[Congressional Record Volume 141, Number 73 (Thursday, May 4, 1995)]
[Senate]
[Pages S6148-S6155]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
COMMONSENSE PRODUCT LIABIL- ITY AND LEGAL REFORM ACT
The PRESIDING OFFICER. Under the previous order, the Senate will now
resume consideration of H.R. 956, which the clerk will report.
The assistant legislative clerk read as follows:
A bill (H.R. 956) to establish legal standards and
procedures for product liability litigation, and for other
purposes.
The Senate resumed consideration of the bill.
Pending:
(1) Gorton amendment No. 596, in the nature of a
substitute.
(2) Abraham amendment No. 600 (to amendment No. 596), to
provide for proportionate liability for noneconomic damages
in all civil actions whose subject matter affects commerce.
(3) Kyl amendment No. 681 (to amendment No. 596), to make
improvements concerning alternative dispute resolution.
(4) Hollings amendment No. 682 (to Amendment No. 596), to
provide for product liability insurance reporting.
Mr. GORTON. Mr. President, I yield 10 minutes to the Senator from
Arizona.
Mr. KYL. Mr. President, I thank the Senator from Washington for
yielding. First, I want to begin by saying that the comments of the
Senator from Georgia just now are right on the mark in terms of the
amendment that we will be voting on. I certainly subscribe both to what
he said and what the Senator from Washington has previously said about
this.
My conversation, Mr. President, this morning, has to do with a very
specific amendment which we will be voting on, the Kyl-McCain
amendment, which will have the effect of striking section 103 of H.R.
956.
This amendment preserves State law on alternative dispute resolution
procedures and ensures the plaintiffs and defendants are treated
equally through the ADR, or alternative dispute resolution process.
The amendment strikes section 103, which says when alternative
dispute resolution procedures are employed, these procedures are
enforceable only against the defendant, not against the plaintiff.
Currently, of course, under the State laws under which this would be
applied, ADR provisions are equally applicable to the plaintiffs and to
the defendants. Of course, it should remain that way.
Mr. President, a fundamental tenet of American jurisprudence is that
all parties go into court with equal rights. As a matter of fact,
Americans, I submit, would not submit their disputes, their lives, and
their fortunes to a decision by the judge or a jury if they knew that
the deck was stacked against them when they began.
That is precisely what this section 103 of the bill does today. That
is why we are striking this section.
What this section says is that when a State has an alternative
dispute resolution procedure, the parties may use it. Well, that adds
nothing to current law. That is the law of the States. Parties can take
advantage of those alternative dispute procedures, and they should.
As a matter of fact, we are trying to encourage more alternatives to
proceeding through the actual trial of the case. The second part of
section 103 provides for the notice by one party or the other that that
party wants to invoke those procedures. Again, this amendment or this
bill changes nothing in that regard.
The part that changes the law and that we wish to strike is titled
``Defendant's Penalty for Unreasonable Refusal,'' meaning unreasonable
refusal to go through the alternative dispute resolution process.
Defendant's penalty; there is no concomitant plaintiff's penalty.
In other words, the authors of this section have provided that,
although
[[Page S6149]] the defendant would suffer the consequences of refusing
to go through alternative dispute resolution, if the defendant wishes
to go through that process--and we all encourage them to do so--and the
plaintiff unreasonably refuses to do so, there is no penalty on the
plaintiff.
Mr. President, that is fundamentally unfair. It is exactly the kind
of thing the American people wish Members to reform in this litigation
process that we engage in in our country.
The whole idea of reform here, the whole notion of what we are
debating, is fairness. This provision would inject a fundamental
element of unfairness where one party is penalized for not going
forward with alternative dispute resolution, and the other party
suffers no adverse consequences at all. It is fundamentally unfair.
Now, what the provision states is that the court shall assess
reasonable attorney's fees and costs against a defendant who refuses to
proceed; final judgment is entered against that defendant that that
refusal was unreasonable or not made in good faith.
That is typical of the State alternative dispute procedures here,
that where either parties says, ``Let's go to alternative dispute
rather than going all the way through trial'', and the other party
says, ``No, I do thought want to do that,'' and it turns out the other
party loses and the court finds that that party's refusal to go through
the alternative dispute resolution procedure was unreasonable or not
made in good faith, then costs and attorney's fees can be assessed
against that losing party. That is the law in many States today. We
should preserve that law.
This section of the bill changes that procedure in State law. It
says, ``No, even though you say that the losing party who refuses to go
through the alternative dispute resolution in good faith should have a
penalty, we are going to strike that in the case of only one-half of
the parties, the plaintiff.'' The plaintiff gets a free ride. The
plaintiff can refuse alternative dispute resolution in bad faith and
still not be penalized. A defendant who refuses alternative dispute
resolution and who loses, and the court determines he has done that in
bad faith, has a penalty rendered against him.
Mr. President, I could argue either way that there should or should
not be a penalty. I do not want to change the State law in that regard.
That is why, instead of saying that the penalty would lie to both the
defendant and the plaintiff, which we could have done with this
amendment, we have simply said ``Let's strike the section and leave
State law the way it is. State law treats both parties fairly. That is
the way it should be.''
So I urge all my colleagues who for the last several days have been
arguing that this is not something that the Federal Government should
be involved in, that we should let the States experiment, that we
should let them decide their own procedures here--I urge them to
support this resolution, my amendment, because my amendment allows the
State law to be preserved as it is today with no change on alternative
dispute resolution. I think we want to encourage alternative dispute
resolution. We will certainly not be encouraging it if we say we
believe in it but only if it is a stacked deck, only if it can be used
against the defendant but not against the plaintiff.
