[Congressional Record Volume 143, Number 4 (Tuesday, January 21, 1997)]
[Senate]
[Pages S225-S234]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ASHCROFT (for himself, Mr. McCain, Mr. Lott, Mr. Abraham, 
        Mr. Allard, Mr. Brownback, Mr. Chafee, Mr. Coverdell, Mr. 
        Craig, Mr. DeWine, Mr. Domenici, Mr. Enzi, Mr. Faircloth, Mr. 
        Grams, Mr. Hagel, Mr. Hatch, Mr. Helms, Mr. Hutchinson, Mr. 
        Kyl, Mr. Murkowski, Mr. Nickles, Mr. Roberts, Mr. Santorum, Mr. 
        Sessions, Mr. Smith, Mr. Thomas, Mr. Thurmond, Mr. Warner, Mr. 
        Coats, Mr. Lugar, Mr. Gramm, Mr.

[[Page S226]]

        Kempthorne, and Mrs. Hutchison):
  S. 5. A bill to establish legal standards and procedures for product 
liability litigation, and for other purposes; to the Committee on 
Commerce, Science, and Transportation.


                the product liability reform act of 1997

  Mr. ASHCROFT. Mr. President, let me quickly encapsulate this 
important piece of legislation for the American people.
  Last year, in a bipartisan effort, we succeeded, and this year this 
bill is sponsored by a group of individuals including the chairman of 
the Commerce Committee, Senator McCain, Senator Lott, Senator 
Coverdell, Senator McConnell, Senator Abraham, and Senator Gramm, and I 
believe that we will again this year have a bipartisan approach. I have 
already spoken with a number of the people who were active in this 
measure--Senator Gorton, Senator Rockefeller, Senator Lieberman, and 
Senator Dodd--about last year's approach. We again have introduced a 
similar bill. This is a step on the road of reforming the legal system 
to provide reason and rationality where the legal system, the tort 
system has been out of control.
  Three years ago, for general aviation, the private airplane business, 
the small plane business, we passed a law which provided a framework of 
responsibility which put that part of the tort system back under 
control. People pooh-poohed the idea. They said, ``It won't help; it 
won't work to pass such a law.'' But we are now again building such 
airplanes in the United States. There are 9,000 new jobs in that 
industry alone because we made that decision, and the quality of the 
airplanes is better than it has ever been before. We have not deprived 
anyone of the capacity to receive compensatory damages as a result of 
inferior products or defects in products, and we want to extend the 
tort reform effort which began with general aviation a step further.
  The second step we took last year, in 1996, when we enacted 
securities law tort reform. And that law went into effect this last 
year. So it is now time for us, having done the general aviation 
portion of legal reform and tort reform and having moved from that to 
the securities law, to move to manufacturing generally in the product 
liability area. It is not an attempt to curtail compensatory damages. 
People who are injured should be compensated for their injuries. But it 
is an attempt to bring sanity and reason to an out-of-control tort 
system which is hurting the quality of our products, stifling 
innovation and making it very difficult for some industries to survive 
here. I need not tell most folks that they have already made these 
kinds of adjustments in the European Economic Community and, of course, 
by our competition in the Pacific Rim.
  This is another step forward in tort reform, and I commend those who 
have agreed to help us in this respect. I look forward to working with 
Senators on the other side of the aisle. The President of the United 
States has repeatedly reiterated his desire to sign a good bill in this 
respect and we will be fashioning a bill this year. The bill which we 
have signed is the conference report from last year's effort which 
passed both Houses of the Congress, and it will provide a place holder 
as we assemble good legislation this year which we can send to the 
President and urge him to sign.
  Mr. President, I thank you for the opportunity to introduce these two 
measures, S. 4 and S. 5.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                  S. 5

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Product 
     Liability Reform Act of 1997''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.

                   TITLE I--PRODUCT LIABILITY REFORM

Sec. 101. Definitions.
Sec. 102. Applicability; preemption.
Sec. 103. Liability rules applicable to product sellers, renters, and 
              lessors.
Sec. 104. Defense based on claimant's use of intoxicating alcohol or 
              drugs.
Sec. 105. Misuse or alteration.
Sec. 106. Uniform time limitations on liability.
Sec. 107. Alternative dispute resolution procedures.
Sec. 108. Uniform standards for award of punitive damages.
Sec. 109. Liability for certain claims relating to death.
Sec. 110. Several liability for noneconomic loss.
Sec. 111. Workers' compensation subrogation.

