[Congressional Record Volume 141, Number 68 (Wednesday, April 26, 1995)]
[Senate]
[Pages S5703-S5725]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    COMMONSENSE PRODUCT LIABIL- ITY AND LEGAL REFORM ACT

  The Senate continued with the consideration of the bill.
  Mr. FEINGOLD. Mr. President, I rise today to express my strong 
opposition to S. 565, the Product Liability Fairness Act of 1995. It is 
because I really see it as the worst of both worlds.
  First, I think it is a bill that has been shown to have little, if 
any, demonstrated need; second, I think it will have drastic and undue 
effects on some of our most vulnerable citizens in this country.
  Those who support this legislation have stated over and over that the 
bill is to everyone's benefit. It supposedly will benefit 
manufacturers, investors, business owners, workers, and consumers, they 
say.
  Yet, I have still not heard of a single major U.S. consumer 
organization that has endorsed this legislation. The legislation is, in 
fact, opposed by virtually every group in the country representing 
working people, consumers, children, and the elderly.
  The Product Liability Fairness Act says that it seeks to set uniform 
Federal standards for product liability legislation that would override 
certain existing State laws.
  It is not really a bill that provides uniformity at all. Those State 
laws that are more protective of injured consumers are preempted under 
this bill while those State laws that go beyond what this bill would do 
in terms of shielding negligent manufacturers are left intact. They are 
left the same. It is not a bill that has anything to do, really, with 
uniformity.
  In addition, Mr. President, it establishes a heightened--that is, 
more difficult--conscious and flagrant standard for the rewarding of 
punitive damages in product liability cases, and it would arbitrarily 
cap damage awards for punitive damages at $250,000, or three times 
economic damage.
  Again, those State laws with higher caps or no caps are preempted. 
Those States with lower caps or no punitive damages awards are left 
completely untouched.
  The bill would also set a 20-year statute of repose, unless, of 
course, a State law has a lower statute and is, therefore, left alone 
and also a 2-year statute of limitation.
  Finally, Mr. President, this legislation would eliminate joint 
liability for noneconomic damages and create new standards for seller 
liability.
  There are several reasons why I oppose this bill. Before I talk about 
the specific flaws of this legislation, I think it is important to note 
the larger context that the issue of product liability reform fits 
into. That is why, as I look at this whole bill, I oppose the whole 
approach. It is not a question of fixing this and fixing that. I think 
the whole concept driving this bill is an error and should be defeated.
  For the past several months, all of us, Republicans and Democrats, 
have, of course, been trying to interpret the meaning of the November 
election. Many of our Republican colleagues have interpreted those 
elections as being a statement against big, inefficient and 
bureaucratic government. I disagree with a lot of the statements that 
have been made about what the November elections have been about. But I 
think that maybe is one legitimate interpretation of the elections, to 
say that people have had it with big government. And I think in many 
cases that is a legitimate complaint that our constituents have, and 
that they did express on November 8.
  It would make no sense to argue that all Government programs should 
be run by Washington, DC, or that all Government programs should be run 
by the States. Some programs do address underlying problems that are 
national in scope, across State borders. But others are more local in 
nature and are best left to the local and State governments to 
determine how they can best address problems that they are more 
familiar with than are the folks that work in Washington, DC.
  With regard to this matter I, for one, strongly believe that there 
are many issues that should clearly be left to the State and local 
governments to address. One of the reasons I opposed last year's crime 
bill was precisely because it shifted power away from our State and 
local courts and the law enforcement officials there, who have been 
dealing with crime problems in their own regions and are best equipped 
with the knowledge and creativity to solve those problems. So that is 
one reason why I opposed the crime bill, because I did not think we 
should have an overarching Federal Government controlling all aspects 
of that issue.
  Many on the other side of the aisle have been among the strongest 
proponents for the so-called States' rights issue. Indeed, our 
distinguished majority leader has stated repeatedly this year his 
intention to dust off the 10th amendment and give greater control over 
local problems to the State governments. It was the Speaker of the 
other body who stated the following in his address to the Nation on 
April 7, about the intent of the congressional Republicans in the 104th 
Congress. He said:

       We must restore freedom by ending bureaucratic 
     micromanagement here in Washington. This country is too big 
     and too diverse for Washington to have the knowledge to make 
     the right decision on local matters. We've got to return 
     power back to you, to your families, your neighbors, your 
     local and State governments.

  Given those statements, how does this square with the legislation we 
are considering today? What happened to the need to address local 
problems on the local level? All this talk about States' rights is 
about to go right out the window, as we usurp over 200 years of State 
control over their tort systems. It seems a very odd trend indeed.
  It should come as no surprise that this legislation is vehemently 
opposed by the American Bar Association, the National Conference of 
State Legislators, and the Conference of State Chief Justices. But 
those who support this legislation do not want to listen to State 
legislators or State judges or consumer organizations. They do not even 
want to listen to those individuals who have been tragically maimed or 
injured by the negligence of a small but powerful group of 
manufacturers.
  Of course, those who support this legislation justify the bill by 
saying that such drastic action is needed to curb the so-called 
litigation explosion that has supposedly resulted in a court system 
totally bogged down in product liability litigation. Let us take a 
quick look at just how bogged down are our courts with product 
liability claims. The Department of Justice, using data compiled by the 
National Center for State Courts, recently released a study of 378,000 
State tort cases which apparently represents about half of all tort 
suits completed between July 1991 and June 1992. According to the 
study, only 3 percent of all tort claims involve product liability, 
just 3 percent of all tort claims. The bulk of the tort claims 
[[Page S5704]] come in the form of automobile accidents and premises 
liability.
  This study also found that in 1993 tort claims comprised only about 
10 percent of all civil case filings. That means that the so-called 
massive usurping of State sovereignty because of a so-called explosion 
is occurring to address an area that represents less than 1 percent, 
actually less than a half a percent of all civil case filings. So, this 
is no panacea for our civil justice system.
  Despite these statistics supporters continue to claim that our small 
business and manufacturing communities are suffocating under the burden 
of liability insurance and the constant threat of litigation. Yet just 
2 years ago the National Association of Manufacturers--clearly one of 
the biggest backers of this legislation--announced their own results of 
a survey they had conducted of their own members in which they asked 
their members what specific issues were of concern to them and what 
problems in their minds pose the largest impediments to growth in the 
manufacturing industry. The results are very interesting and I think 
somewhat at variance with the claims of those who are so strongly 
supportive of this bill.
  Somewhat incredibly, given the rhetoric, just 8 percent of the 
respondents listed product liability as a major problem in the 
manufacturing industry, only 8 percent. This is not a survey of the 
whole public. This is a survey of manufacturers. In fact, almost three 
times as many of the respondent manufacturers listed the Federal budget 
deficit as undermining the growth of the manufacturing sector.
  So who is on the side of the manufacturers here? Those who support 
reforming the legal system, which less than 1 in 10 manufacturers 
listed as a major impediment to growth in investment? Or those of us 
who have consistently been out here voting for legislation that slashes 
Government spending and reduces the deficit, such as the President's 
1993 budget bill that has cut our annual projected deficits by almost 
$100 billion.
  I guess I am a little surprised at the eagerness of those on the 
other side to usurp the authority of the States to address a problem 
that has traditionally been a State issue. Unfortunately, though, I am 
no longer surprised at the continued pecking away at the provisions and 
principles contained in our Constitution. In this case I think this has 
something to do with some of the principles embodied in the Bill of 
Rights. I think it is astonishing the number of different efforts 
underway in this Congress that would dramatically alter the U.S. 
Constitution. Let us just start with the proposed constitutional 
amendments.
  We had the balanced budget amendment, which was thankfully defeated 
in this body. We had a constitutional amendment being proposed for 
line-item veto authority. Soon we will apparently be considering term 
limit constitutional amendments, which in my view represent a 
profoundly undemocratic viewpoint, that we need to limit people's 
voting rights by telling the voters back home for whom they can and 
cannot vote.
  There are other things this Congress apparently has in store for 
rewriting, redrafting, and in my view gutting the Bill of Rights. 
Constitutional amendments have been introduced on school prayer and 
flag desecration which, to my knowledge, would mark an unprecedented 
historical event by amending the first amendment. And in the Judiciary 
Committee recently, Mr. President--you sit on that committee as well--
the Republicans have all but stated their intention to toss out the 
exclusionary rule, a key legal principle derived from the fourth 
amendment, on unlawful search and seizures. Perhaps we will soon be 
holding hearings in the Judiciary Committee on the eighth amendment and 
what may be obsolete principles, according to some, of excessive bail 
and cruel and unusual punishment.
  In a sense I think this bill unfortunately turns us to another 
provision of the Bill of Rights, the seventh amendment. This product 
liability legislation in my view really, at least in principle, 
contradicts an important legal principle that has been the cornerstone 
of our judicial process for the last 200 years, and that is the right 
to trial by jury. True, there have been no proposals in the 104th 
Congress, at least not yet, to eliminate an individual's right to a 
jury trial. But I am concerned about it, especially after the senior 
Senator from West Virginia has described the efforts of some in this 
Congress to relegate the Constitution to the rare book room of the 
library.
  But I think it is clear what a tremendous emphasis our Founders 
placed on the notion of allowing a panel of your peers to determine 
your fate, and that it is the jury, representative of the American 
people as a whole, that is best equipped to hear the facts of a case, 
filter out the truth, determine who is at fault in a case, and then 
finally determine the appropriate degree of punishment. That is a jury 
function in our common law tradition, not a judge function, 
traditionally, and certainly not the function of the Federal Government 
as embodied in the U.S. Congress in Washington.
  I will speak in more detail about this at a later time but I view 
this measure as nothing more or less than an assault on the concept of 
trial by jury.
  Mr. President, in addition this legislation is riddled with 
complications and contradiction. Let me discuss this cap on punitive 
damages for a moment. Under this legislation, punitive damages are 
capped at $250,000, or three times a plaintiff's economic damages, 
whichever is greater.
  First, I find it interesting that those who support this legislation 
claim that it provides uniform Federal standards with respect to 
product liability. How can they even stand up with a straight face and 
say that? It is simply not true because, if this was truly a uniform 
standard, that would mean the punitive damages would be capped at 
$250,000, or three times economic damages in all of our 50 States. But 
that is not the case. Those States that currently prohibit punitive 
damages would be permitted to continue to completely prohibit punitive 
damages. They would not have to comply with this new Federal standard 
of allowing at least up to $250,000 or three times economic damages in 
punitive damage awards.
  So let us be clear about what this means. This is the opposite of 
uniformity. If two individuals living in States with different sets of 
product liability laws are injured by defective products produced in 
those respective States the two individuals have substantially 
different legal rights and remedies available to them. But that is not 
all. One of the foremost purposes of punitive damage awards is not only 
to punish those manufacturers who deliberately and willfully market a 
product they know to be effective and dangerous, it also is to deter 
other manufacturers from engaging in such practices. I would presume 
that the reason some punitive damage awards are permitted under this 
bill--at least I hope this is the view--is because the supporters of 
this bill presumably agree that punitive damages have at least some 
sort of role, some purpose to play in deterring such abuses and 
protecting consumers.
  Mr. President, this just does not add up. Under this bill, those 
States that currently prohibit punitive damages would be able to 
continue to completely prohibit punitive damages. That means consumers, 
children, and the elderly living in different States with different 
sets of laws will have substantially different protection from injuries 
and defective products.
  So much for this notion that this bill is all about uniform Federal 
standards, and so much for the idea that this bill is fair, equitable, 
and beneficial to consumers. But again, I assume that most of the 
supporters of this legislation do have a feeling of supporting some 
concept of punitive damages, recognizing that there are clearly a set 
of cases where punitive damage awards are appropriate and necessary to 
sanction a manufacturer who has been willfully negligent.
  Mr. President, I ask: Why do we not force those States that currently 
have this absolute rule prohibiting any punitive damage awards to 
change their laws and to meet this new Federal standard that is 
proposed in this bill?
  I guess I am going to have to take a crack at predicting the answer 
to that question. I presume that the answer would be that we here in 
Congress should defer to the State legislatures that have made the 
determination that there should be no punitive damage awards in their 
State's product liability cases.
  [[Page S5705]] But how does this rationale justify the preemption of 
State laws, such as those in my home State of Wisconsin, that allow 
punitive damage awards where appropriate? Why do we not respect the 
State of Wisconsin enough to defer to the wisdom and judgment of its 
legislature and its Governor on this matter?
  It appears to me to be completely contradictory to say that you 
support uniform Federal standards for product liability laws, and also 
support the notion that States can have different standards for 
punitive damage awards. The bottom line for those on the other side of 
this aisle is clear: Giving more power to the State and local 
governments is a great idea, but only when you agree with the 
principles and policy that those entities are pursuing.
  Second, I assume that those who support limiting punitive damages do 
so because they believe that these awards are out of control and that 
limiting punitive damages will allow us to somehow simultaneously 
improve our productivity and innovation and somehow continue to 
constrain the abuses--sometimes very willful abuses--of manufacturers 
who market defective products.
  I would like to now examine those premises. First, with regard to the 
frequency and size of punitive damage awards, I think that the evidence 
that has been presented thus far has made it clear that punitive damage 
awards have been grossly mischaracterized. They are not out of control. 
They are not adversely affecting the competitiveness of American 
manufacturers.
  Recently, the Senate Judiciary Committee on which I serve held a 
hearing on punitive damage. At that hearing Dr. Stephen Daniels of the 
American Bar Foundation reported findings of a study that he completed 
of over 19,000 civil jury verdicts in 89 counties in 12 States plus the 
entire States of Alaska, Idaho, and Montana for the years 1988 through 
1990.
  Not only did this study find that punitive damages are awarded in a 
small percentage of all civil cases--that figure was roughly 4.8 
percent--the study also excluded that punitive damage awards were 
modest and more often awarded in financial property harm cases than in 
product liability cases. This study was consistent with an earlier 
study of Dr. Daniels of punitive damage awards in the early 1980's. 
That study at that time produced very similar results.
  The bottom line is that in recent years there has been virtually no 
proliferation in the size or frequency of punitive damage awards.
  As has been cited by others as well, another study by Professors 
Michael Rustad and Thomas Koening found that during the years 1965 
through 1990, a 25-year period, there were a total of just 355 punitive 
damage awards in both State and Federal courts. Roughly a quarter of 
these awards were reversed or remanded upon appeal. Mr. President, 91 
of these cases were related to the asbestos issue. That means excluding 
asbestos cases there has been an average of about 10 punitive damage 
awards a year in both Federal and State courts for the past 25 years.
  Clearly these studies and others demonstrate the inaccuracy of claims 
that punitive damages are increasing in size and frequency. Those who 
believe we need to cap punitive damage awards in product liability 
cases, as this bill prescribes, should understand that we are only 
talking apparently about roughly 10 cases per year.
  What will happen to the quality of American-made products under this 
legislation? How concerned will multimillion-dollar corporations be 
about the safety and quality of their products when they are most 
likely to face a punitive damage award that would only be equal to a 
fraction of their profits in one day--just a fraction of one day's 
corporate profits? It does not sound like much of a deterrent.
  Just last year, a California jury ordered Dow Corning Corp. to pay 
$6.5 million in punitive damages for knowingly manufacturing faulty 
silicone gel breast implants. This verdict was upheld by the ninth 
circuit court of appeals that found that Dow Corning knew that the 
product had possible defects and exposed thousands of women to a 
potentially painful and debilitating disease.
  Under this legislation, that punitive damage award would have been 
reduced to three times economic damages, or about $l.4 million. It 
would have been a 78-percent reduction in that judgment. Measured 
against Dow Corning's assets of $l.4 million, punitive damage award for 
these acts would have only represented about 0.04 percent of that 
corporation's assets; just four one-hundredths percent.
  What does this mean? It means that a corporation was able to 
knowingly market a product that they knew to be defective, and they 
knew it threatened the health of thousands of women. And yet under this 
bill they would only have had to pay a penalty of four one-hundredths 
of 1 percent of their assets of a huge corporation.
  That is what happens when you replace the jury's knowledge and 
familiarity with the particulars of a case and replace it with an 
arbitrary cap on certain damage awards. That clearly illustrates just 
who stands to benefit from this legislation and demonstrates the 
absurdity of the notion that anyone could say that this bill is fair to 
consumers.
  I also want to discuss the elimination of joint liability for 
noneconomic damages under this legislation. Opponents of the principle 
of joint liability make a pretty compelling case. I have to concede 
that on the surface it is one you really have to examine in order to 
counter it. It is hard to understand. Why should someone who is held to 
only 50 percent, or 25 percent, or even 10 percent liable for an 
individual's injury be forced to assume a much greater burden of 
compensatory damages if another liable party is financially unable to 
pay the damages? Certainly there is a force behind that when you just 
look at it on the surface.
 Why should a party that is held to be partially liable for an injury 
be forced to pay an entire damage award if the other party or parties 
are unable to pay?

