[Congressional Record Volume 141, Number 76 (Tuesday, May 9, 1995)]
[Senate]
[Pages S6330-S6335]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ORDER TO PROCEED TO S. 534
Mr. DOLE. Mr. President, I ask unanimous consent, and this has been
cleared by the Democratic leader, at 12 noon on Wednesday, May 10, the
Senate proceed to calendar 74, S. 534, the Solid Waste Disposal Act.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOLE. Mr. President, I think Senator Harkin plans to offer his
amendment in about 20 minutes, at 7 o'clock. I am not certain whether
the amendments by Senator Boxer or Dorgan will be offered.
We have the agreement, in any event. I want to thank my colleagues on
both sides of the aisle. This means no more votes tonight. We can alert
our colleagues but there will be debate on the Harkin amendment, and I
assume other amendments if they want to be called up. I thank the
Chair.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. ABRAHAM. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ABRAHAM. I thank the Chair.
Mr. President, I rise this evening in support of the product
liability reform bill now under consideration, and I would like to just
preface my remarks by offering my compliments to the bill's managers
for their tenacity in sticking with this process as we have moved
through all the various perspectives to find a point of common
agreement between 60 Members of the Senate. I think both Senator
Rockefeller and Senator Gorton worked very effectively on this product
liability reform effort.
I believe the bill represents an excellent start at reforming our
civil justice system, a system that eats up over $300 billion a year in
legal and court costs, awards, and litigants' lost time, not to mention
the loss to consumers and the economy from higher prices for products,
innovations and improvements not on the market, and unnecessarily high
insurance costs.
By placing reasonable limitations on punitive damages in product
liability suits, this legislation will begin the process of reforming
our litigation lottery without harming anyone's right to recover for
damages suffered.
I am especially pleased that the bill now includes a special
provision limiting punitive damages for individuals with assets of less
than $500,000 and for small businesses with fewer than 25 employees.
This provision is modeled on a proposal that Senator DeWine and I
cosponsored and provides that the maximum award against such
individuals or entities is the lesser of $250,000 or twice compensatory
damages.
Mr. President, no one benefits when businesses go bankrupt because of
arbitrary punitive damage awards. Small businesses are particularly
susceptible to such problems as are the millions of Americans employed
by them.
The bill will also eliminate joint liability for noneconomic damages
in product liability cases. Thus the bill would end the costly and
unjust practice of making a company pay for all damages when it is only
responsible for, say, 20 percent just because the other defendants are
somehow judgment proof.
The bill would replace the outmoded joint liability doctrine with
proportionate fault in which each defendant would have to pay only the
amount necessary to cover the damage for which he or she was
responsible.
The bill also creates some important limitations on the liability of
sellers of products generally as well as on the liability of suppliers
of raw materials critical to the production of lifesaving medical
devices.
These provisions go a good way toward restoring individual
responsibility as the cornerstone of tort law. They also recognize an
important fact about our legal system. Ultimately, in its current form,
it is profoundly anticonsumer. By raising the prices of many important
goods, our legal system makes them unavailable to poor individuals who
cannot afford them when an exorbitant tort tax has been added. And in
extreme cases our legal system can literally lead to death or misery by
driving off the market drugs that, if properly used, can cure terrible
but rare diseases or medical devices for which raw materials are
unavailable on account of liability risks.
These are important reforms, Mr. President; reforms that will
increase product availability, decrease prices and save jobs.
[[Page S6331]] When we allow our tort system to stifle production
and innovation the real losers are consumers--who must pay higher
prices and choose between fewer and less advanced goods--and workers--
whose job opportunities disappear.
By eating up 4.5 percent of our Gross Domestic Product, the tort
system costs jobs. Besides causing companies to discontinue or not
introduce products, it also hurts American businesses overall by making
them less competitive in the world market.
A 1994 Business Roundtable survey of 20 major U.S. corporations
reveals that they receive 55 percent of their revenue from inside our
country, but incur 88 percent of their total legal costs here. Clearly
such discrepancies in legal costs put our companies at a disadvantage
in the world marketplace.
