[Congressional Record Volume 142, Number 42 (Monday, March 25, 1996)]
[Senate]
[Pages S2835-S2836]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     PRODUCT LIABILITY FAIRNESS ACT

 Mr. KYL. Mr. President, I support the conference report of the 
Product Liability Fairness Act.
  This is a historic day in the effort to enact meaningful civil 
justice reform. For the first time in more than two decades, the Senate 
and the House of Representatives have debated and passed product 
liability reform.
  Product liability reform was part of the Contract With America. 
According to the Luntz Research Co. survey released in March 1995, ``83 
percent of Americans believe that our liability lawsuit system has 
major problems and needs serious improvements.''
  Now, all that remains is for the President to do his part to make 
product liability reform a reality.
  I commend the efforts of my colleagues from Washington and West 
Virginia, Senators Gorton and Rockefeller, for their 15-year effort to 
bring needed reform to the Nation's product liability laws.
  Historically, America's economic strength has been in manufacturing, 
where much of our wealth has been created. It is essential that the 
Congress move to protect our Nation's manufacturing base from 
unreasonable litigation. Although product liability law is a small area 
of tort law, it is also a critical area in which America is losing its 
competitive edge.
  Mr. President, the conference report contains many important 
provisions which were contained in the original Gorton-Rockefeller 
bill. The alcohol and drug defense would create a complete defense 
created if the claimant was more than 50-percent responsible for his or 
her injury. The bill also provides for a reduction in damages by the 
percentage of the harm resulting from claimant's misuse or alteration 
of a product.
  The bill provides for a punitive damages cap that limits recovery to 
$250,000 or 2 times compensatory damages, whichever is greater. 
Exceptions are established for small business--under 25 employees--and 
individuals with a net worth of less than $500,000. With these two 
exceptions, the limit is $250,000 or 2 times compensatory, which ever 
is lesser.
  The bill's statute of limitations requires that suits be filed within 
2 years after the harm and the cause of the harm was discovered, or 
should have been discovered.
  The bill provides for joint and several liability for all economic 
damages, but several liability only for noneconomic damages.
  The bill provides that biomaterial suppliers who furnish raw 
materials, but are not manufacturers or sellers, are protected from 
liability when the supplier is not negligent. Further, a product seller 
can be held strictly liable as a manufacturer only in two 
circumstances: where the claimant can't get service of process on the 
manufacturer, or where the judgment is unenforceable against the 
manufacturer, as is the case when the manufacturer is judgment-proof.
  During the product liability floor debate, I offered three 
amendments. Amendment 1, which passed by a vote of 60 to 39, struck out 
provisions in the original Senate bill that penalized, with attorney 
fees and court costs, only defendants, but not plaintiffs who refused 
to enter into ADR. Under State law, ADR provisions are equally 
applicable to plaintiffs and defendants, and we should keep it that 
way.
  Amendment 2, which was tabled by a vote of 56 to 44, would have 
limited non-economic damages to $500,000 in medical malpractice cases. 
Amendment 3--which was tabled by a vote of 65 to 35--would have limited 
attorneys' contingency fees to 25 percent of the first $250,000. The 
amendment also provided that 25 percent of a punitive damage award is 
rebuttably presumed to be ethical and reasonable.
  Although the House bill had both a non-economic damages cap of 
$250,000 in medical malpractice cases and an attorney-fees limitation 
provision, neither of these two provisions were included in the 
conference report. I will continue to work to see that these provisions 
are enacted into law. However, one important provision from the House 
version that was included by the conferees shortens the statute of 
repose from 20 to 15 years, thus reducing the time period during which 
a claimant may bring a product-liability action after taking delivery 
of a durable good.
  The conferees also limited the ``additur'' provision contained in the 
original Senate bill. Thus, in a case of egregious conduct, a judge may 
raise the claimant's punitive damage recovery no higher than the amount 
proposed by the jury, unless State law provides otherwise.
  I want to note some other important provisions contained in the House 
bill that unfortunately were dropped by the Senate-House conferees. The 
``loser pays'' provision, which would discourage frivolous lawsuits, 
was dropped. The ``FDA defense,'' which would prohibit the imposition 
of punitive damages upon a manufacturer of a product that has received 
FDA approval, was also eliminated. And, as I mentioned earlier, the 
conferees also dropped the $250,000 cap on non-economic damages in 
medical malpractice actions. Moreover, the conferees dropped provisions 
that would have extended the punitive damage cap and joint and several 
liability reform to all civil cases. I regret that these provisions are 
not in our bill.
  In spite of the narrow scope of the conference report, President 
Clinton has indicated that he will veto this bill. And this is despite 
the fact that back in August 1991, Governor Clinton was leader of the 
National Governor's Association when it approved--unanimously--Federal 
product-liability reform. Also as Governor, Mr. Clinton twice supported 
NGA resolutions calling for product-liability reform.
  The President's track record on this issue caused the Washington 
Post, in a March 14 editorial, to predict that the bill should be 
``accepted by both houses and signed by the President.'' The veto 
decision prompted another Post editorial 5 days later, this one 
entitled, ``Trial Lawyers Triumph.''
  Mr. President, I could not agree more, and it is a real shame.
  The limited reform in this bill will be an important first step, but 
only a first