  Some believe this is a good argument for supporters of this bill. It 
sounds good; it sounds fair, unless, of course, you are a 10-year-old 
child who has lost his vision for the rest of his life because of the 
negligence and irresponsibility of a manufacturer who is held not 
entirely but the manufacturer is held partially liable for the damages. 
The manufacturer is partly responsible for the horrible thing that has 
happened to this 10-year-old.
  Suppose in this case the manufacturer is held 60 percent liable while 
the large multi-million-dollar retail chain that sold the product is 
held 20 percent liable, and other parties involved make up the 
remaining 20 percent. Suppose the manufacturer then files for 
bankruptcy. What happens then? Sure, the child's family will be 
reimbursed for their hospital bills and maybe for the lost wages of the 
10-year-old for the lawns he used to mow or the driveways he used to 
shovel.
  When we talk about noneconomic damages--noneconomic damages--the 
child under this law, under this bill before the Senate, will only get 
a fraction of that to which he is entitled.
  I notice that the interests that support this legislation have 
cleverly chosen to highlight kids in that age group, using the Little 
League of America as an example of the need for tort reform. But what 
about the baseball games that this 10-year-old boy could no longer 
participate in because of his loss of vision? What about the fact that 
this 10-year-old boy could no longer even watch a baseball game either 
at a stadium or on television? Baseball is finally back, as of 
yesterday and today. But this bill cuts out those considerations and 
caps them for a child such as this.
  Is it fair that supporters of this legislation are more concerned 
about the manufacturer who is 10 or 20 or even 30 percent liable for an 
accident, partially liable, more concerned about that manufacturer than 
the child who is zero percent responsible, zero percent responsible, 
and completely innocent of any wrongdoing? Is that the right balance?
  Of course, those corporate interests backing this legislation are not 
terribly concerned about those questions. They are preoccupied with 
stock reports and profit margins. You have to recognize that asking the 
retailer to pay more is much more fair than forcing an injured child 
who is 100 percent innocent of any wrongdoing to receive only a 
fraction of the compensation that will allow him to return to as 
[[Page S5706]] close a life as possible before the accident, which the 
retail chain is partially to blame for, actually occurred. And I think 
this provision, this provision that I am discussing now--and it is hard 
to choose because there are a lot of bad ones in the bill--more than 
any other one in the bill as revealing the outlandish proposition that 
this bill is fair. It is this provision that changes the complexion of 
our legal system.
  This legislation will alter the precept of our legal system to say 
that a victim of wrongdoing and negligence is no longer the principal 
concern of the tort law. The principal concern will now be the profits 
and economic health of a business interest that has been convicted by a 
jury of negligence in the manufacture, sale, and use of a defective 
product. This is about companies that have been adjudicated guilty of 
making something that did not work right and that can hurt people. This 
is not about companies that have been found to be innocent. This 
legislation is grounded in a belief that it is more important for our 
business and manufacturing communities to remain prosperous, very 
prosperous in many cases, and shielded from liability than it is to 
return an innocent victim of a defective product back to a state as 
close as possible to their well-being before the accident occurred.
  So, Mr. President, I look forward to returning to discuss a lot of 
the specific amendments and issues in the bill. Let me just conclude my 
opening statement by saying that I believe these choices here are 
fairly clear, the lines are fairly well drawn, and that bill is a bill 
that definitely deserves to go down to defeat in the Senate.
  I thank the Chair and I yield the floor.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, first I ask unanimous consent that the 
Senator from North Carolina [Mr. Faircloth] be added as a cosponsor 
both to S. 565, the Product Liability Fairness Act of 1995, and to the 
Gorton substitute amendment to H.R. 956.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GORTON. Mr. President, I think perhaps at this point in the 
debate, it may be appropriate to speak not so much to the broad nature 
of the bill but to two or three arguments advanced by the last two 
opposing Senators, the distinguished Senators from Wisconsin and from 
California.
  Together with Senator Hollings, the Senator from Wisconsin was 
somehow or another implicating the seventh amendment right of trial by 
jury into this debate and has implied at least that the bill before us 
somehow or another restricts that constitutional right to trial by 
jury.
  This is a curious, perhaps a bizarre argument. It is an argument 
which is equally applicable to every statute, State or Federal, which 
sets legal parameters which juries must follow in reaching verdicts. To 
say somehow or another that a limitation on punitive damages is a 
violation of the seventh amendment is to say that a jury instruction 
limiting actual damages to those that have really been suffered by a 
victim is somehow unconstitutional, that any instructions to any jury 
as to what the law is under any circumstances are unconstitutional.
  Even more strange, more bizarre to this Senator, is the proposition 
coming from Members of this body who when we are dealing with the 
criminal code want very strict legal limitations on sentences that can 
be imposed on convicted criminals. I have not heard either of these 
Senators argue that a jury which finds an individual guilty of a 
misdemeanor under Federal law should be permitted to impose life 
imprisonment on that convict, and yet that is exactly the proposition 
for which they argue here in connection with a civil case.
  They argue that as a form of punishment, punitive damages, a jury's 
discretion should be absolutely unlimited, no matter how egregious the 
conduct; no matter whether we are dealing with an individual, a small 
company, or a large corporation, the jury's discretion should be 
untrammeled, and that the jury should be permitted to impose punitive 
damages of whatever limit.
  Mr. President, that is analogous to saying a jury ought to be able to 
sentence a jaywalker to hanging if for some reason or other the 
discretion of the jury should reach that point.
  Why is it--this is one question I have not heard answers to, directly 
or indirectly. Why is it that in our entire criminal code we have as a 
protection against convicted defendants limits on sentences, but in 
civil actions in which proof does not need to be adduced beyond a 
reasonable doubt but only by a preponderance of the evidence in many 
States, and by clear and convincing evidence should this bill pass, why 
here alone should that discretion be absolutely unlimited?
  It is a question I would like to have answered by those who oppose 
any kind of limitations. A debate against the specific limitations of 
this bill and adjustment, a feeling that we can do better, is something 
that I know both the Senator from West Virginia and I are both open to.
 We may not have gotten the formula exactly right.

  But the proposition that there should be some kind of limit seems to 
me to be obvious and has even moved the Supreme Court of the United 
States to say, without coming up with what those limits are, that there 
may be some constitutional limits, with the clear implication that 
Congress could make just exactly such a decision.
  The next point that I should like to clear up at this stage, Mr. 
President, is the confusion, I think--and I can only ascribe it to 
that--which is the inevitable result of listening to opposition 
speakers about whether or not there is some kind of limitation in this 
bill on the recovery of all of the damages which an individual actually 
suffers as a result of the negligence of a manufacturer.
  Mr. President, the only limitations in this bill are limitations on 
punitive damages, which by definition are not direct compensation for 
losses suffered as the result of an accident or of someone's 
negligence. No limitations are imposed by this bill on the recovery of 
actual damages--loss of wages, medical expenses, and the like. No 
limitations are included in this bill on the recovery of noneconomic 
damages. ``Pain and suffering'' is the usual phrase for such damages. 
There are those who propose such limitations, but they are not included 
in this bill, and this Senator does not intend to vote for any. And I 
believe I also speak for the Senator from West Virginia in that 
connection.
  So no individual, none cited by the Senator from California, none 
cited by the Senator from Wisconsin, none cited by the Senator from 
South Carolina, will be deprived by the passage of this bill of his or 
her right to recover all economic and all pain and suffering damages 
which a jury determines they have suffered in a product liability 
action.
  The only limitations are on the amount of punishment to which a 
negligence defendant can be subjected. And there, as I have already 
said, we have the curious argument that in the civil courts that 
punishment should be unlimited while in the criminal courts it should 
be subjected to very, very real limits.
  I also found interesting and somewhat curious the argument of the 
Senator from Wisconsin with respect to joint damages. He said--and I 
believe I am paraphrasing him correctly--why should an innocent victim 
be deprived of all of the damages that victim suffered even from a 
party not responsible for all of those damages? That, if a retailer, 
for example, is responsible for only 30 percent of the losses of an 
individual plaintiff, the plaintiff should nonetheless be able to 
collect 100 percent of his total damages from that retailer.
  Well, why not from you or me, Mr. President? Under those 
circumstances, what difference is there? Once we have determined the 
defendant is responsible for more than what that defendant was 
responsible for, there really is not any distinction between one 
citizen and another.
  Should we, for example, in the Criminal Code, when two brothers, one 
wealthy and one not wealthy, are sentenced for a crime, each, in 
addition to a jail sentence, is fined $100,000, say that the wealthy 
brother should pay the other brother's fine because the other brother 
cannot pay it? Well, of course not. We would never think of doing that 
in a criminal case. And yet we do that constantly in connection with 
joint liability.
  [[Page S5707]] That is not justice, Mr. President. And if we feel 
that the victim should always be fully compensated, then perhaps that 
is a duty of society as a whole, but it should not be imposed on one 
party not responsible for the particular harm for which compensation is 
being sought.
  I want to congratulate the Senator from West Virginia on his 
marvelously logical answers to the Senator from California on research 
and development of new products. Of course, if you look only at a 
particular victim, that victim and that victim's attorneys want the 
maximum possible recovery. But when the net result of the system which 
causes that tells one very large company that it should logically give 
up AIDS research or contraceptive research lock, stock, and barrel 
because the flame is not worth the candle, that there are simply too 
many risks in the development of a new product, it is not an answer to 
say that there are other companies that are still engaged in research. 
We in our society want the maximum possible number of people, of 
individuals and of companies, to attempt to deal with all of the ills 
which afflict the human race.
  We were not advantaged, to take another example, when 20 years ago 20 
companies made and developed football helmets and now only two are 
left. That is not an advantage.
  Mr. INHOFE. Will the Senator yield?
  Mr. GORTON. The Senator is happy to yield.
  Mr. INHOFE. That is a good point to yield on.
  If you will forgive me for this observation. I have been watching the 
debate on this most significant bill. It seems as if we have been 
hearing from no one except lawyers. And I do not want to lose sight of 
the fact that this bill is not so much a legal reform as a potential of 
being the largest jobs bill passed in probably a decade.
  When the Senator talks about the football helmets, there are so many 
products that used to be produced exclusively in America that are not 
produced here any more for that one very reason. You mentioned football 
helmets. I could name a number of things.
  But what comes to my mind, in the real world, I was in the field of 
aviation. In fact, I have the distinction of being the only Member of 
Congress to ever fly an airplane around the world.
  I remember, when I did that, going across Europe and seeing where all 
of the aircraft are being made today that used to be made in America. 
Prior to 1980, we manufactured about 17,000 single-engine aircraft each 
year. In the last 4 years, we have averaged about 400 a year.
  And there is not any big mystery as to why that happened. It happened 
because you cannot be globally competitive and offset the costs of 
product liability.
  In fact, in the other body, when I was in the Aviation Subcommittee, 
we had a bill up that we were successful in getting passed finally this 
last year, the Aviation Revitalization Act of 1994. We had testimony 
from Beech Aircraft that the average cost to offset the exposure of 
product liability was $83,000 a vehicle. Obviously, if you are talking 
about a large jet aircraft, that $83,000 is not all that significant. 
But when you are talking about a single-engine plane or a four-
passenger aircraft, you cannot be competitive.
  We actually had the repose bill that I think you remember and you 
were participating over on this side on it.
  I remember when Russ Meyer, who is the president of Cessna Aircraft, 
testified before our committee. Now this is a product liability bill 
that did one thing. It said that once a manufacturer of an aircraft or 
of aircraft parts had had that aircraft or those parts functioning as 
they were designed to function for 18 years, beyond that point they 
could not be held liable for something that went wrong with the 
product.
  They had some exceptions to it. That seemed to be very reasonable. 
Russ Meyer, the president of Cessna Aircraft, said on the record, 
``Inhofe, if you pass that bill, we at Cessna Aircraft will start 
manufacturing single-engine aircraft which we quit manufacturing in 
1986 and we commit that we will manufacture 2,000 airplanes in the 
first year after the bill is passed after our tooling up.''
  That is exactly what has happened. You might remember when Piper 
Aircraft went into bankruptcy. There was a news conference. The 
president of Piper said that the reason they went into bankruptcy was 
because they could not be competitive on a global basis. In fact, they 
even suggested they could move their tooling up to Canada and make the 
same airplanes and make a profit, while they could not in this country.
  Anyway, as a result of all that, we were successful in passing that 
bill. I remember when it started out as being a 12-year repose and then 
went to 15 years. When they finally agreed to settle on 18 years, I 
went to the underwriting community and said, ``I think that is too 
long.'' They said, ``No.''
  The point is there has to be some point in the future in which 
lawsuits cannot be lodged against manufacturers. It is now a reality. 
Since that time, Cessna Aircraft has done what they said they would do, 
they are producing aircraft.
  I have heard estimates as to how many jobs will be created 
nationwide, and it is in excess of 25,000 jobs, just in one industry 
where product liability reform was the cause of the increase in jobs.
  We know in Kerrville, TX, Mooney is now increasing their production 
rate by 40 percent. We know that Unison is now making electronic 
ignition systems. In my State of Oklahoma, there is a single-engine 
manufacturer whose first model will be coming off the assembly line in 
the next few weeks. It is a composite single-engine airplane. We know 
in Nowata, OK, they are making cylinders, all because of one thing. We 
reformed product liability in one industry and that industry happened 
to be the aircraft industry.
  So I think sometimes when we become too theoretical and try to guess 
what the future will bring if we do this, this is an actual case as to 
how many jobs in America are being created as a result of product 
liability reform only in one industry.
  I was very glad to be a part of that, and you were, too. I certainly 
think that is the most convincing evidence that we should expand that 
to other manufactured items.
  Mr. GORTON. Mr. President, I thank the Senator from Oklahoma for that 
eloquent statement. It does seem to me that the experience of just the 
past year, since the passage of that small aircraft statute of repose, 
indicates much more graphically than can any theoretical argument the 
actual positive impact on jobs, on the availability of new products, of 
American competitiveness. We do not have to argue theory anymore. We 
can now argue from fact, and the burden of proof, it seems to me, is on 
those who say ``that far and no further'' is overwhelming.
  I must tell you, when the Senator from California stated that she 
felt that no changes were needed in our product liability laws, and 
when we got the same implication from the Senator from Wisconsin, I 
looked up their record last year in voting on that aircraft bill 
expecting to find they voted against it, but they voted for it. So 
their position must be that aircraft is the only thing where any kind 
of reform is needed. Nothing else. It was the only industry adversely 
affected by product liability litigation.
  Of course, that proposition is insupportable. If a statute of repose 
alone could have such a dramatically positive impact on the small 
aircraft industry, it is obvious that balance changes, such as these 
are which, as I already said, does not restrict anyone's right to 
recover all of their actual provable damages in any product liability 
case, that the positive impact of change is going to be dramatic and 
significant.
  For those who look back and say here are terrible things that 
happened and we want an absolutely risk-free society in any and all 
circumstances, they see, I think quite erroneously, one set of 
consequences. Those who feel that we have not developed all of the 
products that we ought to develop in the history of the United States, 
that we should encourage new developments and that we should encourage 
competition, and that while those who make serious mistakes, purposeful 
or negligent mistakes, should be responsible for the consequences of 
those mistakes, we are not going to add to that responsibility, 
absolutely unlimited, unfettered by any discretion, punishment without 
any of the protections of the 
[[Page S5708]] criminal code that we should do that, seems to me, as I 
believe it does to the Senator from Oklahoma, overwhelmingly obvious.
  As I said in the beginning, and as the Senator from Oklahoma said so 
eloquently, we now have one very positive example of how this kind of 
legislation works. Now let us do more of it, and I think we will see an 
even more dramatic recovery in many industries which have been 
constricted on the part of many companies that have abandoned lines of 
products and many new companies, entrepreneurs who would like to go 
into new businesses and who are discouraged from doing so by the 
specter of lawsuits.
  Mr. ROCKEFELLER addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. ROCKEFELLER. Mr. President, during the course of the discussion 
this afternoon, it seems that the debate has centered on the premise 
that somehow there isn't anything wrong with the present system.
  Let me try to lay out some of the reasons why we need to change the 
product liability system, not radically, but change it in a way which 
makes it fair to consumers and to businesses.
  Let us just start out by saying the consumers lose often under the 
current system. They receive inadequate compensation through product 
litigation. Severely injured consumers only recover about a third of 
their actual damages, while their mildly injured counterparts recover 
approximately five times their economic losses. There is a disparity 
there which is not good.
  Consumers wait forever. They have to wait 2\1/2\ years to receive 
their compensation because of the whole process of a trial and 
depositions and then appeals, particularly where punitive damages are 
concerned, which can force people to wait even longer. So an injured 
person can be forced to wait between 2\1/2\ to 4 years to get 
compensated for something that happened to them, let us say in a 
machine shop where their hand was mangled which puts them in a position 
of having to depend entirely on their own resources, worker's 
compensation,
 and health insurance, if they have any health insurance. The consumer 
pays heavily for our current product liability system, and that is 
because the costs of liability insurance increase the costs of products 
that people need. Consumers also suffer because manufacturers decide 
not to introduce needed new products, and thus the consumers do not get 
the products they need. Consumers may be paying 50 percent of the cost 
of the ladder in insurance costs for liability. For some 
pharmaceuticals it is up to 95 percent. Under our system, consumers can 
pay outrageous costs.

  The current tort system pays more to lawyers and transaction costs 
than it does to claimants. That is really a quite remarkable statement. 
How can we have a product liability system where somebody is injured 
and the lawyers on both sides end up getting more money than does the 
injured person? I do not understand why that is not something that 
somebody would want to change and make better. I think the consumer 
loses on that.
  The consumer also faces a closed courthouse door under the current 
law, and that is because in some States the statute of limitations 
simply does not allow the consumer to take his or her request for due 
process into the courtroom because it is already closed; the door is 
closed. And we are saying in our bill that, in fact, we are going to 
make sure that anybody who has been injured, but may not even know it 
at the time because it may be a toxic injury or a chemical injury of 
some sort, will still be able to be compensated. Under our bill, 
injured persons will still be able to seek compensation 15 or 20 years 
after they have been injured if they do not discover that injury until 
that much time has elapsed. This is called the discovery rule, and it 
applies not only to the discovery that the individual is sick, but also 
to the cause of the illness, and once that has been discovered, the 
statute of limitations for 2 years begins to run.
  This is a very proconsumer change, particularly in the world that we 
are moving into, which has so many toxic chemicals that can threaten 
the health of consumers.
  I think, also, because we have talked about consumers--and this is 
meant to be a balanced bill so let us also talk about manufacturers. I 
think manufacturers lose under the current system.
  Liability stifles research, and it stifles development. This has been 
amply recorded in the literature. Many businesses spend a lot more on 
litigation than on research and development. That may not be the only 
reason. Companies tend to be pulling back on R&D anyway. But the fact 
that they spend more on litigation--many do--than on R&D does not sound 
to me like an American sort of system. Well, that is our current 
system. I would think people would want to make it a better one. 
Liability makes successful products unmarketable.
  I have already talked this afternoon about Bendectin, the antinausea 
medication, different AIDS-related and pre-AIDS-related vaccines and 
medicines, football helmets, and others. They simply are not made 
available because it is decided they are too big a risk and therefore 
Bendectin, which is available in Canada and has been for years, is not 
available in the United States, and thus our consumers and our 
manufacturers lose under this because they are precluded from doing 
something for fear of litigation.
  Liability decreases funding. That is fairly obvious. The fear of 
product liability has diminished investment in basic scientific 
research. Now, that is important because you have basic research and 
you have applied research leading to commercialization of a product, 
and they are very different. Basic research is sort of the seminal 
research. That is the kind of thing where you really have to have a 
sense of stability and predictability and confidence in the future, and 
that is now way down, and part of the reason for that is the fear of 
product liability litigation.
  I think that the United States itself, as a country, loses under the 
current system of product liability. Insurance rates disable 
manufacturers. American manufacturers pay 10 to 50 times more product 
liability insurance rates than do their foreign competitors. Well, at 
some point, when you are fighting over every nickel in a car or in some 
vaccine, or something else, these things matter, and the foreign 
country wins out and we lose out. So America loses out.
  In fact, in Texas, in a single year, they have estimated that the 
liability system has cost the State of Texas 79,000 jobs. I cannot 
prove that, but that is what has been said. Texas stands behind that. 
Seventy-nine thousand jobs in West Virginia would be as if a 
substantial part of the population simply moved out. And then the funny 
thing also is that there is no real proof that the current product 
liability system does not enhance product safety. It is interesting 
that the number of tort suits rose dramatically in the 1980's, even 
though consumer injury rates declined steadily. Tort goes up, injuries 
go down, and now that was not just in the 1980's but also in the 
1970's. For 20 years, injuries were going down and tort actions were 
going up.
  Let me spend a moment discussing the costs of the tort system in the 
United States. Estimates of the cost of tort litigation, of which 
product liability litigation is part, range from $80 billion to $117 
billion a year. Concerning the need for uniformity, the United States 
has 51 separate product liability systems. The European Economic 
Community, which is 13 countries, has one product liability system. 
Japan has one system. I have worked very hard in Japan. For years we 
had something called the structural impediment talks with the Japanese, 
and we would tell each other what we thought each country ought to do 
to improve their performance so that our trade deficit would get better 
and theirs would get less better, and one of the things the Japanese 
kept saying to us was that you ought to get more uniformity into your 
product liability laws because you are getting eaten alive by a lot of 
countries, including ourselves.
  This is staggering, and I hope that those who hear my voice will 
listen to this. Nearly 90 percent of all companies in the United States 
of America can expect to become a defendant in a product liability case 
at least once. It has been suggested that there were only 11 cases in 
which punitive damages were awarded in 1990. But if 90 percent of all 
businesses can expect to be sued at some point, this is the so-called 
[[Page S5709]] chilling effect. Are 90 percent of American businesses 
doing the wrong thing each day?
  Manufacturers today can be sued for products that were manufactured 
in the 1800's. I do not think that is the American way.
  Companies can be forced to pay damages to persons whose abuse of 
alcohol and illegal drugs caused their injuries. That is wrong; that is 
unfair. In 1994, the Gallup survey said that one in five small 
businesses reported that they have decided not to introduce a new 
product or not to enhance an existing one out of concern for potential 
product liability. That is 20 percent of all small businesses saying we 
are not going to improve our product, or we are going to withdraw the 
products we are about to introduce.
  Interestingly, the Brookings Institution found no link between 
lawsuits and the safety of products. That is an important statement. 
And they documented many instances where safety improvements are not 
made, again, because of the fear of litigation.
 That being, if they made an improvement, it would imply that the 
previous iteration was somehow not safe and therefore they might get 
sued.