                TITLE II--BIOMATERIALS ACCESS ASSURANCE

Sec. 201. Short title.
Sec. 202. Findings.
Sec. 203. Definitions.
Sec. 204. General requirements; applicability; preemption.
Sec. 205. Liability of biomaterials suppliers.
Sec. 206. Procedures for dismissal of civil actions against 
              biomaterials suppliers.

        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

Sec. 301. Effect of court of appeals decisions.
Sec. 302. Federal cause of action precluded.
Sec. 303. Effective date.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that--
       (1) our Nation is overly litigious, the civil justice 
     system is overcrowded, sluggish, and excessively costly and 
     the costs of lawsuits, both direct and indirect, are 
     inflicting serious and unnecessary injury on the national 
     economy;
       (2) excessive, unpredictable, and often arbitrary damage 
     awards and unfair allocations of liability have a direct and 
     undesirable effect on interstate commerce by increasing the 
     cost and decreasing the availability of goods and services;
       (3) the rules of law governing product liability actions, 
     damage awards, and allocations of liability have evolved 
     inconsistently within and among the States, resulting in a 
     complex, contradictory, and uncertain regime that is 
     inequitable to both plaintiffs and defendants and unduly 
     burdens interstate commerce;
       (4) as a result of excessive, unpredictable, and often 
     arbitrary damage awards and unfair allocations of liability, 
     consumers have been adversely affected through the withdrawal 
     of products, producers, services, and service providers from 
     the marketplace, and from excessive liability costs passed on 
     to them through higher prices;
       (5) excessive, unpredictable, and often arbitrary damage 
     awards and unfair allocations of liability jeopardize the 
     financial well-being of many individuals as well as entire 
     industries, particularly the Nation's small businesses and 
     adversely affects government and taxpayers;
       (6) the excessive costs of the civil justice system 
     undermine the ability of American companies to compete 
     internationally, and serve to decrease the number of jobs and 
     the amount of productive capital in the national economy;
       (7) the unpredictability of damage awards is inequitable to 
     both plaintiffs and defendants and has added considerably to 
     the high cost of liability insurance, making it difficult for 
     producers, consumers, volunteers, and nonprofit organizations 
     to protect themselves from liability with any degree of 
     confidence and at a reasonable cost;
       (8) because of the national scope of the problems created 
     by the defects in the civil justice system, it is not 
     possible for the States to enact laws that fully and 
     effectively respond to those problems;
       (9) it is the constitutional role of the national 
     government to remove barriers to interstate commerce and to 
     protect due process rights; and
       (10) there is a need to restore rationality, certainty, and 
     fairness to the civil justice system in order to protect 
     against excessive, arbitrary, and uncertain damage awards and 
     to reduce the volume, costs, and delay of litigation.
       (b) Purposes.--Based upon the powers contained in Article 
     I, Section 8, Clause 3 and the Fourteenth Amendment of the 
     United States Constitution, the purposes of this Act are to 
     promote the free flow of goods and services and to lessen 
     burdens on interstate commerce and to uphold constitutionally 
     protected due process rights by--
       (1) establishing certain uniform legal principles of 
     product liability which provide a fair balance among the 
     interests of product users, manufacturers, and product 
     sellers;
       (2) placing reasonable limits on damages over and above the 
     actual damages suffered by a claimant;
       (3) ensuring the fair allocation of liability in civil 
     actions;
       (4) reducing the unacceptable costs and delays of our civil 
     justice system caused by excessive litigation which harm both 
     plaintiffs and defendants; and
       (5) establishing greater fairness, rationality, and 
     predictability in the civil justice system.
                   TITLE I--PRODUCT LIABILITY REFORM

     SEC. 101. DEFINITIONS.

       For purposes of this title--
       (1) Actual malice.--The term ``actual malice'' means 
     specific intent to cause serious physical injury, illness, 
     disease, death, or damage to property.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings an action covered by this title and any person on 
     whose