It is no secret that I wish we had gone farther with this bill, to
protect the nonprofit organizations, the towns and villages and the
ordinary Americans who remain victims of our current broken legal
system. I hope that Members of this body who support this legislation
but at this time do not want to apply its reforms more broadly will on
further reflection see their way clear to taking the next step; to
enact similar reforms to assist homeowners, accountants, farmers,
volunteer groups, charitable organizations, all small businesses, State
and local governments, architects, engineers, doctors and patients,
employers and employees. But I feel strongly that the legislation under
consideration, even limited to its present scope, is an important step
toward making our civil justice system fair and efficient and improving
the lives of our citizens. I urge its prompt final passage.
I urge its prompt final passage.
Mr. President, as I say, I hope that we will go further in the days
ahead, whether in the form of independent legislation or as part of
further discussions of legal reform that may come before the Senate in
the context of securities litigation or some other issue before us,
because I think that we need an overall and comprehensive reform of the
system.
I know that I speak for a number of the Senators who are active and
working on this bill in saying that we are delighted with the progress
we have made so far and, while we may not think we are yet close to our
final destination, we have taken a good first step. And, most
importantly, I can say that, at least for this Senator, I am dedicated
and committed to continuing the fight to keeping this whole issue of
reforming our legal system before the Senate and I remain hopeful that
we will enact more reforms in the months ahead.
Mr. President, I yield the floor, and suggest the absence of a
quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Abraham). Without objection, it is so
ordered.
Mr. HARKIN. Mr. President, I ask unanimous consent that the pending
amendment be set aside.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HARKIN. Mr. President, I ask unanimous consent that the amendment
I am about to send to the desk be made in order.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 749 to Amendment No. 690
(Purpose: To adjust the limitations on punitive damages that may be
awarded against certain defendants)
Mr. HARKIN. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Iowa [Mr. Harkin] proposes an amendment
numbered 749 to amendment No. 690.
Mr. HARKIN. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
In section 107(b) of the amendment as amended by amendment
No. 709 insert the following:
``(6)(i) Notwithstanding paragraph (1), the amount of
punitive damages that may be awarded in any product liability
action that is subject to this title against an owner of an
unincorporated business, or any partnership, corporation,
unit of local government, or organization that has 25 or more
full-time employees shall be the greater of--
``(I) an amount determined under paragraph (1); or
``(II) 2 times the average value of the annual compensation
of the chief executive officer (or the equivalent employee)
of such entity during the 3 full fiscal years of the entity
immediately preceding the date on which the award of punitive
damages is made.
``(ii) For the purposes of this subparagraph, the term
`compensation' includes the value of any salary, benefit,
bonus, grant, stock option, insurance policy, club
membership, or any other matter having pecuniary value.''.
Mr. HARKIN. Mr. President, this is a very straightforward amendment.
It simply provides that the caps on punitive damages that are in the
amendment will not apply in cases where a business is sued and the
chief executive officer's salary over the previous 3 years is greater
than the total compensatory damages in the case for businesses with 25
or more employees.
This is less than 13 percent of all businesses, according to the
Census Bureau. In those instances, the cap on punitive damages, in my
amendment, would be raised to twice the compensation of the chief
executive officer for 1 year averaged over the last 3 years.
Again, let me try to put it in plain English. What my amendment
provides is that if a corporation is sued and it has over 25 employees,
then the cap on punitive damages that is in the Gorton substitute
amendment will not apply. The formula to be used would be that punitive
damages would be capped at twice--just twice--the annual compensation
of the chief executive officer of that corporation and that annual
compensation would be determined by averaging the last 3 years.
Mr. President, we all agree that punitive damages that are paid
should not be disproportionate, but proportionate to what? This
legislation basically says that a multibillion-dollar corporation can
consciously and flagrantly disregard the safety of others and have that
conduct proven, not just by a preponderance of the evidence but by
clear and convincing evidence. So what this means is that the
legislation before us says this multibillion-dollar corporation can
consciously, flagrantly disregard the safety of others, be sued and go
to court, have it proven that they consciously and flagrantly
disregarded the safety of others by clear and convincing evidence, and
the maximum punitive damages for this kind of heinous conduct is only
twice the compensatory damages of the plaintiff, even if those damages
are such a small amount that they are only a tiny proportion of the
company's profits and assets.
I believe the more important comparison in punitive damage cases is
the proportion of the damages to the size and the financial strength of
the business.
