[Congressional Record Volume 142, Number 39 (Wednesday, March 20, 1996)]
[Senate]
[Pages S2341-S2386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
COMMON SENSE PRODUCT LIABILITY LEGAL REFORM ACT OF 1996--CONFERENCE
REPORT
The PRESIDING OFFICER. Under the previous order, the Senate will now
proceed to the conference report to accompany H.R. 956.
The clerk will report.
The legislative clerk read as follows:
The committee of conference on the disagreeing votes of the
two Houses on the amendment of the Senate to the bill (H.R.
956), a bill to establish legal standards and procedures for
product liability litigation, and for other purposes, having
met, after full and fair conference, have agreed to recommend
and do recommend to their respective Houses this report,
signed by a majority of the conferees.
The Senate resumed consideration of the conference report.
Mr. GORTON. Mr. President, I am pleased, after a lapse of almost 1
year, to present to the Senate and to support the conference report on
H.R. 956, the Common Sense Product Liability Legal Reform Act of 1996.
This is a bipartisan proposal reflecting, essentially, the decisions
made here in the U.S. Senate last year, without the broader additions
that were passed by the House of Representatives.
Mr. President, during the course of this 5 hours today, there will be
many statements--passionately held--about what the future holds with
respect to both our legal system and our economic system, and whether
this bill should pass. As a consequence, Mr. President, I want to start
my remarks with a statement about what has already happened as a result
of a very modest product liability reform that was passed by the
Congress of the United States, and signed by the President, just 2 or 3
years ago. I am going to do that because that action speaks louder than
any words we can say about the desirability of this broader
legislation.
On August 17, 1994, President Clinton signed the General Aviation
Revitalization Act of 1994. That act created an 18-year statute of
repose on general aviation, piston-driven aircraft. That single
provision, in less than 2 years, has already had a magnificently
positive impact on the general aviation industry.
Since the enactment of the bill, the general aviation industry has
recorded its best year in more than a decade. In 1986, as a result
largely of product liability litigation, Cessna, a famous name in
aviation, stopped producing piston-driven aircraft. It has now
reentered that field. In July, Cessna will
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open a new $40 million facility in Kansas and, once again, will begin
to produce piston-driven aircraft. The facility will employ about 2,000
people.
Cessna is not alone in this connection, Mr. President. Piper
Aircraft, just 2 years ago, was having an extremely difficult time
getting out of a bankruptcy proceeding to which it had been subjected.
No investor wanted to come to the rescue of that famous American
company because it would have to assume its liability risks. Since the
enactment of that simple piece of legislation, however, investors have
come forward. The Piper Aircraft Co. has come out of bankruptcy, and
its employment has increased by 30 percent. More generally, employment
is up at every general aviation manufacturing facility in the United
States by 15 percent. We went to the Internet last week to find the
kind of job openings that have resulted from this resurgence in general
aviation activity. Here is a brief list of some of the jobs we found:
Avionics technician, Cessna; computer control technician, Cessna;
systems designer, Cessna; weights engineer, Cessna; senior cost
accountant, Raytheon; senior engineer, software systems certification,
Raytheon. Exactly the kind of high-skill, high-wage jobs that the
United States needs in order to continue its leadership in world
technology, and in order to provide jobs for coming generations.
Mr. President, that bill less than 2 years ago was criticized as
restricting the rights of plaintiffs. Yet, Mr. President, I am
confident when I say that there is not a single Member of this body--
or, for that matter, of the House of Representatives--who ever, in the
course of a political campaign or to meet an obligation, turned down a
ride in a Cessna aircraft on the grounds that those aircraft were
negligently manufactured. Those who most eloquently defend the present
legal system--a system which for all practical purposes bankrupted
Cessna and Piper by reason of lawsuits claiming negligent manufacture--
never once acted on that and said, ``Oh, no, I cannot get on the plane;
it was negligently manufactured.''
Mr. President, I cannot imagine that there is a Member of this body,
or of the House of Representatives, who ever said, ``I won't allow my
child to get a whooping cough vaccination because the materials in that
vaccination were negligently manufactured.'' And yet they will stand up
here today and say, ``We cannot change the law. We cannot protect those
manufacturers against lawsuits like that because it would be unwise to
do so.''
The present system has driven every such manufacturer--except one--
out of the business, and has caused the cost of that vaccine to be
multiplied by 400 percent. It is less available and more expensive
because of the insistence that we continue to allow absurd lawsuits to
be brought against those manufacturers. The people of the United States
deserve, we all agree, a system that is fair and efficient, yields
reasonably predictable results, holds parties responsible in accordance
with their fault, and perhaps most importantly reduces the wasteful
transaction costs associated with all kinds of litigation, but in this
case product liability litigation.
Estimates of total tort costs of litigation and associated activities
range from some $80 to $117 billion a year. Every dollar of these costs
is forced back on consumers through higher prices on products used
every day, and not at all, incidentally, limits the choice of those
products as well.
Listen to just a few facts about today's product liability system in
America. The current system accounts for about 20 percent of the cost
of a ladder. It accounts for 50 percent of the cost of a football
helmet. Injured parties, on the other hand, receive less than half of
the money spent on product liability actions, with the other half going
to lawyers and their associated expenses. Nearly 90 percent of all of
the companies in the United States can expect to become a defendant in
a product liability case at least once--90 percent of all of the
companies in the United States. Are 90 percent of them negligent
manufacturers or product sellers? No. Many win these lawsuits, but they
have to pay their attorney fees and they have to pay their insurance
costs, in any event.
Product liability insurance costs 15 times as much in the United
States as it does in Japan and 20 times more than it does in Europe.
Are their manufacturers, as a result, automatically negligent and
indifferent to their consumers? Under the present laws in most of the
States of the United States, manufacturers can be sued for products
manufactured in the 1800's--manufactured a century ago.
The present system costs too much. In a book published 5 years ago by
the Brookings Institution the following note appears:
Regardless of the trends in tort verdicts, most studies in
this area have concluded that, after adjusting for inflation
and population, liability costs have risen dramatically in
the last 30 years, and most especially in the last decade.
I have already spoken to the proposition that more of the money in
the system goes to the lawyers and to their associates than goes to
victims. Liability insurance costs affect every manufacturer in the
United States.
One example from my own State is a water ski manufacturer, Connelly
Water Skis of Lynnwood, WA, pays an annual premium every year of
$345,000 for product liability insurance even though it has never lost
a case. It has never lost a case--but still has to pay that huge
premium.
The present system takes forever--years--to settle cases.
Compensation, ironically, is unfair. The smaller the amount of damages,
the larger the percentage of recovery. The larger the actual damages,
the actual losses to an individual, the lower the percentage of actual
recovery.
Unpredictability. Last year in a hearing before the Commerce
Committee a Virginia law professor, Jeffrey O'Connell, explained:
If you are badly injured in our society by a product and
you go to a highly skilled lawyer . . . in all honesty the
lawyer cannot tell you what you will be paid, when you will
be paid, or, indeed, if you will be paid.
What is the effect of a broken down system on people in the United
States today? First, it is increased costs. I have already referred to
the fact that one manufacturer of vaccines has raised its price 400
percent, from $2.80 to $11.40, solely to recover the cost of increased
lawsuits, and that in 1984 two of the three companies manufacturing the
DPT vaccine decided to stop production because it just simply was not
worth it, by reason of the cost of the product liability. Later in that
year, the Centers for Disease Control recommended that doctors stop
vaccinating children over the age of 1 in order to conserve limited
supplies of that vaccine.
Second, it is very clear that the fear of product liability
litigation hinders the development of new products in the United
States, and the marketing of those products once they are developed. In
an American Medical Association report entitled ``The Impact of Product
Liability on the Development of New Medical Technologies,'' they wrote:
Innovative new products are not being developed, or are
being withheld from the market because of liability concerns,
or the inability to obtain adequate insurance. Certain older
technologies have been removed from the market not because of
sound scientific evidence indicating lack of safety or
efficacy but because product liability suits have exposes
manufacturers to unacceptable financial risk.
Rawlings Sporting Goods, one of the leading manufacturers of
competitive football equipment for more than 80 years, announced in
1988 that it would no longer manufacture, distribute, or sell football
helmets. Two manufacturers in the United States out of 20 that were in
this business in 1975 remain in that business today.
A recent article in Science magazine reported that a careful
examination of the current state of research to develop an AIDS vaccine
``shows liability concerns have had negative effects.''
It points out that Genentech halted its AIDS vaccine research after
the California legislature failed to enact State tort reform. Only
after a favorable ruling did they renew or resume that research.
On that same topic, consider a recent comment by Dr. Jonas Salk, the
inventor of the polio vaccine. I quote Dr. Salk:
If I develop an AIDS vaccine, I do not believe a U.S.
manufacturer will market it because of the current punitive
damage system.
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Not only does the current system hurt medical innovation, it also
inhibits small companies from producing everyday goods. For example,
again in my own State, Washington Auto Carriage in Spokane distributes
various kinds of truck equipment throughout the United States. Here is
what its owner, Cliff King, says, and I quote him.
We have been forced out of selling some kinds of truck
equipment because of the exorbitant insurance premiums
required to be in the market. As a result, this type of
equipment tends to be distributed only by a very few large
distributors around the country who can afford to spread the
costs over a very large base of sales. Ultimately there is
much less competition in these markets.
Many arguments are made against this proposal on the basis of
federalism. The United States is a single market, however, a single
market now with 51 different product liability regimes. As a result,
one of the associations that is most interested in a devolution of
power to the States, the National Governors' Association, recognizes
that the current patchwork of U.S. product liability law is too costly,
time consuming, unpredictable and counterproductive, resulting in
severely adverse effects on the American consumer, workers'
competitiveness, innovation and competence.
Mr. President, we will have a considerable period of time today
during which to debate details of this legislation, but I wish to
return just for a moment to the point with which I began this
explanation of the bill.
First, the Members of the Senate, even those who argue most
passionately and eloquently to retain the present broken down system,
do they act in their own lives as if these manufacturers were engaged
in nefarious activities indifferent to the safety of their consumers?
Did they, during all of the years in which Cessna and Piper were being
driven out of business by the system they defended, refuse to fly on
their airplanes? No. Do they tell their families or do they themselves
refuse the latest medical devices, the latest serums, the costs of
which have been driven sky high by product liability litigation? No,
they do not. They use them. They use them for their children. Do we
have an example of what even modest reform in this field means to the
American economy? Yes, we do, in the general aviation industry. And so
I am convinced that we can and should pass this modest product
liability reform, and we can expect an immodest and positive result:
more competition, better goods and services, lower prices, fewer
lawsuits, and a higher degree of justice for the American people as a
whole.
This issue has been debated in this body for more than a decade at
this point. It is time to bring that debate to a close, to pass this
legislation, and to see the relief that the American consumer, the
American manufacturer, and American competitiveness needs to be
successful in the world of the 21st century. As a consequence, I
urgently ask my fellow Senators promptly to pass this bill and send it
to the House and then to the President of the United States.
The PRESIDING OFFICER. Who yields time?
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina, [Mr.
Hollings], is recognized.
Mr. HOLLINGS. I yield so much time as will be necessary.
I am thoroughly bemused by my friend from the State of Washington
starting off on aircraft with the very categorical statement that no
one ever got on a plane saying that Cessna's planes were unsafe or the
manufacturer was negligent. If they thought so, they were not going to
get on the plane. They would not have to say it. Come on. Who are we
kidding?
By coincidence, just last Thursday, I saw it reported that a Cessna
plane down in Florida took off with the Blackburn family from my
hometown and it had barely gotten off, I observed, to fly over the
waters, and it turned and went down in about 5 to 10 feet of water at
the most. We saw the pictures of them trying to save the family. The
husband and wife and two of the children were lost, the pilot was lost,
and the little 11-year-old hangs on as we talk.
Being an observer, I wondered what had happened. Stories have come
again and again that the pilot was most experienced. Someone saw the
engine streaming smoke. I cannot tell. You cannot. No one can at the
moment. But it appears that it is a product liability situation. There
is not any question in my mind. It occurs again and again.
It brings me right to the point, Mr. President, of the shabby nature
of this whole proceeding. I say that because we passed this bill in the
Senate last May and finally agreed to a conference on the House side in
November. They had one short, brief meeting. Under the rules in the
House, you have to at least have a meeting. But thereafter there was
nothing.
It really bemuses me when the distinguished Senator says we are now
to consider the conference report. We now consider the conspiracy
report. It is not a conference. I never conferred. I was appointed by
the distinguished Presiding Officer of the Senate as a member of the
conference but was never told, never consented, never conferred, and
not any on our side of the aisle or our staff were invited other than
the distinguished Senator from West Virginia.
Here is what is happening in the Congress of the United States. I am
going on my 30th year now, and this is the first time I have ever seen
this happen this year and last year where they fixed the jury; namely,
they get together on what they want and, since they are the majority
party, can pick up a vote or two. They then go and bicycle around: Now,
Senator, will this please you if we change this little word? And you
have a ``gerrybuilt'' bill in front of you that never would pass muster
in a conference.
Having fixed the vote, they went ahead and we heard last week that
something was happening. In fact, I could tell it. On Thursday night
Richard Threlkeld on CBS came in at 7:20 and he said the U.S. Congress
is about to consider these dastardly, ridiculous lawsuits, and he went
on to talk about a man in the men's restroom where women came in and he
was insulted. The proponents talk about the coffee case from
McDonald's, and they have these anecdotal, nonsensical matters that
never tell the complete facts. And the truth of the matter is, since we
mention the coffee case, I have the finding right here that confirms
that the jury did award $3 million. But the judge reduced that. After
all, judges do have sense. Jurors do have sense. All wisdom is not
vested in the Senate. And they reduced that amount to $640,000 and the
lady who was hospitalized with third-degree burns, requiring skin
grafts, settled for even a lesser amount. But you hear on CBS national
news, ``All you have to do is spill coffee and run up and get your
money.'' Come on.
Regarding all the planes, now they are back in business and
everything. We always allocate to ourselves that everything begins and
ends right here with the wisdom of the U.S. Senate. They want to tell
how we passed a good budget bill that has corporate America going like
gangbusters, the stock market through the roof, and, yes, people are
buying planes, but they do not want to talk about the budget we passed
that none of them ever voted for. Categorically, one Senator on the
other side of the aisle said, just 2 years ago, that if we pass this
budget they would be hunting us down like dogs in the street and
shooting us, the economy would collapse, there would be a depression;
everything would go wrong.
Here now the stock market sets record levels, corporate America is as
affluent as it has ever been, and they are buying airplanes. And my
colleagues want to attribute that to themselves passing a bill? Come
on.
The next thing the proponents say is the present system costs too
much. Mr. President, it is like a college education. A college
education is most expensive. The only thing more expensive is not
having a college education. If product liability costs, which it does
very little, the worst would be to not have product liability, because
injuries occur. We have a safe America.
I wish I had time to go down through a list of these injuries. When I
say the conference was ``a shabby procedure,'' I mean that last week I
was struggling on Friday to try to find the bill. The bill's supporters
were changing words down to the last minute. They filed a cloture
motion at the time they filed the bill, which means they have the votes
for cloture, and the jury is fixed
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before they hear any arguments. And thereby they can come in with the
fixed jury and say, bam, bam, they have cloture--today I was limited to
an hour postcloture. They could have called for the cloture vote in the
next 20 minutes, since we came in at 10 o'clock. So you are under the
gun when they offer you only a few hours of debate. You are not allowed
to talk sense.
Oh, boy, we could spend an afternoon pointing out the good that
product liability has done. We do not get blown up by that Pinto gas
tank. Cars all have antilock brakes. That elevator is checked. The
steps are marked. Little children do not burn up in flammable pajamas.
The women of America are not threatened with Dalkon shields. And
football helmets are much safer--yes, we have had some wonderful
decisions against their unsafe nature. When you and I played football,
Mr. President, we ran into the line and there was just a piece of
leather and what you would get, many, many a time, was traumatic
cataracts. That does not occur now in high school and college ball,
because of the better construction of football helmets--and product
liability.
We could go all afternoon and try to explain the wisdom of a tort
system that is working at the State level. But the proponents do not
give you time to do that. They come up here with the anecdotal stuff,
that it is costing too much. Let me cite some reports about what it
costs, because the Rand Corp. and the Conference Board have studied
these matters. The Rand Corp. said that less than 1 percent of product
liability injuries ever result in a lawsuit. Over 50 percent of civil
cases are business suits, incidentally. Business is suing business,
like gangbusters. Pennzoil against Texaco, a $10.2 billion verdict,
that one business against business result is more than all the product
liability for personal injuries in the last 20 years, that one case.
And they are talking about, ``It costs too much.''
But what did the Conference Board do? They interviewed 232 risk
managers. We have it in the Record. The Conference Board interviewed
232 risk managers, of the blue chip, Fortune 500 companies, who said
that less than 1 percent of the cost of the product was due to product
liability. It was not a problem.
The proponents knew this. They come in here because they have Victor
Schwartz and there is still a movement against lawyers. This is
pollster driven. We all come here per political poll. Lawyers get rid
of the lawyers.
Ah, Mr. President, ``the trial lawyers have paid them off.'' Yes. The
proponents had a news conference even before the bill was called up.
You see they have radio, TV shows, news conferences, before we even
call the bill, and before those who oppose it have even a chance to say
so. That is why I say it is a shabby operation. But I will quote,
because you have to get the news clips about how two of the Senators:
. . . who will appear on the ballot with Clinton in West
Virginia this fall responded angrily to Clinton's weekend
threat to veto the House-Senate compromise of a bill that
limits damage awards in product liability cases. The two gave
an ``unusually harsh accusation'' to the President, saying
Clinton was ``rewarding'' the trial lawyers who are
``bankrolling his reelection bid.''
That is from the Baltimore Sun.
Come on, it takes a bankroller to find a bankroller. Let us go to the
individual Senators, namely this Senator. I hope I have gotten some
contributions from the trial lawyers. I have been one. But I have been
a business lawyer, too. I have handled antitrust cases. I have sued a
corporation before the Securities and Exchange Commission. When you
come from a relatively small town like I grew up in, you represent all
sides. And look at the record. I have been elected six times to the
U.S. Senate. I will guarantee I have gotten more business contributions
than trial lawyer contributions. So let us dispel this notion about
what you are doing for the trial lawyers. We are thinking of the
Constitution in this case. That is one of the big reasons the American
Bar Association opposes it.
We are thinking of that seventh amendment. We are thinking of what
the bill's supporters said in the original instance about simplicity,
transactional costs, but how this particular measure now increases the
transaction cost and makes complex the so-called simplicity, if there
ever one was.
More than anything else, let us go to the original doctrine of the
Contract With America crowd, from the 1994 election. Oh, they won on
account of the contract. Did you not get the message of the contract?
They have a bunch of children Senators running around, hollering,
``The contract,'' and ``We gave our pledge.'' This Senator was elected,
too, on a pledge: To stop a lot of this nonsense if he possibly could.
None other than the distinguished majority leader said, at the
beginning of this particular Congress:
America has reconnected us with the hopes for a nation made
free by demanding a Government that is more limited. Reining
in our government will be my mandate, and I hope it will be
the purpose and principal accomplishment of the 104th
Congress.
Senator Robert Dole, now the Republican nominee for the Presidency
here in November. I further quote Senator Dole:
. . . We do not have all the answers in Washington, DC. Why
should we tell Idaho, or the State of South Dakota, or the
State of Oregon, or any other State that we are going to pass
this Federal law and that we are going to require you to do
certain things . . .?
The majority leader then went on to say.
. . . Federalism is an idea that power should be kept close
to the people. It is an idea on which our nation was founded.
But there are some in Washington--perhaps fewer this year
than last--who believe that our States can't be trusted with
power. . . . If I have one goal for the 104th Congress, it is
this: that we will dust off the 10th amendment and restore it
to its rightful place.
Those powers not reserved under the Constitution are hereby delegated
to the several States.
Here we go with the devolution group. We started off with unfunded
mandates. They said we had to give everything back to the States. Every
measure that has come up here says, ``Send welfare back, send the
health problem back''--of course, it is all political pap. It is trying
to get rid of responsibility. They do not want to pay the bill.
We have been spending $250 billion more than we have taken in each
year and both budgets--the President's and the Republican budget--will
call again for another $250 billion in expenditures with less than $250
billion in revenues. So they do not want to speak the truth. They want
to get boiled up into term limits, and we have gotten the lawyers now
because this says ``kill all the lawyers,'' as the butcher said in
Henry VI.
People do not realize how he said it. He said anarchy cannot
predominate unless we get rid of all the lawyers. The lawyers, Mr.
President, have been the bulwark of this great democracy. Every
President from Washington up to Lincoln was a lawyer. They are the ones
who founded this country, gave thought and wisdom and direction and
growth.
I hearken the words of Patrick Henry: ``I know not what course others
may take, but as for me, give me liberty or give me death.'' A Virginia
lawyer.
Another Virginia lawyer, a 34-year-old lawyer sitting there and
penning, ``All men are created equal.'' Thomas Jefferson.
James Madison foresaw our problem right here this minute 200-some
years ago. He said, ``But what is Government save the best of
reflection on human nature. If man were angels, there would be no need
for Government, and if angels governed man, there would be no need for
controls over the Government. The task in formulating a government to
be administered by a man over man is first frame that government with
the power to control the governed and thereupon oblige that same
government to control itself.'' James Madison, the lawyer.
This Government is out of fiscal control, and no one wants to talk
about it. I wish you would pick up the business section this morning.
They do not talk about that. They said, ``Well, the idea of deficits
now has gone sort of out of style.'' Why? I can tell the Washington
Post why.
For all last year the Republicans had a fraudulent budget, 7 years to
balance. It was a fraud. It did not balance. Finally, President Clinton
said, ``Well, monkey see monkey do. I will put out a fraudulent budget,
too.'' So when he put one out, they said, ``Ah-ha, fraud.''
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He said, ``No, that's what you have,'' and that is why they stopped
talking, because neither side can possibly balance the budget without
an increase in taxes, and both sides are trying to buy--trying to buy--
the vote in November with a tax cut.
Sheer nonsense, but that is what is going on. That is why they do not
talk about deficits anymore, because you cannot realistically talk
about it and give a tax cut at the same time. So they are moving on to
abortion, immigration, they pick up lawyers--term limits--any kind of
sidebar that is not a national problem to get by the election.
It is all applesauce. It is all Presidential politics. We are
spinning our wheels, and it is a shabby process to come and bring this
without any debate, limited as we are to talk about a national need
that every one of the States over the years has addressed--the
distinguished Senator from Rhode Island got up on the floor and talked
about the years we have been discussing this. He is right. We have been
discussing it for years and years, and the reason it has not passed is
because the States have long since taken care of the problem, whether
the problem was the inability of finding insurance, whether it was
trying to get uniformity, whether it was international competition--you
can go down the list, like Sealtest ice cream, the flavor of the week,
they had a different reason every time.
Every time that the law professors looked at it, they came en masse
and testified, ``For Heaven's sake, don't pass this measure.''
Every time the State legislators came, or the State attorneys general
came, they said, ``Look, we're doing the job. It's a nonproblem.''
Every time the chief justices of the States--the States that they
revere so much in devolution but that are totally repudiated here--the
Association of State Chief Justices came and said, ``Don't pass this.''
The American Bar came and said, ``Don't pass this.''
I do not know who they represent other than themselves trying to get
reelected on a pollster hot button. That is all it is. We can go down
the list of those who oppose this measure still.
The AFL-CIO, do you not think they represent working Americans? Find
me a working American who says this is a good bill.
The Coalition for Consumer Rights; the Consumer Federation of
America; the National Conference of State Legislatures; Public
Citizen--I can go right down the list.
Mr. President, I challenge the supporters of this bill to say what
group, other than the Business Advisory Council and Victor Schwartz,
wants it. I represent people in business, and I can tell you about the
cost of it.
So the Senator mentions the cost. Then he gets into the amount of
lawyers. Since we are talking about the lawyers, I should have
completed my thought. Again, it was a lawyer, Abraham Lincoln, who made
the Emancipation Proclamation. Franklin Roosevelt in the darkest days
of the Depression, a lawyer, said: ``All we have to fear is fear
itself.''
I was admitted to practice before the U.S. Supreme Court in December
1952, Mr. President. We had then the school segregation cases. Brown
versus Board of Education of Topeka--actually the lead case was Briggs
versus Chaney. We had John W. Davis, the former Solicitor General,
argue on behalf of the State. Thurgood Marshall, the lead attorney
arguing not the Kansas case but the Briggs versus Chaney case. I can
see Justice Marshall, a lawyer, standing there now talking about
freedom and bringing this Congress and the people in this land to equal
justice under law.
``Get rid of the lawyers,'' they say. I can go to Ralph Nader, I can
go to Morris Dees, and all the others. I can go down and then I can
come to the 60,000--did you hear the figure?--60,000 registered to
practice downtown in the District, all on billable hours, hardly any in
a court, all fixing us politicians, $200 an hour, $400 an hour.
I have talked to some with ethics charges, and they have gone broke.
They have not paid their bills yet. They got rid of the ethics charge,
but to go back to all the records, they had to pay lawyers $400 an hour
to come and just look over the records in the office.
The billable hour crowd is behind this bill. That is one group. They
do not want to mention it. Lawyers, yeah, they have the Persian rugs,
mahogany desks, and the drapes. They never worked. The trial lawyers
have to convince 12 jurors in their community, all 12--all 12--and have
to withstand judicial review, as the coffee case did where it was
cut. They did not get paid anything. The presumption is, on the amount
to the lawyers, that these injured parties without a lawyer would get
the money. That is why they are having a product liability case,
because they are denying payment. They are denying payment.
But, yes, we had in the committee--I will read about who gets what,
and that this is just a plaintiff's lawyer--people ought to know about
defendants' lawyers and about the billable hours thing. It is
wonderful. We are talking about the time it takes and the backlog. Who
is interested in time and backlog? Then there is the insurance company
lawyer out there on the 20th or 30th floor, and the Persian rugs. He
could care less. He gets his money. If the insurer can put the claim
off and never pay it, at least when they do pay it, it will be in
inflated dollars. The insurance lawyers are the ones who are asking for
continuances and motions and who call their secretary and tell her to
put 52 interrogatories in. Then, they get the discovery going. All they
do is just sit there and answer the phone and go out to the club and
eat lunch and have their martinis and say how smart they are. And they
get paid.
Plaintiffs' lawyers, the defendants' lawyers. I read from the
committee report:
According to calculations derived from the survey conducted
by the insurance services officer of the Institute for Civil
Justice, for every dollar paid to claimants, insurance paid
an average of an additional 42 cents in defense costs. While
for every dollar awarded to a plaintiff, the plaintiff pays
an average contingent fee of 33 cents out of that dollar.
Thus, in cases in which plaintiffs prevail, out of each $1.42
in total litigation costs, including damages, about half of
that goes to attorney's fees, with the defendant's attorneys
on average paid better than the plaintiff's attorneys. Of
course, defendant's attorneys are paid regardless of the
outcome of the case, while the plaintiff's attorneys are paid
only if they win their case; otherwise, they take a loss for
the time and expenses they have incurred.
Mr. President, coming to the Senate, I left a lot of money on the
table. I can say that poor person now in the Boland case--this guy had
broken down between Georgetown and Charleston. As he went back to get
the spare tire out of the trunk, the bus rammed him, dead. The family
did not have any money, whatever it was. I said, ``Well, I'll take
it.'' We spent quite a bit of time and money, won the case, took the
case on appeal, trying to chase down to Florida the particular
defendants in that case, everything else of that kind. We just had to
leave that.
Plaintiff's attorneys understand that is the cost of doing business.
Otherwise, how is poor America ever going to be represented? I take my
hat off to trial lawyers. Heavens above, yes, if they make it, some are
making in these class actions, I guess, healthy amounts. But the
experience is otherwise. As we have heard in the hearings and
everything else like that, the cost is not trial lawyers, the cost is
because of the defense lawyer.
The cost of the enactment of this particular so-called conference,
what I call conspiracy, report, is that individual rights would be
seriously, seriously inhibited. There is not any question about the
matter of the studies that we have had. In 1991, the Rand Corp. showed
that only 2 percent of product liability cases are ever filed. The
majority of the 2 percent are business; 90 percent never get to court.
I have already mentioned the Conference Board. The Rand study said
that less than 1 percent of corporate America is ever named in a
particular lawsuit. Of course, Cornell University's most updated study
shows that in the decades of the 1980's, coming into the 1990's, there
has been a decline of litigation. There used to be what they call, I
forget now, but they had a panic that they just had a plethora of
suits. Actually under the Cornell study the suits have declined 44
percent.
The States have moved in. They have moved in a responsible fashion.
And here we come--in the State of Arizona, for example, they had a
referendum on
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this. This bill abolishes the public vote of the people of Arizona. If
that is not senatorial arrogance, if that is not congressional
arrogance, if that is not Washington Government at its worst--
everybody's campaigning on the stump, Republican and Democrat, that we
are going to get rid of that kind of Washington Government--if that is
not it, I do not know what is.
I could go on, Mr. President, into the matter of the bill itself. The
very interesting thing is that they are talking, oh, so reasonable,
about how they are struggling and how it works and how they have
balance. I hope they do not use that word ``balance'' because I heard
that in the caucus yesterday. Balance, my Aunt Edith. This does not
apply to the business of the majority of people bringing product
liability cases. Oh, no. Hum-mm. No. It does not apply to coming back
on punitive damages and having a separate hearing nor to joint and
several liability. None of this balance talk is about pain and
suffering, none of this at all--
Oh, look through this obstacle course they have here for the poor,
injured party. Not an injured business, no. United Airlines is looking
at suing the Dallas manufacturer, I take it, of the baggage handler out
there in Denver. No. This bill will not apply to them. That is a
corporation. No, siree. That military airplane that crashed--oh, boy, I
think we have had 31 of those F-14's in a period of a few months or
years. We put those planes on line 23 years ago. That last crash
killed, I think, two or three people on the ground there in Nashville.
No case under this bill. No case because they have been exempted.
You have to read this thing. I am proud to stand here and tell the
truth and expose this nonsense, this conspiracy, that has taken on, on
the one hand, a political poll hot button issue, that is a nonproblem,
and expose the movement that is in behind it and continues and
continues because who is paid, when they talk about the trial lawyers
and being bankrolled, who is paid and bankrolling this?
So you have two classes of injured parties. If you are a business
injured, do not worry. If you are instead an individual who struggles
because you not only have to get the investigation cost, you have to
get your medical cost, you have to get it all assumed by that rascally
trial lawyer, and he is assuming the plat to be made, the diagrams, the
photographs and everything else to bring the truth to the 12 men and
women on the jury and suffer all the legal motions and everything else.
The trial lawyers are bankrolling injured parties, for an average, I
would say, of anywhere from 1\1/2\ to 2 years at least on these cases.
If they do not prevail with all 12 or with the supreme court of the
State on appeal, they are goners. They are goners. That has happened
time and time again.
But you have two classes. There the bill's supporters have been very,
very careful to talk about fairness and trying so long. You have two
classes of individual parties: the CEO and the fellow who is working in
the plant. The CEO makes $5 million. Ask AT&T; I think the CEO got up
to $16 million. If he comes in and he gets an injury, he can get twice
times the economic damages. So, if he is out for a year, he can get $32
million in punitive damages.
But if the same fellow in the car that is driving with the CEO--if
the CEO will give him a ride--that fellow will only get $250,000 in
punitive damages. Oh, boy, what a fair bill. It is so studied, so nice,
so pleasant. We have been holding it up because trial lawyers have been
bankrolling everybody, and everything else of that kind.
I wish this crowd would sober up and read this thing. You have the
poor women. You have two classes there. If you have the breadwinner,
the man in the family, he can get all his economic damages and
everything else, but she can be expecting a baby and lose that baby and
never be able to produce a child again, but that is not economic
damage, that is pain and suffering. So there is going to be a separate
hearing there.
Mr. President, later, if the time permits, I want to get to the
uniformity and the global competition that they talk about, because
with respect to, say, the State of Washington which does not have
punitive damages, this law would not apply. To my State of South
Carolina that does have punitive damages, this law shall apply. They
call that uniformity. They call that uniformity.
Interstate commerce is a many splendored thing and the lawyers are
bolixing it up. As for global competition--I have foreign industries
coming in like gangbusters. I have been in the game at least 35, nearly
40 years. This is why I challenged the distinguished Senator from North
Carolina; I know his State; we compete together. We have never had the
blue chip corporations that we have today--I have Firestone, several
GE's, I have several DuPont, American industries. Right here in the
last 2 or 3 months, we have BMW, we have roller bearings, Hoffmann-La
Rouche, the most wonderful pharmaceutical firm that you have ever seen.
Companies from everywhere--Hitachi, in the TV industry.
I want to thank publicly the Washington Post for that Outlook article
on Sunday. I have been trying to bring this trade issue to the U.S.
Senate now--this is the 30th year, this so-called protectionism.
President Ronald Reagan, under section 301, started moving in these
cases and got voluntary restraint agreements. As a result of the
voluntary restraint agreements in things like Sematech--protectionism,
if you please--we are not only holding on to the old jobs but we are
getting new jobs.
I remember the Republican primary campaign in South Carolina, when
the former Governor said, ``Free trade, free trade. Look at this, BMW
taking Senator Dole through its new plant. It was there on account of
free trade.'' It was there on account of protectionism. When we got
voluntary restraints, that is how we got Honda, how we got Toyota, how
we got BMW. Who is kidding whom?
When the distinguished Senator from Alaska, Senator Stevens and I,
put into the defense bill the Buy America provision on roller bearings,
we got Koyo and INF up in York County. That is why they are there.
Voluntary restraint agreements on steel, voluntary restraint agreements
with respect to semiconductors, Sematech, Hitachi. You can go down the
list, Mr. President. Trial lawyers, protectionism. Competition is what
America is interested in at this particular moment, not the tort system
being handled by the States, not term limits and all the other fanciful
games played in political polls. They want America. They want this
Congress to get competitive.
There is nothing wrong with the industrial work of America. The
industrial work of America is the most competitive. What is not
competing is us up here, where we have a failed policy of the cold war
that we had to enact trying to keep the alliance together. Now with the
fall of the wall is the time to build up our economy. Now is the time
to go forward with the protectionism that we have for the environment
that they are trying to get rid of--clean air, clean water, proper
trial at the State level.
I have to read aloud the seventh amendment because I do not believe
they have ever read it. You ought to see what it says. The seventh
amendment to the Constitution:
In suits at common law, where the value in controversy
shall exceed $20, the right of trial by jury shall be
preserved, and no fact tried by a jury, shall be otherwise
reexamined in any court of the United States, according to
the rules of the common law.
They have reexamined the amendment in here where they say, ``Mr.
Trial Judge, do not tell the jury about that $250,000 cap, but if they
come in, then you go and you factually proceed in violation of the
Constitution and come out with your trying of the facts in your
decision.'' Come on.
They say now they have worked over the many years to pass a product
liability bill, and the general aviation bill lets manufacturers sell
airplanes that are working so well. Global competition, we have to get
into the global competition. I am going to write a follow-up piece for
publication. Over half of what is coming in here in imports is American
multinational generated. We are competing with ourselves. The
multinationals that have lost their country as far as business imports
are concerned have gone overseas and they are coming back in and the
foreign entities, foreign governments are coming in here with a
historic chant. It is devastating our economy. Everybody can see it but
us politicians. Everybody can see it but us politicians.
[[Page S2347]]
It is a given in manufacturing that 30 percent of volume is the cost
of the employees, the workers; now we call them the associates. It is a
given, further, that you can save as much as 20 percent of sales volume
by going to a low-wage country in manufacturing.
So if you have $5 million in a sales corporation you can keep your
executive office, your sales force, but move your manufacturing
offshore to a low-wage country and save $100 million, or you can
continue to work your own people and go broke. That is not greedy
corporations. That is a stupid Congress that allows that to happen.
If I ran a corporation and my competition headed overseas and started
cutting his costs that much, I am forced to leave. We have a veritable
hemorrhage of industries leaving. I pointed out that Baxter Medical
that I brought here years ago, with 830 workers, has just gone to
Malaysia. Secretary Reich says, and the Congress says, now what we have
to do is retraining, retraining, retraining. Come on. I have skilled
training coming out of my ears. We can train them to do anything. We do
not need a Federal program. We have BMW without a Federal retraining
program, and all these other industries.
But assume they are right and they are retrained into wonderful
computer operators, 830 of them, the next day. The average age is 45.