  The United States is the only nation in the world that allows a 
safety improvement to be admitted as evidence that the preceding 
product was less safe. We do it legally. Therefore, companies have 
reason to be afraid.
  I note that it is 5 o'clock. I yield the floor.
  The PRESIDING OFFICER (Mr. Brown). Under the previous order there 
will be 1 hour of debate equally divided between the Senator from 
Michigan and the Senator from South Carolina.
  Mr. HOLLINGS. Mr. President, the Senator from Michigan would amend 
his amendment to provide not just ``claimant'' but ``parties''--which 
would be both the plaintiff and the defendants.
  Therein, Mr. President, goes right to the reason--one of the big 
reasons--I put in my amendment to his. It was quite obvious to me, 
quickly reading on last evening the amendment of the distinguished 
Senator from Michigan, that here they were getting plaintiffs' lawyers. 
In my amendment I wanted to get at all lawyers.
  Now, right to the point, in this limited time, once again what we 
have, Mr. President, is an issue that searches for justification, or a 
solution looking for a problem that has been going on for some 15 
years.
  It started, of course, back in the Ford administration whereby they 
said it was a national problem, and President Ford appointed a 
commission. The commission found it was not a national problem and 
recommended leaving it to the States.
  They were not satisfied with that, Mr. President. They came in and 
said insurance was impossible to obtain. We, of course, refuted this 
argument, and they do not even contend for it today.
  Otherwise, they came with the claim that there was a litigation 
explosion and we needed massive product liability reform in order to 
confront the national litigation explosion, which, of course, was 
decreasing not increasing.
  Then they came and said they were not developing certain products out 
of fear of litigation, this was particularly true in the drug and 
chemical industry. Of course when we were debating NAFTA and GATT these 
industries proclaimed that they were world class and could compete with 
anybody in the world. So then they came with competitiveness. There was 
a buzz word that went on around here for about 5 years, that the 
market--by the way, which now we will leave everything to the market 
forces--the market was insufficient and what we needed was a Congress 
to pass a law to make us competitive, and that unless we legislate 
product liability we could not be competitive.
  Of course, we pointed out in our own backyard we had some 100 German 
industries, 50 Japanese industries, blue-chip corporations of America, 
who all were coming to my State and never once complaining about 
product liability.
  I have been the Governor and the Senator there now for numerous 
years, and the attraction of industry and we can relate industry after 
industry almost get a habit of asking the question. So it was not 
competitiveness.
  Then they started with various gimmickry with respect to the Little 
League. They said, no, they were not involved. And then they went, of 
course, to the matter of the Girl Scouts. The Girl Scouts said, ``Wait, 
wait. That is not the case at all. We do not have a problem with 
product liability.''
  Then they had a little TV show where a former colleague, Senator 
George McGovern of South Dakota, came on and said he went broke on 
account of product liability. Now they have quit running that because 
that is not the case at all.
  Still a solution searching for a problem, now they place their ace 
card--lawyers, aha. Any time we take a poll in America, immediately the 
disdain for lawyers. So they say, if we cannot get this bill passed on 
lawyers, it will never pass.
  It talks here in the amendment, as I was just reading it, of ``equity 
in legal fees.'' I challenged the distinguished Senator from Kentucky 
and the Senator from Michigan on last evening to bring me the series of 
product liability cases where somehow the clients had been done in by 
the plaintiff's lawyers.
  Of course, the amendment by the Senator from Michigan termed it 
``claimants.'' Now I guess he would like to say, just a minute, we will 
change ``claimants'' to ``parties'' and get attorneys on both sides.
  But there is not any question that these men are very erudite and 
very learned and have written books in law and everything else of that 
kind, and they knew what they were doing until, of course, we put up 
our amendment, and said, wait a minute, we will bring into focus the 
real issue here, and that is not product liability, but lawyers.
  Now, if I could put in a bill to solve the lawyers problem, I would 
do it. However, I do not know that we are that good here in the Senate 
of the United States.
  Be that as it may, the idea is, as was said in Henry VI ``Kill all 
the lawyers.'' Take any poll, and if we can convince the individual 
Members, who are busy on so many different issues, to come now and vote 
whether for or against lawyers, they will vote against the lawyers, and 
we will get this bill passed.
  I think of the saying:

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

  Patrick Henry, the lawyer.
  We can see, Mr. President, that young leader sitting with his bill in 
hand, crafting the Declaration of Independence, Thomas Jefferson, the 
lawyer, or the father of the Federalist papers.

       But what is government, save the best of reflections on 
     human nature? If men were angels, the government would not be 
     necessary. And if angels governed man, there would be no need 
     for controls over the government. So the task in formulating 
     a government to be administered by man over man is first, 
     frame that government with the capacity to control the 
     government and thereupon oblige that same government to 
     control itself.

  James Madison, father of our Constitution.
  Again, going up all Presidents right on up to Abraham Lincoln. We can 
see him, ``equal justice under law,'' signing the Emancipation 
Proclamation. Abraham Lincoln, the lawyer.
  Or the darkest days of the Depression, people searching for hope. 
``All we have to fear is fear itself.'' Franklin Delano Roosevelt, a 
lawyer.
  I can see now in December 1952, standing before the Supreme Court of 
the United States.

       But your honor, if the State-imposed policy of separation 
     by race is removed, the young children will have the freedom 
     to choose their school and their own classmates and play 
     together.

  The beginning of the end of segregation in this land. Thurgood 
Marshall, of the NAACP, a lawyer.
  Even today, we find Ralph Nader crusading for safety and health. On 
last evening's TV Morris Dees down in Alabama, working around the 
clock--or Mississippi, I forget. I know Morris but I have forgotten. I 
just came back from Mississippi, but I know he has this Southern policy 
on poverty, Southern law center on poverty where he has been tracking 
that Ku Klux Klan.
 And 
[[Page S5710]] now the Michigan Militia and the others, against 
terrorism, at the risk of his own life; Morris Dees, a lawyer.
  We begin to wonder, if these lawyers had been silenced what we would 
have in this land? Obviously I am very proud to be an attorney at the 
bar and I am not going to join in this derision, save of those who just 
really are fixers rather than lawyers at the bar, and Heavens knows 
this city of full of them--60,000 lawyers and the majority of them come 
now to fix us, the jury, on billable hours.
  Pat Choate wrote his book, ``Agents of Influence,'' how the Japanese 
have those attorney firms, over 100, retained at a cost of over $110 
million. The country of Japan, by pay, is better represented than the 
people of the United States in Washington. The consummate pay of 535 
House Members and Senators is only $71 million. But they are all over 
us, and that is the genesis of this thing that has been going on for 15 
to 16 years--the power of the lobby. Because the problem does not 
exist. It is not a national problem. We do have product liability; 46 
of the 50 States have reformed their product liability laws in the last 
15 years. But now comes the ace card, if we can play this with respect 
to the equity of legal fees. What is the equity? That is the most 
amazing thing, to this particular Senator, to have the parties 
sponsoring this legislation and trying to amend it talking in terms of 
the consumer, how they are looking out for the consumer. Every consumer 
organization in the country is absolutely opposed to this bill. The 
American Bar Association, they do not have lobbyists up here. The 
Association of State Legislators, they do not have lobbyists up here. 
The Association of State Supreme Court Justices, they do not have 
lobbyists up here.
  But yes, the Business Round Table, the Conference Board, the National 
Association of Manufacturers, the chamber of commerce--yes, they keep 
big buildings full of lobbyists. So we got this legal reform movement 
going and it has been a faltering point. So now they will bring in 
equity in legal fees on last evening--of course for plaintiff and not 
for the defendant. Now the distinguished Senator says, ``I want to make 
it for both sides.'' That is what my amendment said.
  Billable hours--we are paid at $133,000. I figured it out. If we 
could have, rather than a minimum wage, have a maximum wage for these 
fixers, we would have a $50 a billable hour limitation. If they work 51 
hours, I would give them $133,000 a year and then if they work some on 
the weekend they could go on up to a couple of hundred thousand 
dollars--pretty good. But I figure we ought to pay them as much as we 
pay the Senators, and that would be a goodly plenty and I think it 
would clear out 30,000 of the 60,000--if we want to get rid of the 
lawyers. If we want to get rid of the lawyers.
  So there is the amendment to bring into focus the absolutely empty 
nature of this particular initiative. And it is lobbyists moved, 
organized, financed, motivated, committed for in the campaigns. Yes, 
when I ran in 1992 I had the different groups come to me: ``Can't you 
help us this time on product liability?'' I said, ``They just passed 
the reform here in South Carolina. What is the problem? Ask the judges; 
go to talk to our judges. Most of them are Republicans, obviously, in 
South Carolina. They had been appointed by President Nixon, President 
Reagan, President Ford, President Bush. They will tell you in a flash 
it is not a problem.'' But they have to find some reason. Now they are 
playing the ace card, and that is why I put up this particular 
amendment.
  I do not guess I will be able to control them. I would like to. But, 
be that as it may, we have had our time at bat to expose the nature of 
this particular amendment and the nature of this particular 
legislation. It is absolutely not in the interests of consumers, not in 
the interests of good law. We have the professors, 121 professors at 
law have come as a group to attest against this particular measure. 
They do not have lobbyists up here. No, it was not considered in the 
Judiciary Committee where fundamental law is considered. There was a 
quick 2-day turn, adding on amendments in the evening, destroying any 
idea of uniformity.
  That is what they started with. At least they had the good conscience 
to change the title. I thought maybe it was a gimmick, but I will give 
them credit for conscience. You will find this bill over on the House 
side, ``To regulate interstate commerce by providing for a uniform 
product liability law.'' But when you get over to the Senate side it is 
some kind of fairness act they call it now. They at least got away from 
the uniformity, not trying to continue that particular charade. ``This 
act may be cited as `The Product Liability Fairness Act Of 1995.'''
  So we have the amendment relative to fees and instituting regulatory 
measures--bureaucracy at its worst. I have time to practice law but not 
to keep all the records. I have a simple, clear-cut contingent fee. I 
assume all the costs, assume all the expenses, assume all the bills for 
the doctors, the witnesses, assume all the printing measures for the 
transcript of the record, the appeal record and everything else of that 
kind going up to the court--I assume all of those. And when I get 
through, if we win then we get the third. If we lose we get nothing and 
I have paid all the bills.
  It goes right to the heart of the misunderstanding of the 
distinguished Senator from West Virginia, Senator Rockefeller, when he 
talks about delays, the trial lawyers delay. Heavens above, you get 10 
or 15 of these cases you have backed up in the office thousands of 
dollars of cost and hours spent and never paid for. Billable hours? I 
never had a client with billable hours in 20 years of law practice, but 
you got that backed up. It is in my interests to bring that to a 
conclusion. I have to move on these cases. We are not trying to delay.
  The ones who can sit up in the ivory tower on the 32d floor with the 
mahogany walls and Persian rugs and all the secretaries running around 
and all the investigators and you press buttons and say ``Well, yes, I 
am having this coffee but mark it down as thinking. Give me another 
billable hour.''
  Come on. You are worried about lawyers and their fees? Let us get to 
the defense counsel that is running up the majority of the costs. He is 
absolutely wrong. He is not for the consumers, the Senator from West 
Virginia. They are getting their money. They are not complaining. And 
they are getting the majority of it. When it comes to who gets the 
majority of the fees, plaintiff or the defendant, the defendants do. 
The national insurance study, we put it in the committee report, shows 
they are the ones running up the costs. We have no time or interest in 
running up any kind of costs whatever.
  It is a proud thing in America that the poor and middle class can get 
competent representation. It has worked. It continues to work. It is 
not a national problem. They never have had a hearing in any particular 
body about lawyers' fees. But if that is the game, then when we take up 
medical malpractice we will go into doctors' fees. And we will try 
these amendments and initiatives that they have because they cannot 
prove their case otherwise. I wait for the distinguished Senators from 
Kentucky and Michigan to show me the series of cases in product 
liability where there was not any, as the title says here, ``equity in 
legal fees.''
  I retain the remainder of my time.
  The PRESIDING OFFICER. The distinguished Senator from South Carolina 
retains the remainder of his time. It is 11 minutes.
  The distinguished Senator from Michigan is recognized.


          Amendment No. 597, as modified, to amendment No. 596

  Mr. ABRAHAM. Mr. President, I yield myself such time as I desire.
  Mr. President, following discussions with my colleague from South 
Carolina, and the managers, I ask unanimous consent to modify the 
underlying first-degree amendment. I send the modification to the desk.
  The PRESIDING OFFICER. Is there objection to that modification?
  Mr. HOLLINGS. No objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 597), as modified, to amendment No. 596, is as 
follows:

       At the end of the amendment add the following new title:

                    TITLE III--EQUITY IN LEGAL FEES

     SEC. 301. EQUITY IN LEGAL FEES.

       (a) Disclosure of Attorney's Fees Information.--
       [[Page S5711]] (1) Definitions.--For purposes of this 
     subsection--
       (A) the term ``attorney'' means any natural person, 
     professional law association, corporation, or partnership 
     authorized under applicable State law to practice law;
       (B) the term ``attorney's services'' means the professional 
     advice or counseling of or representation by an attorney, but 
     such term shall not include other assistance incurred, 
     directly or indirectly, in connection with an attorney's 
     services, such as administrative or secretarial assistance, 
     overhead, travel expenses, witness fees, or preparation by a 
     person other than the attorney of any study, analysis, 
     report, or test;
       (C) the term ``party'' means any person who retains an 
     attorney in connection with a civil action arising under any 
     Federal law or in any diversity action in Federal court;
       (D) the term ``contingent fee'' means the cost or price of 
     an attorney's services determined by applying a specified 
     percentage, which may be a firm fixed percentage, a graduated 
     or sliding percentage, or any combination thereof, to the 
     amount of the settlement or judgment obtained;
       (E) the term ``hourly fee'' means the cost or price per 
     hour of an attorney's services;
       (F) the term ``initial meeting'' means the first conference 
     or discussion between the party and the attorney, whether by 
     telephone or in person, concerning the details, facts, or 
     basis of the claim; and
       (G) the term ``retain'' means the act of a claimant in 
     engaging an attorney's services, whether by express or 
     implied agreement, by seeking and obtaining the attorney's 
     services.
       (2) Disclosure at initial meeting.--
       (A) In general.--An attorney retained by a party shall, at 
     the initial meeting, disclose to the party the party's right 
     to receive
      a written statement of the information described under 
     paragraph (3).
       (B) Waiver and extension.--The party, in writing, may--
       (i) waive the right to receive the statement required under 
     subparagraph (A); or
       (ii) extend the 30-day period referred to under paragraph 
     (3).
       (3) Information after initial meeting.--Subject to 
     paragraph (2)(B), within 30 days after the initial meeting, 
     an attorney retained by a party shall provide a written 
     statement to the party containing--
       (A) the estimated number of hours of the attorney's 
     services that will be spent--
       (i) settling or attempting to settle the claim or action; 
     and
       (ii) handling the claim through trial;
       (B) the basis of the attorney's fee for services (such as a 
     contingent, hourly, or flat fee basis) and any conditions, 
     limitations, restrictions, or other qualifications on the fee 
     the attorney determines are appropriate; and
       (C) the contingent fee, hourly fee, or flat fee the 
     attorney will charge the client.
       (4) Information after settlement.--
       (A) In general.--An attorney retained by a party shall, 
     within a reasonable time not later than 30 days after the 
     date on which the claim or action is finally settled or 
     adjudicated, provide a written statement to the party 
     containing--
       (i) the actual number of hours of the attorney's services 
     in connection with the claim;
       (ii) the total amount of the fee for the attorney's 
     services in connection with the claim; and
       (iii) the actual fee per hour of the attorney's services in 
     connection with the claim, determined by dividing the total 
     amount of the fee by the actual number of hours of attorney's 
     services.
       (B) Waiver and extension.--A client, in writing, may--
       (i) waive the right to receive the statement required under 
     subparagraph (A); or
       (ii) extend the 30-day period referred to under 
     subparagraph (B).
       (5) Failure to disclose.--Except with regard to a party who 
     provides a waiver under paragraph (2)(B) or (4)(B), a party 
     to whom an attorney fails to disclose information required by 
     this section may withhold 10 percent of the fee and file a 
     civil action for damages in the court in which the claim or 
     action was filed or could have been filed.
       (6) Other remedies.--This subsection shall supplement and 
     not supplant any other available remedies or penalties.
       (b) Effective Date.--This title shall take effect and apply 
     to claims or actions filed on and after the date occurring 30 
     days after the date of enactment of this Act.

