of State law in an area that is not regulated 
by the Federal Government, which is a very important point, we are 
about to preempt but we are preempting in an area where there is no 
Federal regulation of insurance, we ought to ask ourselves, is there 
really a crisis that mandates we take this enormous preemption step?
  Again, I went and looked at this. People kept coming at me and saying 
product liability, product liability, product liability, product 
liability; you have to do something about it. So I went and looked, 
because I believed the hype.
  I found that out of 10 million civil litigation cases filed a year in 
the United States, obviously an overly litigious society, less than 
60,000 of those cases or less than six-tenths of 1 percent are products 
liability cases. And the number of such cases is already declining by 
36 percent overall from 1985 through 1991, excluding the asbestos 
claims which I know nobody wants to deprive someone from compensation 
for.
  So, already cases in which punitive damages are awarded, Madam 
President, are rare. Professor Michael Rustad, Associate Professor of 
Law at Suffolk University Law School, in a 1991 study found only 353 
cases nationwide in which punitive damages were awarded in products 
liability cases from 1965 through 1990--a 25-year period, or an average 
of 14 cases in the entire United States of America per year.
  And while punitive damages were awarded at this 14 cases a year 
rate--14 cases a year--an average of 29,000 Americans were killed in 
connection with the use of consumer products, and an additional 33 
million Americans were injured by those products. Fourteen cases per 
year adjudicated against the companies, 29,000 people killed.
  So it is clear that punitive damages hardly reflect the crisis in 
America. They are a rare occurrence as is, without the changes that 
this bill would put into place.
  What troubles me, Madam President, in the case of this bill is that 
hype has really replaced reality. The proponents of this bill have 
exaggerated the cost to business of the current system and they 
minimize the risk of changing this system in terms of the consumer.
  Last week, in the Washington Post, Robert Kuttner wrote an article in 
which he pointed out that the promoters of this bill frequently cite a 
figure of $100 billion a year cost to businesses when in fact the 
actual figure, according to the National Association of Insurance 
Commissioners--who finally, now for years this debate has raged on and 
only last year did we finally get a figure that honestly reflected what 
the payout is. Is it $100 billion? Nope. Is it $50 billion? Nope. Is it 
$25 billion? Nope. The cost is $4 billion.
  So, I want to respectfully suggest, Madam President, that the 
arguments on the floor and the hype that has surrounded the bill does 
not do justice to the fairness that we ought to seek in a remedy.
  I agreed earlier that costs are high. I think we ought to try to find 
a way to mitigate some of those costs for startup businesses.
  The Presiding Officer, the Senator from Massachusetts, and the 
Senator from South Carolina all have high tech companies and we all 
understand how difficult it is for biotech to be able to start some new 
products. We ought to try to find pool-risk ways of dealing with the 
costs of insurance. We ought to deal with this overhead. But we do not 
have to take a one-sided effort to deny people the redress within the 
court system, established and working over years and now proven not to 
be extraordinarily expensive, and somehow lopsided against those folks 
without a fair balance of what might be better said of reforms also 
involving the insurance companies themselves.
  It has in fact been astonishing to me to hear from the junior Senator 
from Texas and others who want to suggest that victims of unsafe or 
defective products are actually going to be helped by this legislation. 
I do not know of one consumer organization supporting the bill.
  Among those who are openly working against it are the Consumer 
Federation of America, the Consumers Union, the American Council of the 
Blind, Environmental Action, the National Consumers League, and the 
National Women's Health Network.
  And you can look at some of the folks who are pushing hard for this 
change, on the other hand: The Union Carbide Co., which wound up paying 
$400 million for the Bhopal disaster in India; the fact that they wiped 
out the inhabitants of the neighborhood of the plant that they had in 
India. They would love to have this. The Exxon Corp., which was 
negligent to the tune of billions in the Exxon Valdez disaster, they 
are pushing for it. The Ford Motor Co., which designed the defective 
gas tanks that caused the car to explode when hit from behind at speeds 
as low as 21 miles per hour, they like this bill. Procter & Gamble, 
which manufactured tampons found to have lead to the death of women who 
died of toxic shock syndrome, they are pushing for it. RJR Nabisco, 
Brown & Williamson, Philip Morris, and every other major cigarette 
manufacturer, and many others companies with a direct interest, they 
are supporting this bill. And, obviously, I suppose you cannot blame 
them for doing that.
  But we ought to be responsible.
  When it comes to legislation that is being supported by people who 
still advocate that smoking does not cause cancer, I worry about their 
arguments and I worry about their credibility.
  So I hope that, if anything, the debate of the last hour has shown 
that we are really not ready to proceed forward on this legislation. We 
