[Congressional Record Volume 141, Number 72 (Wednesday, May 3, 1995)]
[Senate]
[Pages S6033-S6068]
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. HEFLIN addressed the chair.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. HEFLIN. Mr. President, I would like to address the Dole amendment
and its relationship to other parts of the bill.
The Dole amendment, of course, extends the provisions of this
proposed bill to all civil actions involving interstate commerce. That
includes almost every automobile accident, and every conceivable type
of accident, not just product liability cases. And, as we know, the
language ``interstate commerce'' has been so liberally construed up
until the very recent Lopez case that it includes almost any situation.
There are many examples, too numerous to cite here, that can
demonstrate the liberal construction of the interstate commerce clause.
Let me first recite the provision not only in the Dole amendment but
in the overall bill pertaining to punitive damages, that if you seek
punitive damages and any party can call for a bifurcated trial which
means that at the request
[[Page S6034]] of any party, the trier of facts, the jury, shall
consider in a separate proceeding as to whether punitive damages should
be awarded. By the way, bifurcated proceedings will result in an
increase in transitional costs which is somewhat ironic in as much as
the proponents of this legislation have maintained that one of the
bill's objectives is to reduce, not increase, transactional costs.
If there is evidence of punitive misconduct, it is inconceivable to
me that any defendant would not take advantage of a bifurcated trial.
So, all punitive damage cases will have two trials. In the first trial,
which is the trial in regard to underlying liability, compensatory
damages will be sought, which includes noneconomic damages and economic
damages, and all of its component aspects. There is this provision in
the Dole amendment, and also in the overall bill--it is just a
repetition put here--that evidence relative only to the claim of
punitive damages as determined by applicable State law shall be
inadmissible--not admissible, but inadmissible--in any proceedings to
determine whether compensatory damages are to be awarded.
That means that in an automobile accident case or in a truck/
automobile case, you could prove negligence in the trial in chief, but
you could not prove gross negligence. Basically, what that means--and
every defendant who would come along would argue--yes, you can argue
that the truck that caused the accident, that did the wrongdoing,
crossed the center line and hit an individual. But you could not prove
that the driver had three beers or had a pint of whiskey, because that
issue would go to the punitive damage aspect of the case. You could not
prove basically that the owner of the truck knew, under these
circumstances, that that driver had been convicted four times before of
drunk driving. You could not prove in the trial in chief that the
driver of that motor vehicle--and it was known to the owner of the
truck, the truck company, that defendant had been convicted twice of
reckless driving. You could not go into any aspect that would be
evidence relating punitive damages and punitive misconduct.
Now, you could not prove in the Pinto automobile cases that there was
a memorandum to the effect that a company will come out financially
better rather than having a recall because of the location of the fuel
tank and the certain danger that would result in the case of a rear end
collisions. The memorandum in question showed that the company would
come out better financially and with less expense to just pay off the
claims that might arise from rear end collisions.
Now, how does this relate also to the Snowe amendment which is in the
Dole amendment? We have to go in and look to several liability for
noneconomic loss. Under the Snowe cap, the cap on punitive damages is
twice the amount of economic and noneconomic damages.
Section 109 of the bill on the matter of several liability reads
Each defendant shall be liable only for the amount of
noneconomic loss allocated to the defendant in direct
proportion to the percentage of responsibility of the
defendant determined in accordance to the harm to the
plaintiff with respect to which the defendant is liable.
Therefore, in a motor truck and automobile accident, if a person were
suing for punitive damages in a particularly egregious situation and
trying to prove noneconomic damages, such as pain and the suffering,
for example, and being aware of the basis for the cap of the Snowe
amendment, that person could not prove against the owner of the truck
that the owner knew of four convictions of drunk driving and two
convictions of reckless driving in his efforts to establish the several
liability of the driver and the owner of the truck.
How can a person establish under not only the Dole amendment but
under the bill as a whole the amount of noneconomic damage, for
example, against the owner of the truck?
Now, that is just one example, and there are probably a multitude of
other examples. There are other aspects, but these two relate together
in that, together, they put an injured party at a terrible
disadvantage. It in effect says, regardless of the injury or the human
element in this, we are interested in profits.
To me, as I look at all of this, and every time I see more and more
instances which raise serious questions in my mind, there are all sort
of provisions throughout this particular bill that just really shock
the conscience as regards to the issue of fairness.
I am deeply concerned that people do not really understand how the
provisions interrelate and what ultimate impact the bill will have on
the individual and his or her rights to seek fair redress for injuries
he or she may have received.
How much time is remaining on our side?
The PRESIDING OFFICER. Sixteen minutes.
Mr. HEFLIN. I reserve the balance of my time.
Mr. GORTON. Mr. President, how much time does the Senator desire?
Mr. McCONNELL. Mr. President, 7 or 8 minutes.
Mr. GORTON. I yield 8 minutes to the Senator from Kentucky.
Mr. McCONNELL. Mr. President, the amendment I offered yesterday to
broaden this bill to include medical malpractice reform, which the
Senate approved, may have been the shot heard around the civil justice
system, but the amendment we will be voting on offered by Senator Dole
to extend punitive damages reform to all civil cases in the country is
really the beginning of the revolution.
The Dole punitive damages amendment, together with an Abraham-
McConnell amendment on joint and several liability, which we will offer
shortly, are the true tests of whether the Senate is going to provide
meaningful and comprehensive civil justice reform for every American.
Let me explain why the Dole amendment is so important to restoring
justice to our civil justice system. Economic and noneconomic damages
are awarded to compensate an injured party, to make the person whole in
every possible way. That is a fundamental purpose of civil liability
and one which I strongly support.
Punitive damages, on the other hand, are assessed to punish the
responsible party for conduct that is almost criminal in its
recklessness, deliberateness, or malice. Since we assign liability for
economic and noneconomic damage on the basis of fault, it is clear that
punitive damages are meant to punish something much more than mere
negligent conduct. Such damages are to be sought in extreme and unusual
situations, not as a bonus, in every case, Mr. President.
However, as any students of the tort system can say, the distinction
between the two types of civil damages have become seriously blurred,
making a mockery of the different purposes these damages are meant to
serve.
Claims and large awards for punitive damages have become routine.
Plaintiffs who are fully compensated for their injuries throughout
economic and noneconomic damages get an extra windfall that bears no
relation whatever to the harm that they have suffered.
The lawyers who represent these plaintiffs are stuffing their pockets
with the money, as many plaintiffs lawyers will take up to half and
even more of the total amount of these lucrative damage awards.
Often, Mr. President, the potential for such enormous punitive
damages awards entices people to sue in the first place. Plaintiffs,
egged on by their lawyers, will sometimes turn down offers to
compensate all their harm in the hope of scoring big with punitive
damages or extorting a much larger settlement out of a defendant, who
is understandably reluctant to play punitives roulette.
In other words, what was once intended as a very narrow remedy lying
somewhere between civil and criminal law has now become a gold mine
that is exploited without regard to the considerations of justice and
due process. The Dole amendment is designed to restore the concept of
punishment to punitive damages.
If we accept the principle that the law of punitive damages must be
reformed in product liability and medical malpractice, it follows that
such reform should be extended to other civil actions as well.
Punitive damage reform will not limit an injured party's right to be
[[Page S6035]] fully compensated for any harm. Instead, it will give
relief to consumers in the form of lower prices at the checkout counter
and lower insurance costs for their homes and businesses. To confine
that relief to product liability and medical malpractice gets only part
of the job done.
Now, who is hurt by excessive punitive damages awards? The list is
almost endless. Cities, counties, park districts, nonprofit agencies,
charities like the Girl Scouts and the Little League and small
businesses.
For example, the Girl Scouts in Washington have to sell 87,000 boxes
of Girl Scouts cookies just to pay their liability insurance premium.
In southern Illinois, they must sell 41,000 boxes to cover insurance
liability. Girl Scout camps can no longer afford to offer horseback
riding because of excessive risk. They have no diving boards in the
swimming pools--too much exposure to litigation.
Cities spend $9 billion on liability judgments and settlements every
year. An employee of the Smithsonian won a $400,000 award--$390,000 in
the form of punitive damages because his supervisor called him an
unflattering name. I guess that proves that sticks and stones may break
my bones, while names earn a lawsuit.
For small businesses, one lawsuit can mean bankruptcy, even if it is
won. The huge fee and time spent away from the businesses has literally
wiped out mom and mop enterprises despite the fact that they win the
suit. No wonder so many small businesses cave in to legal extortion
rather than risk court costs, legal fees, disruption of the business,
harm to their reputation, and exposure to the most expensive lottery in
America--punitive damages.
The National Federation of Independent Business, which has been one
of the true heroes on civil justice reform, brought to my attention the
case of Hunt Tractor in my home State of Kentucky. They have been sued
in two cases involving product liability allegations. In one case, the
equipment operator was obviously negligent; and in the other case, the
owner had modified the equipment to make it unsafe.
While Hunt won both cases, it cost the company and its insurance
carrier more than $100,000 to defend, and countless hours entangled in
legal proceedings.
Domino's, the chain of pizza delivery restaurants, was found liable
for the injuries of a woman harmed when one of its pizza trucks was
rushing to meet Domino's promised 30-minute-delivery deadline.
Regardless of whether you believe Domino's had some share of the
responsibility, the damages awarded in the case were astonishing. Out
of a total award of $79 million, close to $78 million was punitive
damages.
Some of my colleagues have mentioned the situation in Alabama, a
State I have a great deal of interest in. I was born there and lived
the first 8 years of my life in Alabama. In Alabama, plaintiffs
routinely recover punitive damage awards. In three counties studied by
Prof. George Priest, of the Yale Law School, he found that punitive
damages were
awarded in 72 to 95 percent of all cases in these three counties in
Alabama--all cases.
It is hard to imagine that in all these cases defendants have behaved
so egregiously as to warrant an assessment of punitive damages.
Clearly, we need to bring punitive damages under control and relate
them to punishment--not another routine part of every case. That is
what this debate is about. It is not, as the opponents of reform have
claimed, about taking money away from victims. It is about bringing
some certainty to civil punishment, just as we do for criminal
defendants.
I thank the Chair and I yield the floor.
The PRESIDING OFFICER. Who yields time?
Ms. MOSELEY-BRAUN addressed the Chair.
Mr. HEFLIN. Mr. President, I ask for the yeas and nays on the Shelby
amendment.
Mr. GORTON. Excuse me, will the Senator withhold?
Mr. HEFLIN. All right, I yield to the Senator from Illinois.
The PRESIDING OFFICER. The Senator from Illinois is recognized.
Ms. MOSELEY-BRAUN. Mr. President, I know that I do not have a great
deal of time, but I would like to discuss very briefly why I believe it
would be a mistake for the Senate to adopt the Dole amendment on
punitive damages. I know that the sponsors of this amendment are
confident that their amendment, as drafted, will ensure that no
limitations are placed on the ability to recover punitive damages in
Federal civil rights cases. I am not sure that I agree with their
assessment; however, even if it were correct, the pending amendment
will have disastrous consequences in numerous cases that are brought
pursuant to State law, including cases to vindicate civil rights. I
have here a letter from Morris Dees, chief trial counsel for the
Southern Poverty Law Center, which states:
The Southern Poverty Law Center has used both Federal and
State laws to cripple a number of white supremacist and neo-
Nazi groups during the past 10 years. If a Senate bill that
limits punitive damages is enacted, these judgments would not
be possible.
A description of some of the types of cases that would be impacted by
the Dole amendment illustrate the major harm that broadening the
limitations of punitive damages to cover all civil litigation would
create.
In 1990, the Southern Poverty Law Center won a $12.5 million judgment
against the White Aryan Resistance and its leaders--Tom Metzger and his
son John--for the beating death of a black student in Portland, OR. Of
that award, $2.5 million was for compensatory damages, while the
remaining $10 million was for punitive damages, a punitive award that
was four times the amount of compensatory damages.
During the trial for civil damages, it was demonstrated that Mr.
Metzger and the Ayran Resistance had for years preached that nonwhites
were ``God's mistakes,'' and that Jews were the progeny of Satan. Tom
Metzger and his son, John, sent agents to Portland, OR, to organize the
East Side White Pride, a youth division of the Aryan Resistance. At the
organizational meeting, members were encouraged to commit violent acts
against blacks, a fact that had disastrous consequences for a 28-year-
old black Ethiopian immigrant named Mulugeta Seraw. While walking home,
Mr. Seraw was attacked with a baseball bat by three skinheads who had
attended the White Ayran Resistance meeting. Mr. Seraw--who had come to
America to attend Portland State University, and who shipped money from
his part-time job to his family back in Ethiopia--didn't stand a
chance. He was dead before he ever reached the hospital.
Mr. President, I mention this case because it was brought not
pursuant to Federal civil rights laws, but pursuant to a State wrongful
death statute, the very type of civil action that will be impacted by
the Dole amendment. And it is not the only lawsuit of its kind that the
Dole amendment would limit.
Consider this case: In 1987, a wrongful death claim was brought
against the United Klans of America for the lynching death of 19-year-
old Michael Donald, a masonry student at Carver State Technical College
in Alabama. The case resulted in a $7 million judgment against the
Klan. Again, as this is exactly the type of claim that would be
impacted by the Dole amendment, I will briefly describe the facts.
While walking home from his sister's house one evening, Michael
Donald was kidnapped by two Klan members, Henry Hays and James
``Tiger'' Knowles. After driving to a deserted woods, Michael was
ordered out
of the car. A newspaper account describes what happens next:
Henry Hays pulls a knife. Michael Jerks free. He runs. They
chase him. He grabs a fallen tree limb. They knock it away.
Hays has the noose. They wrestle it over Michael's head.
Michael pulls on the rope, running in circles. Knowles holds
the other end and beats him, again and again, with the tree
limb. Michael collapses. Henry Hays pushes his boot into
Michael's face and pulls the rope tight. They drag him
through the dirt to the car. They lift him into the trunk.
Knowles asks Hays if he thinks Michael is dead. ``I don't
know,'' Hays replies, ``but I'm gonna make sure.'' He cuts
Michael's throat three times. They drive back to Henry Hays'
house and throw one end of the rope over the limb of a
Camphor tree across the street. Then they lift Michael by the
neck--high enough to swing. From the porch, the rest of the
Klansmen can see. As Knowles steps back up to join them, he
feels a friendly punch. ``Good job, Tiger.''
Mr. President, Tiger Knowles and Henry Hays were convicted of crimes
for their role in Michael Donald's brutal death, which some people may
feel
[[Page S6036]] is sufficient punishment. But for civil rights activists
in the deep South, it was not. They recognized that this behavior was
part of a pattern and practice of conduct by the Klu Klux Klan,
designed to deprive minorities of their civil rights under law. So
these activists sued the Klan, not pursuant to Federal Civil Rights
Laws, but pursuant to State wrongful Death Statutes.
At trial, evidence was presented to show that on the
evening of the murder, Tiger Knowles and Henry Hays had been
told by their local Klan leader ``get this down: if a black
man can kill a white man, a white man should be able to get
away with killing a black man * * * .'' The jurors were shown
a Klan newspaper, that had a
drawing of a black man with a noose around his neck, a
drawing that Tiger Knowles testified had influenced his behavior.
Jurors were informed of countless other, similar incidents in which the
United Klan had been involved. And ultimately--and quite wisely, I
would assert--they awarded Michael's mother, Beulah Mae Donald, $7
million.
Perhaps there are some who feel a lower award would be appropriate in
this case. Again, I will quote from a newspaper account which describes
that amount of the award:
The Klan cannot pay. It has nowhere near that kind of
money. So, in addition to a quarter of the wages some of the
klansmen will earn for the rest of their lives, and in
addition to titan Bennie Hays' house and farm, Beulah Mae
Donald accepts every penny of the several thousand dollars
that the United Klans of America has to its name, and the
deed and keys to its national headquarters. She shuts it
down.
Mr. President, I have outlined two examples of punitive damages in
wrongful death cases, but these are not the only types of State law
cases that would limited by the Dole amendment. In 1988, the Southern
Poverty Law Center won $1 million from two Georgia Klan groups who
attacked marchers celebrating Dr. King's birthday. Or consider a recent
award of $7 million in punitive damages against a law firm that
tolerated sexual harassment--a claim that was brought pursuant to
California's Fair Housing and Employment Act, not Federal civil rights
law.
As I stated at the beginning of debate on this legislation, I hope to
be able to vote for cloture on a narrow, moderate product liability
bill. I support reforms such as a statute of repose, or limitations on
vicarious liability, or limitations of recovery if drug or alcohol use
caused the injury. But I will never support any legislation that would,
in the guise of civil justice reform, make it more difficult to bring
civil rights claims under State law. I would never vote for an
amendment that will restrict the ability of civil rights groups to sue
the Klu Klux Klan. I urge my colleagues to reject the Dole amendment,
and I ask unanimous consent that the text of the letter from the
Southern Poverty Law Center, as well as the article describing their
work, be printed in the Record following my remarks.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Southern Poverty
Law Center,
Montgomery, AL, April 25, 1995.
Senator Tom Daschle,
Hart Senate Office Building, Washington, DC.
Dear Senator Daschle: The Southern Poverty Law Center has
used both federal and state tort laws to cripple a number of
white supremacist and neo-Nazi groups during the past ten
years. If a Senate bill that limits punitive damages is
enacted, these judgments would not be possible.
In 1987, the Center got a $7 million judgment against the
United Klans of America for the lynching death of a black
teenager. The judgment bankrupted this violent hate group
whose members had previously bombed the Sixteenth Street
Baptist Church in Birmingham, Alabama, killing four young
girls.
In 1990, the Center got a $12.5 million judgment against
the White Aryan Resistance and its leader Tom Metzger for the
death of a black student in Portland, Oregon, at the hands of
Skinheads. Most of the judgment was punitive damages. The
group we sued is now virtually out of business.
In 1988, the Center got $1 million judgment against two
Georgia Klan groups for their assault on a group of marchers
celebrating Dr. King's birthday. Almost all of this amount
was punitive damages. We bankrupted both groups and took
property from several members.
We presently have a civil damage suit pending against
Rescue America and its Florida leader, John Burt. Our client
is the family of slain abortion doctor David Gunn. Without a
large punitive damage award, a favorable judgment would not
be significant or effective.
Senator, this is a bad bill that is being proposed in the
frenzy of political change. I urge you to vote against
cloture on any bill or amendments that limit the ability of
our civil justice system to punish those people and
organizations that inflict unspeakable injuries on our
friends, neighbors, family members and communities.
Sincerely,
Morris Dees,
Chief Trial Counsel.
____
[From the Los Angeles Times magazine, Dec. 3, 1989]
The Long Crusade
(By Richard E. Meyer)
When Morris Dees was 4, his daddy gave him his only
whipping. He used a belt, and he whipped him all over the
barnyard. It was for speaking with disrespect to a black man.
It made an impression, but nothing like the impression his
daddy left a few years later, when Morris Dees was old enough
to tote water. It was summer in Alabama, mercilessly hot. He
carried the water in a bucket out to his daddy's workers,
hoeing cotton in the fields.
One of them was Perry Lee. She was black. She kept a big
dip of snuff in her cheek. One day, as Morris Dees handed her
the water dipper, his daddy drove up. Perry Lee tucked a
finger behind her teeth, flicked out her snuff and took time
to drink. Morris Dees' daddy did two things his son never
forgot.
With Perry Lee's hoe, he kept up her row, so she would not
worry about falling behind.
Then he took the same dipper and drank.
Morris Dees grew up with a golden touch. He sold cotton
mulch in high school, birthday cakes in college and mail
order books after law school. By the time he was 32, he and a
partner had sold the business for $6 million.
He lent the touch to raise money for Democratic
presidential candidates--and, at the same time, Morris Dees,
his daddy's son, put the touch to work for people like Perry
Lee. In 1971, he co-founded and funded by directmail appeals
the Southern Poverty Law Center in Montgomery, Ala., a
nonprofit group of attorneys who use the law like a sword.
The law center recently unveiled a civil-rights memorial
designed by Maya Lin, creator of the Vietnam Veterans
Memorial. But its real importance is its litigation on behalf
of the underdog. The center has challenged employment
discrimination, hazardous working conditions, denial of
voting rights, shoddy education, tax inequities and the death
penalty. Its battles against the Ku Klux Klan are legendary--
so successful that Morris Dees is a man marked for
assassination.
He is praised as a courageous klan-buster, but he also gets
crticized--even among those who share his goals. His critics
say that some racists are toothless and that he busts them to
impress the center's donors.
Now Morris Dees is coming West--to take on California's own
Tom Metzger, of Fallbrook, and his White Aryan Resistance
(WAR). Dees has sued Metzger, charging him with inciting neo-
Nazi skinheads who killed a black man. He wants the courts to
order Metzger and his organization to pay damages to the
victim's family. His tactic is to ruin Metzger financially--
as he has empires of the klan--and put him out of business.
If he succeeds, he will undo one of the most important
white supremacists still operating.
Morris Seligman Dees, 52, is a soft-spoken man with light
blue eyes and sandy hair. He is informal, given to wearing
open shirts and loafers with no socks. He is wealthy enough
to retire. But he does not.
What is it like to do what he does?
Why, with the inherent danger, does he keep on doing it?
It is spring of 1981, a Wednesday might in Mobile, Ala. Out
in the suburbs, members of United Klans of America, the
biggest, most secretive and arguably most violent of the Ku
Klux Klans, are meeting at Bennie Hays' place. Usually they
talk about klan business in Bennie's barn, then watch TV over
at his house. But by most accounts--testified to, published
or simply told--their meeting this night marks the beginnings
of something that becomes extraordinary.
They are preoccupied by what they consider an outrage. A
white policeman has been killed in Birmingham, 85 miles from
Montgomery. A black has been charged with the murder. And it
looks like the jury is deadlocked. Bennie Hays, 64, titan in
charge of Klavern 900, commands everyone's attention.
Although he will deny it later, two klansmen swear that Benny
Hays declares to the meeting assembled; ``Get this down: If a
black man can kill a white man, a white man should be able to
get away with killing a black man . . .''.
Klansman James (Tiger) Knowles, 17, borrows a 22-caliber
pistol. Then Knowles, fellow klansman Benjamin Franklin Cox,
20, and Henry Hays, 26, who is Bennie Hays' son and a member
of the klan as well, go to Cox's home and pick up a rope.
They tell Cox's mother they need it to tow a car.
They listen for word. On Friday night, Knowles and Cox go
to Henry Hays' home to catch the 10 o'clock news. In the car,
Tiger Knowles knots a hangman's noose. As they pull up chairs
in front of Henry Hays' TV, a newscaster announces that the
jury in the black man's case has, indeed, deadlocked. If the
black man is not retried, he will go free.
Henry Hays and Tiger Knowles burst for the door. They drive
straight to a black
[[Page S6037]] neighborhood. They see an elderly black man,
but he is too far from their car. Besides, he is on a public
telephone--he could appeal for help.
Not far away, Michael Donald, 19, the youngest son of
Beulah Mae Donald, 61, is walking home from his sister's
house. A masonry student at Carver State Technical College,
Michael Donald works part time in the mail room at the Mobile
Press Register. He is quite, broad-shouldered and well-
mannered. He likes music, plays basketball on a community
team, dates two or three girls.
As he detours to a corner gas station to buy cigarettes,
Henry Hays and Tiger Knowles pull up.
They motion him over.
Knowles asks the way to a nightclub, and Michael Donald
starts to direct him.
``Come closer,'' Knowles says.
Michael Donald leans over. Knowles pulls out the pistol.
``Be quiet,'' Knowles says.
They order him into the car and drive across Mobile Bay and
into the woods.
``I can't believe this is happening,'' Michael Donald
pleads. ``I'll do anything you want. Beat me; just don't kill
me. Please don't kill me.''
The car stops. They order him out. Knowles holds the
pistol. Michael Donald grabs him. All three scuffle for the
gun. It goes off.
The bullet whines into the air.
Henry Hays pulls a knife. Michael jerks free. He runs. They
chase him. He grabs a fallen tree limb. They knock it away.
Hays has the noose. They wrestle it over Michael's head.
Michael pulls on the rope, running in circles. Knowles holds
the other end and beats him, again and again, with the tree
limb.
Michael collapses.
Henry Hays pushes his boot into Michael's face and pulls
the rope tight.
They drag him through the dirt to the car. They lift him
into the trunk. Knowles asks Hays if he thinks Michael is
dead.
``I don't know,'' Hays replies. ``But I'm gonna make
sure.''
He cuts Michael's throat--three times.
They drive back to Henry Hays' house and throw one end of
the rope over the limb of a camphor tree across the street.
Then they lift Michael by the neck--high enough to swing.
From the porch, the rest of the klansmen can see.
As Knowles steps back up to join them, he feels a friendly
pinch.
``Good job, Tiger.''
In the dead of night, two of the klansmen drive downtown to
the Mobile County courthouse. Out front, they set flame to a
cross. And in the cool of the early morning, the city finds
Beulah Mae Donald's son, hanging from the camphor tree,
bruised, broken, dead.
Despite the rope and the burning cross, the Mobile County
district attorney declares that race--much less the Ku Klux
Klan--does not seem to be a factor in Michael Donald's death.
But the black community calls it a lynching.
Beulah Mae Donald's attorney, state Sen. Michael Figures,
says it is clear to him that, at the very least, white
extremists of some kind are involved.
Whites accuse Figures, who is black, of stirring up racism.
The police investigate, but they do not question the klan.
Instead, they look into a theory that Michael Donald might
have been involved with a white woman at the Press Register
and gotten killed in a love triangle. Than they investigate a
theory that he might have gotten killed in a drug deal. They
arrest three men they describe as junkies. But when the case
goes to a county grand jury, it tumbles apart.
Thousands of blacks march in protest.
All Beulah Mae Donald wants, she says, is ``to know who
really killed my child.''
Michael Figures' brother, Thomas, an assistant U.S.
attorney in Mobile, asks for a second investigation--this
time by a federal grand jury.
And this time, Tiger Knowles cracks.
He plea-bargains. In return for his testimony, Knowles gets
life--and Henry Hays gets death.
There the matter of Michael Donald might remain--but for
the district attorney, who continues to maintain the klan's
innocence. ``I'm not sure this as a klan case,'' the district
attorney says. Rather, he declares, this was a case in which
members of the Ku Klux Klan just happen to have been
involved.
Morris Dees simply does not believe it, and he cannot
ignore it.
From what he can plainly see, Tiger Knowles and Henry Hays
did not act in a vacuum. Dees calls Michael Figures and
suggests that Beulah Mae Donald and the NAACP filed a civil
suit against the United Klans of America, headed by Robert
Shelton, its imperial wizard. Dees proposes to prove that the
killers carried out a policy of violence for which the klan
is responsible--just as a corporation is liable for the
actions of its employees when they carry out its policies.
Although individual klansmen--Tiger Knowles and Henry
Hays--were prosecuted, nobody has ever tried suing United
Klans as a whole for damages. The idea, Dees says, would be
to win a financial judgment large enough to bankrupt it.
Beulah Mae Donald approves.
On her behalf, Morris Dees sues United Klans of America in
U.S. District Court in Mobile for $10 million.
The klan sees trouble.
Even before jury selection, it consents to a broad
injunction against harrassing blacks. Then, as the trial gets
under way, Morris Dees calls Tiger Knowles to testify.
Flanked by federal marshals, Knowles walks into court, pest
Beulah Mae Donald at the plaintiff's table.
Already a turncoat for testifying against Henry Hays, today
he will add to the vengeance the klan feels against him. He
walks past former fellow klansmen, seated at the defense
table. Next to them is Shelton, their imperial wizard. Not a
defendant, he is there as the chief officer of United Klans.
Morris Dees questions Knowles softly, Knowles tells how it
was that Michael Donald died.
``We got the gun,'' Tiger recalls, ``and then later . . . I
tied the hangman's noose in Henry's car.''
Throat cut, face bruised, clothing in disarray, wounds on
the hands. Was that his work?
``Yes.''
Dees holds up a drawing from a klan newspaper edited and
published by Shelton. It shows a black man with a noose
around his neck.
Had Tiger seen the drawing before he killed Michael?
``Yes.''
Had it influenced him?
``Yes, it did.''
Tiger steps down to show how Michael Donald was strangled.
Beulah Mae Donald sobs softly.
John Mays, the klan attorney, asks Tiger if he had heard
Shelton order violence.
No, Tiger replies, but ``he instructed us to follow our
leaders.''
Tiger recalls how Bennie Hays had suggested that if a black
man could get away with killing a white man, then a white man
ought to be able to get away with killing a black man.
``Mr. Hays is who I took orders from . . . He took his
orders from Mr. Shelton. . . .
``All I know is I was carrying out orders.''
Mays concedes that Michael's murder is a ``horrible
atrocity''--but he tries to portray the klan as a political
organization. Shelton tells the jury that white supremacy is
a political goal--nothing more. He says that nothing in the
klan bylaws approves of violence. He says that he does not
advocate violence.
