[Congressional Record Volume 141, Number 11 (Thursday, January 19, 1995)]
[Senate]
[Pages S1207-S1209]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY:
  S. 243. A bill to provide greater access to civil justice by reducing 
costs and delay, and for other purposes; to the Committee on the 
Judiciary.


                  the civil justice reform act of 1995

  Mr. GRASSLEY. Mr. President, I rise today to introduce legislation to 
reform America's Federal Civil Justice System. The purpose of this 
bill, the Civil Justice Reform Act of 1995, is to 
[[Page S1208]] improve deserving parties' access to the Federal courts 
by reducing the volume of frivolous cases, to reduce the costs of 
Federal civil litigation, and to encourage the settlement of disputes. 
It is similar to the bill introduced by Senator DeConcini and myself in 
March 1993.
  This bill introduces some modest reforms that will reduce the 
economic and social costs our society has borne due to the litigation 
explosion. Our society spends billions of dollars every year on civil 
lawsuits. More than $1 billion goes just to pay for the Federal 
district courts, which handle hundreds of thousands of civil cases 
annually. It has become clear to most Americans that our system of 
dispute resolution through adversarial lawsuits has gotten out of hand, 
and reason needs to be restored to it. More litigation does not 
necessarily translate into more justice.
  Many of the elements of this bill are based on the 1992 Access to 
Justice Act. For example, my bill reintroduces a modified English rule 
on attorney's fees that will award prevailing parties in Federal 
diversity cases reasonable attorney's fees, with adequate safeguards to 
protect against possible injustice. This provision is hardly the 
radical proposition some will paint it as being. In fact, for those of 
my colleagues who are always fond of pointing out that the United 
States is the only industrialized country that fails to provide some 
benefit or another, I would point out that this so-called English rule 
is followed by most industrialized countries, with the United States 
being the most notable exception. So I think it is worth trying in the 
United States in a limited class of cases--diversity suits--in order to 
see if it is effective in discouraging frivolous lawsuits.
  By limiting the rule to diversity cases, the bill ensures that no one 
will be denied a forum for their dispute, since all such cases can be 
filed in State court. If the defendant removes the case to Federal 
court, then the loser pays rule will not apply. This limited English 
rule will expire in 5 years unless Congress chooses to continue it, 
after a fourth-year report by the administrative office of the courts 
on the effectiveness of the rule.
  The bill also includes a number of safeguards to avoid any unintended 
consequences. The amount the loser must pay is limited to the amount of 
his or her own fees. Moreover, the court is given broad discretion to 
limit the amount the loser must pay if it finds such payment to be 
unjust under the circumstances of the case before it.
  The bill also requires 30 days advance notice of intent to sue--
something most responsible lawyers already do. It also requires 
prisoners with civil rights cases--which currently constitute of around 
10 percent of the Federal civil docket--to first exhaust their 
administrative remedies before filing suit in Federal court.
  To promote early settlement of cases and reduce litigation costs, the 
bill contains a statutory offer of judgment rule. It is similar to a 
proposal by Judge William Schwartzer, former director of the Federal 
Judicial Center. This rule will allow either party to a lawsuit to 
offer a settlement to the other party at any point in the litigation. 
If the settlement is declining and the party rejecting the offer 
ultimately gets a judgment less favorable than the settlement offer, he 
or she is then responsible for the offeror's attorneys fees from the 
time the offer was made. This will give parties a strong incentive to 
offer and accept reasonable settlements.
  Another provision of my bill will begin to curtail some of the 
excesses of the expert witness battles that dominate too many Federal 
trials. Following the example of several States, particularly Arizona, 
my bill will limit parties to one expert witness on a given issue.
  The Civil Justice Reform Act of 1990 has had a positive effect on the 
Federal courts in reforming pretrial, processes to reduce costs and 
delay. This bill takes the next step by making some limited fee 
shifting proposals and a few other modest reforms for reducing 
litigation costs. I look forward to the hearings I intend to hold in 
the Subcommittee on Administrative Oversight and Courts, and to 
discussing these proposals with my colleagues on the Judiciary 
Committee, as well as the full Senate.
  I ask unanimous consent that the full text of the bill appear in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 243

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Civil Justice Reform Act of 
     1995''.