The compensation package of the CEO of a company with at least 25
employees, as my amendment provides, is inevitably going to be a
reasonably fair proportion of the total cash flow of the company. Now,
I have chosen to have it apply to only those businesses that have 25 or
more employees so that a small business, a sole proprietor, who retains
all of the profits of the company as his or her compensation is not
affected.
There is only one purpose for punitive damages, and that is
deterrence. That is the only purpose of punitive damages, to deter that
flagrant, irresponsible action, that disregard from the safety of
others, from happening in the future. Yet, who believes that a punitive
damages award of a few hundred thousand dollars is going to have a
significant impact on a company the size of, say, a major motor
company, a multibillion-dollar corporation?
The CEO's of some companies make $250,000 a week. So how great of a
deterrent will it be to a big corporation if their total punitive
damages is $250,000? That is what they pay their CEO for 1 week.
So why did I choose the compensation packages of the CEO's of these
large companies? Because I believe that unless executive compensation
is
[[Page S6332]] ruinously disproportionate to the resources of the
company--and that is seldom the case--twice that compensation package
will not be so large that it will cause the company to close. No one
can argue that a multibillion-dollar corporation that pays its CEO,
say, $5 million a year is going to close its doors because a punitive
damage award comes to $10 million or 2 years' salary.
The other reason I have chosen executive compensation is because it
is something that is entirely within the control and discretion of the
company's management. And it also takes into account the cash flow of
the company. It is, therefore, more fair than a system based on the
total assets of the company which may be fixed productive resources.
Mr. President, let me read a few examples of the compensation
packages in a few of the major corporations. This is from the recent
issue of Forbes Magazine in the May 22 issue. The cover says ``Pigging
it up: Corporate management who subdues their directors into
submission.'' In this issue it says 800 chief executives are paid $1.3
million per year. That would be one of the lower ones. Some of them are
extremely high. I am just going to read a few. These are some of the
companies that may be involved in the potential lawsuit we are talking
about here.
Here is the compensation of the CEO of General Electric: $8.6 million
per year. Let us see now; that would come out to be about $300,000
every 2 weeks, or about $600,000 a month. So you can see, if General
Electric were to make a product that they knew consciously, flagrantly
disregarded the safety of others--and this was proven in a court of law
by clear and convincing evidence --under the bill before us, they get
$250,000, or twice the compensatory damages. Well, as I showed you, the
CEO makes almost $250,000 a week. So what kind of a deterrent is that
going to be?
Here is Trinity Industries. The CEO there makes $6.2 million a year.
That is about $250,000 every couple of weeks.
Here is Morton International, where the CEO makes $7.5 million a
year.
Here is Chrysler, where the CEO, Mr. Eaton, makes $6.2 million a
year.
Here is Premark International. I do not even know what they do. They
pay their CEO $12.121 million a year. Well, let us see, that is a
million dollars a month. That is $250,000 a week, I guess. So if
Premark consciously, flagrantly made a product in disregard of the
health and safety of others and were sued and taken to court, and that
was proved by clear and convincing evidence, one of the highest
standards, they could have their damages capped for a figure as low as
what their CEO makes in 1 week.
Do you think that is a deterrent? That is not a deterrent at all.
They would laugh that off.
Here is Colgate-Palmolive. Mr. Mark makes $13.460 million a year as
the CEO. I think you get the picture.
Here is Mattel Toys. Their CEO makes $7.6 million per year. Yet, we
are going to say that some kid who got injured by a toy, permanently
disabled for life--and again, let us think again; is it just some kid
who got hurt by a toy because they were misusing it? No, they have to
go to court and prove that the company flagrantly and consciously
disregarded the safety of that child in making that toy. It has to be
not by a preponderance of the evidence but by clear and convincing
evidence, a higher standard. After all that, we will slap their hands
and cap the punitive damages at a small fraction of their company's
worth.
So, again, I think, Mr. President, you get the picture. There are 800
companies here. I am not going to run through them all. Again, I am not
mentioning these companies because I want to cast aspersion on these
companies. I have nothing against them. In fact, they are probably
pretty decent, good companies. I have had dealings with some of them
before. I am sure they want to be good citizens and want to employ
people, and they want to make our country great. I am not saying these
companies are bad. I am just using this as an example of the kinds of
compensation they pay their CEOs.