Shelton adds triumphantly: ``I'm not ashamed to be a white
person.''
In America, Mays says, ``we don't punish the organization.
We punish the individuals.''
But Dees counters with a tutorial in klan history. With
testimony from some former klansmen and depositions from
others, he shows how Shelton personally directed the infamous
Mother's Day attack in 1961 on Freedom Riders at the
Trailways bus station in Birmingham; how a United klansman
was convicted of bombing Birmingham's 16th Street Baptist
Church in 1963, killing four black girls as they prepared to
participate in the 11 o'clock service; how four klansmen
killed Viola Liuzzo, a white civil-rights worker, in 1965
after hearing Shelton say, ``If necessary, you know, just do
what you have got to do,'' and how in 1978, just 2\1/2\ years
before Michael Donald was killed, Shelton told a group of
klansmen, ``Sometimes you just got to get out there and stop
them,'' after which the klansmen fired shots into the homes
of blacks, including the state president of the National
Assn. for the Advancement of Colored People.
Ku Klux Klan policy is hardly politics, Dees declares. Make
no mistake, he says, it is violence.
Finally, Dees calls klansman William O'Connor to the stand.
On TV news tape the day that Michael died, Bennie Hays had
been pictured walking up to the camphor tree to look at his
body. O'Connor tells the jury that Hays had said it was ``a
pretty sight.''
Hays, acting as his own lawyer, calls O'Connor a liar. He
says he had no knowledge of any plans to kill Michael
Donald--and that anybody who says anything to the contrary is
lying.
``I have never in my life heard anybody talk about a
hanging,'' he tells the jury. He says lynching talk was a
``no-no'' during klan meetings. And, Bennie Hays says, Henry,
his convicted son, still maintains that he is innocent.
As both sides wind up their cases, Tiger Knowles summons
Morris Dees to his jail cell. Although he has been testifying
for the plaintiffs, Tiger is a defendant--and he wants to
offer a closing statement of his own.
``Say what you feel,'' Dees counsels.
When court resumes, Tiger Knowles, one of the killers of
Michael Donald, stands in front of the jury box.
He won't take long, he says. He knows people have tried to
discredit his testimony, but everything he has spoken is
true. ``I've lost my family, and I've got people after me,''
he says. ``I was acting as a klansman. I hope people learn
from my mistakes, learn what it cost me.''
He turns to the jurors, ``Return a verdict against me,'' he
says, beginning to shake, ``and everything else.''
Then he turns to Beulah Mae Donald. He pauses.
He is in prison for life--but he is alive. Her son is dead.
Trembling, then sobbing, Tiger Knowles apologizes. Jurors are
crying, Judge Alex T. Howard, Jr., wipes his eyes. Tiger
tells Beulah Mae Donald that he has nothing to pay her, but
if it takes the rest of his life
[[Page S6038]] to make amends, he will--for any comfort it
may bring. As for her son, he says, ``God knows, if I could
trade places with him, I would.''
Softly, from her chair, Beulah Mae Donald forgives him.
The members of the jury deliberate for four hours. In the
end, they award her $7 million.
The klan cannot pay. It has nowhere near that kind of
money. So, in addition to a quarter of the wages some of the
klansmen will earn for the rest of their lives, and in
addition to Titan Bernie Hays' house and farm, Beulah Mae
Donald accepts every penny of the several thousand dollars
that the United Klans of America has to its name--and the
deed and keys to its national headquarters.
She shuts it down.
Before, during and after victory, retribution from the klan
and other white racists is a worry for Dees and his staff--
sometimes a big one.
One night in the summer of 1983, a man stops his pickup on
South McDonough Street, not far from an entrance to the
Montgomery city sewer system. Two younger men step out of the
truck. Silently they drop down into the sewer, out of sight.
The older man drives off.
He is Joe Garner, 37, a convenience store operator. The
younger men are Tommy Downs and Charles (Dink) Bailey, both
20, who rent a room from Garner behind one of his stores, out
in the county near Snowdoun. Besides being their landlord,
Garner has become an influence on their lives.
For their mission of the moment, Garner has given Downs and
Bailey a flashlight, a pair of brown gloves, some silver duct
tape, a garden sprayer and a container of gasoline. They
carry these items, in an old canvas bag, down into the sewer.
One block north, on Hull Street, they climb out of the sewer
and slip along Hull to the Southern Poverty Law Center. They
dash into some bushes in back.
Earlier the same evening, Morris Dees has returned to the
law center from northern Alabama, where he gave federal
investigators evidence against members of the Invisible
Empire, Knights of the Ku Klux Klan. This particular arm of
the klan had attacked the president of the Southern Christian
Leadership Conference and other blacks during a civil-rights
march in Decatur, and Dees' evidence--including the
identities of many of the assailants--eventually will lead to
the conviction of several klansmen, including a former grand
wizard.
After the criminal trial, Dees will sue the Invisible
Empire, Knights of the Ku Klux Klan, winning an $11,500
settlement for the marchers and a ban against further
harassment. And--more galling still--he will win a court
decree ordering seven klan members to sit down with civil-
rights leaders, who will teach them race relations.
Hours before Tommy Downs and Dink Bailey arrive at the law
center, Dees and his investigators have locked the front door
and gone home.
Tommy Downs eases out of the bushes. By his signed account
to investigators, he sticks some of the duct tape to a back
window, then taps along the tape with a tire tool. The glass
cracks silently under the tape, and he lifts it out.
He runs back to the bushes and listens for a burglar alarm.
There is none. Someone has forgotten to set it.
Downs fills the sprayer with gasoline. Then he slips
through the broken window. With Dink Bailey standing guard
outside, Downs sprays the carpet with gasoline. He sprays
around the desks and around the filing cabinets, then opens a
few drawers and sprays inside. He lights the gasoline--and
crawls back outside.
Downs and Bailey run along Hull Street and climb back down
into the sewer. They wait.
A smoke detector alerts the fire department. From an
opening in the sewer, Downs and Bailey watch as fire trucks
and police arrive. Then they duck down and make their escape.
At the law center, the gasoline vaporizes quickly, and the
fire follows the vapor straight up. It scorches the carpeting
and the file cabinets and causes $140,000 worth of damage to
the walls, frame and ceiling. But virtually all of Dees'
evidence against the klan--in the file drawers--survives.
When Dees arrives, the fire is still burning. On the wall,
the law center clock is melted to a halt: 3:48 a.m.
Morris Dees has a hunch.
About a month before, he remembers, he had summoned Joe
Garner to the law center for a deposition in the Decatur
case. Garner had denied being a klan member--but Joe Garner
sounded like someone who might carry a grudge, even against
being questioned.
Dees checks into Garner's background--and into the past of
his two renters. He discovers that when Tommy Downs moved
from a previous address, he left behind a certificate that
declared him to be a member of the klan. And the klan
certificate is signed by none other than Joe Garner.
Within weeks, a law center investigator finds, a photo
showing Tommy Downs marching at a klan rally--and Joe Garner
marching in front of him. Both are wearing klan robes. On the
arm of Garner's robe, just above the wrist, are the stripes
of an exalted cyclops.
Dees brings the certificate and the photo to the Montgomery
County district attorney.
The district attorney summons Tommy Downs before a grand
jury and points out that lying could mean jail for perjury.
Downs begins to cry. He confesses that he torched the
Southern Poverty Law Center. It was Joe Garner, he says, who
wanted it done--to destroy all of Dees' evidence against the
Ku Klux Klan. And Tommy Downs reveals that Joe Garner has
more in mind.
He wants to blow up downtown Montgomery.
Civil-rights leaders are planning a march. Downs says
Garner wants to plant dynamite in the sewers beneath the
streets--and touch it off as the civil-rights leaders pass
overhead. The district attorney investigates--and finds 123
7-ounce sticks of dynamite and 8 pounds of plastic explosive.
That, says a bomb expert with the Alabama Department of
Public Safety, is enough to destroy an entire city block.
In addition, Downs says, Garner wants to set explosives on
Morris Dees' car and blow it up one day when Dees drives to
work.
The authorities arrest Joe Garner. He, Downs and Bailey
plead guilty to a variety of state and federal charges. Joe
Garner is sent to federal prison for 15 years. Downs and
Bailey get lesser sentences.
Often, retribution is aimed solely at Morris Dees.
In one of his early fights, he wins a court order ending
harassment of Vietnamese fishermen along the Texas Gulf
Coast. The order is against a group of Texas fishermen--and a
band of klansmen headed by Louis Beam, the Texas grand dragon
of the Knights of the Ku Klux Klan.
Worse for the Knights, Dees wins a second court order that
disbands Beam's Texas Emergency Reserve--a group of
paramilitary klansmen organized into what amounts to a
private army. During the legal proceedings, Beam calls Morris
Dees an Antichrist Jew and holds out a Bible and cross to
exorcise his demons.
And Louis Beam never forgets his humiliating defeat.
He leaves Texas and goes to Hayden Lake, Ida., where
Richard Butler heads the Aryan Nations, an umbrella group of
hard-core white racists. From Hayden Lake, Louis Beam writes
to Dees and challenges him to a ``dual [sic] to the death--
you against me. . . .
``If you are the base, despicable, lowdown, vile poltroon I
think you are--you will of course decline, in which case my
original supposition will have been proven correct, and your
lack of character verified . . .'' Beam writes, ``Your
mother--think of her, why I can just see her now, her heart
just bursting with pride as you, for the first time in your
life, exhibit the qualities of a man and march off to the
field of honor. (Every mother has a right to be proud of her
son once). . . .''
When he gets no reply, Beam goes to Montgomery. He meets
with Joe Garner, who has just come under investigation for
the law center fire. An FBI report, recounting an agent's
interview with Garner, says that Beam tells Garner he thinks
Dees is ``scum.''
According to the report, Garner introduces Beam to one of
Dees' cousins--who does not like Morris Dees and shows Beam
where Dees lives. The report says Beam videotapes Dees'
property, including details of his home. Then Beam talks his
way into the lobby of the Southern Poverty Law Center. An
investigator throws him out.
At about the same time, another white supremacist who
frequents the Aryan Nations compound in Idaho takes up what
is now becoming a growing cause: killing Morris Dees.
He is Robert Mathews, who organized the Order, which seeks
to wrest large portions of the United States away from its
``Zionist Occupied Government,'' and to establish a nation
for whites only. The Order has in mind banning all other
races, whom it calls ``God's mistakes''--and it wants to kill
all Jews, whom it considers the seed of Satan.
Mathews formulates six steps to accomplish this. Step Five
is the assassination of ``racial enemies''--and Dees in at
the top of Mathews' hit list.
After a stop in Denver, where he and his men kill Alan
Berg, a radio talk-show host who likes to bait racists,
Mathews heads south. A resident of Birmingham who belongs to
the Aryan Nations says Mathews asks him to gather all the
information he can on Dees--but he refuses because he does
not want to become involved.
Finally, Mathews tries to send a confederate, who is
actually an FBI informant, south to finish Dees off.
The informant says that Mathews orders him ``to kidnap
[Dees], torture him, get information out of him, kill him,
then bury him in the ground and put lye on it.''
Within days, the FBI surrounds Mathews' hide-out on Whidbey
Island in Puget Sound in Washington state. The FBI wants
Mathews for a variety of crimes that include the slaying of
Alan Berg and the $3.8 million robbery of a Brinks truck to
finance the Order's incipient white racist revolution.
On Whidbey Island, Mathews and the FBI shoot it out. Night
falls. It is a standoff. FBI agents fire flares. The flares
ignite Mathews' house, and he is burned to death.
One of the last of his men to be captured is Bruce Pierce,
fingered by others as the Alan Berg triggerman.
FBI agents arrest him in Rossville, Ga. In his van, the
agents find cash, weapons and several news articles,
including one about Morris Dees.
[[Page S6039]] The next day, agents stop Pierce's wife. She
is in Dees' state--Alabama. In her trailer, the FBI finds
nine weapons and several books:
``Hit Men: A Technical Manual for Independent
Contractors.''
``Assassination: Theory and Practice.''
Volume 1-5 of ``How to Kill.''
In August, 1989, the FBI opens an investigation into
information from Georgia that some klansmen are yet again
plotting to kill Morris Dees.
The information comes as Dees takes legal steps to collect
a judgment he won for 75 civil-rights marchers attacked by
the klan in Forsyth County, Ga., two years ago.
The judgment totaled $1 million. It was a crushing blow to
both the Invisible Empire and the Southern White Knights.
``We think,'' Dees says, ``it got them riled up.''
More people are likely to get riled up as Morris Dees moves
against Tom Metzger and his White Aryan Resistance.
Metzger, 51, is a one-time member of the John Birch Society
who became the California grand dragon of the Knights of the
Ku Klux Klan. As a klansman, he ran for Congress in 1960 from
California's 43rd District. It reaches across northern and
eastern San Diego County, Imperial County and part of
Riverside County.
In the 1980 primary election, Metzger attracted 33,071
vote--enough to win the district's Democratic congressional
nomination.
Although he ultimately got swamped, his primary election
success gave him what he called ``great exposure.'' In 1982,
he ran unsuccessfully for the U.S. Senate--then founded the
White Aryan Resistance.
Today Tom Metzger, a TV repairman, runs the White Aryan
Resistance from Fallbrook, in San Diego County. He is the
host of ``Race and Reason,'' a TV interview program available
to subscribers on more than 50 cable systems in at least a
dozen states. The White Aryan Resistance publishes a
newspaper. Metzger is linked by computer to white
supremacists across the nation.
Like members of the Order, Metzger has held to racist
tenets over the years, including the belief that non-whites
are ``God's mistakes'' and that Jews are the progency of
Satan.
Metzger has a 21-year-old son, John, who heads his youth
recruitment. John Metzger runs an organization known as the
White Student Union, the Aryan Youth Movement, the WAR Youth
or the WAR Skins.
As the latter name implies, the Metzgers are hospitable to
skinheads, young thugs who shave their skulls and favor
military-style clothing. Skinheads strut about in heavy boots
with steel toes, known as Doc Martens--and they sometimes
carry clubs. Often the clubs are baseball bats. Tom Metzger
supplies the skinheads with his White Aryan Resistance
newspaper. Its comics feature the killing of blacks and Jews.
In a lawsuit filed in October, Dees and lawyers for the
Anti-Defamation League of B'nai B'rith accuse Tom and John
Metzger of sending agents to Portland, Ore., to organize and
guide a particular group of skinheads called the East Side
White Pride. ``The agents reported regularly to . . . [the
Metzgers] concerning their organizing efforts,'' the suit
says. ``The agents also urged . . . [the skinheads] to call .
. . Tom Metzger's telephone hot line to receive aid,
encouragement and direction.''
One night a year ago, the suit says, Metzger's agents and
the East Side White Pride held an organizational meeting of
particular interest. ``At that meeting,'' according to the
suit, ``the agents . . . in accordance with the [Metzgers]
directions . . . encouraged members of the East Side White
Pride to commit violent acts against blacks.''
And on that same night, in southeast Portland, two friends
drop off Mulugeta Seraw, 28, a black Ethiopian immigrant, in
front of his apartment.
It is 1:30 a.m. Seraw works for Avis Rent-A-Car at the
Portland airport. He sends money home to his parents, a son
and five brothers and sisters in Ethiopia, where he hopes to
return after attending Portland State University. Mulugeta
Seraw goes to work at 7 a.m. Bedtime is long past.
He does not make it to his door.
Three skinheads attack him. One has a baseball bat.
Mulugeta Seraw's two friends, also black jump from their
car. They are beaten back.
``Kick them!'' scream two teen-age girls, watching nearby.
``Kill them!''
Three minutes later, Seraw is lying in the street,
bleeding, broken.
Neighbors call the police. Mulugeta Seraw is taken to a
hospital. Doctors pronounce him dead.
Working with descriptions provided by witnesses, police
track down Kenneth Mieske, 23, a performer of ``hate metal''
rock music who uses the name Ken Death; Kyle Brewster, 19,
and Steven Strasser, 20. All are members of the East Side
White Pride.
Mieske pleads guilty to murder and Brewster and Strasser to
manslaughter. Mieske gets a life sentence, which carries
mandatory imprisonment of 20 years. Brewster gets a 20-year
sentence, with a minimum of 10 years' imprisonment. Strasser
plea-bargains for a sentence of 9 to 20 years.
In their lawsuit, filed on behalf of Mulugeta Seraw's
uncle, Engedaw Berhanu, who is the executor of his estate,
Dees and the Anti-Defamation League charge the Metzgers,
their White Aryan Resistance and skinheads Mieske and
Brewster with wrongful death and conspiracy to violate
Seraw's civil rights.
``The actions of the Oregon defendants in attacking Seraw
were undertaken pursuant to the custom and practice of the
defendant WAR of pursuing its racist goals through violent
means,'' the suit says. Moreover, it says, the actions were
undertaken `'with the encouragement and substantial
assistance of the California defendants.''
Without specifying an amount, Dees and the Anti-Defamation
League ask for punitive and compensatory damages to punish
the Metzgers and to deter ``further outrageous conduct of
this kind.''
Legally, this lawsuit is similar to the lawsuit in which
Beulah Mae Donald won the last pennies in the coffers of the
United Klans of America and the keys to its headquarters. And
this is just what Morris Dees and the ADL have in mind.
But unlike the United Klans of America, Tom Metzger says,
he will win. ``They lost more because of the UKA's
incompetence than anything else,'' Metzger says. ``And
because the UKA failed to appeal.
``There is absolutely no basis for this suit,'' Metzger
says. ``I don't have agents. We are not into telling anybody
to go down out on the streets and get anybody and beat on
them. Anybody who says that my son or I have said that is
lying.''
About his chief adversary, Metzger says: ``Morris Dees is a
clever fellow, and he's had some success. So we don't take
this lightly.
``But I am not exactly a pushover, either.''
For his efforts. Morris Dees gets awards--from civil-rights
groups, Common Cause, bar associations and the like. But he
also gets criticism--from writers in magazines such as the
Progressive and the Other Side, a liberal publication that
prints a giver's guide to charitable foundations.
The criticism focuses on the Southern Poverty Law Centers
focuses on the Southern Poverty Law Center's $27-million
endowment and its $3-million annual budget. The center has a
stylish new building. Wags call it the Poverty Place. When
Dees and the center attack racists, these critics say, they
attack a foe who is no longer an important threat--but they
do it anyway to improve donors and make the center's
endowment grow.
Dees makes no apology for resources. It takes money, he
says, to win lawsuits--and to provide the security that the
center and its four lawyers need.
And certainly, Dees says, the klan is not the threat it
once was. His own experts at the law center say that klan
membership is down to one of its lowest levels in history.
Credit goes to good times economically. In bad times, poor
whites tend to take out their frustrations on blacks. Credit
also goes, the experts say, to police work--as well as to
antiklan groups.
So why does Morris Dees keep on doing what he does?
He is a multimillionaires. He does not need his law center
salary of $79,600--more than what many of the 35 members of
his staff earn, but less than the six-figure salary his top
staff attorney makes.
Why does he keep putting himself in bam's way?
He leans back, crosses a soakless loafer over one knee and
pauses.
First, the threat of racist terror may have eased some, but
it has not ended. ``If you don't think skinheads are any
threat, then go ask the Seraws if their son is alive.''
Second, he has always liked a good fight, ``I've had my ass
whipped, and I've whipped a few. . . . We absolutely take no
prisoners. When we get into a legal fight, we go all the way.
. . . Ever since I've been a kid, I've always liked a good
challenge.''
Third, although he was raised a Baptist, he feels a kinship
with Jews. ``My middle name is Seligman, and my family may
have some Jewish connections. . . . You know, years ago,
nobody took the threat to the Jews seriously. I am not saying
that Louis Bearn and his crowd will duplicate what happened
in Nazi Germany. I would think that this country is quite
different. But I do see it as just a personal responsibility
to do what I can to stop just a little bit of this happening
right here. . . . And with the legal training I've got and
what we've put together here, we're in a unique position to
do it. . . .
Like Morris Dees daddy, when he took Perry Lee's hoe. . . .
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, I yield 7 minutes to the Senator from
Nebraska.
The PRESIDING OFFICER. The Senator is recognized.
Mr. EXON. Mr. President, I am pleased to be an original cosponsor and
leading Democratic advocate for the Dole amendment to limit punitive
damage awards in civil liability cases.
As a former small business person, I understand the need for
businesses to plan for contingent liabilities. The litigation explosion
since the 1970's when I left the private sector and entered public life
has made the job of running a small business more difficult today than
it was when my wife and I started our own successful small business.
The Dole amendment will restore some degree of certainty to business,
personal and charitable risk management and
[[Page S6040]] planning; all of which help facilitate commerce in this
great Nation.
Punitive damages are a wild card in today's legal system. These
awards are unpredictable, unrelated to the level of harm caused by a
defendant and potentially they are unlimited. A particular injury, a
particular lawyer, and a particular jurisdiction can mean a big
recovery for the plaintiff and his lawyer and the end of business for
the unlucky defendant.
The real cost of the current system is not only measured in the
number of punitive awards won, but also the legal cost of defending
against such suits, as well as the increased insurance and product
costs for all Americans.
Certainly, no one wants to create a legal system which will encourage
wrongdoing or careless behavior. The problem is that the relationship
between punitive damage awards and safe behavior is not proven. One
could argue that the current punitive damages system creates a bounty
for the litigators to hunt for the right combination of facts, law,
jury, and injury.
This uncertainty has led honest business people to settle even
unworthy cases in order to avoid risking a spin at litigation and the
roulette wheel mentality that goes with it.
The greatest expense of the current uncertainty is the contempt it
generates from average citizens. They hear about unexplainable cases
involving cups of hot coffee, or spilled milk shakes and their faith in
the legal system is shaken. Our hallowed courts could some day take on
the image of a legal casino.
A handful of States, including the State of Nebraska, do not even
permit punitive damages. In the State of Nebraska the total absence of
punitive damages has not created an unsafe environment or careless
manufacturers or increased wrongful conduct. What the State of Nebraska
does have are insurance rates which are more affordable to all
citizens.
Under the Dole amendment, States which want to keep punitive damages
can continue to have such a system, if that is their will. In those
States, punitive damages would simply need to be related to the actual
compensatory damages suffered by an injured party. Nothing in this
amendment would require States to adopt punitive damage systems.
Mr. President, I am pleased to cosponsor and support the Dole
amendment. To those who predict the end of American jurisprudence, I
say come to Nebraska, Washington, or other States where punitive
damages are not part of the State's legal system. You will see a high
quality of life, affordable cost of living, and court systems a little
less jammed with frivolous lawsuits.
Although not as dramatic as the course chosen by the State of
Nebraska, I am confident that the Dole amendment is a step in the right
direction to restore a degree of confidence and predictability to our
legal system.
I thank the Chair. I thank my friend from Washington for yielding. I
yield any remaining time of the 7 minutes originally allotted to this
Senator.
Mr. GORTON. Mr. President, I yield 5 minutes to the Senator from
Utah.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I want to pay tribute to the distinguished
Senator from Nebraska for his fine statement and for his support of
this amendment on this floor. I think many people in this country are
grateful for his leadership in this matter.
Let me spend a few seconds on some of the comments made by one of my
dear friends, Senator Heflin, when he was here. He made reference to
what evidence may be inadmissible in the compensatory damages phase of
the trial.
It must be emphasized that the evidentiary restrictions on the Dole-
Exon-Hatch amendment are based on State law. The relevant language is
section 107(d)(1).
Evidence relevant only to the claim of punitive damages, as
determined by applicable State law, shall be admissible to
determine whether compensatory damages are to be awarded.
Whether particular evidence is admissible or inadmissible,
therefore, depends on the facts of the case and the law of
the State in which the action is brought. Moreover, if
evidence is relevant only to punitive damages, there is no
reason to object to excluding it in the compensatory damages
case, and indeed such exclusion accords with the traditional
rule . . . that irrelevant evidence is inadmissible.
I must mention that bifurcated proceedings in punitive damages cases
are required or permitted under current law in almost all jurisdictions
that permit claims for punitive damages.
Let me turn to the Dole-Exon-Hatch amendment. Naturally, I support
this amendment. It is an amendment worthy of adoption. Unlike the Dole
amendment, several other amendments have been offered that, in my view,
weaken our efforts to reform punitive damages abuses. Thus, I cannot
support those weakening amendments such as an amendment to remove
limits on the award of punitive damages.
Yesterday I came to the floor and spoke at
length about curbing the abuses in our punitive damages laws and the
need for meaningful reform in this area. I would like to consider
another example of out of control punitive damages and their impact.
Consider the case of Sherridan v. Northwest Mutual Life Insurance, 630
So. 2d 384 (Ala. 1993). The insurance company in this case undertook a
background check and numerous interviews of a person who became an
agent for the company.
Moreover, in that case, the company, once it became aware that its
agent had defrauded some policyholders, arguably did everything it
could to rectify the situation. In fact, it was Northwestern Mutual
that first notified the plaintiffs that payments made to an agent to
pay for life insurance premiums were retained by him. The agent fled
after he was confronted by the company. The company then offered to
refund money with 10-percent interest and to reimburse them for any
fees and expenses they may incur related to the money taken by their
agent. The company appeared to do everything it possibly could do to
make the victims whole for any and all loss.
Despite their effort to screen out wayward job applicants and a good
faith effort to resolve this most unfortunate incident, the company was
ultimately sued for compensatory and punitive damages. I should also
mention that the policyholders, owners of a small business, whose
original loss was $9,000, were the only policyholders out of 40 who
held out and sued, rather than settle the case. Reportedly, at trial
there were many repeated and exaggerated references to the wealth of
the company, yet the jury was not allowed to hear of Northwestern
Mutual's efforts to resolve the claim.
The Alabama jury--again an Alabama case, a State where tort law seems
to be running out of control--awarded the plaintiff $400,000 in
compensatory damages and $26 million in punitive damages. The Alabama
Supreme Court reduced the punitive award to $13 million.
So they have the award. They are prone to do this.
Now let us think seriously about this case. The owners of a small
automotive business were defrauded of $9,000 and, in response, the
courts turned these individuals into multimillionaires. How anyone can
defend a system that would allow such an injustice is beyond me. It
really requires some world class rationalization.
Our legal system is in danger of losing all credibility in the eyes
of the public as an institution where justice is served. It is unfair
to American business, to American consumers, and the American public.
Look. The people who are benefiting primarily by these types of
outrageous awards and by the lack of restraint in this area are
attorneys. Not all attorneys, however, should not be maligned because
of these abuses by a few trial lawyers. Our profession is being hurt by
trial lawyers who want to win it all at all costs, who will win at all
costs, who are buying judges, who are influencing judges by
contributions and who literally are denigrating the whole legal
profession.
A competent lawyer can still win big damage awards by getting good
economic damage awards and good noneconomic damage awards. A good
lawyer does not need to allege and recover punitive damages to serve
his client well. In fact, when I practiced law up to 19 years ago, we
used to get big awards for both economic and noneconomic losses.
Let me just say this: There is plenty of room to recover a
significant damage award by arguing persuasively and doing a competent
job as a trial attorney. We do not need to have runaway
[[Page S6041]] juries and runaway courts of law and runaway attorneys
upping runaway punitive damage awards. These abuses are what we are
trying to correct here through our amendment. Punitive damages needs to
be corrected because our country is being dislocated by these out-of-
control approaches to the law.
So I hope that our colleagues will vote down some of these
amendments. I hope that they will vote for this Dole-Exon-Hatch
punitive damages amendment. I think that it will correct some of the
difficulties of our current system, while at the same time provide for
a continuation of good, fair, reasonable laws in our country.
Keep in mind, this judgment affects policy holders and insurance
rates throughout the country, not just in one state. While this case
arose in Alabama, the cost of these excessive judgments are passed on
to all its customers throughout the United States.
Moreover, the very fact that a jury could award such an outrageous
amount of punitive damages cannot go unnoticed by those who make and
sell goods and services in this country. An award like this adds to the
overall litigation climate in this country. It fuels the understandable
perception that the system is a lottery with more and more jackpots.
And those who can get socked with such awards by run away juries have
to take that into account as they price their goods and services--to
the detriment of consumers.
Mr. President, I have heard a number of my colleagues who are opposed
to punitive damage reform claim that there is no increase in reported
punitive damage awards, and thus no need for reform. The figure they
repeatedly cite is a figure from one study that found 355 punitive
damage awards granted by juries in product liability cases in the
period 1965-90. On that basis, they claim that there is no problem with
punitive damages in this country and that, consequently, no legislative
solution is required.
This could not be further from the truth. I have been well aware of
that study, as have many others. However, what I have learned in
studying punitive damages, and in listing to experts testify at
hearings I chaired in the Judiciary Committee is that no one has a
precise handle on the number of these awards. That data is simply not
available. In fact, those who cite to the study seem to have missed an
enlightening statement on the second page of that study. On that page,
it is acknowledged:
The actual number of punitive damage awards in product
liability litigation is unknown and possibly unknowable
because no comprehensible reporting system exists. [See
Michael Rustad, ``Demystifying Punitive Damages in Product
Liability Cases'' (1992), at p. 2.]