  Mr. ABRAHAM. Mr. President, the distinguished Senator from South 
Carolina indicated, as we discussed the effect of the modification, it 
is to correct the transpositional error that took place when we took 
language from another piece of legislation and created this amendment. 
My intent was, and remains, to apply the amendment that I offered 
initially, not just to the clients of plaintiffs' attorneys but to the 
clients of defense attorneys as well. That is the purpose of the 
modification, to fundamentally change the word from ``claimant'' to 
``party'' so it would apply to all cases.
  Mr. President, what I would like to do is talk briefly about why this 
amendment was offered initially and to clarify some ambiguities and 
some misunderstandings that appeared to exist and comment a little bit 
about the merits of the amendment.
  First of all, let me begin by saying that I am an attorney, as is the 
Senator from South Carolina and many other Members of this body. I 
respect my colleagues who are lawyers. I respect the attorneys who 
practice in my State and those who practice in the other States. I 
believe most lawyers are doing an outstanding job, and I think that 
consequently the amendment I am offering is not going to really have 
much effect on the overwhelming percentage of attorneys in America. In 
fact, the goal of my amendment is essentially to eliminate bad 
practices undertaken by some attorneys who do not attempt to keep their 
clients well informed as to the arrangements into which they enter.
  Often we have, particularly in cases where clients who are less 
experienced in the legal system, clients who are unsophisticated about 
the ways in which attorney-client relationships work, we have 
situations where clients are less informed than they should be about 
the arrangements they are entering into. Such is the case when I go to 
have my television or my automobile repaired and inquire ahead of time 
for some assessment of what the cost will be and what is wrong with the 
car or the television set. I think many clients of attorneys need 
similar help to make informed decisions about the types of arrangements 
that they will enter into.
  That is basically the purpose of my amendment. People are unhappy in 
my State and elsewhere with respect to the way the current system of 
legal fees is entered into.
  Just to mention a couple of cases in point, I recently received a 
letter from a Michigan resident who wrote that the U.S. District Court 
for the Northern District of Illinois had just notified him that he was 
included in a class action case, and the court soon would be holding a 
hearing whether to give final approval to a settlement with Chrysler 
Corp. under the proposed settlement. Under the alleged defect in the 
Chrysler credit leases, each class member was going to be paid between 
$2 and $2.50. The attorney who brought the case would be paid up to 
$175,000. Under this agreement, the lawyer would get enough money to 
buy a big, new house. The victims would get enough to buy a Big Mac.
  That struck me as hardly the kind of appropriate practice that we 
should tolerate without the clients having full information as they 
become engaged in the matter. That is the reason a number of 
organizations that represent consumers have called for the kind of 
amendment which I am offering here today.
  Bill Pride, the executive director of an organization of Americans 
who are for legal reform--and the only consumer group, I might add, 
that has publicly stated that it accepts no money from big business, 
supports disclosure of attorney fees, and the sort of approach I am 
taking with this amendment--recently testified before the House 
Judiciary Subcommittee on Courts and Intellectual Property. He stated 
that because of its complexity and expense of lawyers, the legal system 
is inaccessible to more than half the population when they have legal 
problems. For low-income people, legal help is almost nonexistent 
except for the most poor, who qualify for legal aid. Millions of 
middle-income people cannot get any help from lawyers for simple 
remedies because of the complex and expensive and intimidating 
procedures established by the legal profession.
  He went on to indicate the need for reform. One of the reforms that 
his organization supports is the kind of fee disclosure proposal which 
I am offering here today because of its potential value to the clients 
as they enter into legal relationships and negotiate fees.
  So indeed there are people who are not satisfied with the information 
they have with regard to entering into legal arrangements and who are 
not sophisticated enough in dealing with entering into those relations 
to enter into them in a knowledgeable way, or to even know what their 
options are.
  My coming here today is not to argue that fees are too high or too 
low or wrong or right. I did not come before the Senate with this 
amendment to affect the fees that are paid. What I came here for was to 
try to provide a system by which fee arrangements would be 
[[Page S5712]] entered into by the less sophisticated among us on a 
knowledgeable basis.
  The requirements I am suggesting in the amendment I believe are both 
simple and fundamentally fair. Without going into all of the details 
again, as I did yesterday, basically the amendment requires attorneys--
and under the modification, this will be for the defense as well as for 
plaintiffs' counsel--prior to the entering into an arrangement to 
provide the potential client with information as to an estimated amount 
of time that would be involved in handling the matter with an 
explanation of the various options available as far as the nature of 
the arrangements that would be entered into, whether it would be hourly 
billing, or a national fee, or a contingent fee, and then an 
explanation as to the type of fee as well as the specific amounts that 
would be employed; in other words, the per-hour amount, the contingent 
percentage, or the national fee. Following completion of the matter, a 
similar kind of accounting would take place in which the actual hours 
would be made available to the client, the amount of the fee which was 
ultimately calculated or charged, and then the computation of what the 
hourly rate would be.
  I recognize that for some small law firms, this may be more 
burdensome than for others. But like the Senator from South Carolina, 
who I gathered was in a small firm at one time in his career, I began 
my legal career when I left law school in a small firm in Lansing, MI. 
We did not have a lot of fancy computer equipment or access to 
accountants. But we did maintain a pretty good recordkeeping of our own 
efforts and the hours that we put in on matters, regardless of the 
nature of those matters because, simply, we thought it was to be able 
to operate our offices in an efficient fashion, as well as to serve our 
clients better and to be able to satisfy requests of this sort if they 
were to come from clients who knew their rights included the ability to 
make such requests. But I will add a few other points.
  The amount that I am offering has several options in it. One is a 
waiver option. Clients may, under the amendment, waive their rights to 
this information either preliminary to or following the transaction of 
a legal matter. It does not require, therefore, that in each case the 
attorney provide this information.
  Second, I think it is very consistent with a recent formal opinion, 
formal opinion No. 94-389, addressing attorneys' contingent fees, which 
was recently entered into by the American Bar Association Standing 
Committee on Ethics and Professional Responsibility. That section, at 
page 7, said that, among other things, regardless of whether the lawyer 
and the prospective client, or both, are initially inclined toward a 
contingent fee, the nature and details of the compensation arrangement 
should be fully discussed by the lawyer and client before any final 
agreement is reached.
  It went on to say that among the factors that should be considered 
and discussed are the following: The likelihood of success, the likely 
amount of recovery or savings if the case is successful, the 
possibility of an award exemplary or multiple damages, and on and on. 
And included in the things that were recommended was the amount of time 
that is likely to be invested by the lawyer.
  In other words, the proposal I am making is not the only one that I 
think many lawyers already follow. It is also something which the 
American Bar Association, which may be on different sides of other 
parts of this pending legislation, has in its own recent opinion 
suggested ought to be followed.
  Finally, I will just say that we are not in this legislation telling 
the States what to do. This amendment is limited to actions within the 
Federal court; in short, within the purview of what I believe is the 
appropriate purview of this Congress in determining the areas in which 
we might apply these types of regulations; in short, the matters before 
our Federal courts.
  So I would just conclude by saying that when I proposed this and 
brought it to the floor, I really did it with a belief it essentially 
was a matter which would give consumers more information, a right to 
know what the legal fees they were entering would be like, what they 
should anticipate, what their options were, an accounting for those 
fees. In no way was it my intention to cast aspersions on the legal 
profession. Certainly it was not my intention to be critical of the 
many fine lawyers who are referenced by the speech of the Senator from 
South Carolina. I hope that was not the case.
  We are always hearing in the Congress the concerns that virtually all 
of us have I think about consumers, about the interest of consumers, 
about the interests of people who are frequently finding themselves in 
a disadvantaged position with respect to big business, with respect to 
big Government, with respect to other big institutions. Many of those 
individuals find themselves from time to time in circumstances where 
they would like to litigate a concern or defend one. If they are not 
well informed, it seems to me they are at an even greater disadvantage, 
and I believe that this amendment provides a chance to help them and at 
the same time improve the legal system.
  It is the case that there is a lot of criticism about lawyers and the 
way the legal system works. One of the reasons this legislation on 
product liability was generated obviously was because of concerns about 
the system. I do not want to kill all the lawyers. I wish to improve 
the legal system. I think by eliminating from the many concerns people 
have the concern that they are brought into legal arrangements without 
the full knowledge of their options, without the full accounting of the 
time and the dollars involved, that it would substantially improve the 
system and the way it functions.
  Finally, as I said a little earlier, I think we are asking here 
lawyers to do nothing more than we ask of many other professionals in 
many other service parts of the economy. As I mentioned, when I go to 
the auto shop with a car problem, I am given information as to what is 
likely to be wrong, what the likely cost of repairs are, and so on, so 
that I can make an informed decision whether I wish to pursue repair.
  We are told that it is harder to do that in this context because it 
is a more complex area, and I agree it is more complex. But I think, 
because of its complexity, because it is a more difficult area, that is 
all the more reason why we should try to get the people who come into 
this often intimidating setting the sort of information that would 
allow them to make knowledgeable decisions. That is the purpose of my 
amendment.
  At this time, Mr. President, I reserve the remainder of whatever time 
I have remaining.
  The PRESIDING OFFICER. The Senator from Michigan has 17 minutes 
remaining.
  Who yields the Senator from West Virginia time?
  Mr. ROCKEFELLER. Mr. President, I yield myself time.
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. ROCKEFELLER. Mr. President, at 6 o'clock, we are going to have 
two votes, and as the Democratic manager of this bill I wanted to alert 
colleagues on both sides as to the plan that the Senator from 
Washington [Mr. Gorton] and myself have, what we are going to do so 
that Senators might be appraised of the situation.
  The PRESIDING OFFICER. Will the Senator suspend for a moment. Since 
we are under a time agreement, the Chair asks who yields the Senator 
from West Virginia time?
  Mr. ROCKEFELLER. I yield myself 3 minutes.
  The PRESIDING OFFICER. The time remaining is divided between----
  Mr. ABRAHAM. Mr. President, I so yield.
  The PRESIDING OFFICER. The Senator from Michigan yields the Senator 
from West Virginia time. The Senator from West Virginia is recognized.
  Mr. ROCKEFELLER. Again, I want to let my colleagues know of the 
situation and what Senator Gorton and I will do at 6 o'clock. We are 
here to consider repairing something called the product liability bill. 
We are not here to determine the hourly rates of lawyers. We are not 
here to do a variety of other things.
  Therefore, the Senator from Washington will move to table the 
amendment of the Senator from South Carolina, and I will move to table 
the amendment of the Senator from Michigan.
  [[Page S5713]] We are not here, again, to determine how lawyers' fees 
should be publicized. That is my reason. I understand the interest that 
both Senators have in raising these questions. But I want the Senate to 
consider a bill that has been the subject of hearings, close scrutiny, 
and careful work, and that is called the product liability bill. I do 
not think this bill is the bill to use as a vehicle for regulating the 
fees of lawyers, telling them how to publicize their fees or 
intervening into the lawyer/client relationship.
  In moving to table these amendments, the managers and authors of this 
bill want to make a point, however. We are discouraging, actively 
discouraging amendments outside the scope of the product liability bill 
itself. We welcome constructive revisions to this bill within the 
context of the bill, but we do not welcome the phenomenon of loading up 
on this bill for the purpose of making points, some of which might be 
valid, but we just do not want to do that. And we do not want to have 
amendments scoring points against lawyers.
  So we are here to do the serious work of the product liability bill, 
and I want my colleagues to be informed as to how the managers will 
proceed.
  I thank the Senator from Michigan and I thank the Presiding Officer.
  The PRESIDING OFFICER. The Senator from Michigan retains 14\3/4\ 
minutes. The Senator from South Carolina has 11 minutes remaining.
  Who seeks recognition? The Senator from South Carolina is recognized.
  Mr. HOLLINGS. I thank the distinguished President.
  Mr. President, I am trying to find--I thought we had found it. After 
the day was over last evening, I went back to my office and I said on 
that airline case, several airlines really of overcharging, and the 
lawyers steamed up a class action, and as the distinguished Senator 
from Michigan reported in a letter to the colleagues, the lawyers got 
some $16 million and others got coupons worth $20 or $25, one of my 
secretaries said, ``Yes, that got lost in the mail. You had a chance to 
do it.'' But I said I never heard it, but I had plenty of money left on 
the table, I guess, because I never knew anything about the case. So a 
young attorney in my office said, ``Well, I denied knowing anything 
about the case, but I got $150 when I got notice.'' I said, ``Well, who 
are the lawyers?'' He said, ``I don't care. I do not know who the 
lawyers were and don't care. They got me some money.''
  Now, no one is complaining about the lawyers and no one is inventing 
equity. The truth of the matter is we had some 15 years ago, I say to 
the Senator from Michigan, a big debate about the Federal Trade 
Commission coming in and regulating attorneys and attorneys' fees and 
everything else of that kind.
  And we can have the hearings again and come back and go over that 
thing. But in the last dozen years we have not had hearings on this. 
The best the Senator from Michigan refers to is a letter from Michigan 
about a class action and one gentleman over on the House side who 
testified supporting disclosure of fees. I hope he does support 
disclosure of fees. All of us at the bar do.
  Here I hold in my hand ``Model Rules of Professional Conduct and the 
Code of Judicial Conduct'' from the Center of Professional 
Responsibility of the American Bar Association. And we practice under 
this. And it has on page 18 rule 15 about the fees and it runs down--I 
do not want to spend all my time, but it has not only the time and 
labor required, much better than the amendment of the Senator from 
Michigan, the amount involved, the time limitations, the nature and 
length of professional relationship, the experience, whether the fee is 
fixed or contingent, right on down, all in writing.
  I never have found that client--I guess that is the nice experience 
of mine--complain to me about the handling of product liability.
  And we have had it up five times before the Commerce Committee, five 
times with hearings, five times the report and we had every 
ramification that you can think of on product liability, and here we 
come again and without ever having any testimony whatsoever or the 
subject raised about fees, a Senator or a couple say, well, let us go 
to lawyers. We cannot get them on the Girl Scouts or the Little League. 
We cannot get them about their former colleague going broke.
  There is no litigation explosion. The only explosion is businesses 
suing businesses. And after all, remember, we are representing 
consumers. Now, if anybody believes that, I happen to represent the 
consumers in this instance and not the manufacturers. They are trying 
to take advantage here, when we are talking about welfare reform, 
making the recipients more responsible, we are going backward and 
saying manufacturers be more irresponsible. We have got a long litany 
in this debate about the good in America for the safety of products. We 
can count on it. It redounds to our safety and our health; we almost 
take it for granted. Where there have been some adjustments, the States 
have taken care of it. But fees, the equity in fees, to assume that 
there is not any and that you need to pass a law in Congress to get it 
is ludicrous, really laughable.
  I mean any lawyer go down here, or anybody else, to my billable hours 
friends. They will tell you the American Bar and everything else like 
that. They do have an understanding with the billable hours. They like 
it. The phone rings. ``Wait a minute.'' ``There is another $25. I 
answered the phone.''
  ``You got a copy of that? Twenty-five cents for every copy. Run some 
extra copies. We have to pay for the copy machine.''
  ``Put a little fee on the computer.''
  Senator Abraham and I can get computers now. Put fees on those. 
Little internal fees for computers, like these MRI's at the hospitals, 
paid for five or six times. They have bought every computer downtown 10 
or 15 times with little fees on the computers.
  Lawyers know how to look at these. I am one trying to look out for 
the clients. Let us not diminish the rights of the clients.
  I can tell you now, yes, in Henry VI, Dick the butcher says, yes, 
that the first thing we must do is kill all the lawyers. That was not, 
in a sense, a demeaning or pejorative term. He was saying, if tyranny 
was to succeed, the tyrants must first kill the lawyers. And if 
demagoguery is going to persist and succeed, then we are going to have 
to get rid of all the lawyers who are going to expose the demagoguery 
that is going on in our Government today.
  I can tell you here and now, I am proud of that expression ``Kill all 
the lawyers,'' because it is the best of all compliments. We stand in 
the way of the takeover of the big business and the clients that have 
kept this going for 15 years, again and again and again and again, with 
commitments and elections and everything else working. And it is that 
poor, injured client in middle-class America, they cannot pay any 
billable hours, so they come in.
  And, yes, you know, no matter how thin the pancake, there are two 
sides to every pancake and every question. And you do not have a sure 
shot. You have to get all 12 jurors. You do not try a case and get a 
majority vote as we do in the Senate. You have to get a unanimous vote 
by the greater weight of the preponderance of the evidence, or for 
punitive, willful misconduct, by the greater weight of the 
preponderance of the evidence.
  Do not act as though there is a problem out there with respect to the 
trial of cases. If there is runaway verdicts, it is businesses suing 
businesses upon suing businesses upon suing businesses. They love to 
come all dressed up and go in the boardroom and say, ``Well, take them 
on.'' Of course, the lawyers, billable hours, ``Hot dog. That will take 
care of the family and send my boy through college during the next 4 
years. Billable hours, whoopee. We had a board meeting today, and let 
me tell you who we are going to sue. I have no idea if they are going 
to win it, but it will take care of me.''
  That is what has been going on in the courtroom and cluttering it up, 
and not these tort claims because, yes, they are more safe. There is 
less injury, and if there is less injury, there is less tortuous 
injury.
  I cannot understand the logic of the Senator from West Virginia, who 
uses his hands up and down, whatever it is. It is not relevant 
whatsoever, or not responsive.
  I retain the remainder of my time.
  The PRESIDING OFFICER. The Senator from South Carolina retains the 
remainder of his time. He has a little over 2 minutes remaining.
  Who seeks recognition?
  Mr. ABRAHAM addressed the Chair.
  [[Page S5714]] The PRESIDING OFFICER. The Senator from Michigan is 
recognized.
  Mr. ABRAHAM. I yield myself such time as I desire.
  Mr. President, I just want to reiterate a couple of points I made. 
The purpose of the amendment which I have offered is not defined to 
affect legal fees. In fact, it is the second-degree amendment that the 
Senator from South Carolina has offered which would attempt to put 
constraints on those fees.
  Again I express, all I am trying to do is provide information, both 
before as well as after the entering into of a legal arrangement 
between clients and their attorneys.
  I think the descriptions of such an amendment as being overly 
bureaucratic and so on is really inconsistent with several facts. 
First, the fact is that whether it is the distinguished Senator from 
South Carolina or other Members of this Chamber who are attorneys that 
I have spoken to on this or heard from about it--and I have heard from 
several--virtually to a person, they indicate that in one way or 
another they already perform the function of information and 
transmission that we are talking about.
  The attorneys in my State who have talked to me prior to the offering 
of this amendment and since have likewise said that in their current 
arrangements, they provide similar information. But they all 
acknowledge, at least the ones in my State, that there are people in 
the practice of law who do not. And the people who are unfortunate 
victims in these situations are the less knowledgeable, the people who 
are less familiar with the legal process and what their rights are when 
they enter into these kinds of arrangements. They frequently are in a 
disadvantaged position because they are the victim of an injury or a 
harm and in a disadvantaged position because they are intimidated 
entering into the legal process itself.
  Again, I stress that this is really, in my judgment, a choice between 
helping consumers or inconveniencing those attorneys who do not follow 
the various American Bar Association and State bar association 
guidelines that both the Senator from South Carolina and I have 
referred to or the practices of most attorneys.
  It seems to me that to inconvenience those attorneys who do not feel 
it is their responsibility to at least inform their clients as to the 
kind of fee arrangements they are going to enter into and the likely 
amount of time involved, as well as to inform them after the fact of 
what the costs are and how much time was involved, to worry about 
inconveniencing them rather than worrying about protecting those 
consumers of legal services that are at least the victims I am trying 
to help with this legislation is to have the balance struck the wrong 
way.
  So, for that reason, I believe the amendment makes sense.
  I would also just reference back to the example we used yesterday 
that was in a letter we sent around regarding the airline matter. It 
was brought to my attention by an article in the Washington Post. The 
article was written from the perspective of one of the various people 
who were part of the class of people that were affected and received 
these awards. It was not a complimentary position that was taken by 
that plaintiff. It was a position of somebody who apparently was 
representative of a lot of other plaintiffs that were not happy. They 
were unhappy with the outcome. That is often the case. I think it is 
particularly the case when people have no information as to what the 
fee structures will be. And for that reason, I think the amendment that 
I am offering, as I say, will help consumers.
  It may prove to be an inconvenience for some attorneys, but those 
attorneys who will be inconvenienced are the ones who are not following 
the kinds of practices and recommendations of the bar association as 
are those of the profession who I think are doing an outstanding job.
  Mr. President, I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Michigan reserves the 
remainder of his time. He has 10 minutes and 42 seconds remaining.
  Who seeks recognition?
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.
  Mr. HOLLINGS. Mr. President, just in the minute or so that I have 
remaining, I ask unanimous consent to have printed in the Record the 
full text of this Monday edition.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Mar. 20, 1995]

In Settling With Airlines, There's No Free Ride; Coupons for Travelers, 
                        $16 Million for Lawyers

                          (By Anthony Faiola)

       When a number of the nation's major airlines agreed to 
     settle a price-fixing lawsuit by offering passengers discount 
     coupons on air fares, it looked as if the flying public was 
     getting a plum.
       But passengers soon discovered, after the coupons arrived 
     in January, that there would be no free rides because the 
     terms of the settlement limited savings on any one trip.
       Meanwhile, the airlines--defendants in the class-action 
     lawsuit that led to the settlement--found themselves with a 
     wonderful marketing tool. Although the coupons had a total 
     face value of $438 million, they could be redeemed only a few 
     dollars at a time.
       And the lawyers who represented the members of the class in 
     the suit were the ones to make real money--$16,012,500.
       The legal fees and the limited benefits to the flying 
     consumers have led many travel and legal experts, including 
     the federal judge in Atlanta who signed the settlement, to 
     label this a ``lawyers' case.''
       ``Defendant and plaintiff attorneys have learned to fall in 
     line with each other'' in class-action cases, said Cornish 
     Hitchcock, an attorney with Washington consumer activist 
     group Public Citizen. ``A sweet settlement deal for the 
     defendants can be cut, and the plaintiffs can get their huge 
     attorneys' fees, then everyone is happy. Everyone, that is, 
     except for the class,'' he said. Hitchcock was among those 
     who argued for lower legal fees in the case.
       The 4.2 million plaintiffs in the airline case had little 
     choice in who represented them. Thirty-seven law firms 
     nationwide raced to file antitrust suits on behalf of air 
     travelers, then went in search of a class of clients.
       Five firms, in particular, came away with the most in fees, 
     court documents showed. They included the offices of the four 
     lawyers who chaired the steering committee representing the 
     plaintiffs and the Atlanta firm that oversaw the 
     administration of the case.
       In Washington, the firm Cohen, Milstein, Hausfeld & Toll 
     received $326,912,08. In Philadelphia, considered by legal 
     experts as the power center of class-action firms, Fine, 
     Kaplan and Black received $155,685.75; Cohen, Shapiro, 
     Polisher, Shiekman and Cohen received $261,117.03; and Kohn, 
     Nast,
      Savett, Klein & Graf received $382,277.14. In Atlanta, the 
     firm Carr, Tabb & Pope received $504,980.16, according to 
     court records.
       Attorneys calculated the awards based on an estimate that 
     2.3 million travelers would request coupons. Instead, almost 
     double that number responded, which led to lower awards for 
     all plaintiffs.


