[Congressional Record Volume 141, Number 71 (Tuesday, May 2, 1995)]
[Senate]
[Pages S5945-S5961]
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. GORTON. Mr. President, having completed work on all of the 
amendments relating to medical malpractice, the floor of the Senate is 
now open for other amendments to the product liability legislation. I 
understand that serious amendments are to be proposed extending the 
punitive damages provisions of this bill to all litigation and 
extending the rules related to joint liability to all litigation. At 
the same time, there are a number of other amendments, both those which 
would broaden the legislation and those which would narrow it, which is 
appropriate and is relative to be discussed in connection with this 
bill.
  I do hope at this point, after more than a week of debate, that 
proponents and opponents to these amendments will be willing to 
consider adequate, but relatively brief, time agreements, so that we 
can move the legislation forward. As Members come to the floor to 
present their amendments, I intend to make that suggestion to them, and 
we can have first-rate debate and votes and perhaps fewer quorum calls 
than we have had for some time.
  Mr. DOLE addressed the Chair.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. DOLE. Mr. President, what is the pending business?
  The PRESIDING OFFICER. It is amendment No. 596 to H.R. 956.


                           Amendment No. 617

 (Purpose: To provide for certain limitations on punitive damages, and 
                          for other purposes)

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

       The Senator from Kansas [Mr. Dole], for himself, Mr. Exon, 
     Mr. Hatch, Mr. McConnell, Mr. Abraham, Mr. Kyl, Mr. Thomas, 
     Mrs. Hutchison, and Mr. Gramm, proposes an amendment numbered 
     617.

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

       On page 19, strike line 12 through line 5 on page 21, and 
     insert the following:
      SEC. 107. PUNITIVE DAMAGES IN CIVIL ACTIONS.

       (a) Findings.--The Congress finds that--
       (1) punitive damages are imposed pursuant to vague, 
     subjective, and often retrospective standards of liability, 
     and these standards vary from State to State;
       (2) the magnitude and unpredictability of punitive damage 
     awards in civil actions have increased dramatically over the 
     last 40 years, unreasonably inflating the cost of settling 
     litigation, and discouraging socially useful and productive 
     activity;
       (3) excessive, arbitrary, and unpredictable punitive damage 
     awards impair and burden commerce, imposing unreasonable and 
     unjustified costs on consumers, taxpayers, governmental 
     entities, large and small businesses, volunteer 
     organizations, and nonprofit entities;
       (4) products and services originating in a State with 
     reasonable punitive damage provisions are still subject to 
     excessive punitive damage awards because claimants have an 
     economic incentive to bring suit in States in which punitive 
     damage awards are arbitrary and inadequately controlled;
       (5) because of the national scope of the problems created 
     by excessive, arbitrary, and unpredictable punitive damage 
     awards, it is not possible for the several States to enact 
     laws that fully and effectively respond to the national 
     economic and constitutional problems created by punitive 
     damages; and
       (6) the Supreme Court of the United States has recognized 
     that punitive damages can produce grossly excessive, wholly 
     unreasonable, and often arbitrary punishment, and therefore 
     raise serious constitutional due process concerns.
       (b) General Rule.--Notwithstanding any other provision of 
     this Act, in any civil action whose subject matter affects 
     commerce brought in any Federal or State court on any theory, 
     punitive damages may, to the extent permitted by applicable 
     State law, be awarded against a defendant only if the 
     claimant establishes by clear and convincing evidence that 
     the harm that is the subject of the action was the result of 
     conduct by the defendant that was either--
       (1) specifically intended to cause harm; or
       (2) carried out with conscious, flagrant disregard to the 
     rights or safety of others.
       (c) Proportional Awards.--The amount of punitive damages 
     that may be awarded to a 
     [[Page S5946]]  claimant in any civil action subject to this 
     section shall not exceed 2 times the sum of--
       (1) the amount awarded to the claimant for economic loss; 
     and
       (2) the amount awarded to the claimant for noneconomic 
     loss.
     This subsection shall be applied by the court and the 
     application of this subsection shall not be disclosed to the 
     jury.
       (d) Bifurcation.--At the request of any party, the trier of 
     fact shall consider in a separate proceeding whether punitive 
     damages are to be awarded and the amount of such an award. If 
     a separate proceeding is requested--
       (1) evidence relevant only to the claim of punitive 
     damages, as determined by applicable State law, shall be 
     inadmissible in any proceeding to determine whether 
     compensatory damages are to be awarded; and
       (2) evidence admissible in the punitive damages proceeding 
     may include evidence of the defendant's profits, if any, from 
     its alleged wrongdoing.
       (e) Applicability.--Nothing in this section shall be 
     construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by the United States, or by any State, under any 
     law;
       (2) create any cause of action or any right to punitive 
     damages;
       (3) supersede or alter any Federal law;
       (4) preempt, supersede, or alter any State law to the 
     extent that such law would further limit the availability or 
     amount of punitive damages;
       (5) affect the applicability of any provision of chapter 97 
     of title 28, United States Code;
       (6) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation; or
       (7) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum.
       (f) Federal Cause of Action Precluded.--Nothing in this 
     section shall confer jurisdiction on the Federal district 
     courts of the United States under section 1331 or 1337 of 
     title 28, United States Code, over any civil action covered 
     under this section.
       (g) Definitions.--For purposes of this section:
       (1) The term ``claimant'' means any person who brings a 
     civil action and any person on whose behalf such an action is 
     brought. If such action is brought through or on behalf of an 
     estate, the term includes the decedent. If such action is 
     brought through or on behalf of a minor or incompetent, the 
     term includes the legal guardian of the minor or incompetent.
       (2) The term ``clear and convincing evidence'' means that 
     measure or degree of proof that will produce in the mind of 
     the trier of fact a firm belief or conviction as to the truth 
     of the allegations sought to be established. The level of 
     proof required to satisfy such standard shall be more than 
     that required under preponderance of the evidence, and less 
     than that required for proof beyond a reasonable doubt.
       (3) The term ``commerce'' means commerce between or among 
     the several States, or with foreign nations.
       (4)(A) The term ``economic loss'' means any objectively 
     verifiable monetary losses resulting from the harm suffered, 
     including past and future medical expenses, loss of past and 
     future earnings, burial costs, costs of repair or 
     replacement, costs of replacement services in the home, 
     including child care, transportation, food preparation, and 
     household care, costs of making reasonable accommodations to 
     a personal residence, loss of employment, and loss of 
     business or employment opportunities, to the extent recovery 
     for such losses is allowed under applicable State law.
       (B) The term ``economic loss'' shall not include 
     noneconomic loss.
       (5) The term ``harm'' means any legally cognizable wrong or 
     injury for which damages may be imposed.
       (6)(A) The term ``noneconomic loss'' means subjective, 
     nonmonetary loss resulting from harm, including pain, 
     suffering, inconvenience, mental suffering, emotional 
     distress, loss of society and companionship, loss of 
     consortium, injury to reputation, and humiliation.
       (B) The term ``noneconomic loss'' shall not include 
     economic loss or punitive damages.
       (7) The term ``punitive damages'' means damages awarded 
     against any person or entity to punish such person or entity 
     or to deter such person or entity, or others, from engaging 
     in similar behavior in the future.
       (8) The term ``State'' means any State of the United 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Northern Mariana Islands, the Virgin Islands, Guam, 
     American Samoa, and any other territory or possession of the 
     United States, or any political subdivision of any of the 
     foregoing.
       (h) Effective Date.--This section shall apply to any civil 
     action in which trial has not commenced before the date of 
     enactment of this Act.

  Mr. DOLE. Mr. President, this is a bipartisan amendment--Senator Exon 
is a cosponsor, as are Senators Hatch, McConnell, Abraham, Kyl, Thomas, 
Hutchison, and Gramm.
  This is an amendment that offers needed protections from lawsuit 
abuse to every American--small business or large; volunteer or 
charitable organizations. The spectre of lawsuit abuse hangs over us 
all, and our amendment would expand the protections in the Gorton 
substitute to ensure that every American is covered.
  The bill as it now stands calls for limiting punitive damages in 
product liability cases to three times economic damages, or $250,000, 
whichever is greater.
  This amendment makes two changes: It would extend the limits on 
punitive damages beyond product liability to all civil cases; and it 
would provide a rule of proportionality that limits punitive damages to 
two times compensatory damages; that is, any economic and noneconomic 
damages combined.
  This amendment is needed because our Nation desperately needs broadly 
based relief from lawsuit abuse.
  America's litigation tax--the tort tax--hurts every American; at 
least every American who is not a personal injury lawyer.
  Anyone who cares about middle-class American families, consumers, and 
workers would want that litigation tax reduced.
  We all know the numbers: $20 in the cost of an ordinary $100 step 
ladder goes to the litigation tax, as does one-sixth of the price of an 
$18,000 pacemaker and $8 of an $11.50 DPT childhood vaccine.
  The litigation tax is a
   national ``value subtracted'' tax--$1,200 on every American, rich or 
poor, with nothing received in return.

  And where does that money go? According to a 1986 Rand Corp. study, 
less than half ends up with those who are suing. Most goes to trial 
expenses and particularly to lawyers.
  In other words, the litigation tax takes income right out of the 
middle-class family's pocket and puts it into the pockets of one of the 
wealthiest groups in America--personal injury lawyers.
  Even worse, just the fear of litigation has led to the canceling of 
life-saving research and product improvements in many fields. Companies 
are afraid of being sued over anything that is new and this has made 
America less safe.
  In other words, the biggest cost of the litigation tax may be 
measured, not in dollars, but in lives.
  The underlying bill goes a long way toward reducing the abuses we 
currently suffer. But, in my view, it leaves many deserving 
organizations and small businesses outside its protective scope.
  The litigation tax is paid, not just by consumers who buy products, 
but by every nonprofit organization, every small business, every 
municipality in the Nation--and those who depend on the services they 
provide.
  This amendment will free our nonprofit organizations, small 
businesses, and local governments to serve America without first 
serving up a tribute to personal injury lawyers.
  We do not have to look far to count the costs of the litigation tax 
to nonprofits, small businesses, and municipalties--and to the rest of 
America.
  For example, the head of the Girls Scout Council of the Nation's 
Capital Area wrote this to House leaders during the debate over there:

       Locally, we must sell 87,000 boxes of cookies each year to 
     pay for liability insurance. We have no diving boards at our 
     camps. We will never own horses. And, many local schools will 
     no longer provide meeting space for our volunteers.

  The chief executive officer of Little League Baseball, Dr. Creighton 
Hale, has issued a similar plea.
  Writing in the Wall Street Journal recently, Dr. Hale reported that, 
as he put it:

       In recent years, litigation has been the end result of two 
     boys colliding in the outfield [the two picked themselves up 
     and sued the coach]. * * * In still another case--

  He continued:

       A man and woman won a cash settlement when the woman was 
     hit by a ball a player failed to catch. The player was her 
     daughter.
  Dr. Hale says:

       The costs of this litigation lunacy score out * * * in 
     bewildered dads calling our offices asking about personal 
     liability, and volunteer coaches waking up to the fact that 
     they're taking major league risks.

  And he added:

       It's a problem common to all nonprofit organizations and 
     the volunteers they depend on.