[[Page S227]]

     behalf such an action is brought. If such an action is 
     brought through or on behalf of an estate, the term includes 
     the claimant's decedent. If such an action is brought through 
     or on behalf of a minor or incompetent, the term includes the 
     claimant's legal guardian.
       (3) Claimant's benefits.--The term ``claimant's benefits'' 
     means the amount paid to an employee as workers' compensation 
     benefits.
       (4) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' is that measure or degree of proof that 
     will produce in the mind of the trier of fact a firm belief 
     or conviction as to the truth of the allegations sought to be 
     established. The level of proof required to satisfy such 
     standard is more than that required under preponderance of 
     the evidence, but less than that required for proof beyond a 
     reasonable doubt.
       (5) Commercial loss.--The term ``commercial loss'' means 
     any loss or damage solely to a product itself, loss relating 
     to a dispute over its value, or consequential economic loss, 
     the recovery of which is governed by the Uniform Commercial 
     Code or analogous State commercial or contract law.
       (6) Compensatory damages.--The term ``compensatory 
     damages'' means damages awarded for economic and non-economic 
     loss.
       (7) Durable good.--The term ``durable good'' means any 
     product, or any component 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; or
       (C) sold or donated to a governmental or private entity for 
     the production of goods, training, demonstration, or any 
     other similar purpose.
       (8) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) to the extent recovery for such loss is 
     allowed under applicable State law.
       (9) Harm.--The term ``harm'' means any physical injury, 
     illness, disease, or death or damage to property caused by a 
     product. The term does not include commercial loss.
       (10) Insurer.--The term ``insurer'' means the employer of a 
     claimant if the employer is self-insured or if the employer 
     is not self-insured, the workers' compensation insurer of the 
     employer.
       (11) Manufacturer.--The term ``manufacturer'' means--
       (A) any person who is engaged in a business to produce, 
     create, make, or construct any product (or component part of 
     a product) and who (i) designs or formulates the product (or 
     component part of the product), or (ii) has engaged another 
     person to design or formulate the product (or component part 
     of the product);
       (B) a product seller, 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 product seller produces, creates, 
     makes or constructs and designs, or formulates, or has 
     engaged another person to design or formulate, an aspect of 
     the product (or component part of the product) made by 
     another person; or
       (C) any product seller not described in subparagraph (B) 
     which holds itself out as a manufacturer to the user of the 
     product.
       (12) Noneconomic loss.--The term ``noneconomic loss'' means 
     subjective, nonmonetary loss resulting from harm, including 
     pain, suffering, inconvenience, mental suffering, emotional 
     distress, loss of society and companionship, loss of 
     consortium, injury to reputation, and humiliation.
       (13) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity (including 
     any governmental entity).
       (14) Product.--
       (A) In general.--The term ``product'' means any object, 
     substance, mixture, or raw material in a gaseous, liquid, or 
     solid state which--
       (i) is capable of delivery itself or as an assembled whole, 
     in a mixed or combined state, or as a component part or 
     ingredient;
       (ii) is produced for introduction into trade or commerce;
       (iii) has intrinsic economic value; and
       (iv) is intended for sale or lease to persons for 
     commercial or personal use.
       (B) Exclusion.--The term 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; or
       (ii) electricity, water delivered by a utility, natural 
     gas, or steam except to the extent that electricity, water 
     delivered by a utility, natural gas, or steam, is subject, 
     under applicable State law, to a standard of liability other 
     than negligence.
       (15) Product liability action.--The term ``product 
     liability action'' means a civil action brought on any theory 
     for harm caused by a product.
       (16) Product seller.--
       (A) In general.--The term ``product seller'' means a person 
     who in the course of a business conducted for that purpose--
       (i) sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or otherwise is involved in placing a 
     product in the stream of commerce; or
       (ii) installs, repairs, refurbishes, reconditions, or 
     maintains the harm-causing aspect of the product.
       (B) Exclusion.--The term ``product seller'' does not 
     include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--

       (I) acts in only a financial capacity with respect to the 
     sale of a product; or
       (II) leases a product under a lease arrangement in which 
     the lessor does not initially select the leased product and 
     does not during the lease term ordinarily control the daily 
     operations and maintenance of the product.

       (17) Punitive damages.--The term ``punitive damages'' means 
     damages awarded against any person or entity to punish or 
     deter such person or entity, or others, from engaging in 
     similar behavior in the future.
       (18) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, the Virgin 
     Islands, Guam, American Samoa, and any other territory or 
     possession of the United States or any political subdivision 
     of any of the foregoing.

     SEC. 102. APPLICABILITY; PREEMPTION.