Do you think they will hire the 45-year-old computer operator or the
25-year-old? With the cost of retirement, with the medical costs and
everything, the answer is obvious.
What we are dealing with here is not a cost of doing business. I am
identifying our injury. Our injury is the failure to, as Lincoln said,
``disenthrall'' ourselves from free trade, free trade, free trade.
There is no such thing as free trade. In the 1930's, we had reciprocal
trade, and tariffs as the instrumentality--protectionism. Everybody
wants to flatten the income tax--flat tax, flat tax, flat tax, is
something else going on. Well, we lived on tariffs and protectionism
from the beginning of the republic up until 1913. A country, an
economic giant, built on protectionism. But they are all running around
here like children and hollering, ``Protectionism, protectionism, free
trade, free trade. Product liability is such a weight on doing
business.'' And all of the business statistics, findings, insurance
company results and everything else of that kind show otherwise.
I reserve the remainder of my time.
The PRESIDING OFFICER (Mr. THOMAS). Who yields time?
Privilege of the Floor
Mr. GORTON. Mr. President, I ask unanimous consent that Craig
Williams, a fellow on the staff of Senator McCain, be granted the
privilege of the floor during the Senate session today.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GORTON. Mr. President, I yield to the Senator from West Virginia
such time as he may desire.
Mr. ROCKEFELLER. Mr. President, I thank the Senator from Washington.
Mr. President, I am very happy that the Senate, at long last, is
taking this bill up. We have been here before; we have been here many
times before. I wish we could have gotten here sooner this year.
Nevertheless, I am glad we are here. I think there is a natural
tendency in Congress to wait until absolutely the last minute before
important decisions are made, and that is what we are doing again this
time. But so be it.
I am here to report to my colleagues that the Senate product
liability bill has maintained the Senate's standard, which is products
only. It has to be fair. It cannot include a whole lot of extra things
that the Contract With America wanted, or that others wanted, or,
indeed, that earlier generations within this body tried to add on to
this bill. It was always my intention--and it was always the intention
of the Senator from the State of Washington--to keep this bill
disciplined, on products only, not to expand and include all kinds of
other subjects, so that we could keep faith with our colleagues. I
believe we have done that. All of this is now embodied in H.R. 956, the
commonsense product liability legal reform bill.
I am enormously proud of the fact that the Senate really does want to
see meaningful product liability reform, to fix our broken products
system. Most of those on the other side of the aisle feel that way.
There is a merry band of us on our side of the aisle who feel that way,
and we have for a long time.
We can announce to our colleagues that we have done what we promised
we would do--hold to the Senate position in virtually every respect, to
preserve the balanced, reasonable Senate product liability reform
provisions that will provide Federal uniformity to the hodgepodge of
State laws, which deal with product liability today. This will improve
the product liability system for consumers and for business alike.
There is a feeling sometimes in here that the bill has to either be
just for consumers or just for business, and that you are over here or
you are over here. This bill is trying to reach to both sides. We do
some things to help manufacturers, and we do some things to help
consumers. That was the point--to make it a balanced system. The
statute of limitations is one that occurs to me mightily. California,
for example, has a 1-year statute of limitations, and that means, in
California, I presume--and I am not a lawyer--that if you are injured
and wish to sue, you have 1 year within which to do it, and after a
year is passed, you cannot sue. I consider that to be anticonsumer, and
I consider those who are defending the status quo to be defending an
anticonsumer position, which is, in fact, virulently anticonsumer.
Our bill says that one has the right to go 2 years after one
discovers, first, that one is injured and, second, what the cause of
the injury was, so that one knows who to sue. Now, in an era of drugs
and toxics--and we are seeing this, for example, in the Persian Gulf
war with the so-called mystery illness, which is no mystery to me, but
what seems to be a mystery to the Department of Defense--sometimes it
takes 4 or 5 years. Sometimes it takes 15 or 20 years for a toxic or a
drug to show up as an injury. So then you know that you are injured.
But under our bill, that is not enough. You have to know what the
cause of the injury was so you know who to sue. Now, that is clearly
proconsumer, and those who are defending the status quo--that is, those
who oppose this legislation--wish heartily to deny consumers that
window to get into the courthouse door. I find that stunning. I find
that, in many ways, shocking. I am very proud that we have that in our
bill.
Opponents of this legislation have, I believe--and this has been true
in the past--used gross distortions and out and out misstatements about
this bill to try to suggest that it has been significantly changed from
the Senate-passed product liability bill. We are spending our time
running around taking examples, which are patently false, which have
been raised as though they were patently true. That is not a
distinguished aspect of Senate life on this bill.
The fact is that this report is virtually identical to the Senate
bill in every single respect--virtually. Senator Gorton and I, in what
I thought was a rather extraordinary colloquy from the floor, delivered
on our blood oath, in which we both said that if we did not deliver on
this promise, we would vote against proceeding to the bill or vote
against the bill; and that was that we promised to delete the provision
providing a defendant with a right to a new trial under the
``additional amount'' provision. That was an issue. We pledged to
remove it. We did. We also took the House timeframe on the statute of
repose. That was the one change that we made, maintaining the Senate
bill's limited scope, importantly, to durable goods in the workplace.
Now, again, some of the distortions being used are that by reducing
the statute of repose, which was the only area in which we gave the
House what they wanted--we gave them the 15 years, but we did not give
them what they really wanted. They wanted this to include everything,
not just durable goods in the workplace. We maintained the Senate
position even on that.
Beyond that, no substantive changes were really made. Technical and
conforming drafting changes were made, as in any report of this sort.
But that is it. That is the sum of the changes from the Senate-passed
bill, no matter what the opponents of the reform will assert, and will
assert this day. My colleagues need to know that, and they
[[Page S2348]]
should be reassured that this means that the product liability report
is yet one more opportunity to go on record in support of moderate and
beneficial reform of our product liability law.
Senator Gorton has gone through, and will continue to go through, a
detailed legal analysis for the minor changes that were made,
conforming changes. He will also rebut--certainly better than I--the
outrageous claims that are being circulated by the opponents of the
reform. I heard them in the Democratic caucus yesterday, and I am sure
I will hear them on the floor today. However, as coauthor of the Senate
product liability bill, I would like to go on record with my own
analysis of the opponents' wild claim about the report. It is not in
legalese because I am not a lawyer. But it is in English. I want this
Record to reflect what is actually in the bill, rather than what the
other side will, as I have said, continue to misinform Members about
during this crucial debate.
There is a lot of confusing misinformation being circulated. Here are
the facts.
Fact No. 1: There is no cap on economic or noneconomic damages--no
cap on economic or noneconomic damages. Claimants will continue to be
able to recover whatever they are awarded in a court.
Fact No. 2: The statute of repose remains limited to durable goods in
the workplace only--only. Statements being made that they now cover all
goods are wrong.
Fact No. 3: Product sellers, lessors, or renters will not be
protected from negligent liability. That is precisely why the negligent
entrustment exception was moved to the product sellers' section of this
bill.
Fact No. 4: Dow-Corning and other companies who made, or make, breast
implants will not be shielded from liability--will not be shielded from
liability. We went through this last year, and groups, in particular,
women's groups, gave impassioned, very emotional press conferences in
which they said they would be included and that they would be shielded
by this bill. It was not true last year. It is not true this year.
Whether or not they supplied the silicon, they remain as liable as any
other manufacturers who produce a defective product, if they do.
Fact No. 5: And this is very important because this involves a
subject which has struck a number of people on my side of the aisle
deeply, and it has to do with a letter that Mothers Against Drunk
Driving--obviously an incredibly excellent and wonderful group--have
circulated. But we have been trying to reach them to get them to make a
retraction because they have made a mistake. It is a mistake which has
been persuasive, unfortunately, to at least two Members on our side
that I can think of.
I repeat, drunk drivers, gun users, et cetera, will not be protected
from liability in any way. Opponents are intentionally trying to
confuse harm caused by a product--that is, harm caused by a product
which is covered in the bill--and harm caused by the product's use by a
person, or persons, which is not covered in the bill and remains
totally subject to existing State law. Specifically, for those inclined
that way, section 101(15) and 101(a)(1), definition of ``product
liability action,'' includes only ``harm caused by a product, not
use.'' That is an enormous difference.
If I have leased a car and then stopped off at several bars and
become drunk and then cause damage to somebody, I, as a person, can
certainly be sued, but the use of the car, if the car is not defective,
is not actionable under this bill, nor should it be, because this is a
products-only bill. It is the products we are talking about, not the
use, or the user.
Fact No. 6: In all States that permit punitive damages, they will
continue to be available and the additional amount provision--we used
to call that judge additur, but we now call it additional amount
provision--will apply in all those States regardless of whether caps
are higher or lower in that State.
Fact No. 7: Tolling, this was raised in our caucus yesterday; it has
been raised since. Tolling of the statute of limitations will be
covered as they are now by applicable State and Federal law. For
example, for those so inclined, see 11 U.S. Code 108(c), ``automatic
tolling in bankruptcy cases.''
Nothing in the bill, Mr. President, or omitted from the bill, will
change State law on tolling. That is a fact.
Fact No. 8: State law will continue to control whether or not
electricity, steam, et cetera, is considered a product or not.
Fact No. 9: This is not a one-way preemption bill but a mix of State
and Federal rules, as it ought to be, in a bill which is moderate.
Products are in interstate commerce--we have said this over the years
so many times--70 percent. There was a day when things that were
manufactured in California were probably sold in California for the
most part. Today, on a national average, 70 percent of all things that
are manufactured are interstate and are sold outside the borders of
that State and thus are in interstate commerce, and they should be
subject to more uniform rules for business and consumers.
Let me just say again, as I did last year, that the European Economic
Community--which is close to 400 million people and an enormous
competitor for the United States of America economically--all 13
countries have a single product liability law, a uniform product
liability law--all 13 countries, not provinces within those countries
but the whole country.
Japan has just adopted a uniform product liability law, a law uniform
for the country, but we have 51. We have 51 different laws. For
example, in the case of punitive damages, I think about 80 percent of
all punitive damages come from three States--California, Texas, and
Alabama. Why is that? Probably because of something called forum
shopping. Because we have so many different laws--51 different laws--
people can simply try to find the place which is most effective for
their particular case, and there they go. So this is not a one-way
preemption.
Fact No. 10: On joint and several liability--there has been a lot of
talk about that and this is an extremely important issue--30 States
have modified joint and several liability at this point. The Federal
proposal follows the California law affecting only noneconomic damages.
It is interesting on this point; the States clearly recognize that
there are things they want to change in joint and several liability.
Twelve States have eliminated joint liability altogether. Two States
have eliminated joint liability for noneconomic damages. That is
California and Nebraska. Ten States have otherwise limited the
availability of joint liability as to noneconomic damages or damages
generally, with the result being it is significantly less likely that
noneconomic damages would be subject to joint liability. Three States
have eliminated joint liability in cases in which the plaintiff is
negligent and five States have capped awards of noneconomic damages. In
all, 30 States have done this, and these include 8 of the 9 largest
States in the Nation.
For the remainder of my time I wish to remind my colleagues and
whoever else might be listening why some of us have wanted so much to
act on this legislation and to outline the opportunity that this reform
in fact holds for this country and for our people as consumers and as
human beings.
Product liability reform has a very long history in the Congress.
Members in both Houses and on both sides of the aisle have been trying
to reform the product liability rules for over a decade, in fact for
substantially longer than that, and we have done it for the most part
by working together, Republicans and Democrats. No matter what anyone
says to try and hone this issue as truly partisan or divisive, the idea
of product liability reform is a legislative idea with a complete,
thorough, aboveboard, open, and honest history of hearings, of markups,
of floor debate, of cloture votes, and everything and anything else
that one could call the way to legislate.
Yes, we have been persistent, those of us who want to see this law
enacted. We have been dogged. We have been focused because we think
this country and its people need the change. The status quo is hurting
American workers, American business, American consumers, and American
competitiveness. When products by definition cross State lines--at
least 70 percent of them--it makes no sense, absolutely no sense for
product liability rules to be different in all 50 States, which they
are--50 different sets of rules. It breeds unpredictability, delay,
confusion, and
[[Page S2349]]
unfairness that hurts everybody, not just businesses being sued but
people, too.
Senator Gorton and I introduced a bill last year, once again to
reform product liability. And I have to say I have enjoyed enormously a
true partnership in spearheading this effort with Senator Gorton.
Because I said everything good I could think of last year and ran out
of the English language, I can simply thank him once again for his
legal acumen, extraordinary integrity, and extraordinary sincerity in
trying to enact reform.
Different legislation was passed in the House earlier in the year, as
people know, and fortunately one part of it was product liability
reform. In the discussions, many of my colleagues in the House and some
in the Senate deeply wanted to pursue nonproduct liability legal
reforms--nonproduct liability legal reforms, all kinds of ideas--making
it available to all civil torts, putting it on medical malpractice,
which I personally favor but which has no place in a products bill.
This is a products bill. The problem was that the Senate did not have
companion legislation to consider or to conference on the House's ideas
for malpractice reforms or legal reforms beyond product liability.
While I am not opposed to looking at other kinds of legal reforms, I
believe I owe it to my colleagues to whom I and Senator Gorton and
others have made this pledge and to the legislative process to have the
Senate first take up legislation through the relevant committees and
the regular process.
The history of product liability reform legislation makes it obvious
that it is still a very contentious subject, and I always say to my
good friend, Senator Hollings, that I do not like disagreeing with him
on anything, on anything, but I think there is an immensely compelling,
urgent, and clear-cut case for product liability reform.
Senator Gorton and I introduced a bill that is bipartisan, moderate,
balanced, and focused as a way to begin fixing the problems in the
product liability system. The report is in essence the same bill with
improvements suggested by the administration--I repeat, with
improvements suggested by the administration--and others interested in
getting responsible product liability enacted into law. Even the
National Governors' Association, usually the most insistent that the
job should be left to the States, which we have seen in Medicaid and
welfare reform and many other things, even in these last 10 months, has
said in formal resolutions that ``uniform standards'' are needed in
product liability. They have so said. One of those resolutions was
passed.
In fact, the original task force on product liability--one of the
members was then Governor Bill Clinton, and he was the leading force at
NGA--had a unanimous report in favor of uniform standards and twice the
President of the United States voted to support that position.
Last August, the Economic Strategy Institute, the organization headed
by Clyde Pressler, with whom I believe the Senator from South Carolina
generally agrees, and a voice for tough action on trade and other
areas, issued a report called--and this is not what I would call the
best title I have ever read in my life, but it is called ``Tortuous
Road to Product Liability Reform.''
To paraphrase, when the institute issued the findings of its recent
research, it said that America's unique approach to product liability
has brought enormous and growing costs to the resolution of disputes,
and the costs are borne by consumers and U.S. business alike.
It goes on to say that costs are eating up money that could be spent
on wages, on research and development, on training and other
investments to be competitive with the rest of the world where our
principal economic opponents have adopted uniform product liability
standards. The institute's report underscores that product liability
reform would significantly benefit consumers and business.
I think everybody knows that I obviously am disappointed by the
President's recent statements indicating that he intends to veto this
report, particularly when the administration issued a statement by the
President on May 4, when the Senate was debating amendments to expand
our product liability reform bill, that concluded with the final
paragraph which I think shows how much consensus we have managed to
develop over the years on the point that action on product liability is
needed. It said in that statement, ``The administration supports the
enactment of limited but meaningful product liability reform at the
Federal level. Any legislation must fairly balance the interests of
consumers with those of manufacturers and sellers.''
It was this President who just 2 years ago signed legislation
providing the American aviation industry and its consumers with
provisions very much like what is in the current report for product
liability reform. That bill, the general aviation bill, thoroughly
described by Senator Gorton, has helped the small plane industry make a
major comeback since its enactment, and the President when he signed it
said he felt that this would create many, many jobs for Americans. The
President was correct then in arguing for reform, and I hope, hope and
hope and pray, that he will seize the opportunity of moderate, balanced
reform that our conference report presents to him now.
Mr. President, I believe this conference report is the legislation
the President was calling for last May. I truly believe that it is. I
consulted with the administration every step of the way during this
long process to meet its parameters and those of many of my Democratic
colleagues. I felt an obligation to so do. I think and believe that my
colleagues know how hard I have fought to stay within these parameters.
Now we are voting on the conference report that produces the product
liability reform the Democrats and Republicans in both Houses have
toiled in the vineyards to achieve these many years. At a time when
America clearly faces threats to our jobs and economic growth across
the world, where they do not have the same maze of conflicting laws, we
should do everything we can to suit up, not surrender. Consumers should
not have to bear the costs of ridiculous delays or be denied the
breakthrough drugs or other innovations that the current system scares
off.
So I think this conference report, in concluding, Mr. President, has
earned the votes of those who support meaningful product liability
reform in good faith, those who sincerely mean it. The final decision,
of course, is the President's. He said he is going to veto it. Having
so said, obviously, he has a chance to hear this debate, to rethink his
position, and to change his position itself and, in fact, to sign the
bill. He could still do that.
As I have said, I hope he will take that time and see this vote as a
reason to reconsider his position.
I thank the Chair, and I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. HOLLINGS. Mr. President, I yield 25 minutes to the distinguished
Senator from Alabama.
The PRESIDING OFFICER. The Senator from Alabama is recognized for 25
minutes.
Mr. HEFLIN. Mr. President, Senator Rockefeller, I am sure, has
endeavored to live up to his commitments to not expand the conference
report, to the best of his knowledge, but being a nonlawyer, I am
afraid some of his advisers who are writing it did not explain to him
the vast expansion of this report over what the Senate passed before.
There are numerous changes, subtle changes in many instances--for
example, the changing of the word ``and'' to ``or,'' which greatly
expanded the bill.
The proponents are referring to the various special interests who
have concerns about this legislation. You know to whom they are
referring--trial lawyers and advocates on behalf of the American
consumer. But there are a lot of other special interests that are
involved, particularly those who have been endeavoring to save money
and to make a bigger profit. In that category could be many elements of
business from manufacturers to wholesalers, distributors, retail
sellers and also including the insurance industry. These can certainly
be called special interests.
This report's section on punitive damages has, with regard to small
businesses, a provision about ``the lesser amount'' and therefore
providing a maximum cap on punitive damages of
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$250,000 if a business has less than 25 employees. I doubt if there is
any company that has 25 employees that does not carry substantial
excess liability insurance over and above $250,000. Most businesses
carry liability insurance in large amounts, and the relationship of
employees to the policy of insurance that is carried, that protects
them, is not really germane at all.
The conference report is greatly expanded by lowering by 25 percent,
from 20 to 15 years, the statute of repose. For example, the statute of
repose will apply to a bridge. Most contractors' negligence and the
defects in the production of a bridge do not occur during the first 5
years, 10 years, or even 15 years of a bridge's use. A defect in a part
or component product of a bridge manifests itself by a bridge
collapsing, or giving way after a period of time in excess of 15 years.
Under the definition of the term ``products,'' it is anything that is
used in the construction of a bridge under this bill, and there are
many component products that are manufactured for the purpose of
lasting many, many years.
So, as we see in particular mountainous areas where bridges span big
gaps, or cross between mountains, you will have a real danger after 15
years of a collapse and under the statute of repose of 15 years, an
insured person or his estate is outright prohibited from bringing a
suit to determine fault. Also, consider that it is 15 years from the
date of the delivery to the first purchaser that the statute begins to
run. There are many consumer items, products that are delivered to the
first purchaser, which is not the consumer, that may stay on the shelf
2 or 3 years. What do we have? The statute running even sooner against
unwary consumers.
We should also consider workplace products and their safeguards that
are supposed to protect innocent workers. What you protect is a person,
a farmer from losing a hand in a corn machine, which harvests corn. Or
you can have any type of other situations where there is an absence of
or defect in safeguards associated with machinery. I have charts to
show the various items of where safeguards are left off. Consider a
plastic injection molding machine or a tractor, manufactured more than
15 years prior to the accident where a 34-year-old person was killed,
and where the manufacturer failed to equip it with rollover protection
system. Consider a punch press which lacked guards and safety devices.
All of these items illustrate how an innocent person could be adversely
affected by the 15 year statute of repose contained in this conference
report.
Then the statute of repose has some language that says ``not caused
by a toxic material.'' The issue arises in regard to whether or not,
for example, asbestos is a toxic harm or toxic material. There are
various and sundry people who would say a position can be taken that
asbestos is not a toxin or a poison, but that breathing it, is unlike
poisons like chlorine or benzene. They say that asbestos is simply a
rock fiber and asbestosis, the most prevalent asbestos-related disease,
is caused not from toxic interaction between the asbestos fibers and
cells but, instead, because the needle-like asbestos fibers pierce and
destroy air sacs in the lungs.
It takes generally 15 or 20 years of exposure to asbestos material
before the disease develops. But under the statute of repose, you do
not have a right to bring any suit. You are forever barred from
bringing a suit after the passage of 15 years from the date of delivery
to the first purchaser.
Now tell me this is fair. This, to me, is a great expansion of the
conference report from the Senate-passed bill. But let us look at some
of the other expansions in this report.
The report has a change of a slight word about a standard of
liability other than negligence. For years and years, product liability
bills have excluded natural gas and electricity, but this report comes
back from conference with a change in language providing that if
natural gas or electricity is subject to a different standard than
negligence, then it is subject to all of provisions of this
legislation--this is a vast expansion.
Now, natural gas and electricity are looked upon, in practically all
States, to be highly dangerous and are subject to laws that say that if
they are sold, the producer and seller must be held to the highest
standard of care in order to protect the public. But the conference
report contains an expansion for the first time in about 18 years. Was
this merely an inadvertence or was it intended?
Natural gas is odorless, and producers have to add a fluid to it for
people to smell it in order to detect it. It is generally referred to
as ``skunk juice.'' But if somebody fails to add it or fails to put the
proper amount in and a devastating accident occurs, are those in the
production chain allowed to reap the benefits of this legislation's
protections, say, as to the caps on punitive damages? Is that not a
great expansion of the conference report? I just wonder how many homes
are heated with natural gas, and there is a particular case that just
occurred recently, a Seminole natural gas case out in Texas where there
was an explosion and three people were killed and many were injured.
Punitive damages were awarded by a jury.
Obviously, that brought to mind a very crafty, highly intelligent
drafter, who now says we can take care of similar situations by a
little sleight of pen and make these type of these cases come within
the ambit of the bill. I am sure that the distinguished proponents of
this legislation did not realize or never were told about this
particular change, but it greatly expands the bill, make no mistake
about it.
Consider the provision regarding negligent entrustment. There was a
provision in the Senate-passed bill that said that the limitations of
this bill shall not apply to any suit brought for negligent
entrustment. The Mothers Against Drunk Driving had insisted that that
provision be in the Senate bill. That is where you have the State dram
shop laws, where liability is provided where tavern or bar owner sells
whiskey to a minor or to a drunk who then drives a car under drunken
conditions and kills an innocent victim. Under the Senate-passed bill,
a defendant was not provided with the limitations of this bill such as
the caps on punitive damages. But now a defendant could come within the
limitations contained in the conference report. Gun dealers, who have
been subject to negligent entrustment actions on the State level for
selling guns to known incompetents or criminals, would now benefit from
the subtle change between the Senate-passed bill and the conference
report which is now before the Senate.
The negligent entrustment provision was moved from one place in the
Senate-passed bill to another place in the conference report, and this
subtle change allows defendants in negligent entrustment actions to
avail themselves of the limitations in this conference report. The
Mothers Against Drunk Driving are utterly opposed to this report and
are urging Senators to vote against cloture.
Then there is the issue of the statute of limitations of 2 years
where a court orders an injunction, like a company goes into bankruptcy
and you, therefore, are enjoined by law from filing a product liability
suit. Under the bill that was passed by the Senate, that time did not
count--the statute of limitations was suspended or tolled. It said that
that time did not count on your statute of limitation running of 2
years.
But, by sleight of hand, it is removed from the bill and it is no
longer there. The President, in his veto message that he sent, points
that out. I had read the bill, and I had not discovered that. I went
back and read it again, and I saw how craftily that had been omitted
from the conference. So, therefore, if your company goes into
bankruptcy, there is an automatic stay against being able to file a
civil suit. Therefore, that provision that gave you protection against
the running of time is removed.
I mentioned a definition of durable goods, how the adding of a
``comma'' in the durable goods section now brings in many, many
household goods--baby cribs, lawn mowers, razors, electric razors that
are used--any type of thing that has a projected life of 3 years is now
in it. Before in it, it had to be related to a business. No longer does
it. But it includes household goods that are there.
There is another change about remediation relating to Superfund in
regards to the environment. I am not sure that I understand it, but it
was
[[Page S2351]]
changed for some reason. The conferees did not make these changes
unless they are trying to give some sort of protection to some company.
Another change to me that was unusual was the conferees changed the
name of the bill. When the bill was in the Senate and passed the Senate
it was called the Product Liability Fairness Act of 1995. I made a
speech about it and said that was the biggest misnomer and pointed out
the unfair provisions. For example, business can sue for commercial
loss, and they are not subject to these provisions. The report exempts
business in their suits against each other. But they contain provisions
that it would apply to individuals, to injured parties. But if you are
an injured business, you can sue for loss of profits, you can sue and
are not subject to the bill's limitations.
For example, you have a statute of limitations for 2 years here,
while in most States the statute of limitations, under the Uniform
Commercial Code, is anywhere from 4 to 6 years, just for example.
Business suits are not subject to it. Yet the biggest verdicts that
have been rendered relative to punitive damages are business cases.
Pennzoil versus Texaco and so on. But anyway the proponents changed the
name to the Commonsense Product Liability Legal Reform Act of 1996.
I just do not believe that it is common sense or fairness either way.
I think it is a misnomer. Is it common sense to include governmental
entities, the Department of Defense, the GSA, and subject them to the
provisions of this, but not subject business by allowing them to be
able to sue for their commercial losses? But does it make common sense
that in this time of deficits where we are trying to reduce Government
spending, to put the Federal Government at a disadvantage as regards
this bill?
The Department of Defense has helicopters, tanks, trucks, et cetera.
Almost all products that the military buys are built with the idea of
having a long life.
But does it make common sense, in these days, to have the Government
subjected to the statute of repose of 15 years? Does it make sense, in
these days of where we are trying to take care of local governments and
not to have unfunded mandates, to impose this bill's limitations upon
governmental entities?
Does it make sense, common sense, to allow them to not subtract time
from bankruptcy from a statute of limitation? Does it make common sense
not to show in a trial in chief that the engineer who designed a
railroad bridge was a known alcoholic, and the company knew it, and
they still did not take steps to review his works, and a bridge on a
railroad collapses? I mean, let us go down the list relative to
commonsense matters.
But this idea of fairness is a smokescreen for patent unfairness.
When you get movements, say, started, and the questioning of all the
trial lawyers, therefore it gives you an opportunity not to just maybe
address one issue or two issues, but it addresses all of these issues
that you have lost cases on. So therefore you want to protect the
insurance company and you start adding and adding.
I think there is also the question of fairness where the issue of a
separate trial on punitive damages is requested. If a separate trial
has been requested, it is automatically granted. But the report says
you cannot show the conduct of the defendant which exhibits a
conscious, flagrant indifference to the safety of others. That is the
standard in this report that allows for punitive damages.
A claimant cannot show that type of conduct in the trial in chief for
compensatory damages--that is the trial for economic nor noneconomic
damages. Remember noneconomic damages include pain and suffering that
may be caused by conscious, flagrant indifference to one's safety. Is
that fair to a person who has been badly disfigured, scarred, or
suffered a loss of limb by a product whose manufacturer knew of its
defect but refused to take steps to recall the product.
I would like to give this illustration of commercial loss. There are
two commercial airplanes, one of them Delta, one of them American. They
collide and we will just say here, for a hypothetical viewpoint, the
American is at fault. The passengers that are killed in any one of them
are subject to the limitations of this act. But Delta can sue for the
loss of profits which are not limited and can have a different statute
of repose or statute of limitations; it can sue with no limit on
punitive damages for their commercial loss relative to this accident.
But the passengers are limited under the provisions of this report.
Is it fair that businesses have a double standard? If it is good for
the goose, it ought to be good for the gander. But why do the
proponents exclude civil actions for commercial loss? That shows how
one sided this legislation is.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. HEFLIN. I ask unanimous consent for 2 more minutes.
The PRESIDING OFFICER. The Senator is yielded 2 more minutes, if
there is no objection. Without objection, it is so ordered.
Mr. HEFLIN. If that plane falls on Yankee Stadium, and has killed or
injured people--they are bound by the limitations of this act. But the
owner of Yankee Stadium can sue for the loss of profits due to the
destruction of his grandstand. None of the provisions pertain to him.
So this is a grossly unfair bill, and it does not make common sense.
The conference bill greatly expands the Senate passed bill. It is
extreme in its provisions. It denies an injured party rights. It is
particularly harmful to women in title II's provisions regarding
biomaterial suppliers, giving a complete immunity or bar to suit to
such suppliers. I wish I had time to go into all of that, and I urge
them to review title II carefully. I urge that my colleagues vote
against cloture on this bill.
The PRESIDING OFFICER (Mr. Ashcroft). The Senator from Washington.
Mr. GORTON. I yield such time as the Senator from Connecticut
desires.
Mr. LIEBERMAN. I thank my friend and colleague from the State of
Washington.
Mr. President, I rise as an enthusiastic supporter of the conference
report accompanying H.R. 956, called the Commonsense Product Liability
Legal Reform Act of 1996. In this case, it is not just a title. This
bill is full of common sense. It is reform. This is a moderate bill. It
is a thoughtful bill. It reflects compromise. It reflects years of
effort to solve a real problem.
Sometimes when we get into the back and forth of the arcane legal
concepts involved here, we may lose sight of the fact, as Senator
Gorton pointed out in his excellent opening statement, and Senator
Rockefeller, there is a real problem out there. Our tort system, our
system for compensating those who were injured as a result of other's
negligence, has gone off the track. People in this country know there
is too much litigation. People know that they are not benefiting from
it. They are actually paying more for it in higher consumer prices and
lost opportunity for jobs and lost opportunity to use new products that
require some risk. People in this country, businesses, are afraid to
take that risk. Why? Because they are worried about being bludgeoned by
a lawsuit, regardless of whether they are negligent or not.
I have to tell you when I was attorney general of the State of
Connecticut, I was involved--and my friend and occupant of the chair
may have gone through the same experience--I was at a national meeting
of the attorneys general. I recall voting for a resolution that spoke
out against product liability reform. I did not know much about it. We
were oriented in a different direction. I started going around the
State of Connecticut. I made it a practice to visit businesses,
particularly small businesses in the State. People out there are the
heroes. They are out there, day in, day out. They are not making big
money. They took a risk. They are working hard. Maybe they have 10, 20,
30, 40, 50 people, maybe a few more, in their business.
I am interested always in knowing, how did you get started? How did
you raise the money to get into it? How are you doing? What can I do to
help you? Over and over again, right there at the top, one, two, or
three, ``Do something about all this litigation. We are constantly
being sued, and even though we are not negligent we have to pay so much
money to lawyers.'' Or, ``We get
[[Page S2352]]
frightened because they come after us not just to pay the cost of an
injury, medical, lost wages, et cetera, but the intangibles of pain and
suffering, or so-called punitive damages which go well beyond the
specific injuries suffered. Please help us with this.'' That is how I
got into this battle.
It seemed to me this was a real problem. There is a real problem out
there. The bill that comes out of conference is a real commonsense
solution to that problem. It puts some very moderate limits and lines
and parameters on the existing system. It does not deny an injured
plaintiff the right to recover any wages lost, any medical expenses;
indeed, even the so-called noneconomic intangibles of pain and
suffering, loss of consortium, et cetera. What it does, basically, is
to say in the category of punitive damages, punishment, I guess created
at the outset for probably a good reason, which was to add to this
civil justice system some sort of extra punishment to a truly negligent
producer of a product, to get that person not to do that anymore. It is
almost a kind of criminal penalty; in fact, it is quasi-criminal.
What has happened with this presumably well-intentioned concept of
punitive damages, it has become a club held over the head of
defendants, worried that juries may come in with multimillion-dollar
verdicts. So they settle regardless of whether they are negligent or
not. So it is a limitation of the greater of $250,000, no small amount,
or twice the compensatory damage that is economic and noneconomic as we
have talked about--that is the basic limit on punitive damages that
this bill provides. Very moderate.
Senator Gorton and Senator Rockefeller have spent the 9 months since
the Senate passed this bill, saying ``No'' to just about everyone who
sought to change the bill passed on the Senate floor last May. They
said ``No'' to Democratic Senators; they said, ``No'' to Republican
Senators, and they said ``No'' to the House conferees.
What they have produced is a bill that is remarkably similar to what
the Senate passed last year with overwhelming Republican and Democratic
support. Frankly, Mr. President, I do not understand why anyone who
voted for this bill last May will not vote for cloture and vote for
this bill today when it comes up.
Senators Gorton and Rockefeller deserve our thanks, but to speak in
much more tangible terms--they deserve our votes this afternoon to
break this filibuster. They have spent these many months in the
disagreeable position of saying ``No'' to so many, specifically so that
Senators who voted for the Senate bill last May--we understood the
margin was not greatly over the 60 votes required to break a
filibuster. Again, not 51 for a majority, but 60 to break a filibuster.
They kept saying ``No'' so that the 60-plus votes last May would stay
there when the conference report came out.
I think they have achieved what most people thought, frankly, was
impossible in the conference report they brought up, because the House
yielded to the Senate on almost every proposal, every measure, every
item in controversy.
What now do our colleagues, Senators Gorton and Rockefeller, face?
Last-minute concerns, distortions, new arguments. I would not blame
these two warriors if they were dispirited. I admire them for not being
so. Unfortunately, it is what we have come to expect in these debates.
The hostile fire keeps coming in from every different direction. It is
like having a shot fired; it is defended against; another shot fired on
another perimeter; it goes on and on. It is meant to blur over the
basic requirement for this bill, and the basic moderation and common
sense of the bill before the Senate.
Mr. President, I have a particular interest in title II of this bill,
the so-called biomaterials provision. It is almost identical to a bill
that I was proud to cosponsor and introduce with our colleague from
Arizona, Senator McCain, in 1994. We reintroduced it in 1995. Happily,
the Commerce Committee incorporated the bill into the conference report
on product liability early last year.
Mr. President, among the attacks that have come up here at the last
minute as we come close to finally doing this after 18 years, now, that
we have been working at this. I make reference to the Bible. I hope we
are not going to have to wander for the 40 years the children of Israel
did before they got into the promised land. I am looking at my
colleague and dear friend, Senator Gorton, he deserves better than
that. Here we are, close to this vote. We look like we have worked out
a very sensible bill and now new crossfire comes in after this proposal
has been up for years. I want to answer a few charges raised against
the biomaterials provision.
In the middle of last week as the final conference report had been
under discussion for months, was being completed, we are suddenly
confronted with claims that the provision would ``devastate the chances
for recovery,'' of claimants in the so-called breast implant cases;
that those claimants then presented proposed amendments to fix the
allegations that there were problems in the bill. Of course, we have
also seen some extraordinarily active lobbying on behalf of those
suddenly urgent amendments.
Since so much confusion and concern seem to have been generated as a
result, I want to respond. First, the product liability bill and the
biomaterials provision is prospective. It does not go into effect until
it is enacted.
The bill only applies to civil actions filed after it is adopted. It
would have, therefore, no effect on the thousands of breast implant
claims already filed, pending--no effect. It would have no effect on
claims filed in Dow Chemical's bankruptcy proceeding, past or future.
It would have no effect, as Senator Rockefeller pointed out earlier, on
the capacity of bankruptcy judges and State judges in product liability
cases, including breast implant cases, to toll the statute of
limitations, to stop it from going while the bankruptcy proceeding is
going on. Finally, to the extent that any claims are filed after this
bill becomes law, it would have no effect on the overwhelming majority
of those cases, for the following reasons:
First, Dow Corning was the originator and largest single manufacturer
of breast implants. The biomaterials title explicitly preserves the
liability of manufacturers and sellers of implants like Dow Corning.
In other words, if you are claiming to be a supplier but you are
actually a manufacturer or seller, there is no protection under the
bill.
Second, the provision has no relevance to litigation in which
claimants are seeking to impose liability on Dow Chemical and Corning
Corp., the two corporations that own Dow Corning, since neither was a
biomaterial supplier under the title II definition of a supplier. To my
knowledge, no one has argued that they were biomaterial suppliers.