  [[Page S5947]] This is not even close to being in the ballpark of 
what most people think of when we think of justice in America.
  Mr. President, legal speculators have declared war on American 
volunteerism, entrepreneurship, and local government--the institutions 
that make for strong communities and a better America.
  Expanding the limits on punitive damages to all civil suits will help 
end the legal speculators' war on these institutions. It will help 
return justice to the law. It will reach into every home and school and 
town board and small business and community group in the Nation.
  It will tell them that they need not fear for their financial 
security when they venture outside their home to help a neighbor or 
open a small business.
  It will tell them the siege is over.
  Mr. President, it seems to me that this is a very, very important 
amendment to the substitute. It is one that I hope my colleagues will 
look at very, very carefully.
  I would certainly be willing to enter into a time agreement on this 
amendment. We would like to finish action on the punitive damage 
amendment today, as well as a joint and several liability amendment. I 
hope we can reach some time agreement. I state that now so that my 
colleagues on the other side of this issue, perhaps we can negotiate a 
time agreement later this afternoon.
  I yield the floor.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER (Mr. Kyl). The Senator from Utah.
  Mr. HATCH. Mr. President, I am pleased to be a cosponsor of the 
amendment to S. 565.
  This amendment would, in effect, extend the punitive damage provision 
of S. 565 for product liability actions to all civil actions. The 
subject matter affects interstate commerce brought in State or Federal 
courts.
  Our system of civil justice is broken, in the eyes of many people. 
The American people do deserve better. They deserve change. They 
deserve some common sense in our legal system.
  I hope we can pass this amendment, along with some others, and send 
S. 565 to the President for his signature.
  Let me be clear: The pending amendment helps volunteer organizations, 
towns, cities, counties, States, farmers, small businesses, 
transportation companies, convenience stores, blood banks, school 
boards, as well as product manufacturers. This amendment is 
proconsumer.
  The pending amendment focuses on one aspect of our civil justice 
system: Punitive damages. Punitive damages are not awarded to 
compensate a victim of wrongdoing. These damages constitute punishment 
in an effort to deter future egregious misconduct.
  Punitive damage reform is not about shielding wrongdoers from 
liability, nor does such reform prevent victims of wrongdoing from 
being rightfully compensated for their injuries or for their damages. 
Safeguards are needed to protect against abuse in the form of punitive 
damages.
  In a 1994 opinion authored by Justice Stevens, the Supreme Court 
noted that punitive damages pose an acute danger of arbitrary 
deprivation of property. That was the Honda Motor Co. case.
  More than that, our current punitive damage system harms consumers. I 
wish all of my colleagues could have heard the testimony of George L. 
Priest, who appeared before the Judiciary Committee on April 4 of this 
year. Mr. Priest is a professor of law and economics at the Yale Law 
School and has taught in the area of tort law, product liability and 
damages for 21 years, for the last 15 years at Yale.
  Since 1982, he has been the director of the Yale Law School program 
in civil liability. He has studied jury verdicts extensively, and he 
did not appear before the committee on behalf of any client, interest, 
or group.
  Professor Priest testified, ``The reform of punitive damages alone, 
even reforms that would cap punitive damages or introduce a 
proportionality cap, will help consumers.''
  I note that the amendment before Members embodies a proportionality 
principle for punitive damages. I will return to Professor Priest's 
remarks later in my remarks and to this point later.
  Let me give examples of what is wrong. This past September, an 
Alabama Supreme Court upheld a multimillion dollar punitive damage 
award against an automobile distributor who failed to inform a buyer 
that his new vehicle had been refinished to cure superficial paint 
damage. The amount expended to refinish this automobile, $601, was less 
than 3 percent of the vehicle's suggested price. A number of States do 
not require disclosure of repairs costing below a 3 percent threshold. 
Indeed, Alabama later adopted such a minimum threshold statute after 
the events which occurred in this case.
  The victim was a purchaser of a $40,000 automobile. Nine months after 
his purchase, he took his vehicle to Slick Finish, an independent 
automobile detailing shop, to make the car look ``snazzier'' than it 
normally does--to use his terms. He was not then dissatisfied with the 
vehicle's look and had not previously noticed any problems with the 
car's finish. It was then that he was told by the detailer of the 
partial refinishing.
  As a result of the discovery, he sued the automobile dealer, the 
North American distributor, and the manufacturer for fraud and breach 
of contract. He also sought an award for punitive damages. He won and 
he did hit the jackpot.
  At trial, the jury was allowed to assess damages for each of the 
partially refinished vehicles that had been sold throughout the United 
States for a period of 10 years. The jury returned a verdict of $4,000 
in compensatory damages. It also returned a verdict of $4 million in 
punitive damages.
  On appeal to the State Supreme Court, the punitive damages award was 
reduced to $2 million, applicable only to the North American 
distributor. The U.S. Supreme Court has accepted this case for review 
of the constitutionality of the $2 million punitive damage award.
  There is some indication that the law, though, did not permit that 
type of an award but the court decided anyway that they would halve the 
award from $4 million to $2 million.
  My colleagues want to know why Americans are fed up with the civil 
justice system? I defy any Member of this body to read the opinion in 
this case and tell the American people that justice was done.
  Why does it matter? In this case, it is not the purchasers of $40,000 
automobiles that I am so concerned about, although they are consumers 
too. But the North American distributor of this automobile, spending 
tens of thousands of dollars in fees to defend a lawsuit over a $601 
paint refinishing, and subject to a ridiculous $2 million punitive 
damage award, employs our constituents. Many of those employees cannot 
afford such expensive cars--nor can they afford such ridiculous results 
from our legal system. If the cost of business goes up, that cost will 
get passed on, and a business can only raise prices so far before its 
product becomes uncompetitive. At some point, that business will have 
to reduce its payroll. Who makes out like bandits from this case? The 
purchaser of a car with a $601 refinished paint job and, of course, his 
lawyer. I mean, punitive damages, for this case? And 2 million dollars' 
worth?
  I should also note that this same defendant can be sued again and 
again for punitive damages by every owner of a partially refinished 
vehicle. In fact, according to defense counsel, the same plaintiff's 
attorney has filed 24 other similar lawsuits. No surprise there.
  As a further note about this fiasco, in one of those other cases, the 
jury awarded no punitive damages. The very same conduct by the 
defendant and in one case, it is socked with $2 million in punitive 
damages and in another case zero punitive damages. Who knows what the 
litigation lottery will bring in the other, similar cases.
  Let us look at another example. The September 26, 1994, National Law 
Journal, has a headline reading: ``Blockbuster Busted for $123.6 
Million.''
  A Dallas, TX, judge ordered Blockbuster Entertainment Corp., Video 
Superstores Master LP, and an individual to pay $14.7 million in 
damages and interest and $108.9 million in punitive damages to an 
individual investor. Why?
  [[Page S5948]] In 1986, the investor invested in the first 
Blockbuster franchises, and according to his attorney, ``he was 
supposed to be included in the sale when the general partner sold.'' 
But the plaintiff-investor was not informed when such a sale was made. 
He charged the three defendants with breach of fiduciary duty and 
fraud. Aside from the $14.7 million in damages and interest, as 
mentioned earlier, the judge assessed just over $36 million in punitive 
damages to each of the three defendants, or an astonishing $108.9 
million in punitive damages assessed against the defendants.
  If the defendants in this case did breach their fiduciary duty and 
commit fraud, the plaintiff should be made whole. The pending amendment 
would not alter anyone's right to such a recovery.
  But is this a case where punitive damages should also be imposed for 
the wrong? Moreover, after over $10 million in actual damages and 
nearly $4 million in interest, is there a further deterrent effect by 
imposing punitive damages? I do not have all of the facts, and I 
understand the case is under appeal. But even if punitive damages are 
appropriate, is it sensible to impose nearly 109 million dollars' 
worth, or over 7 times the award of damages and interest? I might add, 
if this plaintiff could meet the substantive standard of the pending 
amendment, the amendment itself would allow over $30 million in 
punitive damages. Frankly, that is an astronomical award itself, yet 
critics of this amendment argue that it is penurious.
  My colleagues should understand, as the American people do, such 
awards impose costs. Prices on goods and services can be affected, 
wages and benefits paid to employees and the level of employment itself 
can be affected. The availability of goods and services can be 
affected.
  Let me go back to Alabama, for yet another case, demonstrating the 
lack of common sense in our current civil justice system giving rise to 
this amendment. Indeed, this example is so outrageous, I will simply 
quote, at some length, the well-considered testimony of Professor 
Priest, at our April 4, 1995, hearing. This is from his written 
statement:

       In the case Gallant v. Prudential, decided this past April 
     1994, Iran and Leslie Gallant sued Prudential Life Insurance 
     Company based on the actions of a Prudential agent. The 
     Gallant's had purchased a combination life insurance-annuity 
     policy with a $25,000 face value at a monthly premium of 
     roughly $39.00. At the time of sale, the agent had told them 
     that the value of the annuity was roughly twice what in fact 
     it was; the agent had added together the table indicating 
     ``Projected Return'' with the table indicating the lower 
     ``Guaranteed Return.'' A jury found this action fraudulent 
     and held the agent liable and Prudential separately liable 
     for failing to better supervise the agent.

  Professor Priest goes on to say:

       Fortunately, the problem was discovered before either the 
     policyholder had died or had retired to receive the annuity. 
     Thus, to the time of trial, there was no true economic loss 
     beyond the failed expectation of the larger future return. I 
     have carefully read the transcript of the testimony, and the 
     Gallants testified that, between the time that they 
     discovered the misinformation and Prudential called them to 
     offer a remedy (Prudential offered to return their premiums 
     or to discuss adjusting the policy), they had suffered 
     roughly two weeks of sleepless nights and substantial anger 
     at having been misled. That was the extent of their ``mental 
     anguish''.
       Twenty years ago, I taught cases of this nature in a course 
     entitled Restitution, in which the appropriate remedy was 
     restitution of all paid premiums or out-of-pocket costs. On 
     very rare occasions such as especially egregious actions by a 
     defendant, some courts considered awarding plaintiffs the 
     benefit of the bargains, say, by increasing their annuity 
     benefits.
       Our modern world has changed: After a one and one-half day 
     trial, an Alabama jury awarded the Gallants damages equal to 
     $30,000 in economic loss; $400,000 in mental anguish; and $25 
     million in punitive damages.

  Again the face value of the policy was only $25,000, and they had not 
yet qualified to receive that. Think about it. A $25,000 policy, the 
agent made a mistake, they have 2 weeks of alleged sleepless nights, 
they were angry for much of that time, and they got $30,000 in economic 
loss, $400,000 for their 2 weeks of sleepless nights and anger, and $25 
million in punitive damages.
  Professor Priest said:

       I do not wish to minimize the harm to the Gallants, 
     especially the indignity of the misrepresentation, nor to 
     condone the fraudulent actions of the agent, apparently 
     perpetrated on several other Alabama citizens who recovered 
     separately. Nevertheless, there is not a single person to 
     whom I have described this case--not an attorney, whether 
     plaintiff or defendant; not a liberal or a conservative; not 
     even a radical or idealist Yale Law student (or faculty 
     member)--who has not been shocked by the outcome or who could 
     defend it as a rational or sensible verdict in the context of 
     the harm. Again, many defenders of punitive damages argue 
     that exceptionally large verdicts are usually overturned on 
     appeal. Alabama provides a review procedure for punitive 
     damages verdicts that the U.S. Supreme Court has approved. In 
     the Gallant case, however, the judge conducting the review 
     affirmed the $25 million award in its entirety, though 
     directing part of the amount to be paid to the State.
       What will be the effect of a punitive damages verdict of 
     this nature? The Gallants appear to be persons of modest 
     means (before the verdict). Does a verdict of this nature 
     help middle- or low-income consumers? Totally, the opposite. 
     The insurance policy in question--face value, $25,000--was 
     the cheapest form of life insurance annuity available on the 
     market; again, its monthly premium was only $39.00. 
     Obviously, at such a premium, the insurance carrier could not 
     be expecting to make a substantial profit on the policy. 
     Indeed, an expert in the case estimated that over the entire 
     life of the policy, the premiums net of payouts paid by the 
     Gallants would increase Prudential's assets by only $46.00. 
     Prudential, like most other life insurance companies, profits 
     more substantially from large dollar, rather than small 
     dollar policies. The expert estimated that the verdict 
     reduced dividends to every Alabama policyholder . . . by 
     $323.

  That points out the ridiculousness of this.
  Priest goes on to say:

       How do we analyze a case like this in terms of whether 
     punitive damages serve a necessary deterrent effect? In his 
     closing argument, the . . . attorney for the Gallants asked 
     the jury to determine a level of damages that would send a 
     message to the giant Prudential Life Insurance Company that 
     fraudulent behavior on the part of an agent will not be 
     tolerated. What kind of damages message is necessary to 
     achieve that effect? Obviously, if the insurer stood to gain 
     no more than $46 over the life of the policy, any damages 
     judgment greater than $46 sends the insurer a message by 
     making the policy unprofitable. (Of course, I ignore entirely 
     Prudential's defense costs plus the reputational harm from 
     the lawsuit.) The jury in the Gallant case went substantially 
     beyond that amount, however, in awarding compensatory damages 
     of $30,000 for economic loss and $400,000 for the mental 
     anguish of the two weeks' lost sleep and anger. It certainly 
     cannot be argued that the jury has undervalued the Gallant's 
     compensatory loss--indeed, the $400,000 for the mental 
     anguish award is extreme. Furthermore, there is no reason to 
     think that the agent's behavior in other contexts would go 
     undetected. (Prudential later settled other cases brought by 
     the agent's clients.) As a consequence, there is no 
     justification for a punitive damages award whatsoever.
       What will be the effect of punitive damages verdicts such 
     as that in the Gallant case? In the face of such a verdict, 
     what is the rational response of an insurer like Prudential 
     or other insurers selling similar policies? Regrettably, but 
     necessarily in a competitive industry, the rational response 
     is to quit selling such low value policies altogether. It 
     makes little sense to expose the company and its 
     policyholders to the risk of such a damages verdict given the 
     very small gain from the sale of such a policy.
       Is this the type of product that our civil liability system 
     should drive from the market? Obviously, not, and low-income 
     consumers in Alabama are directly harmed as a result. Here, 
     the dramatically differential effects of such verdicts on 
     high-income versus low-income consumers are made clear. In my 
     own view, it is far more important to our society to have our 
     insurance industry provide life insurance coverage to low-
     income citizens, since the relatively affluent of our society 
     have other means of providing financial security for their 
     families. The availability of financial protection and 
     security at relatively low cost will be substantially 
     diminished if such low premium policies, as here, are no 
     longer available.
       More generally, where expected punitive damages verdicts 
     are added to the price of products and services, the first to 
     feel the effect will be low-income consumers. And where the 
     magnitude of punitive damages verdicts rise, imperiling the 
     continued provision of the product or service, the first to 
     be affected will be those products and services with the 
     lowest profit margins, most attractive to the low-income. The 
     Gallant case provides a dramatic
      example of the effect. Following Gallant and other large 
     punitive damages verdicts, several insurers have quit 
     offering coverage in Alabama altogether.

  I understand this case settled for an undisclosed sum. I urge my 
colleagues to take a close look at the concerns raised by Professor 
Priest.
  The consequences of our current civil justice system can be felt in 
many ways.
  [[Page S5949]] The July 17, 1992, Science magazine reported that 
Abbot Laboratories put off testing for a drug that might prevent the 
spread of AIDS from infected pregnant women to their newborns. Why? 
According to the article, ``Abbott officials announced that testing its 
HIV hyperimmune globulin (HIVIG) * * * would make the company too 
vulnerable to lawsuits.'' This action touched off some controversy. The 
Science article continued:

       In spite of the uproar, National Institute of Health 
     officials agree with Abbott that liability is a significant 
     issue in AIDS vaccine and therapy research. A recent 
     investigation by Science (April 10, 1992, page 168) revealed 
     that fear of lawsuits has led several HIV vaccine developers 
     to delay or even abandon promising projects.

  Creighton Hale, chief executive officer of Little League Baseball, 
wrote about lawsuits filed against coaches over the ordinary mishaps of 
a baseball game in the February 13, 1995, Wall Street Journal. He 
noted, ``from my spot in the bleachers, the costs of this litigation 
lunacy [result in] bewildered dads calling our offices asking about 
personal liability, and volunteer coaches waking up to the fact that 
they're taking on major league risks.'' He went on to say 
significantly, ``It's a problem common to all nonprofits and the 
volunteers they depend on. Little League Baseball has seen its 
liability insurance skyrocket 1000 percent--from $75 dollars per league 
annually to $795--in a recent five year period. Good Samaritans are 
caught in a suicide squeeze.''
  Mr. Hale urged Congress to extend common sense legal reform beyond 
products liability cases to cover volunteers and others. I note that 
Ms. Jan A. Verhage, executive director of the Girl Scouts Council of 
the Nations Capital, which also serves the surrounding Maryland and 
Virginia communities, wrote to Speaker Gingrich on February 13, 1995. 
She asked that legal reform legislation be extended to include 
organizations like the Girl Scouts.
  Now, she was not speaking for the national organization. But her 
comments are very telling: ``Locally we must sell 87,000 boxes of these 
Girl Scout cookies each year to pay for liability insurance. We have no 
diving boards at our camps. We will never own horses, and many local 
schools will no longer provide meeting space for our volunteers.''
  Paul A. Crotty, the top lawyer for New York City, wrote to Commerce 
Committee Chairman Larry Pressler on April 5, 1995, on behalf of New 
York City and Mayor Guiliani. He urged that the punitive damages 
provision in the underlying products liability bill be extended to all 
cases. He wrote, ``Although punitive damages generally cannot be 
imposed against cities, they generally can be imposed against 
governmental employees. Excessive awards against individuals providing 
government services can be as destructive as large awards against 
businesses that manufacture or sell products.''
  This is all just the tip of the iceberg.


