[Congressional Record Volume 141, Number 48 (Wednesday, March 15, 1995)]
[Extensions of Remarks]
[Pages E602-E603]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                              LEGAL REFORM

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Wednesday, March 15, 1995
  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, March 15, 1995, into the Congressional Record.
                              Legal Reform

       The House last week approved three bills that would effect 
     wide-ranging legal reforms in civil lawsuits. The measures 
     respond to a public perception that the legal system has 
     become burdened with excessive costs and long delays and that 
     the growing number of lawsuits, particularly frivolous suits, 
     are swamping the courts. These bills seek to curb lawsuit 
     abuse which weakens the economy, eliminates jobs, and injures 
     our global competitiveness.
       I supported two of the three bills, albeit with some 
     reservations. The civil justice system needs reform--and 
     these bills are a first step in the reform process--but the 
     bills considered in the House were poorly drafted and hastily 
     considered and they overreach. My greatest concern is that 
     their impact would be to tilt the courts in favor of large 
     companies at the expense of individual plaintiffs. My 
     expectation is these problems will be addressed during Senate 
     consideration.


                        product liability reform

       This measure, which I supported, would for the first time 
     create a uniform product liability law (covering state and 
     federal actions) in three areas: punitive damages; joint and 
     several liability; and fault-based liability for product 
     sellers. First, the bill caps non-economic and punitive 
     damages for all civil lawsuits. Punitive damages are awarded 
     to punish negligence, rather than to compensate a victim, and 
     non-economic damages are for things such as pain and 
     suffering. Non-economic damages would be capped at $250,000, 
     and punitive damages would be capped at three times the 
     claimant's award for monetary losses (such as lost wages and 
     medical bills) or $250,000--whichever is greater. Second, the 
     bill restricts ``joint and several liability'' by allowing 
     non-economic damages only up to the level of a defendant's 
     responsibility. In other words, someone who is only 20% 
     responsible would pay only 20% of the non-economic damages. 
     Third, the bill prohibits product liability suits for 
     injuries caused by products that are more than 15 years old, 
     unless the product is expressly guaranteed for a longer 
     period, or if the product causes a chronic illness that does 
     not appear for more than 15 years (such as asbestos).
       It is probably necessary to narrow the risk of 
     manufacturers' and sellers' liability in certain cases 
     involving defective products. Juries are sometimes confused 
     and sometimes come in with awards that are neither reasonable 
     nor justified by the evidence. In many cases, judges 
     routinely reduce those jury awards drastically, but perhaps 
     not in all cases. The restrictions on joint and several 
     liability also make sense. The important link is between 
     behavior and responsibility, and the bill limits a 
     defendant's liability to the share of damages caused by his 
     own actions.
       Capping punitive damages, however, has to be approached 
     with great care. This bill represents a federal encroachment 
     on well established state authority and responsibility. 
     Furthermore, high punitive damages serve to keep a 
     manufacturer on his toes.

[[Page E603]]

                      securities litigation reform

       This bill, which I supported, would limit so-called 
     ``strike'' lawsuits--class action lawsuits filed by 
     stockholders against companies or stockbrokers for having 
     misrepresented the company's economic position when the class 
     of stockholders decided to buy the stock. Further, the bill 
     limits security fraud suits by individual stockholders for 
     similar claims of misrepresentation.
       The problem of frivolous class action lawsuits against a 
     company as soon as its stock drops is a real one. Because 
     their stock prices are so volatile, high technology companies 
     are especially vulnerable. Even so, we do not want to weaken 
     the deterrent to financial fraud. To this end, the House, 
     with my support, approved amendments to promote public 
     disclosure of stock information; narrow exceptions to 
     defendant liability; and define the responsibilities of 
     accountants in reporting cases of fraud to federal 
     regulators.


                        civil litigation reform

       This bill, would make several significant changes in the 
     federal civil justice system. First, it would require losing 
     parties in federal civil cases to pay the attorneys' fees of 
     the winning party under certain circumstances. Second, the 
     bill would restrict the admission of scientific evidence in 
     federal court. Third, the measure would make sanctions 
     against lawyers who file frivolous lawsuits mandatory, rather 
     than leaving the decision to the judge.
       I opposed the bill primarily because of its ``loser pays'' 
     provisions. A key principle of the American system is 
     accessible justice and I do not want to pass laws which 
     prohibit or deter an individual from a meritorious vet risky 
     lawsuit for fear that the penalty would be financial ruin. 
     Everybody wants to curb frivolous lawsuits--and I supported 
     an amendment that would give a defendant the opportunity to 
     seek dismissal of a frivolous suit.
       The bill, in contrast, would place average Americans at a 
     disadvantage in disputes with large corporations, for whom 
     the risk of paying opposing attorneys is simply the cost of 
     doing business. A middle-income plaintiff could be forced to 
     accept a small settlement unless he or she is willing to 
     assume the risk of being financially ruined by the payment of 
     the fees of the other side's attorneys, who may be expensive 
     corporate lawyers.


                               conclusion

       In general, I think the entire legal reform package 
     deserves a searching examination in the Senate. I have been 
     impressed throughout the debate that the House has focused on 
     a tide of anecdotes purporting to show the American legal 
     system as out of control, swamped with frivolous product 
     liability and personal damage suits. I am less sure that the 
     evidence supports the lesson of those anecdotes.
       The balance that must be struck is to protect the people's 
     right to sue while at the same time reducing frivolous and 
     expensive lawsuits. That is not an easy balance to strike and 
     the details reaching that balance become very complicated. My 
     hope is that the Senate will improve upon the House-passed 
     bills. I am inclined to think that they are simply too raw to 
     be enacted in their present form.
     

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