It is fundamentally unfair, and we should never be a party to
changing the law of the States in a way that will result in unfairness
to one side or the other in litigation. So I urge my colleagues when we
vote in about an hour on these various amendments to the bill to
support the Kyl-McCain amendment to strike section 103 and thus
preserve State ADR proceedings and preserve the balance between
plaintiffs and defendants proceeding under those procedures.
I yield the floor, Mr. President.
Mr. HEFLIN. I wonder if the Senator can respond to a question or two?
Mr. KYL. I will be happy to reply.
Mr. HEFLIN. I have come to somewhat agree with the Senator in regards
to this. I have always been sort of puzzled as why that was put in
there.
Of course, in original ideas on alternate dispute resolution methods,
some of the States have had what they call court-annexed arbitration,
and they put a penalty relative to the failure to bind on the claimant,
plaintiff, when this occurs, which raises an issue that it could be a
violation of the seventh amendment, of the right to a trial by jury, by
saying anything is mandatory under the concept of court-annexed
provisions. Previous bills, as I recall, said if the judgment that
occurred was less than what the award had been in an arbitration
proceeding which is a part of the alternate dispute resolution, that
then plaintiff would have to pay the reasonable attorney's fees and
court costs and so on. And that raised the question of whether that was
causing a claimant to be deprived of the right of trial by jury.
This language here has, in section 103(a)(1), that they can have an
offer to proceed to voluntary, nonbinding alternate dispute resolution.
If it is voluntary and nonbinding, I do not understand why you would,
in effect--unless it is sort of an effort to have an encouragement for
defendants, realizing that claimants would be the ones who would
probably want a nonbinding, voluntary alternate dispute procedure to
start in order to more rapidly dispose of their claims. In particular,
in the States that have had procedure, they usually have a dollar
amount limitation.
Actually, this is already authorized under existing law which we
voted on several years ago, the Biden Civil Justice Act. I do not
remember the specific title and name of it, but it authorized
nonbinding alternate dispute resolutions in the Federal courts. You
could have such a proceeding under this existing statute.
So, I have been puzzled why proponents attempted to have the
provision for a possible defendants' penalty. The only reason I see is
I thought they were probably doing it for window dressing, purely for
the purpose of trying to say we are giving something to the claimant;
while we are taking away 100 different things, we are going to give you
1 with the alternative dispute resolution provision.
Of course they use the word ``unreasonable'' in this section which
allows for some leeway on behalf of a defendant.
But overall, in fairness, I sort of tend to support the Senator's
amendment here to strike the provision from the underlying Gorton
substitute. I do not know what the others will do but as it is right
now, unless I am convinced otherwise, I may well vote with you.
Mr. KYL. I appreciate the comments of the Senator from Alabama. That
helps to give us more background on this as well. I think he is
absolutely correct, that as a matter of States rights many States have
these procedures today. If they have them, we leave them in place. But
to the extent that we change them by saying in effect they only apply
to one party, we, at the Federal Government level, will have injected
an element of unfairness and I just do not think we want to be a party
to doing that.
I know the Senator from Washington wishes to proceed so that is all I
will say about that, but I appreciate the comments of the Senator from
Alabama. I certainly agree with him on that.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, we are at this last half-hour or 45
minutes before a series of votes, speaking to several amendments: The
underlying broad amendment by the Senator from Michigan to extend the
joint liability provisions of this bill to all litigation; the
amendment proposed by the Senator from Arizona and discussed during the
course of the last few minutes; and an amendment by the Senator from
South Carolina on insurance data collection and reporting requirements.
While he spoke briefly to that last night, I think it important to
outline for the benefit of my colleagues who will soon be voting on it
what that amendment actually does. The amendment is not so much an
insurance reporting act, though it does add inevitably to the huge
amount of paperwork with which our society and economy is already
burdened, as it is another skillful attempt for all practical purposes
to kill this bill, this whole idea.
What the amendment would do would be to sunset all of the substantive
provisions of the proposal which is now before us. I want to repeat
that. It would sunset all of them.
[[Page S6150]]
I am sorry. Mr. President, I apologize. The notes I have here--the
Senator from South Carolina has crossed those provisions out of this
provision. Now, it simply requires costly and unnecessary reporting
requirements and institutes a brandnew Government bureaucracy.
It stems from the proposition from the opponents to this bill that
the only goal of the bill is to lower insurance costs. Yet, I do not
believe that either the Senator from West Virginia or I have ever
included lower interest costs as one of the rationales for the passage
of this bill. We hope that it might well be an incidental impact of the
passage of the bill. But it is not central to our arguments.
To go back to the beginning, each of us has said that it is designed
to improve the competitiveness of American businesses, large and small,
to increase economic growth and to create more jobs, to make the
present system more fair by making it more open to small claims through
an alternative dispute resolution mechanism and by creating a uniform
and in many cases in many States a more generous statute of limitation
on claims and to reduce overall liability costs. But whatever the
situation may have been 25 or 30 years ago, overall liability costs are
a large universe, of which insurance premium costs are only one and one
increasingly less important element. Why? For three reasons:
First, in many States, punitive damage awards cannot be insured
against. It is not true in all cases but it is true in many States. It
is the arbitrary nature of punitive damage verdicts, which is a major
goal of the reforms contained in this bill.
Second, several years ago through a solution developed in the
Commerce Committee, of which both the Senator from South Carolina and I
are members, a market solution was created for the nonresponsiveness of
insurance premiums to market changes by a Federal Risk Retention Act
which allows small businesses to pool themselves together to self-
insure in the area of product liability, an act which has been utilized
by thousands of small businesses across the country. So they are
outside of the insurance field entirely.