                               statistics

  Let me say a word about the battle of statistics that rages over 
punitive damages. Supporters and opponents of this amendment can rely 
on various studies about the number and dollar amount of punitive 
damages awards. We heard reports on some such studies in the Judiciary 
Committee. There is no single definitive study.
  But let me say this: anyone with even a passing familiarity
   with our civil justice system knows that the likelihood of a 
punitive damages award, justified or not, is far greater today than 40 
years ago. Moreover, and this is the crucial point, even beyond the 
increase in the frequency and amount of actual awards over that time, 
the mere threat of punitive damages affects volunteers, school boards, 
businesses of all sizes. The mere inclusion of a claim for punitive 
damages in today's litigation climate boosts the settlement value of a 
case, regardless of the case's merits. Insurance premiums go up, 
products and services are curtailed, innovation is stifled, consumer 
prices go up, and payroll costs rise, adversely affecting employment.

  Professor Priest states,

       Forty years ago, punitive damages verdicts were 
     exceptionally rare and were available against only the most 
     extreme and egregious of defendant actions. The world of 
     civil litigation is severely different today. Both the number 
     and, especially, magnitude of punitive damages judgments have 
     increased dramatically, indeed the frequency of claims for 
     punitive damages has increased to approach the routine. These 
     claims affect the settlement process, both increasing the 
     litigation rate and, necessarily, increasing the ultimate 
     magnitude of settlements even in cases that are settled out 
     of court.

  The terrible, irrational consequences of these developments are easy 
to see. Take the $601 paint refinishing case in Alabama that mushroomed 
into a $2 million litigation bonanza. If the plaintiff knew punitive 
damages were not a real possibility, the case could have settled. How 
utterly wasteful to the economy to have such a minor case, the 
equivalent of less than a fender-bender under any rational view, 
actually proceed through depositions and discovery, let alone actually 
be tried and then go through the appeals process. For heaven's sake, 
this paint refinishing case is now before the Supreme Court of the 
United States. What a waste of the company's resources which go to its 
lawyers and to court costs, and of scarce judicial resources. Only the 
plaintiff and his lawyer, if on a contingent fee, benefit from this 
windfall.
  A civil justice system where all of this can happen is broken. One of 
the problems which needs fixing is the lack of meaningful control over 
punitive damages.


                               deterrence

  The cost of our current civil justice system might be offset at least 
somewhat if it actually does deter egregious wrongdoing. Here again, 
listen to the testimony of Professor Priest:

       I have never once seen a careful study in a specific case 
     showing that a punitive damages judgment of some particular 
     amount was necessary to deter some particular wrongful 
     behavior.
       * * * forty years ago, in a tort law regime that provided 
     little in the way of consumer remedies, it might have been 
     that ever-increasing civil liability verdicts, including 
     punitive damages verdicts, would serve to reduce the number 
     of accidents. That view, however, has been totally 
     discredited today, and I know of no serious tort scholar 
     publishing in a major legal journal who could maintain it. 
     Instead, it is widely accepted--and it is a routine 
     proposition of a first-year modern torts course--that 
     compensatory damages--economic losses and pain and 
     suffering--serve a complete deterrent purpose in addition to 
     their role in compensating injured parties. Compensatory 
     damages impose costs on defendants who wrongfully fail to 
     prevent accidents, costs equal in amount to the injuries 
     suffered * * *.

  He also testified that adverse publicity is another powerful 
deterrent to wrongdoers.
  Let me stress that the pending amendment, of course, by no means 
eliminates punitive damages. Indeed, it allows punitive damages in an 
appropriate case, in an amount up to
 three times economic damages or $250,000, whichever is greater.

  Actually, that was the old rule. Senator Snowe's language allows two 
times the total of compensatory and noneconomic damages.


                               consumers

  Do punitive damages help consumers? Here, again, is the testimony of 
Professor Priest: ``The central problem of punitive damages, however, 
is that except in the rare cases of jury undervaluation of damages or 
underlitigation, punitive damages settlements and verdicts 
affirmatively harm consumers, ands low-income consumers most of all.

       Where punitive damages become a commonplace of civil 
     litigation as in Alabama, or even where they become a 
     significant risk of business operations, consumers are harmed 
     because expected punitive damage verdicts or settlements must 
     be built into the price of products and services. The effect 
     of the greater frequency and magnitude of punitive damages 
     recoveries of modern times has been to increase the price 
     level for all products and services provided in the U.S. 
     economy.

  Indeed, Mr. President, as mentioned earlier, a punitive damage award 
in a case like Gallant versus Prudential, involving a combination life 
insurance-annuity policy with a $25,000 face value and $39 monthly 
premium, can only make insurance less available and more costly for 
middle- and low-income people.
  Mr. President, the problems with the current punitive damages regime 
in this country are national in scope. Only Congress can fix these 
problems.
  The pending amendment would require that the claimant establish by 
clear and convincing evidence that the harmful conduct was carried out 
with conscious, flagrant indifference to the 
[[Page S5950]]  rights or safety of the claimant before winning an 
award of punitive damages. It would then place a proportional limit on 
punitive damages of up to two times the sum of a plaintiff's economic 
loss and noneconomic loss.
  Any party to the action could obtain a separate proceeding for the 
consideration of whether punitive damages are to be awarded and the 
amount of such award. Our amendment does not supersede or later any 
Federal law. It does not deny States the right to enact punitive 
damages provisions, consistent with this amendment, or to place further 
limits on such awards. These are worthy provisions.
  I urge support for the Dole amendment.
  I yield the floor.
  Mr. KYL addressed the Chair.
  The PRESIDING OFFICER (Mr. Abraham). The Senator from Arizona.
  Mr. KYL. I speak in support of the Dole amendment. The comments of 
the Senator from Utah just given really portray I think in the most 
thorough way the basic thrust of this amendment and the arguments for 
it. I will very briefly just add at the margins some information which 
I think helps to flesh out the arguments that have just been made by 
the Senator from Utah.
  As he pointed out, this amendment would extend the product liability 
punitive damage limitation in the Gorton-Rockefeller bill to be set at 
two times the economic damages in all civil actions involving 
interstate commerce. The exception is the civil rights and 
environmental laws. Therefore, at the margin, this amendment makes the 
underlying bill even better than it is.
  Historically, as has been noted, punitive damages were awarded in 
only the rarest and most egregious cases in order to punish, to make an 
example of the defendant when that defendant's conduct fell below a 
certain standard. According to Prof. George Priest of Yale Law School, 
who has already been quoted here, 65 to 78 percent of all tort actions 
over the last fiscal year include punitive damages in the pleadings. So 
what was originally designed to be a recovery in the very most narrow 
situation has now become part of the pleadings in a majority, even 
exceeding three-fourths, of the cases. Although punitive damage awards 
represent a relatively small part of the overall awards, the amount of 
the average award continues to increase.
  For example, according to Investors Business Daily, in an article of 
April 3 of this year, a study of jury awards between 1965 and 1984 
shows that the average inflation adjusted damage award increased 1,595 
percent, Mr. President. These awards clearly are skyrocketing, and they 
need to be reined in. Punitive damage awards have in effect become a 
lottery in which the jackpot is continuously doubling. The lawyer's 
incentive to file suit is the 30 percent of the settlement amount and 
the 40 percent of most trial judgments that he or she realizes. The 
plaintiff's incentive is the often outrageous jury verdict.
  Two well-publicized examples will be recalled by most people: The 
nearly $1 million awarded to the McDonald's customer who put hot coffee 
between her legs while driving and, unfortunately, was burned; and the 
Alabama case in which actual damages totaled only $1,200 but the jury 
awarded $4 million in punitive damages.
  I said that punitive damages were skyrocketing a moment ago. Those 
were not my words. Those were the words in an opinion of Justice Sandra 
Day O'Connor, who said in a 1993 Supreme Court opinion that they were 
``skyrocketing.'' She was addressing a lower court ruling which upheld 
a $4.3 million award, Mr. President, to a convicted felon who, in the 
course of violently robbing a 72-year-old subway passenger, was shot 
and paralyzed by a transit authority police officer. The case was 
McCummings versus New York City Transit Authority, 1993.
  This is outrageous, Mr. President. It is the kind of cap that we need 
to place into law. These outrageous punitive damages create a tort tax 
paid by consumers in the form of higher prices, higher insurance 
premiums, and reduced market choice and quality.
  It is a regressive tort tax paid disproportionately by citizens on 
the lower end of the economic spectrum because higher prices, of 
course, hit them the hardest.
  Do punitive damages serve as a necessary deterrent? Sadly, Mr. 
President, in many cases, no.
  Again, according to Richard Posner, the best theory is that full 
compensatory damages generate exactly the optimal level of deterrent.
  Mr. President, punitive damages are a quasi-criminal remedy. They are 
the product of a bygone era when the resources of public prosecutors 
were slim.
  Today, public prosecutors are better able to serve the public 
interest in a certain level of punishment. To the contrary, plaintiffs 
and their lawyers seeking huge punitive damages awards often initiate 
litigation without consideration of the public interest, but of their 
own interest. That is why these damages need to be controlled.
  Let me cite just a few of the examples. The Senator from Utah cited 
some egregious examples a moment ago.
  Another example: A juror in a punitive damages case said that his 
fellow jurors discussed a damage award of between $100,000 and $8.5 
million before deciding on $10 million. Later, when asked why $10 
million was chosen, this juror said, ``Quite honestly, I think it had 
something to do with finding a round figure. We were given no 
guidelines.''
  There was a recent article in USA Today, March 6, 1995, which I think 
had some interesting points to make and some other examples to cite. I 
will cite just a couple quotations from the article.

       The court system that's supposed to assure fair 
     compensation for people harmed through the fault of others 
     looks at times more like a gambling casino than the house of 
     Justice.
       Some injured individuals are walking away with pots of 
     money--far, far beyond any actual losses they've suffered.

  Here are some of the horror stories that the USA Today story cited.

       The Alabama woman awarded $250,000 in punitive damages even 
     though she wasn't injured and wasn't even present when a gas 
     water heater malfunctioned.
       The San Francisco mugger who won a $24,595 judgment for leg 
     injuries when a cab driver pinned him to a wall with his taxi 
     to keep the criminal from escaping.
       The Miami woman awarded $250,000 after she, having used 
     cocaine and alcohol and splashed herself with gasoline, was 
     severely burned trying to light a barbecue.
       The Florida theme park ordered to pay 86 percent of a 
     woman's award for injuries received on its ``Grand Prix'' 
     ride, even though the jury found the park only 1 percent at 
     fault and the woman's husband--who rammed his car into hers--
     85 percent at fault.
       The tricycle manufacturer who settled out of court for $7.5 
     million rather than risk an even more generous jury award 
     over the color of its trikes.
       According to one five-state study, the dollar volume of 
     punitive-damage awards against business alone is up 89-fold 
     over a 20-year span.

  I want to quote just one other thing from this USA Today article 
before I close, Mr. President.

       Given the emotional pull of tragic personal injuries or 
     honest businesses driven to bankruptcy, few opportunities to 
     exaggerate have been missed by either side. But there is at 
     bottom an undeniable sense: The system doesn't operate 
     fairly. And that sense of unfairness invites opportunists to 
     try to cash in--looking for a jackpot on the chance that the 
     system's unfairness will work in their favor:

  And then this article goes on to note a couple other cases.

       Like the Michigan man who lost an eye when a July 4 
     skyrocket exploded in his face and then sued his parents for 
     letting him set off fireworks when he was drunk.
       Or the 305-pound man who had a stomach-stapling operation 
     and sued the hospital because he was allowed near a 
     refrigerator and ate so much he popped his staples.