       (a) Preemption.--
       (1) In general.--This Act governs any product liability 
     action brought in any State or Federal court on any theory 
     for harm caused by a product.
       (2) Actions excluded.--A civil action brought for 
     commercial loss shall be governed only by applicable 
     commercial or contract law.
       (b) Relationship to State Law.--This title supersedes State 
     law only to the extent that State law applies to an issue 
     covered by this title. Any issue that is not governed by this 
     title, including any standard of liability applicable to a 
     manufacturer, shall be governed by otherwise applicable State 
     or Federal law.
       (c) Effect on Other Law.--Nothing in this Act shall be 
     construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any law;
       (2) supersede or alter any Federal law;
       (3) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (4) affect the applicability of any provision of chapter 97 
     of title 28, United States Code;
       (5) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation;
       (6) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum; or
       (7) supersede or modify any statutory or common law, 
     including any law providing for an action to abate a 
     nuisance, that authorizes a person to institute an action for 
     civil damages or civil penalties, cleanup costs, injunctions, 
     restitution, cost recovery, punitive damages, or any other 
     form of relief for remediation of the environment (as defined 
     in section 101(8) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601(8)).

     SEC. 103. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, 
                   RENTERS, AND LESSORS.

       (a) General Rule.--
       (1) In general.--In any product liability action, a product 
     seller other than a manufacturer shall be liable to a 
     claimant only if the claimant establishes--
       (A) that--
       (i) the product that allegedly caused the harm that is the 
     subject of the complaint was sold, rented, or leased by the 
     product seller;
       (ii) the product seller failed to exercise reasonable care 
     with respect to the product; and
       (iii) the failure to exercise reasonable care was a 
     proximate cause of harm to the claimant;
       (B) that--
       (i) the product seller made an express warranty applicable 
     to the product that allegedly caused the harm that is the 
     subject of the complaint, independent of any express warranty 
     made by a manufacturer as to the same product;
       (ii) the product failed to conform to the warranty; and
       (iii) the failure of the product to conform to the warranty 
     caused harm to the claimant; or
       (C) that--
       (i) the product seller engaged in intentional wrongdoing, 
     as determined under applicable State law; and
       (ii) such intentional wrongdoing was a proximate cause of 
     the harm that is the subject of the complaint.
       (2) Reasonable opportunity for inspection.--For purposes of 
     paragraph (1)(A)(ii), a product seller shall not be 
     considered to have failed to exercise reasonable care with 
     respect to a product based upon an alleged failure to inspect 
     the product--
       (A) if the failure occurred because there was no reasonable 
     opportunity to inspect the product; or

[[Page S228]]

       (B) if the inspection, in the exercise of reasonable care, 
     would not have revealed the aspect of the product which 
     allegedly caused the claimant's harm.
       (b) Special Rule.--
       (1) In general.--A product seller shall be deemed to be 
     liable as a manufacturer of a product for harm caused by the 
     product if--
       (A) the manufacturer is not subject to service of process 
     under the laws of any State in which the action may be 
     brought; or
       (B) the court determines that the claimant would be unable 
     to enforce a judgment against the manufacturer.
       (2) Statute of limitations.--For purposes of this 
     subsection only, the statute of limitations applicable to 
     claims asserting liability of a product seller as a 
     manufacturer shall be tolled from the date of the filing of a 
     complaint against the manufacturer to the date that judgment 
     is entered against the manufacturer.
       (c) Rented or Leased Products.--
       (1) Notwithstanding any other provision of law, any person 
     engaged in the business of renting or leasing a product 
     (other than a person excluded from the definition of product 
     seller under section 101(16)(B)) shall be subject to 
     liability in a product liability action under subsection (a), 
     but any person engaged in the business of renting or leasing 
     a product shall not be liable to a claimant for the tortious 
     act of another solely by reason of ownership of such product.
       (2) For purposes of paragraph (1), and for determining the 
     applicability of this title to any person subject to 
     paragraph (1), the term ``product liability action'' means a 
     civil action brought on any theory for harm caused by a 
     product or product use.
       (d) Actions for Negligent Entrustment.--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.

     SEC. 104. DEFENSE BASED ON CLAIMANT'S USE OF INTOXICATING 
                   ALCOHOL OR DRUGS.

       (a) General Rule.--In any product liability action, it 
     shall be a complete defense to such action if--
       (1) the claimant was intoxicated or was under the influence 
     of intoxicating alcohol or any drug when the accident or 
     other event which resulted in such claimant's harm occurred; 
     and
       (2) the claimant, as a result of the influence of the 
     alcohol or drug, was more than 50 percent responsible for 
     such accident or other event.
       (b) Construction.--For purposes of subsection (a)--
       (1) the determination of whether a person was intoxicated 
     or was under the influence of intoxicating alcohol or any 
     drug shall be made pursuant to applicable State law; and
       (2) the term ``drug'' means any controlled substance as 
     defined in the Controlled Substances Act (21 U.S.C. 802(6)) 
     that was not legally prescribed for use by the claimant or 
     that was taken by the claimant other than in accordance with 
     the terms of a lawfully issued prescription.