ought to sort through the hype and we ought to try to find a balance in 
this legislation so that we can reduce the cost to those who deserve to 
have it reduced but so that we do not expose a whole new generation to 
the eradication of the tort system that has proven itself both 
effective and important.
  I think for that reason that we are well served not to close out the 
debate after a few hours on as an important subject such as this.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Mr. GORTON. Madam President, on the only rollcall vote that was taken 
on this issue, the distinguished Senator from Wisconsin lost by the 
narrowest margin, 51 to 49. He has expressed a desire to revisit that 
issue in a milder fashion and has, as I understand, prepared and is 
seeking wide approval for a sense-of-the-Senate resolution on the 
subject of court records to seek to do this.
  I just wanted to announce, from what I have seen of it, I think it 
would be acceptable, and if comes to us within a relatively short 
period of time before the 6 o'clock vote on cloture, I am going to ask 
unanimous consent to temporarily lay aside the current two amendments 
and give the Senator from Wisconsin a couple of minutes to present his 
ideas.
  Mr. LAUTENBERG addressed the Chair.
  The PRESIDING OFFICER. Is there objection to the request of Senator 
from Washington?
  Mr. HOLLINGS. Reserving the right to object.
  Mr. GORTON. I am not making a request.
  The PRESIDING OFFICER. There is no request being made.
  The Senator from New Jersey.
  Mr. LAUTENBERG. I thank you, Madam President.
  I just wanted to take a few minutes to discuss the procedure by which 
we are considering this legislation.
  Madam President, I have been anxious, as I think some others have 
been, to offer a couple of amendments. Unfortunately, I have not had 
the opportunity to do so. Instead, the debate has been filled up with 
pending amendments and with further discussion about the bill. It has 
been frustrating.
  However, I do want to at least discuss one of the amendments that I 
intend to offer, if given the opportunity--and of course much of that 
depends on what finally happens with the cloture vote. It is a proposal 
that I think belongs in any discussion of product liability.
  What I plan to do, given the opportunity, is to offer an amendment 
under which any person who provides a firearm to a disqualified 
individual would be liable for all damages caused by the discharge of 
the firearm by the recipient if bodily injury or death results. By 
``disqualified individuals'' I mean individuals to whom it is unlawful 
to provide a firearm either under current law, or under the Senate-
passed crime bill that includes felons, juveniles, drug addicts, and 
people with mental problems, among others.
  Liability would extend only to those who know, or have reasonable 
cause to believe that the person to whom they are transferring the gun 
is on this prohibited list of gun possessors.
  Madam President, the proposal is similar to shop laws which were 
discussed earlier today. Those are State laws that hold a tavern owner 
or cafe owner responsible if he or she serves someone liquor beyond 
their capacity to drive safely and they have an accident. That 
liability passes back onto the seller or the purveyor of the alcohol. 
What I am proposing is not much different.
  The goal is to minimize the number of transfers of guns to those who 
should not have them. We have seen too often where people with a wink 
of an eye or turning of a head permit someone to have a gun who they 
know is not allowed to receive the gun. And, of course, the other goal 
is to compensate victims.
  So, Madam President, depending on how the 6 o'clock vote turns out, 
if the bill is still open to amendment after that, whether it is this 
evening or tomorrow, I hope to offer my gun transfer amendment. I just 
wanted to alert my colleagues that I would like to be able to offer 
this amendment. I talked to the proponents of the bill as well as the 
opponents of the bill. This has little to do with a calculation as to 
whether the bill is going to be successful in passing the body or not. 
But it is something I believe should be there.
  At a later time, perhaps, if there is amendment opportunity still 
available, there is something in the area of tobacco I would like to 
discuss as well. But we will leave that for a later moment.
  I thank my good friend and colleague from South Carolina, who 
deferred after waiting a long time for the floor, to give me these few 
minutes.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.
  Mr. HOLLINGS. Madam President, we have been waiting. I was delighted 
to yield, always, to my distinguished colleague from New Jersey.
  There is so much to be said to clarify the record and put things in 
proper perspective. Once again this afternoon, Madam President, we 
veritably heard the cry of Dick, the butcher, in Henry VI. ``The first 
thing we do, let's kill all the lawyers.''
  That has been the sentiment of Vice President Danny Quayle and his 
Competitiveness Council. There are some who still believe, yes, ``The 
first thing we do, let's kill all the lawyers.''
  The truth of the matter is that this cry was by Dick the butcher as a 
follower of Jack Cade, the demagog who was trying to overthrow the 
government in Henry VI. The demagog realized that the best way to take 
over the government and destroy individual freedoms was to first get 
rid of the lawyers. So that is a high compliment, Madam President.
  The United States of America, from its very beginning, most of its 
first 16 Presidents were lawyers:

       Is life so dear, or peace so sweet, as to be purchased at 
     the price of chains and slavery? Forbid it, Almighty God. I 
     know not what course others may take, but for me, give me 
     liberty or give me death.

  That was, of course, the cry from a Virginia lawyer, Patrick Henry.
  Again, Thomas Jefferson, the lawyer, sat there as he drew up and 
fathered our Declaration of Independence:

       We find these truths to be self-evident, that all men are 
     created equal.

  James Madison, the best of all those lawyers, wrote in the Federalist 
Papers--and I will never forget it because it is so pertinent today:

        But what is government itself but the greatest of all 
     reflections on human nature? If men were angels, no 
     Government would be necessary. If angels were to govern men, 
     neither external nor internal controls on Government would be 
     necessary.
       In framing a government which is to be administered by men 
     over men * * * first you must enable the Government to 
     control the governed; and in the next place, oblige it to 
     control itself.

  Now, expenditurewise, today we are totally out of control. We spend 
$1 billion a day that we do not take in, which I have called not just 
interest costs but interest taxes. We are in a juxtaposition whereby 
everybody is against taxes but everybody is willingly raising taxes $1 
billion a day. That is exactly where we are because we failed to heed 
the admonition of one of the lawyer greats and fathers of our country, 
James Madison.
  You can see Abraham Lincoln, the lawyer, putting his pen on the 
Emancipation Proclamation, and lawyer Franklin Delano Roosevelt, in the 
darkest days of the depression saying, ``The only thing we have to fear 
is fear itself.''
  Thurgood Marshall in the fifties. I can see him in December 1952, 
before the U.S. Supreme Court, putting meaning to ``All men are created 
equal,'' demanding that there be no discrimination or denial of due 
process because of race, religion, sex or previous condition of 
servitude.
  You can come right on down through history. So why now the 
disparaging comments about lawyers? Madam President, I think you can go 
right to the most recent issue of the Harvard Business Review. In that 
Harvard Business Review is an article about alternative dispute 
resolution--exactly what we are discussing right now--why it does not 
work and why it does.
  The article notes how lawyers on both sides in a particular 
alternative dispute resolution began taking depositions, though they 
were careful not to use that word.

       One observer characterized the two sides as driven by false 
     litigiousness, arrogance and greed, and charges of attorney 
     misconduct flew back and forth almost daily. Eventually the 
     judge ruled against company A, which, then did what? Promptly 
     asked an appeals court to overturn the decision.

  After that, both companies began to litigate in earnest. They are 
still fighting today and the list of suits and countersuits grows 
longer every day. Company B is estimated to have laid out as much as 
$25 million a year to pursue its claims.
  Imagine setting $25 million aside. That is the trouble in this town. 
I have not met anybody who tried a law case in their life. They are all 
jury fixers and we in Congress are the jury. Permit me to read further 
from the article:

       Few senior corporate managers are willing to forego a 
     chance to win a courtroom trial. CEO's want to be able to 
     take the other guy to the cleaners, if they believe they are 
     in the right, and they are going to bet the ranch if they 
     have to. Often the case itself becomes less important than 
     the principle involved. In the struggle between the 
     electronics giants, for instance, the chief legal counsel for 
     company A declared, ``if the other side continues its 
     strategy of copying, I am going to continue the strategy of 
     suing.''

  Yesterday I went down the long list of the corporate judgments--one 
corporation suing another. Not product liability, not product liability 
punitive damages, but showing the corporate case, for example, of 
Pennzoil against Texaco for some $10.2 billion. Other cases that we 
cited: $350 million punitive damages; $400 million punitive damages; 
$70 million punitive damages. Yes, there is a problem with lawyers, and 
we are seeing it in this particular piece of legislation.

