[Congressional Record Volume 140, Number 85 (Wednesday, June 29, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 29, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
               S. 687, THE PRODUCT LIABILITY FAIRNESS ACT

  Mr. KERREY. Mr. President, I voted against cloture on S. 687, the 
Product Liability Fairness Act for three reasons. The first is that the 
proponents of the bill have not shown that the uncertainty of product 
liability lawsuits has put U.S. manufacturers in crisis, a claim that 
has been made repeatedly. Second, the bill, in attempting to address 
this perceived crisis, unfairly makes some rules uniform without 
providing uniformity in other rules. Third, recent trends indicate that 
the product liability system is regulating itself.
  Support of S. 687 requires a firm belief in the premise that U.S. 
manufacturing is at a disadvantage compared with other countries and in 
need of Federal relief because of product liability laws. Some 
industries, like the small aircraft industry, have been able to 
document a trend of losing ground to foreign manufacturers over a 
number of years. However, in the vast majority of industries, the facts 
and trends indicate otherwise. U.S. workers produce $49,000 in output 
each year, more than any other country. Our rate of unemployment is 
lower than any other country. In addition, the General Accounting 
Office, in a 1988 report, found that insurance costs represented a 
relatively small proportion of businesses' annual gross receipts--.06 
percent for large businesses and about 1 percent for small businesses. 
U.S. business and manufacturing is alive and thriving.
  Another frequently cited need for reform is the notion that the 
amount of litigation in this country is dragging down the United 
States. I think the reality is quite the contrary. Our system of 
justice is based upon the right to trial by jury. Yes, it is true that 
we are a litigious society. However, litigation is the price we pay to 
remain a free and self-governing people. Juries do not work for trial 
attorneys. Juries are made up of our neighbors and colleagues who work 
for a living, know the value of a dollar, and determine the proper 
amount that an injured party should receive. In reality, the number of 
product liability cases in Federal courts, other than asbestos cases, 
has been steadily declining.
  Senator Rockefeller and the manufacturers who support this bill seek 
to instill balance in the jury system which is often unpredictable. I 
think this is a reasonable goal. Unfortunately, S. 687 does not achieve 
the balance I believe is necessary.
  In Nebraska, like most other States, our manufacturers export over 80 
percent of their goods for sale in other States exposing them to 
varying State laws. I understand their desire for uniformity. But many 
believe that S. 687 will actually result in less uniformity in the law 
of product liability for the simple reason that the bill preempts some 
State laws while leaving others intact. In addition, the bill places 
the responsibility of interpreting and applying a mix of State and 
Federal law in the State courts. The result is that we will disrupt 
established State law and be left with different interpretations of the 
new law, an outcome which does not help manufacturers or consumers.

  In addition, S. 687, while providing some uniformity for 
manufacturers, does not provide the same measure of uniformity for 
injured parties
  In an effort to provide better balance in the bill, I made several 
suggestions to the bill sponsor, Senator Rockefeller. One suggestion I 
made was adopted by Senator Rockefeller. The change addresses the 
unfairness of penalties applied to parties under section 101 which 
governs expedited product liability judgments. Under that section a 
defendant's penalty for rejection of a settlement offer is capped at 
$50,000, but the claimant's penalty is not capped. I am pleased that 
Senator Rockefeller agreed to include a $50,000 cap on the claimant's 
penalty to mirror that of the defendant. This change provides fairness 
and uniformity for both parties. However, the fact remains that many 
other sections of the bill override State laws where those laws protect 
consumers, but leave intact the different State laws where those laws 
benefit manufacturers.
  Uniformity for both manufacturers and consumers is especially 
important in Nebraska whose citizens would be in a worse position under 
the bill because strict Nebraska laws would remain in place in addition 
to the new Federal rules legislated in the bill. For example, Nebraska 
citizens would be harmed by the section of the bill on punitive 
damages. Punitive damages are meant to act as a punishment for 
companies whose wrongdoing goes beyond mere negligence to the level of 
outrageous misconduct. S. 687 establishes the burden of proof an 
injured party must meet to qualify for punitive damages and provides a 
defense to punitive damages for drugs or aircraft that have been 
approved by Federal agencies. However, the bill specifically exempts 
States, like Nebraska, which do not currently offer punitive damages. 
Thus, a Nebraska injured by a defective product could not get punitive 
damages, whereas an Iowan, for example, could. I think this is an 
unconscionable result for the citizens of Nebraska. When the Federal 
Government takes over an area of law and does so with the justification 
that uniformity must be achieved, then uniformity ought to be achieved 
for Nebraska consumers as well as manufacturers.
  I want to make one thing clear. I do not oppose intervening to assist 
manufactures where a clear case has been made to do so. In fact, I 
cosponsored and voted in support of S. 1458, the General Aviation 
Revitalization Act which passed the Senate in March. What distinguishes 
these two bills is that with regard to general aviation, the industry 
was able to show trends measured over a period of time which indicated 
that the small plane industry was being usurped by foreign competition. 
In addition, the bill was very tailored in its intervention. Rather 
than the more scattershot approach outlined in S. 687, the general 
aviation bill only imposed a 15 year statute of limitation within which 
a person may bring suit.
  A third reason why I chose not to support S. 687 at this time is that 
the product liability system has begun to moderate in recent years. 
Intervention is less compelling now than it was 4 or 5 years ago. As I 
mentioned before, the number of product liability cases in Federal 
courts, other than asbestos cases, has been decreasing in recent years, 
falling 40 percent between 1985 and 1990. According to the Commerce 
Committee's report on S. 687, the filing of tort lawsuits, which 
include product liability lawsuits, make up less than one percent of 
all cases filed in State courts, and less than 10 percent of most 
States' civil caseload. In addition, last Friday's New York Times 
contained a front page story with the headline ``U.S. Juries Grow 
Tougher on Plaintiffs in Lawsuits.'' The story reported on studies that 
show a plaintiff's chances of winning at a product liability trial 
dropped to 41 percent last year from 43 percent in 1992 and 59 percent 
in 1989.
  In short, the proponents of the bill did not make the case that such 
a drastic usurpation of State control is necessary. The truth is that 
it is very difficult, if not impossible, to predict the ramifications 
of this legislation, especially its potential consequences for people 
injured by defective products. Without a clear need to intervene I 
cannot support Federal intrusion into the well-established area of 
State law.

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