                       frustration for travelers

       The coupons cannot be used for flights during certain 
     blackout dates and cannot be pooled for significant 
     discounts. The largest discount on a $240 ticket, for 
     instance, is $10.
       Travelers such as Adams Morgan resident Geraldine Triana, 
     one of 4.2 million passengers who gathered years-old flight 
     receipts in the hopes of gaining an award, said the case 
     amounted to frustration and wasted time.
       Triana, who flies primarily between Long Island and 
     Washington on fares of less than $200, doubts she'll get much 
     use from her four coupons, each valued at $25. To get a full 
     $25 credit, she has to buy a ticket worth at least $250.
       ``Where is the justice in that?'' she said.
       The coupons do offer sufficient incentive that consumers 
     want to use them, making them an effective marketing tool for 
     the airlines. In fact, Alaska Airlines, one of the few large 
     carriers not named in the original case, asked to be a 
     defendant when it learned of the coupon program and was 
     accommodated.
       ``The airlines using those coupons are going to see 
     substantial additional ticket sales because of them,'' said 
     Louis Cancelmi, a spokesman for Alaska Air. ``We asked to be 
     named in the case because, once we saw the settlement, we 
     realized it was to our competitive disadvantage not to do 
     so.''
       Spokesmen for the other defendant airlines--American, 
     Continental, Delta, Northwest, TWA, United and USAir--cited 
     the court-approved agreement that provided the coupons and 
     declined to comment further. Under the agreement, the 
     defendant airlines did not admit fault. Eastern and Pan 
     American World Airways, both now defunct as operating 
     entities, also were among the original defendants.
       In her Philadelphia office, Dianne Nast, one of four 
     lawyers who served as co-chair of the plaintiffs' committee, 
     said that the 4.2 million plaintiffs ``should be satisfied'' 
     with what they got. Coupons, she said, ``are better than 
     nothing.''
       ``Just because a settlement may benefit a defendant doesn't 
     mean it won't benefit the plaintiff; that's not logical,'' 
     said Nast, a partner in Philadelphia's Kohn, Nast, Savett, 
     Klein & Graf. She now is working on class- 
     [[Page S5715]] action cases against tobacco and silicon-
     breast implant manufacturers.


                           best job possible

       Nast said she and her colleagues expended thousands of 
     hours of legal time wrangling against some of the best 
     corporate attorneys in the business. Class-action cases, she 
     said, remain the best way to bring together scores of
      people commonly wronged, but who could never gain 
     retribution on their own.
       ``Considering the circumstances, we did the best job 
     possible,'' Nast said. ``I don't feel the fees were too high. 
     In fact, in this case, I would say they were low.''
       The lawyers had asked for $24 million in fees and expenses. 
     The federal judge in the case lowered that amount to slightly 
     more than $16 million.
       The case started in the shadow of Washington Dulles 
     International Airport, where the Airline Tariff Publishing 
     Co. (ATP) has its headquarters.
       The company is owned by 30 domestic and international air 
     carriers and was created by the airline industry to 
     distribute fares to travel agencies through one database.
       But in 1989, the U.S. Justice Department was alerted by 
     reports in the aviation trade press of suspicions that the 
     database was being used for electronic fare negotiations 
     among its member carriers.
       Mark Schechter, deputy director of operations for the 
     department's antitrust division, said an investigation was 
     begun in the summer of 1989. Schechter said the Justice 
     Department believed the airlines were comparing fares through 
     the computer system before they were listed on travel agents' 
     computers.
       For example, according to Justice Department 
     interrogatories filed in connection with its case, United 
     Airlines inserted a ``proposed'' fare into the ATP computer 
     on Dec. 15, 1988, that would increase prices by $15 between 
     Chicago and several cities. Two weeks later American, 
     Braniff, Continental, Delta, Northwest, TWA, USAir and 
     Piedmont, which later merged into USAir, also posted 
     ``proposed'' increased fares in the computer, matching 
     United's and essentially ratifying its increase. On Jan. 14 
     all these airlines implemented the suggested $15 increase.
       On Dec. 21, 1992, the department filed a civil antitrust 
     suit against most major airlines in U.S. District Court. The 
     Justice Department settled its case with the airlines last 
     March. The airlines agreed to stop using the database to 
     compare fares but did not admit fault.
       ``This was a major case, probably the most important civil 
     antitrust case brought since AT&T,'' Schechter said. ``It was 
     hotly contested and hotly litigated, there were nine 
     defendants out there and each of them had top legal talent, 
     they were very well represented and ready for a fight.''
       On June 28, 1990, long before the Justice Department 
     settlement, lawyer Nast read about the department's 
     investigation in the Wall Street Journal. She immediately 
     asked her Philadelphia firm's researchers to begin 
     investigating.
       Dozens of other lawyers saw the Journal story too and 
     launched their own investigations. In Washington, 
     Philadelphia, Atlanta, San Francisco and more than a dozen 
     other cities, firms specializing in class-action litigation 
     rushed in.
       ``I had heard some things, you know, some hints at 
     Washington parties, that this airline case was brewing,'' 
     said Jerry Cohen, a Washington lawyer who was
      co-lead counsel on the case. Cohen is a former member of the 
     Senate antitrust and monopoly subcommittee and his firm, 
     Cohen, Milstein, Hausfeld & Toll, played a key legal role 
     in the Exxon Valdez case. The tanker Exxon Valdez ran 
     aground in 1989 in Alaska's Prince William Sound, spilling 
     10 million gallons of oil.
       ``But when we saw the Journal article, we assigned a couple 
     of people to look into it, and we prepared a complaint. 
     Before we filed, we talked to several other law firms to find 
     out how they were going to handle it.''
       By August, 37 firms had filed suits.
       The attorneys, Cohen said, used a complicated formula to 
     quantify the airlines' liability, and came up with a total of 
     $3 billion.
       ``These lawyers don't waste their time on the small 
     stuff,'' said Laurance Schonbrun, a San Francisco attorney 
     who argued before the court that the plaintiffs' attorneys 
     should be paid in coupons, not cash, because that's what they 
     won for their clients.
       When the suits were filed, attorneys listed specific 
     individuals as plaintiffs. These plaintiffs were, in many 
     cases, friends or pre-existing clients of the law firms, said 
     Federal District Judge Marvin Shoob, who presided over the 
     case in Atlanta.
       The 42 named plaintiffs took home as much as $5,000 each, 
     for a total of $142,500. They were the only members of the 
     plaintiffs to receive money, court records show.
       Judah I. Labovitz, also a co-chair in the case, said the 42 
     plaintiffs ``are more than just names on a piece of paper.'' 
     His law firm's plaintiff was a longtime friend and client, 
     Labovitz said. ``He dug up his travel records and gave a 
     deposition. The entire class benefited from his actions, why 
     shouldn't he get some money?'' Labovitz said.
       In September 1990 the cases were consolidated in Atlanta 
     and a steering committee was established to coordinate the 
     efforts of the 37 law firms. Some of the largest and best-
     known firms became the leaders and Nast, Labovitz, Cohen and 
     Philadelphia attorney Allen D. Black became co-chairs.


                           coupons, not cash

       Several factors pushed the parties toward a settlement with 
     coupons rather than cash, attorneys for both the airlines and 
     the plaintiffs said.
       The airline industry was in financial chaos in the midst of 
     a recession that would see it lose more than $10 billion over 
     three years. If the case were won and cash settlements were 
     huge, it could bankrupt the industry, lawyers for both the 
     plaintiffs and the airlines agreed.
       Meanwhile, the plaintiffs' lawyers faced the prospect of 
     proving electronic collusion in front of a jury that might 
     not have the patience for a technical trial potentially 
     lasting three years or more.
       ``You've got to have a little common sense. All the 
     airlines were in serious trouble at the time,'' Cohen said. 
     ``They literally had no money. Eastern and
      Pan Am had already gone belly up, and Continental, Northwest 
     and TWA were in serious trouble.''
       But opponents, primarily consumer activists, cried foul. 
     ``It would have been better for the plaintiffs if the lawyers 
     took the case to trial,'' said Edward M. Selfe, a corporate 
     attorney from Birmingham who filed a motion to stop the 
     settlement on the grounds consumers should receive rebates, 
     not coupons.
       However, plaintiffs counsel had invested considerable time 
     and effort in developing the case, with no guarantee they 
     could win and recover even their costs, much less their legal 
     fees.


                       $16 Million in Legal Fees

       So the settlement was reached: $438 million worth of 
     coupons to an unknown number of passengers for up to a 
     maximum of 10 percent of the cost of their air fares, and $16 
     million in legal fees to plaintiffs' counsel.
       Each individual plaintiff, however, did not receive even as 
     many coupons as originally expected because there were many 
     more applicants than the settlement presumed, and there was a 
     ceiling on the payout.
       The plaintiffs' lawyers had estimated that 2.3 million 
     people would seek coupons, Shoob said. The plaintiffs' 
     attorneys formulated that number based on the advice of 
     experts, and relying on the history of plaintiffs' response 
     in similar cases.
       The number of travelers responding came in at 4.2 million. 
     Included were huge corporations, such as International 
     Business Machines Corp. and AT&T Corp., which entered claims 
     of more than $1 billion and ended up getting most of the 
     coupons. However, AT&T and several other companies now say 
     the coupon restrictions make them extremely difficult to 
     redeem.
       ``Obviously, we were surprised,'' Nast said. ``We believe 
     it was due to all the publicity the case received.''
       The miscalculation had the effect of making the settlement 
     appear more lucrative then it actually was, Shoob now said. 
     The minimum payback per person worked out to $73 in coupons, 
     with a limit per flight of a 10 percent discount. Earlier 
     projections had put the minimum payback at almost $140 in 
     coupons per person, he said.
       ``I based my approval on the belief that claimants would 
     get much more back than they actually did,'' Shoob said. ``I 
     believe [the attorneys made] an honest mistake--there was no 
     attempt to purposely mislead the court. But it was a mistake 
     nonetheless.''
       Nast said: ``We looked at the historical response to this 
     type of situation to calculate--but this was an extraordinary 
     case. I feel it's a comment on how good a job we did for the 
     class that so many people responded.''
       Shoob said, ``in this case, even in the event of a cash 
     settlement, chances are, each person in the class would have 
     received an extremely small amount of money in comparison to 
     the return to the lawyers.''
       ``I think [class-action] cases are absurd,'' he said. ``So 
     many are generated by lawyers not to benefit the class, but 
     to generate legal fees. The lawyers are just doing their job 
     under the law. The flaw is with the law that allows it.''

  Mr. HOLLINGS. The amount of money in that case referred to by the 
distinguished Senator in the justification for his amendment, the 
airlines case, with the total verdict of $438 million, that is where 
the lawyers got $16 million. There were 4.2 million plaintiffs. They 
had law firms racing all over; 37 law firms were racing around. They 
have all the law firms listed.
  But rather than a third or 20 percent or 10 percent or 5 percent or 1 
percent, it is less than 1 percent that the lawyers got.
  Now, you have all of those clients in there. I knew that this 
particular fee, even though it sounded outrageous in the news story, 
was based in reason by the court. The court would not approve giving 
the clients $25 and giving the lawyers $16 million. That is the garish 
nonsense that you find going on as justification for product liability 
reform.
  On that basis, if Senators want to vote on that basis not only for 
the amendment of the distinguished Senators from Michigan and Kentucky, 
but on product liability, let them do 
[[Page S5716]] that. But that is how extreme they have gotten.
  Now, here is the case. I hope everybody will read about the 37 law 
firms and the 4.2 million plaintiffs and the $438 million obtained, to 
be divided up. And the lawyers, all those 37 law firms, got $16 
million. I rest my case, Mr. President.
  I hope you do not table our amendment. If we can get a good vote on 
this amendment, it will bring attention to the really fanciful nature 
of this entire exercise on product liability.
  We have welfare reform, we have the budget, we have 
telecommunications, we have terrorism, we have a crime bill to come up, 
we have more work to do that is good work of national significance, 
rather than manufacturing amendments through halfway stories in the 
Washington Post.
  I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator yields back the remainder of his 
time. There are 10 minutes 42 seconds remaining to the Senator from 
Michigan.
  Who seeks recognition?
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan is recognized.
  Mr. ABRAHAM. Thank you, Mr. President. I just will make several 
comments.
  One, in the case the Senator from South Carolina and I have been 
discussing, I just will point out, again, this is a quote from the 
media, the judge in that case actually later said that he regretted 
having approved of the fees that were involved for the reasons that he 
believed they were inappropriate.
  Again, my point is not to talk about excessive fees or fees that are 
inadequate. I have not yet encountered any attorney who says they did 
not earn the fees that they charged, and since they feel that way, my 
guess is they should not object to the requirements of this amendment, 
which would simply ask that prior to and following the conclusion of 
matters, accountings be made and the fees, as well as the hours 
involved, be tabulated.
  I would also stress though, as I did earlier, the amendment provides 
a waiver provision so that those attorneys who feel this is too 
burdensome and cumbersome can at least seek to have their clients waive 
this right to have both prior- as well as post-litigation or settlement 
accounting occur.
  But basically, again, Mr. President, I think that the thrust, at 
least of my underlying amendment, is one of disclosure, it is one of 
providing consumers with the right to know the kind of legal 
arrangements that they are getting into, and the right to know what has 
transpired and how the fees that they are paying will be structured.
  I believe it is pro-consumer. I believe the only people who might 
find this inconveniencing are those attorneys who are not following the 
common practice that is outlined by so many legal organizations of 
calling upon attorneys to provide that sort of information.
  Mr. President, at this time, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GORTON. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                 Amendment No. 598 to Amendment No. 597

  Mr. GORTON. Mr. President, what is the pending business?
  The PRESIDING OFFICER. The pending business before the body is now 
the amendment by the Senator from South Carolina.
  Mr. GORTON. Has all time for debate expired?
  The PRESIDING OFFICER. All time has expired for the debate.
  Mr. GORTON. Mr. President, I move to table the Hollings amendment.
  Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.


               Vote On Motion To Table Amendment No. 598

  The PRESIDING OFFICER. The question is on the motion to lay on the 
table amendment No. 598, by the Senator from South Carolina.
  All those in favor of the tabling motion will vote aye, those opposed 
will vote no.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. LOTT. I announce that the Senator from Missouri [Mr. Bond] and 
the Senator from Oregon [Mr. Hatfield] are necessarily absent.
  Mr. FORD. I announce that the Senator from Nebraska [Mr. Exon] is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
who desire to vote?
  The result was announced--yeas 94, nays 3, as follows:

                      [Rollcall Vote No. 134 Leg.]

                                YEAS--94

     Abraham
     Akaka
     Ashcroft
     Baucus
     Bennett
     Biden
     Bingaman
     Boxer
     Bradley
     Breaux
     Brown
     Bryan
     Bumpers
     Burns
     Byrd
     Campbell
     Chafee
     Coats
     Cochran
     Cohen
     Conrad
     Coverdell
     Craig
     D'Amato
     DeWine
     Dodd
     Dole
     Domenici
     Dorgan
     Faircloth
     Feingold
     Feinstein
     Ford
     Frist
     Glenn
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Harkin
     Hatch
     Heflin
     Helms
     Hutchison
     Inhofe
     Jeffords
     Johnston
     Kassebaum
     Kempthorne
     Kennedy
     Kerrey
     Kerry
     Kohl
     Kyl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Mikulski
     Moseley-Braun
     Moynihan
     Murkowski
     Murray
     Nickles
     Nunn
     Packwood
     Pell
     Pressler
     Pryor
     Reid
     Robb
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Shelby
     Simon
     Simpson
     Smith
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner
     Wellstone

                                NAYS--3

     Daschle
     Hollings
     Inouye

                             NOT VOTING--3

     Bond
     Exon
     Hatfield
  So the motion to lay on the table the amendment (No. 598) was agreed 
to.
  Mr. GORTON. Mr. President, I move to reconsider the vote.
  Mr. ROCKEFELLER. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. LEVIN. Mr. President, I am generally a supporter of disclosure 
requirements, but I will vote to table the Abraham amendment for two 
reasons.
  First I believe that the States are more familiar with the issues 
raised by this amendment and that it is inappropriate for us to take 
over this area of the law in a floor amendment which has not even been 
considered in committee.
  Second, the amendment would impose a cumbersome new regulation on 
attorneys--not just in product liability cases, but in all cases in 
Federal court. Attorneys would have to send not one, but two notices of 
fees to each client in a case. That may sound simple, but the chief 
case that has been cited as the basis for this amendment was a class 
action brought on behalf of some 4.2 million individuals. That means, 
presumably, that 8.4 million separate notices would have to be mailed 
out in that case alone.
  Moreover, the amendment would require attorneys to calculate hourly 
fee rates even in cases where the client is being charged on a basis 
other than hourly rates--such as a contingent fee or a flat fee. That 
means that every attorney would have to keep records of every hour 
spent on every case, even in cases where those hours are not the basis 
for the attorney's fees, and the actual basis for those fees is fully 
disclosed to the client. That is a huge new paperwork requirement, the 
cost of which would inevitably be borne not by lawyers, but by their 
clients.
  I believe that we should avoid these cumbersome new requirements and 
leave requirements for disclosing attorneys' fees in the hands of the 
State governments unless and until a clear need is shown for the 
Federal Government to take over.
  I also intend to vote to table the Brown amendment to revise rule 11 
of the Federal Rules of Civil Procedure. The Rules Enabling Act 
delegates to the Supreme Court the power to prescribe rules of 
procedure for the Federal district courts. The courts have far greater 
expertise in rules of judicial procedure than does the Congress. 
Accordingly, I do not believe that we should step in and overturn the 
courts' 
[[Page S5717]] decision without hearings and without a clear showing of 
need.
         vote on motion to table amendment no. 597, as modified

  The PRESIDING OFFICER. Under the previous order, the question now 
occurs on amendment 597, as modified, offered by the Senator from 
Michigan.
  Mr. ROCKEFELLER. Mr. President, I move to table the amendment and ask 
for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There appears to 
be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion of 
the Senator from West Virginia [Mr. Rockefeller] to table the amendment 
of the Senator from Michigan [Mr. Abraham]. The yeas and nays have been 
ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. LOTT. I announce that the Senator from Missouri [Mr. Bond] and 
the Senator from Oregon [Mr. Hatfield] are necessarily absent.
  Mr. FORD. I announce that the Senator from Nebraska [Mr. Exon] is 
necessarily absent.
  The PRESIDING OFFICER (Mr. Grams). Are there any other Senators in 
the Chamber who desire to vote?
  The result was announced--yeas 45, nays 52, as follows:

                      [Rollcall Vote No. 135 Leg.]