Third, while Dow Corning invented silicone breast implants and was
the single largest manufacturer of them, they also sold silicone gel to
other companies that manufactured breast implants. Those companies,
generally, are the large pharmaceutical and manufacturing companies.
Many claims have been made against them, and the biomaterials provision
will have absolutely no effect on those claims.
Now, what if a raw material supplier knew the product might harm the
person in whom the medical device was implanted? Will that person be
let off? No. Biomaterial suppliers who sell raw materials or components
they know are going to hurt somebody will find no protection under the
biomaterials provisions of the bill. If the raw material supplier knows
its material will cause harm, and fails to disclose it, that supplier
cannot be said to be providing the product described in the contract
between the manufacturer and the supplier because it departed so
substantially from the expectations of the parties. That, too, in the
legislation before us, is an exception from the general protection
offered to suppliers. They are not protected if, in fact, they are
manufacturers, if, in fact, they are suppliers, and if they breach the
specifications of the contract with the manufacturers or the
description of the product as certified by the FDA. A supplier who
provides a product that does not meet contract requirements, or these
specifications, is not eligible for protection under the provision.
We have tried to construct a liability scheme where suppliers would
have some comfort that they would have the opportunity to prove their
innocence early in the litigation. The responsibility of ensuring that
a medical device is
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safe for the purpose intended should rest with the manufacturer
responsible for the design, testing and research of that product, not
with the supplier who is supplying a component that, of its own, will
have no benefit and cannot be used as an implant for the consumer
desiring it.
The suppliers have been sued because they are viewed as ``deep
pockets.'' The cases against them have almost always been dismissed
without a finding of any liability. Raw materials suppliers are
typically supplying generic products with a lot of different uses. I
will get into what happened in the field that has generated a need for
this provision in a moment.
So let me repeat, Mr. President, that this provision will not
preclude present or future breast implant claims filed against these
companies. They remain available to satisfy judgments.
Plaintiffs will likely argue that Dow Corning, for instance, was so
involved in the creation of the product originally to be a manufacturer
in all instances, or they violated applicable contractual requirements
or specifications by supplying silicone gel that ``did not constitute
the product described in the contract'' because it departed so
substantially from the expectations of the parties. Those arguments are
consistent with title II, and they will be in order if this bill is
enacted into law.
Remember what I said earlier, that the major difference here, even in
an extreme biomaterials case, is that the arguments by the suppliers to
get out of a case because they are innocent will be able to be made
earlier in the litigation. Under our current system, these innocent raw
material component suppliers who have supplied small amounts of
material and have not been involved in design, testing, or manufacture
of medical devices, fear the cost of being kept in these lawsuits for
years more than they fear the judgments, because they know they are
innocent. We have found very little evidence that such raw materials
suppliers are ultimately ever found liable in these cases.
So why the provision in the first place? This, again, is why I say
this bill is not just an exercise in legal theory; it responds to a
very real crisis out there in the real world.
Title II, the biomaterials provision, is a response to what I would
call a genuine public health crisis. It is there to end a frightening,
artificially caused biomaterials shortage that doctors, patients, the
American Cancer Society, the American College of Cardiology, Paralyzed
Veterans of America, and other major medical societies, scientific
organizations, and patient and consumer groups have all pleaded with
Congress to solve.
What is the cause of this artificial shortage of biomaterials, the
stuff that you need to make the devices I am going to describe? It is
not because we are running out of those materials. It is because the
fear of litigation by the suppliers, who make very little money in
supplying the raw materials and component parts for these extraordinary
devices, far outweighs any benefit they can incur by selling these
devices. It is just not worth it to them. But it is worth it to the 8
million people whose lives are either being sustained or made normal by
the miraculous array of medical devices that technology makes possible
today.
What are we talking about? Pacemakers, hip and knee joints,
hydrocephalic shunts for children, balloon angioplasty catheters,
defibrillators, vascular grafts, and even, in some cases, sutures used
in common surgery. We all know people whose lives are either being
sustained or made better by these unbelievable devices. Fifty years
ago, who would have guessed that life could be sustained by these
devices? The fact is--and we have heard testimony before committees of
Congress--that the people who make these devices obviously need raw
materials to make them. They need resins, plastics, rubber, and other
component parts. And the suppliers either have cut back or have given
them a warning they are about to do it by a date certain. The most
recent date is January 1, 1997, next January, because they cannot
afford the millions of dollars that they have to pay to defend lawsuits
for supplying a nickel's worth, a dime's worth, or a quarter's worth of
plastic resin or rubber.
The problem is not a genuine shortage. It is an unnatural shortage
caused by a system of litigation that has gone wild. The economics of
the decision that these raw materials suppliers make are unfortunately
understandable because of the small amount of money that they make on
these devices. The fact is that since 1994 12 raw material suppliers,
including three major chemical companies, have decided to simply stop
selling to medical device manufacturers. The medical device
manufacturers are scrambling to find substitute products but sometimes
they are simply not available.
If you doubt whether this is a crisis just check the congressional
testimony. Listen to the father of the young man--boy--who passed out
because he had water on the brain. They put in a hydrocephalus shunt
that takes the water out of the brain. The child was living a normal
life. He actually came and testified before one committee hearing which
I had. He is a wonderful looking young man, and very active.
Periodically they have to replace that shunt. And, if there is not the
raw materials to do that, this young boy faces a tragedy, and his
family with him.
It is worth noting that the administration in the statement of policy
issued by the President over the weekend opposing the product liability
bill singled out the biomaterials provision for praise and acknowledged
the importance of ensuring that ``biomaterials suppliers will continue
to provide sufficient quantities of their products to medical device
manufacturers.''
Contrary to what some of our colleagues I am afraid may have heard in
the last week or so from those opposed to this bill, this provision is
not a trick nor a ruse to protect bad suppliers from legitimate claims.
This is an effort to respond to a genuine public health crisis, one
that is well documented, and, as I say, acknowledged by the
administration in its praise, in its statement of policy.
The biomaterials provision does nothing to reduce the liability of
manufacturers, or other responsible parties but consistent with the
fundamental and fair premise of this legislation--this conference
report--it places responsibility where it ought to be--on those who do
wrong, and protects from unnecessary harassment and enormous cost those
who have done no wrong.
Mr. President, this bill actually in that sense so fundamentally
relates to the broader questions of values in our society and the fear
that people often have that our legal system has gone astray, that
those who do wrong are not punished and too often those who have done
no wrong suffer. We most often hear that cry about the criminal justice
system. But it has unfortunately become true in our civil justice
system as well. The guilty parties do not pay enough. The innocent
parties pay too much. And all of us end up paying, and the price we pay
for consumer goods and lost jobs are paying for this irrational a
system.
Mr. President, that is what this bill is all about. There are those
who oppose the bill who describe it in ``either/or'' terms. Either you
are probusiness or proconsumer. You are either proinnovation or
prosafety. That rhetoric misses the point--preventing us from dealing
with the central issue. The fact is that this bill is probusiness and
proconsumer. It is proinnovation and prosafety. It is aimed at putting
liability back where it should be--on the parties who are actually
responsible for any harm and so are best able to prevent injury.
It is aimed at protecting the defendants from being frightened by
lawyers and lawsuits into paying legal fees and settlement costs when
they are in fact not responsible for any harm.
All of that contributes to the cynicism and mistrust of our legal
system which is so fundamentally corrosive to the way we live in our
country, and so costly to our society.
Mr. President, I ask unanimous consent that a list of raw material
suppliers and their action withdrawing various products from the market
be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[[Page S2354]]
SUPPLIER WITHDRAWAL AS OF DECEMBER 1995
----------------------------------------------------------------------------------------------------------------
Supplier Raw material Withdrawal date Device affected
----------------------------------------------------------------------------------------------------------------
Allied Signal Chemicals.......... ACCUFLOR CFx May 1995........................ Pacemaker batteries.
fluorinated carbon.
Altec............................ Surgical stainless Summer 1994..................... ....................
steel.
Ausimont USA..................... Fluoropolymers....... January 20, 1994................ Pacemakers.
BASF Corp........................ PEKEEK, Ultrapek December 1994................... Production of spinal
polymer. implants.
Dow Chemical..................... Medical grade resins April 1992...................... Cardiac prosthetic
and film products. devices and long-
term implants.
Pellethane, April 1995...................... Pacemaker leads.
polyurethane and
Isoplast.
Dow Corning...................... Silastic December 1993................... No sales for medical
silicone. implants or use in
obstetrical,
gynecological,
contraceptive
applications, or
load-bearing or
drug-loaded
implants.
du Pont.......................... All polymers January 31, 1994................ ....................
TEFLON
(tetrafluoroethylene
), DACRON
polyester,
DELRIN
acetyl.
Furakawa (Japanese vendor)....... Nickel/titanium December 1994................... Scoliosis correction
memory metal. implant system.
Industrial Techtronics........... Tantalum X-ray market January 1995.................... ....................
beads.
Montell Polyolefins.............. UHMW polyethelene.... 1995............................ Biomet Co.
(orthopedic
implants)
polyethelene coats
the surface of
artificial joints.
Owychem.......................... Alathon ................................ ....................
polyethelene resin.
Rehau............................ Silicone adhesives... March 1995...................... ....................
Shell............................ PET.................. February 1994................... ....................
Victrex.......................... PEEK (polyether ether 1994............................ ....................
ketone) & PEK
(polyether ketone).
----------------------------------------------------------------------------------------------------------------
Mr. LIEBERMAN. Mr. President, I did not always support a national
approach to product liability reform and I can well understand the
hesitancy, particularly of newer Members, to support Federal
involvement in what traditionally has been the province of state law.
In fact, as attorney general of Connecticut and a member of the
National Association of Attorneys General, I voted for resolutions
opposing earlier Federal product liability legislation that would have
swept away virtually all State product liability laws and repealed the
doctrine of strict liability for product defects.
But as I traveled around the State of Connecticut, this problem--
product liability litigation--kept coming up in my discussions with
small business men and women, with small and large manufacturing
companies, and with plant managers. They told me of problems they had
experienced with the product liability system, of the expense of
defending yourself even when you win, of the cost of settlements to
avoid paying litigation costs, and of the time and energy that product
liability suits diverted away from the business of designing new
products and bringing them to market.
At a time when we need to be rebuilding our country's manufacturing
base, to be promoting innovation in our manufacturing sector, to be
designing, building, and bringing to market the next generation of
high-quality, high-value added products the world will need, our
liability system chills innovation.
The debate should really center around consumers, because it is
consumers who suffer because of this system, not simply businesses.
Consumers are the ones who have to pay higher prices in order to cover
product-liability-related costs. If a ladder costs 20 percent more
because of liability-related costs, consumers--not businesses--end up
paying that 20 percent premium.
The best interests of consumers as a whole are not always identical
to the interests of people who are seeking compensation. The people who
suffer or die because a new drug or medical device was never developed,
or was delayed in its development, are hurt as surely as those who
suffer because a device malfunctioned or a drug was improperly
designed. These silent victims of our product liability system's
chilling effect on innovation are consumers whose interests also
deserve protection.
Of course, even for its intended beneficiaries, people who are
injured by defective products, the legal system hardly can be said to
work well. GAO, in its 5-State survey, found that product liability
cases took an average of 2\1/2\ years just to reach trial. If the case
was appealed, it took, on average, another year to resolve. This is a
very long time for an injured person to wait for compensation.
In some instances, too, our product liability laws have erected
barriers to suit that just do not make sense. For example, in some
States, the statute of limitations--the time within which a lawsuit can
be brought--begins to run even though the injured person did not know
they were injured and could not have known that the product was the
cause. In those States, the time in which to bring a suit can expire
before the claimant knows or could ever know there is a suit to bring.
Mr. President, no one will argue that this bill will cure all the
ills in our product liability system. That would require a gargantuan
overhaul and we are not likely to reach reach agreement in the near
future as to what that would look like.
I make no secret of the fact that I would have preferred a broader
bill. Product liability cases are only a part of the problems in our
civil justice system. I have very real concerns that when we fix some
of the problems there, some lawyers will just target nonmanufacturing
clients, like financial service providers, municipalities, nonprofit
organizations. I would have preferred a bill that covered much more,
but clearly that was not to be.
By working incrementally to eliminate the worst aspects of our
current system with respect to product liability, perhaps we can begin
to create a record that will allow us to restore some balance to our
tort system overall. The enactment of the Federal General Aviation
Revitalization Act of 1994 has demonstrated that reform does not mean
that injured people will go uncompensated and bad actors unpunished,
but that reform means more jobs and safer aircraft. I hope we will have
the same chance to build the same foundation for more reform with this
modest, balanced product liability bill.
For people injured by defective products, this bill makes a set of
very important and beneficial changes. First, it enacts uniform,
nationwide statute of limitations of 2 years from the date the claimant
knew or should have discovered both the fact he or she was injured and
the cause of the injury. Injured people will no longer lose the right
to sue before they knew both that they were hurt and that a specific
product caused their injury.
Second, this bill will force defendants to enter alternative dispute
resolution processes which can resolve a case in months rather than
years. If the defendant unreasonably refuses to enter into ADR, it can
be liable for all of claimant's costs and attorney's fees. On the other
hand, if a plaintiff unreasonably refuses to enter ADR, they will
suffer no penalty.
For workers who face possible injury in the workplace, this bill will
reform the product liability system to give employers a stronger
incentive to provide a safe workplace. Under current law, an employer
is often permitted to recoup the entire amount of workers compensation
benefits paid to an employee who was injured by a defective machine,
even if the employer contributed significantly to the injury by, for
example, running the machine at excessive speeds or removing safety
equipment. This essentially means that an employer can end up paying
nothing despite the fact that their misconduct was a significant cause
of the injury.
This bill would change this. When an employer is found, by clear and
convincing evidence, to be partly responsible for an injury, the
employer loses recoupment in proportion to its contribution to the
injury. This does not change the amount of money going to the injured
person, but it makes the employer responsible for its conduct.
Manufacturers of durable goods--goods with life expectancy over 3
years that are used in the workplace--will also be assured that they
cannot be sued more than 20 years after they deliver a product. This
will bring an end to suits such as the one in which Otis Elevator was
sued over a 75-year-old elevator that had been modified and
[[Page S2355]]
maintained by a number of different owners and repair persons through
the decades. By the way, this same provision will not apply to
household goods such as refrigerators, and is only intended to cover
those workplace injuries that are already covered by workers
compensation.
Manufacturers will also have some protection against deep pocket
liability. While the bill still permits States to hold all defendants
jointly liable for economic damages such as lost wages, foregone future
earnings, past and future medical bills, and cost of replacement
services, noneconomic damages such as pain and suffering will be
apportioned among codefendants on the basis of each defendant's
contribution to the harm.
For wholesalers and retailers, they will, in the majority of cases,
be relieved of the threat that they can be held liable for the actions
of others. Under current law, for example, the owner of the corner
hardware store could be sued for injuries resulting from a power saw
just as if she was the manufacturer of a power saw, even if she had no
input in the design or assembly of the power saw and had done nothing
other than to inspect a sample to make sure there were no obvious flaws
and to put the items on the shelf.
For our American economy and industrial base, passage of this product
liability reform legislation will move us back to promoting innovation
and the development and commercialization of new products. Passing this
bill will create and save jobs here, not overseas.
Mr. President, let me reiterate that I believe this bill can be a
win-win situation. It provides real balance. It balances the scales of
justice to ensure that the victims of defective products will continue
to be compensated while consumers receive the best products available.
It is incremental reform. Frankly, it is a lot less than I had hoped
for and that I voted for. But I think it is incremental because it is
hoped that is the way to begin the road to genuine legal reform in our
country.
In this debate today, we hear a lot of charges, countercharges, and
attacks coming from every which direction as we come close to the vote.
One thing should not be lost. This bill does not absolve a company that
has not made a safe product. If a company has made a defective product,
it will and must be held fully accountable, period. But when a company
does follow the rules and makes a safe product, it should not have to
settle frivolous claims simply to avoid the expense of litigation and
protect against the risk that a huge and irrational judgment will be
awarded against it.
Mr. President, once again I thank my colleagues, Senators Gorton and
Rockefeller, who have really been extraordinarily able and honorable in
this task.
I honestly believe that what is on the line here today in this vote
is not just the fate of this product liability bill, but it is a
broader question of whether this Congress is able to function on a
bipartisan basis and get something done to respond to a real problem as
we have described out in society.
The critics who say--I hear this all the time when I go home--``Why
are you folks all so political? Why don't you get together and get
something done, and respond to some real problems? Why don't you
compromise?'' A compromise is not just to reward the people who send us
here to serve them. Compromise is getting something done.
Senators Gorton and Rockefeller--Republican and Democrat working hard
for years now but particularly the last year and 3 months--bipartisan,
and willing to accept compromise, get the bill past the hurdle of
breaking a filibuster here in the Senate with over 60 votes, get it
passed, take it to the conference committee, again compromise, get
something done to start us down the road to a response, to a real
problem, and now we are faced with these last-minute attacks and a
threat of a veto by the President.
I think what is on the line here is whether, with all the procedural
intricacies at work, we can produce. I hope that the answer is yes. I
hope that we will vote this afternoon to break the filibuster, that we
will then tomorrow pass this bill and that President Clinton will then
reconsider his decision to veto it.
This is a moment of opportunity. It is a moment of test for this
institution, and it may not come again in this way for quite a long
time.
I thank the Chair.
I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, I am sure the distinguished Senator from
Connecticut would also include me in his thanks but, of course, not
being in the conference and not making any contribution I am not due
any thanks at all. We just could not participate.
I was rather interested to hear for the first time that the House
gave in on all of these things because we never conferred on any House
giving into anything.
Just highlighting, of course, the nature of this endeavor, the fact
is this Senator spoke and shepherded over a 3-year period a
communications bill that passed this Senate on a bipartisan vote of 91
Senators. So I know how to work in a bipartisan fashion. But this thing
is a hijacking, if I have ever participated in one.
I yield 10 minutes to the distinguished Senator from Louisiana.
Mr. BREAUX. Mr. President, I thank the Chair. I thank very much the
senior ranking member of the committee for yielding, and for the work
he has put in over the years on this issue.
Mr. President, I rise in opposition to the legislation for a number
of reasons but principally because it is bad policy. It is bad public
policy. And, second, it is not necessary. It is not needed. There are
some who have argued that there is a rash of product liability suits
and everybody who makes a product in America is just about on the verge
of not making products anymore because they fear they may get sued if
they make bad products that injure people, whether they do it with
gross negligence, or it is just the egregious nature of what they are
doing; but they may get sued and put people out of business.
The facts are just the opposite, and that is one of the issues I wish
to focus on, plus the punitive damages question.
First of all, is there so much litigation out there that companies
are not producing products? No. The legislation is trying to fix a
problem that does not exist. Product liability cases account for only 4
percent of all of the injury cases that are filed in this country--4
percent. Only 4 percent of the cases dealt with defective products.
There is not an explosion of product liability cases.
Then if you look at the statistics, out of 762,000 civil cases
resolved in the Nation's 75 most populous counties in the whole country
in 1991 and 1992, only 360 cases out of 762,000 cases dealt with
defective products. Is there an explosion of litigation from products?
I think the facts are just the opposite.
Something else. In all of those 360 product cases, do you know how
many had punitive damages awarded? Three. Three. And yet the principal
focus of this legislation that is before the Senate is that we have to
pass this legislation because the country is in chaos because of
product liability suits, when the truth is that only 4 percent of all
of the civil cases filed are product liability cases.
The second point I wish to focus on is this part of the bill that
says Washington knows best. Our Republican colleagues want to block
grant just about everything in Washington to the States and let them
decide--Medicaid, welfare, you name it. ``Give it to the States;
Washington does not know what it is talking about'' is the statement
that I hear from my colleagues on this side of the aisle except when it
comes to this legislation, it is just the opposite. Their position on
this legislation is that the States do not know anything, that the
States are messing it up so bad that we are going to have Washington
decide what is the appropriate remedy for people in the various States
who are injured by defective products back in their States. Welfare, we
are going to do it in the States; Medicaid, we are going to do it in
the States, but when it comes to product liability we are going to do
it here in Washington.
This legislation says that no matter how egregious the actions of a
person or a company that makes a product, the cap on damages, punitive
damages is $250,000. My friend from Connecticut
[[Page S2356]]
said that is really a lot. Let me give you an example of the problem.
The $250,000 figure is out of the air. It is something that they just
picked up. It has no basis in fact. This legislation says that if a
person is going to be entitled to punitive damages against a company
for the most egregious type of behavior that we have ever heard of, the
cap is going to be $250,000 or two times the economic damages.
The courts have said that unlike damages which are awarded to
compensate an individual for his injuries, punitive damages are unique
because they are based on an entirely different public policy
consideration, that of punishing the wrongdoer to change that
wrongdoer's behavior, and, second, to set an example to others that you
should not do that type of behavior. Punitive damages are generally
awarded for egregious, morally repugnant conduct, conduct that is so
offensive to the average American that we say that person who has done
this should not do it again. We have to make an example of this type of
morally repugnant behavior so that others who may think about doing it
will not do it again.
That is what punitive damages is all about. And that is on what this
bill arbitrarily sets a cap of $250,000. Let me tell you what is wrong
with that, why it is not based on anything.
Say you have a person, I call him Joe Six-Pack in this case, and Joe
Six-Pack is just as mean and ornery a fellow as you ever want to meet.
And one day Joe Six-Pack is walking down the street in his hometown and
a guy is coming in the opposite direction, and when he gets next to
Joe, Joe just hauls off and knocks the ever-living everything out of
the guy because he did not like the way he looked. He smashes his fist
into the guy's face, and he breaks his cranial bones, permanently
disfigures him and sends him to the hospital. They have to do surgery
to reconstruct this individual's face.
The individual, after he finally recovers, says, ``I am going to sue
Joe. I want him to pay for my suffering, my hospital bills.'' And the
court says he is right; that was repugnant, morally offensive behavior.
We are also going to assess punitive damages because we do not want
this to happen again. So how much is the right amount? OK, they take a
look at what Joe Six-Pack is worth. Say Joe Six-Pack is worth $10,000.
That is the savings, the money he has. If the court says we are going
to fine him maybe half a percent of his assets, that is a $50 fine.
Does anybody think a $50 fine is going to change Joe Six-Pack's
behavior? Is that enough to tell Joe that he should not do that again?
Probably not. The court could say, ``Well, let's fine Joe 1 percent of
his assets.'' Is that enough to change Joe's behavior and set an
example for others they should not do it? That is a $100 fine. I doubt
whether that really will affect Joe's behavior. He may do it again just
because he is an ornery fellow or he does not care.
The court may say, ``Well, maybe punitive damages are 5 percent.
Let's fine him $500.'' Is that enough to change Joe's behavior?
Probably getting close. Probably he will think a second time before he
walks up to the next person and smashes him in the face if he knows the
court said, ``Joe, that's morally repugnant behavior. You are fined
$500.'' Joe is going to say, ``I don't think I am going to do that
again.''
So let us take another example. How about a Corp. Let us call it XYZ
Corp. It is a small Corp., with only $50 million of assets. And I say
small because of the Fortune 500, the number 500 company on the Fortune
500 list has assets of $4 billion. So XYZ Corp. with $50 million of
assets is pretty small.
Let us assume XYZ Corp. starts making a product. Let us say they make
pajamas for children, and when they make those pajamas for children
their engineers say, ``Mr. CEO, we just found out that these pajamas
that you make for children are flammable; these pajamas catch on fire
very easily, and we are making them for children. We could fix that by
adding this retardant chemical to it so it will not catch on fire.''
The president and the board says, ``Forget it; we have this whole
warehouse full of them. We are going to sell them. We don't care; we'll
take our chances.''
XYZ Corp. starts selling their pajamas all over the United States,
and, lo and behold, the inevitable happens; a child catches on fire
walking in front of the fireplace, is horribly burned and disfigured
for life. The engineers come back to the chairman and the board and
say, ``Look, we told you that was going to happen. This is our study.
We saw it. It's flammable. Let's change it.''
The president and the board say, ``No way. We still have half a
warehouse full of pajamas. We are going to sell the rest of them. We
don't care. We don't think it's going to happen again. We don't care
what your studies say. Forget them. File them away.''
Sure enough, a second child who is wearing the same pajamas catches
on fire in front of a fireplace, is horribly disfigured and burned,
with economic damages, pain and suffering, disfigured for the rest of
that person's life, and they file suit against XYZ Corp. The court
says, ``Your behavior is morally repugnant to this country. Your
behavior is indefensible. Your behavior needs to be punished. How much
should we punish XYZ Corp.?''
Well, if we said half a percent was not enough to affect Joe Six-Pack
because it would only be $50 of his assets, a half a percent of XYZ
Corp. would be $250,000. That is the cap in this bill. That is the cap
in this bill. And if we said that that was not enough to affect Joe
Six-Pack's behavior, a $50 fine, why should the same percentage be
enough to change XYZ Corp.'s position in manufacturing defective
products that they know are defective?
We said that a 1-percent fine of $100 was not enough to affect old
Joe. Joe was still going to do whatever Joe was wanting to do, smashing
people in the face. It was not enough to change his behavior. How about
a 1-percent fine for the XYZ Corp.? That is $500,000. We said it would
not have an effect, but it is also twice the cap in this bill. We
cannot even do that under this legislation.
So we say 5 percent was probably getting pretty close to affect Joe's
behavior. That is what, $500. That probably changes his mind about his
social behavior and society. How about XYZ Corp.? A 5-percent fine is
$2.5 million. But forget it when this legislation is passed, because
somebody in Washington has decided that $250,000 is the magical number.
Let me show you something. The No. 500 corporation on the Fortune 500
list in this country has assets of $4 billion. If this cap is in place
and they make a defective product and they are fined the maximum of
$250,000, do you know what percentage of their assets that turns out to
be? That is .00625 percent. Does anybody think that a maximum fine that
is .00625 percent of that corporation's assets is going to have any
effect on their social behavior? I bet they do not even consider it. It
is a dot on their asset sheet.
So, if we get back to the point that punitive damages is to tell a
reckless defendant, who has had a jury say that this is morally
repugnant behavior, if we tell them that from here on out, Congress in
Washington, in our wisdom, has decided that the maximum fine is
$250,000 and it has no relationship to the ability of a defendant to
pay, we are making a serious public policy mistake. We should, I think,
be ashamed of this legislation with this type of cap. I am. The States,
I think, are doing a good job. It is not a problem. In addition to not
being a problem, this arbitrary proposal makes no sense.
You wonder why a lot of the very big businesses think it is a great
idea? It is because a cap of that small amount is such a small
percentage of their assets, they can continue to make those pajamas.
They can continue to say, ``We are not going to listen to our engineers
who have told us it is flammable. We are not going to listen to our
engineers who told us that children can catch on fire wearing this
product and the only thing we have to do to fix it is to add a fire
retardant ingredient. Do you know what? We are not going to do it
because we still have that warehouse full of pajamas and we are going
to keep selling them.''
How many young kids would be in danger? That is just one example.
There are literally hundreds of them.
Mr. President, I will conclude simply by saying this legislation is
not necessary, it is not needed, there is not a problem. In addition to
that, it is a bad public policy statement.
I yield the remainder of my time.
[[Page S2357]]
Mr. McCONNELL. Mr. President, this is a historic day. For more than a
decade we have tried to pass product liability reform. In every
Congress, until this Congress, the opponents of reform have mounted
successful filibusters. But this year we broke through the filibuster,
and the Senate passed a modest bill. Now, the conference report is
before us, and we must again break a filibuster.
The American people are frustrated with the legal system. Cases take
too long to resolve and too many injured don't get fairly compensated,
while a few win the lawsuit lottery.
Litigation drains billions from our economy, adding a tort tax to
goods and services. For example, the average price of an 8-foot ladder
is $119.33, but the actual cost is less than $95.00, with the
litigation tax responsible for a 25-percent increase in the cost.
Lawsuits drive the price of a heart pacemaker up 20 percent, from
$15,000 to $18,000.
If we don't fix the problems of our legal system, consumers will have
fewer choices and American companies will have a smaller share of the
global market.
This bill is a significant, although imperfect, step in the right
direction. But before I mention what the bill does, let me explain what
the bill doesn't do. The opponents have scared many into believing that
this bill cuts off the right to sue for injuries. But it doesn't. Those
who are injured by defective products will be able to sue and recover
all of their losses--their lost wages, all medical bills, any costs for
home assistance, and even so-called pain and suffering damages.
This bill does not close the courthouse door to any injured party.
So, there will be no horror stories as predicted by the opponents, of
those injured by cars, household appliances, or workplace machinery
shut out of the legal system. It's simply not true.
The bill does contain a modest limitation on punitive damages, which
are supposed to punish the responsible party, not be a windfall for the
injured party. Punitive damages are limited to the greater of $250,000
or two times compensatory damages. But this bill contains no limitation
on economic damages or pain and suffering damages.
The bill also provides some limited protection to those who have
nothing to do with the defect in the product, but who sometimes get
stuck with the tab in a lawsuit. An injured will be able to recover
from those who are responsible for the defects in the products--the
manufacturers, and not the sellers who simply put the merchandise on a
shelf or in a showroom. And, if the injured party can't find the
manufacturer, or if the manufacturer can't be sued, or if a damage
award can't be collected from a manufacturer, then a product seller
will be responsible. So, injured parties will always be fully
compensated for their injuries. The opponents of this bill are only
scaring and deceiving consumers when they claim this bill will cutoff
the ability of injured persons to recover.
And, this bill make a necessary change in the assessment of pain and
suffering damages against multiple defendants. Each defendant will only
be responsible for its proportionate share of noneconomic losses. This
will, hopefully, discourage suing someone who is only remotely
connected to the defective product on the basis of that defendant's
deep pockets.
Mr. President, the time for this bill is long overdue. The problems
of our legal system--long delays, inefficiency and unpredictability in
getting compensation to those injured--are only getting worse. And that
means more burdens on productivity and invention in our economy.
I regret that the President has announced his intention to veto this
bill, based upon false assumptions about the bill. As I've already
said, the bill won't prevent injured from recovering; it won't limit
the recovery of damages that compensate victims for their injuries. The
President's assertions to the contrary just simply aren't true.
Survey after survey and poll after polls show that the American
people are frustrated by our legal system and particularly dissatisfied
with the legal profession. Those lawyers who misstate the facts about
this bill in an effort to scare the public do their profession a
disservice. Not only does this bill protect the injured party's right
to compensation, but it would also restore some public confidence in
lawyers and the legal system. It is unfortunate there's a failure to
understand this fact at the other end of Pennsylvania Avenue.
I urge my colleague to vote for this conference report. Let the
American people know that this Congress wants to improve the legal
system and protect the injured consumers.
The PRESIDING OFFICER. Who yields time?
Mr. HOLLINGS. Mr. President, I yield 10 minutes to the distinguished
Senator from Michigan.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. LEVIN. Mr. President, I oppose this conference report for a
number of reasons. One of the principal ones is the fact that it does
not provide uniformity when it comes to product liability.
The statement of the managers says that one of its purposes--this is
on page 3--``* * * is to establish certain uniform legal principles of
product liability.'' Its sponsors on the floor have said the same
thing, that it is aimed at providing uniformity when it comes to rules
governing product liability. But, unfortunately, this bill fails to
live up to its own statement of purposes. Indeed, it violates its own
statement of purposes because there is no uniformity that is provided
in this bill. There is no fair balance among the interests of product
users, manufacturers, and product sellers.
This bill has what perhaps could be called a one-way preemption
approach. Under this approach, States are allowed to adopt laws that
differ from the so-called uniform standards, providing that States are
more restrictive on the rights of injured parties. But, if States seek
to be less restrictive on the rights of injured parties, they are then
prevented from doing so. This is not uniformity. This is not a bill
which says that we are going to have a 15-year statute of repose, that
is it, that is what injured plaintiffs have, that is what defendants
can count on. That would be a uniform standard. This bill does
something very, very different from that.
This bill says that if a State wants to be more restrictive than the
provisions of this bill, more restrictive in terms of the ability of
plaintiffs who are injured persons to recover, that they are allowed to
do so. It is only if a State decides they want to be less restrictive
on the rights of injured parties that they are prevented from doing so,
that they are preempted from doing so. That is not uniformity. That is
a one-way street. That is preemption of the rights of injured parties.
I want to go through some of the language in these titles to make
this point clearer, to make the point that we are not going to have one
law that governs all the States. We are not going to eliminate the
patchwork of product liability laws. We are still going to have a
patchwork. We are still going to have States that are more restrictive
than the particular ceiling which is set forth in this statute. There
is not going to be a uniform rule which is fair. There is going to be a
so-called rule, which is applied if this passes, but not really. States
are allowed to be more restrictive if they choose to do so.
Let us take a look at section 106 of this conference report. Section
106 provides that:
Subject to paragraphs (2) and (3), no product liability
action that is subject to this Act concerning a product, that
is a durable good, alleged to have caused harm (other than
toxic harm) may be filed after the 15-year period beginning
at the time of delivery of the product to the first
purchaser. . . .
That sounds pretty uniform. It says, ``Subject to paragraphs (2) and
(3), no product liability action * * * may be filed after a 15-year
period.'' That is the statute of repose. As a matter of fact, the
heading of that section, 106, says ``Uniform Time Limitations on
Liability.'' The word ``uniform'' is right in the heading.
Then you read paragraphs (2) and (3). Paragraph (2) says,
Notwithstanding paragraph (1), if pursuant to an applicable
State law, an action described in such paragraph is required
to be filed during a period that is shorter than the 15-year
period specified in such paragraph, the State law shall
apply. . . .
How do the sponsors use the word ``uniform'' in the title, when in
fact they permit diversity, providing it is downward, providing it is
more restrictive on the rights of injured parties?
[[Page S2358]]
That is allowed. The title ``uniform'' is used, although a patchwork
of laws is permitted, providing they are more restrictive than the 15-
year limit which is provided for in section 106. How is that for a
misleading label? Uniform? There is nothing uniform about it.
My dear friend from West Virginia said this morning that when
products cross State lines, it makes no sense for product liability
rules to be different from State to State. Well, if it makes no sense
for product liability rules to be different from State to State, how
does it then make sense to allow States to be more restrictive than the
15-year statute of repose?
They cannot be less restrictive. They cannot give more rights to
injured parties, only less. But to use the words of my dear friend from
West Virginia, if it makes absolutely no sense for liability rules to
be different from State to State, why then are States allowed to move
in one direction, to be more restrictive under section 106 and section
108 and a whole host of other sections, but they cannot be less
restrictive to persons who are injured?
That is not uniformity. That is uniform unfairness. That is a
consistent unfairness. That is a one-way street. That is a one-way
preemption.
Let us take a look at some other provisions of the law. Section 108
of the conference report contains a provision entitled, again,
``Uniform Standards for Award of Punitive Damages.''
Uniform standards. It is not a uniform standard in section 108. When
you read it, it says, and this relates to punitive damages:
Punitive damages may, to the extent permitted by applicable
State law--
And then it goes on to say what those punitive damages can be. But
State law governs if it is more restrictive. What happens if State law
is less restrictive? What happens if State law is more generous to
injured parties? What happens if State law is tougher on defendants in
terms of punitive damages? That is not allowed. That is preempted. But
if a State law is more restrictive, that is, again, allowed.
That is not uniformity, and if it makes sense for product liability
rules to be uniform from State to State or, to use the words of the
Senator from West Virginia, if it makes no sense for product liability
rules to be different from State to State, then it surely makes no
sense to allow States to vary from the rule downward to be more
restrictive on the rights of injured parties. All they are prevented
from doing is to be less restrictive in terms of the rights of
plaintiffs and injured parties.
Another section, section 110. Section 110 of the bill contains a
provision that limits joint and several liability in product liability
suits. The statement of managers explains that this provision is
intended to preempt State laws that are more favorable to plaintiffs,
but not to preempt State laws that are more favorable to defendants.
Here is what the statement of managers says. It says that the House-
passed version specified that the section, and here we are talking
about the section on joint and several liability, the section--
. . . does not preempt or supersede any State or Federal
law to the extent that such law would further limit the
application of the theory of joint liability to any kind of
damages.
So this section on joint and several liability, according to the
House version, is not intended to limit or preempt or supersede any
State or Federal law if that law further limits--further limits--the
application of joint and several. That is OK. That is OK in the House
version, and then we are told by the statement of managers----
The PRESIDING OFFICER. The Senator's time has expired.
Mr. LEVIN. If I could have 30 more seconds.