In addition, testimony in the Judiciary Committee by Victor Schwartz
indicated that other research demonstrated that, in just 5 States since
1990, 411 jury verdicts have awarded punitive damages. Punitive damage
awards are certainly more frequent than opponents of this measure are
willing to admit. And, of course, the Dole amendment covers all civil
actions. There have also been a number of punitive damages awards
outside the product liability context.
Perhaps what is by far the most important factor to keep in mind,
however, is that excessive punitive damage awards have a harmful effect
regardless of the number of reported cases on punitive damages. The
number of reported cases bears no relationship to the detrimental
impact of punitive damages because most cases are settled before trial.
A mere demand for punitive damages in a case raises the settlement
value of the underlying case and delay settlement.
The end result is that plaintiffs' trial lawyers begin to include
exorbitant requests for punitive damages in the most routine cases.
Data presented to the Judiciary Committee by Prof. George Priest, of
Yale Law School, showed that in certain counties in Alabama between 70
and 80 percent of all tort cases filed include a claim for punitive
damages. Unfortunately, using punitive damage claims as a threat in
litigation is incredibly commonplace.
The allegation of punitive damages makes settlement nearly impossible
because it is difficult to place a value on the claim for punitive
damages. It also makes the prospect of a huge loss a real risk for
defendants. That artificially inflates the cost of settlement.
Further, liability insurance costs in turn must rise. The bottom line
is that these costs are passed on through the economic system, where
consumers and workers ultimately pay the price. That occurs regardless
of the precise number of punitive damage awards that juries in fact
granted in any particular period.
I also urge my colleagues to support Senator DeWine's amendment to
offer small businesses some further protection against punitive
damages. In my view, small businesses are the engine that drive our
economy and provide much of our new employment opportunities. They
truly deserve our support. Many small business owners are forced to
live in constant fear of losing their entire investment and livelihood
as a result of one lawsuit. That fear puts an enormous strain on their
businesses, and more importantly, on the lives of their family members.
This amendment offers our small business some modest relief from
abusive claims.
Finally, I had intended to offer an amendment concerning the
important issue of multiple punitive damage awards. I will pursue that
issue on another day.
the multiple punitive damages problem
Mr. HATCH. Mr. President, I rise today to discuss one of the most
serious problems facing our civil justice system today--the imposition
of multiple punitive damage awards against a party for the same act or
course of conduct. The multiple imposition of punitive damages is
simply unfair and undermines the public's confidence in our system of
civil justice. Earlier this year, I introduced the Multiple Punitive
Damages Fairness Act, S. 671, which addresses the fundamental
unfairness of a system that allows a person to be sued again and again,
sometimes in different States, for the same wrongful act. I had
intended to offer the substance of my legislation as an amendment to
the Products Liability Act, but have decided to withhold my amendment
at this time.
Punitive damages, as we are all aware, are not awarded to compensate
a victim of wrongdoing. These damages constitute punishment and an
effort to deter future egregious misconduct. Punitive damage reform is
not about shielding wrongdoers from liability, nor does the multiples
bill prevent victims of wrongdoing from being rightfully compensated
for their damages.
The people of Utah and the rest of the Nation have known for a long
time that our system of awarding punitive damages is broken and in need
of repair. State and Federal judges have repeatedly called upon the
Congress to address this important issue. The American Bar Association
House of Delegates, in a resolution approved in 1987, called for
appropriate safeguards to prevent punitive damages awards ``that are
excessive in the aggregate for the same wrongful act.'' Although their
recommendation suggests this action should be taken at the State level,
there is no practical way to implement meaningful reform addressing
multiple awards at the State level. The multiple imposition of punitive
damages is one area where a Federal response is clearly justified.
Likewise, the American College of Trial Lawyers, a group comprised of
both plaintiff and defense counsel, in a strongly worded report on
punitive damages discussed the problems associated with the multiple
imposition of punitive damages for both plaintiff and defense counsel.
They wrote:
From the Defendant's standpoint, there is a very real
possibility that the punitive awards will be duplicative and
therefore result in punishing the defendant more than once
for the same wrongful conduct. This obviously offends basic
notions of justice. Conversely, a plaintiff runs the risk
that prior awards may exhaust the defendant's resources, and
that, not only will there be insufficient funds from which to
pay the plaintiff's punitive award, but the funds will be
inadequate to pay a compensatory award.
More recently, Judge William Schwarzer, Director of the Federal
Judicial Center, wrote abut the problems with multiple punitive
damages. He concluded: ``Congress needs to adopt legislation that
creates a national solution, invoking its power over commerce. The
repeated imposition of punitive damages for the same act or series on a
firm engaged in interstate commerce surely constitutes a burden on
interstate commerce.''
[[Page S6042]] Let me be very clear about what this amendment does.
This amendment does not in any way affect a person's ability to be
fully compensated for their economic and noneconomic damages. A
plaintiff remains entirely able to recover their full compensatory
damages if this amendment is enacted. Likewise, this amendment does not
in any way limit the amount of punitive damages that may be awarded
against a defendant.
Judge Friendly, a highly respected circuit court judge, first
recognized the difficulties of the multiple imposition of punitive
damages in several States in a 1967 opinion, Roginsky v. Richardson-
Merrell, [378 F.2d 832 (2nd Cir.)] where he wrote:
The legal difficulties engendered by claims for punitive
damages on the part of hundreds of plaintiffs are staggering.
If all recovered punitive damages in the amount here awarded
these would run into the tens of millions. . . . We have the
gravest difficulty in perceiving how claims for punitive
damages in such a multiplicity of actions throughout the
nation can be so administered as to avoid overkill.
My amendment goes to the heart of the fundamental unfairness so
eloquently described by Judge Friendly.
The defendant and consumers are not the only ones hurt by excessive,
multiple punitive damage awards. Ironically, other victims that the
system is supposedly intended to protect, may be most seriously
impacted by multiple punitive damage awards that precede their case.
Funds that might otherwise be available to compensate them for their
compensatory damages can be wiped out at any early stage by excessive
punitive damage awards.
As mentioned, safeguards are needed to protect these later victims
against the abuses inherent in the early award of multiple punitive
damages. The conflict between current litigants seeking punitive
damages and potential litigants seeking merely compensatory damages was
addressed in a recent case, Edwards v. Armstrong World Industries, [911
F.2d 1151 (5th Cir. 1990)]. In that case, the court reluctantly
affirmed a lower court decision awarding punitive damages explained its
misgivings in the decision:
If no change occurs in our tort or constitutional law, the
time will arrive when Celotex's liability for punitive
damages imperils its ability to pay compensatory claims and
its corporate existence. Neither the company's innocent
shareholders, employees and creditors, nor future asbestos
claimants will benefit from this death by attrition.
Incidently, just 1 month after Judge Jones wrote those words,
Celotex, already liable for $33 million in punitive damages, and faced
with a potential quarter of a billion dollars in additional punitive
damages as the result of an ongoing trial involving 3,000 additional
claims, in which it had been decided that punitive damages would be
calculated at two times the amount of compensatory damages, Celotex
filed for bankruptcy protection under chapter 11, where it remains
today.
Let me give another example that illustrate several of the concerns
with multiple punitive damages. The Keene Corp. also illustrates how a
company can be hit with so many punitive damage suits that they
eventually declare bankruptcy.
In the late 1960's, the Keene Corp. purchased a subsidiary company
for $8 million. Unfortunately, the subsidiary had made thermal
insulation that contained about 10 percent asbestos. When the asbestos
danger came to light in 1972, Keene closed the subsidiary. The company
has only sold about $15 million in products while they owned the
subsidiary.
From 1972 onward, Keene has had 50 punitive damage verdicts returned
against it. Most of these verdicts involve claimants who were exposed
to asbestos 25 years before the Keene Corp. was formed. The Keene Corp.
has paid out over $530 million in damages as a result of that purchase,
much of it to lawyers, and it still faces numerous lawsuits.
Ultimately, Keene was forced into bankruptcy just last year. And, as
a result, victims who might have been entitled to receive compensatory
damages may be left out in the cold. Keene filed papers in every case
that asked for punitive damages, calling on the courts to disallow
further awards since they no longer served any deterrence value or
public policy purpose.
Obviously, the multiple imposition of punitive damages for Keene's
wrongful conduct served no legitimate purpose. The company had already
stopped selling the alleged harmful product and the $530 million paid
out in damages was surely a sufficient punishment and deterrent.
This imposition of multiple punitive damages awards in different
States for the same act is an issue that can only be addressed through
Federal legislation and, thus, necessitates a congressional response.
State and Federal judges have no authority to address the clear
inequities confronting these defendants. In Juzwin v. Amtorg Trading
Corp., [718 F. Supp. 1233, 1235 (D.N.J. 1989)], the court vacated its
earlier order striking, on due process grounds, the multiple imposition
of punitive damages. In arriving at this decision the court noted:
[T]his court does not have the power or the authority to
prohibit subsequent awards in other courts. . . . Until there
is uniformity either through Supreme court decision or
national legislation this court is powerless to fashion a
remedy which will protect the due process rights of this
defendant or other defendants similarly situated.
Let me remind my colleagues that it is the courts, and not just
private interests, that are calling for reform of multiple punitive
damages.
My legislation addresses precisely the problems inherent in a system
that allows every State to punish a defendant separately for the same
wrongful act or conduct. More important, it is straightforward and
simple. The legislation prohibits the award of multiple punitive
damages based on the same act or course of conduct for which punitive
damages have already been awarded against the same defendant.
This legislation also allows some flexibility. It allows some
discretion to the court to allow subsequent cases to proceed to the
jury on the issue of punitive damages, if there is new and substantial
evidence that justifies the imposition of additional such damages, or
if the first award was inadequate to punish and deter the defendant or
others.
Under the first exception, if the court determines in a pretrial
hearing that the claimant will offer new and substantial evidence of
previously undiscovered, additional wrongful behavior arising out of
the same course of conduct on the part of the defendant, other than
injury to the claimant, the court may let the jury decide to award
punitive damages.
The second exception included in this amendment was not contained in
S. 671. This exception gives the court discretion to determine in a
pre-trial proceeding whether the amount of punitive damages previously
imposed, was insufficient to either punish the defendant's wrongful
conduct or to deter the defendant or others from similar behavior in
the future. If, after a hearing, the court makes specific finding that
the damages previously imposed were not sufficient to punish or deter
the defendant or others, the court may permit the jury to make an
additional award of punitive damages. In both instances, the judge will
deduct the amount of the prior award from the award in this subsequent
case.
Moreover, my legislation will not preempt State law where a State
prescribes the precise amount of punitive damages to be awarded. Thus,
if a State desires to fix the amount of punitive damages for a specific
egregious act, they may do so under my amendment. Likewise if a State
desires to make an award of punitive damages proportional to the
compensatory damages awarded, they may do so through State legislation.
This provision is intended to preserve the discretion of States to
legislate on this aspect of punitive damages in this limited fashion.
Finally, my legislation makes it clear that a defendant's act
includes a single wrongful action or a course of conduct by the
defendant affecting a number of persons. In applying this act, the
phrase ``act or course of conduct'' should be interpreted consist6ent
with our legislative objective of eliminating multiple punishment for
what is essentially the same wrongful behavior.
I have looked at the problem of multiple punitive damages for some
time and have concluded that a federal response is the only way of
effectively addressing this issue. My legislation is a small step in
addressing the larger problem of excessive punitive damages,
[[Page S6043]] but a needed beginning. I hope Senators join me in
supporting this important legislation. It allows the unfettered
imposition of punitive damages by a jury to punish and deter those who
offend our community. However, with limited exception, we punish the
defendant only once for his misconduct. I believe this is a fair way to
proceed on this issue.
Mr. HEFLIN addressed the Chair.
The PRESIDING OFFICER (Mrs. Hutchison). The Senator from Alabama.
Mr. HEFLIN. Madam President, how much time is remaining on our side?
The PRESIDING OFFICER. Eleven minutes.
Who yields time?
The Senator from Alabama.
Mr. HEFLIN. Madam President, again, let me address some of the things
that I think have escaped the attention of people--the
interrelationship with the Dole amendment and the underlying bill, the
underlying Gorton substitute--which deal with the issue pertaining to
the calculation on each defendant of the noneconomic damages, and then
its relationship to the Snowe amendment which basically sets the cap on
punitive damages at twice the noneconomic damages, and the economic
damages.
The underlying bill and the Dole amendment provide for a bifurcated
trial--that is, two--where punitive damages are sought. If punitive
damages are sought, then any--and I read from the Dole amendment, which
is the exact language as in the bill --
. . . evidence relative only to punitive damages as
determined by applicable State law shall be inadmissible in
any proceedings to determine whether compensatory damages are
to be awarded.
Compensatory damages include noneconomic damages so therefore you
cannot prove gross negligence; you cannot prove recklessness; you
cannot prove wantonness; you cannot prove intentional conduct
pertaining to the compensatory damage trial. The Dole amendment
includes all civil actions, including automobile accidents that I
talked about. It would also include this matter of the issue pertaining
to rental cars.
Take, for example, a company decides there is need of a recall of
certain cars, and therefore in the recall of those cars there is an
immediate danger. But they continue to lease those cars. Then, in
effect, you could not prove it where you sought also punitive damages.
Now, the noneconomic damages as it relates to section 109, which is
several liability for noneconomic damages, provides, and I read:
Each defendant shall be liable only for the amount of
noneconomic loss allocated to defendant in direct proportion
to the percentage of responsibility.
For the harm, in other words, the percentage of fault. Therefore, if
you seek punitive damages, then under the underlying bill and the Dole
bill, you cannot prove in the compensatory damage lawsuit in the trial
in chief those elements of fault which constitute elements that would
go to the proof of punitive damages. You are precluded. It is
inadmissible.
So how can you prove the percentage of fault that may rest on
defendants that have been guilty of punitive damage conduct,
wantonness, conscious, flagrant indifference? How can you prove that
and how can there be any logical sense way of determining what the
noneconomic loss is? And in its relationship here, it makes it an
impossibility. Therefore, when it comes to the case, as I pointed out,
of a motor vehicle, where the company knew that the man had been
convicted of four drunk driving charges, two reckless driving charges,
and they continued to allow him to operate and drive trucks, you could
not prove any of that in the case in chief. Therefore, you could not go
toward the establishment of the percentage of harm of noneconomic
damages towards that defendant.
And then in the punitive damages, it can only be twice the amount
that might be allocated to him in the overall situation.
So it seems to me that the relationship of this and the punitive
damages, particularly with the Snowe amendment really, have so many
consequences. I have just thought of a few. There are a multitude of
consequences that occur relative to this matter.
So I wish to point out that this is a situation which ought to be
carefully considered, and I just do not believe even the authors of the
bill and the authors of the Snowe amendment recognize the dangers that
they are getting into relative to these matters.
How much time remains?
The PRESIDING OFFICER. The Senator has 3 minutes 40 seconds.
Mr. HEFLIN. I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. How much time remains to my side?
The PRESIDING OFFICER. Eleven minutes 15 seconds.
Mr. GORTON. Madam President, we are discussing here several
amendments dealing with the concept of punitive damages in the court
systems of the United States, a healthy discussion, and it is one that
I do not believe has been previously debated on the floor of the Senate
in spite of the invitation to do so extended by the Supreme Court of
the United States.
Before we get into any of the details, I believe it important for
Members and for the public to understand the peculiar nature of
punitive damages. Punitive damages by the very title are a form of
punishment imposed by juries on defendants in civil litigation. All
other forms of punishment under our judicial system come as a result of
criminal trials, in which case defendants have a wide range of
constitutional protections and very particularly have the benefit of a
limitation on punishments--a series of sentences set out by statutes
either in specific terms or within ranges, together with the
proposition that their guilt must be proven beyond a reasonable doubt.
With respect to punitive damages, not only is the standard of proof
lower but there are literally no limits on the amount of punishment,
the fines, the damages, which can be imposed.
I must say that I find it peculiar that any Member of the Senate
defends such a system which presents to juries, without any guidance or
any limitation whatsoever, the right on any basis whatsoever to award
any amount of punitive damages whatsoever, without even the slightest
degree of relationship to the actual compensatory damages suffered by
such a defendant. Over a century and a quarter ago, a judge in a New
Hampshire court said:
The idea is wrong. It is a monstrous heresy. It is an
unsightly and unhealthy excrescence deforming the symmetry of
the body of the law.
We might not use exactly that language today, Madam President, but I
believe that my friend, the Senator from Nebraska, was entirely correct
when he pointed out that his State and mine, lacking authority for
punitive damages in civil cases, do not have discernibly more
negligent, more outrageous, more unreasonable people engaged in
business, whether that business is in making and selling products or in
providing nonprofit services. There simply is not any real indication
that this form of unlimited punishment has an actual impact on the
economy other than discouraging people from getting into business in
the first place, from developing and marketing new products, and other
than causing them to withdraw perfectly valid products from the
marketplace.
More recently, the Supreme Court of the United States has taken up
this issue itself and in effect has invited us to move into this field.
The majority opinion in a recent case, Pacific Mutual Life Insurance
Company versus Haislip, in 1990, says:
One must concede that unlimited jury discretion, or
unlimited judicial discretion for that matter, in fixing
punitive damages may invite extreme results that jar one's
constitutional sensibilities.
And that is exactly what the case is right now. These jar one's
constitutional sensibilities.
Justice O'Connor, in a dissent in that same case, said:
In my view, such instructions--Instructions that the jury
could do whatever it thinks best.
Are so fraught with uncertainty that they defy rational
implementation. Instead, they encourage inconsistent and
unpredictable results by inviting juries to rely on private
beliefs and personal predilections. Juries are permitted to
target unpopular defendants, penalize unorthodox or
controversial views, and redistribute wealth. Multimillion
dollar losses are inflicted on a whim. While I do not
question the general legitimacy of punitive
[[Page S6044]] damages, I see a strong need to constrain
juries with standards to restrain their discretion so that
they may exercise their power wisely, not capriciously or
maliciously. The Constitution requires as much.
Madam President, this bill does not abolish the concept of punitive
damages. It does, however, provide some limit on the sentences which
juries can impose in the way of punitive damages--a sentence not to
exceed twice the total amount of all of the economic and noneconomic
damages which the juries have already found. To me, that seems
eminently reasonable.
And I literally fail to understand why there is such a passionate
defense of a system of absolutely unlimited liability, absolutely
unlimited punishment, in the American system.
One would think at the very least that the opponents would come up
with alternative standards upon which to make judgments with respect to
punitive damages and other limits if they do not like the limits that
are here. But we have one second-degree amendment before us that, once
again, says there are absolutely no limits, absolutely no limits. And
the opposition to the Dole amendment is that in every case which it
covers beyond those already covered by the bill there should continue
to be absolutely no limits on punitive damages. Madam President, that
is simply wrong.
The PRESIDING OFFICER. Who yields time?
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Straight to the point in the limited time available
here, Madam President, it is totally misleading to state that there is
no test, to say that in criminal law, we have a test, but in civil
litigation, punitive damages, there is no test whatever.
To the contrary, there is a stipulation going right straight down the
line of cases that, in awarding punitive damages, Madam President, you
have to look at the ability to pay. There is a listed group of tests
that are included. You have to look at the willfulness. These damages
have to be found on willful misconduct, and right on down the line.
I want to get right to the McDonald's case, when they say there is no
limit, that these punitive damages punish.
Then in that McDonald's case, I heard the foreman of that particular
jury in an interview say she thought it was a frivolous charge at first
until they found out there were some 700 cases and that McDonald's had
cost-factored out, on a cost-benefit basis, the hotter the coffee, the
more coffee you received out of the coffee bin. So they just wrote it
off. They could keep taking the 700 claims and give third-degree burns
over a sixth of the body and keep them 3 weeks in the hospital and
everything else.
But punitive damages were awarded in that McDonald's case for $2.7
million. The court itself reduced it to $480,000.
There are limits in every jurisdiction. And punitive damages, if you
go right to the automobile cases, caused in the last 10 years
72,254,931 cars to be recalled. That is wonderful safety on the
highways of America. Why? Because of punitive damages? It has been
proved from the Pinto case on down in all of these automobile cases.
Had it not been for the punitive damage portion of the award, none of
these would be recalled because the manufacturers could put it in the
cost of the car.
We have garage door openers redesigned, we have cribs withdrawn, we
have Drano packaging redesigned, firefighters' respirators redesigned,
Remington Mohawk rifles recalled, the production of harmful arthritis
drugs ceased, charcoal briquets properly labeled, steam vaporizers
redesigned, heart valves no longer produced by Bjork-Shively, hazardous
lawnmowers redesigned, hotel security strengthened, surgical equipment
safely redesigned. On and on down the list, punitive damages have
proved their worth to society.
And to come now and say in criminal cases we have sentencing
guidelines, but there are no guidelines whatever in punitive damages
cases is totally misleading. In fact, they have gone to the U.S.
Supreme Court and the U.S. Supreme Court has upheld in the several
States the punitive damages awards that have been made.
So we go right on down each one of the cases over and over again and
again and we find, for example, in the leading case to ensure that a
punitive damage award is proper, one, the defendant's degree of
culpability, which must be willful misconduct; two, duration of the
conduct; three, defendant's awareness of concealment; four, the
existence of similar past conduct; five, likelihood the award will
deter the defendant or others from like conduct; six, whether the award
is reasonably related to the harm likely to result.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. HOLLINGS. I thank the Chair.
The PRESIDING OFFICER. The Senator from Washington has 4 minutes and
30 seconds remaining.
Mr. GORTON. Was not the order for voting at 11:15?
The PRESIDING OFFICER. That was the original intent of the order. The
Senator may yield back his time, if he wishes.
Mr. GORTON. This Senator can make one very, very brief comment. He
finds it curious that his friend from South Carolina, who is the
leading member of his party and the former chairman of the Senate
Commerce Committee, on which this Senator serves, and a cosponsor or a
supporter of all of the automobile safety legislation which has gone
through that committee in the last 15 years, which is the primary cause
of a greater safety, should ascribe all changes in safety to product
liability litigation. If that is true, he and I have certainly been
wasting our time on hearings on automobile safety and passing laws
respecting seat belts and air bags and side impact protection and the
like.
Mr. DORGAN. Madam President, will the Senator yield?
My amendment will be the first amendment voted on when we begin this
series of votes. I wonder if the Senator would yield 1 minute to me.
Mr. GORTON. Do I have a little bit more than a minute remaining?
The PRESIDING OFFICER. The Senator has 2 minutes and 40 seconds
remaining.
Mr. GORTON. I will finish this thought and I will yield the remainder
of my time to the Senator from North Dakota.
In any event, even the Senator from South Carolina has not come up
with any parallel with respect to punitive damages and the criminal
code. In the criminal code, maximum sentences for all offenses right up
to and including the most aggravated forms of murder are set out in the
statutes, ranges on which sentences can be imposed. With respect to
punitive damages, there are no such limits. This proposal in its
present form has such limits tied logically enough to the amount of
damages which the person has actually suffered. This is the appropriate
way to go.
I yield the remainder of my time to my friend from North Dakota.
Mr. DORGAN. How much time remains?
The PRESIDING OFFICER. The Senator from North Dakota would have 1
minute and 40 seconds.
Amendment No. 619
Mr. DORGAN. Madam President, the amendment that will be voted on
immediately following my 1 minute or so will be the amendment I offered
that strikes the limitation or the caps on punitive damages.
I want to explain why I offered this amendment. As I do so, let me
say is that I have supported the notion of product liability reform. I
voted for this bill coming out of the committee, although I had a
problem with this section. I likely will vote for this bill going out
of the Senate with respect to product liability reform.
But the standard is that you must prove that a company, that there is
clear and convincing evidence that the harm was carried out with a
conscious, flagrant indifference of the safety of others. If you have
proven that standard of a company that they moved forward with a
conscious, flagrant indifference of the safety of others, why on Earth
would you want to put a cap on punitive damages?
The whole notion of punitive damages is to punish a company that
would do that. We have very few punitive damages awarded in this
country. It is not a crisis. Yes, I think we should have some product
liability reform, and I support that. But the bill last year that was
brought to the floor of
[[Page S6045]] the Senate reforming the product liability laws had no
cap on punitive damages; none at all. Now this year they bring a bill
to the floor with this cap. This cap should be stricken.
I hope that Members of the Senate will support my amendment. Again,
the standard is conscious, flagrant indifference to the safety of
others. If a corporation or a company has demonstrated that, then we
say to them, ``By the way, when someone tries to punish you for
conscious, flagrant indifference to the safety of others, we won't let
them punish you very much. We will put a cap on that.''
Why would we do that? That is absurd. That makes no sense. It was not
done last year; it should not be done this year.
I hope Members will support my amendment to strike that cap.
The PRESIDING OFFICER. The time of the Senator from North Dakota has
expired.
Mr. GORTON addressed the Chair.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Madam President, has all time been utilized?
The PRESIDING OFFICER. All time has expired.
Mr. GORTON. Madam President, I ask unanimous consent that all votes
in the stacked sequence, following the first vote, be reduced to 10
minutes in length.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GORTON. I also call for the regular order which would make the
voting sequence begin with the Dorgan amendment, with one exception.
I ask unanimous consent that the Shelby amendment be the last of the
second-degree amendments to the Dole amendment considered.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Mr. GORTON. What is the pending business, Madam President?
The PRESIDING OFFICER. Amendment No. 619, the Dorgan amendment, will
be the first amendment to be voted on.
Mr. GORTON. Madam President, I move to table the Dorgan amendment and
ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Vote on Motion to Table Amendment No. 619
The PRESIDING OFFICER. The question is on agreeing to the motion to
lay on the table amendment No. 619. The yeas and nays have been
ordered. The clerk will call the roll.
The bill clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 51, nays 49, as follows:
[Rollcall Vote No. 145 Leg.]
YEAS--51
Abraham
Ashcroft
Bennett
Bond
Brown
Burns
Campbell
Chafee
Coats
Cochran
Coverdell
Craig
DeWine
Dole
Domenici
Exon
Faircloth
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hatch
Hatfield
Helms
Hutchison
Inhofe
Jeffords
Kassebaum
Kempthorne
Kyl
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Moynihan
Murkowski
Nickles
Nunn
Pressler
Robb
Santorum
Smith
Snowe
Stevens
Thomas
Thurmond
Warner
NAYS--49
Akaka
Baucus
Biden
Bingaman
Boxer
Bradley
Breaux
Bryan
Bumpers
Byrd
Cohen
Conrad
D'Amato
Daschle
Dodd
Dorgan
Feingold
Feinstein
Ford
Glenn
Graham
Harkin
Heflin
Hollings
Inouye
Johnston
Kennedy
Kerrey
Kerry
Kohl
Lautenberg
Leahy
Levin
Mikulski
Moseley-Braun
Murray
Packwood
Pell
Pryor
Reid
Rockefeller
Roth
Sarbanes
Shelby
Simon
Simpson
Specter
Thompson
Wellstone
So the motion to lay on the table the amendment (No. 619) was agreed
to.
Mr. GORTON. Madam President, I move to reconsider the vote.
Mr. ROCKEFELLER. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Vote on Amendment No. 622
The PRESIDING OFFICER. The question is on amendment numbered 622,
offered by the Senator from Ohio [Mr. DeWine].
Mr. GORTON. Madam President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. GORTON. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ABRAHAM. Mr. President, the amendment I have offered with the
distinguished Senator from Ohio [Mr. DeWine], is extremely important
for small business owners across the country. This amendment protects
small businesses and other small entities with 25 employees or less
from excessive punitive damage awards over $250,000. Individuals,
including small businesses organized as sole proprietors, whose net
worth does not exceed $500,000 would also be protected.
Let me make it clear that small business owners support requiring
someone to make restitution when they cause injuries. However, under
our current liability structure businesses can be bankrupted by the
addition of punitive damage awards that are vastly in excess of the
business' ability to pay. The result is fewer small businesses and lost
job opportunities. Our amendment will not limit plaintiffs from
receiving full compensation for their economic and noneconomic damages.
Mr. President, this small business punitive cap amendment will be
rated by the National Federation of Independent Business as a key small
business vote for the 104th Congress. This amendment is also strongly
supported by the 739,000 members of the National Restaurant
Association. I ask unanimous consent that letters of endorsement by the
NFIB and National Restaurant Association be printed in the Record. I
yield the floor.
There being no objection, the letters were ordered to be printed in
the Record, as follows:
National Federation of
Independent Business,
Washington, DC, May 2, 1995.
Hon. Spence Abraham,
U.S. Senate,
Washington, DC.
Dear Senator Abraham: On behalf of the more than 600,000
members of the National Federation of Independent Business
[NFIB], I commend you for offering an amendment that would
protect small business owners from excessive punitive damage
awards.