                                YEAS--45

     Akaka
     Biden
     Bingaman
     Breaux
     Bryan
     Bumpers
     Byrd
     Cochran
     Cohen
     D'Amato
     Daschle
     Dodd
     Ford
     Gorton
     Graham
     Gramm
     Harkin
     Heflin
     Hollings
     Hutchison
     Inouye
     Jeffords
     Johnston
     Kennedy
     Kerrey
     Kerry
     Leahy
     Levin
     Lieberman
     Mack
     Moseley-Braun
     Moynihan
     Murray
     Nickles
     Nunn
     Pell
     Pryor
     Reid
     Rockefeller
     Roth
     Sarbanes
     Shelby
     Simon
     Specter
     Thompson

                                NAYS--52

     Abraham
     Ashcroft
     Baucus
     Bennett
     Boxer
     Bradley
     Brown
     Burns
     Campbell
     Chafee
     Coats
     Conrad
     Coverdell
     Craig
     DeWine
     Dole
     Domenici
     Dorgan
     Faircloth
     Feingold
     Feinstein
     Frist
     Glenn
     Grams
     Grassley
     Gregg
     Hatch
     Helms
     Inhofe
     Kassebaum
     Kempthorne
     Kohl
     Kyl
     Lautenberg
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Murkowski
     Packwood
     Pressler
     Robb
     Santorum
     Simpson
     Smith
     Snowe
     Stevens
     Thomas
     Thurmond
     Warner
     Wellstone

                             NOT VOTING--3

     Bond
     Exon
     Hatfield
  So the motion to lay on the table the amendment (No. 597) was 
rejected.
  Mr. GORTON. Mr. President, I move to reconsider the vote.
  Mr. ROCKEFELLER. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The question is now on agreeing to the Abraham 
amendment.
  So the amendment (No. 597) was agreed to.
  Mr. DOLE. I move to reconsider the vote by which the amendment was 
agreed to.
  Mr. ABRAHAM. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                 Amendment No. 599 to Amendment No. 596

  Mr. GORTON. Mr. President, what is the pending business?
  The PRESIDING OFFICER. Amendment numbered 599.
  Mr. BROWN. Mr. President, I believe the next item for consideration 
is amendment numbered 599, which is an amendment that I proposed which 
would restore the deterrence against bringing frivolous actions and 
frivolous lawsuits.
  Mr. President, it is my personal feeling, and I believe the feeling 
of the distinguished senior Senator from Alabama, that this debate 
could be concluded fairly quickly, perhaps as short as 20 minutes on 
each side; and then it would appear that it is the will of Senators to 
move to a vote at that point.
  Mr. President, rule 11 is a very important part of civil procedure. 
Rule 11 changed in 1983 to provided strong admonishment against 
attorneys bringing frivolous actions.
  It was changed again in December of 1993. It was changed, 
unfortunately, not through a vote or deliberation of this body, but by 
our failure to act.
  Tragically, that automatic change in the Federal Rules of Civil 
Procedure resulted in the gutting of the protection against frivolous 
actions embodied in rule 11. The new rule 11 now allows someone to 
allege facts, bring facts before the court without knowing that they 
were true or without having fully investigated the facts.
  This amendment restores parts of the old rule 11 that more 
effectively deter frivolous action. I will be dealing with rule 11 in 
detail in a few minutes. I wanted simply to alert Senators that we will 
be moving to a vote on this, I believe, within 40 minutes or so. This 
vote is about discouraging frivolous action and frivolous lawsuits.
  Our hope is that this amendment will play an important part in this 
bill, because stopping inappropriate actions and frivolous lawsuits is 
very much an essential ingredient, I believe, in reform of the judicial 
process. I yield the floor.
  Mr. HEFLIN. Mr. President, I rise in opposition to the Brown 
amendment.
  Let me first explain a little bit about the procedure, what happens 
regarding the Federal Rules of Civil Procedure, which include rule 11.
  There has been controversy over the history of this country as to how 
courts ought to take care of its rule making authority. The prevailing 
view is that the judiciary--and this includes the States--has inherent 
power to determine its own rules.
  However, Congress felt it had a role, and so it adopted the Rules 
Enabling Act by which rules of procedure would be changed by first 
having a committee appointed by the Judicial Conference of the United 
States, to study any proposed change or changes.
  After the committee made its report to the Judicial Conference, which 
is a body composed of judges from all levels of the judiciary, the 
Judicial Conference would study any proposals and then make 
recommendations to the Supreme Court of the United States. Then the 
Supreme Court of the United States would consider the issue and make 
recommendations to Congress. Under the Rules Enabling Act, Congress has 
6 months to either adopt the recommendations, to modify them, or to 
delete them.
  This particular rule 11 that came up was submitted to the Congress 
and the 6-month time period expired prior to Congress taking any 
action, and so all of the proposed Rules of Civil Procedure, including 
rule 11, went into effect on December 1, 1993. We knew toward the end 
of the Congress in 1993 that if any changes had to be made, they had to 
be made before December 1, 1993.
  If a Senator was interested in making a change to a rule, he or she 
could introduce a bill, but no bill was introduced proposing to change 
rule 11.
  During that 6-month period in 1993 in the House or in the Senate, if 
there were reasons for change, a bill could have been introduced in the 
House or the Senate.
  In all fairness to Senator Brown, he said that he did not like rule 
11, but he never took the steps to modify the proposed changes, and now 
he is now belatedly taking steps on this particular bill, which is 
unrelated and not germane to the pending legislation.
  My colleague from Colorado raises issues about frivolous lawsuits and 
let me say that this has been considered by many concerned groups of 
people. The Brown amendment is completely opposed by the civil rights 
community. The Brown amendment is opposed by the Department of Justice. 
Six members of the Supreme Court approved rule 11 that is now in 
effect. Senator Brown quoted from Justice Scalia's dissent. There are 
always going to be dissents over at the Supreme Court, but if you have 
a 6 to 3 vote in the Supreme Court of the United States, that is a 
pretty good vote.
  As I have listened to the criticisms of the new rule 11 from Senator 
Brown and others, I do not agree with them. I have before me a 
memorandum
 from the Administrative Office of the U.S. Courts which says:

       I am writing to address criticism raised during the markup 
     of H.R. 2814 that the amendments to Rule 11 of the Federal 
     Rules of Civil Procedure will eviscerate the rule's effect on 
     parties filing frivolous proceedings and papers.
       [[Page S5718]] The amendments to Rule 11 retain the rule's 
     core principle to ``stop and think'' before filing: By 
     broadening the scope of Rule 11 coverage and tightening its 
     application, the amendments reinforce the rule's deterrent 
     effect and also eliminate abuses that have arisen in the 
     interpretation of the rule. Although the amendments strike a 
     balance between competing interests, the changes 
     strengthening the rule have been neglected by those critical 
     of the amendments and need to be highlighted.
       First, the amendments expand the reach of the rule by 
     imposing a continuing obligation on a party to stop 
     advocating a position once it becomes aware that that 
     position is no longer tenable.

  What they would like to go back to under the old rule, as I interpret 
it, would be to allow ``a party to continue advocating a frivolous 
position with impunity so long as it can claim ignorance at the time 
the pleading was signed, which could have been months or years ago.''

       Second, the amendments specifically extend liability to a 
     law firm rather than limiting the liability to the junior 
     associate who actually signs the filing.
       Third, the amendments specifically extend the reach of Rule 
     11 sanctions to individual claims, defenses, and positions, 
     rather than solely to a case in which the ``pleading-as-a-
     whole'' is frivolous. Some court decisions have construed the 
     rule to apply only to the whole pleading, relieving a party 
     of the responsibility for maintaining a single or several 
     individual frivolous positions.

  So rule 11 that went into effect on December 1, 1993 was designed to 
strengthen this matter.

       Fourth, the amendments equalize the obligation between the 
     parties by imposing a continuing obligation on the defendant 
     to stop insisting on a denial contained in the initial 
     answer. Frequently, answers are general denials based on a 
     lack of information at the time of the reply. The amendments 
     impose a significant responsibility on the defendant to act 
     accordingly after relevant information is later obtained.
       It is also important to highlight the provisions of the 
     rule that the amendments retain. A party must continue to 
     undertake ``an inquiry reasonable under the circumstances'' 
     before filing under the amendment. In those cases where a 
     party believes that a fact is true or false but needs 
     additional discovery to confirm it, the amendments allow 
     filing but only if such ``fact'' is specifically identified. 
     The provision does not relieve a party of its initial duty to 
     undertake a reasonable prefiling investigation. In cases of 
     abuse, the court retains the power to sanction sua sponte and 
     the aggrieved party can seek other remedies, e.g., lawsuit 
     for malicious prosecution.
       The existing rule does not require a court to impose a 
     monetary sanction payable to the other party. Instead, the 
     rule does provide a court with the discretion to impose an 
     appropriate sanction, including an order requiring monetary 
     payments to the opposing party and to the court.

  Now, as to the hearings that we had in the Judiciary Committee, the 
old rule 11--that is one that was in effect before December 1 of 1993--
had language that said that signature to a pleading demonstrated that 
the pleading ``is well grounded in fact.''
  Senator Brown at the subcommittee hearings on July 28, 1993, grilled 
the chairman of the Rules Advisory Committee that had proposed to the 
Judicial Conference this aspect of the rule change.
  Senator Brown claimed that under the new rule 11, a party ``no longer 
has to research a claim and know that it is true.'' He feels that a 
party ``no longer has to know his facts'' before bringing a lawsuit.
  Well, what Senator Brown ignores from the testimony and the response 
the chairman of the committee, Judge Sam Pointer, gave is that the new 
rule 11 ``still calls for and demands that attorneys have made a 
reasonable investigation under the circumstances.''
  As Judge Pointer demonstrated, oftentimes a party does not get all 
the facts until the discovery is finished, and the new rule does, 
indeed, require high standards and is not an egregious loosening of 
standards.
  The point is that under this new rule 11, ``if a plaintiff is going 
to make an allegation that he does not have hard support for, the 
plaintiff should say, I do this on information and belief, and be under 
a responsibility to withdraw that or not continue to assert it, if 
after reasonable opportunity for discovery, it turns out there is no 
basis for it.''
  Now, the new rule 11 has changes from the old rule in that if a 
violation regarding a pleading is found, then the court may impose 
sanctions.
  Under the old rule, the language was that a court must impose a 
sanction if it found a violation of the rule.
  As Judge Pointer demonstrated in his testimony, a court needs the 
flexibility or discretion to impose sanctions because a complaint, or 
for that fact an answer or motion to dismiss may contain a technical 
violation, but the rest of that pleading could be perfectly acceptable. 
Why, then, should a court be required to impose a sanction? Such 
discretion would not, in my judgment, giveaway to mass, irresponsible 
pleading.
  Obviously, those who are purporting to change rule 11 raise the 
possibility that a party could intentionally bring a frivolous action 
and, upon a finding of such by the court, might escape a penalty. The 
response to that concern is that well, yes, there could be no penalty, 
but in that type of egregious intentionally frivolous pleading a court 
will most likely impose a sanction.
  Under the new rule--

       [I]f warranted, the court may award to the party prevailing 
     on the motion the reasonable expenses and attorney's fees 
     incurred in presenting or opposing the motion.

  Also, a court on its own initiative may begin a show-cause proceeding 
as to whether a party has violated the rule. This should take care of 
concerns by Senator Brown that plaintiffs could irresponsibly plead, 
claim, et cetera. The court has its own power to initiate an inquiry as 
to whether rule 11 has been violated.
  As the Senate can clearly see, this is a highly technical matter that 
we are being called upon to consider, and it is attempting to be 
amended onto an unrelated bill without the Members of this body having 
an adequate opportunity to study the issues. For us here in Congress to 
have to consider this amendment on an unrelated bill seems to me to be 
an irresponsible way of legislating.
  So it is my opinion that we ought not to be involved in this at this 
time. The Judiciary Committee had hearings, and there was ample 
opportunity for action to be taken. But no action was brought forth 
through the form of a bill being introduced to make any changes to rule 
11.
  There are always efforts to look at matters and matters can always be 
considered by this body. But the Judicial Conference is designed and is 
much better equipped than this body to make the decisions pertaining to 
that matter.
  It seems to me that it is just improper and an inappropriate time to 
bring this matter up at such a late stage as this. If there had been a 
real sincere effort, it could have been done within the 6-month time 
period allowed pursuant to the Rules Enabling Act. It seems to me that 
we ought not to be dealing with this amendment at this time on this 
unrelated bill.
  It may be that a bill could be introduced later, if they wanted to, 
and at other times go through the process.
  But I feel that the new rule is a flexible rule and has provisions 
that strengthen--not weaken--the efforts to prevent frivolous lawsuits. 
The new rule is expected to reduce the number of inappropriate motions 
requesting sanctions, thereby allowing courts to focus more attention 
on legitimate sanction requests.
  Mr. President, let me read from Rule 11 as it now exists. This is 
about representations in a pleading.

       By presenting to the court, whether by signing, filing, or 
     submitting, or later advocating a pleading, a written motion, 
     or other paper, the attorney or unrepresented party is 
     certifying to the best of the person's knowledge, 
     information, and belief, formed after an inquiry reasonable 
     under the circumstances, that it is not being presented for 
     any improper purpose, such as to harass, or to cause 
     unnecessary delay, or needless increase in the cost of 
     litigation. The claim, the defenses, and other legal 
     contentions therein are warranted by existing law, or by 
     nonfrivolous argument for the extension, modification, or 
     reversal of existing law, or the establishment of the new 
     law. The allegation and other factual contentions have 
     evidentiary support, and if specifically so identified are 
     likely to have evidentiary support of a reasonable 
     opportunity for further investigation or discovery. The 
     denials of fact show contentions are warranted to the 
     evidence, and, if specifically so identified, are reasonably 
     based on a lack of information or belief.

  This is strong language. I want to point out basically what the 
difference is. The current rule 11 allows a judge some discretion 
rather than making sanctions mandatory.
  [[Page S5719]] That is the guts of the rule, whether or not a judge 
ought to have some discretion pertaining to a matter or whether, on the 
other hand, it ought to be absolutely mandatory.
  This is being opposed by the civil rights community and by a number 
of others.
  I ask unanimous consent that a letter that was addressed to the 
Honorable George J. Mitchell, from the Committee on Rules of Practice 
and Procedure of the Judicial Conference of the United States, Judge 
Alicemarie H. Stotler, be printed in the Record.
  I ask unanimous consent that a letter from the Alliance for Justice 
relative to this issue also be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         Committee on Rules of Practice and Procedure of the 
           Judicial Conference of the United States,
                                   Washington, DC, March 15, 1994.
     Hon. George J. Mitchell,
     Majority Leader, U.S. Senate,
     Washington, DC.
       Dear Senator Mitchell: I am requesting your assistance in 
     opposing Senator Brown's amendment (No. 1496) to S. 4, the 
     ``National Competitiveness Act of 1993.'' Senator Brown's 
     amendment would change certain parts of the amendments to 
     Rule 11 of the Federal Rules of Civil Procedure, which became 
     effective on December 1, 1993. The Rule 11 amendments were 
     submitted to Congress in May 1993 only after extensive 
     scrutiny by the bench, bar, and public in accordance with the 
     Rules Enabling Act.
       Serious consideration of amendments to Rule 11 began about 
     four years ago. The rule had been the subject to thousands of 
     decisions and widespread criticism since it was substantially 
     amended in 1983. In an unusual step, the Advisory Committee 
     on Civil Rules issued a preliminary call for general comments 
     on the operation and effort of the rule. It also requested 
     the Federal Judicial Center to conduct two extensive surveys 
     on Rule 11.
       After reviewing the comments and studies, the committee 
     concluded that the widespread criticisms of the 1983 version 
     of the Rule, though frequently exaggerated or premised on 
     faulty assumptions, were not without merit. There was support 
     for the following propositions:
       Rule 11, in conjunction with other rules, has tended to 
     impact plaintiffs more than defendants;
       It occasionally has created problems for a party which 
     seeks to assert novel legal contentions or which needs 
     discovery to determine if the party's belief about the facts 
     can be supported with evidence;
       It has too rarely been enforced through nonmonetary 
     sanctions, with cost-shifting being the normative practice;
       It provides little incentive, and perhaps a disincentive, 
     for a party to abandon positions after determining they are 
     no longer supportable in law, or in fact; and
       It sometimes has produced unfortunate conflicts between 
     attorney and client, and exacerbated contentious behavior 
     between counsel.
       The draft amendments broadened the scope of the obligation 
     to ``stop-and-think'' before filing or maintaining a position 
     in court, but placed greater constraints on the imposition of 
     sanctions. The amendments were later revised by the advisory 
     committee and the Standing Committee on Rules and approved by 
     the Judicial Conference of the United States and then adopted 
     by the Supreme Court, with two justices dissenting.
       The amendments strike a fair and equitable balance between 
     competing interests, remedy the major problems with the 1983-
     version of the rule, and should reduce both the extent of 
     court-involvement with Rule 11 motions and the time spent on 
     frivolous claims, defenses, and other contentions.
       The amendments represent the end product of a rigorous 
     public rulemaking process that worked as contemplated by 
     Congress under the Rules Enabling Act. The issues were fully 
     aired in a public forum. Interested individuals and 
     organizations were provided, and responded to, opportunities 
     to comment on the changes. The language of the amendment was 
     meticulously drafted only after the Judicial Conference 
     committees, which consist of prominent lawyers, law 
     professors, and judges, had the benefit of this public 
     examination.
       Senator Brown's amendment to Rule 11 would undercut the 
     Rules Enabling Act process frustrating not only the intent of 
     the Act but also the participants in the rulemaking process, 
     including the public and many advocates of Rule 11 change. 
     Your leadership in maintaining the integrity of the Rules 
     Enabling Act would be greatly appreciated.
           Sincerely yours,
     Alicemarie H. Stotler.
                                                                    ____

                                         Alliance for Justice,

                                                   April 26, 1995.
     U.S. Senate,
     Washington, DC.
       Dear Senator: The undersigned organizations urge you to 
     oppose the changes to Federal Rules of Civil Procedure 11 
     that have been offered as an amendment to the Products 
     Liability Fairness Act. This amendment poses a grave threat 
     to civil rights and public interest litigation.
       The proposed changes would roll back advances in Rule 11 
     that were recently enacted following careful and thoughtful 
     discussion involving all concerned parties across the 
     political spectrum. We know from experience that returning to 
     the old Rule 11 will be particularly devastating to 
     underrepresented Americans.
       Under the old rule, threats of sanctions quickly became the 
     standard ammunition in the arsenal of defense counsel. The 
     result was an avalanche of satellite sanctions litigation 
     that occupied a great deal of judicial resources and was 
     often as frivolous as the litigation Rule 11 was designed to 
     eliminate.
       The old rule had a particularly harsh effect on civil 
     rights and public interest organizations and their clients. 
     As the Judicial Conference's Advisory Committee on Civil 
     Rules found:
       (1) Rule 11 . . . has tended to impact plaintiffs more 
     frequently and severely than defendants; (2) it occasionally 
     has created problems for a party which seeks to assert novel 
     legal contentions or which needs discovery from other persons 
     to determine if the party's belief about the facts can be 
     supported by the evidence; [and] (3) it has too rarely been 
     enforced through nonmonetary sanctions.
       Noting these concerns, the Judicial Conference offered 
     amendments that made sanctions permissive; created a 21-day 
     ``safe harbor'' period; and made clear that the purpose of 
     sanctions was to deter frivolous claims. These amendments 
     garnered broad support among judges, bar associations, legal 
     scholars, litigators and the Department of Justice, and were 
     ultimately adopted by Congress.
       The safe harbor provision was a particularly significant 
     and welcome change. Once a party raised a Rule 11 objection 
     to a pleading, the opposing party has 21 days to consider the 
     objection and, if warranted, withdraw the challenged claims--
     drawing the courts into further litigation.
       The Rule 11 amendment threatens to roll back these 
     achievements and resurrect the very problems that prompted 
     the Judicial Conference, the Supreme Court and many others to 
     take action. The amendment would have an especially heavy 
     impact on plaintiffs, placing the cost of litigation beyond 
     the reach of ordinary Americans, particularly public interest 
     and civil rights litigants. It compromises the very notions 
     upon which our legal system is based--fairness and equity.
       We urge you to reject any amendments to Rule 11.
           Respectfully,
     Nan Aron,
                                             Alliance for Justice.
     Lou Bograd,
                                   American Civil Liberties Union.
     Leslie Harris,
                          People for the American Way Action Fund.