     SEC. 2. DIVERSITY OF CITIZENSHIP JURISDICTION; AWARD OF 
                   ATTORNEYS' FEES TO PREVAILING PARTY.

       (a) Award of Fees.--Section 1332 of title 28, United States 
     Code, is amended by inserting after subsection (e) the 
     following new subsection:
       ``(f)(1) The prevailing party in an action under this 
     section shall be entitled to attorneys' fees only to the 
     extent that such party prevails on any position or claim 
     advanced during the action. Attorneys' fees under this 
     paragraph shall be paid by the nonprevailing party but shall 
     not exceed the amount of the attorneys' fees of the 
     nonprevailing party with regard to such position or claim. If 
     the nonprevailing party receives services under a contingent 
     fee agreement, the amount of attorneys' fees under this 
     paragraph shall not exceed the reasonable value of those 
     services.
       ``(2) In order to receive attorneys' fees under paragraph 
     (1), counsel of record in any actions under this section 
     shall maintain accurate, complete records of hours worked on 
     the matter regardless of the fee arrangement with his or her 
     client.
       ``(3) The court may, in its discretion, limit the fees 
     recovered under paragraph (1) to the extent that the court 
     finds special circumstances that make payment of such fees 
     unjust.
       ``(4) This subsection shall not apply to any action removed 
     from a State court under section 1441 of this title, or to 
     any action in which the United States, any State, or any 
     agency, officer, or employee of the United States or any 
     State is a party.
       ``(5) As used in this subsection, the term `prevailing 
     party' means a party to an action who obtains a favorable 
     final judgment (other than by settlement), exclusive of 
     interest, on all or a portion of the claims asserted in the 
     action.''.
       (b) Study and Report.--(1) The Director of the 
     Administrative Office of the United States Courts shall 
     conduct a study regarding the effect of the requirements of 
     subsection (f) of section 1332 of title 28, United States 
     Code, as added by subsection (a) of this section, on the 
     caseload of actions brought under such section, which study 
     shall include--
       (A) data on the number of actions, within each judicial 
     district, in which the nonprevailing party was required to 
     pay the attorneys' fees of the prevailing party; and
       (B) an assessment of the deterrent effect of the 
     requirements on frivolous or meritless actions.
       (2) No later than 4 years after the date of enactment of 
     this Act, the Director of the Administrative Office of the 
     United States Courts shall submit a report to the appropriate 
     committees of Congress containing--
       (A) the results of the study described in paragraph (1); 
     and
       (B) recommendations regarding whether the requirements 
     should be continued or applied with respect to additional 
     actions.
       (c) Repeal.--No later than 5 years after the date of 
     enactment of this Act, this section and the amendment made by 
     this section shall be repealed.

     SEC. 3. OFFER OF JUDGMENT.

       (a) In General.--Part V of title 28, United States Code, is 
     amended by inserting after chapter 113 the following new 
     chapter:

                   ``CHAPTER 114--PRETRIAL PROVISIONS

``Sec.
``1721. Offer of judgment.