Again, my amendment says that if you go through all of these hoops
and you get punitive damages, we are going to cap it just at twice the
annual compensation of the CEO. Mr. President, here is an article from
the Tampa, Florida, Tribune, April 13th. I want to read the first
couple of paragraphs. It says:
The Nation's corporate chief executives find their jobs an
enriching experience these days. ``Greed clearly is back in
style,'' says Robert Mongs, a principal of Lenz, Inc., an
activist investment fund in Washington.
``There is almost a feeling among CEO's that the money is
there to be taken.''
If these companies want to pay their CEO's $12 million a year, or $7
million a year, that is their business. I believe it is our business as
lawmakers charged with responsibility to provide for the general
welfare of our people.
Now, Mr. President, the word ``welfare'' appears twice in the
Constitution of the United States. Most people do not know that. It
first appears in the Preamble of the Constitution, which is part of the
Constitution, where it lays out the reasons for the Constitution. One
of the reasons is to promote the general welfare. It does not say stand
back and let the States do it. It charges Congress with promoting the
general welfare of our people.
Then in article I, section 8, which lays out the duties and
responsibilities of Congress to lay and impose duties and customs, to
regulate the Army and Navy--it has a whole list--to regulate commerce,
a whole list of things that Congress is specifically charged to do, in
article I, section 8.
One of those is to provide for the common welfare of the people. That
is our responsibility. We are charged by that when we raise our hand
and swear our oath to uphold and defend the Constitution.
The Constitution says clearly that we are to provide for the general
welfare. In providing for the general welfare, we want to make sure
that people--average citizens of this country--have the assurance that
when they buy a product, consume a product, or use a product, when they
travel on our highways, that they can be reasonably certain that what
they are using, what they are buying, what they are consuming, is not
going to harm them. That is our responsibility.
That is why we pass safety and health laws. That is why we put
stoplights on our intersections. Now a stoplight, Mr. President,
restricts my freedom. I want to go down that street. I do not want to
stop at a stoplight but that stoplight restricts my freedom of
movement. We have decided for the public safety that we will regulate
the flow of traffic and we put up stoplights.
That is why we have food inspection laws. That is why we have all
kinds of safety laws. And that is another reason why we have left
untouched in our country for these 200-plus years the common law that
we inherited from Great Britain that goes back over 600 years, the
concept of tort feasor, the concept that someone must take due care and
concern that his actions do not harm others. If those actions do harm
others, I am held accountable and responsible.
I believe it promotes responsibility. It makes people think twice
about their actions and about what we make, how we act, and what we do.
That is why I find this bill before the Senate so out of step with what
we have been doing for 600 years and so out of line with what we in our
offices and in our speeches say we want. We want people to act
responsibly. We say if someone is not responsible we want them held
accountable.
In the bill as it is, a corporation could make something, hurt
somebody. As I pointed out, they could be maimed for life. How are they
held accountable in terms of deterrence and punitive damages if we have
these low caps?
I believe that is a modest amendment. It is not going to bust any
company. There is no company--no company in this magazine, not one
company--could say that if they had to give up 2 years of their CEO's
compensation, that they will go broke. If they are, their board of
directors will fire everybody running that company.
I believe that at least 2 years of compensation of what a CEO makes
could be a deterrent to that company in terms of their future actions.
Certainly, $250,000 is not a deterrent.
Does any person think that a company with the resources to pay one
person $12 million a year would flinch from paying even $1 million in
punitive damages? Some of the individuals make as much money as the
salaries of
[[Page S6333]] all the United States Senators combined, and no one
thinks we are undercompensated here.
We all agree with the Dole proportionality of punitive damages award.
It ought to be apportioned to the damages caused and the pain and
suffering and the injury to the person. It also ought to be apportioned
to the resources of the person or the company that caused that injury.
This goal of proportionality has been served for centuries by the jury
system, under the watchful eye of a judge.
Mr. President, I must also say that this bill surprises me. Many of
the proponents of the bill keep talking about returning power to the
local level. It does not get any more local than putting a decision in
the hands of a jury of one's peers. These are not people who ran for
office. These are not people who went through years of law school or
other special training for their jobs.
The people who the proponents of this bill apparently think can
apparently no longer be trusted to come up with fair verdicts are good
citizens, the ones who serve on juries, pay their taxes, and go to the
polls.
Now we are being told by the proponents of this bill, ``We cannot
trust you.'' Well, considering that everyone here was put here by those
same citizens who sit on the juries, how can we now doubt their wisdom?