     SEC. 105. MISUSE OR ALTERATION.

       (a) General Rule.--
       (1) In general.--In a product liability action, the damages 
     for which a defendant is otherwise liable under Federal or 
     State law shall be reduced by the percentage of 
     responsibility for the claimant's harm attributable to misuse 
     or alteration of a product by any person if the defendant 
     establishes that such percentage of the claimant's harm was 
     proximately caused by a use or alteration of a product--
       (A) in violation of, or contrary to, a defendant's express 
     warnings or instructions if the warnings or instructions are 
     adequate as determined pursuant to applicable State law; or
       (B) involving a risk of harm which was known or should have 
     been known by the ordinary person who uses or consumes the 
     product with the knowledge common to the class of persons who 
     used or would be reasonably anticipated to use the product.
       (2) Use intended by a manufacturer is not misuse or 
     alteration.--For the purposes of this Act, a use of a product 
     that is intended by the manufacturer of the product does not 
     constitute a misuse or alteration of the product.
       (b) Workplace Injury.--Notwithstanding subsection (a), and 
     except as otherwise provided in section 111, the damages for 
     which a defendant is otherwise liable under State law shall 
     not be reduced by the percentage of responsibility for the 
     claimant's harm attributable to misuse or alteration of the 
     product by the claimant's employer or any coemployee who is 
     immune from suit by the claimant pursuant to the State law 
     applicable to workplace injuries.

     SEC. 106. UNIFORM TIME LIMITATIONS ON LIABILITY.

       (a) Statute of Limitations.--
       (1) In general.--Except as provided in paragraph (2) and 
     subsection (b), a product liability action may be filed not 
     later than 2 years after the date on which the claimant 
     discovered or, in the exercise of reasonable care, should 
     have discovered--
       (A) the harm that is the subject of the action; and
       (B) the cause of the harm.
       (2) Exception.--A person with a legal disability (as 
     determined under applicable law) may file a product liability 
     action not later than 2 years after the date on which the 
     person ceases to have the legal disability.
       (b) Statute of Repose.--
       (1) In general.--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 or lessee.
       (2) State law.--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 with respect to such period.
       (3) Exceptions.--
       (A) A motor vehicle, vessel, aircraft, or train, that is 
     used primarily to transport passengers for hire, shall not be 
     subject to this subsection.
       (B) Paragraph (1) does not bar a product liability action 
     against a defendant who made an express warranty in writing 
     as to the safety or life expectancy of the specific product 
     involved which was longer than 15 years, but it will apply at 
     the expiration of that warranty.
       (C) Paragraph (1) does not affect the limitations period 
     established by the General Aviation Revitalization Act of 
     1994 (49 U.S.C. 40101 note).
       (c) Transitional Provision Relating to Extension of Period 
     for Bringing Certain Actions.--If any provision of subsection 
     (a) or (b) shortens the period during which a product 
     liability action could be otherwise brought pursuant to 
     another provision of law, the claimant may, notwithstanding 
     subsections (a) and (b), bring the product liability action 
     not later than 1 year after the date of enactment of this 
     Act.

     SEC. 107. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.

       (a) Service of Offer.--A claimant or a defendant in a 
     product liability action may, not later than 60 days after 
     the service of--
       (1) the initial complaint; or
       (2) the applicable deadline for a responsive pleading;

     whichever is later, serve upon an adverse party an offer to 
     proceed pursuant to any voluntary, nonbinding alternative 
     dispute resolution procedure established or recognized under 
     the law of the State in which the product liability action is 
     brought or under the rules of the court in which such action 
     is maintained.
       (b) Written Notice of Acceptance or Rejection.--Except as 
     provided in subsection (c), not later than 10 days after the 
     service of an offer to proceed under subsection (a), an 
     offeree shall file a written notice of acceptance or 
     rejection of the offer.
       (c) Extension.--The court may, upon motion by an offeree 
     made prior to the expiration of the 10-day period specified 
     in subsection (b), extend the period for filling a written 
     notice under such subsection for a period of not more than 60 
     days after the date of expiration of the period specified in 
     subsection (b). Discovery may be permitted during such 
     period.

     SEC. 108. UNIFORM STANDARDS FOR AWARD OF PUNITIVE DAMAGES.