  This particular piece of legislation is now being submitted as if 
they are really concerned about the plaintiff and the money not getting 
to the injured party. Now come on, come on; let us get off that 
nonsense. No one believes that.
  You know who opposes their bill? Those hired for the plaintiffs, the 
trial lawyers of America. They are absolutely in opposition to it. Do 
you not think they know about the welfare, the injury, the damage, and 
the needed assistance and relief for their clients? The Trial Lawyers 
Association has seen through this sham. I heard the distinguished 
Senator from Illinois earlier today talk about the masquerade. I began 
thinking of ``Phantom of the Opera.'' Well, their masquerade is being 
exposed.
  Here, Madam President, is a list of those who oppose this bill: The 
AFL-CIO; the Alliance for Justice; Consumers Union; Environmental 
Action; the National Consumers League; the National Insurance Consumers 
Organization.
  I ask unanimous consent that the list of organizations and 
individuals, and also a list of consumers for civil justice--both of 
these lists--be printed in the Record.
  There being no objection, the lists were ordered to be printed in the 
Record, as follows:

   List of Organizations and Individuals Opposed to Federal Product 
                         Liability Legislation

       AFL-CIO, Alliance for Justice, American Association of 
     Retired Persons, American Bar Association, American Council 
     of the Blind, American Lung Association, American Public 
     Health Association, Americans for Democratic Action, Asbestos 
     Victims' Education and Information, Asbestos Victims of 
     America, Brown Lung Association, California PIRG, Citizen 
     Action, Colorado PIRG, Conference of Chief Justices, 
     Connecticut PIRG, Consumer Federation of America, Consumers 
     Union, Dalkon Shield Chaimants' Committee, DES Action USA.
       Disability Rights and Education Fund, Environmental Action, 
     Florida PIRG, Friends of the Earth, Illinois PIRG, Maryland 
     PIRG, Massachusetts PIRG, Michigan Citizens Lobby, Minnesota 
     PIRG, National Association for Public Health Policy, National 
     Campaign Against Toxic Hazards, National Coalition Against 
     the Misuse of Pesticides, National Conference of State 
     Legislatures, National Consumers League, National Insurance 
     Consumers Organization, National Spinal Cord Injury 
     Association, National Women's Health Network, New Jersey 
     Citizen Action, New Jersey PIRG, New Mexico PIRG.
       Oregon State PIRG, Pennsylvania PIRG, PIRG in Michigan, 
     Public Citizen, Public Voice for Food and Health Policy, 
     Ralph Nader, Service Employees International Union, Local 82, 
     Sierra Club, Trauma Foundation, United Auto Workers, United 
     States Public Interest Research Group, United Steel Workers, 
     Vermont PIRG, Washington PIRG, White Lung Association, 
     Wisconsin PIRG.
                                  ____