Finally, of course, most very large businesses, many of the business
enterprises which have abandoned product lines or decided not to
continue to develop new product lines, are self-insurers. They do not
go to insurance companies to insure themselves against product
liability costs. They make their own business judgments about what they
will develop and what they will market.
My friend and colleague from West Virginia is constantly brought up
as being originally a sponsor of a bill like this a number of years
ago. It is true that he was. But as I trust is the case with all of us,
changing circumstances and greater thoughtfulness change our minds on
particular courses of action. It has changed my mind on the substance
of this bill. There was at least one previous product liability bill in
the Commerce Committee which I opposed in the committee, one quite
different from this. But when Senator Rockefeller, several Congresses
ago, offered an amendment like this, the product liability bill that we
were dealing with included strict limits on liability, caps on pain and
suffering damages, which this one does not. We did not have the Risk
Retention Act in existence at that time. It was a much better argument
at that point that this proposal would have a clear cost-cutting effect
on insurance.
Mr. HEFLIN. Mr. President, will the Senator yield for a question?
Mr. GORTON. Yes; I am happy to yield for a question.
Mr. HEFLIN. I was interested in what the Senator had to say about
whether the Senator really does anticipate that the passage of this
bill would reduce insurance costs. The Senator has given a couple of
reasons why certain things are outside. But as I understand it, one of
the main ideas has been that this would cut transaction costs, which I
question, because it bifurcates a trial requiring additional hearings.
But basically, will the Senator agree that where companies have
liability insurance that there is in practically all policies no limit
on transactional costs? The defense that occurs to the company as a
result of liability insurance is borne by the insurance companies.
Therefore, I raise the issue.
One of the arguments is the cost. I have heard the Senator talk
about it--defense fees, the deposition fees, and those things from the
defense side which really would be borne by the insurance companies.
Therefore, it would have some relationship to the overall cost of
insurance, would it not?
Mr. GORTON. I am not entirely certain what the question from the
Senator from Alabama consists of. But I think I understand it. I will
do the best that I can to answer it.
Yes; one of the goals of this bill is to reduce transaction costs. It
is to see to it that more of the money that goes into the legal system
goes to actual victims, whether product liability as the bill is now
more inclusive, medical malpractice. We find it an absolute scandal
that for every dollar that goes into the product liability system only
40 cents or so gets to victims. And 60 cents goes to transaction costs,
most of which goes to lawyers.
We have not separated out how much of those lawyer fees are
defendants' fees. That is a matter I suspect of indifference to the
victim. It is 60 percent. Of course, for most insurance policies there
is no limit on the amount that the insurance company will spend in
defending the defendant in such a case. There hardly could be. Under
those circumstances the claimant's attorney would simply drive the
engine until that level had been reached and then no longer would have
any opposition.
What we are attempting to do in this bill is, one, create more
situations in which there was a prompt settlement through something
less than full litigation through the ADR provisions in the bill;
second, by limiting to in some respects consistent with the
Constitution--in fact, a response to the invitation from the Supreme
Court of the United States under the Constitution to do so--somehow
limiting the possibility of huge punitive damage verdicts causing cases
to settle earlier, and at a more reasonable price and at a lower
transaction cost; third, of course, simply doing more justice in the
system. We hope that it will modestly cut back on the number of
lawsuits that are brought in the first place, especially frivolous
ones, and cause the meritorious lawsuits to be settled more quickly and
even when they go to trial to be settled less frequently with lengthy
appeals to appellate courts.
This Senator did not say, I report, Mr. President, to my friend, that
we did not believe that there would be any reduction in liability
insurance costs. The Senator said that we were not utilizing that, we
were not making that prediction as an argument in favor of the bill.
The argument in favor of the bill is greater justice, especially for
smaller claims, the increase in economic growth and the creation of
jobs, and the encouragement of the development of new and improved
products on the part of the American business community.
If you ask this Senator does he think that liability insurance costs
will go down, he does. He certainly hopes so. But the point is that if
they do not, unlike the situation 8 or 10 years ago, those who have to
purchase the insurance or who face product liability claims will have
an alternative, an alternative that we created for them in risk
retention pools.
If the competitive market among big insurance companies does not lower
the costs, those risk retention pools certainly will, and they are not
a subject of this amendment.
Mr. HEFLIN. I might inquire of the Senator if there was testimony--I
do not know whether it was this year or last year--from the American
Insurance Association, one of their officers, which basically said that
passage of the bill would not, I repeat, not, bring about any reduction
in liability insurance premiums? Some words are that there would be
insurance cost savings. I do not remember right offhand the person who
said it, but I remember seeing that in a previous report of the
Commerce Committee.
Does the Senator remember that testimony?
Mr. GORTON. I do not remember that testimony this year. I believe the
Senator from Alabama is probably correct about some such testimony for
years past. But to exactly the extent that that is true, the amendment
which we are discussing is irrelevant and has no impact other than
probably
[[Page S6151]] to drive up costs because it drives up the paperwork
involved in the entire system.
Mr. HEFLIN. In regard to the alternate dispute resolution, if I
recall right--I do not have it before me right now--there was a GAO
study which indicated that they thought the bill would increase the
transaction costs and that one of the reasons for it was the way the
alternate dispute resolution provision was contained in the bill. Does
the Senator recall that testimony?
Mr. GORTON. I am sorry; I was distracted.
Mr. HEFLIN. I was speaking of the GAO report. I do not have it before
me. But as I recall the GAO report indicated that the provisions of the
bill--maybe it was a predecessor of it--in their judgment would not
reduce transactions costs, and that one of the reasons was they felt it
could possibly increase it was because of the alternate dispute
resolution methods that were there--increasing it another hearing as
well as the provisions dealing with bifurcation, separate hearings that
you would have to go through--thereby bringing about additional
lawyer's fees in regards to those proceedings, particularly on the
defendant's side where there is an hour billable approach.
