[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

[[Page S2342]]

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.


[[Page S2343]]


  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

[[Page S2344]]

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.''

[[Page S2345]]

 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

[[Page S2346]]

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

[[Page S2350]]

$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

[[Page S2353]]

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?

[[Page S2377]]

       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

[[Page S2379]]

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

[[Page S2380]]

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]]
MS Run-Time Library - Copyright (c) 1990, Microsoft Corp LLLLLLLLLLLLLLLLLLLLCLLLLLCCLLLLLLLLLLLLLLLLLLLLLRLLLRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR3456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcYYYYYYYYYYNNNNNNNNNNNNNNNNNNNNYNNNNNNYNNNNNNNNNNNNYYYNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN&&@Yrtvxz|~ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½sKï¿½ï¿½ï¿½Kï¿½Kï¿½Kï¿½Kï¿½FDKï¿½KLLL L            &'AZrtvxz|~ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½sKï¿½ï¿½ï¿½Kï¿½Kï¿½Kï¿½Kï¿½FDKï¿½KLLL L              [1;37;41m[12;16H         TABULAR:: x%c column not allowed         [m[1;37;41m[12;16H         Boxhead is too big (SCRATCH_SIZE)        [m[1;37;41m[12;16H                BELL %c IN BOXHEAD                [m[1;37;41m[19;16H TABULAR:: Table width exceeds program limitations!! [mc:\disc\temp$$%02d[1;37;41m[19;16H Could not remove temp file [m[20;16H Temp file name = %s [m[1;37;41m[19;16H TABULAR:: Fatal error while setting boxhead [m[1;37;41m[19;16H   TABULAR:: ILLEGAL FUNCTION: BELL %c IN TABLE   [m[1;37;41m[12;16H         TABULAR:: error on rule indicator        [m[1;37;41m[12;16H             BELL %c not accounted for             [mc:\disc\temp$$%02d[1;37;41m[19;16H TABULAR:: can't create temp file %s [m[1;37;41m[19;16H TABULAR:: error writing temp file %s [m[1;37;41m[19;16H TABULAR:: can't close temp file %s [mc:\disc\temp$$%02d[1;37;41m[19;16H TABULAR:: can't open previous created temp file: [m[20;16H     %s [m[1;37;41m[19;16H TABULAR:: can't read temp file %s [m[1;37;41m[19;16H TABULAR:: can't close temp file %s [m[1;37;41m[19;16H Extremely long table column near: [m[20;16H %s [m[1;37;41m[12;16H         TABULAR:: Bell oi%c not allowed for        [mREADDEVICEWRITEDEVICE[1;37;41m[19;16H No files matching %s found [m[1;37;41m[19;16H First format number in file required on input [20;16H EXAMPLE: cdtp filnam.ext fmtno                [m--m-fr-usc-i-d-ft-a-ts-b-nt-tf'ï¿½-ï¿½-ï¿½\DISC\FORMAT\F0634.CD\DISC\HEADS\H4624.CD\DISC\OUT\