                      Consumers for Civil Justice

       NJ Environmental Federation, NAACP, NOW--National 
     Organization of Women, Industrial Union Council, Black Issues 
     Convention, NJ Citizen Action, New Jersey Environmental Lobby 
     (NJEL), IUE, AFL-CIO, United Auto Workers (UAW--Region 9), NJ 
     Hemophilia Foundation, Central Jersey Spinal Cord Injury 
     Assn., NJ White Lung, Central Labor Union--AFL-CIO, 
     Communications Workers of America (CWA--AFL-CIO), CHILD--Cape 
     May, Amalgamated Transit Union, American Littoral Society, 
     Arthur Kill Watershed Association, Aspira, Inc. of New 
     Jersey, Association to Improve Benefits.
       Bayonne Citizens for Clean Air, Bergen Labor Council, AFL-
     CIO, Bergen Save the Watershed Action Network (SWAN), 
     Boilermaker's Local 28, Center for Visual Arts, Chemical 
     Workers Association, Clean Ocean Action (COA), Coalition 
     Against Toxics--Camden County, Columbian Federation, 
     Committee of Internists and Residents, Concerned Citizens of 
     Union County, Concerned Citizens of Wayne, Copeland 
     Surveying, Inc., Cornucopia Network of New Jersey, Council of 
     N.J. State College Locals--AFT, Creative Risk Services, Inc., 
     CWA Local 1032, CWA Local 1081, DES Action--New Jersey, 
     Edison Wetlands Association.
       Environmental Response Network--Atlantic County, Grassroots 
     Environmental Coalition (GREO), Hospital Professionals & 
     Allied Employees, Hudson Labor Council, IBEW Local 
     1032, Implant Victim Action Committee, International 
     Association of Machinists, International Federation of 
     Professional Technical Employees, Ironbound Committee 
     Against Toxic Waste, Local 8-149--OCAW, Local 262, Retail, 
     Wholesale Dept. Store Union--United Food & Commercial 
     Workers, Local 617 Service Employees International Union, 
     Machinist Union Local 914, Mercer Environmental Coalition, 
     Middlesex County Environmental Coalition, Monmouth County 
     Citizens for Clean Air, Monmouth County Friends of 
     Clearwater, N.J. Coalition of Labor Union Women, Network 
     for Environmental & Economic Responsibility at United 
     Church of Christ, New Jersey Right to Know and Act 
     Coalition.
       Newark Teachers Union, NJ Coalition of Occupational Safety 
     & Health, NJ PIRG, Ocean County Citizens for Clean Water, 
     People United for a Klean Environment--Burlington, Peoples 
     Medical Society, PHILOPOSH, Pompton Lakes Against Pollution, 
     Princeton Area Committee of NJEF, Public Citizen, Rain Forest 
     Relief, Rutgers AAUP, Sheetmetal Workers Local Union 27, 
     Sierra Club, NJ Chapter, Skylands Clean, Teamsters Local 945, 
     The Command Trust, East Coast Connection Silicone Breast 
     Implant Support Group, TMJ Association, United Labor Agency, 
     United Passaic Organization (UPO), United Transportation 
     Union Local 60, Utility Co-Workers' Association, VOCCAL--
     Oakland, WATER--Vineland.