We are told by the statement of managers that the language that I
just quoted reflects the conference agreement's intent. It is not just
the House provision, it is the conference agreement's intent.
So, Mr. President, what we have here is not uniformity. We have a
one-way preemption in this bill that allows the State in section after
section after section to be more restrictive of the rights of injured
parties. All that they are preempted and prevented from doing at the
State level is being less restrictive on the rights of injured parties.
That is not fair. That is not uniform. It is one of the reasons I
will vote against this conference report, because even though you can
make out an argument for uniformity, I think there is a good
intellectual argument that can be made for uniformity, if it is true
uniformity, if it applies both ways, to both plaintiffs and defendants,
if it is not just a one-way street that allows States to be more
restrictive but not less restrictive. That is intellectually
defensible.
Whether you agree with it or not, at least it is consistent, at least
there is a coherent logic to it. But to provide, as this bill does,
that State laws which are more restrictive are preempted but not the
ones less restrictive, it is unfair, unbalanced, and it is one of the
reasons I will vote against this bill.
Let us look at one example of how this one-way preemption provision
would work. The bill would override State laws that provide joint and
several liability for noneconomic damages. Joint and several liability
is the doctrine under which any one defendant who contributed to the
injury may be held responsible for 100 percent of the damages in a
case, even if other wrongdoers also contributed to the injury.
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 causing the damage 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. Case and effect often cannot be assigned on a
percentage basis with accuracy. 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, however, does not recognize that in the real world,
multiple wrongdoers may each be a cause of the same injury. It insists
that responsibility be portioned out, with damages divided up into
pieces, and the liability of each defendant limited to a single piece.
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
parties who contributed to the injury, he or she will not be
compensated for his entire loss. The real world result is that most
plaintiffs will not be made whole, even if they manage to overcome the
burdens of our legal system and prevail in court. Isn't it more fair to
say that the wrongdoers, each of whom caused the injury, should bear
the risk that one of them might not be able to pay its share than it is
for the injured party to bear that risk and remain uncompensated for
the harm?
The bill before us completely ignores the complexity of this issue
with its one-way approach to Federal preemption. States which are more
favorable to defendants are allowed to retain their laws. But State
laws that try to reach a balanced approach between plaintiffs and
defendants would be preempted.
Roughly half the States choose to protect the injured party through
the doctrine of joint and several liability. Another half dozen States
have adopted creative approaches to joint and several liability,
seeking to balance the rights of plaintiffs and defendants.
Let me give you a few examples.
Louisiana law provides joint and several liability only to the extent
necessary for the plaintiff to recover 50 percent of damages; there is
no joint and several liability at all in cases where the plaintiff's
contributory fault was greater than the defendant's fault.
Mississippi law provides joint and several liability only to the
extent necessary for the plaintiff to recover 50 percent of damages,
and for any defendant who actively took part in the wrongdoing.
New Jersey law provides joint and several liability in the case of
defendants who are 60 percent or more responsible for the harm; joint
and several liability for economic loss only in the case of defendants
who are 20 to 60 percent responsible; and no joint and several
liability at all for defendants who are less than 20 percent
responsible.
[[Page S2359]]
New York law provides joint and several liability for defendants who
are more than 50 percent responsible for the harm; joint and several
liability is limited to economic loss in the case of defendants who are
less than 50 percent responsible.
South Dakota law provides that a defendant that is less than 50
percent responsible for the harm caused to the claimant may not be
liable for more than twice the percentage of fault assigned to it.
Texas law provides joint and several liability only for defendants
who are more than 20 percent responsible for the harm caused to the
claimant.
All of these State laws are efforts to address a complex problem in a
balanced manner, with full recognition of factors unique to the State.
To the extent that they are more favorable to the injured party than
the approach adopted in this bill, however, they would all be
preempted.
On the other hand, other States, which take a more restrictive view
of joint and several liability, or even prohibit it altogether, would
be allowed to retain their individual State approaches. That just does
not make sense.
Mr. President, there is a list of problems in our legal system that
we could all go through. Going to court takes too much time and it
costs too much money. Some plaintiffs get more than they deserve, while
others who suffer injuries may spend years in court but recover nothing
at all. As Senator Gorton, one of the lead authors of the bill before
us, explained during last year's debate on the Senate bill:
[T]he victims of this system are very often the claimants,
the plaintiffs themselves, who suffer by the actual
negligence of a product manufacturer, and frequently are
unable to afford to undertake the high cost of legal fees
over an extended period of time. Frequently, they are forced
into settlements that are inadequate because they lack
resources to pay for their immediate needs, their medical and
rehabilitation expenses, their actual out-of-pocket costs.
I agree with Senator Gorton that there is unfairness in our current
legal system. There is unfairness to defendants in some cases, and
there is unfairness to plaintiffs in other cases. However, the
conference report before us does not even attempt to address the
problems faced by plaintiffs. There is absolutely nothing in this bill
to assist those who have been hurt by defective products and face the
difficult burdens of trying to recover damages through out legal
system.
On the contrary, the bill makes every effort to override State laws
which attempt to help the victims of defective products. Only laws that
make it harder for the injured party to obtain compensation are
permitted. That is not uniform, it is not fair, and I cannot support
it.
The PRESIDING OFFICER. Who yields time?
Mr. GORTON. I yield such time that the Senator from North Dakota may
desire.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I appreciate the Senator yielding time. I
would like to ask a series of questions about the bill and about one
section of the bill specifically.
I voted for this bill and move the bill to conference. I am inclined
to vote for cloture today. But I have reviewed what came out of
conference, and one area gives me some concern. I want to go through it
with the Senators on the floor, especially Senator Gorton.
There is on page 6 of the bill that the Senate passed an exclusion
for the term ``product.'' The bill included on the bottom of page 6
under (ii), the exclusion reading: ``electricity, water delivered by a
utility, natural gas or steam.''
We were clearly deciding that these utilities were not covered as
products in this bill.
The bill came back from conference with that provision. However, a
new clause was added. The same words existed-- ``electricity, water
delivered by utility, natural gas or steam.'' This is in the part of
the bill which is defining what is excluded from the bill. That is what
the Senate passed.
But the conference report comes back with the same words but goes on
to say: ``except * * *'' In other words, we are excluding utilities
``except to the extent electricity, water delivered by a utility,
natural gas or steam are subject, under applicable State law, to a
standard of liability other than negligence.''
Forty-four States have such standards; 18 of them have been litigated
on the subject of electric utilities. It appears to me that what the
conference has done in this section is added utilities as being covered
by this bill. I have asked questions of half a dozen experts in the
last 24 to 48 hours, and the answers I get are not satisfying. The
answers I get are, ``Well, that's what the words say, but that's not
what it means.'' I am assuming courts will say this means what it says,
not what someone says it means. So I want to go through a couple of
questions.
I ask the Senator from the State of Washington, how is the provision
that went into conference different from the provision that came out?
When it went in, it said ``electricity, water delivered by a utility,
natural gas and steam'' are excluded. Period. They are not part of this
bill. When it came out, it seems to say they are now a part of this
bill, which is a major change.
Mr. President, I ask that we might have an interchange. I ask the
Senator from Washington if he can respond to that for me.
Mr. GORTON. I can. I would start by referring the Senator from North
Dakota back to page 6 of the original bill, the bill that passed the
Commerce Committee, on which both of us serve, and passed this body,
the Senate, unchanged and to look at the entire subsection (B),
entitled ``Exclusion.'' The Senator from North Dakota will see in that
exclusion.
The term ``product'' does not include,
(i) tissue, organs, blood, and blood products used for
therapeutic or medical purposes, except to the extent that
such tissue, organs, blood and blood products (or the
provision thereof) are subject, under applicable State law,
to a standard of liability other than negligence.
It goes on to say,
[And] (ii) electricity, water delivered by a utility,
natural gas, or steam . . .
The next reference that I would make to the Senator from North Dakota
is in the Senate committee report on that bill. On page 24 of the
Senate committee report on the bill that passed the Senate here, in
subsection (ii), the explanation under the term ``product'' there is,
for all practical purposes, word for word this exclusionary language,
particularly the last two sentences.
The term does not include tissue, organs, blood and blood
products used for therapeutic or medical purposes, except to
the extent that such tissue, organs, blood and blood
products, or the provision thereof, are subject under
applicable State law to a standard of liability other than
negligence.
In other words, the same word is in the statute.
The term also does not include electricity, water delivered
by a utility, natural gas or steam.
There is a footnoted comment. And the footnote reads:
Claims for harm caused by tissue, organs, blood and blood
products used for therapeutic and medical purposes are, in
the view of most courts, claims for negligently performed
services and are not subject to strict product liability. The
act, thus, respects State law by providing that in those
States, the law with respect to harms caused by these
substances will not be changed. In the past, however, a few
States have held that claims for these substances are subject
to a standard of liability other than negligence, and this
act does not prevent them from doing so. Such actions would
be governed by the act. Actions involving claims for harms
caused by electricity, water delivered by a utility, natural
gas or steam are treated in the same manner.
When this went to conference--we had the better part of a year to
read through every detail--the proposition, the meaning of this bill,
as it passed the Senate, showed up in the proposition that this
exception appeared in subsection (i) on page 6. It did not appear in
subsection (ii). The same words have now been added to subsection (ii),
which simply accords with the committee report interpretation of the
language that we passed here in the Senate.
So the fundamental answer at this point to the question that is
raised by the Senator from North Dakota is that this change does not
change the meaning of the act as it was set out in the committee report
to the original Senate bill. State law, in other words, in each of
these cases, whether it is tissue or electricity, State law will
govern.
If a State passes a law that says electricity is a product, yes, it
would be
[[Page S2360]]
governed. If that State consciously decides to treat electricity as a
product, then it would be a product under this bill. But these strict
liability States, you know, do not do that. It leaves it entirely up to
North Dakota or California or to Washington or West Virginia to make
that determination. If it wishes for strict liability, it can impose
strict liability. If it wants to call it a product--I do not know of
any that do--but if it wants to call it a product, it can bring it up
to this bill. That is up to the State.
Mr. DORGAN. You are arguing one of two things. Either you are making
the case that utilities are defined as a product under the bill, as
originally passed by the Senate, because of a footnote on page 24 of
the committee report. In other words, you are saying that utilities
would not be excluded from the definition of the term product but, in
fact, are covered by this bill. Therefore, what came back from the
conference is not a change. That might be what you are arguing. I do
not think that is the understanding of most Members of the Senate.
I think, having read what left the Senate on its face--it says on
page 6, ``Exclusion,'' that is, an exclusion not to be treated as a
product includes:
(ii) electricity, water delivered by a utility, natural
gas, or steam.
You might be arguing, I think, that although we might have read that
as an exclusion, it never really was. Utilities were really going to
come under this. We just did not understand the application of the
footnote on page 24, or you are making the case now that what has been
done in conference has no impact at all on what the language really
means. What you are saying then is that utilities are truly excluded,
and what you have done comports with the description under ``tissues,
organs and blood,'' and your intention is to make sure that utilities
are not defined as a product but, in fact, are a service and are,
therefore, excluded under the definition section of this bill. I am not
sure what you are saying.
Mr. GORTON. I would say the second is correct, with the exception if
a State wants to define it as a product and bring it under this bill,
they can.
Mr. DORGAN. But that is not what the language says. It says it is
excluded unless the State defines it with a standard of strict
liability.
I am saying to you that there are 18 States that already have this
with respect to electric utility cases alone. Are you saying, the way
you have written this, those 18 States have already decided this bill
will cover electric utilities? If that is the case, that is a
remarkable change from what left the Senate.
Mr. GORTON. I am sorry.
Mr. DORGAN. Let me try it one more time. The Senator is saying the
States can make the decision whether utilities are excluded or not. The
bill passed by the Senate was very simple. On page 6--it cannot be
misread, notwithstanding any other footnotes in some other committee
report--it says:
Exclusion.--The term [product] does not include--
electricity, water delivered by a utility, natural gas or
steam.
That is what the Senate passed. I am coming to the floor to ask the
question, has that dramatically changed so that in fact utilities are
no longer excluded? Did somebody lift up the flap on the tent and
utilities snuck in to get a massive exclusion under this bill? If that
is the case, then I am very concerned about this. What I am hearing
from people is to say, ``no, it kind of reads that way, but that is not
really the effect of it.''
I do not have the foggiest notion of how one relates to the
contradiction between how something reads and how someone intended it.
That is why I am asking the question of, what is your intent? Is it
your intent that just as in the bill passed by the Senate, it is your
intent that the exclusion means that utilities will be excluded,
period?
Mr. GORTON. I am sorry. Repeat it again.
Mr. DORGAN. Is it the intent, just as in the bill that was originally
passed by the Senate, that the exclusion under (B), page 6, would still
remain, that electricity, water delivered by a utility, natural gas and
steam are, in fact, excluded? They are not products? Is that the intent
of the people that wrote whatever they wrote in this conference?
Mr. GORTON. Well, first I need to say that no outside group came and
asked whatsoever.
Mr. DORGAN. I did not say ``outside group.''
Mr. GORTON. The intent of the conference committee drafters was to
see to it that subsection (i) and subsection (ii) read the same way,
because we had already described them as having the same meaning in the
original Senate bill. There was an inconsistency. There they were
described in the Senate bill, conference report, as having exactly the
same meaning. So there is a change only to the extent that something
was already gone with respect to tissue, organs, and blood.
Mr. DORGAN. But you cannot describe in the conference report what the
language means. The language means what it says it means.
My question, first, is, when this language left the Senate, did it
mean that utilities were excluded from the definition of products? I
thought it meant that. Most Members of the Senate thought it meant
that. That is what I think it says. Do you believe that is what it
says?
Mr. GORTON. I think that is the case not only with electricity but
with respect to tissue, organs, and blood.
Mr. DORGAN. That is fine. I am not interested in those, but I am
interested in electricity.
Mr. GORTON. Let me finish. I think it is exactly the same exclusion
for both unless a State legislature has determined that they ought to
be considered products. That is a privilege that the State legislature
has now and retains under this bill.
Mr. DORGAN. That is not what the law says that you are asking us to
vote on, as written. You are not talking about whether the State wants
to determine if it is a product. You are talking about the question of
the standard the State determines, appropriate.
There are certain kinds of things that are very dangerous and high
risk that the States determine it wants an elevated standard of
liability. It's called a strict liability standard. The way this is
written, you are saying that utilities are excluded as products under
this bill. They are excluded. They are not involved in this bill,
except if a State determines that their standard is one of strict
liability, then they are considered as products.
What you have done, you have swept claims against utilities under the
bill. My point is, 18 States have already determined that in their
courts with respect to claims against electric utilities alone, 14 have
permitted strict liability in claims against natural gas utilities and
11 have allowed the same standard of strict liability on water utility
cases. The fact is that there have been court cases and legislation on
this very point. Thus, it appears it is already determined that claims
against utilities are going to fall under the definition of
``products'' under this bill. I am not trying to be antagonistic. I
voted for cloture before, and I voted for this bill on final passage. I
want to understand whether somebody decided to bring a big moving van
here and move something into this bill that no one on the floor
understands. The ``moving van'' means loading up utility interests and
putting it in.
Let me frame it in as simple a way as I can. Is it the intention of
those who wrote this when it left the Senate, is it the intention that
utilities shall not be considered a product? Is it the intention that
the language as written--it says under ``exclusion'' on page 6 that
utilities are not part of this bill. They are not a product. They are
excluded, period, end of sentence, just declarative, end of sentence.
If that is the case--I want the answer to that--if that is the case,
one says that judgment has not changed, how do we reconcile that with
the changed language? That is what I am trying to understand. I am not
trying to take up anybody's time or cause trouble. I am trying to
understand exactly what this does and means with respect to utilities.
I may be putting whoever is listening to sleep, I am sure, but it is
very important.
Just parenthetically, while I am asking this question, I think this
is one of those interesting issues where there is a little bit of truth
on all sides, frankly. I know both sides immediately just separate and
say, ``Well, you are wrong; we are right,'' and, ``We are wrong; you
are right.'' The fact is there
[[Page S2361]]
is a little bit of truth on the product liability issue in general.
There are too many lawyers in America too prone to file lawsuits. I
understand all that. I do not want to injure anybody's rights to
redress for grievance in our court system if they get a defective
product.
I have advanced this bill because it was narrow enough, to me, and
because I thought it was a reasonable approach. When I see the
conference report, first of all, nobody pulled this out for us to say
this was a change. However, the more I look at it, the more it occurs
to me that something has happened here that is of concern. I am trying
to understand what it is because you are dealing with a very large
industry--the electricity and the utility industry--and something has
changed this definition.
So, I know that the Senator from South Carolina wanted to ask a
question, but I have the two questions I want to ask: First, is it the
understanding of the folks that wrote this when we originally dealt
with it in the Senate that the exclusion--very straightforward on page
6--meant that we were excluding utilities? End of the story. That was
my notion. I voted for it. Was that the notion that everyone else had
who wrote this? It is pretty hard to misread it. Even if you have page
24 of the conference report, it is not hard to misread what it says. It
says:
Exclusion.--The term ``product'' does not include electricity, water
delivered by utility, natural gas or steam.
Is your understanding the same as mine, that under that bill
utilities were excluded? They were not to be considered products for
this bill? I ask the Senator from Washington.
Mr. GORTON. My understanding was that it was the meaning as is stated
in the conference committee report of the original bill that they were
excluded unless the State had defined them as a product and had
subjected them to strict liability. That was the meaning of the
original bill and the meaning of this bill.
Mr. DORGAN. But the original bill was not written that way or
understood that way by this Senator.
Is it your understanding there are many States that have adopted a
standard of strict liability, which would mean that the way you
interpret the provision in the original bill would redefine utilities
as a product and provide for utilities protection under this bill?
Mr. GORTON. Do I have a specific understanding of that or can I name
the States? I would have to answer the question ``no.'' The committee
report, which I believe to be accurate, says that most of the courts in
most States treat these matters as matters that are subject to a
negligent standard, not to a strict liability standard. Certainly there
are some States treating them as strict liability.
Mr. DORGAN. But those who do adopt a strict liability standard,
because these are kinds of activities that have a potential for greater
danger and so on, is it the intention of those who have authored this
to say for those States that adopted that standard of strict liability
that we will offer protection of the utility industry under this bill?
I think, frankly, that is a substantial departure from what most
people in this Senate would understand. I had thought originally some,
incidentally, whom I have consulted with in the last 2 days or day on
this, they say, ``No, you do not understand this. We do not really mean
utilities fall under this bill.'' That is comforting to me, except the
language seems at odds with that.
I think what Senator Gorton is saying is the way I read it, that
those many States who have decided on the standard of strict
liability--and there are many of them--will be told by this piece of
legislation that utilities, for them, will now be a product whose
interests will be protected by the limitations in this bill, and I
daresay, I do not think there are two Senators on the floor of the
Senate that understand that to be the case.
Can you respond to that? I am not trying to cause trouble for you. I
want to understand exactly what we are doing.
Mr. GORTON. The answer to the question of the Senator from North
Dakota is that in such States, such States are subject to the
restrictions of this bill, exactly as they were under the intention of
the bill as it was originally passed by the Senate Commerce Committee
and by the Senate itself, as is evidenced by the Senate committee
report, and that the change in the statutory language was simply to
conform the statutory language with the intention expressed in the
committee report.
Mr. DORGAN. We are both on the Senate Commerce Committee. I ask, do
you think it was or is the intention of the Senate Commerce Committee
to provide protection for utilities under product liability?
Mr. GORTON. Under the same circumstances that it would provide it for
any other similarly situated organization, providing product liability
provides it for any manufacturer, or for that matter, distributor, no
matter how large or how small.
The direction of the bill, the direction of a product liability bill
is to provide a degree of predictability and a protection of the
consumer interest for the producers of goods--not services in this
case--goods. If this is the description that a State uses for its
utilities, yes, the committee did intend to provide exactly that
protection, and that is exactly what the committee report says.
Mr. DORGAN. Well, the bill that we passed in the Senate Commerce
Committee that came to the Senate floor that I supported said this, and
said only this; it had no caveats, no exception, no exclusions. It said
on page 6, ``Exclusion. The term `product' does not include
electricity, water delivered by utility, natural gas or steam.''
The answer I am hearing from the Senator from Washington now is that
you would have had to understood more than this language in order to
understand the importance of it, because you are saying that this
really meant except those 44 States, 18 of whom already had court cases
on the issues of standard of strict liability on electric utilities.
Those that adopt a standard of strict liability will find that
utilities in their States have their products or their services defined
as products in this bill.
There is something wrong here. There is something that does not
connect. I am trying to understand, because I have been a supporter,
and I am trying to understand what does not connect here. What are we
trying to avoid by including the exception? I come from a school of
nine people in my graduating class, and we did not have the highest
math there or advanced reading, but I understand what I read, and it
says, ``the term 'product' does not include electricity, water
delivered by utility, natural gas or steam.'' Period, end of story.
I voted for that. I say I agree with that. Utilities are not covered
as products because they are in the section called ``Exclusion.'' Now I
am hearing a description that says, ``No, you only read what was in the
law. There was something else behind it.'' So I am just trying to
understand where we are. If someone can enlighten me. Where are we with
respect to utilities?
Mr. HARKIN. Will the Senator yield for a question?
Mr. HOLLINGS. Will the Senator yield?
Mr. DORGAN. I guess. I do not know that you will enlighten me.
Mr. HARKIN. I have never heard of this. Can I ask a question?
Mr. DORGAN. Well, who has the floor, Mr. President?
The PRESIDING OFFICER (Mr. Jeffords). The time is under the control
of the Senator from South Carolina.
Mr. HOLLINGS. I will yield on my own time just a minute. I say to
Senator Dorgan, he is right on target. In the zeal to avoid using what
is intended--namely, the expression of strict liability and nuisance--
for utilities, as put in the juxtaposed position in this language,
where you have two exceptions, almost like a mathematical case of two
negatives making a positive. Yes, positively, utilities are covered,
wherein they have strict liability on nuisance tests. I have here in my
hand a majority of States that do have it.
I ask unanimous consent to have this printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[[Page S2362]]
THE FOLLOWING CHART INDICATES WHERE A CAUSE OF ACTION UNDER STRICT LIABILITY CAN BE BROUGHT BY AN INJURED PARTY
----------------------------------------------------------------------------------------------------------------
State Natural Gas Electricity Water
----------------------------------------------------------------------------------------------------------------
Alabama
Alaska.............................. ........................ ....................... State Farm v.
Municipality of
Anchorage, 788 P.2d
726, 729.
Arizona............................. Mast v. Standard Oil ....................... Ramada Inns., Inc. v.
Co., (1983) 140 Ariz Salt River Valley
19; 680 P.2d 155 Water Users' Assn',
523 P.2d 496, 498-99
(Ariz. 1974).
California.......................... Davidson v. American Pierce v. Pacific Gas & Transamerica Insurance
Liquid Gas Corp. (1939) Electric Co. (1985, 3d Co. v. Trico
32 Cal App 2d 382, 89 Dist) 166 Cal App 3d International Inc.,
P2d 1130. 68, 212 Cal Rpt 283, (1985) 149 Ariz. 104;
CCH. 716 P.2d 1041.
Colorado............................ Blueflame Gas, Inc. v. Smith v. Home Light & Barr v. Game, Fish &
Van Hoose (1984, Colo) Power Co., (1987, Parks Comm'n, 497 P.2d
679 P2d 579. Colo) 734 P2d 1051, 340, 343 (Colo. Ct.
CCh. App. 1972).
Garnet Ditch &
Reservoir Co. v.
Sampson, 110 P. 79, 80-
81 (Colo. 1910).
Connecticut......................... Dunphy, et al vs Yankee Carbone v. Connecticut
Gas Services Co., Light & Power Co.
(1995) Conn. Super. (1984) 40 Conn Supp
Docket No. CV94- 120, 482 A2d 722
0246428S.
Delaware............................
(2) Does not recognize strict
liability in Tort For Products
Liability Actions
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois............................ Decatur & Macon County Troszynski v.
Hospital Asso. v. Erie Commonwealth Edison
City Iron Works (1966, Co., 356 N.E.2d 926.
4th Dist) 75 III App 2d 923 (III. App. Ct.
144, 220 NE2d 590. 1976)
Genaust v. Illinois
Power Co. (1976) 62
III 2d 456, 343 NE2d
465..
Cratsley v.
Commonwealth Edison
Co. (1976, 1st Dist)
38 III App 3d 55, 347.
Elgin AIrport Inn, Inc.
v. Commonwealth Edison
Col. (1980, 2d Dist)
88 Ill App 3d 477
Indiana............................. Southern Indiana Gas & Petroski v. Northern
Electric Co. v. Indiana Indian Public service
Ins. CO. 91978) 178 Ind COmpany (Ind. App.
App 505, 383 NE2d 387. 1979) 396 N.E. 2d 933
Public Service Indian,
Inc. v. Nichols (1986,
Ind App) 494 NE2d 349
Hedges v. Public
Service Co. (1979, Ind
App) 396 NE2d 933.
Iowa................................ Pastour v. Kolb Hardware
Inc, (1969, Iowa) 173
NW2d 116.
Koppinger v. Cullen-
Schiltz & Associates
(1975, CA8 Iowa) 513
F2d 901.
Kellar v. Peoples
Natural Gas Co., (1984)
352 N.W.2d 688.
Kansas.............................. .Worden v. Union Gas
System, Inc. (1958) 182
Kan 686, 324 P2d 501
Williams v. Amoco Prod.
Co., 734 P.2d 1113,
1121-23 (Kn. 1987)
Kentucky............................ ........................ Bryant v. Tri-County Winchester Water Works
Elec. Membership v. Holliday 45 S.W.2d
Corp., 844 F. Supp. 9, 10-11, (Ky. 1931).
347, 351.
Louisiana........................... American secur. Ins. co. Sessums v. Louisiana
v. Griffith's Air Power & Light Co.
Conditioning (1975, La (1981, CA5 La) 652 F2d
App 3d Cir) 317 So 2d 579 cert den 455 US
256. 948, 71 L Ed 2d 661,
102 S Ct 1448
Maine
Maryland............................ Dudley v. Baltimore Gas Voelker v. Delmarva
& Elec. Co., 98 Md. Power & Light Co., 727
App. 182, 632 A.2d 492. F. Supp 991, 994
Minnesota
Mississippi
Missouri............................ McGowen v. TriCounty Gas Hills v. Ozark Border Amish v. Walnut Creek
Co. (1972, Mo) 483 SW2d Electric Cooperative Dev., Inc. 631 S.W.2d
1 91986, Mo App) 710 866, 871 (Mo. Ct. App.
Crystal Tire Co. v. Home SW2d 338. 1982)
Service Oil Co. (1971, Covington v. Kalicak,
Mo) 465 SW2d 531 319 S.W.2d 888, 894
(Mo. Ct. App. 1959)
Montana
Nebraska............................ ........................ Rodgers v. Chimney Rock
Public Power Dist.
(1984) 216 Neb 666,
345 NW2d 12
Nevada
New Hampshire
New Jersey.......................... ........................ Aversa v. Public
Service Electric & Gas
co., 186 N.J. Super,
30, 451 A.2d 976
(1982)
Huddell v. Levin, 537
F.2d 726 (3 Cir. 1976)
New Mexico
New York............................ ........................ Farina v. Niagara Pixley v. Clark, 35
Mohawk Power Corp. N.Y. 520, 531 (1866)
(1981, 3d Dept) 81 App
Div 2d 700, 438 NYS2d
645.
North Carolina......................
(2) Does not recognize strict
liability in Tort For Products
Liability Actions
North Dakota
Ohio................................ ........................ Otte v. Dayton Power &
Light Co., (1988) 37
Ohio St 3d 33, 523
NE2d 835
Oklahoma
Oregon.............................. McLeane v. Northwest ....................... Union Pac. R.R. v.
Natural Gas Co., 467 Vale, Oregon
P.2d 635 (Or. 1970). Irrigation Dist., 253
F. Supp. 251, 257-58
(D. Or. 1966).
Pennsylvania........................ ........................ Schriner v. Pa. Power &
Light Co. 501 A.2d
1128, 1134 Pa. Super.
Ct. (1985)
Carbone v. Connecticut
Light & Power Co., 40
Conn Supp 120, 482 A2d
722 (1984)
Smithbower v. S.W.
Cent. Rural Elec. Co-
op., 374 Pa. Super.
46, 542 A.2d 140,
appeal denied 521 Pa.
606
Rhode Island
South Carolina...................... ........................ Priest v. Brown 91990,
SC App) 396 SE2d 638
South Dakota
Tennessee
Texas............................... Smith v. Koening (1965, Houston Lighting & Anderson v. Highland
Tex Civ App) 398 SW2d Power Co. v. Reynolds; Lake CO., 258 S.W.
411. (1986) Tex App Houston 218, (Tex. Ct. App.
(1st Dist)) 712 SW 22d 1924).
761. Texas & Prac. Ry. v.
Frazer, 182 S.W. 1161,
1162 (Tex. Ct. App.
1916).
Utah................................ ........................ ....................... Zampos v. U.S.
Smelting, Ref. &
Mining co., 206 F.2d
171, 176-77 (10th Cir.
1953).
Vermont
Virginia............................
(2) Does not recognize strict
liability in Tort For Products
Liability Actions
Washington.......................... Zamora v. Mobil Corp. ....................... Johnson v. Sultan Ry. &
(1985) 104 Wash 2d 199, Timber Co., 258 P.
704 P2d 584 1033, 1034-35 (Wash.
New Meadows Holding Co. 1927).
v. Washington Water
Power Co., 687 P.d 212,
216 (Wash. 1984)
West Virginia
Wisonsin............................ ........................ Ransom v. Electric
Power co., (1979) 87
Wis 2d 605, 275 NW2d
641.
Koplin v. Pioneer Power
& Light Co. (1990,
App) 154 Wis 2d 487,
453 NW2d 214..
Kemp v. Wisconsin
Electric Power Co.
(1969) 44 Wis 2d 571,
172 NW2d 161.
Wyoming............................. ........................ Wyrulec Co. v. Schutt
(1993, Wyo 866 P2d
756.
----------------------------------------------------------------------------------------------------------------
Mr. HOLLINGS. I reserve the remainder of my time.
Mr. DORGAN. Mr. President, let me continue to inquire. I will not
take much more time. I still do not understand the answer. Is the
answer that the utilities essentially are providing services and are
therefore not covered as products under this bill?
If that is the case--and that is what I thought was the case--then
fine. But there is extra language here, where there needs to be a
record in the Senate, that says here is exactly what this legislation
means. If we have a circumstance where we are saying in 44 districts
they have strict liability, the services of a utility are now put under
the entire provisions of this law, that is a substantial change.
[[Page S2363]]
Mr. GORTON. Let me summarize a response to the general concern
expressed by the Senator from North Dakota. Generally, at least in
common law, the provision of electricity has been considered a service.
The provision of the service is not governed by strict liability.
Strict liability is a concept that applies to products.
A number of States have determined that there should be a standard of
strict liability applied to electricity and, for that matter, to the
delivery of blood, the subjects of the first subsection of that
section. If a State treats as a product the delivery of electricity, or
the supply of blood, and subjects it to strict liability, it is subject
to the provisions of this act. It was meant to be subject to the
provisions of this act by the bill as it was reported from the Commerce
Committee. It is included as a part of the Commerce Committee report.
It was noticed simply by someone on the staff that, for some reason or
another, subsection (2) omitted the language that was in subsection
(1), and it was added during the course of the drafting of the
conference committee report. That was not intended to create any
difference in the way in which the bill would have been interpreted, in
any event. It was intended to bring it into conformity with the
committee report, and it has done so. But if the fundamental question
of the Senator from North Dakota is, if a State imposes strict
liability under these circumstances and treats electricity as a
product, it is subject to those provisions, and I say ought to be.
Mr. DORGAN. Imposing strict----
Mr. GORTON. If I can say one other thing, obviously, this question
did not come up during the long debate we had a year ago. If it had, to
the best of my ability, I would have answered the question of the
Senator the same way I am answering now. That is what was meant. Had I
memorized this footnote at the time? No, I had not. I would have had to
refer to it, but I would have come up with the same answer.
Mr. DORGAN. The State deciding to adopt strict liability with respect
to a utility does not put it in the category of products. I do not
understand the mixing of the two.
Let me take it one step further then. If that is the case, what would
the logic be in saying to a State that because it decides to impose a
standard of strict liability on utilities--because potentially you have
some very hazardous kinds of circumstances that can exist with respect
to electricity, steam, natural gas, and so on. But because a State
decides to impose strict liability on that, what would be the logic of
saying, by the way, you decided to do that, therefore, we will put the
utilities under the protection of this law. I do not understand the
logic of attaching that.
Mr. GORTON. Exactly the same logic that applies to the entire bill.
If the utility manufactured a toaster, which is clearly a product, and
gave it as a bonus to its customers, that product would be subject to
this bill. The whole logic of the bill is to provide a degree of
predictability to the law from State to State, which does not exist at
the present time. That logic is every bit as applicable to a utility as
it is to General Motors or to a small business that is engaged in
retail sales.
Mr. DORGAN. Mr. President, I will not take this further. But I say
there is a substantial difference between utilities and toasters. The
reason I supported the bill is I think there has been too much
litigation in this country; some of the litigation is totally
inappropriate. I supported it on that basis, to create a reasonable
response without abridging the rights of the people who want to sue,
yet trying to reduce the number of lawsuits in our country. I felt that
was appropriate.
I am surprised at the description of what the exclusion means on page
6 of the bill, as originally passed in the Senate. The answer to the
question I am asking this afternoon is that the new language in the
conference report does not alter what the old language intends to do.
It was so clear on its face. It says ``exclusions.'' The term
``product'' does not included electric and water delivered by utility,
natural gas, or steam--period, end of section, end of story. There is
nobody in my hometown who could misread this. And I did not misread it,
I do not think.
The answer now, I guess, is that the added language of that section
does not change the intended section because the section was intended
to mean something that did not comport with the way it was read.
So I guess legislation is a strange process. I am trying to
understand what exactly does this bill do as we move along. There is
plenty in the bill I am satisfied with. I commend those who have
created some provisions of this bill that I think advance the interests
most of us want to find common interest on. But I think it is obvious
from the discussion that there is a substantial amount of
misunderstanding about what this exclusion means with respect to
utilities.
Mr. GORTON. Let me try one other approach to this subject because it
applies equally to the two subsections of this section. The whole
concept of many of these damages, especially punitive damages, is a
concept that is based on a company doing something wrong--in our case,
and from some of the definitions, egregiously wrong. It is based on
negligence or gross negligence. When a State or a given organization is
subject to a standard of strict liability, it is liable for all of the
damages that it causes to an individual--in this case, using whatever
it is that the company produces, regardless of whether it is negligent
or not. It may have engaged in the highest standard of safety available
for such an organization. Yet, a legislature or a Congress has
determined that, for some reason or another, the whole cost, all of the
damages created by that organization, ought to be imposed on the
organization, without regard to its having done anything wrong. That is
what strict liability means.
You do not have to prove negligence or that there was anything wrong
at all with what the particular organization did. You are still going
to hold it liable. Well, that is the reason for the first subsection.
Under those circumstances, it seems quite logical that you are not
going to be required to pay for more than the damages that were
actually created.
Mr. DORGAN. If I may finally say, you are absolutely correct about
strict liability. But the reason for the standard of strict liability
is that there are some kinds of activities that are sufficiently
dangerous and contain sufficient risks that a strict liability standard
has been determined to be in the public interest.
What I think you are saying is if, in the case of utilities, a State
determines that a strict liability standard is appropriate, that is the
same as a State defining a utility as a product. There is no
relationship between the standard and the product. I think most of us
believe----
Mr. GORTON. But it seems to me, I say to the Senator from North
Dakota, there is a relationship between the standard and what kind of
damages ought to be allowed over and above the actual losses suffered
by the victim.
Mr. DORGAN. That is a different issue. The issue is under exclusion.
The term ``product'' does not exclude what? The Senate has determined a
product does not exclude utilities--the Senator has been patient. I am
trying to understand exactly the consequences of this legislation. It
is, while a boring subject for some, nonetheless a very important
subject with a lot at stake for the American people.
Last evening, I read a fair amount about this. It is not fun reading.
It is not a page-turner. But while I was struggling through it, I was
trying to understand exactly what we have done and what the
consequences will be. I personally think there is room for product
liability reform, and I have voted that way and likely will continue
to. I am very concerned about that, and I will continue visiting with
the Senator about it.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. HOLLINGS. I yield 15 minutes to the distinguished Senator from
Iowa.