Small business owners support requiring someone to make
restitution when they cause injuries. However, our current
liability rules can mean that businesses can be bankrupted by
the addition of punitive damage awards that are vastly in
excess of the business' ability to pay. Because of the
potential for such an outcome, many small business owners
are, in effect, forced to settle out of court. This results
in higher insurance premiums, higher consumer prices, and
worst of all, increased disrespect for our legal system.
Your amendment does not mean that plaintiffs will not be
compensated; they will still be able to recover unlimited
economic and non-economic losses. It merely means that
punitive damage awards over and above actual restitution will
be capped at a level that permits many small businesses to
survive a lawsuit.
Thank you for offering this important common sense small
business amendment. Passage of your amendment along with the
underlying Dole amendment will be Key Small Business Votes
for the 104th Congress.
Sincerely,
John J. Motley III,
Vice President,
Federal Government Relations.
____
National Restaurant Association,
Washington, DC, May 3, 1995.
Hon. Spence Abraham,
U.S. Senate,
Washington, DC.
Dear Senator Abraham: On behalf of the National Restaurant
Association and the 739,000 units the foodservice industry
represents, I want to express our support for your amendment
providing protection for small businesses from excessive
punitive damage awards.
In an industry dominated by small businesses--72% of all
eating and drinking establishments have sales of $500,000 per
year or less, and experience profit margins in the 3 to 5%
range--an excessive damage award can force a restaurant to
close its doors. This hurts not only the business owner and
his/her family, but the employees and their families as well.
Everyone agrees that citizens should have the right to sue
and collect reasonable compensation if they are wrongfully
injured.
[[Page S6046]] However, common sense legal reform is needed
to bring balance back into the system. Your efforts in this
regard are greatly appreciated.
Again, thank you for your efforts to protect America's
small businesses.
Sincerely,
Elaine Z. Graham,
Senior Director, Government Affairs.
Mr. BAUCUS. Mr. President, I want to voice my support for two
amendments offered by Senator DeWine to S. 565 that were passed by
voice vote today. The first amendment places a $250,000 cap on the
amount of punitive damages that can be awarded against small businesses
that have a net worth of less than $500,000. The second amendment
allows juries to consider a defendant's assets when determining the
appropriate amount to award for punitive damages.
I oppose S. 565. I believe that this bill extends the reach of the
Federal Government into an area that properly belongs to the States.
And rather than slowing litigation, I believe S. 565 will create
confusion and therefore more litigation. Under this bill you will have
50 different State courts interpreting the impact on this law on
existing State case and statutory law. It is a result that only the
lawyers will benefit by.
At the same time, I recognize just how hard small businesses struggle
to stay afloat. And, I am well aware that Montana law recognizes the
need to appreciate small business concerns. For example, Montana allows
small companies to operate as ``limited liability'' companies. By doing
this, small companies are able to limit their liability exposure to the
amount of capital invested. Montana also requires to look at a
defendant's financial resources in determining punitive damages awards.
To the extent that we are going to enact Federal legislation
governing certain aspects of tort law, I believe it is important to
include provisions that are specifically targeted to small businesses.
For this reason, I support the DeWine amendments as offered.
Mr. GORTON. Madam President, this amendment and the next amendment
have been worked out by the two managers and can be agreed to by voice
vote.
The PRESIDING OFFICER. The question is on agreeing to the amendment
numbered 622, offered by the Senator from Ohio [Mr. DeWine].
So the amendment (No. 622) was agreed to.
Mr. GORTON. Madam President, I move to reconsider the vote.
Mr. BENNETT. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Vote on Amendment No. 623
The PRESIDING OFFICER. The question is on amendment No. 623, offered
by the Senator from Ohio [Mr. DeWine].
If there be no further debate, the question is on agreeing to the
amendment.
The amendment (No. 623) was agreed to.
Mr. GORTON. Madam President, I move to reconsider the vote.
Mr. JOHNSTON. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Amendment No. 621, as modified, to Amendment No. 617
Mr. SHELBY. Madam President, I send to the desk a modification of the
amendment I have at the desk.
The PRESIDING OFFICER. Without objection, the amendment is so
modified.
The amendment (No. 621), as modified, is as follows:
At the appropriate place insert the following:
SEC. . LIABILITY FOR CERTAIN CLAIMS RELATING TO DEATH.
In any civil action in which the alleged harm to the
claimant is death and, as of the effective date of this Act,
the applicable State law provides, or has been construed to
provide, for damages only punitive in nature, a defendant may
be liable for any such damages without regard to this
section, but only during such time as the State law so
provides.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Is the Shelby amendment now the pending business?
The PRESIDING OFFICER. The Shelby amendment as modified is the
pending business.
Mr. GORTON. Madam President, this is worked out with the two Senators
from Alabama who are opponents to the bill but who nevertheless have a
legitimate question about a quirk in Alabama law. The amendment applies
only to certain cases in Alabama, and is acceptable.
THE PRESIDING OFFICER. If there be no further debate, the question is
on agreeing to the amendment.
The amendment (No. 621), as modified, was agreed to.
Mr. SHELBY. Madam President, I move to reconsider the vote.
Mr. GORTON. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Vote On Amendment No. 617, As Amended
The PRESIDING OFFICER. The question is on the Dole amendment, No.
617, as amended.
Mr. GORTON. Has a rollcall been ordered?
Madam President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to amendment No.
617, as amended. The yeas and nays have been ordered. The clerk will
call the roll.
The assistant legislative clerk called the roll.
The result was announced--yeas 51, nays 49, as follows:
[Rollcall Vote No. 146 Leg.]
YEAS--51
Abraham
Ashcroft
Bennett
Bond
Brown
Burns
Campbell
Chafee
Coats
Cochran
Coverdell
Craig
DeWine
Dole
Domenici
Exon
Faircloth
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hatch
Hatfield
Helms
Hutchison
Inhofe
Jeffords
Kassebaum
Kempthorne
Kerrey
Kyl
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Nunn
Pressler
Santorum
Simpson
Smith
Snowe
Stevens
Thomas
Thurmond
Warner
NAYS--49
Akaka
Baucus
Biden
Bingaman
Boxer
Bradley
Breaux
Bryan
Bumpers
Byrd
Cohen
Conrad
D'Amato
Daschle
Dodd
Dorgan
Feingold
Feinstein
Ford
Glenn
Graham
Harkin
Heflin
Hollings
Inouye
Johnston
Kennedy
Kerry
Kohl
Lautenberg
Leahy
Levin
Mikulski
Moseley-Braun
Moynihan
Murray
Packwood
Pell
Pryor
Reid
Robb
Rockefeller
Roth
Sarbanes
Shelby
Simon
Specter
Thompson
Wellstone
So the amendment (No. 617), as amended, was agreed to.
Mr. DOLE. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. HATCH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. GORTON. Mr. President, is there now an order in which the Senator
from Tennessee [Mr. Thompson] is to offer the next amendment?
The PRESIDING OFFICER (Mr. Thomas). That is correct.
Under the previous order, the Senator from Tennessee is recognized.
Mr. GORTON. Mr. President, I will shortly suggest the absence of a
quorum. But, Mr. President, with the cooperation of the other side of
the aisle, we will seek time agreements on future amendments and will
hope to stack votes on any amendments which are ready to vote for
sometime late in the afternoon so Members are not called back and forth
willy-nilly.
While we look for that and wait for the Senator from Tennessee, I
suggest the absence of a quorum.
Mr. FORD. Mr. President, we could not understand the distinguished
Senator from Washington. May we have order?
The PRESIDING OFFICER. We will have order in the Senate. The Senator
is exactly right.
Will the Senator repeat his statement?
Mr. GORTON. Under the previous order, the Senator from Tennessee, who
is now present, has the right to offer the next amendment. I was
suggesting that we attempt to get time agreements on as many amendments
as possible in the future, but at the same time, to stack votes for
sometime later
[[Page S6047]] this afternoon, if it is possible to do so, so that
again we can bring Members here for votes, perhaps more than one vote,
but not interrupt their schedules every hour or so.
Mr. HEFLIN. Mr. President, might I say, before we agree to that, we
would have to see what the amendments are.
Mr. GORTON. I fully agree. This is simply a suggestion. I hope it
will work. If it does not, we will proceed to the regular order.
Mr. President, I see the Senator from Tennessee is present. I yield
the floor.
Mr. THOMPSON addressed the Chair.
The PRESIDING OFFICER. Under the order, the Senator from Tennessee
has the floor.
Mr. THOMPSON. Thank you, Mr. President.
Amendment No. 618 to Amendment No. 596
(Purpose: To limit the applicability of the uniform product liability
provisions to actions brought in a Federal court under diversity
jurisdiction)
Mr. THOMPSON. Mr. President, I call up an amendment numbered 618,
which is at the desk, and I ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Tennessee [Mr. Thompson] proposes an
amendment numbered 618 to amendment No. 596.
Mr. THOMPSON. 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:
In section 102(a)(1), after ``commenced'' insert the
following: ``in a Federal court pursuant to section 1332 of
title 28, United States Code, or removed to a Federal court
pursuant to chapter 89 of such title''.
In section 102(c)(6), strike ``or'' at the end.
In section 102(c)(7), strike the period at the end and
insert ``; or''.
In section 102(c), add the following new paragraph:
(8) create a cause of action or provide for jurisdiction by
a Federal Court under section 1331 or 1337 of title 28,
United States Code, that otherwise would not exist under
applicable Federal or State law.
Mr. THOMPSON. Mr. President, we are now engaged in a national debate
on an issue that is important to the future of this country. The issue
before us essentially is should the U.S. Congress federalize certain
portions of our judicial system that, up until now, have been under the
province of the States? And, if so, should we make major changes or
more modest ones?
I cannot think of a more important subject for us to consider than
our system of justice. The judicial system is a bedrock of our free
society. It must be fair. It must be perceived to be fair. Our citizens
must have confidence in it. As we continue our deliberations, we must
do so with the purpose in mind of striving for a system that is most
likely to achieve justice in most cases. It is serious business, and
our decisions should not depend upon whose favorite ox is being gored
at the moment.
At the outset, I must say that we could do this process a service by
refocusing the terms of this debate. It seems that we have in large
part gotten off to a somewhat rocky start, and have been spending too
much time arguing about which side is the most greedy and which side
has contributed the most to which party's political campaigns.
Most of the literature, most of the press, and a lot of the
conversation has had to do with those subjects, and it is an all-too-
easy refuge for those who really do not understand the issues or who do
not care and are simply trying to win the debate.
As far as the debate going on between the private interests of each
side of this legislative battle, I have not noticed that either side is
going against its own economic interest.
They are all sophisticated and well financed.
It seems that nowadays the debate on important issues is going the
way of political campaigns: concentrating on grossly distorted
anecdotes, sound bites, and 30-second commercials designed to appeal to
ignorance and emotion. That is fine for the contestants in this matter
to engage in if they choose to do so, but this body has a duty and a
different function.
First, we need to address the issue of federalism. At the outset, I
must state that I have great concern with any proposal that imposes a
Federal standard in an area that has been left up to the States for 200
years. I would remind many of my Republican brethren that we ran for
office and were elected last year on the basis of our strong belief
that the government that is closest to the people is the best
government; that Washington does not always know best; that more
responsibility should be given to the States because that is where most
of the creative ideas and innovations are happening. Whether it be
unfunded mandates, welfare reform, or regulations that are strangling
productivity, we took the stand that States and local governments
should have a greater say about how people's lives are going to be run,
and the Federal Government less.
People have different notions about the importance of philosophical
consistency. But let there be no mistake about what we are doing if by
legislative fiat we usurp significant areas of State tort law, passed
by State legislators, elected in their own communities. We are going
against the very fundamentals of our own philosophy which has served as
our yardstick by which we measure all legislation.
In the Contract With America, every provision, in one way or another,
has to do with limiting the power or authority of the Federal
Government or one of its branches with regard to the States or
individuals except one: the change in the legal system. That provision
has nothing to do with limiting or changing the rules with regard to
the Federal Government--but, rather, with the Federal Government
changing the rules between two private parties, the very thing we have
been so critical of in the past. I would say to my friends who are
conservative in all matters except this one: If and when we are no
longer in the majority, we will stand naked against our opponents as
they rewrite our tort law for America to fit their wishes and
constituencies because we will have lost the philosophical high ground.
It is ironic that all of this is occurring at a time when the
philosophical battle that we have been fighting for so many years is
finally being won. Several recent Federal court decisions, including
the recent Supreme Court decision in the Lopez case, have finally begun
to place some restrictions on Congress' use of the commerce clause to
regulate every aspect of American life. Conservatives have been
complaining for years that congressional expansion into all areas, with
the acquiescence of the Federal courts, has resulted in rendering the
restrictions of the commerce clause meaningless. Now the courts have
let Congress know that there are limitations to Congress' authority to
legislate in areas only remotely connected to interstate commerce. And
yet as we won the war, we take the enemy's position. We are now the
ones who seek to legislate and regulate medical procedure in every
doctor's office in every small town in America. And we are the ones who
now seek to legislate and regulate the fee structure between a lawyer
and his client in any small town in America.
It is not as if the States have abdicated their responsibilities in
this area. Many States have tougher and more restrictive laws than
those advocated before this body.
Four States have no punitive damages. Some States have caps on
punitive damages. Most States have gone from a preponderance of the
evidence standard to a clear and convincing standard for punitives. My
own State of Tennessee has a 10-year statute of repose while the
products bill before us allows 20 years. And as was recently pointed
out by the National Conference of State Legislatures, ``Each of the 50
State legislatures, many configures by a fresh influence of Republican
tort reformers, is considering some type of overhaul of the legal
system.''
It is not as if State legislatures wish to be relieved of the burden
of dealing with the subject of tort reform. As the president of the
National Conference of State Legislatures recently said:
As you know, NCSL regards the unjustified preemption of
State law as a serious issue of federalism, comparable in
many ways to the issue of Federal mandates. Federal mandates
erode the fiscal autonomy of States, while Federal preemption
erodes the legal and regulatory authority of States. Every
year Federal legislation, regulations, and court decisions
preempt additional areas of State law, steadily shrinking the
jurisdiction of State legislatures.
[[Page S6048]] NCSL opposes Federal preemption of State
product liability law, strictly on federalism grounds. Tort
law traditionally has been a State responsibility, and the
imposition of Federal products standards into the complex
context of State tort law would create confusion in State
courts. Without imposing one-size-fits all Federal standards,
States may act on their own initiative to reform product
liability law in ways that are tailored to meet their
particular needs and that fit into the context of existing
State law.
However, we are told that, while all of the above may be true, the
system has totally gotten out of hand. It is said that our Nation is
smothering under an avalanche of litigation and frivolous lawsuits;
that our legal system is nothing more than a lottery system and that
the lawyers are the only ones who really win the lottery. Well let us
examine all of that.
In the first place, I want to say that in any system run by human
beings there are going to be abuses and miscarriages of justice and our
legal system is no exception. For example, there is no question but
that some frivolous lawsuits are filed. However, it should be
understood by the American public there is not one thing about any of
the substantive legislative proposals we have considered or will
consider that will in any way diminish the possibility of frivolous law
suits. No proponent of reform will argue that there is. There is simply
no way to prejudge a case before it is filed. What we can do and should
do is impose a penalty upon the litigants and the lawyers once a court
has determined that a lawsuit is frivolous. The Brown amendment, which
strengthened rule 11 in Federal cases, does that. I voted for it, and I
hope it finds its way into any legislation that is finally adopted.
Also, I am convinced that some industries in some States are being
hit especially hard. I am very sympathetic to those that produce
products or render professional services, that provide jobs for working
people, and that make the wheels go around in our economy. That is why
I am working to help relieve the burden of regulation that they face
and the tax burden that too often penalizes investment and
productivity.
My own personal opinion is that the number of lawsuits brought in
this country is too high and that it is a reflection of more serious
things going on in our society.
However, nothing in the proposed legislation would cut down on the
number of lawsuits, and I do not think anyone believes that it is
Congress' role to place a quota on the number of lawsuits that can be
filed in this country.
We have reached a point where a lot of people would support any
legislation if they thought it would hurt lawyers. And there is no
question that lawyers are often times their own worst enemy. My own
opinion is that the profession has become too much
like a business, too bottom line oriented, that lawyer advertising has
hurt the profession that some of the fees being reported from Wall
Street and other places over the last decade or so have caused the
public's regard for the legal profession to fall dramatically. Frankly
that is something that the U.S. Congress should be able to appreciate.
So we have an imperfect system in an imperfect world.
However, there is another side to the story. The fact of the matter
is that all things considered, the system has served up pretty well for
a long period of time. Our State tort system has provided us with a
form of free market regulation. Goals like achieving product safety are
reached without additional and intrusive government mandates that other
countries have imposed as a substitute for a tort-based compensation
system.
Also, in the State courts during 1992, all tort cases amounted to 9
percent of the total civil case load. In the Federal courts, product
liability claims declined by 36 percent between 1985 and 1991, when one
excludes the unique case of asbestos. Since 1990, the national total of
State tort filings has decreased by 2 percent. If this trend continues
in the next 10 years, State courts will experience a decline of 10
percent in State tort filings. As a matter of fact, the primary cause
of the surge in litigation in Federal courts has been disputes between
businesses. Contract cases, which make up only one type of all
commercial litigation, have increased by 232 percent over the period of
1960 through 1988.
And there is a lot going on that does not meet the eye that has to do
with self regulation in a free society. Every day all over the country
lawyers are telling clients that they do not have a winnable case, or
that, although they have a pretty good case, the expense involved is
not worth the potential recovery. You see, lawyers do not make money on
frivolous lawsuits. Insurance companies learned a long time ago that
paying off on frivolous cases in order to avoid potential litigation
expense does not pay off. And the plaintiff lawyers know that the
insurance companies will not pay extortion.
Also going on every day in this country are cases which are settled
where a person was wrongfully injured and received a reasonable amount
of compensation. That is most cases. They do not make the newspapers.
Also going on every day in this country are decisions by insurance
companies not to settle with the plaintiff even though he is clearly
entitled the recovery because he is a little guy and stretching it out
for a couple of years and causing his lawyer to have to bear the burden
financing the depositions and other expenses will make the plaintiff
and his lawyer more amenable to a lower settlement later on. Besides,
they know that they can put the settlement money to good use for that
2-year period and make money on that money. On balance, it more than
makes up for their own attorneys' fees.
Also, going on quite often, are situations where a large corporate
defendant is caught having committed outrageous conduct which resulted
in tremendous injuries to innocent people. Often these cases are
settled even before suit is filed because the plaintiffs do not want to
go through a lawsuit and defendants know what might be in store for
them if the plaintiffs get a mean lawyer who knows what he is doing.
This is the real world. This is the rest of the iceberg of our legal
system that most people do not see. It is free market, give and take,
sometimes rough and tumble, and sometimes produces injustices. But we
have always believed in America that, with all its faults, the best way
to resolve disputes is not at 20 paces but with a jury from the local
community who hears all the facts and listens to all the witness and
who is in the best position of anybody in America to decide what is
justice in any particular case. Then you have a judge who passes on
what the jury did and then you have at least one level of appeal to
pass on what the judge did. And I can assure you--and anybody who has
ever been there knows this--that you do not find much run-away emotion
left by the time you get to the appellate level in most State courts.
So if we are determined to ring out the injustices that slip through
the State system here at the Federal level, what are we going to
replace it with?
What are we going to replace it with? A one-size-fits-all standard?
One standard that would apply to mom and pop and to General Motors? One
standard that would cover both the frivolous lawsuit and the lawsuits
involving gross misconduct by the defendant? In our haste to correct
one problem, are we not running the danger of creating greater
problems?
Let me give you another example from real life. A lot of people are
concerned about frivolous lawsuits against the medical profession. I
share that concern. There have been good physicians wrongfully sued in
this country. I think the system pretty well takes care of the problem
in the end, but I regret that they have to go through that process. I
am sure most of them were very displeased with me--my good friend and
his supporters--when I could not go along with a $250,000 punitive cap
on their exposure. I wish I could have gone along with it. But I could
not. Because, not only do I have grave reservations about Congress
legislating in this area, but in addition, the same cap that would
legitimately and properly help them in some cases would unfairly hurt
others in other cases. That is the problem with the one-size-fits all
approach in Washington.
Let me tell you a little story. David and Tammy Travis from
Nashville, TN, came to see me last Wednesday, April 26. They have been
following this debate and they wanted to tell me about their daughter
Amanda. Amanda was a 5-year-old girl who was scheduled to
[[Page S6049]] have a routine tonsillectomy at a medical clinic in
Nashville. Amanda arrived at the clinic at 6 a.m. A nurse, not an
anesthesiologist, administered the anesthesia and he administered the
wrong anesthesia. Also, Amanda was hooked up to the wrong intravenous
solution, as well.
The errors continued as Amanda was given demerol even though she was
not complaining and was not even awake. When Amanda began throwing up
blood, the nurse informed the family that this was normal. By 2 o'clock
that afternoon Amanda was lethargic. The nurse told
the family that a doctor wanted to keep Amanda overnight, which was
represented to be normal. However, the nurse had not contacted the
doctor and had made that decision herself.
Later in the afternoon, Amanda could not breathe. The short-staffed
hospital had only a nurse and a sitter on duty. In fact, the nurse who
administered the anesthesia was a drug addict, who subsequently died of
an overdose while preparing to go into an operating room for another
patient. The clinic had known that the nurse had this drug problem.
When Amanda was hooked up to emergency equipment, her head blew up
like a balloon, and she began to bleed out of her mouth, as her father
used his handkerchief to try to stop the flow. The nurse ran off to get
more equipment to open the airways. By this point, Amanda was getting
so little oxygen that Mrs. Travis pleaded that 911 be called. Someone
at the clinic did call 911 and the paramedics rushed Amanda to
Vanderbilt Hospital. By this point, Amanda was essentially dead,
although the paramedics did their best to revive her.
After Amanda died, her parents were not given timely copies of her
records from the clinic. Amanda's parents did, however, obtain the
records from Vanderbilt. When they received the clinic's records, it
was obvious that the clinic had altered the records to cover up their
errors. The clinic tried to make it look like Amanda had been fine when
she left the clinic, and that it was the paramedics who had messed up.
The case went to trial about 2 years after the lawsuit was brought.
The Travises are people of modest means. Their lawyer, Randy Kinnard of
Nashville, financed 48 depositions and other expenses out of his own
pocket over the 2-year period. The case was settled during trial for $3
million, an amount that reflected the clear liability of the clinic and
availability of punitive damages. The lawyer's fee, incidentally, was
30 percent.
The Travises traveled to Washington with their story even though Mrs.
Travis was under doctor's orders not to travel as a result of recent
knee surgery. They came to my office with Mrs. Travis in a wheelchair.
The Travises have no further financial interest in any of this
legislation. They simply want to ask me to try to help make sure that
we did not do anything up here that would make it more likely that
other parents would lose their little girls the way they did; that we
did not do anything to make it more economically feasible for hospitals
or large companies to hire on the cheap or to cut corners.
The question presented to me is whether or not I am going to be a
part of a process that tells Tennesseans that they cannot award this
family $3 million if a jury in Tennessee, after hearing all the
evidence, gives them that amount, or a company, realizing that they are
finally at the bar of justice, coughs up that amount. I will not be a
party to that.
We had another situation in Hardeman County in rural west Tennessee a
few years ago that is instructive. A chemical company contaminated the
region's groundwater. Residents exhibited various forms of disease:
cancer, liver damage, kidney, skin, eye and stomach ailments, and
nervous, immune, and reproductive system disorders. The jury found the
chemical company had knowingly and recklessly dumped the chemical waste
at its landfill site, failed to make the dumping site leakproof,
disregarded the warnings of contamination by one of its own senior
employees, failed to warn residents or government officials of the
dangers, and attempted to cover up evidence when an investigation was
initiated. Residents of Hardeman County recovered $5.3 million in
compensatory damages and $7.5 million in punitive damages. Do I think
that Congress should tell Tennesseans that they cannot allow the jury
who heard the case to award those damages? I do not.
I get the feeling that there are cross currents running through the
Senate at this point in our deliberations. I believe that there is a
strong and understandable feeling that we should pass some tort reform
measure in this session of Congress. I think, however, that there is
another feeling that we are not quite sure of what we ought to pass and
we fear that we do not fully appreciate or understand the effect of
what we may be about to do.
It seems to me that the responsible thing to do is to take a second
and harder look at the proposals before us and try to respond to a
legitimate Federal interest while resisting the temptation to
federalize 200 years of State law that has undergone substantial reform
and is still being reformed as we deliberate. I suggest that because of
the interstate nature of the activity that there is a legitimate
Federal interest in the products liability laws of this Nation.
Approximately 70 percent of all manufactured goods in this country
travel in interstate commerce. I believe that this is one area under
consideration that would pass the commerce clause test. Furthermore,
not only do the products travel in interstate commerce but the
litigants in product litigation are often also
interstate in nature in that they are citizens of States different
than that of the manufacture, thereby creating diversity jurisdiction,
and are able to avail themselves of the Federal court system.
Therefore, it would seem reasonable to legislate in an area involving
interstate commerce with regard to litigation involving our Federal
court system.
Therefore, I am offering on behalf of myself, Senator Cochran, and
Senator Simon an amendment to limit the bill's application to cases in
Federal court. If my amendment were adopted, and a plaintiff filed a
case in Federal court under diversity of citizenship jurisdiction, this
Federal legislation would govern the case. If the plaintiff filed this
suit in State court, State law would control. However, if the defendant
successfully removed a case filed in State court to Federal court, this
Federal law would apply.
My amendment would restore the federalism that the bills currently
drafted would threaten. At a time when the American people
overwhelmingly believe that the Federal Government has obtained too
much power at the expense of the people and the States, we should not
adopt a Washington-knows-best approach to tort law.
Particularly troubling is the selective preemption H.R. 956 creates.
States cannot provide less protection to defendants than the bill
mandates, but States are not prohibited from providing more. It is the
bill's selective preemption that guarantees that it will not produce a
uniform response to a supposedly national problem. The preemptive
features of the bill overlook that Americans are unique individuals.
Moreover, States have their own right to determine the law that should
be applied to their own special situations.
My amendment is based not only on theories of federalism, it also
recognizes the enormous practical problems the bill, as currently
drafted, would cause to State-Federal relations.
Because State law would still govern tort cases to the extent that
the bill did not preempt it, there would be numerous questions to
litigate concerning the relationship between the Federal law and
existing State laws. New, different, and inconsistent interpretations
of the Federal law and the State laws would result. Under the
underlying bill, Federal courts of appeal would resolve these issues.
Those courts, not State courts, would ultimately determine the scope
and meaning of State law as it interacts with this bill. To my mind,
Federal courts should be bound by State court decisions on the meaning
of controlling State law. By contrast, this bill would make State
courts follow Federal court interpretations of controlling State law.
Such a regime turns federalism on its head.
As I previously stated, my amendment recognizes that interstate
commerce is the justification for a Federal tort reform bill. And it is
interstate commerce that justifies Federal court
[[Page S6050]] jurisdiction in cases brought by citizens of one State
against citizens of another State. I believe that the commerce clause
rationale of the bill corresponds precisely with the reasons underlying
Federal diversity jurisdiction. Moreover, by adding this amendment, the
bill would actually provide a uniform law in Federal court to resolve
the tort cases to which it applies. The existing bill would not achieve
that result.
Despite the claims made, no one truly knows the effect that this
underlying bill will have on the ability of injured persons to recover
adequate compensation for their injuries. Nor will anyone know whether
competitiveness of American businesses will be enhanced or insurance
premiums will fall if H.R. 956 is enacted. At the same time, the bill
would displace 200 years of law based on actual experience. If the bill
failed to achieve its objectives, there would be almost no means of
unscrambling the federalized egg. By contrast, applying the bill only
to Federal court cases would provide an opportunity to experiment. If
the bill's ideas work, States can adopt these rules as their own.
Potentially, a preemptive approach might then make sense. But if the
bill created numerous practical problems, well-tested State law would
remain undisturbed while Congress acted to fix the problems in the
Federal law.
The practical effect of the amendment would be that defendants sued
out of State in many instances would be able to remove their cases to
Federal court and obtain the Federal rule. Defendants sued in their
home State courts would not be able to remove the case to Federal
court. Thus, those defendants would be governed by their State law as
applied by their own State court. I believe that this is a much more
sensible approach than the one now before the Senate, and one
consistent with the Federal system and the Constitution.
Mr. President, we should protect the right of the States we represent
to maintain their core function of crafting law designed to compensate
injured persons. We should also permit Federal courts to apply Federal
law to those cases that represent truly national concerns. We should
certainly be careful before we displace many years of law based on
experience. My amendment would accomplish all those goals. I strongly
recommend its adoption.
amendment no. 618, as modified, to amendment no. 596
Mr. THOMPSON. Mr. President, I send the amendment to the desk.
The PRESIDING OFFICER. The Senator from Tennessee has sent up a
modification. Is there objection to the modification? Without
objection, it is so ordered. The amendment is so modified.