     ``Sec. 1721. Offer of judgment

       ``(a)(1) In any civil action filed in a district court, any 
     party may serve upon any adverse party a written offer to 
     allow judgment to be entered for the money or property 
     specified in the offer.
       ``(2) If within 14 days after service of the offer, the 
     adverse party serves written notice that the offer is 
     accepted, either party may file the offer and notice of 
     acceptance and the clerk shall enter judgment.
       ``(3) An offer not accepted within such 14-day period shall 
     be deemed withdrawn and evidence thereof is not admissible, 
     except in a proceeding to determine reasonable attorney fees.
       ``(4) If the final judgment obtained by the offeree is not 
     more favorable than the offer made under paragraph (1) which 
     was not accepted by the offeree, the offeree shall pay the 
     offeror's reasonable attorney fees incurred after the 
     expiration of the time for accepting the offer, to the extent 
     necessary to make the offeror whole.
       ``(5) In no case shall an award of attorney fees under this 
     section exceed the amount of the judgment obtained. The court 
     may reduce the award of costs and attorney fees to avoid the 
     imposition of undue hardship on a party.
       ``(6) The fact that an offer is made under this section 
     shall not preclude a subsequent offer.
       ``(7)(A) Subject to the provisions of subparagraph (B), 
     when the liability of 1 party [[Page S1209]] has been 
     determined by verdict, order, or judgment, but the amount or 
     extent of the liability remains to be determined by further 
     proceedings, any party may make an offer of judgment, which 
     shall have the same effect as an offer made before trial.
       ``(B) The court may shorten the period of time an offeree 
     may have to accept an offer under subparagraph (A), but in no 
     case shall such period be less than 7 days.
       ``(b) A party making an offer shall not be deprived of the 
     benefits of an offer it makes by an adverse party's 
     subsequent offer, unless the subsequent offer is more 
     favorable than the judgment obtained.
       ``(c) If the judgment obtained includes nonmonetary relief, 
     a determination that it is more favorable to the offeree than 
     was the offer shall be made only when the terms of the offer 
     included all such nonmonetary relief.
       ``(d) This section shall not apply to class or derivative 
     actions under rules 23, 23.1 and 23.2 of the Federal Rules of 
     Civil Procedure.
       ``(e)(1) Except as provided under paragraph (2), the 
     provisions of this section shall not be construed to prohibit 
     an award or reduce the amount of an award a party may receive 
     under a statute which provides for the payment of attorney's 
     fees by another party.
       ``(2) The amount a party may receive under this section may 
     be set off against the amount of an award made under a 
     statute described in paragraph (1).''.
       (b) Technical and Conforming Amendment.--The table of 
     chapters for part IV of title 28, United States Code, is 
     amended by inserting after the item relating to chapter 113 
     the following:

``114. Pretrial provisions..................................1721''.....

     SEC. 4. PRIOR NOTICE AS A PREREQUISITE OF FILING A CIVIL 
                   ACTION IN THE UNITED STATES DISTRICT COURT.

       (a) In General.--Chapter 23 of title 28, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 483. Prior notice of civil action

       ``(a)(1) No less than 30 days before filing a civil action 
     in a court of the United States the claimant intending to 
     file such action shall transmit written notice to any 
     intended defendant of the specific claims involved, including 
     the amount of actual damages and expenses incurred and 
     expected to be incurred. The claimant shall transmit such 
     notice to any intended defendant at an address reasonably 
     expected to provide actual notice.
       ``(2) For purposes of this section, the term `transmit' 
     means to mail by first class-mail, postage prepaid, or 
     contract for delivery by any company which physically 
     delivers correspondence as a commercial service to the public 
     in its regular course of business.
       ``(3) The claimant shall at the time of filing a civil 
     action, file in the court a certificate of service evidencing 
     compliance with this subsection.
       ``(b) If the applicable statute of limitations for such 
     action would expire during the period of notice required by 
     subsection (a), the statute of limitations shall expire on 
     the thirtieth day after the date on which written notice is 
     transmitted to the intended defendant or defendants under 
     subsection (a). The parties may by written agreement extend 
     that 30-day period for an additional period of not to exceed 
     90 days.
       ``(c) The requirements of this section shall not apply--
       ``(1) in any action to seize or forfeit assets subject to 
     forfeiture or in any bankruptcy, insolvency, receivership, 
     conservatorship, or liquidation proceeding;
       ``(2) if the assets that are the subject of the action or 
     would satisfy a judgment are subject to flight, dissipation, 
     or destruction, or if the defendant is subject to flight;
       ``(3) if a written notice prior to filing an action is 
     otherwise required by law, or the claimant has made a prior 
     attempt in writing to settle the claim with the defendant;
       ``(4) in proceedings to enforce a civil investigative 
     demand or an administrative summons;
       ``(5) in any action to foreclose a lien; or
       ``(6) in any action pertaining to a temporary restraining 
     order, preliminary injunctive relief, or the fraudulent 
     conveyance of property, or in any other type of action 
     involving exigent circumstances that compel immediate resort 
     to the courts.
       ``(d) If the district court finds that the requirements of 
     subsection (a) have not been met by the claimant, and such 
     defect is asserted by the defendant within 60 days after 
     service of the summons or complaint upon such defendant, the 
     claim shall be dismissed without prejudice and the costs of 
     such action, including attorneys' fees, shall be imposed upon 
     the claimant. Whenever an action is dismissed under this 
     subsection, the claimant may refile such claim within 60 days 
     after dismissal regardless of any statutory limitations 
     period if--
       ``(1) during the 60 days after dismissal, notice is 
     transmitted under subsection (a); and
       ``(2) the original action was timely filed in accordance 
     with subsection (b).''.
       (b) Conforming Amendment.--The table of sections at the 
     beginning of chapter 23 of title 28, United States Code, is 
     amended by adding at the end the following:

``483. Prior notice of civil action.''.

     SEC. 5. CIVIL RIGHTS OF INSTITUTIONALIZED PERSONS ACT.

       (a) Exhaustion of Administrative Remedies.--Section 7 of 
     the Civil Rights of Institutionalized Persons Act (42 U.S.C. 
     1997e) is amended--
       (1) by amending subsection (a) to read as follows:
       ``(a) In any action brought pursuant to section 1979 of the 
     Revised Statutes of the United States, by any adult convicted 
     of a crime confined in any jail, prison, or other 
     correctional facility, the court shall continue such case for 
     a period not to exceed 180 days in order to require 
     exhaustion of such plain, speedy, and effective 
     administrative remedies as are available.''; and
       (2) in subsection (b)--
       (A) by redesignating paragraphs (1) and (2) as paragraphs 
     (2) and (3), respectively; and
       (B) by inserting immediately after ``(b)'' the following:
       ``(1) Upon the request of a State or local corrections 
     agency, the Attorney General of the United States shall 
     provide the agency with technical advice and assistance in 
     establishing plain, speedy, and effective administrative 
     remedies for inmate grievances.''.
       (b) Proceedings in Forma Pauperis.--Section 1915(d) of 
     title 28, United States Code, is amended to read as follows:
       ``(d) The court may request an attorney to represent any 
     such person unable to employ counsel and may dismiss the case 
     if the allegation of poverty is untrue, or if satisfied that 
     the action fails to state a claim upon which relief can be 
     granted or is frivolous or malicious.''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall take effect on the date of the enactment of 
     this Act.

     SEC. 6. EXPERT WITNESSES.

       (a) In General.--Chapter 119 of title 28, United States 
     Code, is amended by inserting after section 1828 the 
     following new section:

     ``Sec. 1829. Multiple expert witnesses

       ``In any civil action filed in a district court, the court 
     shall not permit opinion evidence on the same issue from more 
     than 1 expert witness for each party, except upon a showing 
     of good cause.''.
       (b) Technical and Conforming Amendment.--The table of 
     sections for chapter 119 of title 28, United States Code, is 
     amended by inserting after the item relating to section 1828 
     the following new section:

``1829. Multiple expert witnesses.''.

     SEC. 7. SEVERABILITY.

       If any provision of this Act or the amendments made by this 
     Act or the application of any provision or amendment to any 
     person or circumstance is held invalid, the remainder of this 
     Act and such amendments and the application of such provision 
     and amendments to any other person or circumstance shall not 
     be affected by that invalidation.

     SEC. 8. EFFECTIVE DATE.

       Except as expressly provided otherwise, this Act and the 
     amendments made by this Act shall become effective 90 days 
     after the date of the enactment of this Act. This Act shall 
     not apply to any action or proceeding commenced before such 
     effective date.
                                 ______