Mr. HARKIN. I thank the Senator. I have listened very carefully to
the preceding colloquy, and I must say that I read both the House and
the Senate version of that, and I read what came in afterward in the
conference report. Quite frankly, I was opposed to this bill before,
and now even more so, because I think it is clear what happened in
conference.
As we have said now, 44 States, as I understand it, have strict
liability
[[Page S2364]]
laws. Now those utilities will come under the purview of this bill and,
therefore, it will cap damages to the extent that it is my
understanding now that, under this bill, for example, the Seminole
pipeline and natural gas facility in Texas, exploded in 1992, killed
three, injured a lot, caused a lot of damage in two counties, and a
jury awarded $46 million in punitive damages. It is my understanding
that now, under this bill, that will not be able to happen after this.
So I thank the Senator from North Dakota for bringing that out. I had
not focused on that before.
Mr. President, I want to say that the debate over product liability
has been clouded by misinformation and anecdotal evidence, which is
substituting for a careful consideration of the facts.
Mr. President, you know, every time a jury is impaneled, they are
told by a judge they should consider only the facts, not hearsay, not
speculation, but only the facts. Well, Mr. President, we are sort of
sitting as a jury here. We ought to consider the facts. But what we
have before us in this legislation--what we are hearing is hearsay,
speculation, and a distortion of the truth. If, in fact, this Senate
finds in favor of the conference report, and we were a jury, the judge
would be well within his purview to dismiss the jury for not adhering
to the instructions of the court and following the facts of the case.
It is wrong for a jury to decide on anything other than the facts,
and it is wrong for us to legislate based on anecdote and
misinformation, but that is what we are doing. This is not commonsense
reform. This is nonsense regression. This bill ought to be called the
caveat emptor bill of 1996, throwing us back to the old days when it
was buyer, beware. If you bought something and it hurt you, tough
luck--buyer, beware. That is what this bill is about. It turns back the
clock years.
In the midst of all the legalese, it is hard to sort out what is
really at stake here. It is really very simple. We are talking about
people's lives. We are talking about their health, and we are talking
about their happiness and about families.
This bill is about as antifamily, antihuman rights as I have ever
seen. What the bill does is places economic worth on a higher plateau
than individual work. I find that totally objectionable.
We have heard a lot of words about the need to promote values of
greater responsibility and accountability. If you believe in those
values, you ought to oppose this bill because it absolves wrongdoers
from responsibility and does not hold them fully accountable for their
actions.
We have heard a lot of talk about sending more power to the States.
If you are for that, you ought to oppose this because this puts power
in Washington. We have heard a lot of talk on the floor about putting
more power in the hands of the people. If you believe in that, you
ought to oppose this legislation because this takes power out of the
hands of citizens and juries and puts it in the hands of big
Government. Plain and simple, this bill is big Government, big
business, and it is a big mistake.
Now, of course, most businesses do not set out to harm consumers with
their products. Obviously not. But sometimes faulty products do make it
to the market, and sometimes they make it to the market through
carelessness or through sheer disregard of the public safety by those
manufacturers. Sometimes people get hurt and die because of it. In the
zeal to pass this conference report, let us not pass over the victims.
There is a lot of talk about the victims. Let us talk about the
victims--the children severely burned by highly flammable pajamas,
women who die from toxic shock syndrome, women with silicone breast
implants who have now lupus and scleroderma.
Again, I want to make it clear that most businesses are responsible.
Most businesses take due care and concern. But there are those who do
not. The current product liability system is based on a fundamental
premise that we want to make sure that people--average citizens of this
country--have the assurance that when they buy a product, when children
consume a product, when they travel on our highway, they can be
reasonably certain that what they are using, consuming, or buying is
not going to harm them.
Part of that is our responsibility, and that is why we have health
and safety and food inspection laws. That is why we have left untouched
in our country the common law that we inherited from Great Britain that
goes back several hundred years, the concept of tort feasor, the
concept that someone must take due care or concern that his actions do
not harm others, and if they do, that person must be held accountable
and responsible. Those are the core values embodied in our Nation's
laws. It is the essence of the common law. It goes back several hundred
years.
My friend from North Dakota said we have too many lawyers in this
country. I do not know about that, but I do believe that more knowledge
of law and a love and respect of law--and especially the common law
that we have inherited--makes us a more decent and a more law-abiding
citizenry. That is what we are forgetting here. We are forgetting the
history of tort feasance. For the life of me, I do not understand how
people argue about we ought to be personally responsible and now saying
we do not have to follow that admonition.
With this legislation, we all know that punitive damages awarded for
grossly negligent behavior are capped. But in their efforts to make the
product liability system uniform across the United States, supporters
have fashioned a one-way preemption: This legislation strikes down only
those aspects of State law that give citizens more protection from
defective products. That is a one-two punch.
The bill passed by the Senate last year was bad, and this conference
report is worse. It is far more extreme. It preserves some of the worst
provisions of the Senate bill, like the elimination of joint and
several liability and the cap on punitive damages, and expands other
areas resulting in a bill that is the consumers' worst nightmare.
Let me talk for a couple of minutes about the elimination of joint
and several liability for noneconomic damages. Again, it violates the
golden rule of responsibility and accountability. You do not have to
worry about being accountable and making sure the victim is wholly
compensated unless the victim has a high-paying job. The Senator from
Louisiana talked about that earlier. Eliminating joint and several
liability for noneconomic damages eliminates the protections
particularly for women, children, and elderly, because noneconomic
losses constitute a greater proportion of their total losses.
So, again, this bill is antiwomen, it is antichildren, and it is
antielderly. I do not understand that. We are supposed to be for
individual workers. And, yet, what this says is that if you have a
high-paying job, you are worth more than a child or worth more than an
elderly person who has been a homemaker. You are worth more than they
are.
Under current law, joint and several liability enables an individual
to bring one lawsuit against the companies that are responsible for the
manufacture of a dangerous, defective product and have the defendants
apportion fault amongst themselves if the jury finds for the plaintiff.
Under joint liability, victims are compensated fully for their injuries
even if one or more of the wrongdoers is insolvent.
Our civil justice system is founded on the principle that the victim
deserves the greatest protection. This bill turns that basic value on
its head. It says we should protect the wrongdoer. This bill says they
deserve protection.
Mr. President, consider one case, the Claassen family of Newhall, IA.
Bill, Jeanne, his wife, and their 4-year-old son, Matt, were returning
home from a family gathering on November 6, 1993, in their 1973
Chevrolet pickup. Another driver failed to stop at a stop sign and
rammed into the passenger side of their pickup at a speed of about 30
miles an hour. Eyewitnesses confirmed that the Claassen's pickup
immediately burst into flames on impact. The flames raced up the
outside of the passenger door and engulfed Jeanne Claassen's face in
flames.
The Claassen's son, Matt, was seated between Bill and Jeanne in the
pickup. Bill struggled to get Matt out of the truck before returning to
rescue his wife. He was unable to rescue her and was convinced that she
had died in the fire. Witnesses who arrived on the
[[Page S2365]]
scene immediately after the collision heard Bill telling his son that
his mommy had died and gone to heaven.
Jeanne Claassen survived and is still recovering today. Her face and
head permanently disfigured, she has not been able to return to her job
as a medical technician. They are reluctant to take her back because of
her appearance. She continues to undergo painful surgery to regain some
semblance of her former self. Her young son Matt often relives that
nightmare in his school drawings, once drawing an igloo engulfed in
flames. He sometimes has trouble relating to the different way his
mother now looks.
The Claassens are currently in litigation to recover damages from the
two parties involved in this accident, the driver of the other car and
the General Motors Corp. that manufactured the truck.
The driver of the other car has no personal assets, and her insurance
will only cover some of Jeanne's many continual medical expenses.
General Motors has been under criticism for refusing to recall the 1973
and later models of the C/K pickups. These model trucks have the fuel
tanks outside of the frame rail of the vehicle, making them more
susceptible to the type of accidents like Jeanne Claassen's.
By eliminating joint and several liability for noneconomic damages,
this legislation will make it potentially more difficult for Jeanne
Claassen to be compensated for her loss if the court rules in her
favor. The driver of the other car is insolvent, and once the insurance
money runs out, GM will not necessarily have to chip in to cover
expenses. But Mrs. Claassen's pain and suffering will continue.
This legislation says that it really does not matter about her, it
does not matter about the exploding fuel tank when awarding noneconomic
damages. If one of them cannot pay, if one of the defendants cannot
pay, we will just stick it to Mrs. Claassen. But--and here is the rub
in this bill--if Mrs. Claassen was a CEO making millions of dollars a
year for a major corporation, this bill would not hesitate to take care
of her economic losses. She does not have a big economic loss, but she
has personal losses. She has pain and suffering. She has a lot of loss
in her life. This bill says, tough luck. If she had been the CEO of a
major corporation making 20 million bucks a year, this bill would have
been for her. But not for this Mrs. Claassen. What kind of
discrimination against human beings are we about to engage in if we
approve this conference report?
Mr. President, there are a lot of things I object to in this bill,
but that is what I find most objectionable--economic losses are more
important than human losses, pure and simple. If you have money, this
bill is for you. But if you suffer the loss of consortium, if you
suffer the loss of one of your family, pain and suffering,
disfigurement, sorry, you are out of luck. Under this bill, Mrs.
Claassen would be out of luck.
The elimination of joint liability for noneconomic damages forces our
legal system to make a value judgment based upon your economic worth,
and that is why this bill is so antiwoman and antifamily.
Last, let me just talk about capping punitive damages. I think I
heard earlier the Senator from Connecticut saying $250,000 is a lot of
money.
Mr. President, I have here a list of the amount of money made by
CEO's of our major corporations. I figured out how long it would take
to reach the cap of $250,000.
The CEO of Boeing makes $1.4 million a year. It would take 9 weeks of
his salary to reach this cap. Do you think that is going to be a
deterrent to Boeing? IBM, it would take 5 weeks. Sears & Roebuck, it
would take 1 month. That is not a deterrent.
When this bill first came to the floor, in good faith I offered an
amendment which I thought would tend to balance things out. I am
opposed to caps, but I said if you are going to have a cap, let us put
the cap at twice the annual compensation of the CEO of the corporation.
That way it protects small businesses because, if you are a CEO of a
small business, you do not have much money every year so you would have
less exposure, but if you are a CEO making $20 million a year, well,
then twice that would be the limit on the cap.
I lost on that amendment, but to me it still makes better sense than
what we have in this bill of saying $250,000 or twice the compensatory
damages, whichever is greater. This defeats the purpose of the
deterrent effect of the product liability laws. They have made a
difference. Ford Motor Co. redesigned the Pinto only after a $125
million lawsuit was awarded in which a 13-year-old boy was severely
burned when the Pinto he was riding in burst into flames.
The PRESIDING OFFICER. The Senator's 15 minutes have expired.
Mr. HARKIN. Yet evidence showed Ford Motor Co. knew it was a faulty
design, but they went ahead anyway because they said it would cost less
to have to pay it out in damages than to redesign the car.
Mr. President, what this bill does is it lets those tort feasors off
the hook.
I know my time is up. I could go on and on. Quite frankly, we should
not say that simply because you make a lot of money you are going to
get awarded more damages, more punitive damages will be assessed
against someone if you make more money than if you are a homemaker or a
child or an elderly person. That is discrimination of the worst sort.
I hope and I trust we will not invoke cloture on this bill and that
we can continue to abide by the principles of individual work and
responsibility and accountability in our country.
I thank the Senator for yielding me this time.
The PRESIDING OFFICER. Who yields time?
The majority manager is recognized.
Mr. GORTON. Mr. President, I yield 10 minutes to the Senator from
Rhode Island.
The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
Mr. CHAFEE. Mr. President, first of all, in connection with the
remarks of the distinguished Senator from Iowa, I point out there is an
additur provision in this bill dealing with punitive damages. I do not
want to debate that whole thing here; I only have 10 minutes, but I
would stress that point of which perhaps the Senator was not aware.
Mr. President, yesterday, I briefly outlined the history of this
legislation, which represents now 15 years--15 years; that is a long
time--we have been debating this liability reform act. It started in
1981 when Senator Kasten, of Wisconsin, introduced the first bill.
Finally, here we are today with a fair and a reasonable bipartisan
bill that not only has passed both Houses but did so with strong
majorities. The House approved a broader bill, not this one but a
broader one, which I presume those on the other side would find more
offensive. They passed that 265 to 161, a very substantial majority. In
the Senate, the bill that we passed had 61 votes in support of it, 61
out of 100.
So with a track record like that, you might think product liability
reform would soon become law. But here we are faced with two major
obstacles, a cloture vote this afternoon to protect against further
filibustering on this issue, and, worse than that, a newly raised
threat of a Presidential veto. If this bill does not make it past the
procedural hurdle of cloture, or if the President does not reconsider
his threat of a veto, this bill will not become law.
To be prevented from succeeding at this point, I must say, is
particularly galling. After all, I suspect that this bill has seen more
roadblocks in the last 15 years than any other bill we have seen here.
Indeed, I venture to guess that product liability has been subject to
more cloture votes than any other subject. There were 2 cloture votes
in 1986, 3 in 1992, 2 in 1993, 4 in 1995, for a total of 11 cloture
votes in all. Yet, it seemed in this new Congress we were going to win
it; once and for all this gridlock would be ended.
Drafting of this bill was a bipartisan effort right from the
beginning. It is not a Republican bill; it is a Republican-Democratic
bill, a bipartisan bill. The White House was well aware of what was
going on. The White House watched closely as the Senate took up the
bill and began adding amendments. It is my understanding that it was
the administration, during the Senate debate in May, that quite
helpfully suggested the addition of the so-called additur provision to
the final version.
So, as I say, it went sailing through here, 61 to 37. What happened
to change
[[Page S2366]]
the White House's attitude? Did the bill change dramatically in
conference from what went through here in the Senate? The answer is,
hardly at all. It was clear to all that the House's broad tort-reform
bill would not be approved by the administration. Therefore, to their
credit, the conferees, representatives from the House and
representatives from the Senate meeting together, decided to stick
closely to the Senate version that had passed so overwhelmingly and
that seemed to have White House support. So the bill that we will vote
on today, or the bill that we are dealing with, is virtually identical
to the Senate-passed bill that won such strong approval.
I do not know why the President appears to have changed his mind. I
cannot believe he is personally opposed to a Federal liability law for,
as a Governor, as Governor of Arkansas, the President sat on the
National Governors' Association committee that drafted the first
National Governors' Association resolution dealing with Federal
liability reform.
Here we have a copy of the letter from the President to Senator Dole
setting forth the reasons for the veto.
I ask unanimous consent the letter be printed in the Record at the
conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. CHAFEE. We are told it is an ``unwarranted intrusion on State
authority.'' Yet, the National Governors' Association enthusiastically
supports this measure.
We are told the bill would ``encourage wrongful conduct because it
abolishes joint liability.'' But joint and several liability, it has
been pointed out, applies still to economic damages.
The letter accuses the bill of ``increas[ing] the incentive to engage
in the egregious conduct of knowingly manufacturing and selling
defective products.'' I do not find this charge makes much sense. Then
it goes on to say that the ``additur'' provision the White House itself
put in here, the provision being that the judge himself can increase
the punitive damages--the White House had a hand in drafting that--now
they say that is not adequate.
So I do not think any of these three statements that the President
has in his letter represents what this conference report really would
do. I think that is very, very unfortunate.
To my judgment, this bill is sound and reasonable. Under the bill,
those who sell but do not make products--sell the products but not
necessarily having made them--are liable only if they did not exercise
reasonable care. If they offered their own warranty and it was not met,
or if they engaged in intentional wrongdoing, obviously they will be
liable. But they cannot be caught up in a liability suit where they did
nothing wrong. I do not see much trouble with that.
If the injured person was under the influence of drugs and alcohol
and that condition was more than 50 percent responsible for the event
that led to the injury, the defendant cannot be held liable.
If plaintiff misused or altered the product--this is the one we see
so often in the area I come from, people have altered machinery and
equipment that they have purchased--in violation of the instructions or
warnings to the contrary, or in violation of just plain common sense,
then the damages are reduced accordingly. I just cannot understand why
we ought to blame the manufacturer for behavior that everyone knows
would place the product user at risk. That does not seem fair to me.
Does that not contradict our notion of an individual's personal
responsibility? The person has to have some sense of responsibility
here.
The bill allows injured persons to file an action up to 2 years after
the date they discovered or should have discovered the harm and its
cause. For durable goods, the actions may be filed up to 15 years after
the initial delivery of the product. These also seem to me to be fair.
Either party may offer to proceed to voluntary, nonbinding,
alternative dispute resolution.
The most controversial element of the bill, I suppose, is the
punitive damages. I remind my colleagues that these damages are
separate and apart from compensatory damages. The compensatory damages
are meant to make the injured party whole. The punitive damages are
awarded where there is ``clear and convincing evidence'' proving
``conscious, flagrant indifference to the right of safety of others.''
The amount of punitive damages may not exceed two times the amount
awarded for compensatory loss or $250,000, whichever is the greater.
Again, I must say I have had trouble with punitive damages for a long
time. I have great difficulty understanding the basis of that;
certainly that the punitive damages go to the plaintiff instead of the
State for retraining of those who are committing the errors. It might
be manufacturers, it might be physicians, whatever it is. But I have
great difficulty understanding why in the world punitive damages should
go to the plaintiff.
In conclusion, I pay my compliments to Senators Rockefeller, Gorton,
Pressler, and Lieberman for the work they have done on this. I
certainly urge the President to reconsider his position and join the
bipartisan coalition supporting this very important legislation.
I urge him to sign this bill into law.
Exhibit 1
The White House,
Washington, March 16, 1996.
Hon. Bob Dole,
Majority Leader, U.S. Senate, Washington, DC.
Dear Mr. Leader: I will veto H.R. 956, the Common Sense
Product Liability Legal Reform Act of 1996, if it is
presented to me in this current form.
This bill represents an unwarranted intrusion on state
authority, in the interest of protecting manufacturers and
sellers of defective products. Tort law is traditionally the
prerogative of the states, rather than of Congress. In this
bill, Congress has intruded on state power--and done so in a
way that peculiarly disadvantages consumers. As a rule, this
bill displaces state law only when that law is more
beneficial to consumers; it allows state law to remain in
effect when that law is more favorable to manufacturers and
sellers. In the absence of compelling reasons to do so, I
cannot accept such a one-way street of federalism, in which
Congress defers to state law when doing so helps
manufacturers and sellers, but not when doing so aids
consumers.
I also have particular objections to certain provisions of
the bill, which would encourage wrongful conduct and prevent
injured persons from recovering the full measure of their
damages. Specifically, the bill's elimination of joint-and-
several liability for noneconomic damages, such as pain and
suffering, will mean that victims of terrible harm sometimes
will not be fully compensated for it. Where under current law
a joint wrongdoer will make the victim whole, under this bill
an innocent victim would suffer when one wrongdoer goes
bankrupt and cannot pay his portion of the judgment. It is
important to note that companies sued for manufacturing and
selling defective products stand a much higher than usual
chance of going bankrupt; consider, for example,
manufacturers of asbestos or breast implants or intra-uterine
devices.
In addition, for those irresponsible companies willing to
put profits above all else, the bill's capping of punitive
damages increases the incentive to engage in the egregious
misconduct of knowingly manufacturing and selling defective
products. The provision of the bill allowing judges to exceed
the cap in certain circumstances does not cure this problem,
given Congress's clear intent, expressed in the Statement of
Managers, that judges should do so only in the rarest of
circumstances.
The attached Statement of Administration Policy more fully
explains my position on this issue--an issue of great
importance to American consumers, and to evenly applied
principles of federalism.
Sincerely,
Bill Clinton.
Several Senators addressed the Chair.
The PRESIDING OFFICER (Mr. Frist). Who yields time?
Mr. HOLLINGS. Mr. President, I yield 10 minutes to the distinguished
Senator from Wisconsin.
The PRESIDING OFFICER. The Senator from Wisconsin.
Mr. FEINGOLD. Mr. President, I rise today to speak in opposition to
the conference report on the Common Sense Product Liability Legal
Reform Act. Supporters of this legislation have made the claim that
this bill will benefit manufacturers, investors and business owners and
workers. They also say it will benefit consumers. Yet, to my knowledge,
this bill is opposed by virtually every group in the country that
represents working people and consumers and children and the elderly.
One of the reasons for this is that the claims that have been made on
behalf of this bill do not really add up. The people who support this
bill claim the bill would set uniform Federal standards for product
liability legislation.
[[Page S2367]]
They claim uniformity is essential and that knowing the laws are going
to be the same everywhere you go is absolutely critical for business
interests that might be unsure of what the marketplace and a legal
system of a particular jurisdiction will hold for them. That is the
whole basis of this bill. That is the core concept, that you have to
have this uniformity across the board, or businesses really will not
know what to do in terms of location, business location decisions.
I would like to use my time to speak about two aspects of this notion
of uniformity. First, let us remember that this legislation marks an
unprecedented event. We are, for the first time, imposing the demands
of the Federal Government in an area of law that has, for 200 years,
been the sole domain, the sole province of the States. I thought this
was a Congress devoted to devolution, not to the Government at
Washington making mandatory rules.
I thought that was the mantra of the new Republican majority, that
the States know best, that most of the time the best decisions are
those that are made by the folks back home and not by the
decisionmakers in Washington. I remember time and time again the
majority leader coming down to the Senate floor and telling us it was
time to ``dust off the 10th amendment.''
I remember when the Speaker of the other body went on national TV
last spring and in an address to the Nation said the following:
This country is too big and too diverse for Washington to
have the knowledge to make the right decisions on local
matters. We've got to return power back to you, to your
families, your neighborhoods, your local and State
governments.
Mr. President, what happened to those words? What happened to the
10th amendment? What happened to the need to address local problems on
the local level? All this talk about States rights is about to go right
out the window as we usurp over 200 years of State control over their
tort systems.
We have a bill before us that has as its central premise the notion
that the Federal Government is a better administrator of justice than
the States and that the U.S. Senate is better suited to determine the
outcome of a civil trial than are 12 average Americans sitting in a
jury box.
How troubling that, at a time when Americans are so distrustful of
their Government, we in Government are not willing to trust Americans
to administer civil justice. But I suppose that for the sponsors of
this bill, this is a reasonable price, so long as we get some
uniformity in our laws.
Unfortunately--and I really want to stress this--this bill has about
as much uniformity as a circus parade. Look at the new punitive damage
cap contained in the bill. That provision caps punitive damages in most
cases at the higher of $250,000, or two times compensatory damages.
That sounds pretty uniform, does it not? But read the small print.
If a State has a law that is more restrictive--more restrictive--than
the Federal cap, then that particular State law prevails. If a State
has a law that is less restrictive than this Federal cap, then, and
only then, the Federal cap prevails.
Moreover, under this bill, those States that currently simply
prohibit punitive damages, do not allow them at all, they would be
permitted to continue to not allow any punitive damages.
So what does this mean for American consumers? It means the consumers
and children and the elderly living in different States with different
sets of laws will have substantially different protections from
injuries and defective products.
Mr. President, so much for the uniform Federal standards and so much
for the idea that this bill is somehow fair and equitable and
beneficial to consumers.
But what this really is is sort of a one-way preemption of State
laws, and it is grounded on the premise that some States know better
than others and that some Americans can properly serve on juries but
others cannot. With this new concept of, let us call it, selective
federalism, perhaps we should change the words above the Supreme Court
so they read ``Equal justice under the law, unless you live in the
following States,'' and then list the appropriate States.
Mr. President, I also find it absolutely ludicrous that the
supporters of this bill would suggest that we are providing uniformity
when we are going to have completely different standards and rules
throughout the 50 States. If I had to pick one provision of this bill
that demonstrates how nonsensical this notion of uniformity is, I would
have to choose the provisions seeking to reestablish a new Federal
statute of repose.
This bill creates a new Federal standard for the number of years a
manufacturer or product seller can be held liable for harm caused by a
particular product. Known as a statute of repose, that period is 15
years under this conference report.
Why 15 years? Where did that come from? It is a good question. The
product liability legislation considered in the 103d Congress, written
by the same two principal authors, contained a 25-year statute of
repose. Why? Well, a footnote in the committee report from that
Congress justified the 25-year limit by pointing out that, according to
testimony received by the Commerce Committee, and I quote, ``30 percent
of the lawsuits brought against machine tool manufacturers involve
machines that are over 25 years old.'' Therefore, Mr. President,
presumably the authors of this bill, last time around, selected 25
years as the life expectancy of all products manufactured in the United
States.
So last May, we considered a product liability bill that the
supporters tried to characterize as much more moderate and much
narrower than the product liability bill considered in the 103d
Congress. But in many cases, the bill we considered last May was worse
than its predecessor. For example, they dropped the 25-year statute of
repose to only 20 years. Why? Once again, good question. The committee
report for the Senate-passed legislation conspicuously left out that
footnote from last time about the machine tool testimony and just makes
no mention whatsoever as to why 20 years was selected for that bill.
Instead, the committee report promotes the consistency of the 20-year
statute of repose with the General Aircraft Revitalization Act of 1994
that was passed by this body in 1994.
It also justifies a Federal statute of repose on the basis that Japan
is poised to enact a short 10-year statute of repose. So now,
apparently, the Japanese Government knows better than the State of
Wisconsin how to properly administer civil justice in cases involving
Wisconsin litigants. I wonder how the Framers of the Constitution would
feel about that assertion, Mr. President.
What is too bad is, in this conference report before us, it does not
end there because, as I said, the conference report before us does not
have a 25-year statute of repose, does not have a 20-year statute of
repose, it even has now a significantly shorter 15-year statute of
repose. So we have gone from 25 to 20 to 15, and they call this a
moderate bill.
Again, what in the world is that 15 years based on? It strikes me as
being completely arbitrary and it seems less concerned with what the
life expectancy of certain products should be and more concerned with
making sure we pass as short a statute of repose as can possibly be
done politically.
Finally, Mr. President, worse, this takes us back to the issue of
selective preemption of State authority over liability laws. Under this
conference report, if a State legislature has decided against having a
statute of repose or has decided on a statute that is longer than 15
years, then this new Federal law will override the judgment of that
State legislature.
Again, when you really look at this bill, it is not about uniformity
at all. It will lock in a lack of uniformity and different treatment
throughout the States and not provide the central purpose of the bill,
as I understand it, which is to provide all the businesses in the
country with some kind of uniformity.
So, Mr. President, on behalf of all the consumers who will be
affected by this, as well as the concern about uniformity, I simply
must say that this conference report should be defeated.
I yield the floor.
Mr. DODD addressed the Chair.
The PRESIDING OFFICER. Who yields time?
[[Page S2368]]
Mr. GORTON. I yield 5 minutes to the Senator from Connecticut.
The PRESIDING OFFICER. The Senator from Connecticut.
Mr. DODD. Mr. President, I thank my colleague. I will try to use less
time than that, because I know my colleague from Washington has several
requests for additional time.
First of all, let me commend our colleagues from West Virginia and
from Washington for their tremendous work on this legislation. They
have spent countless months, indeed years, working on this issue. I
want to express my gratitude to them and the gratitude of my
constituents in Connecticut. They have dealt with a complicated,
sensitive issue in a forthright manner, allowing all to have a full say
in what ought to be included in the legislation. I strongly urge our
colleagues to support their effort, the Common Sense Product Liability
and Legal Reform Act of 1996.
Mr. President, I am not new to this issue. During this debate, I have
been playing a supporting role to the efforts of Senator Rockefeller
and Senator Gorton. But I began working on this issue 10 years ago,
when I joined with our former colleague, Jack Danforth, and attempted
to fashion a product liability bill. None of our efforts ever made much
headway through the legislative process, but I think we helped lay a
foundation for the measure we are considering today.
Mr. President, when I ask the businesses in my State to list the
single most important issue to them, they tell me that it is product
liability reform, more so than taxes or any other issue. This is
particularly true of my smaller manufacturers, the tool and die makers,
and other industries that are supported by larger companies like United
Technologies, Sikorsky, and Electric Boat. This is the issue they care
more about than anything else.
Across this country, manufacturers are spending seven times more to
prepare for product liability cases than they are on research and
development.
Because of these costs, innovative products never make it to the
market. There is no question, for example, that there would be more
research into an aids vaccine if companies were not fearful of the
current product liability system.
Additionally, the high costs of litigation raises the cost of many
products. This so-called tort tax accounts for an estimated 20 percent
of the cost of a ladder, 55 percent of the cost of a football helmet,
and 95 percent of the cost of childhood vaccines.
The excessive costs of the product liability system also hurt the
competitive position of American companies. Some American manufacturers
pay product liability insurance rates that are 20 to 50 times higher
than their foreign competitors.
Of course, if this system were working well for consumers, that would
be an important argument for maintaining the status quo. But that is
not the case.
As I mentioned earlier, consumers are denied innovative products and
must pay higher prices for products. And what about people who are
injured by the products that do make it to the marketplace? Do they
benefit from the current system? The answer is no.
A General Accounting Office study concluded that it takes almost 3
years for a case to be resolved. That is 3 years that an injured person
must wait to be made whole. Regrettably, this delay leads many injured
people, particularly those with very severe injuries, to settle for
less than their full losses.
Clearly, the present system is broken. We need to fix it and the
conference report makes some important repairs. My colleagues have
already discussed some aspects of the bill, but let me highlight some
provisions that are particularly important.
uniform system
First, by providing Federal standards in certain areas, this measure
will provide a more uniform system of product liability. These
standards will add more certainty to the system, and help reduce
transaction costs.
When you consider that 70 percent of all products move in interstate
commerce, Federal standards make sense. The National Governors
Association supports this approach. The association has testified:
The United States needs a single, predictable set of
product liability rules. The adoption of a Federal uniform
product liability code would eliminate unnecessary cost,
delay, and confusion in resolving product liability cases.
alternative dispute resolution
The provision in the bill that encourages the use of alternative
dispute resolution will also help reduce the excessive costs in the
current system. Currently, too much money goes to transaction costs--
primarily lawyers fees--and not enough goes to victims.
A 1993 survey of the Association of Manufacturing Technology found
that every 100 claims filed against its members cost a total of $10.2
million. Out of that total, the victims received only $2.3 million,
with the rest of the money going to legal fees and other costs.
Clearly, we need to implement a better system in which the money goes
to those who need it--injured people.
statute of limitations
Consumers will also benefit from a statute of limitations provision
that preserves a claim until 2 years after the consumer should have
discovered the harm and the cause. In many cases, injured people are
not sure what caused their injuries, and by the time they figure it
out, they have often lost their ability to sue. This legislation will
provide relief for people in such situations and allow them adequate
time to bring a lawsuit.
This legislation will also improve the system for businesses--from
large manufacturers to the hardware store down the street.
alcohol and drugs
Under this bill, defendants would have an absolute defense if the
plaintiff was under the influence of intoxicating alcohol or illegal
drugs and the condition was more than 50 percent responsible for the
plaintiff's injuries. This provision, it seems to me, is nothing more
than common sense. Why should a responsible company pay for the actions
of a drunk or a drug user?
product sellers
The bill also institutes reforms to help product sellers. They would
only be liable for their own negligence or failure to comply with an
express warranty. Product sellers who are not at fault can get out of
cases before running up huge legal bills. But as an added protection
for injured people, this rule would not apply if the manufacturer could
not be brought into court or if the claimant would be unable to enforce
a judgment against the manufacturer.
punitive damages
In my view, the conference report also strikes an appropriate balance
on punitive damages. There are reasonable limitations on punitive
damages, but the judge could award a higher amount against large
businesses if the limited punitive damage award is insufficient to
deter egregious conduct.
biomaterials
The biomaterials provision also addresses a critical problem. It
would limit the liability of biomaterials suppliers to cases where they
are at fault, and establish a procedure to ensure that suppliers, but
not manufacturers, could avoid unnecessary legal costs. This provision
will help ensure that Americans continue to have access to lifesaving
and life-enhancing medical devices.
My colleague from Connecticut, Senator Lieberman, authored this
proposal and I commend him for his excellent effort.
balanced legislation
The provisions I have outlined demonstrate the balance this
legislation strikes between consumers and businesses. In the final
analysis, the reforms in the bill should strengthen the product
liability system for everyone.
Mr. President, I commend the conferees for staying so close to the
Senate bill. In my view, the House bill went too far. It contained
provisions that would have applied in a wide range of cases, including
medical malpractice.
The stakes of legal reform, the rights and responsibilities of all
Americans, warrant a more cautious approach. There are some areas of
our legal system where problems must be addressed. Securities
litigation and product liability are obvious examples, but we should
avoid wholesale changes.
The conference report we are debating today takes the right approach.
It is a moderate measure that makes modest reforms. It strikes a
careful
[[Page S2369]]
balance between the needs of consumers and businesses, and should help
improve the product liability system for everyone.
Before closing, let me again commend Senator Rockefeller and Senator
Gorton for their excellent work on this legislation. As I discussed
earlier, this conference report has very few changes from the Senate
bill that they crafted so carefully. They have also done a superb job
in keeping this legislation moving forward.
I urge my colleagues to vote for cloture and help pass this
conference report.
Mr. President, I yield back whatever time I may have remaining to our
distinguished colleague from Washington.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, before I yield to the distinguished
Senator from Minnesota, I ask unanimous consent to have printed in the
Record an article entitled ``In Defense of Big (Not Bad) Business''
from the Washington Post.
There being no objection, the article was ordered to be printed in
the Record, as follows:
In Defense of Big (Not Bad) Business
(By Jerry J. Jasinowski)
Engaging in class warfare and anti-industrial rhetoric has
become the favorite blood sport in this political year.
We have the unlikely duo of presidential candidate Pat
Buchanan and Labor Secretary Robert Reich warning us about
anxious workers and their stagnant wages. A seven-part
treatise in the New York Times blames corporate callousness
for the ills of society, while Newsweek recently threw the
mugs of four leading American business executives on its
cover under the headline ``Corporate Killers.''
How quickly perceptions change. Little more than a year ago
I was invited to address an international gathering of
corporate and political leaders in Davos, Switzerland, to
talk about an American industrial renaissance that had
restored the United States to the top spot among the world's
economies for the first time in nearly a decade. And instead
of warning of Japan's industrial might, a constant theme
throughout the 1980's, I found myself describing a quality
and productivity revolution that has led to record job
creation in the United States.
No one in this country seems to know it or care, but while
Americans have been busy berating our capitalist system with
unbridled enthusiasm, the U.S. economy has become the envy of
the industrialized world.
Indeed, the current anxiety over jobs and wages illustrates
the verity of the notion that a big enough lie, repeated
often enough, can take on the trappings of reality. I may be
fashionable--and in some cases politically expedient--to
argue that American workers are underpaid, underappreciated
and on the brink of losing their jobs. Some are--and these
concerns need to be addressed. But to suggest that this is
the prevailing phenomenon taking place in our economy is
wrong, or at the least, a very distorted view of reality.
While corporate downsizing gets the headlines, the American
economy has quietly grown richer--gaining more than 8 million
net new jobs since 1992 and putting our unemployment rate at
an historically low 5.5 percent. In the past 25 years, U.S.
employment has increased 59 percent and we have created more
than five times as many net jobs as all the countries of
Europe combined.
Even in areas like U.S. manufacturing, to take a favorite
topic of media concern, the picture is not so bleak as news
reports, or a cursory look at the data, might suggest.
According to government statistics, around 1.7 million
manufacturing jobs disappeared between 1988 and 1993. But
many of the positions shed by manufacturers were never the
assembly line jobs typically associated with manufacturing in
the first place. Rather, a sizable portion of the eliminated
positions were back-office jobs like payroll and accounting,
which are now contracted out to companies that the Labor
Department classifies as ``service sector'' firms. It's also
worth remembering that millions of jobs are created in other
sectors as a direct result of manufacturing. It happens when
a new restaurant locates near a manufacturing plant, the so-
called ``multiplier effect.'' And it happens when jobs that
were considered by the government to be manufacturing are
spun off--the most common example being GM's transfer of its
data-processing to EDS, a move that overnight classified
thousands of jobs from manufacturing to service.
The data can be equally misleading when it comes to wages.
It has by now been widely reported that median household
incomes, adjusted for inflation, have been falling for nearly
two decades, and by 7 percent since 1989 alone. But the wage
decline doesn't take into account other factors that greatly
mitigate its effect. First, the size of the average American
family has been declining meaning the typical household
paycheck is being spread over fewer people. And when the
overstatement of inflation contained in the consumer price
index is eliminated, income growth actually climbs by 15
percent.