  Mr. President, these examples would be humorous if the problem were 
not so serious. The problem is that we are all paying for this, for 
this jackpot, this lottery that is called punitive damages. It is time 
to rein it in. It is time to put a modest cap on these punitive 
damages.
  That is all the amendment of the majority leader does. It is time 
that we adopt this kind of approach to the liability reform that is 
before us today and, hopefully, that we will be voting on later this 
afternoon. I urge my colleagues to support this amendment.
  I yield the floor.
  Mr. ROCKEFELLER. Mr. President, I suggest absence of a quorum.
  The PRESIDING OFFICER. The absence of a quorum has been noted. The 
clerk will call the roll.
   [[Page S5951]] The legislative clerk proceeded to call the roll.
  Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROCKEFELLER. Mr. President, I rise again to report to my 
colleagues on our situation and to make a reflection.
  This morning, we conducted a series of rollcall votes. I believe 
there were eight. They all had to do with something called malpractice 
reform, which is not part of the product liability reform.
  We were able to accept two amendments, which means that we did not 
accept others. Those were on fairly minor issues, I might say.
  Of the eight amendments that required votes, the Senate adopted three 
by sort of an interesting variety of margins. The net result is that 
the product liability bill, which is the sole focus of the concern of 
the Senator from West Virginia, as well as the Senator from the State 
of Washington, now includes the malpractice proposal as offered by the 
Senator from Kentucky, which prevailed with 53 votes.
  So that means we now have a bill which has product liability in it, 
has malpractice reform in it. I have indicated before that I think at 
some point Senators are going to have to make a choice. I do not think 
when it comes right down to it, we are going to be voting on a bill 
that has these two elements in it. We may be voting on no bill that 
has, therefore, nothing in it. Or we may be voting on a bill that has 
both elements in it which causes both elements to lose, products and 
malpractice, which is in nobody's interest. Now we found another one. I 
say this with all respect and without anything but respect. But we are 
debating an amendment by the majority leader, with a number of other 
Senators as cosponsors, to limit punitive damages in all civil actions, 
not just product liability. So now this comes from the House.
  This, again, opens up an entire new range of problems and 
possibilities for product liability and the chances of passage. This is 
opening the whole thing up. It is all civil torts. I recognize the 
basis of the amendment. There is a very impressive array of 
organizations, including municipalities, small businesses, nonprofit 
groups--they want to curb the costs--and problems associated with 
punitive damages in our legal system. They have that right in a 
democracy, and they are exercising that right. And now we are seeing 
the results of that.
  I am not going to get into the substance of the amendment or into the 
merits of the amendment. I simply want to indicate that this is not 
product liability as it has been introduced. It is, again, trying to 
open it up so that other things can be attached to it. Some may think 
that helps it. Some may think that by adding other extraneous areas it 
shows that they are abreast of everything that is going on in the House 
and fighting with equal vigor, and I understand that; I understand it 
politically, substantively, and every other way.
  But it does not help product liability to pass. I would remind 
Senators, as I have on a number of occasions and I will continue, that 
the underlying amendment here is the Product Liability Reform Fairness 
Act of 1995. For both those who oppose it and who favor it and who have 
invested a lot of time in it, it is this bill which we want to see 
acted upon.
  So I just make this point at the beginning of the debate. And I am 
perfectly willing to have a time agreement. I understand the majority 
leader will be very amenable to a time agreement. I think that is being 
shopped on both sides. I do not expect this debate to go on for a very 
long time. But, again, it is an extraneous amendment. I simply point 
that out. It hurts the possibilities of product liability reform. I 
think it has almost no chance of passing. Of course, a vote will tell 
that, but I forecast that. Thus, I wonder what it is in fact we are 
accomplishing by all of this.
  I thank the Chair and yield the floor.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. I turned on the TV in the office and was amused to see 
a series of whining and moaning and groaning with respect to punitive 
damages. This contract crowd is going in two different directions. 
Under the contract now, the welfare recipient is to show more 
responsibility. Under the contract, we have a family. They do not want 
Government in anything, but they want it in everything. They want it in 
the family. I would think that would be the last thing, to get into the 
family. But the contract crowd wants a family bill. And, of course, 
fundamental to the family is that we punish the child when it 
misbehaves. We spank the baby and teach it some discipline when it 
misbehaves and teach it how to do right as opposed to doing wrong.
  But when it comes to large corporate America and manufacturers, there 
should be no spanking. All of a sudden, it costs consumers. Mr. 
President, whoever thought for a second that this bill is in the 
interests of consumers? It is the biggest fraud that ever tried to be 
perpetrated on this august body. Every consumer organization in the 
United States of any size, care, or responsibility is absolutely 
opposed to the bill.
  And with regard to the better legal minds of the American Bar 
Association, the State supreme court justices and their Conference of 
Chief Justices of the several State supreme courts, the Conference of 
State legislatures, the attorneys general, oh, yes, they are going to 
look out for them? Uh-uh, no, they are looking out for manufacturers. 
Look at the section in here that exempts the manufacturer. They have 
all of these great provisions in here because they say they are so 
concerned about consumers, except when you mention manufacturers. They 
say, by the way, manufacturers should be exempt from this bill.
  Now, come on. I will read several things about punitive damages, and 
I will go right to the heart of the issue. It is not saving consumers' 
pocketbooks and costs. This crowd knows the cost of everything and the 
value of nothing. The truth of the matter is on account of product 
liability in this country of ours, we have the safest products and we 
are saving our citizenry from injury, from maiming, from blindness, 
from being killed over and over again by the millions. Why do you think 
there were over 19 million car recalls in the last 10 years? We went to 
the Department of Transportation and we summed up all these automobile 
recalls. And if you think the big automobile companies--not only in the 
United States, but Toyota in Japan, and others--are recalling defective 
automobiles to save consumers money--they are doing it to save 
themselves money on account of product liability, because they are 
going to get nailed. And so to save themselves money, they save lives 
and injury to the consuming public. It is not the pocketbook that we 
are involved with here. On the contrary, it is the safety of products 
and the safety of our citizenry.
  So let us quit bringing all of these cases, one by one, out here, and 
say, oh, what a terrible punitive damage verdict this is and thereby we 
have a national problem. Not so.
  The States have handled this. And rather than going into this case or 
that case--I do not countenance for a second that there are not some 
mistakes. There are mistakes everywhere in the administration of the 
law. That does not call for national legislation. But, in a general 
sense, if you take all the product liability verdicts in the last 30 
years--and this is what we asked when we saw the witness take the stand 
in the Commerce Committee. We asked Jonathan S. Massey, an expert who 
had defended punitive damages before the U.S. Supreme Court, allegedly 
the most experienced attorney. I said, yes, but I still get these 
anecdotal incidents of what we would call outrageous punitive damage 
findings.
  I said, ``Could you please go and get into the record exactly all the 
punitive damage verdicts for the last 30 years, since 1965, and find 
out just exactly how many there were, and what were the amendments and 
then add them all up?'' With respect to that, I ask unanimous consent 
to have this material printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                    [[Page S5952]] April 13, 1995.
     Hon. Ernest F. Hollings,
     U.S. Senate Committee on Commerce, Science and 
         Transportation, Washington, DC.
       Dear Senator Hollings: At the hearing on April 4, 1995 
     before the Consumer Affairs, Foreign Commerce, and Tourism 
     Committee of the Committee on Commerce, Science, and 
     Transportation on S. 565, the Product Liability Fairness Act 
     of 1995, you asked me to compare the $3 billion in punitive 
     damages awarded in the Pennzoil v. Texaco case with the sum 
     of punitive damage awards in all product liability cases 
     since 1965.
       The attached pages show that punitive damage awards in 
     products liability cases since 1965 come to a fraction of the 
     $3 billion figure. For products liability cases in which the 
     punitive damage award is known, the total comes to 
     $953,073,079. There are 109 additional cases in which the 
     punitive damage award was not reported by the court or either 
     party, most likely because it was not large. If one were to 
     extrapolate for those 109 cases by taking the average award 
     in cases in which the punitive award is known--which would 
     err on the side of the inflating punitive damage awards in 
     products liability cases--the total of punitive damage awards 
     in all products liability cases since 1965 would come to only 
     $1,337,832,211--less than half the award in Pennzoil v. 
     Texaco.
       I hope this information is of assistance.
           Sincerely,
     Jonathan S. Massey.
                                                                    ____

            product liability punitive awards, 1965-present

       Alabama--20 cases--$58,604,000; 9 additional cases with 
     unknown amounts.
       Alaska--2 cases--$2,520,000; 1 additional case with unknown 
     amounts.
       Arizona--6 cases--$3,362,500; 3 additional cases with 
     unknown amounts.
       Alabama--1 case--$25,000,000; 0 additional cases with 
     unknown amounts.
       Alaska--1 case--$1,000,000; 0 additional cases with unknown 
     amounts.
       Arizona--2 cases--$6,000,000; 3 additional cases with 
     unknown amounts.
       California--17 cases--$35,854,000; 9 additional cases with 
     unknown amounts.
       Florida--1 case--$1,000,000; 0 additional cases with 
     unknown amounts.
       Connecticut--1 case--$688,000; 0 additional cases with 
     unknown amounts.
       Florida--1 case--$519,000; 0 additional cases with unknown 
     amounts.
       California--4 cases--$3,618,653; 0 additional cases with 
     unknown amounts.
       Florida--1 case--$750,000; 0 additional cases with unknown 
     amounts.
       California--3 cases--$2,425,000; 0 additional cases with 
     unknown amounts.
       Colorado--3 cases--$7,350,000; 1 additional case with 
     unknown amounts.
       Connecticut--0 cases--$0; 1 additional case with unknown 
     amounts.
       Delaware--2 cases--$75,120,000; 0 additional cases with 
     unknown amounts.
       Florida--26 cases--$40,607,000; 9 additional cases with 
     unknown amounts.
       California--1 case--$30,000; 0 additional cases with 
     unknown amounts.
       Florida--2 case--$3,500,000; 0 additional cases with 
     unknown amounts.
       Georgia--10 cases--$43,378,333; 3 additional cases with 
     unknown amounts.
       Hawaii--1 case--$11,250,000; 0 additional cases with 
     unknown amounts.
       Idaho--0 cases--$0; 1 additional case with unknown amounts.
       Illinois--16 cases--$44,149,827; 3 additional cases with 
     unknown amounts.
       Minnesota--1 case--$7,000,000; 0 additional cases with 
     unknown amounts.
       Illinois--3 cases--$5,000,000; 0 additional cases with 
     unknown amounts.
       Indiana--1 case--$500,000; 0 additional cases with unknown 
     amounts.
       Iowa--1 case--$50,000; 2 additional cases with unknown 
     amounts.
       Kansas--7 cases--$47,521,500; 1 additional case with 
     unknown amounts.
       Kentucky--2 cases--$6,500,000; 0 additional cases with 
     unknown amounts.
       Louisiana--2 cases--$8,171,885; 0 additional cases with 
     unknown amounts.
       Maine--3 cases--$5,112,500; 0 additional cases with unknown 
     amounts.
       Maryland--3 cases--$77,200,000; 2 additional cases with 
     unknown amounts.
       Michigan--2 cases--$400,000; 0 additional cases with 
     unknown amounts.
       Minnesota--4 cases--$10,000,000; 1 additional case with 
     unknown amounts.
       Mississippi--4 cases--$2,790,000; 1 additional case with 
     unknown amounts.
       Missouri--9 cases--$20,785,000; 1 additional case with 
     unknown amounts.
       Montana--2 cases--$1,600,000; 1 additional case with 
     unknown amounts.
       Nevada--1 case--$40,000; 1 additional case with unknown 
     amounts.
       New Jersey--4 cases--$900,000; 5 additional cases with 
     unknown amounts.
       New Mexico--4 cases--$1,715,000; 1 additional case with 
     unknown amounts.
       New York--7 cases--$6,019,000; 6 additional cases with 
     unknown amounts.
       North Carolina--2 cases--$4,500,000; 0 additional cases 
     with unknown amounts.
       Ohio--6 cases--$4,393,000; 1 additional case with unknown 
     amounts.
       Oklahoma--6 cases--$15,390,000; 1 additional case with 
     unknown amounts.
       Oregon--3 cases--$62,700,000; 0 additional cases with 
     unknown amounts.
       Pennsylvania--5 cases--$16,298,000; 8 additional cases with 
     unknown amounts.
       Rhode Island--1 case--$9,700,000; 0 additional cases with 
     unknown amounts.
       South Carolina--5 cases--$2,945,500; 4 additional cases 
     with unknown amounts.
       Rhode Island--1 case--$100,000; 0 additional cases with 
     unknown amounts.
       South Dakota--1 case--$2,500,000; 0 additional cases with 
     unknown amounts.
       Tennessee--4 cases--$4,720,000; 3 additional cases with 
     unknown amounts.
       Texas--38 cases--$217,098,000; 19 additional cases with 
     unknown amounts.
       Utah--1 case--$300,000; 0 additional cases with unknown 
     amounts.
       Virginia--2 cases--$340,000; 0 additional cases with 
     unknown amounts.
       West Virginia--3 cases--$2,433,100; 4 additional cases with 
     unknown amounts.
       Wisconsin--7 cases--$10,622,000; 4 additional cases with 
     unknown amounts.
       Florida--1 case--$2,500,000; 0 additional cases with 
     unknown amounts.
       Wisconsin--2 cases--$26,000,000; 0 additional cases with 
     unknown amounts.
       District of Columbia--1 case--$2,500,000; 0 additional 
     cases with unknown amounts.
       Grand total--270 cases--$953,073,079; 109 additional cases 
     with unknown amounts.
       Average punitive award: $3,529,900.
       Extrapolated total of all awards: $1,337,832,211.
  Mr. HOLLINGS. Mr. President, the pages show that punitive damage 
awards in product liability cases since 1965 come to a fraction of $3 
billion. To be exact, they come to $1,337,832,211.
  Why does this Senator say ``a fraction'' of $3 billion? If we go to 
the Pennzoil versus Texaco case, of businesses suing businesses, what 
do we get? We get almost a $12 billion verdict that included what? It 
included a finding of punitive damages in the amount of 3 billion 
bucks.
  In other words, of all the product liability punitive damage findings 
in the last 30 years amounting to $1.3 billion, we have one business-
against-business case of $3 billion. Or another one, since they are 
picking out cases, I will pick the Exxon Valdez case, a case where 
Exxon was sued and they came in with a verdict of what in punitive 
damages? Mr. President, $3 billion.
  I cannot find out the amount for businesses, there are so many of 
them. But it is up into the billions and billions of dollars. If this 
Congress was really interested in lowering the verdicts in tort cases, 
they would go right to the businesses suing businesses. They would go 
right to the automobile accident cases. They would go to all the other 
kinds of tort cases.
  The fact is that, of all the civil findings in the United States of 
America, tort filings only amount to 9 percent of the total amount of 
civil findings; and of the 9 percent, product liability amounts to 4 
percent of the 9 percent or .36 of 1 percent.
  Another problem solved by the States. The Supreme Court Justices and 
legislatures say we handle it, and I will go right, for example, to my 
own State of South Carolina with respect to punitive damages.
  In a recent case of the State versus Rush, but the heading would be 
Gamble versus Stevenson, an appeal of the Southern Bell Telephone 
Telegraph.
  Now, I read from the opinion of the Supreme Court as follows: ``In 
South Carolina punitive damages are allowed in the interest of 
society.'' Listen to that. We would think punitive damages was the most 
heinous offense that ever occurred without any relation in the world to 
the good it has done.
  Why do we fine motorists for speeding and disobeying our motor 
vehicle laws in America? We fine them. Why do we fine the others for 
their various crimes? To make certain they do not commit them again. 
Similarly, with manufacturers.
  Punitive damages--fine them, to make absolutely sure that they do not 
repeat their wrong.
  They would say we cannot lose, we are making money. So why has 
Chrysler recalled 4 million cars to fix the back latch on the door? Not 
on account of the cost. They could get by with that. They would leave 
it there, but they know that there are chances now brought to the 
attention of the public that they are not only going to be verdicts 
against them in compensatory damages but in punitive damages. No longer 
can they factor it in the cost of product because of punitive damages.
  This is the very element that is bringing about the safety--not 
taking care of the parties involved but taking care of society, 
generally--that is the point to be made here.
  The first sentence:

       In South Carolina, punitive damages are allowed in the 
     interest of society in the nature of punishment and as a 
     warning and example to deter the wrongdoer and others 
     [[Page S5953]]  from committing like offenses in the future. 
     Moreover, they serve as an indication of private rights when 
     it is proved that such have been wantonly, willfully, or 
     maliciously violated. Lastly, punitive damages may be awarded 
     only upon a finding of actual damage. In the instant case the 
     trial judge's jury charge concluded the degree of 
     recklessness requisite to punitive damage award, that such an 
     award was to punish a defendant or deter and stop it and 
     others from similar conduct in the future, that is, to make 
     an example of the defendant.