Juries, by and large, are fair and come up with reasonable verdicts.
And they have been doing it since the dawn of our democracy.
What is it about juries that now makes them constantly make these so-
called foolish decisions that the bill's proponents have been reading?
Will the proponents of this bill say that the people who serve on
juries are ignorant? If so, stand up and say so. Will the proponents of
this bill say that the people who serve on juries are easily misled? If
so, let them stand up and say so. Do the proponents of this bill say
that the people who serve on juries lack common sense or they have no
sense of fairness? If so, let them get up and say so. Do the proponents
of this bill say that a jury cannot look at a person who has had a
serious injury and then go on to decide that the product that was
involved was not negligently manufactured? Do the proponents say that?
If they believe so, let them get up and say it.
The facts are just the opposite. In fact, juries decide against
plaintiffs about half the time. Juries have had a long track record in
dispensing wisdom, a record about three or four times as long as the
U.S. Senate.
I find it very interesting that the proponents of this legislation,
some of them are the strongest voices about returning government to the
local level, giving power back to the local level. There is nothing
more local than a jury of your peers. Now the proponents of this bill
are saying, ``We cannot trust you to make these kind of decisions. We
will take it out of your hands.''
As far as I know, there is nothing more fair, there is nothing that
dispenses wisdom and justice more evenly, than juries of our peers. I
may not agree with every jury verdict. Sometimes I believe a jury makes
a mistake. But I was not sitting there. I did not listen to all the
testimony. I was not able to weigh all the pros and cons.
So what I read in the paper may upset me. I can honestly say that
there are times when I have heard of jury decisions that make me mad.
But then after I dig into it, find out about it, and read more about
it, then I find out why the jury reached the decision they did.
So juries are not ignorant. Juries are our neighbors, our relatives,
our friends, the people who put Members in this body in the first
place.
All I say, Mr. President, is that I have opposed caps on damages, but
if we are going to have a cap, and this bill says we are going to have
a cap, let it at least be high enough that punitive damages can serve
their purpose to deter truly heinous actions by the largest companies
in this country.
We should not make it so that they would be so high as to bankrupt a
company. We should not make it so that it would put small businesses
out. That is why I have exempted those businesses of less than 25
employees.
I believe that the amendment I have offered accomplishes that fine
balance and the balance of deterrence, punitive damages high enough to
really deter that kind of action in the future. Not high enough to
bankrupt the company. And not so low as in this bill as to where
companies will just laugh it off. Just laugh it off--$250,000.
Now, I know the proponents of the bill will say, well, the judge can
raise the $250,000 if he wants. True. But then the defendant can say,
well, I do not like it. I want to go back to another trial and go right
back to the process again. And again these multibillion-dollar
corporations will get to write off, of course, all the attorney's fees
and expenses as an ordinary business expense, and we taxpayers pick
that up.
They go right back through the process again. Thus, the cycle just
keeps going. So really what we really have in this bill is a $250,000
cap. That is not enough to be a deterrence.
I believe this amendment will be a deterrence, I believe it is fair,
and I believe it is reasonable.
Mr. President, I ask for the yeas and nays on the amendment.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. GORTON addressed the Chair.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, the Senator from Iowa assumes the question
of deterrence, misconstrues the actual impact of punitive damages, and
totally misstates the provision that he purports to amend. There is no
$250,000 punitive damage cap. In the case of serious injuries, for
anything other than the small business, which is exempted both in the
bill and in the amendment of the Senator from Iowa, for anything other
than a small business, the cap is $250,000 only if the damages to the
plaintiff are minimal. In the cases repeatedly cited by the Senator
from Iowa, the individual maimed for life--that was the last quotation
I remember--it is obvious that the economic damages to that individual
together with the award for pain and suffering, unlimited by any
feature of this bill, added together and multiplied by two is
infinitely greater than $250,000.
Every week in the United States we have compensatory damage awards
well up into the millions of dollars, and in each of those cases,
except for the very, very small business, the maximum award of punitive
damages on the part of the jury under the bill as it exists now is
twice whatever those damages are. The $250,000 figure was only put back
into this proposal to say that you could go that high in case of a jury
award for actual damages that was extremely small. And, Mr. President,
if a claimant goes all the way through a trial and proves that his or
her damages are only $10,000, why should we allow a $4 million punitive
damage award? That is, of course, the essence of what this debate is
about.