Does the Senator recall that?
Mr. GORTON. I have to say to my friend from Alabama I do not recall
that. As the alternative dispute resolution provisions in these bills
have changed from year to year, certainly no such report has been filed
in connection with the alternative dispute resolution proceedings, or,
rather, sections in this bill.
I see, Mr. President, it is now 5 minutes after 12. I know my
colleague from West Virginia wishes to speak, and I yield the floor.
Mr. ROCKEFELLER addressed the Chair.
The PRESIDING OFFICER (Mr. Thomas). The Senator from West Virginia.
Mr. ROCKEFELLER. Mr. President, as one of the managers of what was
once solely a bill to reform our product liability system, I wish to
speak to my colleagues, those who share in a general sense the purpose
of what we are trying to do here, about at least my views on the
business before us.
At 12:15, in 10 minutes, the Senate will vote on three pending
amendments to this bill, and then vote on the first of two cloture
motions. The second cloture motion vote is expected at 2 o'clock, maybe
2:15. I am not sure.
I am going to make a motion to table both the Abraham amendment on
joint and several liability and the Kyl amendment that tries to delete
the alternative dispute resolution section of this bill, alter it in
ways which I find distasteful, but the message I wish to get across
most strongly is that I will vote against both cloture motions. I will
vote against the one at--whenever the first one comes, and I will vote
against the second one. I will not vote for one and against the other,
against one and for the other. I will vote against both. I want both to
fail because there are those of us who believe that this bill needs to
be kept to product liability--and I think there are many of us--so that
we can at least get some tort reform accomplished, which we will not in
any other event. Those folks need to vote in their conscience, if that
is where their conscience dictates, against both cloture motions, to
vote no on both cloture motions. And I hope anybody interested in
achieving actual results on product liability reform will do the same
and vote no on both cloture motions today.
This past week, frankly, has been rather astonishing to me, Mr.
President. One would think, when a majority of Senators get the chance
finally, without a filibuster on the motion to proceed, when we finally
get to work on a bipartisan, balanced, focused piece of legislation to
deal with this very serious problem, that is precisely how they would
spend their time here.
But, no, instead, we have watched Senator after Senator come eagerly
to the floor to add one more ornament to the tree. As I have said
before, anyone who has ever decorated a Christmas tree knows that if at
some point you put too many ornaments on, too many bows on one side of
the tree, that tree is going to fall over and crash down and you lose
the ornaments, the tree, the Christmas spirit, and it is a terrible
vacation. That is the situation I see before us right now. And the
amendments from Senators Abraham and Kyl are going to assist in sending
this tree to the ground.
The Senate has had absolutely no opportunity that I know of to
consider whether the joint and several provisions in the product
liability bill make sense for the rest of civil actions. I do not know
of any hearing on the topic. I do not see a bill from the Judiciary
Committee on the topic, or a report laying out the arguments on an idea
as significant as this one. Yes, the House of Representatives made a
sudden decision to throw the idea into their stew of legislation on
tort reform that passed a couple weeks ago. But this body is supposed
to keep a standard of actually thinking about what it is on which we
vote. We pride ourselves on that. And the idea of deleting the section
in this bill that promotes alternative dispute resolution is appalling
to me.
Maybe I need to restate the obvious. Legislation becomes law when
interests are balanced, when legislators work out difficult problems
together, when problems are addressed with practical remedies.
The alternative dispute resolution provision in our product liability
bill is there for these reasons. Here is one of the parts of this bill
designed solely and specifically to deal with one of the most maddening
problems in product liability. Victims have to wait too long for
compensation. The system is too slow and too inefficient. If I am a
small farmer from West Virginia or some other place and I do not have
any money, and I do not have any money to hire lawyers or any money to
pay for time for 3 years to go by, I can avail myself of the
alternative dispute resolution.
We want to encourage that small farmer who does not have the
resources, the small business person, the person of very modest means.
And this is the way we do it, by allowing him this particular
advantage. That is why we want to promote alternative dispute
resolutions in a way that will speed things up so that that small
farmer will, in fact, come in and probably just speak for himself and
the case will be simply handled right there on the spot, no lawyer, no
problem, no time, no expenditure of money.
I really do not think we have to apologize for devising an approach
that is slanted toward the victim when we are talking about encouraging
them to resolve their cases earlier. Remember, they have wait to 3
years now. We are trying to encourage people to get that amount of time
down.
So in the strongest possible terms, I urge my colleagues to defeat
both of these amendments. And I urge my colleagues, again, to vote
against cloture, not just the first cloture vote but also the second
one that will take place this afternoon at about 2 o'clock.
We now have a bill that has become deformed, disfigured. A small
group of Senators has refused to follow the discipline of working out
with the rest of us who are interested in enacting product liability
reform what we will do to accomplish that. Until they do, we should
bring this bill to a halt.
A majority of Senators are clearly interested in a balanced, moderate
product liability reform bill--I am convinced of that; I deeply believe
that--that serves consumers, victims of defective products, and
business in a balanced way. We still have that opportunity. The pending
cloture votes will demonstrate what it takes to succeed.
Mr. President, I thank the Chair and yield the floor.
Mr. HEFLIN addressed the Chair.
The PRESIDING OFFICER (Mr. Thomas). The Senator from Alabama.
Mr. HEFLIN. Mr. President, I am delighted to hear Senator Rockefeller
state that the way the bill stands now, it is deformed and disfigured.