  That is an affirmative action program, to make an example. Everybody 
is interested in affirmative action. Here it is. Make an example of the 
defendant, the wrongdoer. ``That it must find actual damages before 
awarding punitive damages and that in calculating the amount of such 
damages, it may consider the defendant's ability to pay.''
  Now, Mr. President, to ensure that a punitive damages award is 
proper, the trial court shall conduct a post trial review and consider 
the following: one, the defendant's degree of culpability; two, 
duration of the conduct.
  Mind you me, Mr. President, this is not the jury, the runaway juries, 
the same people that elected Members in Congress, all of a sudden 
impanelled and with a sworn oath, to find unanimously by a 
preponderance of the evidence, willful misconduct. And all 12 having 
found such, that same crowd that elects and sends Members, all of a 
sudden, they have lost their minds, their judgment. They are runaway 
and now have to be restricted by national restrictions. For what? For 
manufacturers, that is for what, and for less safety in America.
  Let me read that again:

       To ensure that punitive damages award is proper, the trial 
     court shall conduct a posttrial review that may consider the 
     following:
       1, defendant's degree of culpability; 2, the duration of 
     the conduct; 3, the defendant's awareness or concealment; 4, 
     the existence of similar past conduct; 5, likelihood the 
     award will deter the defendant or others from like conduct; 
     6, whether the award is reasonably related to the harm likely 
     to result from such conduct; 7, defendant's ability to pay; 
     8, as noted in Haslip case, ``other factors'' deemed 
     appropriate.

  That is, the court, not only the 12 impaneled jurors, but the court 
itself, shall review and study.
  Now, generally, this is a law that applies in 45 of the 50 States 
but, of course, due to the Conference Board, due to the Business 
Advisory Roundtable, due to the National Association of Manufacturers' 
lobbyists that have been going on for years and they come and report at 
every election time, ``Now, Senator, we have to do something about tort 
reform or product liability reform.''
  The average Senator or candidate, not aware of the ramifications, not 
having attended any of the hearings or otherwise, might say, ``Oh? I am 
trying to get votes. Reform?'' They get caught. Words do mean things in 
our society. And they say, ``Heavens, I can get the support of this 
strong crowd. I can even get financial contributions if all I have to 
say is yes, yes, I am for reform. Product liability? Put me down.''
  They put them down. Then they come here and they get embarrassed 
because they finally hear the truth of the matter here. And I sort of 
get embarrassed for them.
  The reason I get embarrassed for them is just this. I got a letter 
today from my distinguished colleague and friend, Drew Lewis, the 
chairman of Union Pacific Corp., dated April 27. He is a former 
Secretary of Transportation. He did an outstanding job. I do not speak 
in criticism or derision. Rather, I speak--and this is the factual 
dismay that I have--because I know he knows better. It is a short 
letter and I know why he is writing it.

       Union Pacific urges your support for S. 565, the Product 
     Liability Fairness Act legislation. The U.S. legal system is 
     out of control. The high cost of litigation and large damage 
     awards translate into higher prices for consumers. Typically 
     less than half the money awarded in product liability cases 
     goes to compensate the claimant. The winner is the trial 
     attorney, not the American consumer. If American business is 
     going to succeed in the global marketplace and American jobs 
     are to grow, your vote is critical. Please vote for cloture 
     and final passage of S. 565.
       Sincerely, Drew.

  Let us take that little letter here and see it exactly. I know this 
gentleman knows better. He is the most sophisticated of former public 
servants and corporate executives and he has been around. I know his 
entities. The Business Roundtable and the National Association of 
Manufacturers and all got him to write this thing and it was ground 
out.
  He calls it the ``Fairness Act.'' He picked up the title. That is not 
what they called it over on the House side. It started off--if you get 
the title of the bill itself on the desk here, you will find out--``To 
establish legal standards and procedures for product liability 
litigation.'' At least it was straightforward in the House. Applesauce 
in the U.S. Senate. Fairness? Fair to whom? Not consumers. This crowd 
does not represent consumers. I have; they have not.
  When I asked the distinguished Chair where was the record here 
whereby trial lawyers had done in their clients, under the Abraham 
amendment, he had one letter from a constituent in Michigan. I knew 
that there were not a big wave of clients being done in. In fact, had 
it not been for the trial lawyers, they would not have received 
anything.
  After all, these manufacturers do have a team of attorneys, 
investigators, adjusters, local attorneys and otherwise, and they 
readily, on any kind of claim or letter they get, immediately zoom in 
and, generally speaking, settle the case or claim. It is good business 
judgment that they do; it is good business judgment they do. They do 
not want to be claimed to have unsafe products.
  It is only when they deny an obvious claim that should be compensated 
that it comes to the trial lawyers. We do not scare up cases--except, 
of course, in these class action suits, like asbestosis. But that is 
what had to be done. That is exactly what was done with respect to the 
example of the Senator from Michigan in his letter with the Senator 
from Kentucky relative to the airlines. They had to go and get all the 
airlines together, get law firms all over the country, and assemble 2.1 
million clients.
  In the letter to the colleagues, under the Abraham-McConnell letter, 
it appeared that, heavens above, quoting the Washington Post, the 
lawyers got $16.1 million in fees and the client got a $25 gift 
certificate for travel. I knew that the client just getting $25 and the 
lawyer getting $16 million would not be approved by any court. So we 
went back to the record.
  Yes, in a class action of that kind, what was the number of clients? 
It was 2.1 million. What was the amount of the verdict? It was $438 
million. How many law firms? They had 37 law firms all over the 
country, and the average fee was not a third, or 33\1/3\ percent, or 25 
percent, or 20 percent, or 10 percent, or 5 percent, or 1 percent. The 
average fee of the attorneys involved was less--less than 1 percent. 
Had they not correlated all that, it would not look so garish and 
enormous to us unstudied witnesses here.
  But this is the Fairness Act, they say. Then the next sentence, ``The 
United States legal system is out of control.''
  That is sheer nonsense. If it is out of control, it is on account of 
businesses suing businesses. It certainly is not a litigation 
explosion. We have proved that. We have proved time and again that 
product liability cases, as the Senator from West Virginia, the 
principal sponsor of the measure, says--when we engaged in looking at 
product liability cases, we find the entity in the testimony before the 
Commerce Committee, unquestioned--no one has proved otherwise--
unquestioned, that there are less filings and less verdicts and less 
plaintiffs' victories all the way across the board. So if the legal 
system is out of control, it is out of control for other reasons but 
not product liability.
  ``The high cost of litigation and large damage awards translate into 
higher prices for consumers.'' I just reread that my way: The high cost 
of litigation and large damage awards translate into higher safety for 
the consuming public of America. That is what it translates into. And 
it ought to go into the costs. It is a minimal cost to them to put out 
safe products. And the best of manufacturers want to do that and they 
brag about the quality now of their particular manufacture. They brag 
about their quality of manufacture. So it is not high cost translating 
into high prices but, let us say, a higher degree of safety.
   [[Page S5954]] ``Typically, less than half the money awarded in 
product liability cases goes to compensate * * *'' We find that is 
incorrect. There was a study by the National Insurance Foundation to 
the effect that, yes, the claimant did not get the majority of the 
money, but the majority of the money was going to the defendants' 
attorneys.
  You ought to see these billable hours. That is why the Senator from 
South Carolina wanted to limit billable hours around this town to $50 
an hour. I could catch the thrust of the movement earlier last week, 
when they came in, about the money going to the claimant as compared to 
the money going to attorneys. And the thrust was that they had given up 
on Girl Scout cookies and they have given up now on Little League 
baseball and all these other things they tried to raise, 
competitiveness and otherwise. Now they say, ``Well, let us kill all 
the lawyers.''
  I say, if you want to get rid of half the 60,000 lawyers in this 
town, if you want to get rid of 30,000 lawyers, just put not a minimum 
wage but put a maximum wage, a maximum wage of $50 an hour which will 
give them the salary of a U.S. Senator. If they worked any overtime, 
like we do work overtime as Senators, they could easily make $200,000 a 
year. But that is where the compensation is going. It is just like the 
situation, if you had a $100 finding, you would find that $40 would go 
to the defendant's attorneys, $20 would go to the plaintiff's 
attorneys, and $40 to the claimant.
  (Mr. THOMPSON assumed the Chair).
  Mr. HOLLINGS. Mr. President, the rationale of this simple statement 
is get rid of or kill all of the lawyers; get rid of the trial lawyers 
because--the next sentence is--``The winner is the trial attorney, not 
the American consumer.'' If you think this crowd is interested in 
consumers, just get all the consumer legislation and look at their 
votes on that.
  But going right back to the report, in the 103d Congress, I knew we 
had this when we had the hearings. In a 1977 survey conducted by the 
Insurance Services Office, for every dollar paid to claimants, insurers 
paid an average of an additional 42 cents in defense costs; while for 
every dollar awarded to a plaintiff, the plaintiff pays an average 
contingent fee of 33 cents of that dollar. Thus, in cases in which the 
plaintiffs prevail, out of each $1.42 spent on litigation, half of that 
goes to attorney fees, with the defendants' attorneys on average paid 
better than the plaintiffs' attorneys.
  That is the national insurance consumer organization finding that the 
attorney for the insurance companies received on the average close to 
one-third more than the average attorney's fee paid to plaintiffs' 
attorneys. I am glad I quoted that for the record, but that is not the 
way this letter reads. ``The winner is the trial attorney.'' We are not 
winners or losers. But if you are going to characterize, as my 
distinguished friend, Mr. Drew Lewis, does here in the letter about the 
winner, he says, ``The winner is the trial attorney, not the American 
consumer.'' Absolutely false. We have all the facts and all the 
hearings proving otherwise.
  Going now to the final two sentences, ``If American business is going 
to succeed in the global marketplace, and American jobs are to grow, 
your vote is critical.'' What is the inference there? The inference 
regarding the global marketplace is that product liability costs and 
the burden on American production is a cost and a burden not suffered 
by foreign production. We will go right to the heart of that matter.
  In addition, working over the years--and I have had a delightful 
experience, I have to immodestly acknowledge, with respect to the 
attraction of industry to my own State, and I will be glad to meet with 
anybody and we will compare the records. We will compare the endeavor, 
and we will compare the results. I have had the experience of working 
at the local level on the attraction not only of the American blue chip 
corporations, but those in the global marketplace. Admittedly, of 
course, many of the blue chips are in the global marketplace. But let 
us go directly to the ones we know. Let us say German industries and 
Japanese industries.
  In our great State of South Carolina, we have over 100 German 
industries. I made the first trip over there with the Governors, to the 
various communities in Germany, with an industrial group to attract 
investment in South Carolina in 1960. So that is 35 years ago. We just 
got, of course, BMW. BMW, by the way, in Spartanburg, stands not for 
Bavarian Motor Works, but BMW stands for ``Bubba Makes Wheels.'' We 