Moreover, even the figure twice the sum of economic and noneconomic
or pain and suffering damages contained in the bill has an exception
pursuant to which the judge can increase that award, if the judge finds
the conduct of the defendant to be as egregious as the description
propounded to us by the Senator from Iowa. The Senator from West
Virginia and I have said that this bill in its final form will not
contain any automatic new trial right for a defendant in any such
cases.
So, Mr. President, the present bill that we are being asked to vote
on does not have any ultimate cap at all on punitive damages in that
extraordinarily rare case in which a judge felt that a very, very high
such award was appropriate. So the Senator from Iowa is wrong that a
badly injured, maimed individual is not going to have a $250,000 cap on
punitive damages when an injury was caused by the deliberate acts or
the outrageous acts of the large corporation. In fact, that individual
is not going to be subject to any cap at all if he or she can prove the
kind of case which was given us here as this horror story. But what we
are doing in this bill is to provide some remote connection between the
actual losses an individual suffers and how much can be added to that
amount by a jury acting without any rules or instructions whatsoever.
It is neither more nor less than that.
We should not have the legal system of the United States of America
as a national lottery where, under certain circumstances with a handful
of juries
[[Page S6334]] in modest cases with almost no damages, the lottery
can create a bonanza partly for an individual but basically, this is
what the debate is all about--for the lawyer class in this country who
find these actions to bring.
More fundamentally, and we have not gotten back to this point
recently in this debate, and I speak not just of the remarks of the
Senator from Iowa but of all of the opponents of this bill, none has
shown that their slogans about deterrence have any true meaning. No
single study has ever shown that punitive damages, the lottery of a
huge punitive damage award, has any real effect on deterrence or on
safety.
I am astounded that a Member of this body who believes so firmly in
the presence of government in our life and of its regulatory capacities
has so little faith in the ability of all of the statutes of the United
States and of all of the statutes of the States dealing with safety in
the production of products to cause them actually to be safe. We passed
measures on automobile safety, on toy safety, and on all other kinds of
product safety, and on the way in which we license drugs and the way in
which we build airplanes to see to it that they are safe and effective.
Yet, apparently, according to the opponents of this bill, nothing would
be safe in America if we did not have unlimited punitive damages. That
is the only way we can see to it that corporations behave, that we can
have a reasonable society.
Mr. President, retired Justice Powell said--and I paraphrase him but
I agree with him--the jury system of litigation taken as a whole is the
most irrational method of business regulation imaginable.
It is not a criticism of a particular jury to say so, Mr. President.
That jury deals with a single instance. It does not know what other
instances there are in many cases. The Congress of the United States,
the legislatures of the several States, when they determine on
regulation, determine it on the basis of all of the evidence, of all of
the weighing of how much we want to encourage certain kinds of
production and what kind of cautions we put on them. This is the way in
which the job is done.
No study shows that punitive damages do anything other than have an
utterly irrational impact of telling many companies it is not
worthwhile going into a new line of business--it is not worthwhile, as
one of our major companies has said, to try to go into the business of
finding a new drug which helps AIDS. We cannot make enough money on it
to risk that lottery that some lawyer someplace will persuade some jury
to whack us with a $25 million punitive damage award.
So we have had dozens of companies get out of the business of
producing the vaccine against whooping cough. Is that a triumph of the
American system, that the cost of whooping cough vaccine has gone up
500 percent and only one or two companies are even willing to make it?
Is it a triumph of the American system that 18 of the 20 companies
that used to manufacture football helmets are not in the business
anymore because it just simply is not worthwhile? Is it a vindication
of the American system that a large company which produces plastic
piping for heart implants, on which it might possibly make $1 million
in a several-year period, has paid close to 40 times that in defending
successfully product liability actions, and looks at the bottom line
and says, what in the world are we doing this for? Why should we
produce this particular product? Those legal fees adhere to defendants
who win just as much as they do to those who lose. And when the company
says it is just costing us too much, we will abandon this line of
research; we will abandon this product; the American people are not
benefited. Who is benefited? A tiny handful of lucky players and a
larger group of trial lawyers.