The amendment (No. 618) as modified, is as follows:
On page 9, line 3, after ``commenced'' insert the
following: ``in a Federal court pursuant to section 1332 of
title 28, United States Code, or removed to a Federal court
pursuant to chapter 89 of such title''.
On page 10, line 19, strike ``or'' at the end.
On page 11, line 4, strike the period at the end and insert
``; or'' and add the following new paragraph:
(8) create a cause of action or provide for jurisdiction by
a Federal Court under section 1331 or 1337 of title 28,
United States Code, that otherwise would not exist under
applicable Federal or State law.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Illinois.
Change of Vote
Mr. LAUTENBERG. Will the Senator yield for a unanimous-consent
request? I have just a short unanimous-consent request to make.
Mr. President, on vote 139 that took place yesterday, I voted
``yea.'' It was my intention to vote ``no.'' It does not change the
outcome of the vote in any way. I ask unanimous consent that that be
recorded as a ``no.''
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SIMON. Mr. President, I will be very brief, I say to my friend
from Washington, because I have a satellite TV feed to high school
students in Illinois that is going on right now.
Mr. GORTON. This Senator simply wanted to inquire about a time
agreement.
Mr. SIMON. I will be very brief.
Mr. President, I strongly support and am pleased to cosponsor this
amendment. It is right in theory. It is in line particularly with the
Court decision that was made the other day about guns in school. I
happen to disagree with that Court decision, but that is the law of the
land. But it is right practically.
What we are doing without this amendment is massively overturning two
centuries of tort law and tort decisions. What this amendment says is,
``Let's move a little slowly. Let's apply this in the Federal courts
but not in the State courts.''
So we can learn, and maybe we will want to, after we have had a
little experience, apply it to the State courts. I think it is a sound
amendment. I am pleased to support and cosponsor the amendment of my
colleague from Tennessee.
Mr. GORTON addressed the Chair.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, first, I should like to inquire of the
Senator from Tennessee, and those who support his amendment, whether or
not we might reach a time agreement for the disposition of this
amendment.
Mr. HEFLIN. Will the Senator yield?
Mr. HOLLINGS. Not at this time.
Mr. HEFLIN. I do not think so at this time. I think we want to ask
some questions and do some things and have a clearer understanding of
what the Thompson amendment does.
I want to engage in a colloquy at least and so forth relative to the
matter. So I would think at this time we ought to know.
The PRESIDING OFFICER. The Senator from Washington has the floor.
Mr. GORTON. If that is the case, I obviously will defer asking for
such a unanimous-consent but will hope that with support of the
amendment we will agree to one. The debate will ultimately be
terminated, perhaps, or at least dealt with by a motion to table. But
if we can plan the afternoon and evening, it will be helpful.
Mr. EXON. Will the Senator yield for a question?
Mr. GORTON. Yes, I will.
Mr. EXON. Since there is a time deadline of 1 p.m., I would like to
ask my friend from Washington whether or not there could be general
agreement on the passage of an amendment that he and I have worked out
with regard to product liability that I think has been cleared on both
sides of the aisle. We have been trying to find an appropriate time to
do that. If possible, I think we can do it in 2 or 3 minutes if we can
get unanimous-consent and if that is the will of my friend from
Washington, the manager of the bill.
Mr. GORTON. Parliamentary inquiry. Is the rule that all amendments
must be filed or formally introduced by 1 o'clock?
The PRESIDING OFFICER. Rule XXII requires that they be filed.
Mr. GORTON. This Senator is perfectly willing to deal with the
amendment of the Senator from Nebraska, with which he is familiar. I am
not sure that the other Senators here are, however. So I do not know
that it is cleared yet.
Mr. EXON. I thought it had been cleared.
Mr. GORTON. I suggest the Senator file it and discuss it with the
principal opponents to the overall bill, and perhaps we can do it in 1
or 2 minutes. It looks to me that they do not know what it is about.
Mr. HEFLIN. Mr. President, as I understand it, he is filing it with
the idea of meeting the post-cloture requirement. In the event of that,
all he has to do is file it at the desk and we can do it. Is that not
all he has to do is file it at the desk?
The PRESIDING OFFICER. The amendment must be timely filed to be
germane.
Mr. HEFLIN. All right.
Mr. EXON. Mr. President, I will comply with the wishes of my
colleagues.
Mr. HEFLIN. In order to clarify, I think if there are amendments
people have, if there is no objection, I think it may be extended until
3 o'clock or something like that, if people have them. I do not know of
any more I am going to file myself.
The PRESIDING OFFICER. The Senator from Washington has the floor.
Mr. HEFLIN. Are there any objections to that?
Mr. GORTON. Mr. President, I do not think I am authorized to make
that distinction at this point. The Senator
[[Page S6051]] can file it right now, and then, if we settle it later,
we can take it up and dispose of it promptly, which I hope will be the
case.
Mr. President, I find myself in a somewhat paradoxical situation.
With almost all of the remarks and policy positions presented by the
Senator from Tennessee, I find myself in agreement. Yesterday, for
example, I voted with him against a limit on noneconomic damages in the
medical malpractice portions of this bill, at least in part for the
very kind of reasons that he outlined. I also found most forceful and
persuasive--having used it myself--his arguments that the strongest
case for congressional legislation in this field rests in the field of
product liability, because we deal, almost without exception, with
products manufactured in one State, sold in interstate commerce in a
national market.
I lost him, however, on the last turn--that that very forceful
argument for greater uniformity in the rules under which product
liability litigation was conducted therefore meant that we should apply
this bill only to litigation conducted in Federal courts, whether it be
product liability or presumably other forms of litigation which have
now been adopted as a part of this bill. In that, I profoundly disagree
with him and find it somewhat surprising that he and other good,
thoughtful lawyers and former judges in this body would countenance
this amendment, even if they oppose this bill overall.
Now, one set of my reasons is purely pragmatic. The other is academic
and theoretical, but nonetheless vitally important, perhaps more
important than the practical reasons. The practical reasons are that 95
percent of product liability cases are filed in State rather than in
Federal courts. Ninety-five percent. That is not unlike the proportion
of all cases in State and in Federal courts. Overwhelmingly, legal
disputes are decided in State courts, not in Federal courts themselves.
So, if interstate commerce is a justification, at least for the
product liability provisions of this bill, why should the rules of this
bill be limited to litigation conducted in Federal courts? That is to
say, 5 percent of such litigation. The interstate commerce impacts of
the development, the production, the distribution, and the use of
products, is not affected in the slightest by the location of the court
in which disputes or problems in connection with those products arise.
If the interstate commerce clause is justification for any Federal
rules in this field, it is justification for such rules in State courts
to exactly the same extent that it is justification for such rules in
Federal courts. There simply is no difference.
The interstate commerce is not the lawsuit, it is not the litigation,
Mr. President; the interstate commerce is the travel of the product,
the fact that the product is produced in one place, sold in another,
perhaps developed in a third and used by a particular individual in a
fourth State, or maybe in 10 or 20 States if it is a movable product.
If we are going to have a set of rules with respect to product
liability litigation, obviously, they should apply in all courts.
Let us go beyond that. We have said that, at the present time, the
distribution of these cases is approximately 95 percent to 5 percent.
We also have opposition to this bill primarily on the grounds that it
will make some litigation more difficult or will limit the recovery of
punitive damages. So the choice now of any lawyer representing a
plaintiff in any case which does not have more severe limits on this
litigation than are contained in this bill will be to bring that
litigation in State court. In fact, if a lawyer who has a choice
between the two brought it into Federal court, that lawyer would
probably be guilty of malpractice. What earthly reason would there be
to bring such a case in Federal court?
So instead of 5 percent of all cases in Federal court, would it be 1
percent? Would it be less than 1 percent? For all practical purposes,
it would approach zero. We would gain no experience in finding which
set of rules were better by the passage of this amendment.
In fact, what we are learning with the present experimentation is
some States have more product liability litigation and some have
greater punitive damage awards than others do.
Now, of course, this amendment applies not only to litigation which
is commenced in Federal Court but litigation which is originally
commenced in the State court and removed to Federal court. And, Mr.
President, to oversimplify the case, getting into the Federal court
with a product liability case like this is almost always going to be
based on what is called ``diversity of citizenship.''
That is to say, the claimants, the plaintiff; in one State, the
defendant is from another State, or a certain amount is in issue.
If that is the case, and the original action is brought at a State
court, it can be removed by the defendant to a Federal court. This
right, however, does not exist when the parties are from the same State
or when there is more than one party and there is a complete and total
diversity of citizenship.
Again, Mr. President, given the way in which claimant lawyers operate
in these situations, always suing or almost always suing not just the
manufacturer but the retailer, sometimes the wholesaler, the developer,
and the like, again, almost any competent lawyer can prevent the
existence of diversity jurisdiction.
Mr. President, I would predict, I think there is not much opportunity
to be contradicted, we would not have 1 percent of this kind of
litigation actually conducted in Federal courts if this amendment were
passed. We would not get this experimentation. We would simply see to
it that the relatively small handful of such lawsuits now conducted in
Federal courts ended up being conducted in State courts.
Even more troubling to me, at least, Mr. President, is the
proposition that this so profoundly changes the nature of diversity
litigation in Federal courts, and gives such a reward to those who game
the system to find the best place in which to sue, that it has been
exactly the opposite role that has obtained for a minimum of 60 years
in this country.
Everyone in this body now who went to law school, or were at one time
in law school, is familiar with the case in the Supreme Court of the
United States called Erie Railroad Co. versus Tompkins in the year
1938.
The Supreme Court, as long ago as that year, found lawyers gaming the
system, figuring out if a more favorable rule of law were going to be
applied in the Federal court than the State court, they would try to
get in to the Federal courts.
So the Supreme Court quite wisely said ``Look, you bring one of these
product liability lawsuits in Federal court or remove it to Federal
court, we are going to apply exactly the same legal rules that State
courts in that State would apply.''
So we cannot get a better deal, a more favorable law, a more
favorable rule by going into Federal court. A person would get exactly
the same rules. That, of course, has been the law of the country ever
since. It is that Supreme Court case that this amendment would
overturn.
I do not mean to say it would be unconstitutional; certainly it would
be constitutional. That is simply a ruling by the Supreme Court on
these relationships. But if Congress wants to create an entirely
different rule, it can do so.
In fact, this Congress has always in the past followed the rule of
Erie versus Tompkins. When Congress does create Federal rules of tort
law--and it does in the Federal Employees Liability Act and the Federal
Longshore and Harbor Workers Compensation Act, and the Merchant Marine
Act--it always says that those rules are going to be applied in any
court wherever it is located in which such an action is brought, so
that the system cannot be gamed.
It would be utterly improper, Mr. President, to depart from that wise
set of rules and to move to a system in which consciously we set up one
set of rules for actions in Federal court and another completely
different set of rules for actions in State courts.
Nor does anything in the bill criticized by the Senator from
Tennessee on the relationship between State and Federal courts,
undercut or contradict that. If I understood him correctly, the Senator
from Tennessee, said that this bill would have Federal courts
interpreting State law through the circuit courts of appeal. Not so.
[[Page S6052]] I will read the section that has to do with that
relationship from the current bill. It says, ``Notwithstanding any
other provision of law, any decision of a circuit court of appeals
interpreting a provision of this title,'' that is to say, Federal law
if we pass this ``this title shall be considered a controlling
precedent with respect to any subsequent decision made concerning the
interpretation of such provision by any Federal or State court within
the geographical boundaries of the area under the jurisdiction of the
Circuit Court of Appeals.''
This does not change the law. This is the law right now--Federal
courts have priority in the interpretation of Federal law. At least at
the Supreme Court level, that determination is binding on State courts
when State courts interpret Federal law.
Nothing in this section gives Federal courts of appeal the right to
interpret State laws. It only gives them the right to interpret this
law, assuming that we pass it, which is something in my view that we
did not have this section in the bill itself.
But to return to the argument, the argument is presented very
forcibly by those who do not want the Congress legislating in this
entire field, who are content with 50 to 53 different jurisdictions on
tort law. They have a lot of precedent on their side. This has been, by
and large with the exception of certain Federal statutes, the way in
which these relationships have been conducted in the past.
The impact of changes in the legal system, more litigious system,
higher judgments, greater risks to research and development of
products, has created an urgency, I think a sufficient urgency, to move
cautiously into this field. It can certainly be properly argued as it
is on the other side that, no, we should not interfere at all.
I think it is that argument that ought to be made, Mr. President,
that we should not involve ourselves in these issues, that we should
defeat this bill. I do not think we should do it by presenting an
amendment, first, which will not have any effect because there will be
so few cases brought; and, second, reverses a wise decision of the
Supreme Court of almost 60 years in age designed to prevent forum
shopping, by saying whatever court a person is in they will abide by
the same rule which this bill is consistent and which this amendment is
not.
I hope we can get on to debating the merits of the entire bill,
product liability, medical malpractice, rules relating to punitive
damages and the like.
As I say, the Senator from Tennessee illustrated the fact that we
have a problem, that we have a problem that crosses State lines. I
believe we should do something about that problem, but I would rather
see Members do nothing than to totally change the relationship between
the State and the Federal courts in the manner which would be
accomplished by this amendment.
Mr. COCHRAN addressed the Chair.
The PRESIDING OFFICER. The Senator from Mississippi.
Mr. COCHRAN. Mr. President, let me, first of all, compliment the
distinguished Senator from Tennessee for bringing this issue to the
Senate in the form of this amendment. I think it highlights the
frustration that many Members feel at this point in the consideration
of this legislation.
The Senator from Washington very correctly points out that this may
be an amendment on which reasonable scholars, even, could disagree in
terms of its impact on this bill before the Senate.
I think it speaks to a frustration that we have seen so many
amendments adopted now, and have been rejected, that seek to enlarge
considerably the subject matter which was first presented to this
Senate in this product liability bill.
I think it is clear that there is a sound jurisdictional basis for
the Congress to legislate in this area under the commerce clause--at
least that is my opinion--but it does not necessarily extend to all of
the subjects that have been debated on this floor after the bill has
been called up.
We have now undertaken to fully explore the Federal role in limiting
or modifying or writing new rules for professional liability of
physicians and others in the health care area, why not insist that
there be included a title on architects and engineers who are also
professionals and who are held to a higher standard of conduct because
they are professionals, but they are not included.
Are we going to permit, then, the legislation to proceed and have all
other professionals excluded because of this omission? Even lawyers are
professionals in the view of most. I mean, they are held to the same
high standard of conduct as professionals. So when they breach their
duty to provide skilled and thoughtful and professional assistance for
pay to some member of society, they are held liable if they breach that
duty, under the standards that are written into the law, just as
physicians are, or hospitals, or others. So I think what the Senator
from Tennessee is pointing out is that we are out into the deep water
now in an effort to comprehensively reform the civil justice system of
the United States, piecemeal, on the floor of the Senate.
We have committees that have jurisdiction over some of these areas.
The Labor Committee, for example, had a markup session and reported out
a bill dealing with malpractice liability and reforms in that area. As
I understand it, that was the basis of the amendment of the Senator
from Kentucky, Senator McConnell, on medical malpractice, which the
Senate has now adopted.
I understand the Banking Committee also is considering reporting out
legal reform legislation dealing with securities transactions where
class action suits are brought against companies or brokerage houses
for various alleged acts of negligence or breaches of duty to the
general public with respect to the value of securities or the conduct
of officers and board members with respect to running the companies in
a skilled way, or at least up to that standard that is owed to the
investor who might buy stock in that company.
There has developed, as I understand it, a sort of cottage industry
in some legal circles of bringing these kinds of actions, and now there
is a cry for reform and restraint and restrictions on those kinds of
actions. The Banking Committee has taken that up. They are considering
it, and I understand they are going to report out a bill. If we are
going to reform comprehensively the civil justice system of this
country, why not await the advice of the Banking Committee on that
subject and include that as a title in this bill or some bill?
I understand the Judiciary Committee has now before it a proposal by
the chairman of that committee, Senator Hatch from Utah, which includes
suggestions for other reforms in the civil justice system of the
country.
My concern, which is reflected in this amendment of the Senator from
Tennessee, is that we have gone so far now, we need to stop and say:
``Wait a minute. This is not a civil justice reform bill. It is not
all-inclusive,'' and try to narrow the application and the scope of
this legislation to something that more narrowly fits the purpose of
the bill that was brought to the floor by the Commerce Committee.
This bill relates to products liability. While some of us disagree
about some of the provisions--we might want to change it, amendments
ought to be considered--nonetheless, it had a fairly narrow application
that was firmly based upon the commerce clause of the Constitution
giving the Congress the power to legislate in this area. Some of these
arguments that I have heard have absolutely nothing whatsoever to do
with the Federal role in our society.
When they were talking about setting the lawyers' fees in certain
contingent cases, I thought back to the time when I remember organized
professional groups pleading with the Congress to do something about
the Federal Trade Commission because they were about to get into the
fee schedules of local professional organizations. Do you remember
that? Several years ago there was a great hue and cry by the--well, I
am not going to name the groups. They might get more attention than
they want.
But the point is, we were arguing that the Federal Trade Commission
did not have anything to do with the setting of fees at the local level
by professionals. That was something that was regulated by professional
societies, or State laws, or other entities--not the Federal
Government. And now here we are being asked to pass judgment on a
[[Page S6053]] fee charged by a lawyer to his client in a purely local
action maybe. It does not have anything to do with the Federal
Government. And the Federal Government should not have anything to do
with that. If you want to read and give effect to the Constitution,
that separates the Federal role from State governments' roles in these
areas.
So I am troubled about where we are now. I think at some point we may
have an opportunity to consider whether this bill should be modified in
a way that puts it more nearly back to where it started and that is
dealing with product liability rather than an effort to comprehensively
fix or modify every conceivable area of civil justice procedure or
substantive law that strikes a Senator in a moment of serious concern
that needs to be addressed on this bill, and we have seen those
amendments come up now, and I guess we will see many others.
So I again compliment the Senator from Tennessee for trying to put in
perspective what we are doing here and what we ought not to be doing
here.
I intend to vote for his amendment.
The PRESIDING OFFICER (Mr. DeWine). The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, we had the occasion to attend the
funeral of our distinguished former colleague, Senator Stennis. Time
and again the visiting Senators who had served with him talked about
his wisdom. My only comment is the wisdom of that distinguished
gentleman is not lost to the Senate when you hear the Senator from
Mississippi, Senator Cochran, talk. He does talk with professionalism.
He does talk of trying to act professionally with respect to a Federal
legislative body, and his statement on the amendment of the
distinguished Senator from Tennessee is music to my ears.
This has been sort of a run-amok situation. When the Senator from
Mississippi says it is not the intent to reform the whole civil justice
system, we started on product liability--that is what he thought and
that is what I thought but that is not what the contract calls for. I
do not want somebody to say I had gotten partisan on this thing,
because I am welcoming the bipartisanship with respect to the amendment
of the Senator from Tennessee. But the RNC talking points show they do
not have any idea of product liability. But they do have the civil
justice. The contract calls for that. And you have seen what has been
provided, Senator, on the House side, which is very, very disturbing.
Right to the amendment of the Senator from Tennessee, and
particularly his address, which has really been music to my ears. It is
like a drink of water in the desert, because he talks professionally of
the duty and responsibility here of the U.S. Congress and the Federal
Government. We do not find--and I agree with the Senator from
Tennessee--the need for the Federal Government to start preempting
local jury trials and the handling of tort cases at the local level. So
what he is saying is, to try to keep step with the theme upon which he
was elected--and incidentally it has been the theme upon which I have
been elected for 28 to 29 years--is that the government that is the
best government--the Jeffersonian phrase most often quoted--``is that
closest to the people'' and the local folks decide these things.
As I have said time and again here, you have a solution looking for a
problem, because product liability cases are on a diminishing scale.
There is no Federal problem with respect to the lawyers' fees
nationally with respect to their clients.
It is only to deter and enhance and enrich the manufacturer that we
even had the Abraham-McConnell amendment. But what the Senator from
Tennessee does, as I read this amendment, is sort of bring a little
order out of chaos. With respect to applicability, and in diversity
cases under title 18 what we have is a jurisdiction and a
responsibility.
So this would apply to the provisions of this bill, and diversity
only in those cases that have been removed from the State courts to the
Federal system. Yes. We have in Federal court a responsibility at the
Federal level. And let us apply whatever they desire, which is almost
open sesame now around here. I cannot tell what the next thing is
coming up. But like the sheepdog can taste the blood, they are going to
gobble up all the rights of the individuals back home because all of a
sudden we, who have been elected by the people back home--think the
people back home have totally lost judgment. We have to tell them how,
why, where, and when. You can put in this evidence but you cannot put
in this.
If that is necessary, the Senator from Tennessee says, let it apply
in those diversity and removal cases, and then we will have fulfilled
our responsibility. I hate to talk longer on the amendment because you
become identified with your position in these matters. Somebody would
say--I can hear them now--``Well, Hollings is for the Senator from
Tennessee's amendment, you had better vote against it.''
I am trying to laud the distinguished Senator from Tennessee,
particularly his comments. I just listened as he went chapter and verse
right down the line. That is the first address of which I had the
occasion to hear the distinguished Senator from Tennessee. I listened
to him through his client, Senator Howard Baker, years ago in earlier
proceedings. But now he is speaking in and of himself. I find that
solid. When they talk about common sense, that solid common sense is
coming through with respect to this particular issue of product
liability and the amendment of the Senator from Tennessee. So I
heartily endorse the attention, particularly of my colleague from West
Virginia, one of the leading sponsors on this bill.
When it comes down to law, yes. We have a responsibility on the
Federal side--diversity and removal. And let us apply whatever
everybody decides by a majority vote is necessary to occur. But let us
not in the context of simplicity and uniformity come back in and jumble
this whole thing into the 50 jurisdictions with the 50 different
interpretations and bring it up to the Federal system for even further
interpretations and appeals and say that what we have now is
uniformity.
The Senator from Tennessee gives us uniformity. There is no question
about it in this particular amendment. I heartily endorse his
initiative and his amendment.
I hope we can sort of calm down now without all of the little
amendments of interested parties. They are on a roll--you can see by
the way the votes are going--to affect all civil cases with respect to
punitive damages. You would never think that would occur on the floor
of the U.S. Senate because punitive damages had a salutary effect in
our society. All I have heard is about runaway juries and the legal
system as a lottery; these catcalls you might call it. It is almost
like an athletic event up here. The deliberative body is the
cheerleading section. The Senator from Tennessee says let us get out of
the stands, get out of the chair, and get down on the field of
responsibility and act like Senators and legislate where we have that
responsibility, and leave the States and the local folks to their own
judgments, their own considerations.
It is not a national problem. There have been problems arising.
States have treated it differently. They have all revised practically
all of their product liability laws in the last 15 years. These State
legislatures come up and say, ``For Heaven's sake, leave us alone.''
They testified before the Commerce Committee. The Association of State
Supreme Court Justices, a bipartisan group says,
For Heaven's sake, let us not put this thing in where we
have to take all of these words of art and interpretation in
the 50 States. Leave us alone.
The American Bar Association, a bipartisan group if there ever was
one, and a study group of lawyers said we studied it again. It is
totally off base. We oppose this bill. Mr. President, 123 legal
scholars have come forward and said now you really, in an effort to
give what you call common sense or uniformity or fairness--to get the
buzzwords going--what you have really done is given the highest degree
of unfairness, the highest degree of complexity that you could possibly
imagine. They testified. The attorneys general testified against this
measure. There it is.
How do I get that over to my colleagues? Well, thank heavens. I know
a lot of them would listen to the leadership of the Senator from
Tennessee,
[[Page S6054]] and I hope they will on this particular score.
I yield the floor.
Mr. HEFLIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. HEFLIN. Mr. President, I certainly join Senator Hollings with
regard to the remarks that have been made by the distinguished Senator
from Tennessee and the distinguished Senator from Mississippi.
The Senator from Mississippi talked about the fact that here we are
really going with this, a product liability to, in effect, change all
civil actions; changing the tort laws. All of a sudden, we have adopted
the Dole amendment which extends to all civil actions affecting
commerce. Of course, under the laws pertaining to commerce, it does not
say ``interstate commerce.'' It says ``commerce.'' I mean some people
resent the decision pertaining to the Lopez case that was handed down.
But this does not say ``interstate commerce.'' It says affecting
``commerce''--the language in the Dole amendment.
I wonder, how far does this go? Of all civil actions? Civil actions,
if there are civil rights cases, based on State law? Is it covered by
this? Does this apply to that? If there are civil rights cases under
Federal law, are they affected by this? There are so many questions
that are raised. There have been, for example, longstanding railroad
laws pertaining to FELA cases. Are they affected by that? There are
longstanding admiralty laws which are civil cases; are they affected by
these amendments? Is the Jones Act, which is another matter pertaining
to seafarers, affected by this act? There are so many things that just
immediately come to mind that raise concerns in my mind.
Consider, for example, the antitrust laws that are enacted by States.
You have the standard of three times damages, and as the bill is now
amended, it is reduced down to two times.
Economic? If there are no noneconomic damages, then it is reduced
down to twice. Are we changing the antitrust laws in reducing the
penalties pertaining to those?
Senator Cochran mentioned that here we are attempting to change all
of these laws on the floor of the Senate.
I said there have been groups that have studied the tort law. There
is the American Law Institute that has published the restatement of
torts. They have published the restatement of a great number of various
fields of law. This product liability bill, the underlying bill, has no
resemblance to that study group which has over the years included
defense counsel, plaintiff's counsel, professors, scholars, and people
who have worked on the concept of tort law, including product liability
law. But this has been written by lawyers that are interested in trying
to save themselves money, and they are trying to save themselves money
at the expense of injured people. And now it is being extended to all
civil actions.
Now, I am not exactly sure what the Thompson amendment does, and I
would like to sort of engage in a colloquy and ask the Senator some
questions pertaining to it.
From what I have been able to read and in listening to my colleague
speak, really the Senator's amendment, as I understand it, limits the
application of the underlying bill as now amended to Federal courts
only. Is that correct?
Mr. THOMPSON. That is correct, I say to the Senator.
Mr. HEFLIN. In other words, it is not controlling on actions that are
tried in State courts, such as the Senator's State and such as Senator
Cochran's State.
Mr. THOMPSON. That is correct.
Mr. HEFLIN. It does not impose any of those provisions that are in
the underlying bill, as amended, upon the State of Tennessee, the State
of Mississippi, the State of Alabama, the State of New York, or any
other State--it does not impose those provisions on them; is that
correct?
Mr. THOMPSON. That is absolutely correct.
Mr. HEFLIN. All right. Now, the provision dealing with the
interpretation of the court of appeals, which is in the underlying
bill, the court of appeals that might interpret a district court and
the Federal courts, that decision that is made relative to the
underlying bill, as amended, would not affect proceedings in a State
court?
Mr. THOMPSON. Under my amendment, that is correct.
Mr. HEFLIN. As I understand it, the Senator's amendment does not
create a new cause of action or a Federal cause of action. Is that
correct?
Mr. THOMPSON. That is exactly correct.
Mr. HEFLIN. In other words, the Senator's amendment, in effect, says
that the provisions of the underlying bill--you have provisions dealing
with punitive damages; you have provisions dealing with misuse and
alteration; you have standards that are created relative to punitive
damages; you have provisions dealing with intoxication and defenses on
that----
Mr. THOMPSON. In the medical area also.
Mr. HEFLIN. You have the biomaterials provision and all of that in
the product liability bill. Are those provisions limited strictly to
cases that are tried in Federal district courts?
Mr. THOMPSON. That is correct.
Mr. HEFLIN. All right. So, now, if I understand it from the Senator's
speech and also Senator Simon's speech, the Senator's idea is that this
would be an experiment, in effect a pilot program for a period of time
in which you would determine how it would work, and from it, State
courts could use the experience. State could learn from that
experience? And, of course, Congress could look at the same thing and
learn from the experiences that might be contained therein; is that
correct?
Mr. THOMPSON. Yes, that is correct.
It occurs to me on that point that States have learned, for example,
from the Federal Rules of Civil Procedure and I believe also perhaps
the Federal Rules of Criminal Procedure. Federal courts adopted rules
that proved to be effective, and after a period of time States like
Tennessee and others adopted State rules that resemble very much or in
some cases are identical to the Federal rules, because over a period of
time they proved to be salutary and desirable.
Mr. HEFLIN. All right. The distinguished Senator from Tennessee, I am
sure, knows of the doctrine which came out of a case in the Supreme
Court called Erie versus Tompkins. Now, Erie versus Tompkins basically
says that State law prevails in diversity cases and prevails in Federal
cases in the event that the Federal law is not written to approach it.
In other words, if there is a void in Federal law, then the concept is
that State law will be followed under the doctrine of Erie versus
Tompkins in the Federal courts.
Mr. THOMPSON. Yes. The Federal court can follow the substantive law
of the State.
Mr. HEFLIN. The Senator is correct in regard to substantive law. So
if this particular bill, as amended, is silent relative to a State law
and is not preempted, then a Federal court would continue to apply
State substantive law in a case brought in the Federal courts? Is that
correct?