  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. BROWN. Mr. President, I want to commend the distinguished Senator 
from Alabama for his thoughtful comments. He is a delight to work with 
even when we do not always see eye to eye. This is an area where we do 
not see eye to eye.
  I wanted to comment briefly on his remarks. First of all, there was 
the implication that these suggested changes have only been considered 
for a short period of time and we have not had a real opportunity to 
look at what effect they would have on the rules. That would not be my 
assessment of them. Let me explain why.
  The rule changed originally in 1983 from having permissive sanctions 
for a violation of the rule to having mandatory sanctions for a 
violation of the rule. That is, when someone has brought a frivolous 
action prior to 1983, the rule was as it is now: that is, you did not 
have to have mandatory sanctions.
  So the fact that this has not been tried before really does not 
square with our experience. The fact is we did try this permissive 
approach to sanctions prior to 1983. I think one could reasonably ask 
what were the results of that experiment when the sanctions were not 
required? There was a study done of that, and it studied the reaction 
of practitioners and judges in changing from permissive to mandatory 
sanctions.
  Here are the results of that study.
  I might mention that this study was conducted of both lawyers and 
judges in the northern district of California, which is part of the 
ninth circuit. The questionnaire was sent to 17 judges, 7 magistrates, 
and 107 attorneys, all of whom had been involved in rule 11 
proceedings, so these were not inexperienced people. They were people 
who had understood the process and worked with it.
  [[Page S5720]] Sixty-eight lawyers, 46 percent of them, responded; 12 
judges and magistrates, 50 percent, responded to the survey, so there 
was a good response. Here is the response: 46 percent of the 
respondents indicated that they had engaged in additional prefiling 
factual inquiry when the sanctions were mandatory. That is, when 
sanctions were mandatory, it resulted in the attorneys doing additional 
prefiling factual inquiry.
  Now, if you favored more factual inquiry before filings are made, you 
are going to want mandatory sanctions because that is what mandatory 
sanctions resulted in. If you do not care about the additional 
prefiling inquiry, if that is not one of your objectives, then you will 
not want the mandatory sanctions and you will want the rules as they 
currently stand.
  The survey also indicated that 33 percent indicated additional 
prefiling legal inquiry when the rule in effect employed mandatory 
sanctions. That is, before they filed, they did additional work to make 
sure they were right on the law before they filed.
  Is that not what we want? Is that not what we should be hoping for, 
that people take the time to find out what the facts are and find out 
what the law is before they bring the lawsuit?
  The survey indicated clearly that having sanctions required resulted 
in additional legal work and additional factual work before lawsuits 
were brought. That is the essence of mandatory sanctions and mandatory 
sanctions are the essence of this amendment.
  So the suggestion that this is some wild idea that has never been 
tried does not square with the pre-1983 and post-1983 experience. The 
fact is we had permissive sanctions prior to 1983, and it resulted, at 
least according to the survey, in less legal research before you filed 
and less factual research before you filed.
  Mr. President, it was alleged earlier that the issue of rule 11 could 
have been brought up earlier, but it was not, somehow implying that the 
people who are concerned about the gutting of rule 11 had been 
dilatory.
  Mr. President, let me be very clear about that. I did introduce a 
bill, but that bill was not brought up for a vote.
  What happened is that the Supreme Court transmitted to us the rule 
changes and made very clear in that transmittal that they were not 
necessarily endorsing them--let me read it because that is a serious 
comment, a serious charge. The letter from the Chief Justice of the 
Supreme Court, William Rehnquist reads:

       Transmittal does not necessarily indicate that the Court 
     itself would have proposed these amendments in the form 
     submitted.

  It cannot be more clear than that.
  The reality is that this was not voted on before, and the reason it 
was not voted on before was because we could not get it put on the 
agenda and we could not get a recorded vote. But a bill was introduced, 
and I did do all I knew how to have the issue come before the Senate. 
That is why it has to be brought up here.
  Now, when you do not allow a vote on a bill, to say somehow the 
proponents of that position have been dilatory I think raises real 
questions. What actually happened here is that these changes became law 
because we did not have a vote. And the Supreme Court's own documents 
say that their transmittal of it does not necessarily mean they agree.
  Now, Mr. President, for those who have read the report, Justice White 
also commented on this, and he made a very important point. He made a 
point that the practice of the Court has generally been--except for two 
Justices, the practice of the Court has generally been not to interfere 
with this process, to simply transfer proposed changes on, because they 
have some questions as to whether or not it is a proper role for the 
Court to draft these changes.
  Justices felt so strongly about this that three of them did dissent, 
which is highly unusual in this matter, and let me read to the Senate 
from that dissent. This is a dissent by Justices Souter, Thomas, and 
Scalia. All three of them dissented. Remember, Justice Rehnquist 
indicated it was not necessarily endorsement; they passed it on, and 
remember Justice White's comments as well. But here is a quote from the 
dissent.

       In my view, the sanctions proposed will eliminate a 
     significant and necessary deterrent to frivolous litigation.

  That is a direct quote out of the Justice's comments.
  The dissent goes on:

       Under the revised rule, parties will be able to file 
     thoughtless, reckless, and harassing pleadings secure in the 
     knowledge that they have nothing to lose.

  Mr. President, that is it in a nutshell. If we fail to address this 
question, it is very clear what the new rules do. Let me read what he 
said.

       Under the revised rule, parties will be able to file 
     thoughtless, reckless, and harassing pleadings secure in the 
     knowledge that they have nothing to lose.

  Now, Members of this body are going to have a chance to go on record 
to see whether or not they favor allowing the filing of ``thoughtless, 
reckless, and harassing pleadings secure in the knowledge that they 
have nothing to lose.''
  Lastly, Mr. President, it was suggested on this floor that there are 
people who would object to my motion.
  Let me assure this body I have personally sought out the groups that 
were discussed. I have called them repeatedly. I have asked for 
meetings. I have asked for their suggestions. They have not been 
willing to respond or meet with us. And this happened not just once but 
on many occasions.
  If Members have questions about this amendment, I hope it is not on 
the basis that this Senator was not willing to go out and ask for 
advice, was not willing to contact the parties that might have concern, 
and was not willing to try and work with them, because I did. I did ask 
for their advice. I did offer to work with them. And as a matter of 
fact, the measure that is before the Senate is not a full restoration 
of the old rulings but willingly adopts a number of the measures that 
were proposed.
  Mr. President, I could not come to this body and acquiesce, as the 
dissent says, in revised rules that will enable parties ``to file 
thoughtless, reckless, and harassing pleadings'' or acquiesce in 
allowing them to do so ``secure in the knowledge that they have nothing 
to lose.'' That would be wrong. And these new rules are wrong.
  Now, it has been suggested that this amendment will eliminate a 
judge's discretion with regard to sanctions. The facts are these. The 
old rules and the amendment that I offer this body does restore the 
requirement that you have sanctions when someone is guilty. This is not 
a game where you blow the whistle and say start over. When you are 
wrong and your actions impede the process in the court, I think 
sanctions are important. But to suggest that we eliminate judge's 
discretion is not accurate. The judge retains discretion under the 
rules to decide what type of sanction is appropriate as well as how 
substantial the sanction is.
  Mr. President, I say that because I think it is important to take 
care of the questions that were raised.
  I simply want to ask the body three questions that I think come full 
circle on this issue of frivolous lawsuits and capture the essence of 
it.
  Should filings be grounded in facts or not? If the Members of this 
body feel filings in Federal court should be founded in facts, they 
should vote for this amendment. If they do not think it is necessary 
that the filing should be founded in facts, they will want to vote 
``no.''
  Two, should sanctions be required if you file frivolous actions? I 
believe if you file frivolous actions and they are found to be 
frivolous actions that sanctions should be required. But if you do not 
think there should be sanctions if you file frivolous actions, then you 
will want to vote ``no.''
  Mr. President, finally, should an injured party be compensated for 
the costs or not? That is, let us say someone files a frivolous action, 
a party is injured because they have to respond and they have to pay 
for attorneys' fees and expenses. The question before us is, should the 
injured party be compensated for costs or not?
  I think they should be. But if you do not think they should be, or if 
you think that priorities should be given to having the sanction go to 
the court and not to the injured party, which is what the new rules 
give priority to--the new rules give priorities to having the sanction, 
if there is any, go to the court instead of the injured party. If you 
think 
[[Page S5721]] the injured party should not be compensated or that 
should be the low priority, then you are going to want to vote ``no.''
  Mr. President, the summation of the concern of the Justice who 
dissented in the transmittal closes with this quote.

       It takes no expert to know that a measure which eliminates 
     rather than strengthens a deterrent to frivolous litigation 
     is not what the times demand.

  Mr. President, it cannot be said better than that. If Members of this 
Senate think that our times demand that you ought to eliminate 
sanctions for frivolous action, then vote no. But I agree with the 
Justice when he says:

       It takes no expert to know that a measure which eliminates 
     rather than strengthens a deterrent to frivolous litigation 
     is not what the times demand.