So what we do in this bill, much more modestly than I would prefer,
is to say at least in the great bulk of cases there ought to be some
relationship to how badly the plaintiff or claimant is actually damaged
and what the maximum punitive damages are. Let there be a ratio. If in
fact the individual is maimed for life, then they are going to be
entitled to huge punitive damages. But if in fact they are damaged
$10,000 or $500, why should they win the lottery when there is no
evidence that this does anything but to constrict our economy?
I say once again, the State immediately adjacent to the State of the
Senator from Iowa, Nebraska, like my own State of Washington, just does
not have punitive damages in the kind of cases we are talking about
here. It does not allow them at all. Why? Because the Constitution of
the United States protects anyone accused of a crime. They have fifth
amendment rights. The case against them has to be proven beyond a
reasonable doubt. There is a maximum sentence. But those who uphold
those constitutional protections as fundamental to our system of
justice say, oh, no, but a civil jury can punish without any limitation
or without any guidelines whatsoever, rationally or totally or
temporarily. There just is no connection between those two.
Moreover, there is also no relationship at all between the
responsibility of business enterprises, the safety with which they
build their products, that is related to whether or not they operate in
a State which has punitive damages or one which bans punitive damages.
Not a scintilla of evidence, not any instance has been imparted to this
body that oh, boy, we better keep punitive damages because look at how
irresponsible companies are that operate in Nebraska or Washington or
one of the other States. Not a peep, Mr. President, about that.
The bottom line is we are dealing with a system that is a great
system for a handful of lawyers in this country. They and their
sidekicks get 60 percent of all of the money that goes into this
product liability system. Claimants get 40 percent of it. We want to
make it a little bit more rational.
The Harkin amendment does not make it more rational. The Harkin
amendment does not even recognize the nature of the $250,000 cap, which
does not apply to anything he talked about, or the fact that there is
no cap at all when the judge finds that the conduct of the defendant
has been particularly egregious, and the Harkin amendment should
therefore be rejected.
Mr. ROCKEFELLER addressed the Chair.
The PRESIDING OFFICER (Mr. Ashcroft). The Senator from West Virginia.
Mr. ROCKEFELLER. Mr. President, not only do I agree with everything
that my able colleague from the State of Washington has said, the
Harkin amendment adds a new section to the bill for setting punitive
damages against businesses with 25 or more employees. It has to be
greater than the amount recorded or using a formula laid out in the
compromise bill which is twice compensatory damages or $250,000,
whichever is greater, or twice the value of annual compensation of the
business' chief executive officer.
Well, that last one obviously is an eye-catcher, ear-catcher. It
sounds innocent enough--and fun. It is kind of fun, cute. But we are on
a deadly serious bill. The people who voted today to make sure that we
would continue to discuss and amend product liability reform were not
trying to have fun with this.
We have been on this bill for several weeks now. I have been doing
this for 9 years. I am sure the Senator from the State of Washington
has been doing it for longer than that. There is nothing in any of my
efforts to sort of do something to amuse myself, enjoy myself. I am
trying to make America better. I am trying to help defendants who
cannot get their claims in time. I am helping to make things more
predictable for businesses so we can strike a balance between consumers
and business.
One thing this is not is just kind of fun. When I say it is deadly
serious, I mean deadly serious because I truly believe there are
products not being developed today which could save lives, and that
people are dying because that is not happening.
There are a couple of facts which I think are relevant. There is not
a $250,000 cap in the Gorton-Rockefeller compromise on product
liability reform, as suggested by the Senator from Iowa. There is not
that cap.
I suggest to those who do read the bill, in product liability cases,
if the jury agrees that the punitive damages should be awarded, the
jury can, and under the bill punitive damages will,
[[Page S6335]] set an alternative ceiling of $250,000, or twice the
amount of compensatory damages.
And then the judge, under the additur provision, decides if that is
not enough, to take it up. So there is no floor.
We are not talking about treating people unfairly. In fact, I think
we are trying to talk, for the first time in a long time, about
treating people fairly.
To highlight some more information about the suggestion of the
Senator from Iowa that there is any sort of special protection for
businesses which are tempted to make defective or unsafe products,
everybody needs to remember that juries under our bill can award
compensatory damages in amounts that span from hundreds of dollars to
millions and millions of dollars.
I have made this point several times, but I will make it again and I
will give you a few more examples this time. I have already talked
about the State of the Senator from Washington, not even considering
punitive damages at all, and within the last 5 or 6 weeks there was an
award of $40 million. I have no idea what the circumstances were. But
that was economic plus noneconomic--compensatory damages, $40 million.