[[Page S2836]]

step. Ultimately, the Congress and a more responsive President must go 
beyond product-liability reform and must comprehensively overhaul the 
entire civil justice system. We must repeal the regressive ``tort tax'' 
that depletes our economy, raises prices, destroys jobs, stifles 
innovation, and reduces exports. The ``tort tax'' created a capricious 
legal lottery that divides neighbor from neighbor, and causes doctors 
to add billions to our national health-care costs each year by 
practicing defensive medicine.
  In Arizona, for instance, medical malpractice premiums have increased 
by nearly 200 percent since 1982. Attorneys' fees and transaction costs 
are an increasingly large part of this increase in litigation expenses.
  The U.S. Department of Commerce has estimated that only 40 cents of 
each dollar expended in product-liability suits ultimately reaches the 
victims. A Rand Corp. study showed that 50 cents of each liability 
dollar does not go to victims, but to attorneys fees and other 
transaction costs. It is clear that the Product Liability Fairness Act 
is a small but critical step toward the goal of national legal reform.
  It is my understanding that this body will consider more 
comprehensive legal reform legislation later this year, including 
Senator Hatch's Civil Justice Reform Act of 1995, and Senator 
McConnell's, Lawsuit Reform Act of 1995. I am also hopeful that the 
Senate Judiciary Committee will hold hearings on S. 11, the Medical 
Care Injury Compensation Act of 1995, a bill I introduced on the first 
day of the 104th Congress. This legislation caps non-economic damages 
such as pain and suffering at $250,000; imposes a limit on attorneys' 
fees of 25 percent of the first $150,000 recovered and 15 percent of 
any amount in excess of $150,000; provides for periodic payments where 
damages for future economic loss exceed $100,000; provides for 
mandatory offsets for damages paid by a ``collateral source''; and 
reforms ``joint and several'' liability.
  Mr. President, I would like to close by addressing one of the 
arguments used by the President in his veto message. this argument 
asserts the unconsitutionality of the preemption of State liability 
laws under the commerce clause of the U.S. Constitution.
  It is clear that no individual State can solve the problems created 
by abusive litigation. This is particularly true in the case of 
product-liability litigation: a product is frequently manufactured in 
one State, sold in a different State, and causes injury in a third 
State. In fact, Government figures establish that, on average, over 70 
percent of the goods manufactured in one State are shipped out of State 
for sale and use.
  It is clearer that a national solution is justified by the 
fundamentally interstate character of product commerce. The threat of 
disproportionate, unpredictable, punitive damage awards exerts an 
economic impact far beyond the borders of any individual State. This 
threat reduces investments, dampens job creation, and prevents new 
products from reaching the marketplace. In an increasingly integrated 
national and international economy, the confusing, inconsistent 
patchwork of State liability awards has cut deeply into America's 
economic strength.
  Unfortunately, since the signing of the Constitution, the commerce 
clause has been stretched and contorted to authorize virtually every 
activity Congress chooses to regulate--except interstate commerce. 
Opponents of legal reform profess concern about the preemption of State 
law and interference with States' rights. And yet it was many of the 
same interests that favored intrusive Federal regulations imposed on 
the States by OSHA, FDA, EPA, and other Federal regulators.
  In truth, States' rights is not what is being defended here, but 
rather, the status quo. Otherwise, why is the litigation industry the 
only segment of the economy that opponents of legal reform believe 
should remain beyond the reach of Federal law?
  Mr. President, legal reform will not cause the creation of a single 
new Federal program or the expenditure of a single new appropriation; 
Legal reform will not impose new taxes or regulations on our citizens. 
Legal reform will simply create clear, consistent legal standards 
covering civil actions brought in State and Federal courts.
  Mr. President, legal reform will enhance the essential principle of 
due process. As the U.S. Supreme Court has said many times, due 
process, criminal and civil, is fundamental to our concept or ordered 
liberty.

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