  Mr. HOLLINGS. Madam President, why is it, if this bill supposedly is 
going to help consumers, that every major consumer organization in this 
country is opposed to it? Yet they have the unmitigated gall to stand 
here and say they are worried about plaintiffs, that not enough money 
is coming to the injured parties. Masquerade, masquerade.
  There are over 100 law professors that have testified in hearings as 
a body in opposition to this. The Conference of Chief Justices opposes 
it.
  Now, they talk and beat down the amendment of the Senator from 
Wisconsin against secrecy, saying, ``Oh, the Conference of Chief 
Justices oppose this amendment.'' But the same Conference of Chief 
Justices, as well as the National Conference of State Legislatures 
oppose the bill itself. Every women's group is opposed to this 
particular bill. Every health group is opposed to this bill. The 
National Association of States Attorneys General is opposed to it. The 
American Bar Association testified against the bill.
  The first thing we do is kill all of the lawyers--the corporate 
lawyers working for manufacturers. It is they who manufactured this 
particular product liability bill. That is what this bill is. This bill 
is a case of product liability, if any ever was.
  Why do I say that? Madam President, you can go right to the bill 
itself, because we have been in it a long time and we have always said: 
If you want uniformity, just put in there, and state: ``There is hereby 
created a Federal cause of action.''
  Do you know what they say? Specifically, on page 11, they say: There 
is not hereby produced a Federal cause of action. They absolutely, in 
the 17 years, in the 20 bills and in some 50 hearings on the Senate and 
House side, admonished if you want uniformity, if you do not want to 
come to these 50 States to try your cases, and so forth, then put in 
there just one line, ``a Federal cause of action is hereby created,'' 
and preempt the State courts. Put down your rules, we have the Federal 
Rules of Civil Procedure and we will just move forward from there.
  That is not what they want. They do not want the federalization of 
insurance, and they do not want this bill to apply to manufacturers. 
They claim to be so concerned about injured parties, about the fact 
that plaintiffs and injured people are waiting 5 years to get their 
money, but do not let this bill pertain to manufacturers.
  They absolutely have a clause in here that there shall not be a 
Federal cause of action, and they have a clause in here that it shall 
not refer to the manufacturer who gets a faulty piece of equipment. 
Those manufacturers can get punitive damages, strict liability, none of 
this settlement disposition and hurdles that the injured victims have 
to go through in this discombobulation, none of that; it does not apply 
to them, Madam President.
  This is not just to get rid of the FDA provision. You can see by the 
tenor of my presentation this afternoon at this late hour that they are 
trying to make deals, that all you have to do is get rid of the FDA 
provision and you have a good bill. I have not referred to the FDA. I 
am referring to the general thrust of this travesty that we have here. 
You might call it the insurance obstacle course bill, if there ever was 
a legal obstacle course built, because they knew what they were doing. 
They have been at it now 17 years, and they very cleverly got this 
thing together.
  They complain about going to the 50 States, but they go to the 50 
States with respect to insurance. These big companies will have 100 
different kinds of policies. They do not mind going to California and 
going to the California Insurance Commission and filing those policies 
and having lawyers to file those documents. It is the same when they 
come to the State of South Carolina. They do not mind going with their 
lawyers and filing all their policies. They just do not want the 
lawyers to defend the injured parties. That is what they want to do. 
They say they want uniformity, but they do not.
  Now, what happens with that particular approach is they set down 
various words of art and restrictions to be interpreted in the 50 
States, all the way up to their State supreme courts and then over to 
the U.S. Supreme Court, all in the context of eliminating legal costs, 
litigation, motions, and delays.
  They start off on a big bog-down. As a trial lawyer, I can tell you 
right now, if the injured party comes into my office and says, ``I want 
you to represent me,'' I say, ``Wait a minute. That Rockefeller bill 
passed and you are already injured, and I will tell you why.''
  I will elicit this understanding from the client and say, ``Look, I 
don't know how they are going to rule, but I can tell you if you have a 
serious case under this procedure and it is going up on appeal, I have 
to take care of all these costs; I have to go through discovery, 
interrogatories. I don't get any fee from you. It is a contingent 
basis. Yes, they will stretch me out 2, 3 years, that kind of thing.'' 
And what will happen?
  Well, if you are a young lady with a medical injury, for one thing, 
joint and several liability. Yes, yes; joint and several liability for 
economic losses, but not for noneconomic. The Dalkon-Shield-injured 
woman, the breast-implant-injured woman comes in and I say, ``Well, you 
know, you don't have any economic loss here. The noneconomic loss, I 
have an additional burden here. I have to severally prove everything. 
Not joint and several for the economic, but for the noneconomic, there 
is a different degree of culpability and a more difficult trial.''
  Then with respect to punitive damages, because we want them to stop 
making these things and not injure other women, I say, ``I have to 
prove not regular carelessness and recklessness, but I have to prove a 
conscious, flagrant indifference to safety.'' A conscious, flagrant 
indifference to safety. And I have to prove that by clear and 
convincing evidence. You have to veritably prove that the fellow just 
set a boobytrap and caught them, if it was a conscious, clear and 
flagrant indifference to safety.