  Mr. President, it is wrong to bring frivolous actions. It is wrong to 
file and not know the facts. It is wrong and I believe personally it is 
unethical for an attorney to bring frivolous actions before our courts. 
That is what the question is in this amendment. Do we favor frivolous 
filings or do we think there ought to be some sanctions for them?
  I yield the floor, Mr. President.
  Ms. MOSELEY-BRAUN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Illinois.
  Ms. MOSELEY-BRAUN. Thank you very much.
  Mr. President, the Senate is currently engaged in what is, in my 
opinion, a constructive debate on the subject of product liability. The 
pending amendment, unfortunately, is destructive. It is destructive, 
certainly, of the relationship between the Congress and the courts, a 
relationship established pursuant to the Rules Enabling Act, that has 
worked and is working. And it is destructive of efforts to craft a 
product liability bill under the guidance of the Commerce Committee.
  Mr. President, the fact is that the Brown amendment is, as you can no 
doubt tell from the ``legalistic'' nature of the debate, a Judiciary 
Committee issue. To the extent that this issue should be taken up and 
debated, it should be done under the auspices of the Judiciary 
Committee.
  I know the distinguished Senator from Colorado feels strongly about 
this. But the question is whether or not it belongs as part of our 
effort to address the issue of product liability reform. I want to 
strongly express my opinion that it does not. This amendment does not 
belong on a Commerce Committee bill.
  In the first instance, Mr. President, the whole argument that we 
should make rule 11 sanctions for the filing of frivolous pleadings 
mandatory--and overturn what was established pursuant to the Rules 
Enabling Act, and what has been accepted by the legal community--
presumes that there is a single definition of what is frivolous.
  I submit to my colleagues that there is no single definition of what 
is frivolous. Indeed, in many instances, what one person may consider 
to be frivolous another might not.
  I would remind my colleagues that there have been instances in our 
history, instances that we look back with some pride at this point, 
which, at first blush, might have been considered frivolous claims. 
Under a mandatory sanctions regime similar to the one being proposed by 
the pending amendment, those cases may not have ever been brought, due 
to the chilling effect of mandatory sanctions. These novel, but 
legitimate, cases may never be given an opportunity to be heard if this 
type of amendment were to be passed willy-nilly, without the reasoned 
consideration that I believe it ought to have.
  I remind my colleagues that it is often necessary to come up with 
novel theories in cases in the areas of civil rights and discrimination 
cases. Rule 11, as amended, reduces this incentive to filing novel 
pleadings. If you think back in the history for a little bit, I think 
this issue becomes clear. When Thurgood Marshall filed the Brown versus 
Board of Education case, to challenge the notion of ``separate but 
equal,'' the plaintiffs relied a great deal on psychological 
arguments--the so-called Brandeis brief. The plaintiffs in Brown relied 
on psychological and sociological evidence that proved the devastating 
impact our separate educational systems were having on the educational 
and human development of minority youths. Who is to say that at first 
impression someone might have said, ``Well, this is a silly argument. 
This is a silly idea.'' Who is to say that Thurgood Marshall might not 
have been intimidated from ever bringing the Brown case under a 
mandatory sanctions regime.
  But because there was not the prospect of mandatory sanctions, 
because Linda Brown could file her novel claim without the threat of 
satellite litigation over whether the claim was frivolous, the doctrine 
of separate but equal was struck down. I could cite several examples of 
that sort of thing happening.
  And so I believe that it makes sense for Congress to allow the court 
discretion in sanctioning parties for the filing of frivolous 
pleadings.
  Mr. President, Congress has established a procedure to amend the 
Federal Rules of Civil Procedure, and that procedure is called the 
Rules Enabling Act.
  Under the Rules Enabling Act, the Judicial Conference appoints a 
committee to consider proposed changes to the Federal rules. The 
committee recommends any necessary changes to the Judicial Conference, 
which then studies the issue and then decides whether or not to 
transmit those proposed changes to the Supreme Court.
  The Supreme Court then decides whether or not to transmit those 
changes to Congress, to us, and then we then have 180 days either to 
reject or modify those changes. If Congress does nothing, then the 
changes go into effect.
  Mr. President, the changes to rule 11 that Senator Brown opposes were 
adopted by the Supreme Court on April 22, 1993. Congress had until 
December 1, 1993, to reject or modify the rule 11 changes. The Senate 
Judiciary Committee, on which I served with Senator Brown, held a 
hearing on this issue on July 28, 1993. Yet in that time Congress took 
no action to reject the rule 11 provisions. I believe that Congress 
should take no action now.
  There is no evidence to indicate that the revised rule 11, which will 
be thrown out by this amendment, has had an adverse impact on Federal 
litigation. Preliminary indications are that it has produced cost 
savings by decreasing the amount of ``satellite litigation''--
litigation on the side--as to what is frivolous, and by encouraging 
parties to withdraw frivolous pleadings within the 21-day safe harbor.
  It is not as though the 1993 amendments to rule 11 completely repeals 
the rule. The amendments gave attorneys the 21-day safe harbor in which 
to withdraw challenged pleadings and made sanctions discretionary in 
the judges, not mandatory.
  In addition, sanctions would normally be paid to the court in the 
form of a fine, rather than to opposing counsel in the form of 
compensation.
  Mr. President, these changes have been strongly supported by the 
civil rights community. As I stated earlier, it is often necessary to 
come up with novel theories in order to pursue civil rights cases. This 
proposed change, I think, would have an extremely detrimental effect.
  In fact, I have a correspondence here from the NAACP Legal Defense 
Fund in which they state that, ``The Brown amendment would be extremely 
detrimental to civil rights litigation.''
  But, again, to get back to what the studies say, the studies back up 
the claim that the rule, as amended, is working.
  A Federal Judiciary Center study demonstrated that, under the 
mandatory sanctions regime, sanctions were imposed in a 
disproportionately higher percentage of civil rights cases than in tort 
or contract cases. Inherent in this problem, of course, is the 
vagueness of the term ``frivolous.''
  In the same study, a group of judges asked to study a complaint 
divided evenly over whether or not the complaint was frivolous, 
prompting one commentator to observe that ``one man's frivolous 
complaint is another man's serious question.''
  And so, Mr. President, I would argue this afternoon that while the 
Senator from Colorado has obviously a concern in this area, this is the 
wrong forum and the wrong time. He spoke about the timeliness of the 
issue. This is the wrong time to take this issue up, and 
[[Page S5722]] certainly this is the wrong bill on which this issue 
should be taken up.
  If, indeed, further changes, further debate about whether or not 
judges should have discretion with regard to rule 11 issues, if that 
debate is to happen, then it should happen in the context in which we 
can make a judgment about it that is a sensible judgment and not just a 
rush to judgment.
  I submit to my colleagues that the effect of this amendment would not 
only be to limit the kind of cases that can be filed but also to limit 
the court's discretion, because in this instance, with this amendment 
in place, all that a judge could do would be to choose an either/or--
either the case is frivolous and thrown out altogether, or he has to 
apply mandatory sanctions.
  That is not the direction in which to go. That is going to increase 
the cost of litigation. That is not going to help the process to work, 
and certainly I come back to my original point, that will then create a 
further imbalance and a further disruption in a relationship that has 
been established giving the courts a process for deciding on amendments 
to the Rules of Civil Procedure. That relationship will have been 
greatly impaired by this kind of rush to judgment.
  So I reluctantly, again--understanding that I serve on the Judiciary 
Committee with the Senator from Colorado--submit to my colleagues, at 
this point in time, on this legislation, this amendment is ill founded, 
and I ask my colleagues to reject it.
  Thank you.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. ROCKEFELLER. Mr. President, I say to the Senator from Iowa, I am 
going to be literally 2 minutes.
  I just want to explain the position of the manager of the bill on 
this, and for the benefit of my colleagues who are listening to this 
debate and their staff who are listening.
  We are now considering an amendment of the Senator from Colorado, 
Senator Brown, that tries to repeal part of the Federal Rules of Civil 
Procedure dealing with rule 11 and the way it serves to inhibit so-
called frivolous pleading.
  This rule was modified as a result of action taken in 1993 following 
the work of the Federal Judicial Conference. I have listened to the 
concerns expressed by the Senator from Alabama and the Senator from 
Illinois, and others, pointing out this amendment is outside the scope 
of the bill before us, which is the product liability bill. From my 
previous tabling motions and votes, I think my colleagues know that I 
am dead serious about trying to keep this bill limited to the bill, 
unloaded, unadorned with amendments that are not directly related to 
it.
  I think that every Senator would agree that frivolous lawsuits should 
be curbed, but I just want to say that at the proper time, I will move 
to table the amendment. It was received very recently and one would 
hope there could be full hearings on the amendment. I wanted people to 
understand what my plan was.
  Mr. BROWN. Will the Senator yield?
  Mr. ROCKEFELLER. Of course.
  Mr. BROWN. Mr. President, I just simply will say to the Senator, I am 
very sensitive to the remarks he made. I understand fully his concerns. 
He has a very important bill that he has brought forward. I want to 
assure the Senator that it would be the last thing I would want to do, 
to somehow burden his bill so that it could not pass. I want to assure 
the Senator, in the event it is adopted but proves later to be a burden 
for the Senator in terms of getting his underlying measure passed, that 
I will work with him in that regard.
  Mr. ROCKEFELLER. I am thoroughly grateful to the Senator from 
Colorado.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, when is it time to take up an amendment 
in the Senate? When is it appropriate to discuss any amendment? 
Everybody knows the rules of the Senate. Almost any time in the Senate 
is a time to discuss anything that you can get before the body. 
Particularly in the case of this approach, it seems to me very 
appropriate now because we are talking about an underlying piece of 
legislation that is basic to making the courts a more effective tool 
for the settlement of disputes.
  In the particular case of the underlying piece of legislation, it is 
to establish some standards in the courts so that those cases that are 
going to be considered by the courts will have some continuing thread 
running through them from State to State to make sure the cases are 
fairly heard. And this issue that is before us, that is presented by 
Senator Brown, is such an amendment as well, an amendment that is going 
to make the Federal courts a more effective body for the determination 
of disputes.
  It has become otherwise because courts can be very easily loaded down 
with frivolous suits. The Brown amendment, which I support, is about 
making the courts serve the intent of the Constitution writers, to be 
an impartial body for the settlement of disputes, but not just any suit 
that might come to people's minds, very serious suits.
  So I want to associate myself with this amendment, and I want to say 
to my dear friend from Alabama, we very seldom disagree. This is one of 
those times because I think it is time now to restore the effectiveness 
of rule 11. A strong, effective rule 11 is one of the most important 
tools that the courts have to fight frivolous, baseless, and even 
sometimes harassing lawsuits.
  A strong effective rule 11 preserves judicial resources for litigants 
who truly need access to our court system, and to give a swift action 
against frivolous lawsuits and claims is, in the end, going to save 
time and going to save money and, by the way, that happens to be 
taxpayers' dollars, and it is going to, most importantly, promote 
public respect for the integrity of the Federal courts.
  Now, on the other hand, the current version of rule 11, the one that 
Senator Brown wants to modify, the current version is of little value 
as a deterrent to baseless lawsuits. It actually allows attorneys to 
file allegations without knowing them to be true. It allows lawyers to 
make assertions without having any factual basis and before any 
research is done.
  In short, the current version of rule 11 encourages the kind of 
baseless suits and claims that rule 11 was originally enacted to 
prevent.
  The current rule eventually says ``Sue first and ask questions 
later.''
  Senator Brown's amendment puts teeth back into rule 11. It does so by 
making sanctions for frivolous suits mandatory, as they once were. In 
fact, Mr. President, rule 11 was amended years ago to make sanctions 
mandatory because rule 11, up to that time, was ineffective when 
sanctions were discretionary, as they are under the current version of 
the rule.
  This amendment thus forces people who come into court to present the 
facts and to present the law in a reasonable and honest way. It deters 
frivolous claims and frivolous suits by denying litigants the 
opportunity to overreach with unresearched facts and to shoot for the 
Moon with unresearched law.
  This amendment also provides the courts with a variety of tools to 
defer frivolous suits, from attorney's fees and expenses to court 
penalties to nonmonetary sanctions. It also accounts for the innocent 
party who has to spend time and money defending against baseless 
claims, which the current version of the rule fails to do.
  This amendment would enable the court to make the moving party whole 
for the money spent defending against frivolous lawsuits or claims.
  Let me use a very specific example. The milkshake case that Senator 
Hatch talked about yesterday. A driver, as we recall, bought a 
milkshake at a McDonald's restaurant and placed it between his legs. 
When he reached for something, he squeezed the milkshake and it spilled 
into his lap. He became distracted and drove into the car of another 
driver who sued the milkshake purchaser and McDonald's. His attorney's 
theory was that McDonald's failed to warn the driver of the danger of 
eating and driving at the same time.
  Now, in reality, he was after McDonald's deep pocket because the 
driver who caused the accident was uninsured. This case was thrown out 
of trial court but was appealed up to the New Jersey Supreme Court--
consuming, if we can believe this, 3 years of the court system's time, 
and thousands and 
[[Page S5723]] thousands of dollars of McDonald's money for defense of 
a baseless action.
  Now, when McDonald's asked for reimbursement for these fees, the 
judge refused, saying of the plaintiff, ``He's creative and imaginative 
and should not be penalized for that.''
  Now, how ridiculous can we get when we talk about frivolous suits? 
This case shows that far from discouraging frivolous litigation, the 
current rule actually encourages it.
  Senator Brown's relatively modest changes will restore the deterrence 
value of rule 11 and will have a positive impact on the ability of the 
Federal courts to deal with the ever-increasing onslaught of 
litigation, because cases delayed is justice denied for some people who 
have a legitimate suit.
  I support and I ask my colleagues to support the needed change 
suggested by Senator Brown.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER (Mr. Ashcroft). The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, I have sought recognition to have a brief 
colloquy or discussion with the proponent of this amendment, the 
distinguished Senator from Colorado, Senator Brown. I have already 
talked with him about the matter, and I think it is useful to make it a 
matter of record as to the meaning of this amendment, which I think is 
reasonably apparent from the language.
  There is always a consideration as to legislative intent as derived 
from these discussions, but I think that it is especially appropriate 
when we have an amendment to have the view of the author of the 
amendment.
  As I understand the amendment, it essentially restores the old rule 
11 which was in existence prior to its amendment. In general terms, is 
that true?
  Mr. BROWN. Yes, it restores the rule that was in effect prior to 
December 1, 1993.
  Mr. SPECTER. As I understand the interpretation of the old rule, it 
provided some reasonable flexibility with respect to the imposition of 
sanctions. My question to Senator Brown is, does his amendment leave it 
to the discretion of the court as to what sanctions would be imposed?
  Mr. BROWN. It does leave to the discretion of the court as to what 
sanctions are appropriate.
  Mr. SPECTER. So that there is no requirement that there be an 
imposition of attorney fees or a loser-pays rule for a violation of the 
rule arising from this amendment to rule 11?
  Mr. BROWN. That is correct.
  The fact is, in the past, before December 1, 1993, there were 
occasions on a number of times when the judges would find that it would 
be inappropriate to award those fees although they found--
  Mr. SPECTER. It would be appropriate?
  Mr. BROWN. It would not be appropriate to award those fees, even 
though they did find a frivolous action.
  Mr. SPECTER. Although the language is mandatory that there has to be 
some sanction, the scope of the sanction is up to the judge? That is, 
it is discretionary with the court?
  Mr. BROWN. That is correct.
  Mr. SPECTER. And the amendment does not require that attorneys fees 
be paid or that the rule of loser pays be a consequence of a violation 
of the rule under the amendment that is being offered?
  Mr. BROWN. That is correct.
  Mr. SPECTER. Mr. President, this, I think, is something which is 
important to have clear, which we have now clarified.
  It is my sense that the adoption of the tightening provisions by 
Senator Brown achieves a purpose of further discouraging frivolous 
litigation. That is already discouraged to some extent, under the 
existing rule 11, but it further discourages frivolous litigation.
  There is legislation in one of the bills passed by the House which 
would impose the loser-pays rule, which is not in the House product 
liability legislation, but their companion bill and it might be 
applicable to all litigation so that it might apply to product 
liability cases.
  It is my sense, given the concern about whether there is frivolous 
litigation or the extent of frivolous litigation, that there is merit 
to try to reduce frivolous litigation to the extent that we can, and to 
discourage some more drastic, draconian measure, which I think would be 
presented by a loser-pays rule.
  The United States has had a tradition throughout the judicial 
experience we have had, that a loser-pays rule is not appropriate for 
our society. Without getting into the pros and cons and the extent of 
what may or may not be the rule in Great Britain, loser pays has not 
been our rule.
  My experience as a practicing attorney has demonstrated to me that we 
ought not to make that kind of a drastic rule which would, in effect, 
close the courts.
  What Senator Brown has done here in proposing a tightening of the 
rule against frivolous lawsuits, it seems to me, would tend to 
discourage any more drastic approach in this field.
  I wonder if my colleague from Colorado would agree with that 
generalization?
  Mr. BROWN. I might say that I concur in the view of the Senator.
  It seems to me if there is a reasonable and a fair procedure to 
discourage frivolous actions in place, that will act as the strong 
deterrent to go to the loser-pays provision that, for example, England 
has incorporated.
  On the other hand, if the rule stays without significant restrictions 
against frivolous lawsuits, my guess is there will be much greater 
strength in this country of movement to go to loser pays.
  Mr. SPECTER. I thank my colleague. Moving on to the one other 
provision I wanted to discuss, with respect to the knowledge of the 
attorney who prepares the pleadings.
  As I understand the amendment of Senator Brown, and I pose this 
question to my colleague from Colorado: does the amendment permit a 
good-faith interpretation as to what the attorney for the plaintiff 
knows; that it is to the best of the person's knowledge, information, 
and belief, as the language says, formed after an inquiry, reasonable 
under the circumstances.
  So in essence, it is a good-faith representation by the attorney who 
signs the pleadings.
  Mr. BROWN. Indeed, that is correct. Rule 11 before and after my 
amendment allows filings for which the party has a reasonable belief 
that it is true. The basic notice pleading system is not affected. One 
can still make a general, encompassing pleading, and then conduct 
discovery.
  I might add, the proposals in the new rule which were meant to 
discourage rule 11 proceedings are retained in this amendment. In other 
words, 21-day safe harbor that is part of the new rules, I retain.
  What that does is require someone who is going to bring rule 11 
proceedings to identify what they think is frivolous, then allow the 
person who has brought the action to correct that within 21 days, and 
indeed if they do it ensures that they are totally free from sanctions.
  That safe harbor provision, that I think is protection against rule 
11 proceedings, was retained. I retained it basically because I thought 
that part of the change seemed to have merit and could be helpful.
  Mr. THURMOND. Mr. President, I rise today in support of the amendment 
offered by my good friend from Colorado, Senator Brown. This amendment 
is appropriate to restore rule 11 of the Federal Rules of Civil 
Procedure to its proper role. Rule 11 is an important weapon to prevent 
the filing of frivolous claims and contentions in Federal courts. 
Significant alterations to rule 11 went into effect on December 1, 
1993, and several of these changes are not desirable.
  This is not an issue of favoring one party or group over another, but 
relates to the standards of veracity which apply to all advocates in 
Federal courts. The issue is whether we in the Congress are going to 
accept changes in rule 11 which lower the standards that attorneys must 
satisfy when filing claims and assertions in Federal court.
  This is an issue which is of importance to the American people, too 
many of whom already hold lawyers and our system of justice in low 
regard. The Congress is ultimately responsible for both the laws and 
the procedures under which our Federal courts operate. We simply should 
not accept the 
[[Page S5724]] lower standards in Federal courts which are made by the 
1993 changes to rule 11.
  The amendment by Senator Brown will correct undesirable changes in 
rule 11, while maintaining other changes in the rule which improve the 
administration of justice. The most critical correction made by the 
Brown amendment would require all factual contentions made in writing 
to a court to have evidentiary support or be well grounded in fact. The 
1993 changes in rule 11 permit a party to make contentions which are 
likely to have evidentiary support after further investigation or 
discovery. It is important to correct this change in rule 11 to prevent 
litigants from making broad assertions in the hope that they will be 
able to support them through future discovery. On the other hand, I am 
pleased that Senator Brown agreed to my suggestion to incorporate the 
long-standing standard that contentions must be well grounded in fact, 
because requiring every contention to have evidentiary support prior to 
discovery might be too high a standard and preclude claims and 
assertions that should be permitted.
  Mr. President, I consider the Brown amendment to be desirable to 
restore the standards of rule 11. I urge my colleagues to support this 
amendment.
  Mr. SPECTER. Mr. President, I would further inquire of my 
distinguished colleague from Colorado, whether the legislative intent 
here is to allow discovery as to matters that a plaintiff could not 
know about? So that when there is language here which says that, ``by 
presenting to the court * * * an attorney * * * is certifying * * * the 
allegations and other factual contentions have evidentiary support or 
are well-grounded in fact,'' if a plaintiff makes representations to 
the attorney which the attorney has reason to accept, that that would 
be a sufficient evidentiary basis for the allegations in the complaint?
  Mr. BROWN. Yes, I believe the Senator has said it correctly. All rule 
11 requires is an objectively reasonable belief that it is true. 
Certainly the case the Senator has outlined would fit that.
  Mr. SPECTER. If there is something which plaintiff does not know 
about, which the attorney does not know about, there would be an 
opportunity for discovery to ascertain facts which are not within the 
knowledge of the plaintiff before there could be a challenge that there 
was a violation of rule 11?
  Mr. BROWN. It is my understanding of the workings of this rule that 
it is quite clear that you can still make general encompassing 
pleadings and then conduct discovery.
  Mr. SPECTER. Because a plaintiff would know on many matters what had 
happened, but if there were some technical matter, some defect in a 
mechanism, for example, in a product, that could not be within the 
knowledge of the plaintiff, it might require some discovery. But you 
have to state a sufficient claim to withstand a motion to dismiss, or 
perhaps just notice pleading. There would be an opportunity for an 
attorney to undertake discovery before there would be a basis for 
seeking sanctions under rule 11?
  Mr. BROWN. Yes. It would be my feeling that this could well come 
under the general pleadings and all it would require is a general 
belief it was true. And it would, under those circumstances, allow the 
discovery.
  Mr. SPECTER. I thank my colleague from Colorado. It is my intention 
to support this amendment and I do so because I think the experience 
under the old rule--if I might ask the specifics of Senator Brown, when 
was the old rule in effect specifically?
  Mr. BROWN. The provision that required sanctions if indeed someone 
had made frivolous filings was adopted in 1983 and lasted through 
December 1, 1993.
  Mr. SPECTER. Within the 10-year period, I think that rule had 
sufficient flexibility to deter frivolous suits but was not so rigid 
and burdensome as to make it impossible to work in a reasonable 
fashion. And by returning to the old rule, which had been in effect for 
that period of time, it is my sense that there will be a tightening of 
the legal procedure and that it will make an improvement and satisfy 
those who are concerned about the filing of frivolous lawsuits.
  It is my sense generally that in seeking congressional changes in 
rules governing judicial proceedings that we have to proceed with 
substantial caution. In my comments on Monday I pointed out some of my 
experience. As a practicing lawyer, I represented both plaintiffs and 
defendants in personal injury cases and had a major piece of 
litigation, which I had discussed on Monday, and have a sense that, as 
we have had accretion or encrustation by the courts since the early 
19th century on the rules of law, where the cases are very, very 
carefully analyzed and considered--I have read many of those cases 
personally in connection with the litigation which I handled many years 
ago, described in some detail in my earlier presentation--that the 
courts have a much better opportunity to handle changes in the law than 
we do in Congress, where frequently only one or two Senators may be 
present at a hearing and our markups do not have the kind of careful 
and close analysis of an issue which judicial decisions have.
  So that when Senator Brown seeks to return to a rule which had been 
in effect for 10 years, which tightens the procedures and which may 
well foreclose a more drastic or draconian change on loser pays, I 
think it is worth enacting. So I compliment my colleague from Colorado 
and I also compliment my colleague from Alabama, who has no peer here 
in terms of his knowledge of the judicial system and of judicial 
temperament. We do not always agree, but Senator Heflin and I have been 
on the Judiciary Committee for 14-years plus together and we have 
agreed most of the time.
  I might say we are going to miss you, Senator Heflin. But on this one 
I must respectfully disagree and decide with Senator Brown.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. BROWN. Mr. President, I ask unanimous consent to add Senator 
Abraham as a cosponsor of the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HEFLIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. HEFLIN. Mr. President, first let me apologize to Senator Brown, 
when I said that he had not filed a bill on this. It was my 
understanding--I was told that, that was done after a reasonable 
search. My staff or someone, must not have done it.
  That sort of illustrates why there ought to be discretion in regards 
to facts, sometimes, that might be stated or alleged. You ought to have 
an opportunity to correct a mistake. There ought to be discretion when 
a party makes an honest mistake.
  But basically this is an issue on whether or not we should return to 
a rule that was in effect for 10 years from 1983 up until December 1, 
1993. The Judicial Conference, through an advisory committee, looked at 
the way rule 11 then was operating and it felt that there ought to be 
some changes made. So they proposed changes and the Judicial Conference 
of the United States agreed that there ought to be some changes made in 
rule 11, and that the rule ought not to be mandatory, but should be 
discretionary.
  It went to the Supreme Court and six out of the nine members of the 
Supreme Court, agreed with the Judicial Conference and the Supreme 
Court recommended the changes to the Congress. And the 6-month deadline 
went by and therefore the new rules of civil procedure, including rule 
11 went into effect because there was no vote trying to amend them or 
trying to prevent them from going into effect.
  So we have a situation in which I feel we ought to see how rule 11 is 
going to work. The judiciary studied it for 10 years, the 10 years that 
the old rule operated and basically this amendment attempts to take us 
back to the old rule. Basically, the Brown amendment has a lot of 
different language but it really comes down to whether or not rule 11 
ought to be mandatory in every instance or whether it ought to be 
discretionary with the judge.
  Senator Grassley talked about the milkshake case. There are bad 
cases. They say bad cases make bad law. You will have, probably, 1 out 
of 1,000 bad cases, but that ought not to necessarily be the 
controlling factor relative to a determination of whether or not the 
[[Page S5725]] rule ought to be mandatory or whether it ought to be 
discretionary.
  I think the procedure that was followed by the judiciary was a very 
deliberate procedure. It involved a studied approach, and scholars 
spent hours and days considering this issue. And here we are going to 
consider this bill on the floor of the Senate, highly technical in 
nature, in about 1 hour and 10 minutes and are going to vote on it. It 
seems to me that the proper course that we ought to follow is to follow 
what the advisory committee of the Judicial Conference did, and what 
the Supreme Court recommended to the Congress.
  So, in my judgment I feel it is a mistake to adopt the Brown 
amendment.
  Mr. BROWN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. BROWN. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. ROCKEFELLER addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. ROCKEFELLER. Mr. President, I wanted to note that I previously 
indicated that I wanted to have a tabling motion to establish the fact 
that I want this bill to be kept a product liability bill alone and not 
to have outside material added to it. But the prevailing sentiment of 
the chairman clearly is for an up-or-down vote, and I have yielded to 
that.
  The PRESIDING OFFICER. Is there further debate on the amendment. If 
not, the question is on agreeing to the amendment of the Senator from 
Colorado. On this question, the yeas and nays have been ordered, and 
the clerk will call the roll.
  The legislative clerk called the roll.
  Mr. LOTT. I announce that the Senator from Missouri [Mr. Bond] and 
the Senator from Oregon [Mr. Hatfield] are necessarily absent.
  Mr. FORD. I announce that the Senator from Delaware [Mr. Biden], the 
Senator from Arkansas [Mr. Bumpers], the Senator from Nebraska [Mr. 
Exon], the Senator from Massachusetts [Mr. Kennedy], and the Senator 
from Arkansas [Mr. Pryor] are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
who desire to vote?
  The result was announced--yeas 56, nays 37, as follows:

                      [Rollcall Vote No. 136 Leg.]

                                YEAS--56

     Abraham
     Ashcroft
     Baucus
     Bennett
     Brown
     Bryan
     Burns
     Chafee
     Coats
     Cohen
     Conrad
     Coverdell
     Craig
     D'Amato
     DeWine
     Dole
     Domenici
     Dorgan
     Faircloth
     Frist
     Gramm
     Grams
     Grassley
     Gregg
     Helms
     Hutchison
     Inhofe
     Johnston
     Kassebaum
     Kempthorne
     Kerry
     Kohl
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Nunn
     Packwood
     Pressler
     Reid
     Robb
     Roth
     Santorum
     Simpson
     Smith
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--37

     Akaka
     Bingaman
     Boxer
     Bradley
     Breaux
     Byrd
     Campbell
     Cochran
     Daschle
     Dodd
     Feingold
     Feinstein
     Ford
     Glenn
     Gorton
     Graham
     Harkin
     Hatch
     Heflin
     Hollings
     Inouye
     Jeffords
     Kerrey
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Pell
     Rockefeller
     Sarbanes
     Shelby
     Simon
     Wellstone

                             NOT VOTING--7

     Biden
     Bond
     Bumpers
     Exon
     Hatfield
     Kennedy
     Pryor
  So, the amendment (No. 599) was agreed to.
  

                          ____________________