Nor do such statistics take into account the fact that
workplace compensation has undergone radical changes in
recent years. As studies by the Federal Reserve and others
have shown, employees nowadays receive a much greater share
of their compensation in the form of various benefits--health
care, paid vacation, pensions, incentive payments, bonuses,
commissions and profit sharing. Using this broader measure of
total compensation, workers are even better off than they
were in the 1970s.
It is also important to remember that workers with the
right skills and in the right fields are sharing handsomely
in the economy's growth. A study by Princeton University
economist Alan Krueger showed that employees who use
computers on the job earn 15 percent more than those who
don't. Indeed, a wage boom has been underway for some time in
many high-tech firms. Assembly-line positions in the
technology sector now typically pay anywhere from $50,000 to
$75,000 annually, including bonuses. And in part because of
automation that has raised the skill-level required to
perform all kinds of jobs on the factory floor, manufacturing
workers in any field now earn an average of $40,000 annually,
for companies like Cypress Semiconductor in San Jose, Calif.,
compensation is even higher. The average worker in this
1,900-person company, including line workers and
receptionists, earns $93,000 a year including benefits.
Even more important than what the numbers tell us about the
present is what they tell us about our future. It is true
that, while the wage picture is not as bleak as we've been
led to believe, there is reason for concern. But a number of
powerful trends suggest that several of the factors that have
kept take-home pay lower than expected and job in security
higher than desired are self-correcting. Others are well
within our power to fix.
The baby-boom generation, combined with the influx of women
into the workplace and high levels of immigration, has
brought on the largest increase in the supply of labor in
American history. Since 1968, the number of Americans seeking
jobs has shot up by 52 million workers, a factor which has
had the inevitable effect of slowing wage growth since so
many more people were out in the market competing for jobs.
Currently there are still too many workers with inadequate
skills struggling to fit themselves into an economy that
increasingly demands higher levels of education. But
demographics will be on the side of the workers in coming
years. For one, four times as many Americans have college
degrees today compared with just 50 years back. More
importantly, the generation now entering the work force is
one-third smaller than the baby-boom generation, which will
inevitably push up employee compensation. A labor force that
is older and more experienced also commands generally higher
compensation, a factor that filters down through the entire
labor market.
Meanwhile, many jobs are going wanting. Some manufacturers
are so desperate for skilled assembly line workers that
they've taken to hiring professional recruiting firms to help
them find qualified applicants. The owner of one Northern
Virginia firm told me that software developers who commanded
$30,000 five years ago now demand, and get, $50,000 a year.
And a newly released study of software programmers nationwide
shows many veteran code writers can command salaries that
exceed $100,000.
John F. Kennedy's oft-repeated maxim that ``a rising tide
lifts all boats'' is as true today is it was 35 years ago.
Unfortunately, the tide hasn't been rising very fast lately.
Though much of the news about the economy is positive, it's
also true that economic growth during the current expansion
has been hovering around 2 percent, roughly half that of
previous post-war expansions. Yet, given improvements in
corporate productivity of late, both in manufacturing and
more recently in the service sector, there is no reason our
growth rate can't be lifted to at least 3 percent a year. If
that happened, we would inevitably see substantial new
economic activity and jobs gains for workers at all skill
levels.
So why isn't the economy growing faster?
Pat Buchanan would have us believe that it's because our
free-trade policies have allowed other countries to benefit
at the expense of Americans. But if anything, the opposite is
true. Exports, in fact, have been responsible for roughly
one-third of U.S. economic growth over the past decade.
According to a new report by the Manufacturing Institute and
the Institute for International Economics, American firms
that export goods or services have experienced a job growth
rate almost 20 percent higher than comparable non-exporting
firms. Exporters are 9 percent less likely to shut down, and
they pay their workers as much as 10 percent more than firms
that do not export, the study found. If anything, we should
be figuring out ways to open up markets across the world, not
stir tensions in a way that could set off a trade war.
It's also time we question whether the Federal Reserve is
keeping interest rates unduly high, and whether we should
continue allowing government to keep the tax burden so high.
The median two-wage earner family carries total tax burden--
federal, state and local--of 38.2 percent, up from 27.7
percent in 1955. This amounts to more than $5,000 a year for
the typical family. Payroll taxes, which represent the
largest single tax on millions of middle income Americans,
have grown at four times the rate of incomes. While this
[[Page S2370]]
last tax is technically paid by employers and employees
alike, it amounts to a direct hit on employees because most
companies simply pass on the burden in the firm of reduced
wages and benefits.
So does all this mean business should be let off the hook?
Certainly not. I would be the last to exonerate business
completely of the charges coming at them of late. Take the
issue of wages. It's true that many companies have done a lot
to share their success with their workers. Last month, for
example, while the press was busy maligning IBM for its
layoffs, the computer maker announced it would spend more
than $200 million increasing employee bonuses, not just for
top executives but for the rank and file. And at Coca-Cola,
where nearly one-third of the workers own company stock, each
employees' holdings shot up in value by an average of $70,000
over the last 15 months.
The problem is that not enough companies are putting a
priority on performance-related compensation. People should
be paid based on the quality of their performance, at every
company, and no matter how lowly the job appears. If only the
top executives are sharing the largess--or if bonuses are
climbing when profits are shrinking--something is wrong.
The other area that needs more corporate attention is
education and training. Again, many companies are investing
significant sums, but too many others aren't. In a constantly
changing work environment, honing skills and keeping up with
the latest technology is an essential priority for all
companies that intend to remain competitive. Yet right now,
the average company spends roughly 1.5 percent of its payroll
on employee training and education. To my mind, that figure
needs to double.
The United States still offers the best employment
opportunities in the world. But if it is to stay that way, it
will require a new social compact in the workplace. That
doesn't mean guaranteed job security--which is impossible in
today's highly competitive world. But it does mean employment
security; ensuring that workers acquire the training and
skills to move up the ladder, if not at one company, then at
another.
For employees, it means that instead of thinking of
themselves as victims, they should be investing in their own
futures. And, in exchange for their hard work, they should
insist that corporations keep up their end by helping to fund
the cost of training, and by rewarding financially those who
help themselves.
Mr. HOLLINGS. This particular article refutes the statement by the
Senator from Connecticut. Big business is doing fine. They are not
worried about new products. They are competitive. They are making the
biggest profits. It goes right back to the official hearings we had
with the conference report, risk managers. Over 432 risks managers sat
there and said it was less than 1 percent of the cost of the product.
So we can hear these statements that this is the No. 1 thing they are
worried about, and everything of that kind and holding things back, but
under the Cornell study, product liability cases are diminished by 44
percent in the last decade and, yes, industries are suing industries
like Pennzoil suing Texaco for a $10 billion verdict. Those things
occur.
But this is not the No. 1 interest of business. The No. 1 interest of
business, that I have been trying to defend in the Commerce Department
and ask what they are interested in, they say they are interested in
capital gains. ``We are not going to really spread our influence
around. On the contrary, we are going to fight for capital gains and
let the Commerce Department and the President take care of that.''
I yield 7 minutes to the distinguished Senator from Minnesota.
Mr. WELLSTONE. I thank my colleague. I thank the Senator from South
Carolina.
Mr. President, I ask my colleagues to consider the faces of people
who will be hurt by this provision. Think of LeeAnn Gryc from my State
of Minnesota who was 4 years old when the pajamas she was wearing
ignited, leaving her with second and third degree burns over 20 percent
of her body. An official with the company that made the pajamas had
written a memo 14 years earlier stating that because the material they
used was so flammable the company was ``sitting on a powder keg.''
This bill contains a cap on the punitive damages a plaintiff could
receive. How would this affect LeeAnn? We are talking about people, we
are talking about consumers. They may not be the heavy hitters, or the
big players, but that is who we are talking about.
It all depends on what kind of compensatory damages the jury awards.
Are we really willing to sit here in Washington and dictate to LeeAnn
and other victims of defective products how much is enough to punish
and deter the people who hurt them?
The jury's role. By capping punitive damages this bill takes power
out of the hands of the jury. This particularly confounds me. People on
juries are fine when they are electing Members of the Senate to their
jobs. But apparently some of my colleagues do not trust them to sit in
judgment of their peers. They sit in judgment of us, do they not? Are
they not usually the finders of facts? How is it that they lose their
competence in the short trip from the ballot box to the jury box?
Elimination of joint liability. In Minnesota we struggled with this
problem and we have come to a middle ground. Joint liability only
applies to wrongdoers who are over 15 percent responsible. But this
bill would say that Minnesota's solution is not good enough. This bill
would preempt Minnesota's law with an extreme measure, one that my
State at least has chosen not to embrace.
Again, Mr. President, real people, faces I would like my colleagues
to see before they vote. Nancy Winkleman, a Minnesotan I met last year
who was in a car crash. Because a defective car underride bar failed to
operate properly, the hood of her car went under the back of a truck
and the passenger compartment came into direct contact with the rear
end of the larger vehicle. Without the benefit of her car's own bumper
to protect her, she was severely injured, losing part of her tongue and
virtually all of her lower jaw. Despite reconstructive surgery, her
face and ability to speak will never be the same.
I cannot imagine the pain that Nancy must have undergone or the pain
that she undergoes every day, nor can my colleagues. If one of the
responsible parties in her case was unable to pay their fair share,
should she go uncompensated for some of that pain or should the other
responsible parties have to make it up? Unless you are certain,
colleagues, that it is more important to protect those other parties,
who usually have been found to be negligent, than to compensate Nancy
for her pain, you should not support this bill. If you do, you will be
hurting real people, you will be hurting real people.
Statute of repose now cut down to 15 years. Jimmy Hoscheit was a boy
at work on his family farm when he was hurt. I met Jimmy last year when
he was in my office telling me his story. He was using common farm
machinery, consisting of a tractor, a mill, and a blower, all linked
together with a power transfer system, much like the drivetrain on a
truck. The power of the tractor was transferred to the other equipment
by way of a spinning shaft, a shaft covered by a freely spinning metal
sleeve. The sleeve is on bearings so if you were to grab the sleeve, it
would stop moving, while the shaft inside would continue to powerfully
rotate at a very high speed.
Apparently when Jimmy leaned over the shaft to pick up a shovel, his
jacket touched the sleeve and got caught on it. However, instead of
spinning free on the internal shaft, the sleeve somehow was bound to
the shaft, became wrapped in Jimmy's jacket and tore Jimmy's arms off.
His father found him flat on his back on the other side of the shaft.
The manufacturer could have avoided all of this if it just provided a
simple and inexpensive chain to anchor the shaft to the tractor.
I ask you, should Jimmy be able to bring suit against the
manufacturer? What if the product was over 15 years old? Does that make
his injury and his pain any less severe?
A similar question can be asked about 6-year-old Katie Fritz, another
Minnesotan whose family I was privileged to meet when we began
consideration of the bill. This is about real people. Katie was killed
when a defective garage door opener failed to reverse direction,
pinning her under the door, and crushing the breath out of her.
We do not know how long some of these machines can last. If that
garage was at a business and was over 20 years old, Katie's family
could not have sued the manufacturer. There would not be any question
of capping punitive damages or having joint liability for noneconomic
damages. They simply would not be allowed to the courthouse door.
Mr. President--the big picture--on behalf of people like LeeAnn,
Jimmy, Katie, Nancy, real people, consumers, I urge my colleagues to
reach into their
[[Page S2371]]
hearts and do the right thing, and to reject this bill. I yield the
floor.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, I ask unanimous consent to have printed
in the Record a letter dated only yesterday from Mothers Against Drunk
Driving in opposition to the bill.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Mothers Against Drunk Driving,
Irving, TX, March 19, 1996.
Re H.R. 956 Conference Report.
Members of the U.S. Senate, Washington, DC.
Dear Senator: On behalf of the more than 3 million members
and supporters of Mothers Against Drunk Driving (MADD) and
the thousands of victims of drunk drivers crashes in this
country, I urge you to oppose the H.R. 956 Conference Report
(The Common Sense Product Liability Act of 1996). While it
may not have been the intent of the sponsors and supporters
of this legislation to limit or restrict the rights of drunk
driving crash victims to be fully compensated for the harm
they have suffered, this will be one of the unintended
consequences of this bill in its present form.
It is clear that alcoholic beverages will fall within the
meaning of ``product'' in this bill and the term ``product
liability action'' in the bill means ``any civil action
brought on any theory of harm caused by a product or product
use.'' The limitations and restrictions imposed by this
legislation will limit recovery by victims of drunk driving
crashes against sellers who irresponsibly serve intoxicated
persons or minors who subsequently cause drunk driving
crashes killing or seriously injuring innocent victims.
Defendants in these dram shop cases will be able to use the
defenses and protections provided to them by this legislation
to prevent these innocent victims from being fully
compensated for the harm they have suffered.
The caps on punitive damages contained in this reform
legislation will directly benefit those who irresponsibly
serve alcoholic beverages to obviously intoxicated persons
and minors in violation of existing laws and in total
disregard for the safety of the citizens who drive on our
highways. In 1994, 16,589 people were killed and an estimated
950,000 were injured in drunk driving crashes in this
country. Punitive damages have historically been allowed
against defendants as a means of ``protecting the public''
and ``deterring dangerous conduct.'' I know of no more
appropriate case for the imposition of punitive damages
without limitations than drunk driving and dram shop cases.
The limitations on recovery of non-economic damages and joint
and several liability are additional roadblocks this
legislation puts in front of drunk driving crash victims.
For the reasons outlined above, MADD urges you to oppose
the H.R. 956 Conference Report. The defects and unintended
consequences of this bill can be corrected and we can avoid
this rush to judgment which will have a devastating impact on
drunk driving crash victims.
Sincerely,
Katherine Prescott,
National President.
Mr. HOLLINGS. Mr. President, I yield 10 minutes to the distinguished
Senator from Hawaii.
The PRESIDING OFFICER. The Senator from Hawaii.
Mr. INOUYE. Mr. President, I thank my colleague for this opportunity
to rise in opposition to the conference report to H.R. 965, the
Commonsense Product Liability Legal Reform Act of 1996.
Before I lay out my reasons for objecting to this conference report,
I would like to express my dismay that while appointed as a conferee, I
was never invited to participate in the conference. I am very
disappointed that the legislative process has deteriorated to this
level where diverse views are no longer welcome.
A critical analysis of the conference report to H.R. 965 reveals that
the balance tips in favor of product producers at the expense of
injured women, children, retires, and the poor.
This measure provides a series of limitations on the ability of
victims to recover from the manufacturers of defective products, while
it expressly exempts the big businesses who support this bill from
those requirements.
For example, if company A purchases a piece of factory equipment from
company B, and that piece of equipment is defective and explodes,
company A can sue company B for all of its lost profits caused by the
disruption of company A's business. On the other hand, the family of
the poor worker who is operating the machine at the time it exploded
must face the limitations in the bill to recover. Further, if the piece
of machinery is 15 years old or older, the worker or his family cannot
recover at all while the business faces no such limitation.
The punitive damage limitation in this bill causes me tremendous
concern. I find it ironic that in the punitive damage section of the
bill, it clearly indicates that punitive damages may only be awarded in
the most serious cases. Yet later in that same section it provides that
the amount of damages that can be recovered for these most serious
cases is limited to the greater of 2 times the economic and noneconomic
damages of $250,000. That same section further limits the ability to
recover damages by creating a special rule protecting individuals of
limited net worth and business or entities with a small number of
employees. The construction of this section is facially inconsistent
with its intent.
I would also like to debunk the myth that punitive damage awards
threaten the viability of many business. The evidence indicates
otherwise. Punitive damages are rarely awarded in product liability
cases. In ``Demystifying the Functions of Punitive Damages in Products
Liability: An Empirical Study of a Quarter Century of Verdicts''
(1991), author Michael Rustad concludes that consumer products are
responsible for an estimated 29,000 deaths and 30 million injuries each
year. Between 1965 and 1990, punitive damages were awarded in only 353
product liability cases--91 of which involved asbestos claims. In
addition, he states that approximately 25 percent of these awards were
reversed or remanded upon appeal. It is apparent that punitive damage
awards do not threaten the viability of businesses.
In addition, this measure discriminates against women, children, and
retirees. Women are most likely to be victims of such dangerous
products as Dalkon shields, Copper-7 intrauterine devices, high
estrogen birth control pills, super-absorbent tampons and silicone gel
breast implants. These products all were justly held liable for
punitive damage awards and were removed from the market. Had this bill
been in effect, punitive damage awards in these cases would have been
severely limited and the impetus for these companies to remove these
dangerous products from the market may not have been as strong.
H.R. 956 also makes noneconomic damages more difficult to recover.
Again, women, children and the poor are disproportionately impacted. It
fundamentally alters the traditional concept of joint and several
liability by eliminating joint liability. H.R. 956 places the harm
caused by defective breast implants, or a women's loss of her ability
to bear children, or the disabling of a child, in a secondary position
to that of the lost salary of a corporate executive.
The corporate executive who misses work because of an injury caused
by a product is unfettered in his ability to recover millions because
he can easily establish his economic damages. However, if a young woman
loses her ability to ever become a mother because of a defective
contraceptive device, she is made to endure additional difficulties to
recover compensation and, under the bill, faces the risk of not being
able to collect her damages at all since these are noneconomic. This is
inherently unfair.
On a very personal note, if I may, Mr. President, thank God that
provisions of this law were not part of the American military laws at
the time I had the privilege of serving this country in uniform. On May
30, 1947, I was retired, not as a general, not as a colonel, but as a
small captain. I was awarded at that time the sum of $175 a month for
the loss of my arm. I would like to believe that my arm is worth much
more than that. But Uncle Sam did not forget us. That amounted to
$2,100 per year. Today, Uncle Sam, understanding the rising cost of
living, is now awarding me $19,140 a year tax free.
In addition to that, Uncle Sam sees to it that if I desire, I can
receive medical services for the rest of my life. The same thing for my
spouse. I have received free education as a result, receiving my law
degree. If this provision was in effect at that time, I would end up
receiving $175 a month, if I am lucky, for the rest of my life. In
other words, Mr. President, Uncle Sam has paid me in damages, and never
once did they ask me, is this the most serious of cases? They did not
ask me about strict liability. It made no difference whether I fell off
a jeep or was struck by a shell. I received in excess of
[[Page S2372]]
$383,000. I think the least that can be done is to do the same for
fellow citizens.
The PRESIDING OFFICER (Mr. Gorton). The Senator from Tennessee.
Mr. FRIST. Mr. President, I yield myself 5 minutes.
Mr. President, I rise today to speak in support of the Commonsense
Product Liability Legal Reform Act of 1996. This piece of legislation
has been crafted carefully. It is tempered. It is moderate. It is
bipartisan.
We now live in the most litigious country on Earth, and we are paying
a huge price as a result. Year after year, companies are forced to lay
off workers or shut down entirely because of the staggering cost of
product liability insurance or because of the threat of outrageous
damage awards that in many cases bear no relation whatever to the
underlying claims. This bill will help stem that tide. It will help
preserve jobs, particularly manufacturing jobs, and it will help create
jobs.
At a time in our country when there is so much focus on worker
unrest, so much focus on the loss of good manufacturing jobs, when
there is so much talk about finding ways to stimulate the economy, this
is an easy call. It is a bipartisan bill. It is supported by 90 percent
of the American public. We all know that the only real group that
opposes it is a small band of plaintiff's attorneys who have become
wealthy at the expense of the public at large. It is the trial lawyers
and a few special interest groups that are preventing this bill from
becoming law.
Mr. President, critics of the House-Senate compromise are concerned
about the violation of States rights. This is one area where a
federalism argument simply does not hold water. The Framers of the
Constitution valued local decisionmaking and they wanted to avoid an
overly centralized Federal Government. However, one important exception
they recognized was the need to have Federal control over interstate
commerce and trade.
Alexander Hamilton, in Federalist No. 11, wrote about his concerns
that diverse and conflicting State regulations would be an impediment
to American merchants. Today, the abuses in our product liability
system have reached the point where they are, indeed, a major
impediment to interstate commerce. The Commerce Department had reported
that over 70 percent of the goods manufactured in a particular State
are shipped out of that State and sold. Moreover, the National
Governors' Association, the obvious protector of States rights, has
adopted three resolutions calling on Congress to enact a uniform
Federal product liability law, most recently in January of 1995.
Opponents of this legislation have also argued the so-called hard cap
on punitive damages. But there is no hard cap on punitive damages. The
bill permits punitive damages to be awarded against large businesses up
to the greater of $250,000 or two times the claimant's compensatory
damages. It is critical to note that it is two times compensatory
damages, not just economic damages. Two times compensatory damages will
still permit huge punitive damages awards in almost all product
liability cases where such punitive damages are appropriate.
The damage awards in this country will still be astronomically higher
than in any other industrialized nation, but at least there will be
some limits that businesses can hang their hats on. If that were not
enough, the trial judge is given the discretion to award even more if
he or she thinks it is appropriate. This is not a hard cap. All it does
is inject an element of predictability into our legal system.
If you asked most citizens in this country whether or not they think
it is fair to cut off lawsuits 15 years after a product was
manufactured, most would agree that is eminently reasonable. And even
this modest limit does not apply in cases involving motor vehicles,
vessels, aircraft, passenger trains, or in any case involving toxic
harm.
At the end of the day, when you finish sifting through the opponents'
concerns with this bill, it is clear that the trial lawyers are
exercising an inordinate amount of political muscle. Their opposition
to this bill is clearly in their own interest. But it is bad politics,
and it is terrible policy.
American workers and American businesses need this bill. Industry
trade associations report that today 30 percent of the price of a step
ladder, 33 percent of the price of a general aviation aircraft, 95
percent of the price of a childhood vaccine are all due to costs of
product liability.
I urge my colleagues to support this bill, and I urge the President
to rethink his position.
I yield the floor.
Mr. HOLLINGS. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator has 9 minutes, 22 seconds.
Mr. HOLLINGS. I yield 7 minutes, 22 seconds to the distinguished
Senator from California.
Mrs. FEINSTEIN. Mr. President, I supported the Senate-passed product
liability bill, and I am very proud of that. I think the findings in
the conference report very clearly state why there needs to be a
product liability bill, not the least of which is some uniformity all
the way across the broad consumer market, known as the United States of
America. While I supported the Senate-passed bill, the conference
report, I believe, raises some new questions, points of controversy
that, since I am not a lawyer, I cannot resolve. I ask one party and
they say one thing; I ask another party and they say another. This may
mean clarification is needed. It may mean that substantive changes need
to be made. But surely, it means, I believe, that we should send this
bill back to conference.
I want, very briefly, in the time afforded me, to make five points.
The first is the section, or the move of the section, on negligent
entrustment. Negligent entrustment, as it was presented in the Senate
bill, applied to the entire bill, and now, in this bill, it has been
placed in a section on ``Liability Rules Applicable to Product Sellers,
Renters, and Lessors.'' This move, I am told, also then places a cap on
punitive damages in negligent entrustment actions, and subjects them to
the limitations on joint and several liability.
This is a problem to me because, in the event of automobiles and
drunk drivers, guns sold or given to people who misuse them, this could
have an impact on the kinds and types of suits and the amount of
judgments derived therefrom. Therefore, my belief is that this entire
issue of negligent entrustment needs to be clarified so that we are
certain that the exception applies throughout the entire bill.
Second the statute of repose. California has no statute of repose.
The proposed statute of repose in the Senate bill was 20 years, and now
it is down to 15 years in the conference report. The bill provides,
however, that any State with a statute of repose that is under 15 years
prevails. California, with no statute of repose, cannot have a higher
standard and maintain no statute of repose. But a State with a lesser
standard of, let us say, a 10-year statute of repose, can prevail. To
me, this is unsatisfactory. For my vote, I would have a very difficult
time having a statute of repose in a bill which is less than 20 years.
I believe it sends a wrong signal to U.S. manufacturers. I believe it
sends a message to manufacturers all across this great land that they
can, in fact, manufacture less durable and perhaps even less safe
products, because their time for liability is cut dramatically,
certainly from no statute of repose to a 15-year statute of repose.
This is a dramatic change in the bill.
The third point is the definition of durable goods. Durable goods are
subject to the statute of repose. In the definition on page 4 of the
conference report, section 101, subsection 7, one comma has been
deleted and one has been added. I must say that what could be just
grammatical has caused a maelstrom of interpretation and
misinterpretation. And I, frankly, do not know who to believe.
This may be a drafting error, or it may be an intentional change in
meaning. But many people point out to me that this change of a comma
could change the definition of durable goods.
The fourth point I would like to make has to do with the additur
provision, and this relates to punitive damages. I believe it needs
further clarification. As I understand the additur provision in this
conference bill, it provides that if a State has a cap on punitive
damages and does not authorize an additur, then a judge is unlikely to
have the authority to award punitive damages above the State cap. I
believe this needs to be cleared up by the conference committee.
[[Page S2373]]
My fifth point has to do with biomaterials. I come from a State with
many responsible companies who are very concerned about the possibility
of losing their supplies of raw materials. They need this legislation
because they produce lifesaving devices, whether they be pacemakers, or
heart starters. I was visited by a very young woman who had a condition
in which her heart periodically would just stop, and she had an
implanted device that would restart her heart. Her heart would
sometimes stop when she was asleep. The people that made some of the
materials that went into this device essentially would not provide it
absent some release from liability.
But, as presently drafted, biomaterials suppliers--including
suppliers of component parts--can be liable only if they fail to meet
their contract specifications, or if they fail to properly register
their materials with the FDA.
First, I think we need a better definition of what is a ``component
part'' in the bill to ensure that this does not sweep too broadly, and
to ensure that this language would not allow certain manufacturers of
devices to escape liability. I believe it is also very important that
raw materials suppliers who know that their products pose a potential
hazard and fail to disclose such harm should be held liable for knowing
behavior.
I thank the Chair.
Mr. PRESSLER. Mr. President, this should be a great day. It should be
a great day for small business. It should be a great day for employees
of those businesses. It should be a great day for consumers. It should
be a great day for those unfortunate enough to be injured by defective
products.
As chairman of the Committee on Commerce, Science, and Transportation
I am extremely pleased and proud to see the Senate take up
consideration of the conference report to H.R. 965, the Commonsense
Product Liability Legal Reform Act of 1996. This is historic. Never in
almost two decades of work have we gotten this far. I am deeply
saddened, however, by the President's announced intention to veto this
important legislation.
I am also quite puzzled. You see, as Governor of Arkansas, Bill
Clinton in August 1991, sat on the committee that drafted and
unanimously approved the National Governors Association's [NGA] first
resolution supporting product liability reform. Governor Clinton also
went on record in support of the second resolution favoring product
liability reform passed by the NGA.
Mr. President, America is plagued by frivolous lawsuits. Every day,
our economy is victimized by ridiculous damage awards, both real and
threatened. This conference agreement represents a substantial reform
of the legal system that allows this abuse. It is tragic some have
allowed this effort to formulate meaningful policy to be overtaken by
political posturing. It is election year politics at its worst. The sad
thing is the posturing is being done for the benefit of certain special
interests. Tragically, if the special interests win, the American
people lose.
Brief History of the Struggle for Reform
Mr. President, over the past 15 years the Commerce Committee has held
23 days of hearings on product liability reform. In this Congress, the
companion measure to H.R. 965--S. 565--was reported by the Commerce
Committee on April 6, 1995. The bill marked the seventh reform bill
reported by the Commerce Committee since 1981. I have been involved
deeply in the product liability reform movement since that time. I was
an original cosponsor of the Risk Retention Act that became law in
1981. This legislation provided for liability insurance pools--so-
called risk retention groups--for businesses. I chaired Small Business
Committee field hearings in Sioux Falls and Rapid City, SD, on this
issue in 1985.
Over the years, I sponsored numerous product liability reform bills
with some of the great leaders in this area including Senators Kasten
and Danforth. These gentlemen are no longer Members of this body, but
this legislation is their legacy. I want to commend them for their
excellent work. They truly pioneered much of this effort. It has
brought us to this point. We would not have gotten this far without
them.
Let me also take a moment to commend two of our current colleagues--
Senators Gorton and Rockefeller--for their hard work and dedication to
this process. They have given years of labor to a cause in which they
both are committed and have done so in an extraordinarily bipartisan
fashion. I also know Jeanne Bumpus and Trent Erickson of Senator
Gorton's staff and Tamera Stanton, Jim Gottlieb, and Ellen Doneski with
Senator Rockefeller have given much of the past year, and in some cases
more time than that, to this effort. On my own staff, I want to commend
Tom Hohenthaner, deputy chief of staff for the Commerce Committee, who
has worked this issue for years and in this Congress managed what has
often been a tortuous process. I also thank Lance Bultena, counsel for
the Consumer Subcommittee, for his dedicated efforts.
Let me next pay tribute to House Judiciary Committee Chairman Henry
Hyde who also served as chairman ofthe conference. Henry and I were in
the same freshman class in the House back in 1974, and I have been
honored to serve with him over the years. At the first meeting of the
conference, I likened Chairman Hyde to a beacon shining brightly in a
field. I would say that his light never wavered in this process and
without his fine leadership we would not be here today. Chairman Hyde
was assisted in this process by Alan Coffee, general counsel and staff
director for the House Judiciary Committee and a savvy veteran of many
legislative battles over the years. Diana Schacht and Peter Levinson,
both counsels to the Judiciary Committee, and both consummate
professionals, also put in a great many hours in this process. Finally,
the House Commerce Committee shared jurisdiction over this measure, and
I think and commend Chairman Bliley for his leadership. Robert Gordon,
counsel to the House Commerce Committee, proved a dedicated and
significant member of the team of staff--all of whom worked so hard on
this conference agreement and legislation that preceded it. Again, I
thank them all.
I know many--including many of our colleagues in the other body--
would have liked to see much broader reform. Indeed, many in this body
wanted more. So why this fairly narrow and moderate approach? The short
answer is: expansion was not possible. We tried. Last April 24 the
Senate began consideration of the legislation. Over the next 2\1/2\
weeks--and some 90 hours of debate--the Senate considered and voted on
over 30 amendments.
Ultimately, the Senate passed a bill very similar to the legislation
reported by the Commerce Committee. In the following months, we
negotiated with our colleagues in the other body who had passed a much
broader bill. Again, activity centered around the possibility of
expanding the scope of the Senate bill. Mr. President, the bill that
has emerged from conference is--virtually--the Senate-passed bill. It
is extraordinarily close to the legislation we sent out of the Commerce
Committee last spring. The Senate should pass it again.
The conference agreement is narrower than many of us would like.
However, while limited in scope, it is an excellent piece of
legislation. This bill is fair, balanced, and well reasoned. Indeed, it
is a moderate package of reforms. It also keeps faith with what we set
out to accomplish--it provides substantial reform to a legal system
that is broken.
Highlights of the Conference Agreement
Mr. President, let me highlight some of those much-needed reforms:
Punitive damages. The conference agreement provides that punitive
damages may be awarded in a product liability case if a plaintiff
proves, by ``clear and convincing evidence,'' that his or her harm was
caused by the defendant's ``conscious, flagrant indifference to the
safety of others.'' This language is to make clear that punitive
damages are only to be awarded in the most serious of cases.
Mr. President, a fact all too often overlooked in this debate is that
punitive damages are not intended as compensation for injured parties.
They are punishment. Punishment of defendants found to have injured
others in a conscious manner. They are used much as fines in the
criminal system. However, currently there are two big differences.
First, unlike the criminal system, there are virtually no standards for
when punitive damages may be awarded. Second, when awarded, there are
no
[[Page S2374]]
clear guidelines as to their amount. This agreement addresses both
problems. It brings uniformity to the punishment and deterrence phase
of product liability law by providing a meaningful standard for when
punitives are to be imposed and at what level.
Under the conference agreement--except in cases against small
businesses--punitive damages in a product liability case may be awarded
up to two times compensatory damages or $250,000, whichever is greater.
An additur provision permits the judge to award punitive damages beyond
this limit if certain factors are met, but the judge cannot exceed the
amount of the jury's original award.
When the defendant is a small business--or similar entity--with less
than 25 full-time employees, punitive damages may not exceed $250,000
or two times compensatory damages, whichever is less. The additur
provision does not apply to small businesses.
Finally, either party can request the trail be conducted in two
phases, one dealing with compensatory damages and the other dealing
with punitive damages. The same jury is used in both phases.
Joint and several liability. Joint liability is abolished for
noneconomic damages--such as pain and suffering--in product liability
cases. Joint liability is a concept allowing one defendant to be held
liable for all damages even though others also were responsible for the
damage caused. What are the consequences? Too often, it means one
person is held responsible for the conduct of another. True wrongdoers
are not held liable. Indeed, consumers ultimately pay these claims--
either through higher prices, loss of service, or higher insurance
premiums.
Therefore, as to noneconomic damages, under this bill defendants
would be liable only in direct proportion to their responsibility for
the claimant's harm--so-called several liability. This section goes a
long way toward correcting one of the most often abused aspects of our
current civil legal system. It would ensure defendants would be held
liable based on their degree of fault or responsibility, not the depth
of their pockets.
Mr. President, this is an issue on which I have worked for many
years. In 1986, I fought to strengthen proposed product liability
legislation, S. 2760, with an amendment regarding joint and several
liability. My amendment--which passed the Commerce Committee--also
abrogated joint and several liability for noneconomic damages in
product liability cases. I am proud the spirit of my amendment of a
decade ago lives on in this legislation.
Alcohol and drugs defense. Under this bill, the defendant in a
product liability case has an absolute defense if the plaintiff was
under the influence of intoxicating alcohol, illegal drugs, or misuse
of a prescription drug and as a result of this influence was more than
50 percent responsible for his or her own injuries.
The philosophy behind such a provision is simple. A society working
hard to discourage alcohol and drug abuse must not sanction such abuse
by allowing individuals to collect damages when their disregard of a
vital societal norm is the primary cause of an accident.
Misuse and alteration defense. Under this legislation, a defendant's
liability in a product liability case is reduced to the extent a
claimant's harm is due to the misuse or alternation of a product. Why
should the manufacturer of a machine pay for injuries I sustain because
I remove safety guards put on in the factory?
Statute of limitations. The statute of limitations for product
liability claims is established as 2 years from when the claimant
discovered or reasonably should have discovered both the harm and its
cause. A plaintiff may not file suit after this time.
This is an excellent example of how this legislation would benefit
victims. Under current law, some States establish the time of injury as
the point at which the time for bringing a claim begins to run. Often
this is not a problem. However, in cases in which the harm has a
latency period or manifests itself only after repeated exposure to the
product, the claimant may not know immediately if he or she has been
harmed or the cause of the harm.
This bill thus would reduce the number of victims who, having
otherwise meritorious claims, are denied justice solely on the basis of
the statute of limitations in the State in which they file their claim.
Statute of repose. A statute of repose of 15 years is established for
certain durable goods. A durable good is defined by the bill as one
having either: a normal life expectancy of 3 or more years, or a normal
life expectancy that can be depreciated under applicable IRS
regulations; and is: first, used in trade or business; second, held for
the production of income; or third, sold or donated to a governmental
or private entity for the production of goods, training, demonstration
or any similar purpose.
No product liability suit may be filed for injuries related to the
use of a durable good 15 years after its delivery unless the defendant
made an express warranty in writing as to the safety of the specified
product involved, and the warranty was longer than 15 years. In such a
case, the statute of repose does not apply until that warranty period
is complete. The statute of repose section does not apply in cases
involving toxic harm.
States would be free to impose shorter statutes of repose and to
cover more than just durable goods. For instance, the House-passed
version of this bill would have applied the statute of repose to all
goods.
The need for a Federal statute of repose was presented well by a
fellow South Dakotan, Art Kroetch, chairman of Scotchman Industries,
Inc., a small manufacturer of machine tools located in Philip, SD. Last
year during hearings, Art told the Commerce Committee how vital product
liability reform is to the ability of American manufacturers to compete
in the global marketplace.
Art told me that under the current patchwork of liability laws, his
company pays twice as much for product liability insurance as it does
for research and development. Mr. President, the system is broken.
Workers compensation subrogation standards. This provision preserves
an employer's right to recover workers compensation benefits from a
manufacturer whose product harmed a worker--for instance, the
manufacturer of a machine used in a business which injures an
employee--unless the manufacturer can prove, by clear and convincing
evidence, that the employer caused the injury--for example by
maintaining an unsafe work environment or taking safety guards off the
machine.