  Now, that again produces the long trial and limits the prospect of 
being compensated properly. It also reduces the prospect of a verdict 
that would deter injury to others.
  But then I get to the real purpose, and that is settlement. I do not 
see how they can say it in good conscience that this is going to 
expedite settlements. Here is how they expedite.
  First the lawyer on the other side, in a serious case, is going to 
make a motion to dismiss, and when he is ruled against he is going to 
appeal that. That will give him quite a bit, a few months. Then after 
that he is going to make an offer, within 60 days after the final 
ruling on that because, you see, they are sitting up in their mahogany 
office with the big oriental rug and everybody running around doing the 
things for them, and they get paid willy-nilly. It does not make any 
difference. They go down to the club to eat lunch, and they come back 
and there is no sweat there. Their family is taken care of. But the 
trial lawyer, he is taking on all of this burden here.
  And after that, they make that offer now and let us say the client 
says yes, but I hear under the law that what you do is, if you get more 
than what you offered, you really can get attorney's fees added on. I 
say, yes, you can get attorney's fees, but they have a limit on that of 
$50,000.
  And to those who have never been in law cases lasting 2 or 3 years, 
the fees, taking care of the costs, the deposition costs and everything 
else of that kind, in that contingency contract, many, many times will 
exceed the $50,000 in a serious injury case, I can tell you that right 
now. You would have $50,000 in the case before you even got it on 
appeal. But that is the limit there, and then if you think you are 
going to get it, it says provided, however, that should be set off by 
the contingency contract that you have with your client.
  Now, that really chills this lawyer because what it says to me, under 
the ethics of the bar, I have to inform my client that here is the 
offer but if you get $1 more, you better get more than $1 more because 
I can tell you right now, I have lost my fee and we have a 
substantially less verdict than any settlement offer ever made. And it 
begins to put me and my client--he says, wait a minute, we have our 
contingency contract. But then I have to explain it to him three times 
to make it clear, and finally you have the lawyer sort of adversely 
against his own client.
  But if he gets less than that settlement offer, if he gets less than 
the settlement offer, there is no limit and it goes against all of 
those particular collateral benefits or costs that he would be entitled 
to. And as explained by the distinguished Senator from Alabama, an 
injured party as we describe here with a breast implant or whatever it 
was, that had health insurance, they would have $100,000 already in 
cost on that particular injury, I can tell you that now, and you have 
been paying for it out of your health insurance. And then if it is real 
serious and the individual dies and you had a $200,000 life insurance, 
you paid all your life not to be injured and have to win a case to find 
out that your life insurance is gone.
  They are for the injured party, they say. Come on. I am reading the 
law, and they cannot contest it. I will give them chapter and verse and 
the page number and the line number. But it takes away that $200,000 
pot. It takes away that $100,000 health insurance.
  Then, even if you get that agreed, they have moved the employer into 
all settlements. Now, you would think that was just a helpful thing, 
but the employers have workman's comp, and they pay workman's comp 
premiums. And if an offer is made, the other side tells the employer: 
Here is the offer, and we have enough in the offer to take care of your 
particular costs that you have paid under workman's comp. And they do 
not get anything. You are not going to get anything on workman's comp, 
whatever. And you better bring pressure on your employee to settle this 
case. And then all of a sudden in addition with this particular bill, 
687--I am not just talking about the FDA provision. I am talking about 
these things that they bragged about and have yet to be exposed. But 
this hurdle here says you have not only the lawyer in a juxtaposition 
with his client, you have employer against employee. And they know how 
to work it. They know how to work it.
  Now, that is exactly why they talk about this is a good bill and a 
fairness bill. This has been really fashioned in the most tricky 
fashion that you have ever seen. It says, ``Provided, however, it is 
not going to apply to the manufacturer.'' It says, further, we shall 
not federalize this. And it says if you do engage in these settlement 
offer shenanigans and you get a verdict more than the settlement offer, 
you do not get a verdict more because you have to take away your 
contingency contract with the lawyer that you have and all of a sudden 
unhire him, fire him. It is like these insurance policies that we had 
down in South Carolina when I was Governor. For example, there was 
Capital Life, and they wanted a new slogan for the new Life, and we 
came up with: ``Capital Life will surely pay if the small print on the 
back doesn't take it away.''
  Now, Madam President, we have learned how to read these bills and do 
not come forward here and start telling us that they are not lawyers 
and they cannot read these things. Here is what Chief Justice Stanley 
G. Feldman said on the claim of uniformity----
  Mr. ROCKEFELLER. Will the Senator yield? I just point to the Senator 
that----
  Mr. HOLLINGS. I know, and I have been here all day long trying to say 
these things, exactly right.
  Mr. ROCKEFELLER. Will the Senator yield for 2 minutes?
  Mr. HOLLINGS. Yes.
  Mr. ROCKEFELLER. We have only 2 minutes remaining.
  Mr. HOLLINGS. All right. I will just read what Chief Justice Stanley 
Feldman said:

       If the primary goal of this legislation is to provide 
     consistency and uniformity in tort litigation, we are 
     concerned that its effect will be the opposite.