Mr. THOMPSON. That is absolutely correct. In other words, in other
diversity cases not covered by the provisions of this amendment or the
underlying bill, Erie would apply and the substantive law of the States
as always would still apply in those cases.
Mr. HEFLIN. Basically, I have a reservation on the philosophical
viewpoint. I think, No. 1, as the bill presently stands, as it is
amended, the Senator's amendment is an improvement. I do have
reservations as to whether or not from a philosophical viewpoint we
ought to be legislating in an area that has been left to the States for
many years. And so it is a question of federalism. I am in somewhat of
a conflict as to whether or not I would support the Senator's
amendment, and that is something I am going to think about and give a
little more thought to.
Mr. THOMPSON. If I could respond to that point just a moment, I think
the Senator is reflecting a conflict that is going on within a lot of
us. A lot of us understand the concern of our constituencies that
businesses, and so forth, have legitimate complaints. A lot of us are
also concerned about this rush to judgment, where the U.S. Congress and
the Federal Government are on the verge of supplanting 200 years of
State law, at a time when many of us are saying in other areas, whether
it be welfare reform, regulatory reform,
[[Page S6055]] taxes, or unfunded mandates, we are all saying get the
Government out of the States' business. States are where the innovation
is going on. Let them take care of themselves. So we are all engaged in
that conflict.
Product liability has been discussed in the Chamber of this body for
many years, long before I arrived. The Senator, I am sure, has engaged
in those debates over the years. I think there is a feeling that this
is an area wherein there is more justification for our involvement on
the Federal level because of the inherent interstate nature of the
activities. Seventy percent of all manufactured goods now travel in
interstate commerce.
If I had my desire, if I could write the legislation, or I could come
to the conclusion, perhaps this is not where I would be. But I see the
freight train going down the tracks, and I think we at some point have
a responsibility to at least try to make sure that we wind up in as
good a position as we can. And for me, that is carving out an area and
saying, look, if we are going to do this, let us not go all across the
board. Let us not usurp all State laws across the board dealing in
these areas without knowing what we are doing.
The Senator from Alabama mentioned and in 5 minutes raised a dozen
questions that nobody knows the answers to. The answers will be decided
through reams and reams and reams of court decisions throughout this
Nation over the next several years. We will create more lawyer work
than we ever dreamed of because of what is going on here.
So what I am saying is, let us take the basic part of the original
underlying legislation, which has to do with products liability, which
has more of an interstate nature to it than what goes on in some small
law office, what goes on in some accountant's office, what goes on in
some doctor's small office or any of these other areas, and couple that
with the interstate nature of most of products litigation, and that is
diversity cases.
Incidentally, I disagree with my distinguished colleague from
Washington concerning the number of diversity cases filed in Federal
courts. Last year, the Administrative Office of the U.S. Courts
reported that 22,000 products cases were filed--tried or disposed of--
in Federal courts. That represents approximately 45 percent of all
products cases.
So, close to half of all products cases, under my amendment, would
get the benefit of this new Federal rule and legislation that we are
proposing. But at least we would not be, in one fell swoop, supplanting
all of the State law that has been developed over 200 years.
I believe that it is justified and it makes some sense in this area
and would allow us to take a deep breath and look and see what we have
wrought, whether or not it is working, whether or not insurance rates
are being affected, whether or not this is something that States want
to emulate or something that we, as the U.S. Congress, want to
backtrack on and say we made a mistake. Under this, we could unscramble
the Federal egg a whole lot better than if we changed all the laws in
the States, got years of decisions, new decisions based on those laws,
learned that we were wrong, got a new group in the majority in this
body and in the House and had them come in and impose their will and
their concept of justice and respond to their clients and their
constituents.
I think it would be a mess. I think we are asking for a real mess
down the road. What I am trying to avoid with this amendment is that
kind of result, which I think would wreak havoc with our court system
in this country.
(Mr. HATCH assumed the chair.)
Mr. HEFLIN. Mr. President, the Senator keeps using the word
``interstate.'' As I read the language that we have now adopted, it is
applied in regard to punitive damages in any civil action whose subject
matter affects commerce, not interstate commerce, but commerce.
Actually, it seems to me that commerce is affected almost by every
conceivable type of action if there is a transaction. That, to me,
under this language that is now in here, makes it so broad. It affects
commerce and affects that aspect of it.
Now, under the Senator's amendment, he would allow for actions that
are transferred, removed from the State courts to the Federal courts.
And that is what is known as a removal action.
It is my understanding today that I think we passed in the Senate
some bills that would enlarge the jurisdiction. But the present
jurisdiction is that if the suit is for $50,000 or less, you cannot
remove it from the State court to the Federal court. So, therefore,
those types of cases of a frivolous nature seeking small damages
relative to this matter would stay in the State court if they are
$50,000 or less. Does the Senator interpret it that way?
Mr. THOMAS. Yes, I do.
Mr. HEFLIN. Now, if you are seeking punitive damages, you are limited
in the amount that you claim with regard to the removal. So, chances
are, you are not going to have many punitive damage cases that are
affected, since there is a limit in the amount of money that you sue
for, in the removal of those small type cases. Does the Senator agree
with that?
Mr. THOMPSON. I am sorry, I missed that.
Mr. HEFLIN. I was just saying that, looking at punitive damages, we
look upon that as being in big figures. But if the suit is only for
$50,000, then the amount that you sue for includes if you seek punitive
damages and it puts a cap on it. You cannot recover more than you can
sue for and if you do not sue for more than $50,000, then you stay in
the State courts and it is not removable to the Federal court.
Mr. THOMPSON. I think that is correct.
Mr. HEFLIN. All right.
Now, I am not sure that I understand this provision, the last one,
which is No. 8. It reads:
In section 102(c), add the following new paragraph:
(8) create a cause of action or provide for jurisdiction by
a Federal Court under section 1331 or 1337 of title 28,
United States Code, that otherwise would not exist under
applicable Federal or State law.
Now, that provision in there, I believe, is in the bill that was
introduced. That is to prevent saying: ``Create a Federal cause of
action,'' and therefore leaves it strictly to the preemption that is in
this bill as amended and does not create a separate cause of action at
the Federal courts; is that correct?
Mr. THOMPSON. That is correct.
Mr. HEFLIN. I thank the Senator. I appreciate the distinguished
Senator from Tennessee responding to my questions relative to these
matters. I have a better understanding relative to what his amendment
attempts to do.
I might just ask him, too, in this regard, I believe if we look at
the Federal law and the Federal Rules of Civil Procedure that apply,
the distinction between equity and civil cases is now combined into
civil cases.
So in the Federal law that we have today under the Federal Rules of
Civil Procedure, cases that we used to make a distinction between--we
used to have really three types of cases. You would have criminal
cases, you would have civil cases, and equity cases.
But the Federal Rules of Procedure, of course, which are not affected
by Erie versus Tompkins, are now combined and you have equity and civil
cases in it. So, basically, under the present Dole amendment, basically
what we are looking at are really two types of cases--criminal cases
and civil cases.
Under this, in regard to the Dole amendment as to punitive damages,
in other words, the only thing it really excludes is criminal cases.
Would the Senator agree with that?
Mr. THOMPSON. That seems to be the result of it.
Mr. HEFLIN. I yield the floor.
Mr. THOMPSON addressed the Chair.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. Mr. President, I, too, share the concern of the Senator
from Alabama concerning the application of the commerce clause to some
of the amendments that we have already adopted. I suppose the courts
will have to determine whether or not there is sufficient interstate
commerce with regard to some of these matters in the future.
In response to some of the comments made by the Senator from
Washington, I have already pointed out that according to the American
Bar Foundation, which is an independent body, separate from the
American Bar Association,
[[Page S6056]] that if you include all the product liability cases
filed in Federal court, plus those removed to Federal court--in other
words, the subject of this amendment--you have approximately 45 percent
of the product liability cases that were filed last year. So this is
not a situation where only a handful of cases would be brought in
Federal court.
Second, the amendment which I propose is not, as it has been
characterized, a killer amendment designed to oppose any kind of
reform. We started off early on in this body dealing with frivolous
lawsuits. The only provision in any of this debate that actually deals
with frivolous lawsuits is the one Senator Brown proposed concerning
rule 11. I supported that. We need a stronger rule 11 to take care of
frivolous lawsuits.
Beyond that, it would be easy enough to simply oppose any legislation
because it interferes with States' legitimate rights in these areas. We
are not doing that. We are trying to strengthen this and come up with
something that not only will pass but will not cause us to regret our
actions later. Our amendment will give us an opportunity to see whether
or not these broad-range measures work in the Federal court system,
which is the system that we ought to be concerned with and with which
we can legitimately deal.
The question arises: Why would anybody ever file a lawsuit in Federal
court anymore under the Thompson amendment? There are several reasons.
For example, the underlying bill, I believe, has a 20-year statute of
repose. Tennessee has a 10-year statute of repose. If it is past 10
years since the product was manufactured, you would certainly bring the
case in Federal court, not State court, because you would want to get
the benefit of that statute of repose.
Also, the State of Washington and other States have no punitive
damages at all. A plaintiff would certainly not want to bring a case in
State courts in Washington if he had an opportunity to do otherwise.
On the preemption of State law, perhaps we are just passing in the
night, as far as our conversation is concerned, but the underlying bill
certainly preempts State law with regard to the subject matter covered
by the underlying bill. So you have a Federal circuit determining what
the interpretation of that law is and then the States have to follow
that Federal court interpretation of that Federal law in cases that are
decided before them.
On the question of forum shopping, under the underlying bill, you
could have 50 different sets of rules in 50 different States. For
example, with regard to caps, they are only caps. States are free to do
more restrictive things if they are within those caps. They cannot do
more liberal things, as far as plaintiffs are concerned. They can do
more restrictive things.
You can have 50 different sets of rules. You can have plaintiffs
shopping through 50 different States in some situations under the
underlying bill. At least under this amendment, there will be many
cases that are properly removable to Federal court. When those cases
are removed, we will have one Federal standard.
So, Mr. President, I respect my distinguished colleague from
Washington and what he is trying to do in his strong fight for a
products bill. I suggest to him that what we are doing here, in the
long run will strengthen his efforts instead of diminish them. I
certainly hope this amendment gets full consideration in this body.
Thank you. I yield the floor.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER (Mr. Burns). The Senator from Utah.
Mr. HATCH. Mr. President, I am proud the Senator from Tennessee is on
the Judiciary Committee working with us on many issues. With regard to
this amendment, I am very concerned about it because I believe this
amendment would undermine much of what our tort reform efforts on the
floor of the Senate really are about and undermine what we have been
trying to do this week.
Senator Thompson's amendment, as I view it, would strictly limit the
coverage of tort reform legislation and, in my opinion, would take the
whole substance out of this legislation.
Only 4 to 5 percent of tort cases are filed in our Federal courts.
That is still a significant number, but it is still only 4 to 5
percent. That is according to the Department of Justice figures. Thus,
under the Thompson amendment, the vast majority of litigation abuses in
this country would go unchecked if his amendment is adopted. Plaintiffs
would be able to sue in State courts to avoid having their suits
subject to the Federal law. Although in some cases defendants might be
able to remove State-filed cases to Federal courts, plaintiffs' lawyers
will surely plead their cases in ways to prevent removal to Federal
courts. The end result is that defendants may be subjected to vastly
different substantive legal standards, depending on the whims or
designs of plaintiffs, and that simply is not fair.
Under the Thompson amendment, parties would be uncertain about what
laws would apply to their conduct. If sued in State court, one rule
would apply. If sued in Federal court, an entirely different set of
laws could apply. That uncertainty will not address the harmful effects
on our economy today and the harmful effects that this bill is trying
to cure. For example, higher liability insurance rates have been a
problem in this country for years due to abusive litigation. Under the
Thompson amendment, insurance companies will not be able to
significantly reduce liability insurance rates because they will have
no idea what risks they are going to face. They will have no idea where
businesses and other groups they insure will be sued. The rates will
continue to remain high, and all of those higher rates will continue to
be passed on to you and me as consumers.
So the people who really lose, if we do not pass this tort reform
legislation, this product liability legislation, as amended in its
current form, will be every consumer in this country. Consumer losses
amount to trillions of dollars over time, and I think it is time for us
to face up to these problems.
Look, I have been a trial lawyer. I have tried hundreds of cases in
my legal career, many of which are cases involving torts. I have to
tell you that I think much good is done by trial lawyers who try to
stand up against some of the evils in society by bringing litigation
with regard to torts that are committed. However, we really in this
country have gone way over to one side to the point where the deck is
stacked. This bill is an attempt to try to bring our laws back to the
middle where people are treated fairly, where lawyers can still win
their cases, where lawyers can still win substantial verdicts, but
where lawyers no longer get these runaway verdicts. These runaway
verdicts really are happening in this country with greater frequency.
I might add, this kind of legislation, as evidenced by the Thompson
amendment, is highly unusual. It is one thing to apply different
procedural rules to cases brought in Federal or State courts. It is
entirely another question to apply a different substantive rule. Ever
since the landmark decision in Erie versus Tompkins, it has been clear
that Federal courts sitting in diversity cases apply the substantive
rules of State law.
This amendment would present a striking, perhaps even unprecedented,
application of a Federal law. The very same tort case would proceed in
State court under one substantive law, but if removed to Federal court
in the same State, because of diversity, a different substantive law
would apply to it. In my view, this does not make sense.
Senator Thompson acknowledges that the commerce clause clearly
empowers Congress to act over product liability cases. This is not an
area in which Congress ought to stay its hand, because the high cost of
litigation abuses cross State lines and because they are a serious
problem. I personally believe this is an area in which a limited
Federal solution is amply justified.
Now, I have had judges all over this country come to me and say,
``You must do something about punitive damages''--from the highest
courts of this land--because they try not to be activist judges and do
not believe that they can resolve this problem, and it is going to take
congressional enactment to do so.
In the last amendment, the Dole-Exon-Hatch amendment, we made a great
effort--and it did pass--to try to
[[Page S6057]] resolve some of these punitive damage problems. I think
that amendment will help us to get those problems resolved. If we
bifurcate the system saying that amendment only applies to the Federal
courts and not to the State courts, we will continue this runaway
system of punitive damages that is hurting everybody in America. And in
the process, we will be hurting the Federal courts as well and the
right of people to go to Federal court.
As a trial lawyer, I went to both State and Federal courts on a
regular basis. I have to say that I enjoyed both of them, and I found
competent people in both courts. But there were areas of the law where
the Federal courts were better. There were areas of the law where the
State courts were better. I tried, in the interest of my clients, to do
the best I could by bringing the cases, when I could, in either of the
courts and made the choice.
As a trial lawyer in those days--true, I am arguing for a time past,
19 years ago as a trial lawyer--our major claims were for economic and
noneconomic damages, compensatory or noneconomic damages. We were able
to get substantial verdicts by presenting our cases on those two
theories. You very seldom alleged punitive damages unless there was
egregious or intentional or willful conduct that justified punitive
damages. But in this day and age, it is almost malpractice to not plead
punitive damages, even in simple negligence cases in some of these
States where the laws have gone awry and where the courts have in
essence been captives of certain trial lawyers who literally are
hurting the practice of law throughout this country by their voracious
desire to make money at all costs, under the guise that they are
helping consumers and those who are injured, when in fact the people
who are primarily being helped are really those particular trial
lawyers who have been doing this.
I can remember in one State, in a contest over a Supreme Court
nomination, where there was a reformer running for the Supreme Court
and the other person was a total captive of certain trial lawyers in
that State. In one evening, 15 trial lawyers raised over $1\1/2\
million for their clone, for their captive, for the person who would
rule for the plaintiffs no matter what the law said, or no matter what
the law meant. Now, that is wrong. We are trying to resolve these
problems with this particular bill.
My colleague from Tennessee is very sincere in this amendment. I have
some feelings about it myself, because I personally do not want to see
injured parties unable to receive adequate compensation for the
injuries they suffered. On the other hand, I do not want to see
everybody else in America irked because we will not curtail some of the
abuses that really go on in trial practice every day.
I am also very concerned because I think some of these lawyers are
really hurting my beloved profession. To some of them, these problems
do not mean anything. It is just a voracious desire to make money at
the expense of really virtually everybody. I think it is time to get
some system that works, that is fair, that still protects the injured
parties, but does not run away, like our current system has been doing
in a great number of States.
Now, there are few States where it is just outrageous, and in a great
number of States we are finding outrageous punitive damage awards from
time to time. In some States, it is almost all of the time. As I said,
it has become a rule rather than an exception to plead for punitive
damages, even in cases where formerly there would be no real claim at
all. I think it is time to do something about this. I hope our
colleagues will vote against this amendment, as sincere as it is, and
as well argued as the distinguished Senator from Tennessee has done it.
I respect him, I respect what he is trying to do, I respect our
profession, and I respect trial lawyers. Most trial lawyers are very
decent, honorable people who want to do the job for their clients. They
want to do what is right. But there are a few who are distorting the
profession and I think making a mockery out of trial law and out of the
damages system of this country. That is what we are trying to resolve
and trying to solve with this legislation. There is no simple way of
doing it. This is the best way I know how.
To that degree, I want to praise the two leaders on the floor,
Senators Rockefeller and Gorton, for the excellent efforts they have
made in order to try to keep this bill together, get it passed, and to
get legislation that might help solve some of these vicious tort
problems in our society today.
I yield the floor.
Mr. ROCKEFELLER. Mr. President, I thank the Senator from the State of
Utah for his very nice closing sentence and also his general argument.
Mr. President, I have been--in case nobody has noticed--trying to
enact what I call moderate product liability for many years--8 or 9--
because I am convinced that consumers and businesses alike are ill
served by the current disjointed State-by-State legal system.
Under this patchwork system of State laws that we have--glorified by
those who propose this--victims are forced to wait far too long for
compensation after their injury, and far too often it is the lawyers
who benefit more from the awards, the settlements received, than the
victims, which is not what I thought America was about.
This is simply unjust. I am absolutely convinced that the flow of
goods in interstate commerce is severely hampered by the patchwork of
product liability laws across this Nation. Businesses of every size and
type simply have no way of knowing, under the current system, what
rules they need to follow. How could they? They have 50 States to deal
with. Businesses are hard pressed these days, small businesses in
particular. This is especially onerous on those same small and startup
enterprises which, in my State of West Virginia and most of the rest of
the Nation, are in fact the backbone of the economy. I daresay that the
Presiding Officer would say that that is true for his State of Montana.
The amendment by the Senator from Tennessee, the very distinguished
Senator Thompson, seeks to limit the bill's application to only those
cases brought in Federal court. Make no mistake about it, this
amendment would effectively kill product liability reform. It is a bill
killer.
The reasons we must reject this amendment are the very same reasons
we need product liability reform in the first place. I have stated that
many times during the debate. The overwhelming majority--and this was
said more ably by my colleague from the State of Washington, Senator
Gorton--about 95 percent of product liability cases, are brought in
State courts now. He suggests that number might go down closer to 1
percent. They would be totally untouched if this amendment were
approved.
Additionally, it is very likely that even fewer cases would be
brought in Federal courts because plaintiffs would keep their options
open for forum shopping, as we call it, for better rules in some other
State courts.
Consumers lose under the current system and that would not change if
the Thompson amendment were adopted. Why do they lose? Consumers lose
because they receive inadequate compensation under current State law.
Consumers lose because they have to wait far too long to receive
compensation.
Far too often, injured consumers are forced into poverty while
waiting for their cases to be resolved. They have to depend on their
own insurance or their own individual resources, if they have any.
Consumers lose because they are forced to pay outrageous legal fees
under a State-by-State system. Consumers also lose because the
patchwork of State statutes of limitation are so severe under the
current law and result in barring legitimate claims. That is the
subject I will discuss in a moment.
The underlying bill would correct these problems by replacing the
State-by-State patchwork with a far more uniform system. The Thompson
amendment would completely unravel that new uniform system.
In earlier debate, I have also set forth why manufacturers lose under
the current State-by-State system. But I think this bears repeating.
Manufacturers lose simply because they face unpredictable and
escalating costs of litigation. These stifle research, these stifle
development, they prevent investment, they cause products to be
withdrawn, they cause products not to
[[Page S6058]] be improved, and they cost--guess what--jobs.
We have been working hard, very hard. The Senator from Washington and
Senators on his side of the aisle and Senators on my side of the aisle
have been working very, very hard to find the right balance.
Senator Gorton is not an extremist. The Senator from West Virginia is
not an extremist. We are trying to find the right balance between
consumers, plaintiffs, and businesses, with a special attention to
small businesses, which is the majority of our businesses. We have been
working very, very hard to find that right balance, to assure that the
rights of the injured are fully protected while we meet the needs of
business to manufacture and to invest.
We need both in this country. A person cannot just say, well, it is
only consumers that count and business does not count, because if we
did not have business, nobody would work. They would have no income. It
is also equally silly to say it is only business that counts, because
then that might take America back to a day when business practiced
differently than they do today.
We have developed, I think, in America, a system whereby we try to
protect consumers, and we do in the bill that the Senator from
Washington and I suggest. The Gorton-Rockefeller substitute strikes
that important balance for consumers and business. The Thompson
amendment, I say again, would destroy that balanced solution.
The amendment of the Senator from Tennessee has a familiar and, I
think, a very curious ring to it: Familiar because so far, the only
suggestion concerning the problems of the product liability maze that I
have heard from the opponents to this bill is the idea embodied in this
amendment; curious because where is the logic in limiting the surgery
proposed in our product liability bill to the equivalent of only one
finger, when the problem plagues both hands?
We should face it. This amendment is based on a refusal to
acknowledge the ridiculous cost, delays, and burdens of a very big
problem called the patchwork of 55 sets of product liability rules and
laws across the States and the territories.
I might add at this point that in earlier years, in hearings in the
Commerce Committee, those opposing product liability reform always said
that there will be this massive confusion if we have some kind of
uniformity at the Federal level in certain areas, everything else being
reserved to the States, which we do in this bill.
They always say, well, imagine a higher court trying to interpret 50
sets of laws. It is a specious argument. It needs to be said that it is
a specious argument.
Right now, we are plagued by the 50 sets of laws, all different, to
all States. So people forum shop, and I guess it is fairly well-known
that if a person wants to go for punitive damages, there are three
States to go to, and that is where most of the amount of the punitive
damages come from. If they can find a way to drag somebody in--and
Alabama is one of those States, curiously, ironically, interestingly--
then people go there and they get very good results. There are two
other States, in particular, also.
The point is that the Federal courts will not take very long--and a
Federal judge pointed this out a couple of years ago--to figure out
when we get uniformity and they have to take these 50 State laws, that
there will now only be one law in a certain area and 50 laws in other
areas.
It will not be confusing very long. It is permanently confusing now
because everybody is running all over the place. Judges are smart
folks. They do not get there because they cannot pass an SAT test; they
get there because they are smart and they have to figure things out
quickly. They will be able to do it.
This will actually make the whole process of interpreting State laws
easier, more efficient, and better. Let that be said, because it has
not been said in this debate. The argument that uniformity somehow
confuses this by throwing open all of these State laws is specious. I
pick that word for no particular reason.
I suggest to the Senators opposing the bill before the Senate and
supporting this amendment, they should both vote against the amendment
of the Senator from Tennessee.
Face it: This amendment guts the purpose of this product liability
reform bill. We are trying to respond to problems that States on their
own simply cannot fix themselves. What can the State legislature of
West Virginia, for example, do about the fact that most of my State
manufacturers sell their products in other States, where the rules
dealing with punitive damages, with joint and several liability, with
the statute of limitations, et cetera, come in every conceivable form?
It is chaos.
I hear the Senator from Tennessee talk about innovation in the
States, and I want to get on to the subject of innovation, since we do
not have a time agreement on this. And I think the Senator from
Washington and I would be glad to agree to a time agreement if any
person shows any interest.
Let me discuss a little bit about product liability. I think the
reason why the bill needs to pass and why I think the bill will pass,
is that consumers lose, Mr. President, under the current system.
Consumers receive inadequate compensation. That is, people who are
injured, through product litigation, severely injured people--
consumers--only recover about one-third of their actual damages.
Just think about that, severely injured, chewed up in a machine, or
something of that sort, and they end up averaging only about a third of
what they should actually get. While those who are mildly injured, who
are also important, recover approximately five times their economic
losses. That is totally unjust. And anyone on this floor who would
defend that should choose not to.
Consumers have to wait a long time to get any kind of justice under
the current system. Injured consumers in need of assistance must suffer
through approximately 3 years of litigation before they receive a
nickel of compensation. That is not the American way. And where we can
improve it we ought to do so.
Consumers pay outrageous costs. To put it another way, the current
tort system which rules the Nation at this point, and which the Senator
from Washington and I are trying reasonably and in a balanced fashion
to change, pays more to lawyers than it does to claimants. It pays more
to lawyers than it does to claimants? Yes. That is wrong. This is
America--that is wrong.
If there are those on this floor who choose to defend that and say
that is good for injured people, that is good law, that is exactly the
way we should leave the law, that we should leave that entirely
unfettered so that lawyers make more off of this than do the people who
are injured whom they purport to be defending, then let them defend
that. Let them defend that. I am interested in their argument. They
always talk about something else. They bring up Victor Schwartz, or
they bring up some little thing here or there, but they never defend
these things because they cannot, because they are dead wrong and they
know it.
Another reason we need to change the product liability system in this
country is because consumers face closed courthouse doors. What do I
mean by that? A lot of people who are injured in this country by a
product cannot file a claim because of something called the statute of
limitations. I am not a lawyer, but I at least know what that means.
And if, for example, I am injured in Virginia, my time for filing a
claim runs out after 2 years from the time that I am injured.
I have had several debates with the Senator from California, Senator
Boxer, about DES. She has said anybody involved with DES hates this
bill. She has used that word many times--hates this bill. Hates the
bill. Hates the product liability reform bill the Senator from
Washington and I are trying to get passed.
What I cannot seem to make clear enough is that under our bill,
anybody who faced the kind of problems that somebody who faces DES
faces, or somebody who faces asbestos, or somebody who faces some other
kind of toxic harm or chemical harm--the Persian Gulf war syndrome,
agent orange, all of this--wherein they do not discover they are
injured for maybe 4 years, 5 years, 6 years, 7 years, 12
[[Page S6059]] years, in our bill we say the statute of limitations,
that is the time you can make application to file suit against the
manufacturer, that person who injured you or that company that injured
you--the two year limitation--should not start until you know that you
are injured and you know what caused your injury. Which means all the
DES people would have been fine under our bill, while they are
completely cut off under the current law if the State has a statute of
limitations which runs out, as most of them do, before DES would have
been discovered.
I posit that, as lawyers say. I posit that. It is fact. People can
say it is not true, I do not like the bill. There is a mindset around
here on this whole subject which is very surprising and disturbing to
me. I think this is not true--reasonable people, I am just looking at
the Senator from Tennessee whom I consider a very reasonable person. I
think he is thoughtful, he weighs things. But a lot of people in the
fighting of this battle over the years have become so hardline that any
kind of a change, any suggestion of a new fact, any suggestion that
maybe the law could be improved, brings 100 percent disapproval and
anger.
It is like somebody just puts out an idea and somebody is afraid the
idea might be good so they immediately squash the idea. They just pound
it down into the ground with their fists and crush the idea for fear it
might be good or develop into something which is good and useful for
the American people and for business.
It is a tendency which I regret in this body, which I do not consider
worthy of the U.S. Senate. It is encouraged, I think, by a sort of
hard-line mentality, and a lack of civility even, in discussing all of
this.
Again, we want to open the courthouse doors through the statute of
limitations. The opponents want the courthouse doors closed. Let them
explain otherwise. Let them explain otherwise.
States with statutes of limitation that begin to run out at the time
of injury, there are four of them: Arkansas, Virginia, Hawaii, Wyoming.
States with statutes of limitation which begin to run when the injury
is discovered or should have been discovered, there are 16 of them. So
that does not mean when the cause was discovered, that just means when
the injury was discovered. That is not enough. It has to be when it was
discovered and when the cause was discovered. We know from the Persian
Gulf war veterans--and I do not know whether this applies to them or
not--but we know they know when they are sick. But we also know that
the U.S. Government and Department of Defense says that they are not
sick. I go visit them and their hands are trembling, they cannot sleep,
they cannot keep their marriages together, they are tired all day, they
cannot keep their jobs, and they cannot focus their eyes on a newspaper
for more than 5 minutes. But the Department of Defense says there is
nothing wrong.
I beg to differ because I visit these people when I go back to my
State of West Virginia, because I care about this and this is a cause
of mine, to unmask Persian Gulf war syndrome. They know they are sick,
but they cannot say why. What caused it? Was it Pyridostigmine? Was it
some other kind of vaccine?