This section of the bill makes no changes to the amount of damages an
injured worker can recover in such cases. It merely provides the
insurer or employer will not be able to recover workers compensation
benefits it paid to an injured employee if the employer or a coemployee
is at fault.
Biomaterials Access assurance. In certain actions in which a
plaintiff alleges harm from a medical implant, title II of the
legislation allows biomaterial suppliers to be dismissed from the
action without extensive discovery or other legal costs. The term
``biomaterial'' refers to the raw materials--such as plastic tubing or
copper wiring--used as part of an implantable medical device.
The legislation does not affect the ability of plaintiffs to sue
manufacturers or sellers of medical implants. However, it releases
biomaterials suppliers from lawsuits if the generic raw material used
in the medical device met contract specifications, and if the
biomaterials supplier cannot be classified as either a manufacturer or
seller of the medical implant.
During our hearings last year, the Commerce Committee heard
compelling testimony that without such changes in the law, the millions
of Americans who depend upon a variety of implantable medical devices
will be at grave risk. Suppliers of biomaterials have found the risks
and costs of responding to litigation related to medical implants far
exceeds potential revenues from the sale of the components they
manufacture.
Indeed, several major suppliers of raw materials used in the
manufacture of implantable medical devices have announced they will
limit--or altogether cease--shipments of crucial raw materials to
device manufacturers. Each of the suppliers indicated these were
rational and necessary business decisions given the current legal
framework.
[[Page S2375]]
Product Liability and Small Business
Mr. President, during the last Congress it was my privilege to serve
as ranking member of the Committee on Small Business. As a member of
that panel for many years, I know product liability reform is essential
to the future health and success of America's small businesses. Indeed,
according to a Small Business Administration study, small firms may be
affected more negatively than large firms by nonuniform product
liability laws.
This is because small businesses do not enjoy economies of scale in
production and litigation costs. In addition, they are less able to
bargain with potential plaintiffs. Finally, their limited assets make
adequate insurance much more difficult to obtain. The cost of product
liability insurance in the United States is 15 times higher than that
of similar insurance in Japan and 20 times higher than in European
countries. We simply cannot compete.
America's small businesses need rationality and uniformity in the
product liability system if they are to compete effectively in the
global marketplace. As I explained previously, this point was at the
heart of the testimony given by Art Kroetch of Scotchman Industries in
Philip, SD, at committee hearings last year.
It also was the point made to me by Jim Cope of Morgen Manufacturing
in Yankton, SD. Jim calls product liability reform a jobs issue for our
State. Morgen has had to lay off workers and has been unable to give
raises to other employees because of losses due to product liability
claims--claims that never have resulted in a verdict against his
company. Nevertheless, Morgen Manufacturing is forced to spend tens of
thousands of dollars defending itself.
To Jim Cope--and many small business owners just like him--tort
reform means more jobs for South Dakota and the Nation.
product liability reform and consumers
Mr. President, opponents of this legislation tell us it would hurt
the American consumer. Don't you believe it. Aside from the jobs issue,
product liability reform would benefit consumers in numerous ways.
It would lower the cost of U.S. goods. The current product liability
system accounts for 20 percent of the cost of a ladder, 50 percent of
the cost of a football helmet, and up to 95 percent of the cost of some
pharmaceuticals.
Reform also would foster competition and provide consumers with a
greater selection of products from which to choose. Studies tell us 47
percent of U.S. companies have withdrawn products from the market and
39 percent have decided not to introduce products due to liability
concerns. As a result, Americans depend on single sources to provide
such vital needs as vaccines for polio, measles, rubella, rabies,
diphtheria, and tetanus.
This bill also would encourage safety improvements. By contrast, the
current system actually discourages companies from engaging in
research. Many fear research aimed at improving an existing product
will be used against them to demonstrate they knew the product was not
as safe as it could be. Certainty in the legal system would reduce this
counterproductive effect.
In addition, the legislation would encourage wholesalers and
retailers to deal with responsible and reputable manufacturers. This,
in turn, would lead to better products for consumers. Under the
conference agreement, product sellers would be legally responsible for
products manufactured by companies that are insolvent or do not have
assets in the United States. This should increase the quality of the
products found on the shelves of U.S. businesses.
Mr. President, I have just outlined five ways this bill benefits
consumers. First, it will mean more jobs. Second, it will lower the
cost of the goods they purchase. Third, it will mean a greater
selection of goods from which to choose. Fourth, it will encourage
testing to make goods safer. Finally, it will help to maintain and, in
some cases, improve the quality of products available to consumers.
A bill that is bad for consumers? How can they say that with a
straight face?
product liability reform and the injured
Mr. President, we also have been subjected to a great deal of
nonsense that this bill would limit the rights of victims. Opponents
paint the picture of injured victims being harmed further when the
courthouse door hits them in the face.
Not only does this conference agreement leave intact a full range of
victims rights, it actually improves the current system in at least two
very critical ways. First, the system we have today is plagued by
delay. Second, compensation that eventually is received often is
inequitable. Curtailing frivolous lawsuits--all this legislation really
seeks to achieve--would significantly improve both problems.
Currently, product liability suits take a very long time to process.
A General Accounting Office study found, on average, that product
liability cases took 2\1/2\ years to move from filing to trial court
verdict. Other studies indicate it is more like 5 years. Most product
liability cases are settled before trial, but even these cases suffer
from delay. One plaintiff's attorney explained that ``most settlement
negotiations get serious only a week or so before trial is scheduled to
begin.''
Delay often results in undercompensation of victims. Many victims are
forced to settle their claims for less than their full losses so they
can obtain compensation more quickly. These individuals often are
forced into this decision because of inadequate resources to cover
medical and rehabilitation expenses while their case drags on.
Another way in which the current system inequitably compensates
victims concerns proportionality. Numerous studies demonstrate the
current tort system grossly overpays people with small losses, while
underpaying people with the most serious losses.
A bill that limits victims rights? Try a bill that strengthens them.
The Truth About Product Liability Reform
There you have it, Mr. President--the truth about what it is we are
trying to accomplish. The truth about how this bill would help
consumers, small businesses and, yes, even those injured in the use of
a product.
The truth is, we would not change anything that is right with
America's current civil justice system. Rather, we would curb the abuse
of frivolous lawsuits that cost each and every one of us in a wide
variety of ways each and every day. The courthouse doors stay open.
Consumers retain a full complement of rights. Lawsuits would continue
to provide a strong check on corporate behavior. Concepts such as
contingent fees would continue to allow citizens with limited means to
bring suit.
The truth, Mr. President, is that election year politics threaten to
kill this effort. The truth is, we all lose if that happens. The truth
is the American people know the current system is broken and want us to
fix it. A recent poll conducted in my home State found 83 percent of
South Dakotans responding feel ``the present liability system has
problems and should be improved,'' while only 10 percent said ``the
present liability lawsuit system is working well and should not be
changed.''
The truth is, that out there in the real America, this is not viewed
as a partisan issue. Seventy-eight percent of Democrats, 83 percent of
independents, and 88 percent of Republicans in South Dakota responding
to the survey I just quoted say there are problems that need to be
fixed. Mr. President, the message is clear. Our constituents do not
believe this should be a political fight. I cannot for the life of me
understand why some among us wish to make it so.
We should adopt this conference agreement. This body approved a
virtually identical bill last year. Nothing done in conference should
change anyone's reasoning. This is a moderate and reasoned bill. Let us
do what is right. Adopt the conference agreement and send it on to the
President. Hopefully, he will remember the strong commitment he
demonstrated to product liability on two separate occasions just a few
short years ago. Hopefully, he will not allow special interests to
continue playing politics. The stakes are simply too high.
the need to address liability for biomaterials
Mr. McCAIN. Mr. President, this bill contains a very important
provision ensuring the availability of raw materials and component
parts for implantable medical devices. This provision is necessary if
Americans are to have continued access to a wide variety
[[Page S2376]]
of life-saving devices, such as brain shunts, heart valves, artificial
blood vessels, and pacemakers. To address this issue, Senator Leiberman
and I cosponsored the Biomaterials Access Assurance Act of 1994, which
has been incorporated in the Product Liability Fairness Act which we
are debating today.
Currently, the manufacturers and suppliers of materials used in
implantable medical devices are subject to substantial legal liability
for selling relatively small amounts of materials to medical device
manufacturers. These sales generate relatively small profits and are
often used for purposes beyond their direct control. Due to their small
profit margins and large legal vulnerability for these sales, some of
the manufacturers and suppliers of these materials are now refusing to
provide them for use in medical devices.
It is absolutely essential that a continued supply of raw materials
and component parts is available for the invention, development,
improvement, and maintenance of medical devices. Most of these devices
are made with materials and parts that are not designed or manufactured
specifically for use in implantable devices. Their primary use is in
nonmedical products. Medical device manufacturers use only small
quantities of these raw materials and component parts, and this market
constitutes a small portion of the overall market for such raw
materials.
While raw materials and component parts suppliers do not design,
produce or test the final medical implant, they have been sued in cases
alleging inadequate design and testing of, or warnings related to use
of, permanently implanted medical devices. The cost of defending these
suits often exceeds the profits generated by the sale of materials.
This is the reason that some manufacturers and suppliers have begun to
cease supplying their products for use in permanently implanted medical
devices.
Unless alternative sources of supply can be found, the unavailability
of raw materials and component parts will lead to unavailability of
life-saving and life-enhancing medical devices. The prospects for
development of new sources of supply for the full range of threatened
raw materials and component parts are remote, as other suppliers around
the world are refusing to sell raw materials or component parts for use
in manufacturing permanently implantable medical devices in the United
States.
The product liability concerns that are causing the unavailability of
raw materials and component parts for medical implants is part of a
larger product liability crisis in this country. Immediate action is
necessary to ensure the availability of raw materials and component
parts for medical devices so that Americans have access to the devices
they need. Addressing this problem will solve one important aspect of
our broken medical product liability system.
This issue came to my attention when I was contacted by one of my
constituents, Linda Flake Ransom, about daughter Tara who requires a
silicon brain shunt. Without a shunt, due to Tara's condition called
hydrocephalus, excess fluid would build up in her brain, increasing
pressure, and causing permanent brain damage, blindness, paralysis, and
ultimately death. With the shunt, she is a healthy, happy, and
productive straight A student with enormous promise and potential.
Tara has already undergone the brain shunt procedure five times in
her brief life. However, the next time that she needs to replace her
shunt, it is not certain that a new one will be available due to the
unavailability of shunt materials. This situation is a sad example that
our medical liability system is out of control. It is tragic, but not
surprising, that manufacturers have decided not to provide materials if
they are subject to tens of millions of dollars of potential liability
for doing so.
It is essential that individuals such as Tara continue to have access
to the medical devices they need to stay alive and healthy. Addressing
this issue by enacting the Product Liability Act would help to ensure
the ongoing availability of materials necessary to make these devices.
It would not, in any way, protect negligent manufacturers or suppliers
of medical devices, or even manufacturers or suppliers of biomaterials
that make negligent claims about their products. However, it would
protect manufacturers and suppliers whose materials are being used in a
manner that is beyond their control.
Mr. President, we must act today to ensure the continued availability
of biomaterials to ensure that the lives of Tara and thousands of other
Americans are not jeopardized. I ask unanimous consent that a column
from the Wall Street Journal entitled ``Lawyers May Kill My Daughter''
be printed in the Record. In this column, Tara's mother eloquently
describes her daughter's condition and the need for this legislation.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Wall Street Journal]
Lawyers May Kill My Daughter
(By Linda Ransom)
Our daughter Tara was diagnosed at birth with
hydrocephalus--sometimes called ``water on the brain.'' In
the old days, there was no treatment for hydrocephalus. Most
babies diagnosed with it died within months. The lucky few
who survived were severely handicapped. These days, the only
medical intervention that works is a surgically implanted
device called a shunt, made of silicone. The shunt is a tube
and a pump that diverts excess fluid from Tara's brain.
Kids outgrow shunts, which is why Tara has already had five
shunt surgeries. She will need more. There are no guarantees
that there won't be complications from the surgeries--she's
already had meningitis, hypotonia and temporary blindness.
But before the new flexible silicone plastics were developed,
shunts were not successful. We know that there are no
guarantees even with a silicone shunt, but at least we have
something that works.
Tara has come a long way. Eight years old, she has mastered
skipping, jumping rope, roller skating and all the other
things that kids do at her age. Until this year, she didn't
even need glasses. She never read the ``risk'' statistics
because she has been too busy reading the original 14 books
of the Wizard of Oz series. Tara is currently in the third
grade at Magnet Traditional School in Phoenix. She has been
the top student in her class for the past two years, with
most of her skills well above the fifth grade level.
More importantly, Tara is the perfect example of hope--hope
in the skill of her surgeons, in advances in medical
technology, and improvements in the shunt itself. She is also
the symbol of our faith--faith in our belief that God's
miracles are the hands of the surgeons and the minds of the
scientists who make the discoveries and create the devices.
Without a shunt, however, she faces increased pressure in
her brain leading to progressive retardation, blindness,
paralysis and death. In the U.S., there are approximately
50,000 hydrocephalics like Tara depending on shunts to stay
alive. That is about the same number of Americans who died in
Vietnam. Hydrocephalics will never get their own wall in
Washington, but they would leave behind just as many
devastated families.
Although scientists are working on new and better shunts,
no one can guarantee that a shunt will be available the next
time Tara needs one. Because of lawsuit abuse, the silicone
from which the shunt is made may no longer be available.
Dow Corning, the only manufacturer of raw silicone used in
shunts, last year filed for bankruptcy as a result of
thousands of lawsuits against their silicone breast implants.
(These implants were recently found to be safe in numerous
studies, including a Harvard report released in the current
Journal of the American Medical Association.) Despite a
preponderance of evidence that silicone products are safe,
lawyers have signaled that they will now make all silicone
devices a focus of their next big class action.
Because of liability and legal blackmail, chemical
companies are no longer willing to sell the raw materials
that go into these desperately needed products--from
pacemakers and heart values, to knee joints and cataract
lenses. For Tara's shunt, there are no alternative materials
or suppliers that can be used.
No one denies there should be just compensation for gross
errors, like the man in Florida who had the wrong leg
amputated. But how can anyone be for speculative lawsuits
against all silicone products when people desperately need
these devices to live? How can anyone put the interests of a
small group of trial lawyers seeking the next big class
action lawsuit over the lives of children?
This lottery system creates big winners, but it also
creates new losers. In Sara's case, no amount of money can
buy a product that may no longer be manufacured because of a
lack of raw materials--even if it is a life-saving device.
Lack of availability is creating a black market for medical
devices in other countries. Tara's neurosurgeon told us that
shunts are so scarce in Russia today, they are removed from
bodies during autopsies and then used in new patients. Would
you want a used device if you needed a pacemaker? Would you
want to buy a shunt on the black market? Would you want your
child to be on a waiting list for one?
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The good news is there are reform efforts under-way in
Arizona and at the federal level. The Senate is planning to
vote, as early as today, on legislation to place reasonable
limits on punitive damages and eliminate unfair allocations
of liability in all civil cases. This would protect all
Americans--not just the manufacturers of medical products but
also small businesses, service providers, local governments
and nonprofit groups. Above all, it would save children like
Tara. Unfortunately, even if the bill passes, President
Clinton has said he will veto it.
I'm not a legal expert. I'm just a desperate mother. But I
know that reasonable changes must be made to protect
everyone. Enact civil justice reform. Don't take hope away
from Tara.
Mr. BURNS. Mr. President, I rise today in support of the conference
report to H.R. 956, The Commonsense Product Liability Legal Reform Act
of 1995.
This is an important piece of legislation that is the result of more
than a decade's worth of effort. I would like to congratulate the
members of the Conference Committee, led by Senators Gorton and
Rockefeller, on their diligence in coming up with a final conference
report.
This bill will help to reign in unnecessary, costly, and time-
consuming product liability cases. There is a lot of talk in this town
about cutting regulations and making American companies more
competitive. But when the talk is over nothing much has changed.
The product liability bill originally passed the Senate more than 10
months ago after prolonged debate. The final conference report is
similar to the Senate-passed bill in scope and focus rather than the
wide-sweeping reform found in the House bill.
This bill is conspicuous not for what is in it, but for what is
missing. The House approved sweeping legal reform last year that would
have addressed other civil cases, besides products, including lawsuits
against doctors, charities, and volunteer organizations.
However, it does have important provisions on punitive damages, joint
and several liability, statute of limitations, statute of repose,
workers' compensation subrogation standards. It also covers product
sellers and States rights.
This bill does not work against consumers; nor is it for
manufacturers. In fact many proponents of products liability reform who
had hoped and worked for broader reform are disappointed in its narrow
scope. H.R. 956 merely attempts to block the free-for-all that has
taken hold of our court system.
Everybody wins under this bill. Consumers will see products ranging
from football helmets to life-saving new drugs become more widely
available and less costly.
And it will not limit the legitimate rights of victims to sue or to
receive full compensation for their injuries.
This legislation is a good step in the right direction. It will not
stop lawsuits, but it will put some restraints on the out-of-control
legal battles we have seen in recent years.
That is why it is so frustrating to hear President Clinton say that
the reforms included in the bill go too far. This was a bipartisan
effort to get a bill that would be enacted into law.
Negotiations between the House and the Senate were tempered with
caution to ensure that it would get the support needed to be passed by
the Senate.
Once again efforts by reform-minded folks in Congress is threatened
by a President that has put plaintiff lawyers interests above those of
regular Americans. Politics once again rears its ugly head. The losers
are consumers, manufacturers, and true victims who find themselves
locked in a case-clogged court system.
Mr. President, once again I ask my colleagues to take a close look at
this legislation and vote in support of cloture.
contingency-fee lawyers' nonsense about the commonsense product
liability and legal reform act of 1996
Mr. GORTON. Mr. President, a document being circulated by the
Association of Trial Lawyers of America [ATLA] and their allied
professional interest groups makes the accusation that the conference
report on H.R. 956, the Commonsense Product Liability and Legal Reform
Act of 1996, is radically different than the bill passed by the Senate.
The contingency-fee lawyers' argument about commonsense product
liability reform is unfounded.
Anyone who reads the conference report and compares it to the Senate
bill can see for themselves that, except for change in the time period,
not the narrow scope, of the statute of repose and two slight
modifications to the additional amount provision, the conference report
is virtually identical to the Senate bill. All familiar with the
history of this bill also know House Members delayed going to
conference, and then agreeing on a conference report, for almost a year
until it became apparent that Senate allies of the trial bar would not
support legal fairness legislation going beyond the Senate bill.
Facts are a stubborn thing for these lawyers, because as hard as they
try to avoid them or argue around them or simply ignore them, as is
often the case, the facts never change. And, the fact is that the
product liability conference report is a narrow and limited proposal
that almost mirrors the Senate's version of H.R. 956.
Statute of Repose
H.R. 956, contains a narrow statute of repose, which places an outer
time limit on stale litigation involving a limited category of
products, workplace durable goods, that is, machine tools used in the
workplace, that are over 15-years old. If the defendant made an express
warranty in writing as to the safety of the specified product involved,
and the warranty was longer than the period of repose--15 years--then
the statute of repose does not apply until that warranty period is
complete. The provision does not apply in any case involving a toxic
harm, or in any case involving motor vehicles, vessels, aircraft, or
trains used primarily to transport passengers for hire.
The only difference between the conference report and the Senate bill
is the conference report's 15-year period; the Senate bill contained a
20-year limitation. Otherwise, the provision, including the limited
category of products covered, is unchanged.
Approximately one-third of the States have enacted statute of repose
legislation; no State provides a more liberal time period or is more
favorable to potential plaintiffs in terms of its scope that the narrow
provision in H.R. 956. Support is also found by comparing the proposed
15-year period to the laws of industrial nations which directly compete
with the U.S. to provide jobs. The EC Product Liability Directive,
implemented by 13 European nations and Australia, and Japan's new
product liability law, which became effective July 1, 1995, each adopt
a 10-year statute of repose which applies to all products. H.R. 956
will help level the playing field against foreign competitors abroad
which put American jobs at risk.
The contingency-fee lawyers argue that the conference report extends
the statute of repose to virtually all goods. This statement is wrong.
Section 101(7) of the conference report narrowly defines the term
Durable good as follows:
Durable Good.--The term ``durable good'' means any product,
or any component part of any such product, which has a normal
life expectancy of 3 or more years, or is of a character
subject to allowance for depreciation under the Internal
Revenue Code of 1986 and which is--
(A) used in a trade or business;
(B) held for the production of income;
(C) sold or donated to a governmental or private entity for
the production of goods, training, demonstration, or any
other similar purpose. (Emphasis added).
Both the conference report and the Senate bill only apply to goods
which have either a normal life expectancy of 3 or more years or are of
a character subject to allowance for depreciation under the Internal
Revenue Code of 1986 and are used in a trade or business, held for the
production of income, or sold or donated to a governmental or private
entity for the production of goods, training, demonstration, or any
other similar purpose. A machine tool is an example of product with a
long life expectancy, subject to depreciation, which is used in trade
or business.
The contingency-fee lawyers are misleading the public to believe that
the workplace use limitation has disappeared from the conference
report. It has not.
the additional amount or additur provision
Recognizing that a flexible approach to punitive damages is likely to
deliver strong bipartisan support for legal reform, opponents have
challenged the constitutionality and content of the provision in H.R.
956 which permits a judge a safety valve to go beyond the
[[Page S2378]]
proportionate limits set for punitive damages against larger businesses
and award additional punitive damages (up to the amount of the jury
verdict) in cases of egregious conduct in a desperate effort to shake
support. The provision is constitutional and represents good public
policy.
The conference report additional amount provision, as mentioned,
contains two slight modifications to the Senate bill. First, a
controversial provision in the Senate bill that would have allowed the
defendant the right to a new trial if the court used award an
additional amount of punitive damages has been removed from the
legislation and does not appear in the conference report. This change
was made in response to requests from the administration and several
Senators just before the final Senate vote. The absence of the new
trial language does not affect the constitutionality of the provision.
Research by the U.S. Department of Justice indicates that the safety
valve provision in H.R. 956 is constitutional.
Second, the Senate bill language was modified in the conference
report to clarify that the additional amount which can be awarded may
not exceed the jury's initial award of punitive damages. The jury is
not informed of the statutory limit. This language strengthens the
constitutional foundation of the provision. Opponents' seventh
amendment right to jury trial arguments are without merit.
product liability does not extend to negligent entrustment
Once again opponents are trying to mislead and confuse product
liability actions, which are covered by the conference report, with
negligent entrustment cases, which are not covered by the legislation.
As in the past, they use attention-getting, but irrelevant examples,
such as drunk driving cases and gun violence.
The trial lawyers' hollow argument is based on the applicability
section of the conference report, which says that the act applies to
any product liability action brought in any State or Federal court on
any theory for harm caused by a product. The reason for this broad
definition is to assure that the bill covers all theories of product
liability, that is, negligence, implied warranty, and strict liability.
The argument then looks to the section dealing with product sellers,
which imposes liability when a product seller fails to exercise
reasonable care with respect to a product. The argument continues that
a product seller's failure to exercise reasonable care in selling a gun
to a minor, convicted felon, or mentally unstable individual would not
be actionable, because the product seller was negligent with respect to
the purchaser and not the product.
This argument reflects an obvious misconstruction of the bill. To
make this clear, one only need look to the acts covered by product
sellers in the conference report. This appears in the definition of
product seller. The bill says that it is applicable to product sellers,
but only with respect to those aspects of a product, or component part
of a product, which are created or affected when before placing the
product in the stream of commerce. The definition then addresses those
things where the product seller produces, creates, makes, constructs,
designs, or formulates * * * an aspect of the product * * * made by
another. See Sec. 101(14)(B). This is classic product liability.
To make the point crystal clear, the product seller section
specifically provides that the conference report does not cover
negligent entrustment or negligence in selling, leasing or renting to
an inappropriate party. Section 103(d) expressly states: A civil action
for negligent entrustment shall not be subject to the provisions of
this section but shall be subject to any applicable State law.
For these reasons, the bill would not cover the situation described
by the trial lawyers. It also would not cover a seller of liquor in a
bar who sold to a person who was intoxicated or a car rental agency
that rents a car to a person who is obviously unfit to drive.
In sum, the product liability bill covers product liability, not
negligent entrustment or failure to exercise reasonable care with
regard to whom products are sold, rented or leased.
trial lawyers' other arguments are similarly without any merit
The trial lawyers' desperate attempt to portray the conference report
as to the right of the Senate bill includes a couple of other minor
points which are so hollow and petty that they deserve only brief
attention. First, the notion that the conference report expands the
product seller section beyond the Senate bill, changes burden of proof
rules for persons who irresponsibly misuse or alter products or seek
punitive damages is completely meritless. The falsity of these
arguments is apparent from the language of the conference report and
the Statement of Managers. Second, the argument that the findings in
the legislation are not supported is foolish. The subject of Federal
product liability reform has been reviewed by Congress for 15 years and
been the subject of hundreds of hours of hearings and floor debate.
Mr. SPECTER. Mr. President, I am voting for cloture on the conference
report on product liability legislation because I believe, on balance,
that the issue should be decided by a majority vote of the Senate.
In deciding to support cloture, I am significantly influenced by the
fact that the conference report corrects my principal concern: punitive
damages on egregious cases.
A decision on whether to support cloture depends upon a variety of
factors such as whether there should be more debate to fully air the
issues or whether a constitutional issue or some other fundamental
matter is involved which warrants a super-majority of 60.
In the past, I have voted for cloture on product liability
legislation in circumstance where I thought the matter should reach the
Senate floor for a majority vote.
On this state of the record on this bill, I think there should be a
majority determination, so I am voting in favor of cloture.
Mr. COATS. Mr. President, I rise today to urge my colleagues' support
for this very important product liability reform legislation. This
legislation is a conservative, but significant attempt to begin the
process of curbing a civil justice system gone awry, a system that has
been overwhelmed by the logistical burdens and economic costs of
unnecessary and unwarranted litigation.
Mr. President, it is very appropriate that Congress begin to address
this broad problem in the area of product liability reform. For it is
this area of law that has become, perhaps, the most unruly, and which
is having an increasingly adverse impact on the U.S. economy. There are
several important provisions contained in this bill. However, I will
limit my comments to the section dealing with biomaterials.
The purpose of this section is to provide a defense to the suppliers
of biomaterials, or parts, which are used in the manufacture of
implantable medical devices. What this section will do is insure the
continued availability of the raw materials that are absolutely
critical to the development of implantable medical devices. Under the
current legal system, claimants who sustain harm from a medical device
are encouraged to go after the company with the deepest pockets, the
one they can get the most money from. Often times, this entity is the
innocent supplier of the raw, biomaterials, that are utilized in the
manufacturing of the device. This, in spite of the fact that the
biomaterials supplier did nothing to cause the injury or harm.
Mr. President, the result of this vicarious liability on the part of
the biomaterials supplier is that, economically, they cannot afford to
supply the materials to the manufacturer because the risk of being
innocently swept up into litigation is too high. You see, the volume of
material they provide to the bio-manufacturer represents such a small
percentage of their total sales that it is simply not cost effective to
take the risk. They are driven out of the market by the risk of
litigation.
Located in my home State, Mr. President, in Bloomington, IN, there is
a very special company: Cook International. This company truly
represents what is great about our economic system. Unfortunately, it
also represents how a system gone awry can harm both business and the
consumer.
Cook International manufactures medical devices. One product line is
medical catheters. These catheters are high precision devices used for
various medical procedures.
A true American success story, Cook International began operating out
of
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the founder's home. It has rapidly grown into an international
corporation manufacturing the very finest in precision medical
catheters. Vital to these instruments is teflon. However, under the
threat of potentially being swept up in a product liability law suit,
Cook's suppliers have served notice that they will soon cease to
provide the vital materials for the manufacture of these life saving
catheters.
Without this legislation, Mr. President, companies like Cook will be
forced to find new suppliers of biomaterials or simply cease to
manufacture these products. The costs of this result can be measured in
lost time, lost jobs, and lost lives.
Mr. President, this is a very simply provision. If a company meets
all specifications of the manufacturer; if they are in no way involved
in the actual manufacturing or sale of the biomedical device; if they
have acted in good faith in meeting their contractual obligation to the
manufacturer; they cannot be swept up in a product liability lawsuit
simply because they have deep pockets. This is fundamentally fair.
I urge my colleagues to support this very responsible effort at
reforming our product liability legal system. I urge them to do so in
order to preserve and ensure the growth of the American manufacturing
industry. I urge them to do so because it is absolutely vital to our
biomedical industry.
Ms. MIKULSKI. Mr. President, today, I will vote against cloture on
the Product Liability Reform Act conference report. I believe the
Senate should have a careful and thorough debate on the consequences of
this conference report.
We should not close the courthouse door to those with legitimate
grievances. Nor should we close debate on an issue as serious and far-
reaching as product liability reform. I particularly do not want to
close debate when there is disagreement on the consequences on this
conference report.
Mr. President, I voted for the Senate's version of the product
liability bill. I absolutely believe Congress should enact a reform
measure to reduce frivolous law suits and have national uniform product
liability standards. I also believe that when it comes to public health
and safety, those who are responsible must be held accountable for
their actions.
The Senate bill achieved a balance which addressed the valid concerns
of the business community while protecting the rights of citizens with
legitimate cases. That's why I voted for it.
I made it clear at the time that moving beyond the Senate bill was
unacceptable to me. I said, ``To move beyond the Senate bill would be a
mistake. The scales on this are delicately balanced. If those scales
are tipped, it is unlikely I will support this bill.''
Mr. President, over the past several days, I have carefully assessed
the conference report on product liability. I have weighed the
arguments made by its supporters and its opponents. Always I have asked
whether the conference report represents the same bill I voted for in
1995, or whether it was changed, tilting the delicate balance I talked
about last spring.
Let me be clear. I do believe we need reform in this area. My job as
a U.S. Senator is to save jobs, to save lives, and to save communities.
I do want to reduce frivolous lawsuits. I want to remove barriers which
stifle innovation. I want us to be economically competitive.
At the same time, public health and safety are paramount with me. I
want consumers to have some assurance that the products they use are
safe. And if products are defective and cause harm, consumers should
know they can seek justice and redress through our courts. I do not
want to shut the courthouse door to people with legitimate claims.
That's why I have grave concerns about this conference report. This
conference report does, indeed, tip the balance.
Let me tell you why:
First of all, under the conference agreement, consumer products not
covered by the Senate bill will now be covered. The caps and other
restrictions under the conference report apply to a wide range of
consumer products and appliances, not just to those used in trade or
business.
Second, the conference report adds another barrier to people who are
seeking punitive damages. Under its provisions, an injured person will
now have to demonstrate that the wrongdoer's conduct was the proximate
cause of harm instead of merely resulting in harm. This is a much more
difficult standard.
Third, the bill could unacceptably shift the burden of proof in cases
where the alcohol and drug defense is used. Under our Senate bill, a
defendant was required to prove the plaintiff was under the influence
of drugs or alcohol. This conference agreement leaves this issue
entirely up to the States.
Finally, the conference report fails to specifically state that the
2-year statute of limitations will be suspended in cases where a court
has issued a stay or injunction. The Senate bill was quite clear on
this point. I fear the conference agreement's silence on this issue
will result in injustice.
For instance, in cases similar to the Dalkon Shield case, a court
could issue a stay, and the statute of limitations could run out for
people who have legitimate claims. I fear this defect in the conference
report will prevent women who have suffered from defective products
from seeking justice.
Mr. President, I know there are disagreements on each of the points I
have just outlined. I know that people interpret the conference
agreement's language on these and other issues in very different ways.
But, I must say that these very differences of opinion have
reinforced my conclusion that I must oppose cloture and this conference
agreement. When there are such deep and serious differences about the
impact of this legislation, I must lean on the side of protecting
consumers. I must place my obligation to protect public health and
safety first.
Therefore, I will oppose cloture today. And I will oppose this
conference report.
Mr. President, before concluding my remarks, I must acknowledge the
tremendous work done by my esteemed colleague, Senator Rockefeller, on
this legislation. He has fought diligently to uphold the Senate's
position on product liability reform. And, I must say that he has
succeeded on a number of issues. His fight has been a valiant one, and
I regret that I am not able to stand by his side today.
Let me just say, this year is not over yet. Many of us want genuine
reform we can all support. Although I cannot support the conference
agreement before us today, I hope we can go back to the drawing board.
I want us to produce a bill which reflects the balance that is needed
between the concerns of business and those of consumers. I would be
proud to support such a bill.
Mr. HATCH. Mr. President, I rise in strong support of the conference
report to the Product Liability Fairness Act.
I would first like to commend and congratulate my distinguished
colleagues, Senators Gorton, Rockefeller, and Pressler for their
longstanding leadership on this issue and on this bill. They have
labored long and hard over several Congresses to come up with a bill
that is measured and fair, and that will accomplish meaningful and
important reforms of our product liability system.
This bill will benefit American workers and consumers. The only
people who may be truly hurt by this bill are some of the Nation's
trial lawyers.
I hope this bill will not fall victim to election year politics. It
is a good bill and one that we have needed for a long time.
When this bill was on the Senate floor last spring, I supported
efforts to broaden it so that its key provisions on punitive damages
and joint and several liability would apply to all civil lawsuits.
We succeeded in passing a Dole-Exon-Hatch amendment to broaden the
punitive damages provision. Unfortunately, the bill with that provision
in it could not survive cloture and the amendment was removed.
While I continue to support broader civil justice reforms--and would
particularly like to see this Congress at least enact a bill to protect
religious and nonprofit organizations and volunteers from excessive
punitive damage awards--I offer my enthusiastic support to this product
liability bill.
Even though it is a modest bill, it represents a significant step in
the right direction toward removing some
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of the outrageous litigation abuses in our system.
Anyone who has looked at the substance of this bill will realize that
this is a limited, reasoned effort that is long overdue. This bill
should not even raise the question of a Presidential veto.
But unfortunately, it has.
The ink was barely dry on this compromise bill before the President,
coming to the defense of a limited and narrowly focused interest
group--trial lawyers--and at the expense of American competitiveness,
American jobs, and American consumers, declared he would veto this
bill.
For the sake of our constituents across the Nation, we should be
crystal clear about where the opposition to this sensible bill comes
from. It does not come from the American people, and it does not come
from American workers and consumers.
Product liability reform is supported by the overwhelming majority of
Americans. They have indicated their frustration with crazy lawsuits,
outrageous punitive damage awards, and abusive litigation. They see a
complete lack of common sense in our civil justice system.
They want change from a status quo that has been unfair and that has
encouraged irresponsible litigation in this country. It is our
responsibility to deliver that change. And it should be the President's
responsibility to sign this bill.
Given the President's last-minute veto of the securities litigation
reform bill, which came following appeals from a few well-placed, well-
heeled trial lawyers, we probably should not be surprised by the
President's obstructionist position on this bill.
Despite the sincere, tireless efforts of a leading member of his
party, Senator Rockefeller, to work out a bipartisan position, the
President has apparently opted to defend the status quo.
Senator Rockefeller should take some heart in the fact that while he
may be no more successful in selling this bipartisan bill to the White
House than his colleague Senator Dodd was in selling the securities
litigation bill, Senator Dodd ultimately crossed the finish line.
We should at least be clear that the President's opposition to this
bill comes only from the well-heeled trial lawyers who have taken
advantage of our litigation system for their own benefit.
For too long, our citizens have been the ultimate victim of lawsuits
and threats of lawsuits that go beyond the bounds of common sense. It
often is not fair, and it often is very extreme.
By some estimates, nearly 90 percent of all companies can expect to
become a defendant in a product liability case at least once. Estimates
of the costs of product liability litigation range from $80 to $117
billion per year. That is simply too high.
Our national resources should not be misdirected to pay for extreme
and unproductive litigation costs. We heard many, many references to
these costs when this bill was on the floor last spring. We heard that
20 percent of the price of a ladder goes to pay for litigation and
liability insurance, that one-half of the price of a football helmet
goes to liability insurance, and on and on. Just who does President
Clinton think is paying these additional costs?
This bill seeks to reduce the litigation tax burdening our economy
and stifling innovation and job-growth. At the same time, it aims to
ensure that those individuals who are harmed by defective products are
compensated by the parties who rightfully should bear responsibility
for wrongdoing.
This is an important point given the disinformation circulating about
this bill. This legislation does not deprive any American of his or her
right to sue.