You do not need punitive damages to get a big award. I am for the
punitive damages, but you do not need them to get major awards.
There was a $70 million compensatory award, again, not even
considering punitive, to the family of a woman who died when a
defective helicopter crashed--in, as it turns out, Missouri. But that
did not stop the jury from awarding $70 million. So we are not kidding
here. We are not doing anything fun here.
There was a $15 million compensatory award--again, not even
considering punitive damages; but a compensatory award--to a boy in a
case involving a defective seat belt. Now, I do not know the
circumstances. This was in Los Angeles County, 1993. I do not know the
circumstances, but this is just compensatory award.
Almost $20 million, Mr. President, in compensatory damages was
awarded to a man injured in some circumstances in which a motorcycle
spun around on the ground during a turn. My eloquence cannot exceed
that, unfortunately, because I do not know what it was. But the man was
injured by a motorcycle and got almost $20 million--I say again, in
compensatory damages alone.
So there is no kind of joking around here. We are trying to do the
right thing.
I might say, on the other side of it--and I do not want to stretch
this out--that there are a lot of things that are not happening in this
country because of the fact that our punitive damages situation is
scaring people away from new products, new research, new improvements,
or whatever.
I have used this case before and I will use it again, because I think
it is devastatingly powerful.
I care a lot about health care and I have worked a lot on health
care. I have been into kidney dialysis clinics. They are not a lot of
fun to go into. The former Governor of Missouri knows what I am talking
about, the Presiding Officer. It is kind of dark and people are lying
back in chairs, and their blood is being completely changed. It is kind
of depressing to be there. I do not think they enjoy it much. Nobody is
talking to anybody else. They cannot work. They are tied into these
huge machines which rise up beside them and behind them.
This was carried a little step further and they developed a dialysis
machine that you could take home with you so that if you worked within
2 or 3 miles, or 4 or 5 miles away, you could come home to that
dialysis machine, do it yourself and then go back to work. It was a
tremendous improvement, because you could go back to work, if your work
was close enough so that you could come back two or three times to do
that.
But then Union Carbide comes along and really comes up with the
answer. They put the whole thing into a suitcase-sized dialysis machine
that you can take to your job with you and do the dialysis on the job.
My 15-year-old son has one of his best friends who, a couple of years
ago, we discovered had diabetes. That is not a lot of fun for a young
kid to find something like that out. I cannot get over the way that
young man, 12 years old at the time, simply adjusted to his new
circumstances and was able to give himself insulin; just disappear for
a few minutes and do it. His courage--he actually grew, grew in my
eyes, and I think he grew in his own realization in the sense of
mortality and what he could do and how precious everything was. He is a
remarkable boy. In fact, I think his aunt is Madeleine Albright, our
Ambassador to the United Nations--a wonderful boy.
But Union Carbide, when they came up with this same kind of you-can-
do-it-right-on-the-spot kidney dialysis machine, had to sell their
business to a foreign company where uniform product liability laws did
not give the same litigation potential because Union Carbide, an
enormous company, determined that the potential liability risk made the
product uneconomical.
So I have to assume there are hundreds of thousands of people who
need these blood changes in this country who are deprived of that now
because Union Carbide could not do that.
I have 20 examples. I will not give them. It is late.
So I know that the amendment has sort of a nice, populist ring to
it--CEO's salary. But this is dead-serious business that we are
involved in.
Product liability reform is something I have fought for as a
nonlawyer because I want to see people's lives get better and I want to
see products developed and I want to see--just on personal grounds, my
mother spent years dying from Alzheimer's disease. There is a cure out
there, but somebody has to put the money up to find that cure. It is
probably not going to be the Federal Government, because we are cutting
back.
So all of this is deadly serious. This is not a bill that should be
used to beat up on business. This is a bill that should be used to beat
up on a legal system which is failing us and, as the Senator from
Washington said, in which the lawyers get 50 to 70 percent of the
money. I do not respect that. I do not like that. I want to change
that.
And for that, among other reasons, I oppose the amendment of the
Senator from Iowa.
I thank the Chair.
Mr. GORTON addressed the Chair.
The PRESIDING OFFICER. The Senator from Washington.
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