That reminds me that this bill, as it stands right now, is pretty much
similar to what the House passed. I do not think whatever we pass here
in the Senate, when it goes to conference, is going to come out much
different from the House bill. I think we know that the Speaker over
there has great influence.
I just feel that, basically, whatever we do here which passes the
Senate and goes to conference will reflect the Speaker's position on
this overall issue. I think the key battle is the battle here in the
Senate and the Senate's
[[Page S6152]] role to be deliberate and to prevent unwise, unfair
legislation.
Now, if there is a disfigurement and a deformity by extending the
language pertaining to punitive damages, by extending the language
eliminating joint and several liability to cover all civil actions,
then that is a recognition that there is a fault with that extension,
there is a fault with the overall underlying principle that is being
brought forth here in regard to punitive damages and also to
eliminating joint and several liability.
The PRESIDING OFFICER. Under the order, a vote is to occur at 12:15.
Mr. HEFLIN. Mr. President, I ask unanimous consent that I be allowed
to proceed for 3 more minutes.
Mr. GORTON. No objection.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HEFLIN. I send to the desk and will ask to have printed in the
Record a letter, dated May 25, 1990, to the Honorable Richard H. Bryan,
then chairman of the Subcommittee on Consumer Affairs, Committee on
Commerce, Science, and Transportation, pertaining to the GAO study.
One of the questions that he asked was:
In your research of the current product liability system,
have you found any evidence that would support the argument
that the current tort system has led to an increase in
transaction costs?
And they ended up saying: ``We believe that S. 1400''--which was a
predecessor bill--``is unlikely to reduce transaction costs in product
liability suits.''
I send that letter to the desk and ask unanimous consent that it be
printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
General Accounting Office,
Washington, DC, May 25, 1990.
Hon. Richard H. Bryan,
Chairman, Subcommittee on Consumer, Committee on Commerce,
Science, and Transportation, U.S. Senate.
Dear Mr. Chairman: Enclosed are my responses to your
questions regarding my February 28, 1990, testimony on
product liability. If you have additional questions or if I
can be of further assistance, please call me, or Cynthia
Bascetta.
Sincerely yours,
Joseph F. Delfico,
Director, Income Security Issues.
Enclosure.
1. In your research of the current product liability
system, have you found any evidence that would support the
argument that the current tort system has led to an increase
in transaction costs? What are the major factors that
contribute to the level of transaction costs? Do you believe
that S. 1400 would reduce transaction costs in product
liability suits?
In our review, we did not collect data over time to assess
whether the current tort system has led to an increase in
transaction costs. We reviewed a 1987 study by the Rand
Corporation, however, that reported that between 1980 and
1985, the annual growth rate for the amount of tort
litigation was about 3 or 4 percent. Expenditures for this
litigation grew at about 6 percent for automobile-related
litigation and about 15 percent for other tort claims,
including product liability.\1\ Although the literature is
replete with general concerns about the costs of litigation,
we did not find any other research documenting trends in
transaction costs associated with the current tort system.
\1\Hensler, Deborah R. et al, ``Trends in Tort Litigation:
The Story Behind the Statistics,'' Rand Corporation,
Institute for Civil Justice, Santa Monica, CA, 1987, p. 25.
The major factor affecting the level of transaction costs
is the length of litigation. As we reported, cases we
reviewed took years to process--almost 2-\1/2\ years to move
from filing of a complaint to the beginning of the trial. On
average, appealed cases took 10 more months. In our review,
we noted two possible reasons for lengthy litigation in
product liability cases. First, the law has been evolving in
many states, which may increase the complexity of the legal
decisionmaking process. Breaking new ground and establishing
new precedents, for instance, take more time than cases where
the law is clearer and requires little deliberation or
interpretation. Second, both plaintiffs and defendants have
little incentive to cut corners. Although plaintiffs have
incentives to expedite the process so that they can receive
compensation, their attorneys may want to invest substantial
resources in developing cases to deter manufacturers from
making harmful products. Defendants may prefer not to settle
cases to deter further suits over the same product. Pretrial
discovery--a time-consuming and expensive feature of
litigation--therefore becomes an important part of product
liability suits for both parties.
We believe that S. 1400 is unlikely to reduce transactions
costs in product liability suits. For cases that are
litigated, the procedural features of the tort system would
not be changed by the bill. It is also not clear that the
bill provides strong incentives for alternative dispute
resolution, which could cut litigation costs. Moreover, the
alternative dispute resolution mechanisms that may be used
are left to the discretion of the states. If these mechanisms
are not binding, then they may add to rather than substitute
for litigation. If this happened, costs could actually
increase.
2. Your study found that product liability cases were quite
time consuming:
A. Could you please identify the specific factors that make
these cases time consuming?
B. Are there any benefits to the judicial process for
having prolongated cases? For example, is lengthy litigation
ever justified in order to insure an accurate record in a
complicated case?
C. What are the disadvantages for having lengthy
litigation?
D. Do you believe S. 1400 would reduce litigation time in
product liability cases?
A. Specific factors that make these cases time-consuming
are the steps required in the legal process. In the vast
majority of cases we reviewed, we noted that defendants often
used the maximum amount of time legally required. Delays
caused by defendants were also common. In most cases,
manufacturers have little incentive to settle cases, as we
said in response to the first question, although some may be
concerned about adverse publicity regarding their products.
In the typical case in our review, the defense was first
granted 30 days to respond to a petition. The defense
typically argued, at the end of the 30 day period, that the
plaintiff did not use the product or that negligence was the
cause, at least in part, of the harm. This began the legal
process known as discovery, in which the burden was on the
plaintiff to build a record by collecting data on product
design, specifications, and other (often proprietary)
information from defendants. The preparation of
interrogatories--testimonial evidence from eyewitnesses,
expert witnesses, and others--was another lengthy process
needed for the record. We also found frequent motions to
extend and delay court dates.