have a wonderful system down there.
  I was with the Vice President this last Friday at a luncheon. We put 
out 20,000 and some BMW automobiles this year from Spartanburg, SC. Do 
they have a problem with product liability? Not at all. I went to Bosch 
not long ago. They came in making fuel injectors for all automobile 
manufacturers, and more particularly now have become expert in antilock 
brake manufacture. They have a 10-year contract with General Motors for 
all the antilock brakes on their cars. They have the contract for 
Toyota and Mercedes Benz. I turned to that manufacturer. I said, ``What 
about product liability? How many product liability claims?'' He said, 
``What is that?'' I said, ``Product liability? You know, where you have 
a defective antilock?'' ``Oh, no, no, no,'' he said, ``We will not have 
that.'' He went right over on the line and he picked up one of the 
antilock brake devices.
  He said, ``See. See that serial number.'' He said, ``We have a serial 
number on every antilock brake that comes out of this factory. We would 
know immediately by that number if there was a defect where it 
occurred. But we haven't had any of that occur down here, and we are 
not going to have any of that occur.'' And he was proud--proud--not 
whining and crying through political representation up here in the 
national Congress about saving consumers money. He was proud of putting 
out an absolutely safe product.
  Can you imagine one of those antilock brakes not working and the 
other three working on an automobile? It would turn it over into a 
tailspin in a minute. They know it. So they are super careful in their 
manufacture. That goes into the cost of the product. And, yes, it costs 
consumers, and consumers welcome paying that higher price for the 
antilock brake and safety.
  Mr. President, it goes to the safety, not the cost. But what happens 
in Germany? In Germany, they come with Mercedes Benz down in Alabama 
where, incidentally, both Alabama Senators are opposed to this bill. 
Both Alabama Senators are opposed to this bill. Mercedes Benz says, 
``We love Alabama, and we are putting our new manufacturer down 
there.'' BMW says, ``We love South Carolina and its product liability 
law,'' just like Mercedes Benz likes Alabama's product liability law, 
and they put a factory there. I have over 100 German factories liking 
the product liability law in my State. I have over 50 Japanese 
industries liking the product liability law in my State. But they are 
not a member of the Business Roundtable.
  So what you have here is this mailing out of absolutely unfounded 
conclusions, which is an embarrassment to this Senator. Specifically, 
you look at what they put out in their advertisements when it comes to 
punitive damages and product liability. Here is the ad they are running 
in newspapers. This is an easy one to carry. It is entitled, ``Let's 
Put an End to the Lawsuit Lottery.''
  You know, my conservative friends, when they get this rap music, say, 
``You have to cut out that rap music. It teaches violence.'' There was 
one that I remember even President Clinton as a candidate took to task, 
about ``kill all the cops,'' the ``cop-killer'' one. He complained 
then. The American public went along with him and voted for candidate 
Clinton to become President because those words mean something. They 
want to cut all of that out. Now that they are blowing up buildings in 
America, and some people say, ``Oh, no. Words don't mean anything.''
  The truth of the matter is, Mr. President, my colleagues on the other 
side of the aisle have a school where they teach them to use words. I 
think this is a good time, since this is the thrust of the measure 
here, if I have it here in one of these files. With respect to the 
words, they come in and they hold a school. I know they attend a 
school, these newcomers to public office. I will see if I cannot find 
that, generally speaking, so that the colleagues can be educated about 
what is really going on. But this is a school that the distinguished 
Speaker has been running for 
[[Page S5955]]  years. He tells all the candidates that have come in. I 
know when a new Republican is elected from South Carolina, he has to 
attend a school to find out how to talk. And, in fact, if they can get 
them ahead of time, they tell them how to campaign and how to use words 
that inflame, words that stir up.
  It was put into the Record some time ago; I think back in 1990, if I 
am not mistaken. But we had the meaningful words. I certainly would 
like to be able to refer to that, because what happens is that they 
call this--that is, the Government here in Washington, and this is 
reported in the David Broder column. They reported that the Government 
in Washington is the ``corrupt, liberal, welfare state.''
  These are the handouts in the schools that they give to my Republican 
colleagues and say you ought to all join in. And they list the word 
``corrupt.'' They list the word ``liberal.'' They list the word 
``welfare.'' So the revolution, according to Speaker Gingrich in his 
courses, is against the corrupt, liberal welfare State. And that is the 
way they refer to it.
  Mr. President, let us go to the words here about the lawsuit lottery. 
There is not any lottery, I can tell you that right now. All you have 
to do, if you defend a product liability case, is convince one juror. 
That is all you have to do, raise a doubt in one juror's mind because 
it has to be a unanimous verdict by the greater weight of the 
preponderance of the evidence.
  But here is the mailout that they put in the advertisements that they 
have going now for the past several weeks. ``Let's Put an End to the 
Lawsuit Lottery. It's sad,'' this article says, the advertisement, 
``but the civil justice system in America has become nothing more than 
a legal lottery.''
  That is outrageous nonsense. It is embarrassing to see things being 
sponsored by responsible business entities that have buddied up 
together here in what they call the Product Liability Coordinating 
Committee.
  It goes on to read, ``With juries returning one outrageous award 
after another, it's not surprising that the number of product liability 
suits is skyrocketing.''
  Absolutely false. We have had hearings upon hearings upon hearings, 
and the filings and the suits themselves are less and less each year. 
The awards given are less and less and the number of plaintiff 
victories are less and less. But this ad says they have skyrocketed--no 
basis in fact.
  ``There are 51 separate laws, one for each State and the District of 
Columbia, governing product liability.''
  There are 51 separate laws, Mr. President, governing insurance 
companies. Do you see them up here complaining? They have to file every 
one of their policies they want to sell in any one of the States. Get 
these casualty companies together and ask them when are they going to 
complain about filing all of these policies here, 50 to 60 different 
policies that they have now, in each one of the 50 States. They are not 
complaining about that. In fact, they want the McCarran-Ferguson 
antitrust exemption so they can get together. They want to continue. I 
have suggested maybe we ought to federalize it because they are in 
interstate commerce. ``Oh, no, no, no, we don't want that. We don't 
want you to see our records.''
  We have had hearings upon hearings upon hearings. We never, in the 
15-year period of handling this problem, have been able to get from the 
casualty insurance companies their costs and profits, their records. 
Even the Senator from West Virginia has put on an amendment, which I am 
constrained to submit later on when we get to the actual bill itself, 
to say that they file these reports. They never have. They do not want 
to.
  The reason we asked for these facts way back almost 15 years ago, 
they said it was impossible to obtain insurance, impossible to obtain. 
They have plenty of insurance. It is easily obtainable. And we wanted 
to find out, as was later found out in other hearings, if they, like 
the S&L's and all, had made bad investments in real estate and where 
their losses came from--not from a product liability litigation 
explosion but, rather, sorry investments in real estate and supermarket 
and shopping center developments. They made the same mistake that all 
of these banks and insurance companies and savings and loan 
institutions had made.
  But this says 51 separate laws. If you did not know what you were 
reading, you would say, ``Good golly, Moses; let's get uniformity.'' 
They do not want uniformity even under this. If they wanted uniformity, 
they would give you a Federal cause of action. That is why, one of the 
big reasons, the American Bar Association says this adds complexity; 
this is not uniformity. You have words of art: requirements, findings, 
measures of evidence, exemptions of evidence, all to be interpreted by 
50 separate supreme courts and the circuit court of appeals here in the 
District of Columbia.
  Now, try that on for a lawyers' full employment act. Come on. 
Everyone knows that if they really wanted uniformity, they would have 
required a Federal cause of action and they would have uniformity and 
that would have at least cut down on some of the multiplicities--the 
appeals, the interpretations, the motions and everything else of that 
kind in the 51 separate laws and separate jurisdictions governing 
product liability.
  ``But today the outcome of a lawsuit can depend more on geography 
than the merits of the case.''
  They know that. Their commercial code, the Uniform Commercial Code, 
is anything but uniform. You can sit up there in New York. You can sell 
a product made in Canada and solicit down in Alabama and deliver it, by 
gosh, to the factory site in North Carolina, and you can say, ``Under 
my interpretation of this particular contract, I select the New York 
law.''
  You have got what they talk about, forum shopping. The manufacturers 
do just that. They know about that. But unless you have diversity of 
jurisdiction--and I do not go over to Alabama, I never have heard of a 
South Carolina lawyer going over and suing in Alabama. They act like 
all we have to do is go over there and file the case in Alabama.
  ``The current product liability system with its patchwork of local 
laws''--patchwork. Who has given us patchwork? Read this bill. ``* * * 
with its patchwork of local laws got its start at the turn of the 
century when businesses were all so local, but times have changed.''
  They are trying to give a sense of history to this. This is 
absolutely false. During my 20 years of law practice before I came to 
the Senate, I never heard of any of this, ever. And they continue to do 
business under different laws in the 50 different States under the 
interstate commerce clause and it is not about times have changed.
  ``American-made products now travel across State lines''--well, they 
have always traveled across State lines.
  I will never forget Henry Grady and the funeral in the days just 
after the Civil War. The Senator from Tennessee would remember it. I 
think they said that he was a poor man, buried, let us say, in South 
Carolina. He was buried with a New Jersey frock and some New York 
shoes, and the buttons were made in Minnesota, the wood for the shovel 
had come from New Hampshire, the steel had come from Pennsylvania, and 
they went on and on down there about the caskets and all. They said the 
only thing South Carolina furnished was the hole in the ground.
  Now, tell me about traveling in the different States. That is Henry 
Grady 100 years ago. They say no, times have changed now and all 
products travel across State lines. ``Unfortunately, so do plaintiffs 
and their lawyers seeking the most favorable State for their claim.'' 
Unless you have diversity, you do not run around and seek anything of 
that kind. And you have the client in the community where the client is 
injured. I can tell you now, having tried these cases, that you go try 
it in the vicinity of the client where they can understand and know the 
injury and we might get a friend on the jury or an acquaintance or 
whatever it is. Sometimes the blind hog picks up an acorn. You might 
get a break. If I go to another State, that immediately cuts me down to 
next to nothing with respect to the fee, if I have to go and get the 
lawyers who know the local law there, let us say, if I went to 
Birmingham, AL, I would have to give all the moneys to the lawyers in 
Birmingham.
  I am not a passthrough for lawyers in Birmingham. I am trying my 
clients' cases in my own State.
   [[Page S5956]] This is outrageous hogwash here and they know it.
  ``Unfortunately, so do plaintiffs and their lawyers seeking the most 
favorable state for their claim. This not only hurts competitiveness, 
it stifles innovation, eliminates jobs and hurts all Americans.
  How can we stop the lawsuit lottery? We need a uniform, modern 
national product liability law.