So you have 16 States--20 States--automatically where people are shut
out. If those who oppose this legislation want to say, ``We are for
that, let them continue to be shut out,'' then let them get up and say
so. Or if they say I am wrong, the Senator from West Virginia is wrong,
then let them get up and say that. Let them get up and say we do not
open the courthouse doors and that they do not close them--as they do,
the courthouse doors--and keep them closed.
It is cruel. It does not make sense. It is based upon old-time life
when it was all machines. Now a lot of the stuff is chemicals, toxins,
and all kinds of things. That is where a lot of accidents happen. The
industrial age has evolved. Just as you can sue somebody under current
law for a piece of machinery that was built in the 19th century and
that has passed through 15 different owners, all of whom have altered
it. That was made for that time, that generation, that industrial
revolution period. That idea is not made for the current times at all.
So we are trying to open the courthouse doors to consumers.
Manufacturers lose under this current system. We are talking about
people and manufacturers, yes, a balanced bill. Liability stifles
research and development. This country is great because of our research
and development, our spirit, our entrepreneurial spirit, which is
embodied in research and development. Japan does not do basic research.
The United States does. Then they come and buy it from us, or we sell
it to them, however you want to characterize it. And on that the
Senator from South Carolina would agree. We sell them our technology.
But we do the basic research. That is the heart of America's greatness,
the basic research we have done and the uses to which we put it.
But because of the current law, the fact is that many businesses
spend far more money on litigation than they do on research and
development. That is bad for business. That is bad for America. The
fact remains that many companies these days--I think it is something
like 47 percent of companies--have withdrawn products because of
litigation fears. And a lot of companies now, if this is possible to
believe, are afraid to improve their current products because by the
act of improving their current products, it would imply that the
previous iteration of that product was somehow defective and,
therefore, they could be sued and, therefore, they do not improve the
product so they cannot be sued. How ridiculous. How unlike America. If
those who oppose this bill want to defend that, then let them go ahead
and do that.
Phyllis Greenberger, who is the executive director of the Society for
Advancement of Women's Health Research, in testimony before the Senate
Commerce Committee on March of this year said:
Liability concerns are stifling research and development of
products for women.
She said:
Contraceptive development in the U.S. provides an excellent
example of how the threat of litigation can devastate an
entire industry. Thirty years ago there were 13 companies in
this country putting their resources towards research and
development of new contraceptives. Today, there are only two.
And then what does she say?
This is not because there is no market demand. Liability
concerns are keeping products which have already been
developed off the market despite a known therapeutic need.
I will use an example which I have used before. It is a very good
one. It is Benedictine.
Benedictine is the only prescription medicine ever approved
in the United States for the treatment of nausea and vomiting
during pregnancy. None other has ever been approved. It was
approved by the Food and Drug Administration. The drug was
used by 30,000 women until assertions arose that it caused
birth defects. While scientific evidence failed to
demonstrate any link and the FDA continued to back the
product.
Remember this is still Phyllis Greenberger talking:
While . . . the FDA continued to back the product, the
manufacturer voluntarily removed Benedictine from the market
due to the overwhelming cost of defending the product.
Currently, therefore, there is no approved product available
to treat pregnant women who experience severe and prolonged
nausea, which can be harmful to the mother and to the fetus.
If that is what the opponents of this legislation want, let them
defend it. They are using Benedictine all over the world--all over the
world but not in the good old U.S.A. because of the fear of product
liability litigation under our present system, which some of us are
trying to change.
I think the United States loses under the current system. Insurance
rates disable U.S. manufacturers. American manufacturers pay 10 to 50
times more for product liability insurance than their foreign
competitors.
You have the European Economic Community, which has adopted uniform
product liability laws. I believe, although I am not 100 percent sure,
that 60 affiliated countries have done the same.
So we will continue to pay as a country 10 to 50 times more in
insurance because we have all of these State laws, which all compete
with each other, and other countries will have a uniform law, and they
all will be our main competitors for exports and imports in this
[[Page S6060]] world. And who loses? The American people, the American
workers, American business. America loses.
In a single year, Mr. President, the liability system cost the State
of Texas 79,000 jobs. If that is the case, then let those who want to
see that current system continue to get up and defend it. When people
run for office, they talk about the need for jobs. Texas is losing jobs
because of this. They have a lot of research and development in Texas,
which is a very progressive, industrial State. So they are very much
hurt by this.
Interestingly, when I say the United States loses under the current
system, part of this is that the current system does not enhance
product safety. I will have something to say about that. I would beg
those listening to listen to this one sentence.
Though the number of torts--that is, suits--in product liability rose
dramatically in the 1980's, consumer interest steadily declined during
the 1980's as it did during the 1970's. So to link this with product
safety is open to some substantial question.
Let me just make some more points. I go back to this problem of
injured people having to wait so long to receive compensation. Mr.
President, after I ran for Governor of West Virginia, an event little
noticed and not long remembered, I gave my inaugural speech on the
steps of the capitol. It was on a day in which the temperature was 37
degrees below zero. So in order for me to say it, I had to really mean
it because people were just freezing all over the place. I made four
promises to the people of West Virginia. I talked about education. I
talked about roads. I said I wanted to remove the sales tax from food,
at that time 3 percent, which I eventually moved to zero. And I wanted
to make the workers compensation system, which at that time we called
the workmen's compensation system, more efficient because I was
offended that in the State of West Virginia when a worker was injured
it took the State 77 days on average to get a check to an injured
worker. I said, how can we be a humane State and do that? And I pledged
in my inaugural address, which is sort of like your constitution, that
I would get it done in 4 days.
Well, I did. I got it down to 4 days. If I am offended by the 77 days
it took under the old West Virginia workers compensation system, what
am I meant to feel about a 3-year period of time on average for an
injured worker under U.S. laws, and State law in particular, to receive
compensation for the first time. Three years later.
An Insurance Service Office study found that it took 5 years to pay
claims with the average dollar loss and that ``larger claims''--that
is, the more seriously injured victims--``tend to take much longer to
close than the smaller ones.''
Now, this is interesting. ``Several injured victims cannot afford to
wait years to receive compensation.'' So what do they do, Mr.
President? They know they are going to have to wait a long time while
the lawyers rake in the money and they wait. They know they are going
to have to wait a long time. They know they do not have the resources.
So what do they have to do? The delays force them to settle, to not use
the system as it is meant to be used but to settle for inadequate
amounts of money. That is shameful. That is shameful. If those who
oppose this bill want to stand up and defend that, I will be here to
hear their argument. That is shameful. They have to settle because they
know they cannot go through the business of paying the lawyers the
money.
Let us talk about the business of bringing the lawsuit, and costs
being so high. The GAO--who I think people respect pretty much
throughout this Hill--estimated that 50 to 70 cents of every jury-
awarded dollar goes to lawyers and legal costs. Fifty to 70 cents of
every jury-awarded dollar goes to lawyers and legal costs. That is
wonderful news for the injured person. It leaves him or her maybe 30
cents, maybe 50 cents. They are hurt. They are the ones hurting. The
lawyers are just running these things through.
I am not picking on trial lawyers in particular. I have always made a
point of saying lawyers on both sides--the trial lawyers and defense
lawyers. They are both part of the act. Defense lawyers are very, very
good at stringing it out, putting in more paper, asking for more
information. They are very, very good at it. But the point is the
people do not get the money. The injured person does not get the money.
The lawyers and the legal process get the money.
A further illustration came in 1994 in a survey by the Association of
Manufacturing Technology. This is hard to follow, so I would ask people
just listen. It found that every 100 claims filed against its members
result in outlays of $4.45 million in defense costs and $8 million in
subrogation paid to employers or their workers compensation insurers.
Claimants, therefore, received only $8.35 million of these 100 claims
in the Association of Manufacturing Technology survey, and since
plaintiffs' attorneys usually received one-third of the awards, injured
people get to keep about $2.2 million while transaction and legal costs
totaled $8.6 million.
Something that bothers me greatly about the current system is that
the current system discourages the development of innovative products.
This is where I got off when I was talking about the amendment of the
Senator from Tennessee. I used the word ``innovation'' in the States.
The chairman and CEO of Biogen, Jim Vincent, stated to the Senate
Commerce Committee in September 1993 that he has decided not to pursue
research into the development of an AIDS vaccine because of the current
U.S. product liability system.
The Immune Response Corp. of California is attempting to develop an
AIDS vaccine, but in 1992 it had to delay important clinical trials
because of liability concerns, and I believe they are not doing it
anymore.
An Office of Technology Assessment study found that liability fears
are a barrier to research testing and marketing of AIDS vaccines and
called for Federal action.
Health Industry Manufacturers Association Vice President Ted Mannon
told a House Energy and Commerce subcommittee that joint liability law
is having an adverse effect on the ability of medical device
manufacturers to obtain biomaterials--the raw materials that make
products such as hip replacements and pacemakers.
I will just do one or two more of these.
In 1994, April 25, the New York Times reported:
Big chemical companies and other manufacturers of materials
used to make heart valves, artificial blood vessels, and
other implants have been quietly warning medical equipment
companies that they intend to cut off deliveries because of
fear of lawsuits.
Now, if we simply want to stop that stuff and the people who have
pacemakers and all the things that we can do in modern medicine do not
matter anymore, then let those who oppose this bill defend that; that
the very essence of modern research and the very essence of modern
medical innovation is being cut off or cut down or cut back or cut out
by the product liability system that we currently have in this country.
One more. The fear of exposure to product liability lawsuits again
has diminished investment in basic scientific research. The reason I
mention the word ``basic'' is because it has always distinguished us
from other countries. We are the ones who do the basic research. The
other countries do the applied research, particularly Japan, and Asian
countries. We do the really hard stuff, which costs a lot of money. You
do the basic research and you come up with materials or products or
possibilities. Then during the applied research and getting it to
commercialization--here the Senator from South Carolina and I would
agree completely--that has been our American problem, the
commercialization of products. But not basic research. That has been
our strength.
Well, Mark Skolnick, who is a professor of biophysics at the
University of Texas, has noted that areas where litigation has occurred
will not receive support for exploration and development. Producers
fearful of possible suits simply make that impossible.
The Conference Board, as I indicated earlier, said that 47 percent of
U.S. companies have withdrawn products from the marketplace because of
product liability concerns.
Gallup, in a 1994 survey, said that one in five small business
executives report
[[Page S6061]] that they have decided not to introduce a new product or
not to improve an existing one out of concern for product liability
litigation.
What are we doing to ourselves, Mr. President? Why is it that such a
small group can prevent our country from progressing while, at the same
time, we protect our people?
I want to say a word about punitive damages.
I want to discuss the punitive damages concept, what it actually is,
so that it becomes clearer.
Again, I am not a lawyer, so I have to look at these things from the
point of view of somebody who is not a lawyer. I do not think the
Presiding Officer is a lawyer, although he has all the attributes
sometimes of that kind of sharp insight. But, as far as I know, I do
not think he is a lawyer. There are a few of us in this body who are
not.
The U.S. Supreme Court--which I do not consider to be a trivial
body--has said that punitive damages have run wild in the United
States.
Jay Rockefeller, representing the people of West Virginia, did not
say that. The U.S. Supreme Court said that.
There are virtually no standards for when punitive damages may be
awarded under the current law and no clear guidelines as to their
amount. Good behavior is swept in with bad. The result is uncertainty
and instability and a chilling effect on innovation.
Now, I go back to Science magazine, 1992. A Science magazine article
reported that at least two companies have delayed AIDS vaccine research
and another company abandoned one promising approach as a result of
liability concerns.
European parents can place children in built-in baby seats in cars.
American parents cannot as easily, because the companies who make baby
seats do not want to improve them on the fear that they will get sued
because a previous iteration might therefore have been inferred to have
been deficient. That's crazy.
So clear, rational rules are needed to promote innovation and
responsible manufacturing practices while, at the same time, providing
assurances that wrongdoers will be justly punished and deterred from
future misconduct.
Please let us not have this as an argument between those who care
about business and those who care about consumers. In fact, and I
believe my colleague from the State of Washington would agree, those of
us who are trying to reform the system care a whole lot more and are
willing to do a whole lot more to help plaintiffs who are injured than
are those who oppose this. Although they claim that they wear the halo
for consumers, they do not. We are trying to help them. They are trying
to keep the system as it is. They say that status quo is perfect; just
leave it exactly as it is.
I have not done it every year, but I have routinely called in the
American Trial Lawyers Association to my office to say: ``Is there some
way that we can work with you to try to work out some compromise on
this subject?'' The answer has always been no. Clear, but not
encouraging. No. Into which I read, therefore, they want the system to
be exactly as it is. Little changes? Big changes? Halfway changes? No.
No changes. No changes.
I remember once one of the leaders of one of the consumer groups
several years ago brought a woman from West Virginia who had been
injured to my office. I guess the idea was to shame me, and to show me
what anguish I had caused this woman. She came in and I saw them.
And at the end of the meeting, the woman was in fact sobbing, holding
onto my hand, saying, ``Your bill would have helped me, perhaps saved
me.''
Now, the leader of the consumer group was, obviously, at something of
a loss. But I have to note that, for the Record, this is the case.
So a clear understanding of the nature of punitive damages is an
essential prerequisite to meaningful reform. Punitive damages are
punishment. They are quasi-criminal in nature and developed in England
and the United States to serve as an auxiliary or helper to the
criminal law. They have nothing to do with compensating a person who
has been harmed and are not in any way intended to make the plaintiff
whole. That purpose is served by compensatory damages, which provide
recovery for both economic--which is lost wages--and medical expenses.
Let me make a point here, too. A lot of people say, ``Oh, economic
damages. Persons making $35,000 a year. They are 30 years old. Now they
cannot work.'' Which, of course, is horrible, if it comes to that.
But they say, ``Well, gee; I guess that is going to be $35,000 for
economic wages.'' No, no, no. It is $35,000 for every year that that
person would have deemed to have been able to work, plus all benefits,
plus all retirement, and all the rest of it.
In fact, if you did that, let us say somebody was making $30,000 a
year, and is 30 years old. They could work for another 35 years. I am
not very good at math, but that would be many, hundreds of thousands of
dollars; way above $250,000.
Mr. THOMPSON. Will the Senator yield for a point?
Mr. ROCKEFELLER. Yes.
Mr. THOMPSON. Was the Senator present when I made my statement
concerning the family who visited me in my office concerning their 5-
year-old daughter recently?
Mr. ROCKEFELLER. I apologize; I was not here.
Mr. THOMPSON. You mentioned the lady who was sobbing in your office.
It reminded me of that visit I had last week. It was a family from
Nashville who had lost their 5-year-old daughter. She had gone in for a
routine tonsillectomy. One error followed another; many, many things
went wrong. The clinic was hiring on the cheap. They had a drug addict
there administering to this person.
Mr. ROCKEFELLER. Is the Senator discussing product or malpractice?
Mr. THOMPSON. Well, this is part of the underlying bill, as I
understand it, the McConnell amendment.
Mr. ROCKEFELLER. I was trying to discuss product.
Mr. THOMPSON. Well, the Senator was talking about punitive damages,
and that is the subject of my question.
And then the clinic sought to cover up. Finally, one of them called
911.
They did several things totally, totally that would constitute gross
misconduct. They finally called 911, and then tried to cover up the
records. They were caught. A lawyer represented them, charged 30
percent, incidentally, financed the litigation out of his own pocket
for 2 years because the plaintiffs did not have the money to do that.
Finally, they got to court. The defense, the insurance company, would
not settle the case until they got to court. The mother broke down in
court and they found out what they were up against in there and settled
the case for $3 million.
Under this legislation, if this passed, I wonder what the Senator
would tell that sobbing mother who was in my office last week in terms
of whether or not we ought to tell the State of Tennessee they cannot
allow a jury in Tennessee any longer to make that kind of award in a
punitive damage case.
Mr. ROCKEFELLER. My answer to the distinguished Senator from
Tennessee is that this particular Senator is trying to work to find a
way in which there will not be caps as classically defined on punitive
damages.
I say to the Senator from Tennessee that I voted, for example, with
Senator Dorgan on his amendment to remove caps. And the Senator did
that for a very specific purpose, because I think we can find a way,
because I do not think we can pass the bill without finding that way,
and I am convinced that we can find a way to do this so that I would
have been as comfortable or as uncomfortable in that room with your
constituent as I was with mine.
Now, I also want to say, when I talk about pain and suffering, the
State of Washington has no punitive damages whatsoever. They have no
punitive damages. Is it not interesting then that within the last 6
weeks that the State of Washington came down with a jury award for
economic and pain and suffering of $40 million?
The only reason I mention that is to say, one, that economic is much
more than people think of it as. It is the rest of your life's wages.
It includes the raises that you might have gotten. It even presumes
promotions you might have gotten, as well as the benefits, insurance,
retirement and all the rest of it.
But pain and suffering is where a jury can get very subjective and
where
[[Page S6062]] a jury does often get very subjective in a proper way
and, in this case, a $40 million award. I do not think anybody who
opposed this bill could have guessed there would have been a $40
million award out of a State that does not even have punitive damages.
That happened 6 weeks ago in Washington.
So, Senator Gorton's and my bill understands and accepts the basic
premise that punitive damages are punishment and provides the
fundamentals that are part of any criminal punishment; a definition of
the crime establishing a level of proof necessary for punishment and
making the sentence fit the crime. So let us define the crime.
S. 565 defines the crime as conduct specifically intended to cause
harm or conduct manifesting a conscious, flagrant indifference to the
safety of those persons who might be harmed by the product. The
standard is fair and is similar to the standards of many States, in
fact. It conveys that punitive damages are to be awarded only in the
most serious cases of extremely outrageous conduct.
Level of proof: S. 565 explains how a claimant must prove the crime
and requires that the proof be clear and convincing. This standard
reflects, I think properly, a middle ground between the burden of proof
standard ordinarily used in civil cases, which is proof by a
reponderance of the evidence and criminal law standard which is proof
beyond a reasonable doubt. So this is in between, clear and convincing.
The U.S. Supreme Court has endorsed clear and convincing evidence
burden of proof standards in punitive damage cases. In addition, each
of the principal groups to analyze the law of punitive damages since
1979 has recommended the standard, including the American Bar
Association, which the Senator from South Carolina mentioned some time
ago is bipartisan if anything ever was bipartisan, and the American
College of Trial Lawyers.
Recently, the standard was recommended in a 5-year study of scholars
by the American Law Institute and, incidentally, the standard is now
law in 24 States.
Making the sentence fit the crime: Most importantly, we try to put
reasonable parameters on sentencing to make it fit the crime; an
established principle of law. Even very serious crimes, such as
larceny, robbery and arson have sentences defined with a maximum
sentence in statute.
As a result of adopting the amendment by the Senator from Maine and
drawing on the interest expressed by colleagues on this side, we
modified the bill to allow punitive awards to go as high as two times
compensatory damages.
Opponents to this bill have argued that unlimited punitive damages
are necessary to police corporate wrongdoing. Absolutely unlimited.
This is not necessarily supported by facts. There is no credible
evidence that products are any less safe in either those States that
have set reasonable limits on punitive damages or in six States--
Louisiana, Nebraska, Washington, New Hampshire, Massachusetts, and
Michigan--that do not permit punitive damages at all. In fact,
Brookings makes no link whatsoever between what is happening in
punitive damages and product safety. That is an argument which is used
by the opponents often.
Furthermore, plaintiffs in those States have no more difficulty
obtaining legal representation than in those States where the sky is
the limit.
I am coming to a close.
Bifurcation: This is a general remedy proposed to ease adverse
impacts of punitive damages awards that permits a trial to be divided
into segments, and this makes sense. The first part of the trial is
addressing compensatory damages, the second dealing with punitive
damages.
One has to do with helping the person. The second with punishing the
manufacturer. Judicial economy is achieved by having the same jury
determine liability and amounts of both compensatory damages and
punitive damages.
This remedy we give the shorthand name of ``bifurcation.''
Bifurcation trials are equitable because they prevent evidence that is
highly prejudicial and relevant only to the issue of punitive damages--
that is, the wealth of the defendant--from being heard by jurors and
properly considered when they are determining basic liability.
Bifurcation also helps jurors compartmentalize the trial, allowing them
to easily separate the lower burden of proof required for compensatory
damages and the higher burden of proof, clear and convincing evidence,
for punitive damages.
So, Mr. President, I will soon yield the floor. First, I simply
conclude by saying that product liability reform--the bill before the
Senate--is not a child, a stepchild, not even a foster child of the
Contract With America. It is the result of people of both sides of the
aisle here in the Senate agreeing that the legal system, where it deals
with interstate commerce, needs to be fixed, and it is precisely
Congress' role, and only Congress' role, to step in where the States
cannot do the job on their own, which is why we need to pass the bill.
I thank the Chair and yield the floor.
Mr. GORTON addressed the Chair.
The PRESIDING OFFICER. The Senator from Washington is recognized.
Mr. GORTON. Mr. President, I want to make a few remarks on the
Thompson amendment. Before that, I want to see whether or not we can
accommodate a number of Members. Rather than seeking a unanimous-
consent agreement on a vote for a time certain, I hope that we will be
able to debate the Thompson amendment fully. At the same time, there is
another amendment that will be proposed by the Senators from Michigan
and Kentucky. I hope that we will be able to set aside the present
amendment and allow them to speak.
I know the Senator from Kentucky is the chairman of the Ethics
Committee and must meet with that committee between 4 p.m. and 6 p.m. I
would like to know whether or not the proponents of the Thompson
amendment will permit that amendment to be introduced, for them to
speak, and then speak back and forth on both of them--however they want
to utilize their rights to continue debate on in this amendment.
Mr. HOLLINGS. Without objection, I will go along with the
distinguished author of the amendment, Senator Thompson. I will need a
little bit of time. You were asking for a time agreement?
Mr. GORTON. I will not make a motion to table until the Senator from
South Carolina has all the time he wishes to speak.
Mr. THOMPSON. Does the Senator from Kentucky need to proceed before 4
o'clock? Otherwise, I believe we can finish in short order. We need a
very few minutes. I think that will probably wind us up.
Mr. McCONNELL. I say to my friend from Tennessee that it is my hope
and the hope of the Senator from Michigan as well, with your
permission, to call up an amendment we are going to offer for
discussion purposes. It could be stacked or laid aside. It will give
both of us a chance to discuss this--in my particular case, the need to
discuss it some time between now and 4 o'clock, because I will not be
available for 2 hours after that. I do not know when these are going to
be voted on in any event.
Mr. THOMPSON. How much time does the Senator from South Carolina
need?
Mr. HOLLINGS. Ten minutes.
Mr. THOMPSON. I think I will need approximately the same. Would it be
all right if we went 20 minutes or so and then brought up the amendment
of the Senator from Kentucky?
Mr. McCONNELL. I say to the Senator from Tennessee it is fine with
me, provided it is all right with the Senator from Michigan.
Mr. ABRAHAM. That would be fine.
Mr. GORTON. Then I will be relatively short.
Mr. HOLLINGS. I defer to the Senator from Tennessee. He is the
author. If the Chair recognizes me, I can proceed----
Mr. GORTON. I think the Senator from Washington has the floor.
The PRESIDING OFFICER. Yes, the Senator from Washington has the floor
at this time.
Mr. GORTON. Mr. President, I wanted to speak briefly on the Thompson
amendment and will do so only relatively briefly to give him some more
ammunition for his wonderful presentation on this subject.
I must start my remarks by confessing that he really had me dead
[[Page S6063]] to rights on one of the comments that he made about the
impact of his own amendment. I will have to confess error and then say
that I believe that error strengthens my case rather than weakens it.
I had said earlier during the course of this debate that the result
of the passage of this amendment, giving litigants in every State two
choices of different laws to enforce would simply mean, because of the
restrictions included in the bill here, that all plaintiffs' lawyers
would seek to bring their actions in the State courts in order to avoid
the restrictions on punitive damages and on joint liability. And the
Senator from Tennessee quite properly pointed out that there are a
number of instances in which this bill, the Rockefeller-Gorton bill,
treats plaintiffs' claimants more liberally than do the laws of various
States. He took the statute of repose, which is 20 years in this bill,
10 to 12 years in most States that have a statute of repose--obviously,
if the cause of action was based on a piece of machinery or a product
that was 15 years old, the choice would be to go into Federal court and
get the advantage of that more liberal provision. He even spoke about
my own State, which does not allow punitive damages and, therefore,
would impel the plaintiff to go into Federal court if the plaintiff
wished punitive damages rather than into the State court.
He is correct. There are certainly some cases in which the claimant
would have a better climate in which to bring such an action in Federal
Court than in State court. But, Mr. President, one of the great vices
of the present system, one of the vices that this bill--to focus on
product liability for the moment--is designed to deal with is the
myriad of 50 different sets of laws and procedures in the courts of 50
States. The justification, as the Senator from Tennessee pointed out
himself, for any legislation in the field of product liability is the
interstate commerce clause and the desire to smooth commerce among the
several States, to have a degree of predictability.
This bill does not attempt to do what bills a decade ago in this
field did, and that is to define negligence and strict liability and
deal with a number of other matters of substantive law. It calls for
limitations only in the field of a statute of repose and joint
liability and punitive damages and allows more restrictive regimes in
the various States to remain enforced. But, certainly, as compared with
the present status of the law, there will be a greater degree of
predictability and a greater degree of uniformity.
As the Senator from Tennessee so eloquently pointed out, if his
amendment passes and should become law, instead of having 50 different
systems in 50 different States, we would have 100 systems in 50
different States. We would double the complexity of the present system,
because he is right--while I am right that in most States most
plaintiffs would seek out the State court and attempt to avoid this
law, under some circumstances in some States they would seek the
Federal court in order to avoid the greater restrictions of State law.
Not only would we not increase predictability and uniformity, we would
double the degree of complexity. And there would be far more gaming of
the system.
I think that every small business in the United States should greatly
fear the Thompson amendment, because now at least if the defendant is
large and obviously capable of paying a large judgment, many plaintiffs
will only sue the manufacturer of a particular product. That
manufacturer will be from a different State than the plaintiff, a case
which under most circumstances could be brought in Federal court. But
if the plaintiff of the future does not want to be in Federal court, we
can bet their sweet life if this is a piece of equipment, a stepladder,
the subject of lawsuits, the Ace Hardware Store in the hometown of the
plaintiff will end up being a defendant.
There will be a lot more small business defendants in product
liability litigation in the future if this amendment passes than there
are now, because that will be the way to avoid diversity of citizenship
and bring the action in State court when the State law is more
favorable.
There will be more defendants, Mr. President. There will be twice as
many applicable laws--two in every State in the United States rather
than one. And there will be less uniformity and less predictability.
Now, Mr. President, it seems difficult for me to imagine any person
thinking seriously about the practice of law and uniformity who really
wants to overturn the doctrine in Erie Railroad versus Tompkins, in
1938, in which the Supreme Court said: ``We are going to end this forum
shopping. We will say it does not matter whether a person brings the
diverse action in State or Federal court; the same law is going to
apply.''
This amendment would reverse that doctrine, would double the number
of applicable laws in the United States, and increase infinitely the
degree of forum shopping on the part of claimants' lawyers.
Mr. HOLLINGS. Mr. President, I want to touch on just two or three
things quickly, and I want to yield, of course, to the principal author
of the amendment, the Senator from Tennessee, with respect to punitive
damages.
The statement was made by Senator Rockefeller that the Supreme Court
said that the punitive damages would just run amok. The fact is, the
Supreme Court of the United States of America has not turned down or
reversed punitive damages.
The most recent case happens to be a West Virginia case of this
particular court, dated June 25, 1993, TXO Production Corp. versus
Alliance Resources. Actual damages were $19,000, Mr. President. Do you
know what the punitive damages were? Punitive damages, $10 million.
Do you think that disturbs the Senator from West Virginia, who says
he is here for consumers? He is for corporations. They can get all the
punitive damages they want. They are not subject to this bill. Oh, no;
as a matter of fact, they are not subject to this bill. The leading
case in his own State, $19,000 in actual damages, $10 million in
punitive damages, upheld by the U.S. Supreme Court.
Second, with respect to keeping all the products off the shelf, and
particularly as the Senator refers to AIDS and AIDS drugs, and how they
are all going out of business.
Mr. President, I ask unanimous consent we have printed in the Record
a statement by Gerald J. Mossinghoff, president of the Pharmaceutical
Manufacturers Association, made last year before the Committee on
Energy and Commerce.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Statement of Gerald J. Mossinghoff
Mr. Chairman and Members of the Subcommittee: I am Gerald
J. Mossinghoff, President of the Pharmaceutical Manufacturers
Association. PMA represents more than 100 research-based
pharmaceutical companies--including more than 40 of the
country's leading biotechnology companies--that discover,
develop and produce most of the prescription drugs used in
the United States and a substantial portion of the medicines
used abroad. I appreciate the opportunity to appear today at
this important hearing on the role of the pharmaceutical
industry in healthcare reform.
Our companies support President Clinton's goal of assuring
healthcare security for all Americans without sacrificing
quality of care. To accomplish this goal, comprehensive
healthcare reform is needed. Total healthcare costs are
rising too fast. And too many people lack coverage for
necessary medical care, including prescription drugs. These
problems must be addressed.