B. In any case, a complete and accurate record would be
necessary to ensure a fair legal outcome. In this sense,
lengthy litigation and its attendant costs might be
justified. Generally, however, we believe litigation should
be shorter, and as a result, we would expect lower overhead
costs and higher net compensation for injured parties. In our
report, we concluded that we cannot determine the degree to
which the benefits of the judicial process balance
substantial administrative costs. We also noted that benefits
thought to accrue from the judicial process include providing
incentives for product safety. The Rand Corporation noted in
its 1987 study that ``there is no ready measure of the
inherent reasonableness of the system's transaction costs.
Especially when we focus on the tort system's goal of
deterrence, we might encounter circumstances in which we find
very high transactions costs acceptable.''\2\
\2\Ibid., p. 25.
---------------------------------------------------------------------------
C. There are two primary disadvantages of lengthy
litigation. First, as we have already discussed, time greatly
increases costs. Second, protracted litigation means that
injured parties wait longer for compensation.
D. S. 1400 will probably not reduce litigation time in
product liability cases because discovery and other legal
processes would not be affected by the bill. And, because the
effect of S. 1400 on alternative dispute resolutions is
unclear, we cannot predict the extent to which lengthy
litigation could be avoided if product liability reform were
enacted.
3. Your study indicated that the data needed to give a
complete evaluation of the effects of tort reforms is not
readily available. Do you have any recommendations on how the
relevant and necessary data might be collected? If so, what
is your projection of the length of time it would take to
collect such data?
When we began our review, we found that with the exception
of ongoing work at the Rand Corporation, very little data had
been gathered in any systematic way about the outcomes of
tort reforms. According to researchers at Rand, neither
critics nor defenders of the civil justice system have much
solid evidence to support their views. In fact, the legal
system is notorious for its fragmentation and dearth of
records on finances and workloads. Our review confirmed
serious inadequacies in available databases, methodological
difficulties in designing rigorous studies, and an overall
lack of empirical evidence that impede efforts to evaluate
the effects of tort reforms.
For a comprehensive assessment of research prospects in
this area, we refer you to the following Rand Corporation
publications: (1) Hensler, Deborah R., ``Researching Civil
Justice: Problems and Pitfalls,'' Summer 1988; (2) Reuter,
Peter, ``The Economic Consequences of Expanded Corporate
Liability: An Exploratory Study,'' November 1988; and (3)
Carroll, Stephen J., ``Assessing the Effects of Tort
Reforms,'' 1987.
Mr. HEFLIN. Senator Hollings is unable to be here. He was called down
to the White House on a budget matter.
In regard to his amendment, he has asked that I point out that his
same amendment was accepted by unanimous consent last year. The
proponents of the bill, Senator Gorton
[[Page S6153]] and Senator Rockefeller, accepted the amendment by
unanimous consent in the last Congress. So I am just repeating that at
the request of Senator Hollings relative to this matter.
But overall, this bill is a very unfair bill. It has added to it to
make it much more encompassing, to make this matter of punitive damages
now extend to other suits far into what it does.
There are other provisions, such as the Abraham amendment, that, in
effect, extends the elimination joint and several liability to all
sorts of suits. Now, in our courts, you either have criminal cases or
you have civil cases. Under this, it extends it to all civil suits
brought under any theory whatsoever. So it is very broad and
comprehensive, and very much covering almost every conceivable type of
civil lawsuit that you might have, including such things as State
antitrust laws.
Sexual harassment in State laws would be covered; disability
protections in State laws; Americans with disabilities would be
covered, as it would apply, by State laws relative to this; automobile
accident cases, all sorts of things in regard to it.
It is an extremely broad and encompassing bill. I think it ought to
be defeated.
abraham amendment no. 600 on joint and several liability
Mr. LEVIN. Mr. President, I intend to vote against the Abraham
amendment to extend limitations on joint and several liability for
noneconomic damages to all civil actions.
The sponsors of this bill, and this amendment, have pointed out that
there are problems with joint and several liability. In some cases, a
defendant who has only a marginal role in the case ends up holding the
bag for all of the damages. That doesn't seem fair.
On the other hand, there are good reasons for the doctrine of joint
and several liability. We all know that cause and effect cannot
accurately be assigned on a percentage basis. There may be many causes
of an event, the absence of any one of which would have prevented the
event from occurring. Because the injury would not have occurred
without each of these so-called but for causes, each is, in a very real
sense, 100 percent responsible for the resulting injury.
This bill and this amendment, however, do not recognize that in the
real world, multiple wrongdoers may each cause the same injury. They
insist that responsibility be portioned out, with damages divided up
into pieces. Under this approach, the more causes the event can be
attributed to, the less each defendant will have to pay.
Unless the person who has been injured can successfully sue all
guilty parties, he or she will not be compensated for his or her entire
loss. The real world result is that most plaintiffs will not be made
whole, even if they manage to overcome the burdens or our legal system
and prevail in court. Wouldn't it be more fair to say that any
wrongdoers who caused the injury should bear the risk that one of them
might not be able to pay its share? Put another way, isn't it more fair
for all of the wrongdoers who cause an injury to bear this risk than
for the victim to carry the burden of uncompensated loss?
More than 30 States either maintain the doctrine of joint and several
liability or have come up with creative approaches to address the
potential unfairness of imposing joint and several liability in some
cases without unfairly hurting the injured party. Because these State
laws are more favorable to the injured party than the approach adopted
in this amendment, so they would all be preempted.