  Preempting each State's existing tort law in favor of a broad Federal 
tort liability law will create additional complexity and 
unpredictability for tort litigation in both products of carefully 
reasoned principles and procedures already developed at the State 
level. The critical experience of State courts with the long process of 
interpretation and consistency on major points of product liability law 
tells us that Federal legislation is not the answer. A legal thicket is 
inevitable and the burden of untangling it, if it can be untangled at 
all, will lie only with the Supreme Court of the United States, a court 
which many experts feel is not only overburdened but also incapable of 
maintaining adequate uniformity in existing Federal law as it is 
variously interpreted by the 13 U.S. court of appeals. Enactment of 687 
would alter in one stroke the fundamental federalism inherent in this 
country's tort law. It is a radical departure from our current legal 
regime and is neither justified by experience nor wise as a matter of 
policy.
  I ask unanimous consent that the distinguished author of the bill be 
recognized for 2 minutes.
  Mr. ROCKEFELLER. I am profoundly grateful to the Senator from South 
Carolina.
  The PRESIDING OFFICER. Is there objection? There being no objection, 
the Senator from West Virginia is recognized for 2 minutes.
  Mr. ROCKEFELLER. In the time remaining before the cloture vote, Madam 
President, I would like to remind my colleagues that we have heard a 
great deal of talk today and that what we come back to is the basic 
fact that the average person in this country who is injured, who has a 
mangled hand or has some other kind of injury which prevents him or her 
from going to work or feeding their family or taking care of their 
affairs has to wait 3, or 4, 5 years before they get a single nickel of 
compensation.
  The Product Liability Fairness Act is an attempt through alternative 
dispute resolution and expedited settlement procedures to speed 
compensation to the victim. We must change the present system where the 
lawyers both on the plaintiff and the defendant's side make much more 
money as they drag out legal procedures than the victims finally 
receive 4 or 5 years later.
  Our bill expedites the process so that victims for once are taken 
into consideration in product liability tort reform. We think this is a 
fair bill and a balanced bill. We understand very well the tactics that 
are being used. We would have preferred much more time to discuss this, 
but we would hope that our colleagues would vote for cloture.
  I would yield to the Senator from the State of Washington.
  Mr. GORTON. Madam President, I hope that the Senators in the Chamber 
will listen to this, although it is 6 o'clock.
  I ask unanimous consent that I be allowed to set aside the pending 
amendments and send up and have passed without debate a sense-of-the-
Senate resolution on behalf of the Senator from Wisconsin [Mr. Kohl], 
which I have discussed earlier. It is simply a sense-of-the-Senate 
resolution on the subject of his amendment this morning.
  Mr. HEFLIN. I object. I would like to have an opportunity to read it 
and see it. We maybe will have something else to come along later in 
regard to that same issue.
  The PRESIDING OFFICER. Objection is heard.
  Ms. MIKULSKI. Madam President, I rise today because I am tired of 
gridlock; that's why I am voting for cloture. I believe it is time for 
a national debate on product liability. Now is the time to improve or 
not improve the bill. The bill should stand or fall on its own.
  I am for cloture, majority rule, and ending gridlock.
  That is my position on health reform, that is my position on banning 
assault weapons, and that is my position on product liability.
  Despite my vote for cloture, though, I am reserving judgment on the 
final passage of the Product Liability Reform Act. I hope that the 
current bill can be improved. There will be many amendments to this 
bill that I want to review. When we have a final bill, then I will make 
a decision on final passage.
  For example, I have deep concerns about the so-called FDA defense, 
and the short statute of limitations, in addition, I would like a 
clarification of the statute of repose.
  Mr. President, FDA-approved products are not always safe, and the 
makers of those products are not always free from blame. There are 
women who cannot have children because the Copper-7 IUD made them 
sterile. There are families who lost loved ones because of a faulty 
heart valve that the FDA approved.
  It was never intended that FDA approval would mean a full 
investigation. The FDA does not have the resources to be the FBI on 
medical devices and drugs. That is why it doesn't make any sense to let 
FDA approval be a shield used by companies against injured consumers.
  I am committed to improving the health care system in this country, 
and especially dedicated to making sure that women and other often 
overlooked groups get the health care and protection they deserve.
  Our goal should be to protect unsuspecting users of drug and medical 
devices. Regulatory agencies have a responsibility to accomplish this 
goal, but if they fail to do so the courts have a responsibility as 
well. And responsibility is at the heart of this debate.
  On the other hand, as this issue moves forward, I believe there are 
arguments in favor of technology, competition and jobs. Responsible 
businesses should be able to cut unnecessary liability costs so they 
can use those dollars not to fight lawsuits, but to create jobs.
  In addition, I acknowledge the validity of the argument in favor of 
uniformity across the 50 States. Case law based on State law was fine 
in the 1950's when the United States was the world's dominant 
manufacturer. But, Madam President, the world has changed. Now we are 
competing with other powers globally. And about 70 percent of 
manufactured products are sold outside the State where they're made.
  I am looking for a balance. I do not want to stymie innovation and 
new technologies; I also do not want to have untried, unreliable 
products. This is exactly the robust debate I believe we should engage 
in. So I will vote for cloture, and I look forward to a thoughtful, 
reasoned debate on these important issues.

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