       But it's time for Congress to act. When it comes to the 
     lawsuit lottery no one wins.

  They do not say that for automobile accident cases, where there is a 
far, far higher number of different laws, different highway speed laws, 
degrees of care, comparative negligence, contributory negligence, go 
right on down the list, all the automobile accident cases and, in this 
case, automobile product liability cases.
  They do not say that here with respect to medical malpractice or the 
securities or anything else.
  Then they have a little thing like they are even trying to mimic 
Oliphant: ``Less than half of all money awarded in a lawsuit goes to 
the victim.'' Like they are for the victim.
  It is clever. But it is outrageous blasphemy, I can tell you right 
now, to put this kind of thing out to the unknowing public and perhaps 
to the unknowing Congressman and Senator. We know better.
  What we have is a solution looking for a problem. What we have here 
is trying to find justification for a lobbying effort that has been 
going on with the AMA, the Business Roundtable, and the Conference 
Board for 15 years, where they seek out the candidates and ask for a 
commitment and, generally speaking, get that commitment without any 
hearing.
  And certainly if they are newcomers to this particular Senate, they 
have not had any hearings in the Commerce Committee. We had 2 days 
because we were told we had to agree to it, because we had to move, we 
had to catch up with the Contract With America. We did not have 
hearings in depth. We had them by reference. I had to include other 
hearings that we had with respect to the law professors that oppose 
this measure, with respect not only to the American Bar Association now 
but the American Bar Association in each one of the five hearings that 
we had over the 15-year period, and all the other entities that went 
into depth on this matter.
  And that is what they hope to do here with this fix that is on in the 
U.S. Senate. And do not come up with, ``Oh, we are looking out for 
consumers.'' They have the audacity in the same instrument here to say 
they look out for consumers when they exempt the manufacturers. The 
unmitigated gall of that provision is just so offensive it gets me 
stirred up.
  How we ever got good, right-thinking folks on the floor of the U.S. 
Senate proposing this measure, saying that they are proposing it for 
the consumer, I do not know. Show me that consumer. What is that 
saying--``Let them come to Berlin.'' Well, show me that consumer. 
Heavens above.
  The Consumer Federation, Consumers Union, Public Citizen, all the 
consumer groups again appear in opposition to this particular measure, 
particularly with respect to punitive damages.
  One more time. On punitive damages, go ahead and cite your two or 
three little cases that sound outrageous. I do not have the time to run 
down and search out every one of the cases to find out whether the 
amount of the verdict was cut, whether it was changed.
  Just like the McDonald's coffee case. Once we searched that out, we 
found out, yes, there were third-degree burns over one-sixth of the 
injured woman's body, 3 weeks in the hospital. After 700 calls and an 
offer to settle for $20,000, they totally ignored it and said we put 
this in the cost of the product, because the hotter we make the coffee, 
the more coffee we produce.
  It is money, money that concerns these manufacturers on product 
liability. That is the one thing, the bottom line. It is not the safety 
of the citizenry in America, but it is the money that they are 
interested in.
  But of all the product liability cases, what we have found, as they 
sum up over the last 30 years, is some $1.333 billion. One verdict in 
business suing business, Pennzoil versus Texaco, a $3 billion punitive 
damages finding in just one case, is twice the number of the consummate 
sum total of all product liability punitive findings in the last 30 
years. Or take Exxon Valdez, another $3 billion in punitive damages.
  At the court level, I do not think the courts of this land have gone 
crazy. They have been all the way up to the Supreme Court to question 
the constitutionality of punitive damages. And each State either 
avoided it or it is measured or it is rescinded and sent back with a 
cut or total elimination.
  Look under the steps that I have read here with respect to the South 
Carolina law. I can go down some other States laws if they are 
interested.
  As a matter of punishment, we spank the baby when the baby 
misbehaves, that crowd that wants the family bill. What we are trying 
to do is spank the manufacturer when the manufacturer misbehaves and 
tell them, ``Don't repeat this. Don't you do this again.''
  And when you tell that manufacturer, you have to look at his size, 
you have to look at his income, you have to look at his culpability, 
you have to look at his willfulness, whether it was mere neglect or 
whether it was a willful act, whether they had any warnings or 
disregarded or heeded the particular warnings, whether it was a mistake 
or exactly what. And you have to prove all that by the greater weight 
of the preponderance of the evidence to all 12 jurors and to the trial 
judge.
  I yield the floor.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, nominally, at least, the issue before the 
Senate at the moment is the Dole amendment. The Dole amendment, which 
incorporates the limitations on punitive damages proposed by the 
Senator from Maine [Ms. Snowe], and accepted earlier here today, would 
extend those limitations from the product liability sections of this 
bill and the now medical malpractice sections of this bill to all 
actions. In other words, we would have one uniform standard of 
limitations and relatively one uniform definition of the degree of 
proof required for punitive damages in all States which have fewer 
limitations at the present time or no limitations at all.
  Mr. President, the majority leader has outlined some of the 
persuasive reasons for this extension. The primary reasons being the 
impact on small businesses which now live under the Damocles sword of a 
punitive damage judgment which can literally put them out of business 
and the increasing and adverse impact of punitive damage awards or 
potential punitive damage awards on nonprofit organizations, including 
charities, including, as the majority leader pointed out, the Girl 
Scouts, Little League, and the like.
  I find these reasons to be persuasive reasons. I find it easy to be 
persuaded because it has been my view, almost from the time that I 
began to practice law, that the rule with respect to punitive damages 
in the State I represent, the State of Washington, which prohibits 
punitive damages for all practical purposes in all civil litigations, 
to be the appropriate rule.
  Punitive damages are just exactly that. They are a form of 
punishment. In our society and American tradition, punishment by the 
Government or at the hands of the Government is traditionally reserved 
for the criminal code. The criminal code carries with it privileges 
against self incrimination, a requirement that the prosecution prove 
its case beyond a reasonable doubt and, of course, explicit statutory 
limitations and definitions of what punishment is appropriate in 
connection with a particular crime. None of these projections exist 
with respect to punitive damages. Juries decide them on an ad hoc 
basis, generally speaking, on whether or not the same conduct or 
product resulted in punitive damages.
  There is, of course, no self-incrimination. The standard of proof in 
many States is a preponderance of the evidence, and even in this bill 
it is clear and convincing evidence, which falls short of the beyond a 
reasonable doubt standard. And most significantly of all, there are 
absolutely no limitations on the amount of punitive damages, thus the 
degree of punishment which can be imposed on a given defendant in civil 
litigation.
  [[Page S5957]] The Supreme Court of the United States has heard 
several appeals of large punitive damage judgments, appeals based on 
constitutional protections through the 14th amendment. The Supreme 
Court has never come up with a standard, with a maxim, by any means, 
although there have been hints that punitive damage awards that exceed 
four times the actual damages come close to reaching some potential 
constitutional limitation.
  So from my perspective, I believe that it is both constitutional and 
appropriate for the Congress to deal with these issues and for the 
Congress to adopt the rule of the minority of the States--my own 
included--that say punishment should be reserved for the criminal code 
and that civil litigation should make a claimant whole, a wronged 
claimant whole, but do no more. As a consequence, I find it easy to 
support the relatively mild limitations which are included in the 
amendment proposed by Senator Dole, the majority leader of this body.
  My friend from South Carolina, with whom I have engaged in debates on 
this subject in the Commerce Committee and here on the floor, is most 
eloquent on the other side of this issue. Whatever his point about a 
political organization which trains its candidates in rhetoric may have 
been, it is very clear that he does not need any lessons in how to 
present a case forcefully and well. He does it here on this floor in 
this connection and in many others. But I must admit to being puzzled 
by at least some elements of the point that he makes. He says that 
because certain foreign companies--in this case in the automobile 
business--are willing to locate their factories in Alabama, that must 
mean they love the Alabama laws with respect to product liability.
  Well, Mr. President, there is no connection between the two. Just 
because the market for manufactured products is nationwide, the 
location of a particular factory is absolutely irrelevant. Those 
automobile companies can be sued, for all practical purposes, in any 
State because they sell their automobiles in every State, whether it is 
the State in which their factory is located or some other. In fact, if 
there might be any possible motivation created by product liability 
laws, which I doubt, it would be to locate your factory in the most 
notorious plaintiff-minded State because at least the judgments in that 
State would not be against an out-of-State manufacturer but an in-State 
one, which might create the tiniest degree of sympathy for the 
manufacturer. But the location of a place at which a manufacturer 
operates and the product liability laws of that State simply have no 
relevance to one another at all.
  The question before this body is whether we are dealing with product 
liability or with medical malpractice or, for that matter, with tort 
litigation in general. Do we have a system at the present time that 
appropriately balances the interests of claimants, people who have been 
injured or claim injury as a result of the use of products or as a 
result of the quality of health care they have received, or as a result 
of any other kind of act; do we properly balance their rights in court 
with other undoubted purposes of our society?
  In the case of product liability, have we properly balanced it with 
our desire that our companies spend large amounts on research and then 
develop new and improved products and then market those products or 
market existing products--sometimes for dangerous occupations where 
inevitably someone using the product is going to be injured? Or do we 
have a system which is so unbalanced that perfectly legitimate products 
are taken off the market, not because they are unsafe but because they 
simply cannot create profits enough to run the risk of litigation, even 
of successful litigation.
  Incidentally, Mr. President, very little has been said here on the 
floor about the impact of unsuccessful litigation in these areas. The 
attorney's fees, the expert witness fees, the cost in time and effort 
on the part of employees is every bit as much when the claim is 
rejected, when there is a verdict in litigation for the defendant, as 
it is when the litigation lottery turns out exactly the other way. Any 
intelligent individual or company is going to say, ``I know I am going 
to get sued and even if I am successful, I am going to spend more money 
than I can possibly make by marketing the product or engaging in the 
activity.'' That individual is going to say, ``Why bother?'' Even if 
that individual or that company has produced something good for society 
or is a part of the medical profession that is frequently sued or, for 
that matter, is a Little League volunteer or Red Cross volunteer, that 
volunteer figures he or she has a good chance of being sued, and it 
hardly matters whether they calculate that they will lose or win the 
lawsuit. They are going to say, ``I do not need the aggravation.''
  It seems to me that it is almost beyond arguing that we have 
constricted the activities, restricted the activities, of individual 
volunteers. We have caused physicians with many productive years left 
in their careers to abandon those careers and to retire when they 
become reasonably financially comfortable. We have caused companies to 
abandon promising areas of research and development. We have caused the 
removal from the market of significant products by the threat of 
litigation, by the lottery of litigation--not just litigation that is 
going to be lost, but litigation which, more often than not, is won.
  We have done this all in the name of a system which produces only a 
relatively moderate percentage of the dollars that go into it for 
claimants who actually establish their claims. A claimant who loses the 
case, of course, ends up with nothing. But claimants taken collectively 
who win these cases, at least in the fields of product liability and 
medical malpractice, win less than half the cost of the system.
  Sixty percent, roughly, of the dollars that go into the system go to 
the lawyers and insurance adjustors and hired expert witnesses--all of 
the transaction costs of the system.
  So we have a system which not only penalizes volunteers and restricts 
the operation of our health care system and restricts research and 
development and the production and sale of goods, but one which is 
extraordinarily inefficient in compensating the actual real victims of 
breakdowns in the system itself.
  To say, as opponents do, that somehow or another this presents no 
national issue whatever just seems to me to beg the question. There is 
a problem. In a national economy, it is appropriate that at least there 
be a partial national solution to the problem.
  Yes, we have not attempted to move all of these cases into Federal 
courts with the requirement that we probably double the number of our 
judges and courthouses. We have not made an entirely uniform system.
  However, we have created in this bill a considerably greater degree 
of uniformity than there is now. We have even, in one section, said 
that the interpretation of this statute by circuit courts of appeals 
are going to be strong precedents for all State courts and all other 
Federal courts in those given circuits.
  So the degree of uniformity as a result of this bill will not by any 
means be 100 percent. It is not designed to be 100 percent. However, it 
will be far greater than it is at the present time, and the 
predictability of the result will be greater than it is at the present 
time, and the lottery aspects of the business will be fewer than they 
are at the present time.
  If we learn from the experience of this bill that greater uniformity 
is not necessary, we can go ahead and change it in the future. This is 
not an unchangeable law, by any stretch of the imagination.
  We can at least find out, by this cautious and partial experiment, 
whether or not the evils ascribed in this legislation are true, but 
whether or not there is a cure or a partial cure as a result of this 
legislation.
  I come back to one initial point, Mr. President. We have already 
tried this solution in one modest area of our Nation's economy: The 
reforms we made just a year ago in connection with the manufacture and 
sale of piston-driven aircraft. It is now clear beyond any argument 
that that business, that manufacturing business, was for all practical 
purposes destroyed by product liability litigation.
  The production of such aircraft declined 95 percent in the United 
States of America over a 20-year period, ascribed by the manufacturers 
to product liability litigation.
   [[Page S5958]] Those manufacturers said that there would be a 
recovery if we reformed the system. We did reform the system a year 
ago, more modestly than the product liability system is reformed here, 
but in a significant fashion.
  Already, there has been a significant recovery, including the 
planning and construction of new plants and an increase in the 
production and sale of U.S.-built piston-driven aircraft.
  This side in the debate is able to argue not from theory but from 
experience. That experience would, it seems to me, give extraordinarily 
heavy weight to saying that if we expand it, if we expand it to other 
areas, we will have a similar, if perhaps not so striking, increase in 
the creation of jobs in this country, in the development and marketing 
of new products, of voluntarism, if the Dole amendment passes and the 
like.
  I hope we will be able to go forward, Mr. President, and cast votes 
on these various amendments and the other amendments before the Senate, 
and reach a positive conclusion to this debate within the immediate and 
foreseeable future.
  Mr. HOLLINGS. Mr. President, I thank the distinguished Senator from 
Washington.
  I mention once again the Girl Scouts, because I want to try to clean 
up the Record here. What I will read here is the Associated Press 
report:

       When advocates of tort reform went looking for sympathetic 
     symbols, they thought they had found a winner--the Girl 
     Scouts of America. The story spread quickly among tort reform 
     lobbyists and their supporters on Capitol Hill, and it was 
     compelling. Girl Scouts in the Nation's Capitol have to sell 
     87,000 boxes of cookies each year just to cover the cost of 
     their liability insurance. The lobbying and public relations 
     machinery went into high gear. The U.S. Chamber of Commerce 
     produced a radio ad using the information, and a business 
     coalition began planning a television spot showing a Girl 
     Scout trudging door to door with a basket of Thin Mints and 
     S'Mores. But when the Girl Scouts got wind of it, they called 
     a halt. The 87,000-box statistic was undocumented, they said. 
     The Girl Scouts do not consider damage suits much of a 
     problem. The local council in Washington has never been sued, 
     and the National Accounting Organization takes no position on 
     tort reform legislation. ``They found an easy and emotional 
     issue that they could get hold of,'' said Sandra Jordan, 
     spokeswoman for the Washington Area Girl Scouts. People will 
     take a sound bite on easy image over hard information.

  Therein, Mr. President, is my position in referring not only to Girl 
Scouts, but to the sound bites here with respect to ``Let's put an end 
to the lawsuit lottery.''
  Now, we are not talking about product liability reform or uniformity 
or, more correctly, any kind of abuses of the law. They immediately 
call it a lottery and skyrocket, and all these words that have been 
used; ``The lottery wins, and the consumer loses,'' and that kind of 
thing.
  I referred a moment ago to the matters of words with respect to these 
words being used here. I know some in this Congress are very sensitive 
about it. However, it has had its effect.
  A former colleague here had introduced this, and we had it received 
otherwise back in 1990, because I am referring to the one who is 
disassociating himself from his GOPAC movement, because here is a GOPAC 
movement that I will read out, and I will say how it has had an effect 
in my State with respect to the Government being the enemy.
  This is a GOPAC letter, signed by Newt Gingrich, and it is addressed:

       Dear friend: The enclosed tape is another in the regular 
     series of GOPAC audio cassettes, but is more than just 
     another tape. This is a special lecture I delivered just a 
     few weeks ago on August 22, 1990, to the third-generation 
     group at the Heritage Foundation.
       I am sending you this tape in the belief that it contains a 
     timely and extraordinary message that could be of help to you 
     in the coming months. While most activists and legislative 
     candidates are not asked to give your views on Iraq, the 
     Mideast crisis, the budget conference, and the state of the 
     economy, it is critical that you have the tools available 
     that will help you take the offensive and define the agenda 
     of the campaign based on our values rather than falling into 
     the trap of merely answering the news releases.
       I have also included a new document entitled ``Language, a 
     Key Mechanism of Control,'' drafted by GOPAC political 
     director Tom Morgan. The words in that paper attest to 
     language from a recent series of focus groups where we 
     actually tested ideas and language.
       I hope this proves useful in writing speeches and other 
     campaign communications. My personal wish for the best of 
     luck in your campaign and everything else.

  Then, the GOPAC language is here, ``A Key Mechanism of Control.''

       As you know, one of the key points in the GOPAC tapes is 
     that language matters.

  I will repeat that sentence. Here is the Speaker himself now saying 
back 5 years ago, practically:

       As you know, one of the key points in the GOPAC tapes is 
     that language matters.
       In the video ``We Are a Majority,'' language is listed as a 
     key mechanism of control used by a majority party along with 
     gender, rules, attitude, and learning. As the tapes have been 
     used in training sessions across the country and mailed to 
     candidates, we have heard a plaintive plea: ``I wish I could 
     speak like Newt.'' That takes years of practice, but we 
     believe that you could have a significant impact on your 
     campaign in the way you communicate if we help a little. That 
     is why we have created this list of words and phrases.
       This list is prepared that you might have a directory of 
     words to use in writing literature and mail, in preparing 
     speeches, and producing electronic media. The words and 
     phrases are powerful. Read them. Memorize as many as 
     possible. And remember that, like any tool, these words will 
     not help if they are not used. While the list could be the 
     size of the latest college edition dictionary, we have 
     attempted to keep it small enough to be readily useful yet 
     large enough to be broadly functional. The list is divided 
     into two sections, the optimistic governing words to help 
     describe your vision, contrasting words to help you clearly 
     define the policies and record of your opponent in the 
     Democratic Party.

  Then, ``Please let us know of your suggestions.''
  Now, Mr. President, listen to these words amongst others. We will put 
them all in the Record:

       Sick, lie, liberal, betray, traitors, devour, corrupt, 
     corruption, cheat, steal, criminal rights.

  I ran into this in my campaign for reelection in 1992. I never heard 
such expressions before, and I wondered where in the world my opponent 
was getting all these blase references and words that really, in my 
judgment, were out of order.
  Now let us bring it up to date in two instances. The Speaker himself 
uses these words. You look in David Broder's column here just about 10 
days ago and you will see where Speaker Gingrich, talking of his 
revolution, says we have a revolution against the Washington 
Government. But he does not call it the Washington Government. He calls 
it--and he has the buzz words, the key words, ``the corrupt, liberal 
welfare state.''
  If these are not inflammatory, I do not know what are. They have had 
that effect in my State of South Carolina.
  I went home to a 600-member State Chamber of Commerce seminar where 
they bring in the congressional delegation and we answer these 
questions as they go along. It so happened the distinguished colleague 
from the 4th district in Greenville, SC, Bob Inglis, had answered a 
question and ended up by saying:

       Yes, abolish the Departments of Commerce, Education, Energy 
     and Housing.

  My turn came immediately afterwards and I said:

       Wait a minute. You don't mean to say that the Chamber of 
     Commerce wants to do away with the Department of Commerce?
       Yes. Yes.

  A good number of them, I would say, a fifth of them, started smiling 
and putting their hands together. And I said to Dick Riley, the former 
Governor, popular Governor, Secretary of Education--he was there and I 
said:

       Dick Reilly, do you want to do away with the Department of 
     Education?
       Yes, yes, yes.
       And HUD and Energy both? All four of them?
       Yes.