As far as I am aware, no hearings have been held on this broad
proposal to abolish joint and several liability for noneconomic damages
in all civil cases. There has been no discussion of the range of State
laws that would be overridden by this amendment and the effect that
overriding them would have. This amendment is unfair and unbalanced,
and I cannot support it.
Punitive Damage Caps For Small Businesses
Mr. BRADLEY. Mr. President, I rise today to express my support for
the amendment offered by my colleague from Ohio, Senator DeWine, and
accepted by the Senate yesterday. The amendment provides for a $250,000
cap on punitive damages for individuals whose net worth does not exceed
$500,000 and corporations, partnerships, associations, and units of
local governments with fewer than 25 employees.
Mr. President, small businesses are the engine that drives the
American economy and provide for at least half of this country's new
employment opportunities. As such, Mr. President, as we debate the
issue of imposing a punitive damages cap, we need to ensure that small
businesses are not punished disproportionately when they take actions
which call for the imposition of such damages.
Mr. President, punitive damages are designed to punish the offender
and protect the public by deterring conduct that is harmful. I am,
therefore, a strong proponent of the right of courts to police
egregious conduct through the award of punitive damages. Thus, while a
cap on punitive damage awards should be sufficient to punish and deter
future action, it should also reflect the fact that a cap that may be
sufficient to punish a large corporation may in fact push a small
business into the abyss of bankruptcy.
Mr. President, I have spoken to small business owners in New Jersey
on this issue. What I have heard over and over again is that if they
commit offenses that merit an award of punitive damages, they should be
punished; however, the punishment and deterrent effect should reflect
the economic situation of the small business offender. Mr. President, a
$250,000 punitive damage award against a small business with assets of
$400,000 may drive the owner out of business, while a $5 million
punitive award against a large corporation with assets in excess of
$500 million will have less of a deterrent effect. I cannot support
such a disproportionate impact on small businesses struggling to meet
their bottom line.
Therefore, Mr. President, I am pleased to support the amendment
offered by my colleague from Ohio which serves to balance our national
interest in punishing and deterring harmful conduct and protecting the
viability of small businesses.
Mr. DODD. Mr. President, I have been working on product liability
reform for more than a decade. During that time, a wide range of my
constituents--consumers, manufacturers, small businesses, and workers--
have told me about the serious problems with the present system.
Injured people are upset about both the length of time it takes to
receive fair compensation and the high cost of legal fees.
Manufacturers are reluctant to introduce new products because of the
inconsistent product liability laws in the 50 States. Small businesses
are hurt by the costs of defending themselves against unjustified
lawsuits. Workers fear that the costs in the present system will drag
the economy down. Consumers question whether they are getting high
quality products at a fair price.
We need reform that will improve the system for everyone. To do that,
we must strike a balance between many competing interests. We must not
adopt reform that tips the balance too far in any direction. In the
past, I have opposed measures that unfairly limited the rights of
consumers, and I will continue to do so.
Because 70 percent of all products move in interstate commerce, this
is an appropriate area for Federal standards. A national, more uniform
system would lower costs and speed the resolution of disputes. At the
same time, we need to be careful about making other changes in the
legal system that have not been as carefully thought out.
The original bill, crafted by Senators Rockefeller and Gorton,
offered the kind of carefully focused, balanced reform that would
improve the system for everyone. I am a cosponsor of that bill. I am
concerned, however, about a number of changes that were made to the
legislation during the past week.
For example, the bill now contains a separate title on medical
malpractice reform. I agree that there are significant problems with
medical malpractice litigation and that Congress should enact carefully
considered reforms. The proposal that was added to the product
liability bill, however, is flawed.
It contains, for example, a provision that would make it harder to
bring lawsuits against obstetricians who are seeing the patient for the
first time. This provision might not have much of an effect on
wealthier patients who
[[Page S6154]] would have a primary doctor supervising the obstetric
services. But what about those poor women who only see the doctor
during the actual delivery of the baby? If they were injured, they
would have a difficult time receiving compensation.
The Gorton-Rockefeller bill was expanded in other ways. For example,
there is now a cap on punitive damages in all civil cases--not just
product liability cases. There have been a number of studies and
commentaries about the problems with punitive damages in product
liability cases. Those analyses suggest that some reform is needed for
those cases. However, it is not clear that we need to reform punitive
damage awards in all civil cases. In my view, we ought to engage in
more extensive debate before taking such drastic steps.
Additionally, I have concerns about putting arbitrary limits on
damages. Because caps limit flexibility, they can lead to unjust
results in some cases. I have filed an amendment that would address
this problem. Under my amendment, the jury would determine whether
punitive damages are appropriate, but the judge would set the amount.
Hopefully, we will resume debate on the bill and consider this
amendment.
Because of these and other concerns, I will vote against cloture.
There is still much work that needs to be done on this bill, and this
is not the time to cut off debate. I still support product liability
reform and will work with my colleagues to enact careful, balanced
reforms. But I will not support efforts to ram through other changes in
the legal system that go far beyond the balanced product liability bill
I co-sponsored.
We have a real chance to actually pass meaningful and fair product
liability reform this year, and I will not support anything that
endangers those chances. In my view, there is a bipartisan majority of
Senators that would support that approach, and I look forward to
working with them to pass a good bill.
Vote on Motion to Table Amendment No. 600
The PRESIDING OFFICER. Under the previous order, the question now
occurs on amendment No. 600.
Mr. GORTON. Has a rollcall been ordered?
The PRESIDING OFFICER. It has not.
Mr. GORTON. I ask for the yeas and nays.
Mr. ROCKEFELLER. If the Senator will yield for a moment, I move to
table the Abraham amendment, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There appears to
be a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. Under the order, the question now occurs on
the motion of the Senator from West Virginia [Mr. Rockefeller] to table
amendment No. 600, offered by the Senator from Michigan [Mr. Abraham].
The yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Rhode Island [Mr. Pell] is
absent on official business.
I further announce that, if present and voting, the Senator from
Rhode Island [Mr. Pell] would vote ``aye.''
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The result was announced--yeas 51, nays 48, as follows:
[Rollcall Vote No. 148 Leg.]
YEAS--51
Akaka
Baucus
Biden
Bingaman
Boxer
Bradley
Breaux
Bryan
Bumpers
Byrd
Cohen
Conrad
D'Amato
Daschle
Dodd
Dorgan
Exon
Feingold
Feinstein
Ford
Gorton
Graham
Harkin
Heflin
Hollings
Inouye
Jeffords
Johnston
Kennedy
Kerrey
Kerry
Lautenberg
Leahy
Levin
Mikulski
Moseley-Braun
Moynihan
Murray
Nunn
Packwood
Pryor
Reid
Robb
Rockefeller
Sarbanes
Shelby
Simon
Specter
Stevens
Thompson
Wellstone
NAYS--48
Abraham
Ashcroft
Bennett
Bond
Brown
Burns
Campbell
Chafee
Coats
Cochran
Coverdell
Craig
DeWine
Dole
Domenici
Faircloth
Frist
Glenn
Gramm
Grams
Grassley
Gregg
Hatch
Hatfield
Helms
Hutchison
Inhofe
Kassebaum
Kempthorne
Kohl
Kyl
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Pressler
Roth
Santorum
Simpson
Smith
Snowe
Thomas
Thurmond
Warner
NOT VOTING--1
Pell
So the motion to lay on the table the amendment (No. 600) was agreed
to.
Mr. ROCKEFELLER. Mr. 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. 681
The PRESIDING OFFICER. The question now occurs on amendment No. 681,
offered by the Senator from Arizona.
Mr. GORTON. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The clerk will call the roll.
Mr. FORD. I announce that the Senator from Rhode Island [Mr. Pell] is
absent on official business.
I further announce that, if present and voting, the Senator from
Rhode Island [Mr. Pell], would vote ``nay.''
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 60, nays 39, as follows:
[Rollcall Vote No. 149 Leg.]
YEAS--60
Abraham
Ashcroft
Baucus
Bennett
Bond
Brown
Bumpers
Burns
Campbell
Chafee
Coats
Cochran
Coverdell
Craig
D'Amato
DeWine
Dole
Domenici
Faircloth
Frist
Gramm
Grams
Grassley
Gregg
Harkin
Hatch
Hatfield
Heflin
Helms
Hollings
Hutchison
Inhofe
Jeffords
Kassebaum
Kempthorne
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Nunn
Packwood
Pressler
Reid
Roth
Santorum
Shelby
Simpson
Smith
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner
Wellstone
NAYS--39
Akaka
Biden
Bingaman
Boxer
Bradley
Breaux
Bryan
Byrd
Cohen
Conrad
Daschle
Dodd
Dorgan
Exon
Feingold
Feinstein
Ford
Glenn
Gorton
Graham
Inouye
Johnston
Kennedy
Kerrey
Kerry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Pryor
Robb
Rockefeller
Sarbanes
Simon
NOT VOTING--1
Pell
So the amendment (No. 681) was agreed to.
Mr. GORTON. Mr. President, I move to reconsider the vote by which the
motion to lay on the table was agreed to.
Vote on Motion to Table Amendment No. 682
The PRESIDING OFFICER. Under the order the question occurs on
amendment 682 offered by the Senator from South Carolina [Mr.
Hollings].
Mr. GORTON. Mr. President, I move to table the Hollings amendment,
and 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 the motion of
the Senator from Washington to lay on the table the amendment of the
Senator from South Carolina. On this question, the yeas and nays have
been ordered, and the clerk will call the roll.
The legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Rhode Island [Mr. Pell] is
absent on official business.
I further announce that, if present and voting, the Senator from
Rhode Island [Mr. Pell] would vote ``nay.''
The PRESIDING OFFICER (Mr. Kyl). Are there any other Senators in the
Chamber who desire to vote?
The result was announced--yeas 56, nays 43, as follows:
[[Page S6155]] [Rollcall Vote No. 150 Leg.]
YEAS--56
Abraham
Ashcroft
Baucus
Bennett
Bond
Brown
Burns
Campbell
Chafee
Coats
Cochran
Coverdell
Craig
D'Amato
DeWine
Dodd
Dole
Domenici
Dorgan
Exon
Faircloth
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Heflin
Helms
Hutchison
Inhofe
Jeffords
Kassebaum
Kempthorne
Kyl
Lott
Lugar
Mack
McCain
McConnell
Moseley-Braun
Murkowski
Nickles
Pressler
Pryor
Robb
Rockefeller
Roth
Santorum
Smith
Snowe
Specter
Stevens
Thomas
Thompson
Warner
NAYS--43
Akaka
Biden
Bingaman
Boxer
Bradley
Breaux
Bryan
Bumpers
Byrd
Cohen
Conrad
Daschle
Feingold
Feinstein
Ford
Glenn
Graham
Harkin
Hatch
Hatfield
Hollings
Inouye
Johnston
Kennedy
Kerrey
Kerry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moynihan
Murray
Nunn
Packwood
Reid
Sarbanes
Shelby
Simon
Simpson
Thurmond
Wellstone
NOT VOTING--1
Pell
So, the motion to lay on the table was agreed to.
Mr. GORTON. Mr. President, I move to reconsider the vote by which the
motion was agreed to.
Mr. LOTT. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
____________________