We need these reforms because it has become evident that we cannot
address these problems comprehensively without a uniform, nationwide
solution to put a ceiling on at least the most abusive litigation
tactics.
Products produced in one State move in interstate commerce.
Manufacturers, product sellers, and individuals from one State may find
themselves being sued in another State.
We need to protect citizens of some States from the product liability
litigation costs imposed on them by other States' legal systems.
We need to assist those affected by laws in States where the
legislatures have attempted reforms only to be thwarted by some State
courts.
This bill does that by encouraging commonsense, responsible, and fair
litigation.
For one, this bill reforms joint and several liability. I have spoken
before about a case against Walt Disney World in which Walt Disney
World was judged to be only 1 percent at fault for injuries a woman
suffered when her fiance rammed into her on a grand prix ride at Disney
World. Under principles of joint and several liability, Disney World
was forced to pay 86 percent of the damages. (Walt Disney World Co. v.
Wood, 515 So.2d 198 (Fla. S. Ct. 1987).)
This bill strikes a sensible balance by limiting joint and several
liability to economic damages. This fairness approach means that
defendants will be chiefly responsible for the harm that they cause
rather than the harm caused by other defendants.
Other provisions also promote fairness. It is 100 percent wrong to
paint them any other way.
Take the 2-year statute of limitations. That gives parties a
reasonable time in which to take legal action after they know, or
should have known, of an injury and its cause, at the same time that it
prevents late-in-the-day lawsuits.
Who can argue with these commonsense provisions, except some of our
Nation's trial lawyers who benefit from the increased fees they receive
from unfair recoveries?
The bill imposes liability on product sellers only under certain
circumstances in which the product seller is responsible for the safety
of the product it sells. A product seller should not be held hostage to
a lawsuit if the manufacturer caused the damage and the plaintiff can
and should be suing the manufacturer.
The bill similarly provides that those who rent or lease products
should be liable only where they themselves have actually been
negligent or otherwise responsible for the harm--not where they are
simply in the supply chain and have done nothing wrong.
The bill provides a defense if the plaintiff was intoxicated or under
the influence of drugs and if that accounted for more than 50 percent
of the responsibility for the harm caused. What is wrong with that
provision?
The bill reduces damages payable by a manufacturer if harm is caused
by any misuse or alteration of the product.
The bill includes a limit on punitive damages in product liability
cases of two times the amount of economic and noneconomic losses. That
permits an adequate punishment where punishment is called for, but puts
some restraint on runaway punitive damages.
We did make some accommodations in this provision, including an
exception allowing judges to go beyond the limits of the bill. This
provision was tightened up in conference, and I think it was improved
somewhat. Although I continue to have some reservations that the
additur provision represents a weakening of the bill's punitive damages
provision, I support this bill.
The provision that we added on the floor to protect small businesses
has remained in the conference report. That provision applies to small
businesses having less than 25 employees and individuals whose net
worth does not exceed $500,000. In cases involving either of those as
defendants, punitive damages cannot exceed the lesser of $250,000 or
two times economic and noneconomic losses.
This worthy provision prevents small businesses and individuals from
facing punitive damages in excess of $250,000.
The conference report adopts the House version of the statute of
repose, which sets a 15-year limit beyond which manufacturers could no
longer be sued in a product liability action. Of course, other parties
having physical responsibility for the product, like product sellers or
renters, would continue to bear responsibility.
I believe it is important to stress that punitive damages are in
addition to make whole, compensatory relief. The administration
produced its policy with respect to the Gorton substitute product
liability bill on April 25, 1995, and was critical of the punitive
damage limitations in the bill.
In the President's statement this past weekend indicating that he
would veto this legislation, the President again criticized the
punitive damages
[[Page S2381]]
provisions--even though those provisions have since been modified in an
attempt to address his concerns.
On May 2, 1995, I received a letter from Prof. George Priest of the
Yale Law School responding to the administration's policy. I think he
gets to the heart of why the administration's concerns then and now are
misplaced, in error, and an excuse to veto this bill.
Let me read from that letter.
Professor Priest--responding to the bill's then punitive damages
limit of three times economic damages or $250,000, whichever is
greater--writes:
The Administration opposes the cap on punitive damages on
the grounds that the cap ``invites a wealthy potential
wrongdoer to weigh the risks of a capped punitive award
against the potential gains of profits from the wrongdoing.
I note that the administration used that exact same phraseology in
its statement of administration policy issued on March 16, 1996.
Professor Priest went on to write:
Meaning no disrespect, the administration's position
displays a naivete unworthy of the serious problems created
for consumers and low-income consumers, in particular, by the
current absence of limits on potential punitive damages
awards.
The administration appears to criticize and to want to
prevent the calculation by potential defendants of future
potential damages. That position cannot be sensibly
maintained because it ignores the only purpose of punitive
damages, which is to deter. There can be no deterrence
without a calculation of a possible future penalty. The
entire system of punitive damages is premised on the hope
that potential wrongdoers will engage in such calculations
and decide against engaging in harm-causing behavior. If
there were no such calculations, there would be no deterrent
effect. The issue, thus, is what the level of potential
punitive damages ought to be in order to obtain appropriate
deterrence.
Although the administration does not address the issue, it
is well established in the analysis of modern tort law (and
hardly controversial within the academy) that the calculation
of compensatory damages alone is sufficient to create the
appropriate deterrence of loss. Additional punitive damages
awards surely reinforce the deterrent effect of compensatory
damages, but at a cost: Where punitive damages awards are
excessive or unpredictable (which the administration seems to
want), producers are deterred from sales altogether and
withdraw products and services from markets. Excessive or
unpredictable punitive damage awards, thus, harm consumers
and low-income consumers most of all because low profit
margin products and services are the first to be withdrawn.
Many scholars believe (and I am among them) that the
current problems created by excessive punitive damages are so
severe that a cap of three times economic damages is still
too high and that consumers--again, especially the low
income--would benefit from a stricter cap.
I think that statement accurately and precisely sets out the reasons
that I and so many others have come to the conclusion that punitive
damages must be limited to benefit consumers. It is simplistic and
inaccurate for opponents of this bill to claim that unlimited punitive
damages benefit consumers. They do not.
I note that the proportionality limit in the current bill was
moderated to two times the sum of economic and noneconomic damages.
Simply put, all of the provisions in this bill are commonsense
provisions that level the playing field and encourage fairness in our
product liability system. They are changes that Americans want and
deserve.
I could go on and on about ridiculous product liability cases that
Americans are sick of hearing about.
Everyone has heard of the McDonald's coffee case, but remember the
McDonald's milkshake case? I spoke at length about that on the floor
last spring.
A man had purchased a milkshake at the McDonald's drive-through, put
it between his legs, spilled it all over himself, and got into an
accident with another driver. That driver sued McDonald's on a product
liability theory and claimed that McDonald's should have warned the
milkshake drinker not to drink milkshakes and drive. (Carter v.
McDonald's Corp., 640 A.2d 850 (N.J. 1994).)
Or how about the president of the Dixie Flag Manufacturing Co. who
testified before the Commerce Committee last April. His company was
sued by a man who stopped to help some employees at another company
lower a flag. The man claimed that, while holding the flag, he was
blown off the ground by a strong gust of wind and that the flag ripped,
causing him to fall and hurt himself. He sued the flag company,
claiming that the flag was unreasonably dangerous. That is bad enough,
but what is worse is that there was no evidence that Dixie Flag had
even sold the flag at issue.
We have just got to restore some common sense into our legal system.
The examples and the abuse go on and on.
Our large and small businesses and our consumers and workers are
being overwhelmed with litigation abuse.
The vice president of the Otis Elevator Corp. provided us with
information indicating that his company is sued on the average of once
a day. Once a day.
Although Otis wins over 75 percent of its cases, on average over the
past 3 years it has spent $20 million per year on liability costs,
about half of which has gone to attorneys' fees.
These are staggering costs that should take our breath away. They
represent resources which could be going to create new jobs or
undertake new advancements. Our national resources should be going to
productive uses--not to unnecessary and overblown litigation and
insurance costs.
In short, I hope the Senate will stand up for what is right and what
the American people want and need. We should send this bill to the
President.
And, the President should sign it.
Mr. DOLE. Mr. President, there is a broad bipartisan consensus that
we must do more to curb lawsuit abuse in America--the kind of abuse
that has turned suing your neighbor into the newest American pastime.
This bipartisan compromise bill is an important first step: It will
restrain outrageous and costly lawsuits that inhibit economic growth,
threaten small businesses, and inflict a litigation tax on American
consumers of $152 billion a year--that's right, $152 billion a year.
I want to congratulate Chairman Pressler, and particularly Senators
Gorton and Rockefeller for their hard work--years of hard work,
really--on this important legislation. I also want to thank Senator
Lott for his assistance in resolving the differences between House and
Senate.
But despite all the work, all of the bipartisanship, all of the sweet
whispers of support out of the White House, suddenly we are voting on a
bill that is under a threat of veto.
Why? Well, let us take a look at what President Clinton said last
Saturday when he issued his veto threat. President Clinton said that he
was concerned about federalism and an ``unwarranted intrusion on State
authority.'' But this argument was long ago dismissed by such concerned
parties as the National Governors Association. In fact, the Governors,
including then-Governor Clinton, called for a uniform national
standard, stating that it would ``greatly enhance the effectiveness of
interstate commerce.''
In other words, this sudden attack of States rights fever is
misplaced.
President Clinton also said last Saturday that he was concerned the
bill would ``prevent injured persons from recovering the full measure
of their damages.'' But compensatory damages are not affected by this
legislation at all. And punitive damages are available for exactly
those situations for which they were intended--situations which involve
wrongdoing or egregious conduct.
That is what the President said.
What the President did not say however was that he has been under
enormous pressure to veto this measure from the wealthiest and most
powerful special interest lobby in America: the trial lawyers.
Mr. Clinton has been one of the most-favored recipients of their
largess. The Center for Responsive Politics found that lawyers and
lobbyists funneled a grand total of $2.6 million to Mr. Clinton's 1992
campaign. That of course vastly understates the real number, since it
is often impossible to identify the source of the real donors. In just
the first 9 months of 1995, lawyers and law firms have pumped another
$2.5 million into the President's campaign coffers.
If money talks, this money screams. And what it screams is very
simple: kill each and every attempt at legal reform. Now, I'm not one
to assume just because someone gives you money, they call the tune. But
this message has apparently been heard down at the White House loud and
clear.
Consider the record: President Clinton instigated a filibuster to
stop legal
[[Page S2382]]
reform that covered small business and charities and volunteer
organizations last year.
President Clinton pulled a much-publicized flip-flop and vetoed the
securities litigation reform late last year. Fortunately, Congress
overrode his veto.
President Clinton now threatens to veto a modest and bipartisan bill
that he once suggested he would support.
This is unfortunate, but how it happened is worse.
Before he said he would veto this bill, President Clinton's allies
did something very cynical. Mr. Clinton's friends on the Hill made sure
that the protections from lawsuit abuses in this compromise bill would
not be extended to charities and nonprofits.
Why would they do that? Everyone professes to want such protections
passed into law. Yet, they insisted.
Well, obviously, it would have been more difficult to veto a bill
that offered protections for charities and volunteer organizations. It
would have interfered with posturing as the defender of the little guy.
So, those protections had to go. And 2 days after those protections
were deleted by his allies, President Clinton issued his veto threat.
I don't intend to play this game. Charities and volunteer
organizations deserve relief, not cynical politics as usual.
Elaine Chao, president of the United Way of America, recently wrote a
passionate plea calling for protections for charities, so caseworkers
in family counseling agencies, literacy tutors, and volunteer
fundraisers won't be chased away by the threat of liability.
All Americans should be outraged, as Elaine Chao puts it, by ``the
proliferation of frivolous lawsuits that treat charities and nonprofits
as pinatas, as so many bags of goodies to be plundered.''
That's why Senator Hatch and I have introduced a bill that provides
such relief. Our bill would protect charities and nonprofits like the
Little League and Girl Scouts. I intend to bring it to the floor for
consideration as soon as possible.
The President and his allies will then be asked to make a simple
choice between protecting charities or enriching trial lawyers.
President Clinton, please do not block this measure again. Do not let
the heavy hand of special interests stay the helping hand of charities.
Mr. President, with nearly 19 million new suits filed per year--1 for
every 10 adults--no one is immune from the lawsuit epidemic. The cost
of defending yourself in an average, nonautomotive case is about
$7,500. That is money you lose even if you win your case.
The lawyers, of course, never lose. It is time that this stopped.
I hope President Clinton will reconsider his ill-advised veto threat.
In the meantime, I urge my colleagues to pass this bill.
Mr. ABRAHAM. Mr. President, I rise today in support of H.R. 956, a
bill to reform product liability law.
A few months ago, the 104th Congress took the first momentous step
toward legal reform. Over President Clinton's veto, we passed H.R.
1056, a bill to reform securities litigation.
This legislation will significantly curb the epidemic of frivolous
lawsuits that are diverting our Nation's resources away from productive
activity and into transaction costs.
In passing H.R. 956, the Senate will be taking an equally important
second step on the road toward a sane legal regime of civil justice.
Our current legal system, under which we spend $300 billion or 4.5
percent of our gross domestic product each year, is not just broken, it
is falling apart.
This is a system in which plaintiffs receive less than half of every
dollar spent on litigation-related costs. It is a system that forces
necessary goods, such as pharmaceuticals that can treat a number of
debilitating diseases and conditions, off the market in this country.
This is a system in which neighbors are turned into litigants. I was
particularly struck by a recent example reported in the Washington
Post. This case involved two 3-year-old children whose mothers could
not settle a sandbox dispute--literally, a preschool altercation in the
sandbox--without going to court.
Something must be done about this situation and this litigious
psychology, Mr. President, and this bill puts us on the road to real,
substantive reform.
It institutes caps on punitive damages, thereby limiting potential
windfalls for plaintiffs without in any way interfering with their
ability to obtain full recovery for their injuries.
It provides product manufacturers with long-overdue relief from
abusers of their products.
And it protects these makers, and sellers, from being made to pay for
all or most noneconomic damages when they are responsible for only a
small percentage.
First, as to punitive damages. No one wants to see plaintiffs denied
full and fair compensation for their injuries. And this bill would do
nothing to get in the way of such recoveries.
Unfortunately, punitive damages have come to be seen as part of the
normal package of compensation to be expected by plaintiffs. George
Priest of the Yale Law School reports that in one county, Bullock, AL,
95.6 percent of all cases filed in 1993-94 included claims for punitive
damages.
Punitive damages are intended to punish and deter wrongdoing. When
they become routine--one might say when they reach epidemic
proportions--they end up hurting us all by increasing the cost of
important goods and services.
For example, the American Tort Reform Association reports that, of
the $18,000 cost of a heart pacemaker, $3,000 goes to cover lawsuits,
as does $170 of the $1,000 cost of a motorized wheelchair and $500 of
the cost of a 2-day maternity hospital stay.
We can no longer afford to allow this trend to continue. I am glad,
therefore, that this bill begins to cap punitive damages--although in
my judgment it only makes a beginning in that area.
I am particularly glad that the bill imposes a hard cap of $250,000
on punitive damages assessed against small businesses--the engine of
growth and invention in our Nation.
Of course, punitive damage awards are not the only things increasing
the costs of needed products.
Throughout the debate over civil justice reform I have been referring
to the case of Piper Aircraft versus Cleveland. I use that example
because it shows how ridiculous legal standards can literally kill an
industry--as they did light aircraft manufacturing in America--and cost
thousands of American jobs.
In Piper Aircraft, a man took the front seat out of his plane and
intentionally attempted to fly it from the back seat. He crashed, not
surprisingly, and his family sued and won over $1 million in damages on
the grounds that he should have been able to fly safely from the back
seat.
These are the kinds of decisions we must stop. Drunken plaintiffs,
plaintiffs who abuse and misuse products--plaintiffs who blame
manufacturers and sellers for their own misconduct--should not be
rewarded with large sums of money. They may deserve our concern and
sympathy, but we, as a people, do not deserve to pay for their
misconduct through the loss of entire industries.
I am happy that this bill establishes defenses based on plaintiff
inebriation and abuse of the product because I believe these defenses
will benefit all Americans.
Finally, it seems clear to me that no manufacturer should be held
liable for noneconomic damages which that individual or company did not
cause.
In its common form, the doctrine of joint liability allows the
plaintiff to collect the entire amount of a judgment from any defendant
found partially responsible for the plaintiff's damages.
Thus, for example, a defendant found to be 1 percent responsible for
the plaintiff's damages could be forced to pay 100 percent of the
plaintiff's judgment.
This is unfair. And the unfairness is aggravated when noneconomic
damages are awarded.
Noneconomic damages are intended to compensate plaintiffs for
subjective harm, like pain and suffering, emotional distress, and
humiliation.
Because noneconomic damages are not based on tangible losses,
however, there are no objective criteria for calculating their amount.
As a result, the size of these awards often depends more
[[Page S2383]]
on the luck of the draw, in terms of the jury, than on the rule of law.
Defendants can be forced to pay enormous sums for unverifiable damages
they did not substantially cause.
This bill would reform joint liability in the product liability
context by allowing it to be imposed for economic damages only, so that
a defendant could be forced to pay for only his proportionate share of
noneconomic damages.
As a result, plaintiffs would be fully compensated for their out-of-
pocket losses, while defendants would be better able to predict and
verify the amount of damages they would be forced to pay.
This reform thus would address the most pressing concerns of
plaintiffs and defendants alike.
Mr. President, problems will remain with our civil justice system
after this bill is made into law--if this bill is signed by President
Clinton and made law.
Charities and their volunteers will remain unprotected from frivolous
lawsuits.
Our municipalities will remain exposed to profit-seeking plaintiffs.
And the nonproducts area of private civil law in general will remain
unreformed--3-year-olds and their mothers may still end up in court
over a sandbox altercation.
In the last session I and some of my colleagues fought for more
extensive, substantive, and programmatic reforms to our civil justice
system. These were consistently turned back.
I believe at this point it is time for us to consider more neutral,
procedural reforms, such as in the area of Federal conflicts rules, to
rationalize a system we cannot seem to tame.
But I am certain, Mr. President, that this bill marks an important
step toward a fairer, more reasonable and less expensive civil justice
system.
This is why I am frustrated that President Clinton has threatened to
veto this bill.
The President has stated repeatedly that he would support balanced,
limited product liability reform. He has been singularly unhelpful in
his opposition to more far-reaching reforms that would do more for
American workers and consumers. But he has claimed that he would
support product liability reform.
Now the President is claiming that this legislation is somehow unfair
to consumers.
Mr. President, is a system in which fifty seven cents of every dollar
awarded in court goes to lawyers and other transaction costs fair to
consumers of legal services?
Is it really pro-consumer to have a system in which, as reported in a
conference board survey, 47 percent of firms withdraw products from the
marketplace, 25 percent discontinue some form of research, and 8
percent lay off employees, all out of fear of lawsuits?
Please tell me, Mr. President, are consumers helped by a system in
which, according to a recent Gallup survey, one out of every five small
businesses decides not to introduce a new product, or not to improve an
existing one, out of fear of lawsuits?
The clear answer, I believe, is that consumers are hurt by our out-
of-control civil justice system, a system which makes them pay more for
less sophisticated and updated goods.
I respectfully suggest that President Clinton look beyond the
interests of his friends among the trial lawyers to the interests of
the American people as a whole.
If he looks to that interest he will find a nation hungry for reform,
yearning to be freed from a civil justice system that is neither civil
nor just, seeking protection from egregious wrongs, but not willing to
sacrifice necessary goods, important public and voluntary services, and
the very character of their communities to a system that no longer
produces fair and predictable results.
If we in this chamber consult the interest of the people, Mr.
President, we will pass this bill. If President Clinton consults that
primary interest, he will sign the bill and make it law.
Mr. President, I yield the floor.
Mr. CONRAD. Mr. President, today's vote marks the return of the
product liability issue to the Senate. It was about 1 year ago, May 10,
1995, when I voted for final passage of the Senate version of the
product liability bill.
Yet before final passage, I voted against cloture four times. I voted
against cloture because I had reservations about some of the provisions
in the bill, including the absolute punitive damage cap and one way
preemption clauses within the bill. However, after cloture was
achieved, I voted in support of final passage in the hopes that the
Senate and House conferees, working in conjunction with the White
House, would reach a reasonable, balanced, and fair compromise.
Unfortunately, the conference report, rather than improving the bill,
raises more questions and concerns. In the Senate bill, the language
made it clear that the following would be excluded from the definition
of product, electricity, water delivered by a utility, natural gas, or
steam. However, the conference report adds an exception that in
application, swallows the exclusion. The exception provides that if
electricity, water delivered by a utility, natural gas, or steam is
subject under State law to strict liability, the provisions of the
product liability conference report apply. This is an expansion of the
Senate bill.
Also, in the Senate bill, the provision regarding negligent
entrustment was found in the applicability section and it provided that
nothing in the title, the products liability bill, would apply to
negligent entrustment cases. However, in the conference report, the
negligent entrustment language is moved to the seller liability section
and therefore negligent entrustment actions are not excluded from the
provisions of the bill. Does the Senate really want to send a signal to
those who, for example, serve alcohol to minors that their liability is
substantially reduced?
The conference report language changes the Senate bill's provision on
statute of repose by reducing the number of years and inserting
ambiguity on the scope of products covered under statute of repose. The
statute of repose is reduced from the Senate bill's period of 20 years
to the conference report's period of 15 years. Changes in the
definition of durable goods have raised ambiguity over whether the
statute of repose remains applicable to only durable goods used in the
workplace.
Finally, my concern remains about provisions which change State law
only when that law is unfavorable to negligent manufacturers. If the
goal is to create a uniform Federal law, the conference report should
not make exceptions for States in the areas of statute of repose and
punitive damage cap formulas.
I regret that I am unable to vote for cloture on this conference
report. I remain supportive of reasonable and balanced product
liability reform. My vote for final passage of the Senate bill on May
10, 1995, is a testament to my position.
Mr. BAUCUS. Mr. President, I rise in opposition to this conference
report.
Like most Americans, I believe we would all be better off with fewer
lawsuits. But, as we vote on this legislation, we must also ask
ourselves if we are being fair to average Americans who are injured by
dangerous products.
As I will discuss in more detail in just a moment, I believe my home
State of Montana has done a fine job of discouraging unnecessary
litigation and excessive damage awards. We have found a balance--a fair
balance--that works for Montana and I believe other states should be
allowed to the same.
BILL INTRUDES ON STATE RESPONSIBILITIES
This past December, I supported welfare reform legislation. My
reason, in essence, was that a Federal program was broken and could be
managed better by State governments.
The product liability bill before us now does just the opposite. It
takes State laws which are not broken and subordinates them to a
Federal law. It preempts the civil law of all 50 States and expands
Federal powers into an area which, for two centuries, has been governed
by the States. That is a very grave decision, and it is one we should
not take unless there is absolutely no alternative.
Now, I am not an absolutist on this point. In some unusual cases--in
particular, when States are violating the rights of individuals--the
Federal Government should step in. For example, the Federal Government
was right to intervene and eliminate segregationist Jim Crow laws
through the Civil Rights Act and the Voting Rights Act.
[[Page S2384]]
But in this case, State governments are exercising their tort law
responsibilities perfectly well. There is no reason for the Feds to
take over.
THE MONTANA CASE
Let us look at the case of Montana to see why.
Our Chief Justice, the Honorable Jean Turnage, summed it up in a
letter he wrote to me in 1994 in his capacity as President of the
Conference of Chief Justices. In that letter he said:
Federal preemption of existing State product liability law
at this point is an unwise and unnecessary intrusion upon the
principles of federalism.
Justice Turnage is on very firm ground. Over time, Montana has
drafted and amended our State laws to make sure they reflect our needs.
For example, our legislature has imposed a punitive damage cap in
medical malpractice cases. We also let small businesses register as
limited liability companies to reduce their exposure to civil suits.
And Montana has already solved many of the other problems this
product liability reform bill attempts to address.
LIABILITY ALREADY REFORMED IN MONTANA
First, we strike a fair balance between plaintiffs and defendants.
The doctrine of joint and several liability is a good example.
Montana applies joint liability only when defendants are more than 50
percent responsible for a person's injury. Defendants who are less than
50 percent liable are accountable only for the amount of injury
directly attributable to their wrongdoing.
This makes sense. Defendants should not be held jointly liable when
they are only minimally responsible. Conversely, the injured should not
go uncompensated when a defendant is more than half responsible.
So we have found a balance on liability. And this bill would destroy
the balance. Because if it passes, Federal law would void Montana's
joint and several liability statute completely.
MONTANA COURTS FAIR IN PUNITIVE DAMAGES
Second, look at Montana's treatment of punitive damages.
Again, we looked at the issue and found a solution that meets our
needs. Our courts award punitive damages only in limited circumstances
where a corporation clearly acts in a reckless way that endangers
public safety.
We allow juries to award punitive damages only when a product
manufacturer or seller is guilty of actual fraud or malice. Montana
juries awarded these punitive damages a grand total of three times
since 1965. And under H.R. 956, Montana juries would have great
difficulty awarding punitive damages even when the defendant has shown
total disregard and disrespect for the health and welfare of the
consumer.
PROTECTING MONTANA WORKERS COMPENSATION LAW
Last but not least, I am deeply concerned about how this legislation
could seriously harm Montana small businesses.
I recently asked Prof. David Patterson of the University of Montana
School of Law to review this conference report and advise me of its
potential impacts on Montana business. Professor Patterson is an
acknowledged expert in Montana workers compensation law. He is also
chairman of the State Bar Ethics Committee.
Professor Patterson has advised me that this conference report could
have unfavorable, perhaps unintentional impacts * * * on Montana
employers.
Specifically, he points to its provisions overriding existing Montana
workers compensation law. As it is today, Montana workers compensation
law protects employers from virtually all workplace-related products
liability suits. But Professor Patterson believes the legislation
before the Senate would eliminate or significantly errode these
protections for Montana employers. I find that deeply troubling.
Mr. President, I ask that the full text of Professor Patterson's
letter to be printed in the record immediately following these remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. BAUCUS. Now, I believe that many companies have legitimate
grievances with some of the State tort laws. But they should take the
complaints to the States and do the job there. It is simply
unnecessary--and really, it is wrong--to bring in Federal law
enforcement and Federal courts to nationalize the tort laws. And its
potential impacts on Montana workers compensation law show how
dangerous--and costly for small businesses--this can become.
As Chief Justice Turnage said, it is unnecessary and unwise for
Congress to try and take over these State responsibilities. Montana has
managed its liability laws for over 100 years. We have exercised our
rights in a responsible and balanced way. And we should be able to do
so for the next hundred years.
And Congress, for its part, should get back to its real business and
what the people expect--working together to balance the budget, raise
the minimum wage, and help our families provide themselves and their
children with a secure future.
Exhibit 1
The University of Montana
School of Law,
Missoula, MT.
Re H.R. 956 counterproductive for Montana employers.
Sen. Max Baucus,
Senate Hart Building, Washington, DC.
Dear Sen. Baucus: As a Montana law professor who teaches
workers-compensation courses, I urge you to consider, before
voting on H.R. 956, the ``Common Sense Product Liability
Legal Reform Act of 1996,'' how surely and severely Section
111 of that bill would impact Montana employers and their
workers compensation insurers.
Section 111(a)(3) of H.R. 956 clearly rewards manufacturers
and sellers of defective workplace equipment who blame
employers for injuries to their employees. Consequently, even
employers who are otherwise immune from liability under
Montana's workers compensation scheme will frequently be
dragged into costly lawsuits between injured workers and the
manufacturers or sellers of defective machinery.
H.R. 956 will also increase workers compensation premiums
in Montana by forcing Montana employers and their workers
compensation insurers to pay for workplace injuries which are
currently the responsibility of manufacturers and sellers of
defective products. Whatever its other merits, H.R. 956
undeniably shifts additional costs of workplace injuries
caused by defective products onto Montana employers.
Finally, and perhaps most dangerously, H.R. 956 seriously
jeopardizes the core immunities historically enjoyed by
Montana employers. H.R. 956 forcibly injects the issue of
employer fault into a previously no-fault state workers
compensation scheme. The bill also expressly preempts all
inconsistent state statutes--including those guaranteeing
exclusive-remedy protection to employers. If (as seems
likely) the Montana Supreme Court, in any of several pending
appeals, finds limits to such a faultbased workers
compensation system under Montana's Constitution, then H.R.
956 will automatically preempt the exclusive-remedy statutes
now taken for granted by Montana employers.
Please consider carefully the unfavorable, perhaps
unintentional, impacts of H.R. 956 on Montana employers.
Please contact me if I can provide additional information or
assistance. Thank you.
Respectfully,
Prof. David Patterson.
The PRESIDING OFFICER (Mr. Frist). Who yields time?
Mr. GORTON. Mr. President, I yield 2 minutes to the Senator from West
Virginia.
Mr. ROCKEFELLER. Mr. President, I thank my colleague from the State
of Washington.
Mr. President, we are about now to vote on what I think is an
enormously important bill in terms of human beings and in terms of the
prospects for a better growing economy. However, I will be specific in
my closing remarks.
There has been so much confusion about what is and what is not
covered under product liability in the conference report, and I think
that is because there has been a very deliberate attempt to mislead
people during the course of this debate and prior to it.
There is one example I hope will enlighten my colleagues. Yesterday I
received a letter from MADD, Mothers Against Drunk Driving, which
incorrectly quoted the legislation and, from that, concluded that drunk
driving cases would be protected. That is totally wrong. Drunk driving
cases will not be covered by this bill. Here is what MADD said. The
bill covers ``harm caused by a product or product use''. Here is the
correct quote, Mr. President. The bill covers ``harm caused by a
product.'' It is product liability that we are talking about--not
product use but product. There is a huge difference.
Mr. President, many other well-meaning workers and people have been
totally mislead about what this bill
[[Page S2385]]
covers. The issue of what is covered and what is not covered is this:
Is it the product that causes harm? If yes, then it is covered in the
bill. However, if the person using the product that causes harm--such
as the driver of a car--the case is not covered by this bill.
Mr. HOLLINGS. Mr. President, I read the law, and it is properly
quoted by MADD. We doublechecked because we heard some rumors. So
checking it out, we found that the MADD position in opposition to this
legislation is the same as I included in the Record, you can read the
exact language which says ``any several action brought, or any theory
of harm caused by a product or product use''--period, end quote. So
they know what they are talking about.
Now to the confusion. You saw that 30-minute demonstration we had out
here about strict liability and utilities. They wrote that in the
double negative fashion because they did not want to say we are going
to exempt strict liability. So they have done so by covering it in this
bill.
Right to the point, they tell the gas company to go ahead and get
reckless and not worry about punitive damages for the simple reason
that now, having been written that way, you have to have malice.
I could cover a plethora of things. The solution is within the
States. The Senator from Rhode Island was correct. We have been on it
for 15 years. The State of Tennessee has acted. The State of South
Carolina has acted. When we say it is a moderate, bipartisan bill, the
opposition is moderate and bipartisan. There is bipartisan opposition
because this goes totally against the grain. When I was sent up here
some 29 years ago standing for States rights, here comes the crowd
finally saying let us have education back to the States; Medicaid, let
us have it back to the States; crime and block grants back to the
States; welfare, the Governors say, come, give it to us, back to the
States. The States are doing the job. The majority leader runs around
with a tenth amendment in his pocket and pulls it out, and says we have
government going back to the States. But the business crowd downtown
wrote this sorry measure. It is not bipartisan with respect to the
conference. We were never asked into that conference; never considered.
That had not happened. That had not happened.
I found out about this on CBS when they talked about the silly case
of women going into the men's room.
The PRESIDING OFFICER. The Senator's time has expired.
Who yields time?
The Senator from Washington.
Mr. GORTON. Mr. President, this debate can come down to an example
involving one individual, a young girl, and one company. The young girl
is Tara Ransom, whose story is told in today's Wall Street Journal, and
who with her parents has come to my office. Tara is one of 50,000
hydrocephalics in the United States with a condition that previously
could not be treated at all and was a literal terror to its victims and
to their parents.
She has, nonetheless, led a normal life, almost a normal life, due to
a series of silicon shunts which have to be replaced every year or so
due to her growth rate.
It is now becoming next to impossible for Tara to get such a silicon
shunt because the one company, Dow-Corning, that is willing to
manufacture it, is in bankruptcy largely due to product liability
litigation and is threatened with class actions.
Dow-Corning simply manufactures the silicone. In one of these shunts
its net return is $1 or $2. As the Presiding Officer as a physician
knows, not every medical device works perfectly at all times and under
all circumstances. I think it is almost inevitable that among those
50,000 hydrocephalics, or the numbers of thousands who use these shunts
at some point or another, one of them is going to die, and there will
be a threat of a lawsuit against every one who had anything to do with
the shunt. The manufacturer of the material itself would be brought
right into that lawsuit. Its liability, even if it wins, the cost of
its attorney's fees will be far more than the gross sales price of all
of the silicone it sold. So it will not sell the material. We now in
some parts of the world have a black market in these shunts for
exactly this reason.
So to save the trial lawyers, to deal with all of the abstractions we
heard from here today, Tara Ransom and others like her may soon not be
able to get the very devices that have allowed them to lead reasonably
normal lives. If this bill passes--and I refer you to the statement of
Senator McCain--that will no longer be the case. It is one of the
harms, one of the outrages, in our present legal system which will be
controlled by this bill.
Mr. President, the Cessna airplane company--in the late 1970's
general aircraft in the United States was being manufactured and
shipped at the rate of more than 17,000 a year. By 1982, it was down to
almost just more than half of that. By 1986, claims hit $210 million a
year. By 1991, Piper went into bankruptcy. By 1993, 100,000 jobs had
been lost in general aviation largely due to our present product
liability system. By that time, fewer than 1,000 planes per year were
being manufactured in the United States as against 17,000. In August
1994, this Congress passed the General Aviation Revitalization Act. All
it consisted of was a statute of repose at 18 years for aircraft. That
is all that was in that reform. Already there has been a rebound. The
very next year more aircraft were manufactured than were manufactured
before, and this year Cessna is building a $40 million plant to hire
2,000 people to get back into this business.
That, Mr. President, is what this debate is all about--whether or not
young people and older people will be able to get medical devices that
they need without the manufacturers being frightened out of the
business by liability costs, and whether or not industries in the
United States will be able to operate successfully to hire people to
produce goods that people would like to buy.
We have a legal system now which has hurt our competitiveness, has
driven up prices, has reduced the choices that the American people
have, all to oblige a handful of trial lawyers. This bill is a modest
beginning to create a redress in that balance and to restore the
economy of the United States and to provide better products for more
people at a lower cost more of the time. It is just as simple as that,
Mr. President.
Mr. President, how much time remains?
The PRESIDING OFFICER. Twenty-four seconds.
Mr. GORTON. I yield the remainder of my time.
Have the yeas and nays been ordered?
The PRESIDING OFFICER. They are automatic.
CLOTURE MOTION
The PRESIDING OFFICER. Under the previous order, pursuant to rule
XXII, the Chair lays before the Senate the pending cloture motion,
which the clerk will report.
The bill clerk read as follows:
Cloture Motion
We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close debate on the conference
report to accompany H.R. 956, the Product Liability Fairness
Act:
Slade Gorton, Trent Lott, Hank Brown, Chuck Grassley,
Craig Thomas, Larry E. Craig, Frank H. Murkowski, Nancy
L. Kassebaum, Mark Hatfield, Larry Pressler, Bob Smith,
Jon Kyl, John H. Chafee, Conrad Burns, Pete V.
Domenici, John McCain.
VOTE
The PRESIDING OFFICER (Mr. Cohen). The question is, Is it the sense
of the Senate that debate be brought to a close? The yeas and nays are
mandatory under rule XXII. The clerk will call the roll.
The bill clerk called the roll.
The yeas and nays resulted--yeas 60, nays 40, as follows:
[Rollcall Vote No. 44 Leg.]
YEAS--60
Abraham
Ashcroft
Bennett
Bond
Brown
Burns
Campbell
Chafee
Coats
Cochran
Coverdell
Craig
DeWine
Dodd
Dole
Domenici
Dorgan
Exon
Faircloth
Frist
Glenn
Gorton
Gramm
Grams
Grassley
Gregg
Hatch
Hatfield
Helms
Hutchison
Inhofe
Jeffords
Johnston
Kassebaum
Kempthorne
Kohl
Kyl
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Moseley-Braun
Murkowski
Nickles
Nunn
Pell
[[Page S2386]]
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