The Administration is to be commended for proposing a
comprehensive healthcare-reform plan that addresses all
elements of an extremely complex healthcare system. We
support strengthening consumer choice among competing private
plans, rather than mandating a single-Government payer. We
support providing comprehensive benefits, including
prescription drugs, for all Americans. We support continuous
coverage regardless of illness. We support greater emphasis
on prevention and medical outcomes. And we support strong
safeguards to ensure quality care. We also are pleased that
the Administration has indicated that it will remain flexible
and open to constructive suggestions on ways to improve its
proposal. We believe that there must be greater reliance on
the free competitive market in a reformed healthcare system.
World leader
For many years, the pharmaceutical industry's success in
developing new and better medicines has made it one of the
country's most innovative and internationally competitive
industries. The industry has a good chance to remain
innovative and competitive--if the incentives for
pharmaceutical innovation are preserved.
[[Page S6064]] In its 1991 study of the industry, the ITC
reported that U.S. firms accounted for nearly two-thirds of
the new drugs introduced in the world market during 1940-
1988. In his recent study, Heinz Redwood stated, ``The
American industry has a clear and outstanding lead in
discovering and developing major, medically innovative,
globally competitive, and therapeutically accepted new drugs
. . . Perhaps the most important finding is that the American
lead includes all but one of the therapeutic classes.'' The
General Accounting Office, in a September 1992 study,
concluded that the pharmaceutical industry maintained its
competitive position and strong international leadership
during the 1980s, while most other high-technology industries
experienced some decline in their position. A report in the
March 9, 1992 edition of Fortune magazine placed the
pharmaceutical industry at the very top of the list of the
country's most internationally competitive industries.
In conclusion, we believe the three principles outlined
earlier in this statement--coverage, competition and cures--
are fully consistent with the six goals specified by
President Clinton for his healthcare-reform plan. Our
industry firmly believes we can contribute significantly in
helping to meet these worthy goals. We look forward to
working with this Subcommittee in your efforts to achieve
healthcare reform in a way that will accommodate our major
concerns.
Mr. Chairman, that concludes my prepared Statement. I will
be pleased to answer any questions that you or other Members
of the Subcommittee may have.
Mr. HOLLINGS. Mr. President, I will read two sentences. ``For many
years''--says the leader of the pharmaceutical industry--
For many years, the pharmaceutical industry's success in
developing new and better medicines has made it one of the
country's most innovative and internationally competitive
industries.
In a study of the industry, the ITC reported that U.S. firms
accounted for nearly two-thirds of the new drugs introduced in the
world market during the period 1940 to 1988.
Forty-eight years, almost fifty years.
There is Fortune Magazine, there is the head of the industry,
speaking for itself. Now we will bring it up to date, to February and
April of this year.
February 23, 1995. I hold in my hand an advertisement entitled ``Drug
Companies Target Major Diseases with Record R&D Investment.'' It is an
advertisement by America's pharmaceutical research companies, and I
read:
Pharmaceutical companies will spend nearly $15 billion on
drug research and development in 1995.
Remember, the Senator from West Virginia said they are all going out
of business on account of product liability, and they could not invest.
The overwhelming evidence is the opposite of what the Senator from West
Virginia contends.
New medicines in development for leading diseases include
86 for heart disease and stroke, 124 for cancer, 107 for AIDS
and AIDS-related diseases, 19 for Alzheimer's disease, 46 for
mental diseases, and 79 for infectious diseases.
The pharmaceutical industry categorically refutes the statements made
by the distinguished Senator from West Virginia.
Now, going right to less than a month ago, April 5, 1995, another
advertisement: ``Who Leads the World in Discovering Major New Drugs,''
put out by the America's pharmaceutical research companies.
Between 1970 and 1992, close to half of the important new
drugs sold in major markets around the world were introduced
by the U.S. pharmaceutical companies. Here at home, the broad
drug industry has been making 9 out of every 10 new drug
discoveries. So when a breakthrough medicine is created for
AIDS, heart disease, Alzheimer's disease, stroke, cancer, or
any other disease, chances are it will come from America's
drug and research companies.
That totally refutes the Senator from West Virginia's statement. Now
finally, the arithmetic, simple arithmetic, refutes this pose for the
consumer, whereby the consumer is not getting the majority of the
money; the lawyer is getting the majority of the money. Of course, the
inference is that the injured party, the plaintiff's lawyers, get the
money. Arithmetic says that 33\1/3\ percent, which has been agreed to
generally in the debate on both sides of the aisle, and parties pro and
con, on a particular measure, 33\1/3\ percent is less than 100 percent
and less than 50 percent, so the other 66\2/3\ percent goes to the
client.
Or take the amendment of the Senator from Kentucky on malpractice: A
25 percent limitation there; 25 percent leaves 75 percent for the
client.
Now, what are the facts? Why does the Senator use that distorted
representation about being so concerned that the consumer is not
getting the money he deserves, like every case brought is a winner?
No. 1, according to the Rand study of product liability injuries, of
100 percent injured, we find that only 7 percent of the injured parties
consult an attorney; only 4 percent hire an attorney; and only 2
percent file a lawsuit. According to the New York Times, one-half of
those filing are losing.
Now, who pays for all of those expenses, except for the plaintiff's
attorney? So it gives no regard and no account for our distinguished
group of professionals who are willing to take it on a contingency
basis, although they are losing half the time, to try to get middle
America and poor injured parties their day in court.
I can tell you now, come to this town and get injured, do not go
downtown on billable hours. I tried to point that out with my
particular amendment. You could not afford to hire the lawyer and we
all know that. But they are being derided here as somehow the lawyers
are running off with all the money.
Where does the money go? According to the National Consumers
Insurance Organization, according to this survey, in our hearings,
For every dollar paid to claimants, insurers paid an
average of an additional 42 cents in defense costs while for
every dollar awarded a plaintiff, plaintiff pays an average
contingent fee of 33 cents out of that dollar. Thus, in cases
in which the plaintiffs prevail, out of each $l.42 spent on
litigation, half of that goes to attorney's fees, with the
defendants' attorneys on average paid better than plaintiffs'
attorneys.
They go take it down to where they are getting 56 percent.
Now here are the poor plaintiffs' lawyers. They are not even seen but
in 2 percent of the product liability injury cases, and of the cases
they file they are only recovering in half. So they are taking the
expenses of the others. You can bet your boots when they finally
prevail and get their third, that is still 66 2/3 percent going to the
client and 33 1/3 percent going to the lawyer. So the lawyers they are
interested in trying to restrict and with their amendments have voted
to limit, they are the ones already in a sense losing.
The Senators stand here and say it is shameful? It is shameful to
misrepresent the idea that this crowd sponsoring this bill is for the
consumer. They know they are for the corporations. They know they are
for the insurance companies. They know the drive. It is corporate
America: Business Round Table, Conference Board, NAM--National
Association of Manufacturers--they have been sponsoring this bill for
15 years and they know it. No consumer organization has come forward
with this bill. All the consumer organizations of size and repute
absolutely oppose the bill. To come up here and talk about shame, and
the consumers are not getting the money, and misrepresenting the facts
with respect to percentage when simple arithmetic shows no one gets
over a third, and if limited by a vote, 25 percent. That leaves 75
percent for the client if they win.
And on that contingent fee, that trial lawyer who is representing the
injured party has to assume all the costs and all the burden and all
the risk. Otherwise that poor injured party would not have a lawyer
because they cannot afford it. They found out $50 an hour was not
enough. I tried to limit it here in my amendment. So they come forward
here in this town with $100 an hour billable hours and going on up to
$500 and more. They could just never get their day in court. We know
that is being cared for back home.
That is why I am so interested in the amendment of the Senator from
Tennessee, because we can stop this pell-mell march to Washington with
the Washington bureaucrats administering and determining, not hearing
any of the facts, disregarding the 12 jurors sworn to listen to the
facts, bureaucrats who say,
Forget about you, you all are runaway. You do not know. You
have not heard. There is no relief. And it is a national
problem and we are going to correct it with this mish-mash
bill.
I favor the amendment of the Senator from Tennessee.
The PRESIDING OFFICER. The Senator from Tennessee.
[[Page S6065]] Mr. THOMPSON. Mr. President, I thank the Senator from
South Carolina for his remarks, which were eloquent as usual. I do
think it is important that we refocus on what we are about here. The
debate most of this afternoon has gotten off onto who is making the
money, who is supporting who, scare tactics and figures taken out of
thin air. I do not know where most of these figures are coming from.
I would like to refocus on what we are about here. We are about our
judicial system in this country. There is nobody on the floor here who
does not want a fair system, one that is fair to all parties. We
certainly all recognize that manufacturers and sellers of products
ought to be treated fairly and should not be put in a position where
they cannot reasonably manufacture products and send them in interstate
commerce and not be put out of business unfairly. We also understand
that there are innocent people out there, children, other innocent
people who sometimes are injured through the negligence and sometimes
through the willful misconduct of large companies. And they need to be
protected. We all know that.
We are talking about a system here. We are not talking about good
guys and bad guys. We are talking about a system. What is the system
that is best designed to produce a good system of justice across the
board for this country?
Traditionally, we have had a system where States determine what their
laws are. They learn, they change laws, a lot of innovation is going on
in a lot of different States as has been pointed out here today.
Changes are being made. Radical changes, in some States, are being
made.
It has been suggested now that in the area of products liability,
primary, we need to take a little bit different look. I am trying to
take a little bit different look.
My amendment is called a killer amendment. This is the first time, I
guess, in the history of the Senate, where we have ever gotten a
product liability debate on the floor. I was one of the ones who said I
will not support a filibuster. I will support bringing this up on a
motion to proceed. I, and people like myself, presumably carried the
day and we got this debate here. And I am suggesting now an approach
that makes sense from the standpoint of what we as a U.S. Congress
ought to be about. Not rewriting all the State laws in this country.
That is against our basic philosophy. That is what I campaigned
against, the Washington-knows-best attitude.
The Senator from West Virginia makes an eloquent plea for a 2-year
statute of limitations. He is entitled to his opinion on a 2-year
statute of limitations. I may agree with a 2-year statute of
limitations. But why should the people of Tennessee have to follow the
dictates of the Senator from West Virginia as to what the proper number
of years for a statute of limitations is? It is just not right. I
cannot go down that road.
Perhaps we can involve ourselves in an area that involves interstate
commerce, that involves products; 70 percent of them which travel in
interstate commerce and which also involves interstate litigants, if
you will. And that is litigants who are in the Federal court because of
diversity of jurisdiction, because you have citizens of various States.
To me, that makes some sense. That makes some sense. That is not a
killer. That is an attempt to legislate in an area that we properly
legislate in. I hope we do not, in this area or any other, rush to
judgment to change longstanding rules or longstanding procedures that
the States have enacted over the years, over 200 years, simply because
of pressures and editorials in newspapers and some rush to judgment.
I support the Contract With America. I have simply pointed out that
this is the only provision in the Contract With America that goes
against our basic philosophy. All the rest of the Contract With America
is limiting the Federal Government. It has to do with limiting one
branch or another: Term limits, line-item veto. It has to do with
limiting the Federal Government with regard to the States. How do we
handle our welfare system? With regard to individuals, how much in
taxes do we take from them or not? It all has to do with limitations on
the Federal Government except this one thing.
What I am suggesting is that with regard to these cases that can
legitimately be called interstate in nature, with regard to litigants
who are legitimately interstate in nature--not because of what I
thought up but because of what has been the law of this country for
many, many years--let us apply some of these things, which are really
broad and far reaching in many respects, but let us go ahead and do it.
Let us go ahead and try it and see and experiment, if you will, and see
if this is going to save the world as we think it is.
I think we have to get straight on our statistics. We keep hearing a
figure, some low figure of tort cases that are brought in Federal
court, and that is true. But the indications from the Administrative
Office of the U.S. Courts, an unassailable source, are that
approximately 45 percent of products liability cases are either brought
in Federal court or removed to Federal court because you have diversity
of jurisdiction.
So is it suggesting that we apply these rules to 45 percent of the
cases gutting this bill? Or is it saying instead of going 100 percent
overnight, interfering in areas that people who are concerned about
States rights and intrusive Federal Government are concerned about,
that we take one step at a time. Under my amendment we would have
uniformity in Federal courts in all States. Under the underlying bill
you have caps in various areas but States are still free within those
caps, as long as they do not go over the caps, to pass what legislation
they want.
You still have 50 different States and 50 different State laws. That
is not uniformity under the underlying bill. At least with regard to
the diversity cases you would have uniformity. Is it bad for small
business because they would be joined in order to defeat diversity?
Would you have complete diversity? Would you join an interstate
defendant? That is happening now. That is what is happening now. The
courts have to determine. Are they properly joined in? So be it? You
follow the legal consequences from that. If they are, you are in State
court. If they are not properly joined then the court throws them out,
and you have diversity and you can go to Federal court, if you want to.
Applying this to 45 percent of the cases before we rush pell-mell to
take over State law in this country is not a killer amendment.
I must say that I understand the legitimate points of both sides of
this argument. I understand the problems the manufacturers have. I am
trying to redress the legitimate problems that manufacturers have in
this country. I understand the proponents believe that we need to level
the playing field some. But for me it is trying, I say to my friends on
the other side, let us at least acknowledge that this is the case and
this is what we are doing, and we are trying to level up the playing
field.
Let us not try to convince the American people that this is a
consumer's bill. This is not a consumer's bill. They say this is a
consumer's bill because of attorney's fees. Most of the attorney's fees
do not go to the litigants. Why is that? Often the defendant company or
the insurance company representing them will string out a case for 2 or
3 years knowing it is a meritorious case causing costs to rise, having
to pay defense attorney's fees and all of that, and then settle a case.
Then they complain about the cost of the system.
That is what happened to the family that came into my office last
week. They had a clear-cut situation where a clinic, if they had been
trying to kill their 5-year-old daughter for a routine medical
procedure they could not have done it any more efficiently. There was
one mistake after another. A drug addict working on the premises who
later OD'd. A comedy of errors; had to call 911; then covered up their
activities. I cannot imagine of a more clear-cut case. Yet, it took 2
years, a lawyer having to finance that lawsuit out of his own pocket as
often happens because they have been dragged around and deposed all
around, running all the expenses up.
Anybody who has ever been involved in this knows the way it happens.
Only when the mother got on the witness stand and broke down they said,
OK, let us settle this case for $3 million.
[[Page S6066]] Should we be terribly impressed with the defense costs
and the court costs and also what was involved in that particular piece
of legislation? Whose fault is that? The parents of that little girl
last week in my office who have no further ax to grind, they have no
monetary or economic interest in this anymore, in this system, did not
think that it was a consumer piece of legislation. They were saying
please do not get into a situation where in this unusual case--thank
God it does not happen every day. But it does happen. And when that
does happen, let us make sure that we set an example that it does not
pay for a clinic or a manufacturer to hire on the cheap, operate on the
cheap thinking that they have a situation out here that is going to
favor them in court, and they do not have to worry about it too much.
Some say it is a consumer bill because of the delays. You are going
to have more delays under this underlying bill, if it passes, without
this amendment than you have ever had before because we are creating
new law. In all of the circuits this new law is going to have to be
interpreted. There is all kinds of language in there. Every word of it
will be subject to court interpretation, new interpretation, new law in
every circuit which will then, with regard to that legislation, be
binding on the States.
Other points that were made: The fact that we have a system with 50
different sets of laws in this country with 50 different States. That
we do. It is called a Federal system. I kind of like it. I thought most
of my colleagues kind of liked it. I may have a different idea about
what the statute of limitations ought to be in Tennessee than the
Senator from West Virginia. People in Tennessee might have different
ideas about a lot of things than other people of other States. They
have a right to address those things.
The suggestion was made that we could under the present system forum
shop and go to Alabama, I believe the State was mentioned, and get a
favorable situation there. Of course, the practical difficulties of
that are well known. To anybody that has gone in the system you are a
long way from home. You hire another lawyer. You expand your expenses--
all of that. But assuming that does happen on occasion, my amendment
would prevent that. If a fellow from Tennessee decided he wanted to get
favorable State law from Alabama and went to the State of Alabama to
sue an Alabama defendant, there would be diversity jurisdiction. They
could go into Federal court and have the Federal standard apply, not
the Alabama State standard.
The point is made that products are being restrained from the
marketplace under our present system. I am sure that is true to a
certain extent. It was said we could have all of these other products
and people are now making products because of liability laws. Of
course, there are no statistics on that. All of this is what somebody
said. But I will take it at face value. So we do not have all the
products that we otherwise would have if we had a different system.
I asked the question. What do we do about that? Assuming that is
true, what do we do about it? Has anybody come up with a solution other
than just wringing our hands and saying that products are being
restrained? Are we going to say that beforehand you cannot sue these
companies? Are you going to say that we can only bring x number of
lawsuits a year--citizens of the United States of America--against
these companies? Of course, not. You cannot do that.
On the other hand, are we going to say what these questions are going
to be like if anybody gets hurt without any proof of negligence,
without any proof of responsibility? Of course, not. We are not going
to say that either.
What is the solution? The solution has always been let them
manufacture their products with the knowledge that if they are
manufacturing a product that affects human life, if they are proven to
be negligent and they kill somebody, they are going to pay damages. And
if they knew that they were likely to kill somebody, they are going to
pay a lot of damages.
I do not know that any of this legislation addresses that problem
except to put some caps on the amount of damages. I do not know a way
in a free judicial system other than the way we have where we let
juries decide these things under the supervision of a judge, under the
supervision of the court of appeals, under the supervision of the State
supreme court. I do not know that anybody has come up with a solution
that is perfect that will make sure the right number of products come
to market and no good products are restrained but bad products are kept
off the market. The U.S. Congress cannot solve that problem. What we
can have is a fair, open, responsible, judicial system with fair rules
for everybody across the board.
Texas has lost how many jobs; how many thousands of jobs because of
its product liability? I do not know where you get these figures. But
my suggestion is that Texas changes law. As a matter of fact, from what
I read in the paper, Texas has made and is in the process of making
substantial changes in its tort law as we speak. Do we need to do that
for Texas? Do we know more about what Texas needs than Texas does?
The Senator from Utah a while ago pointed out that only 5 percent of
the tort cases are filed in Federal court. That is not the product
liability cases which is the major thrust of the underlying bill and my
amendment. But that proves their point, does it not? Most tort cases do
not belong in Federal court because you do not have diversity. But 35
percent of product liability cases are in Federal court because you do
have diversity, and you are more properly in an area that we can
legislate in.
So, Mr. President, I would conclude simply by saying let us refocus
on what this is about. The basic question is do we have a problem? How
bad is it? And what do we do about it? I suggest that we do have some
problem. It is certainly not in the dimension of the world coming to an
end that we have heard on the Senate floor.
For anybody who knows anything about the system, looks at any of the
statistics, it is just not there. But let us address the problem that
we do have. Let us do it in a responsible manner, and let us not lose
our philosophical integrity, those of us who have campaigned on the
basis of limited Federal Government, having States do more in the areas
of welfare, having States do more in the areas that affect the people
who elected the members of the State legislatures who write those laws,
and have Federal Government do a lot less. I suggest that having these
reforms in this area involving interstate commerce, with regard to
litigants who are involved in interstate commerce is a reasonable
approach to a problem that will allow us to see whether or not it
works, how it works, perhaps will wind up in uniformity if States
desire to go in that direction, but does not represent a wholesale
takeover of 200 years of State tort law in this country.
I yield the floor.
Mr. McCONNELL addressed the Chair.
The PRESIDING OFFICER. The Senator from Kentucky.
Mr. McCONNELL. Mr. President, I would like to speak to another
amendment that will be offered by the occupant of the chair at some
time in the next 30 minutes or so dealing with the question of joint
and several liability.
Put another way, Mr. President, we all know what that means. That is
the looking-for-somebody-with-a-deep-pocket problem which is a
pervasive problem in American litigation.
Interestingly enough, the mayor of the city of New York was before a
subcommittee of the judiciary yesterday, and I obtained a copy of his
testimony. It is really quite interesting. The mayor outlined the
problems of the city of New York in recent years with regard to our
tort system, which has clearly run amok. It is very interesting that
last year New York City paid out $262 million in tort cases on roughly
8,000 claims which either proceeded to settlement or verdict.
And the mayor goes back and compares that to earlier years. In 1977,
the mayor pointed out, the city paid out $24 million as compared to
$262 million last year. In 1984, the city paid $84 million compared to
$262 million last year. In 1990, the city of New York paid out $177
million--that was just 5 years ago--compared to $262 million in tort
cases last year.
Most of these, of course, Mr. President, are cases where the
plaintiff was trying to get into the pockets of the
[[Page S6067]] taxpayers of the city of New York. The mayor in his
testimony proceeded to describe it in another way that kind of brings
it home for all of us.
There has been a lot of talk here about whether statistics do or do
not exist in various areas of this debate. The mayor put it this way.
He said--and this was just yesterday before a Senate Judiciary
Committee subcommittee. ``With just half of our annual tort payments,''
said Mayor Giuliani, ``the city could hire 2,900 additional police
officers or firefighters or more than 3,700 teachers.'' The city could
have hired 2,900 additional police officers or firefighters or more
than 3,700 teachers for the money they paid out in tort claims in the
city of New York last year alone.
The mayor went on. He said, ``In terms of our operating budget, the
amount we spent on these cases is more than 61 of 75 agencies of city
government spent over a year.''
Let us go over that. They spent more in tort cases in the city of New
York than 61 of 75 agencies of the city of New York spent last year and
more than the combined amount budgeted to sustain the operation of the
DA's, district attorneys, in all five boroughs of the city of New York.
They spent more money in tort claims last year in the city of New York
than the amount of the district attorneys' budgets of all five boroughs
of the city last year.
The mayor proceeded to say that New York City's personal injury
payout is an enormous expense no matter how you look at it and falls
squarely on the taxpayers, he says, the consumers in the city of New
York.
The mayor went on. It is kind of interesting the way he put it. He
says, ``As individuals, Americans are the most generous people in the
world. They are equally generous with their hard-earned tax dollars,
but they would like to know that their money is being put to use
wisely. When they learn, however, their money is being wasted,
Americans rightly demand an accounting. I submit the time has come,''
said the mayor of New York, ``for an accounting of the waste associated
with the tort system as we know it.''
What he was talking about, Mr. President, is the deep-pocket issue.
``Municipalities and other public entities are often viewed as deep
pockets that can easily afford to pay extra sums to plaintiffs claiming
to be injured.'' He also mentioned a few of those cases.
I thought I might relate to the Senate the mayor of New York
yesterday mentioned one case in which a subway mugger was caught in the
act and shot by an alert transit cop. What did the robber do? Why, he
sued the city and he won $4.3 million. The robber sued the city.
Here is another interesting one that New York experienced. He said in
another case an 18-year-old student in direct contravention--direct
contravention--of a teacher's instructions jumped over a volleyball
net. The teacher said, ``Don't do it.'' And the 18-year-old student did
it anyway. The student suffered tragic injuries. But the city's
liability for the teacher's effort to supervise cost the city $15
million.
The mayor cited another case. The city was ordered by a jury to pay a
woman's estate $1 million after she entered a closed city park, ignored
all the instructions, entered a closed city park and drowned in 3 feet
of water.
So there you have it, Mr. President. That is the kind of thing that
is going on all across America under the concept of joint and several
liability, and it is clearly costing taxpayers, consumers, a lot of
money.
The Senator from Michigan on behalf of himself and myself will bring
up shortly with the permission of the Senate the Abraham-McConnell
joint and several liability amendment which would permit an injured
plaintiff to collect a full judgment from any defendant found to be
liable for any part of the injury.
Mr. President, the doctrine of joint liability permits an injured
plaintiff to collect the full judgment from any defendant found liable
for any part of the injury. It means that no matter how remotely
connected a defendant is to the events leading to plaintiff's injury, a
defendant could be required to satisfy the entire judgment.
That is the kind of thing I was seeking to illustrate in referring to
the testimony of the mayor of New York just yesterday.
The result is that lawyers for the plaintiffs add a whole host of
defendants to a lawsuit in an effort to ensure the plaintiff can get
the full judgment paid. With joint liability, it does not matter if you
had anything to do with the events leading up to the plaintiff's
injury. Instead, the chances of your getting sued depend upon how deep
your pockets are. The deeper the pocket, the more likely to be sued.
For example, if a drunk driver injures an individual on someone
else's property, the property owner will be joined in the lawsuit. It
happened to the Cincinnati Symphony Orchestra, only it was not even the
property owner. The accident happened near one of the orchestra's
performance facilities. And the orchestra, a nonprofit entity, was
needless dragged into a $13 million lawsuit and put at risk for the
judgment.
Nonprofit organizations, municipalities, and small businesses can be
hardest hit by joint liability. Although we do not think of these
defendants as wealthy or rich, they are usually adequately insured,
which also makes them good candidates to be deep pockets. New York
City, to which I just referred, spends more on personal injury awards
and settlements--$262 million in the last fiscal year--than it spends
on funding public libraries.
One industry that is severely impacted by joint liability is the
engineering profession. Often engineering firms are small and
entrepreneurial. The American Consulting Engineers Council reports that
of its 1,000 members, more than 700 are involved in lawsuits. The
typical case involves a drunk or reckless driver speeding down a road
that is undergoing construction. Although the road is well marked with
a detour sign, an accident occurs. The driver sues everybody involved
with the road: the local government, the highway department, anybody
who owns adjoining property and, of course, the engineers who designed
the road improvement. While the engineers--and any of the other
defendants--may ultimately prevail, the costs of defense can be
staggering. The Consulting Engineers report that in 1993, they paid out
more than $35 million in awards and settlements. That is a huge amount
of money, especially considering 80 percent of the engineering firms
employ fewer than 30 people.
What does it mean for consumers and taxpayers? Higher prices and more
taxes, since the engineering firms will have to pass their costs on to
their customer. The local governments who hire engineers to build their
roads and bridges will pay more and the American people will pay higher
taxes to cover these lawsuits.
So, make no mistake about it. The tort tax is real. Every American
lives with it. And every potential defendant has to take account, in
the prices they set, for the possibility of being dragged into a
lawsuit.
I recently received a letter from the institute for the National
Black Business Council, an association of minority business owners. Mr.
Lou Collier, the president of the council, writes in support of
expanding the product liability bill.
Without an expansion of the joint and several liability reform, Mr.
Collier states, ``Millions of small businesses--restaurants, gas
station owners, hair stylists, nearly every small business you can
think of, would still face the threat of bankruptcy. That includes most
African-American firms.'' The latest census data shows that 49 percent
of all black-owned firms are service firms, and Mr. Collier, on behalf
of minority small business owners, asks us to improve the climate for
small business, ``Small business owners and entrepreneurs have to
overcome staggering odds to build a successful company. They shouldn't
have to face a legal system where one frivolous lawsuit can force them
to close their doors.''
Now, that is Mr. Collier on behalf of the minority businesses of this
country.
The amendment offered by Senator Abraham and myself, by eliminating
joint liability for noneconomic damages, would relieve some of those
burdens.
Injured plaintiffs would still recover their full economic loss. But
for the
[[Page S6068]] subjective noneconomic loss, each defendant would be
responsible only for his or her proportionate share of harm caused.
This amendment is fair and consistent with principles of individual
responsibility. It will put an end to the gamble taken by the trial bar
when they join everyone in sight of an injury.
Let me just say in conclusion, Mr. President, having chaired a number
of hearings years ago as chairman of the Courts Subcommittee of the
Judiciary Committee, I had a hard time ever getting any plaintiff's
lawyer to make a good argument in support of joint and several
liability, because it is obviously not just. It violates any standard
of American justice to require that someone who contributed little or
nothing, just a little bit of what may have caused the harm, to end up
getting assessed 100 percent of the damages simply because they are
able to pay. That is not just. That does not have anything to do with
civil justice.
It is astonishing to me, Mr. President, that our tort system in this
country has evolved to the point where essentially innocent parties can
end up being assessed all of the damages for a harm that they did not
cause.
That is what the Abraham-McConnell amendment will be about when it is
subsequently offered. I hope that I will be able to come back to the
floor and speak again on this amendment at the appropriate time.
I wish to commend the occupant of the chair, the Senator from
Michigan, for his great leadership in this tort reform field. He has
been in the Senate now about 4 months, and I cannot remember anybody
who has taken a subject and made a difference on it any more quickly
than he has. I have enjoyed working with him.
We have another issue that we may be talking about later in the
debate, something called an early offer mechanism, which I do not have
the time to address at this point.
I just want to say how much I have enjoyed working with him. We are
greatly in hope that the Senate will decide that changing the way we
handle joint and several liability will be in the best interest of the
American people.
Mr. President, I believe no one is about so speak. I suggest the
absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mrs. MURRAY. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Kyl). Without objection, it is so ordered.
Mrs. MURRAY. Mr. President, I ask unanimous consent that I be allowed
to speak as in morning business for approximately 2 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________