  Half of them clapping and all, standing up. That is what is happening 
about this ``corrupt, liberal welfare state.'' They feel, irrespective 
of the functions and the need for these various departments, that the 
dickens with it. ``The Government is the enemy,'' they say. ``Get rid 
of the Government. That is the only way. Tear it down, rip it out. 
Abandon it, abolish it. And then let us start all over again and to be 
sure none,'' as they say, ``get corrupted. Be sure nobody serves over 6 
years, or 12 years in this body.'' That is what you have going on in 
this land.
  I can tell you here and now, words do count. And they count with 
respect to this, which is a total mislead as to the actual hearings, 
the facts that we had 
[[Page S5959]]  before us about the lawsuit lottery, who wins and who 
loses, and about the rights of consumers and everything else. It is 
entirely different. It is the safety of consumers. It is the 
defendants' lawyers on billable hours that are winning, sitting up 
there just grinding out, trying their own case.
  It is a matter not of a lottery but a sworn jury to listen to the 
facts, reviewed by the trial judge and reviewed by the appellate court. 
And all back to the issue at hand, punitive damages, a sum total of 
$1.333 billion, the whole sum total of all punitive damage findings in 
the last 30 years, which is less than half of one business verdict 
against another business verdict in punitive damages, in two cases, not 
only the Pennzoil case but in the Exxon case.
  I yield the floor.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.


                 Amendment No. 619 to Amendment No. 617

       (Purpose: To strike the punitive damage limits)
  Mr. DORGAN. Mr. President, I rise to offer a second-degree amendment 
to the Dole amendment that is now pending. I send the amendment to the 
desk and ask for its immediate consideration.
  The legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] proposes an 
     amendment numbered 619 to amendment No. 617.

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

       On page 1, beginning with line 3, strike through line 2 on 
     page 8 and insert the following:

     SEC. 107. UNIFORM STANDARDS FOR AWARDS OF PUNITIVE DAMAGES.

       ``(a) General Rule.--Punitive damages may, to the extent 
     permitted by applicable State law, be awarded against a 
     defendant in a product liability action that is subject to 
     this title if the claimant establishes by clear and 
     convincing evidence that the harm that is the subject of the 
     action was the result of conduct that was carried out by the 
     defendant with a conscious, flagrant indifference to the 
     safety of others.
       ``(b) Bifurcation at Request of Either Party.--At the 
     request of either party, the trier of fact in a product 
     liability action that is subject to this title shall consider 
     in a separate proceeding whether punitive damages are to be 
     awarded for the harm that is the subject of the action and 
     the amount of the award.''

  Mr. DORGAN. Mr. President, the amendment I have offered deals with 
the cap on punitive damages in the bill, S. 565, that was reported out 
by the Senate Commerce Committee. I voted for this legislation because 
I think, on balance, there is reason for us to legislate in this area. 
I think there is a problem with product liability legislation. And I 
think the approach that is taken is generally a reasonable approach. 
Therefore, I cast a ``yes'' vote. I did say in the committee, however, 
I was concerned about the punitive damage section and intended to offer 
an amendment on the floor of the Senate to respond to my concerns. That 
is what brings me to the floor today.
  It occurs to me as I listen to the debate on product liability, as 
well as the debate on tort reform in general, that this is another one 
of those cases where there is truth on both sides of this issue. I 
listened to the Senator from South Carolina, who has spoken not just 
this year but in previous years on this subject and speaks with great 
passion and eloquence on this issue. He feels very strongly that it is 
a mistake for Congress to move forward and to enact Federal legislation 
in this area. I understand what he says and why he says it.
  On the other hand, I hear others in the Chamber stand up and speak 
with great persuasiveness about the need for Federal product liability 
legislation to restrain the number of suits that are filed.
  My sense is we are a country that litigates too much. We have lawyers 
all over our country filing suits for virtually everything. I would 
like to see us litigate a little less in this country. I would like to 
see judges throw out frivolous lawsuits and sanction those who bring 
them. I would like to see us back away from this excessive litigation.
  Excessive litigation puts many small businesses and others at risk. I 
talked with a business owner recently and she said, ``They have jacked 
up my insurance cost to $500 a month. I pay $6,000 a year now for 
liability insurance to protect me against lawsuits.'' I asked, ``Have 
you ever been sued?'' ``No, never had a suit against me. But, I have to 
pay these tremendous costs because somebody might decide to sue me.'' 
This is a real problem for many.
  Some might say this is a problem with insurance companies. That may 
be, I do not know. I do know we have too many lawsuits in this country 
and too many people who want to sue. Excessive litigation has an effect 
on people trying to run small businesses who have to shell out money 
month after month in order to protect themselves.
  On the other hand, there are enterprises in this country that provide 
products that they know are unsafe. They make these products available 
to consumers figuring they can make a bunch of money. These 
corporations accept the risk that a product might hurt somebody in 
order to make a profit. In most cases their profit will exceed their 
potential risk for damages. There are plenty of lawsuits that exemplify 
this.
   I think there are merits on each side of this issue. I think we need 
to pass a Federal standard with respect to product liability. But, let 
us go back to last year's legislation on the issue of punitive damages. 
The bill that we reported out of the Senate Commerce Committee last 
year had no limit on punitive damages. We do change the standard or the 
threshold. We raise the bar. We require clear and convincing evidence 
that the harm caused was carried out with a conscious, flagrant 
indifference to the safety of others. That is the bar you have to get 
over in order to prove that you are entitled to punitive damages and 
that this enterprise should be punished for its behavior.
  That is an appropriate place to establish burden of proof. You have 
to prove that there is clear and convincing evidence that the harm is 
carried out with a conscious, flagrant indifference to the safety of 
others.
  Once you have done that, we should not say to the largest enterprises 
in this country, those with billions and billions of dollars, do not 
worry--even though you knew that product was going to harm them, could 
have killed them, we have put a limit on punitive damages. It does not 
make any sense to me.
  Let us take punitive damages as an issue. The punitive damage section 
of tort law is to punish or deter a defendant's egregious conduct. 
There is no litigation crisis with respect to punitive damages. 
According to a survey, from 1965 to 1990, 355 punitive damages were 
awarded in State and Federal product liability lawsuits nationwide, an 
average of 14 a year. Of these awards, only 35 were larger than $10 
million. All but one of these awards were reduced, and 11 of the 35 
were reduced to zero. This was in a 25-year span.
  It is hard for anyone to make the case that punitive damages 
represent some sort of crisis in the area of product liability. That is 
not supported by the facts. Congress should decide to raise the bar and 
create a new, higher standard, higher threshold over which someone who 
was injured must cross in order to prove punitive damages. To restrict 
it even further by placing a limit, a substantial limit on what someone 
can collect on punitive damages, is not justified. I think in rare 
cases where punitive damages should be or can be awarded, if this test 
is met, the test of conscious, flagrant indifference to the safety of 
others, then it is inappropriate for this Congress to provide this 
limitation.
  My amendment would allow the States to debate this and provide their 
own limitation. Some States have limits. My amendment will not affect 
those States. But it will say that the underlying bill, S. 565 will not 
establish a new national standard that will replace every other State 
that has a limit and replace those specific limits. Or, in cases where 
States do not now have a limit, tell those States, ``Here is your new 
limit on punitive damages.'' That is inappropriate.
  I hope that Congress will support the amendment that I am offering 
today, which strikes those provisions in the punitive damages section 
that limit caps.
   [[Page S5960]] I come from a State that is largely a State of small 
businesses. We have some industry and a few larger enterprises. I have 
visited with many North Dakotans who have told me of their view of and 
their circumstances with respect to product liability. The case they 
make warrants this kind of legislation. But, it does not warrant a cap 
that has been placed on punitive damages.
  I would like to include in the Record some examples of punitive 
damage cases. I will not go into them. But most of us understand where 
and when punitive damages have been awarded in this country, and in 
most of these instances they were warranted and necessary. The fact is 
the awarding of those punitive damages deter and persuade other 
corporations from taking the same risk. Corporations who suffered those 
damages may be more careful in the future.
  I think that many safety improvements on products have been made not 
because of the benevolence of those making the products but because 
they worry about the consequences of putting an unsafe product on the 
market. Especially because other large enterprises which put unsafe 
products on the market knowing they were not safe suffered some very 
substantial punitive damages.
  That has helped this country and the people in this country produce 
products that are safer and more reliable and products that consumers 
could purchase without fear of being hurt by the product. I hope that 
we will have an opportunity to allow others to discuss my amendment. My 
understanding is that they are seeking some kind of unanimous consent 
in which we would stack some votes tomorrow. I would like the 
opportunity to have others discuss the issue of lifting the cap on 
punitive damages in the underlying bill.
  Let me again reemphasize. I am not amending the Dole amendment that 
deals with issues other than product liability. My amendment will deal 
with the underlying bill, and the cap on punitive damages in S. 565.
  My hope would be that we will continue to debate this issue. As we 
discuss punitive damages, this Congress ought to consider the option of 
returning to the language in the product liability reform legislation 
considered last year with respect to punitive damages. Under last 
year's legislation a Federal standard would have been established 
without a cap on punitive damages. The legislation we are considering 
this year not only changes the standard but imposes a cap. It seems to 
me this cap is not necessary and inappropriate.
  Last year, I was upset about another provision. The legislation that 
was brought to the floor included an FDA defense, whereby, a product 
that was approved by the FDA would be immune from punitive damage 
liability. Last year, I said I will not support that, and I will not 
vote for cloture until that is stripped out. I voted against cloture, 
until I was assured that the FDA defense would be stricken. I decided 
to vote for cloture at that point.
  The FDA provision was not included in this year's provision, but, 
they put in another cap on punitive damages which they did not have 
last year. That makes no sense to me. I hope that this Congress will 
come to the same conclusion that I have come to, that this bill is 
worth advancing, that we should pass a product liability reform bill, 
but that it should be enacted without the section that includes a cap 
on punitive damages. I think a cap is unwarranted, unfair and unwise.
  With that, I yield the floor.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER (Ms. Snowe). The Senator from Washington.
  Mr. GORTON. Madam President, I thank the distinguished Senator from 
North Dakota for offering and defending his amendment. It moves this 
process forward, and as he said we are seeking at this point a 
unanimous-consent agreement under which we can deal with punitive 
damages today and tomorrow morning the way in which we dealt with 
medical malpractice yesterday and this morning, by gathering all the 
amendments together, debating them tonight and for a while tomorrow 
morning and then voting on them all in a row.


                 Amendment No. 620 to amendment No. 596

 (Purpose: To limit the amount of punitive damages that may be awarded 
                  in a health care liability action.)

  Mr. GORTON. Madam President, at this point I send an amendment to the 
desk on behalf of the distinguished Senator who now occupies the Chair 
and ask for its immediate question.
  I ask unanimous consent to set aside the pending amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report the amendment.
  Mr. GORTON. This is an amendment to the Gorton substitute, so I ask 
to set aside the Dole amendment as well for the purposes of considering 
this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill clerk read as follows:

       The Senator from Washington [Mr. Gorton], for Ms. Snowe, 
     proposes an amendment numbered 620 to amendment No. 596.

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

       On page 19 strike line 22 through page 20 line 4, and 
     insert the following new subsection:
       (b) Limitation on Amount.--
       (1) In general.--The amount of punitive damages that may be 
     awarded to a claimant in a product liability action that is 
     subject to this title shall not exceed 2 times the sum of--
       (A) the amount awarded to the claimant for economic loss; 
     and
       (B) the amount awarded to the claimant for noneconomic 
     loss.
       (2) Application by court.--This subsection shall be applied 
     by the court and the application of this subsection shall not 
     be disclosed to the jury.

  Mr. GORTON. Madam President, for the information of the Senate, this 
is identical to the Snowe amendment on punitive damages which was 
adopted as a part of the medical malpractice amendment which now, as a 
result of our last recorded vote, is a part of this bill. It differs 
only in that it is an amendment to the underlying Gorton substitute and 
imposes the same rule with respect to punitive damages, that is to say, 
two times the combination of economic and noneconomic damages for the 
original limitation on punitive damages included in the Gorton 
substitute.
  I have discussed this next request with the distinguished Senator 
from North Dakota because it is a milder version than his, I think 
logically assuming that we get the votes tomorrow, that it be voted on 
before his amendment, and I ask unanimous consent that it be placed on 
any future agreement to a vote ahead of the Dorgan amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. And I do not expect we will object, but I wanted to clear 
that with our side of the aisle, so if the Senator will withhold 
momentarily.
  Mr. GORTON. I will withhold it momentarily.
  Madam President, I briefly explained this amendment. I would expect 
that it would be adopted by voice vote because there was a rollcall 
vote earlier today on precisely this amendment, and I doubt that the 
body needs that vote repeated. It is in my view a preferable formula to 
that proposed by the Senator from North Dakota, which, of course, would 
remove all limitations and essentially all Federal controls over 
punitive damages. And it is punitive damages, of course, which is the 
subject not only of the Dole amendment but of much of the original 
product liability bill, and it is a formula with respect to punitive 
damages proposed by the occupant of the chair as accepted by a 
unanimous vote this morning.
  Mr. DORGAN. Madam President, I withdraw my reservation. I have no 
objection.
  Mr. GORTON. I repeat the unanimous-consent request.
  The PRESIDING OFFICER. Would the Senator from Washington repeat the 
unanimous-consent request?
  Mr. GORTON. Assuming there is later today an order for votes on all 
amendments dealing with punitive damages, that the Snowe amendment 
[[Page S5961]]  be voted on immediately prior to the Dorgan amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GORTON. Madam President, I wish to repeat once more that I 
understand there are additional amendments to be proposed by the 
Senator from Tennessee [Mr. Thompson], the Senator from Arizona [Mr. 
Kyl], the Senator from Utah [Mr. Hatch], the majority leader, the 
Senator from Kansas [Mr. Dole], and the Senator from Alabama [Mr. 
Shelby], from this side of the aisle and perhaps additional amendments 
on punitive damages on the other side of the aisle. We have no 
unanimous consent on the subject yet. I hope that Members who want to 
speak to the subject of punitive damages and introduce amendments on 
the subject of punitive damages will do so as promptly as is convenient 
to them.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BYRD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  

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