       (a) General Rule.--Punitive damages may, to the extent 
     permitted by applicable State law, be awarded against a 
     defendant if the claimant establishes by clear and convincing 
     evidence that conduct carried out by the defendant with a 
     conscious, flagrant indifference to the rights or safety of 
     others was the proximate cause of the harm that is the 
     subject of the action in any product liability action.
       (b) Limitation on Amount.--
       (1) In general.--The amount of punitive damages that may be 
     awarded in an action described in subsection (a) may not 
     exceed the greater of--
       (A) 2 times the sum of the amount awarded to the claimant 
     for economic loss and noneconomic loss; or
       (B) $250,000.
       (2) Special rule.--Notwithstanding paragraph (1), in any 
     action described in subsection (a) against an individual 
     whose net worth does not exceed $500,000 or against an owner 
     of an unincorporated business, or any partnership, 
     corporation, association, unit of local government, or 
     organization which has fewer that 25 full-time employees, the 
     punitive damages shall not exceed the lesser of--
       (A) 2 times the sum of the amount awarded to the claimant 
     for economic loss and noneconomic loss; or
       (B) $250,000.

     For the purpose of determining the applicability of this 
     paragraph to a corporation, the number of employees of a 
     subsidiary or wholly-owned corporation shall include all 
     employees of a parent or sister corporation.
       (3) Exception for insufficient award in cases of egregious 
     conduct.--
       (A) Determination by court.--If the court makes a 
     determination, after considering each of the factors in 
     subparagraph (B), that the application of paragraph (1) would 
     result in an award of punitive damages that is insufficient 
     to punish the egregious conduct of the defendant against whom 
     the punitive damages are to be awarded or to deter such 
     conduct in the future, the court shall determine the 
     additional amount of punitive damages (referred to in this 
     paragraph as the ``additional amount'') in excess of the 
     amount determined in accordance with paragraph (1) to be 
     awarded against the defendant in a separate proceeding in 
     accordance with this paragraph.

[[Page S229]]

       (B) Factors for consideration.--In any proceeding under 
     paragraph (A), the court shall consider--
       (i) the extent to which the defendant acted with actual 
     malice;
       (ii) the likelihood that serious harm would arise from the 
     conduct of the defendant;
       (iii) the degree of the awareness of the defendant of that 
     likelihood;
       (iv) the profitability of the misconduct to the defendant;
       (v) the duration of the misconduct and any concurrent or 
     subsequent concealment of the conduct by the defendant;
       (vi) the attitude and conduct of the defendant upon the 
     discovery of the misconduct and whether the misconduct has 
     terminated;
       (vii) the financial condition of the defendant; and
       (viii) the cumulative deterrent effect of other losses, 
     damages, and punishment suffered by the defendant as a result 
     of the misconduct, reducing the amount of punitive damages on 
     the basis of the economic impact and severity of all measures 
     to which the defendant has been or may be subjected, 
     including--

       (I) compensatory and punitive damage awards to similarly 
     situated claimants;
       (II) the adverse economic effect of stigma or loss of 
     reputation;
       (III) civil fines and criminal and administrative 
     penalties; and
       (IV) stop sale, cease and desist, and other remedial or 
     enforcement orders.

       (C) Requirements for awarding additional amount.--If the 
     court awards an additional amount pursuant to this 
     subsection, the court shall state its reasons for setting the 
     amount of the additional amount in findings of fact and 
     conclusions of law.
       (D) Preemption.--This section does not create a cause of 
     action for punitive damages and does not preempt or supersede 
     any State or Federal law to the extent that such law would 
     further limit the award of punitive damages. Nothing in this 
     subsection shall modify or reduce the ability of courts to 
     order remittiturs.
       (4) Application by court.--This subsection shall be applied 
     by the court and application of this subsection shall not be 
     disclosed to the jury. Nothing in this subsection shall 
     authorize the court to enter an award of punitive damages in 
     excess of the jury's initial award of punitive damages.
       (c) Bifurcation at Request of Any Party.--
       (1) In general.--At the request of any party the trier of 
     fact in any action that is subject to this section shall 
     consider in a separate proceeding, held subsequent to the 
     determination of the amount of compensatory damages, whether 
     punitive damages are to be awarded for the harm that is the 
     subject of the action and the amount of the award.
       (2) Inadmissibility of evidence relative only to a claim of 
     punitive damages in a proceeding concerning compensatory 
     damages.--If any party requests a separate proceeding under 
     paragraph (1), in a proceeding to determine whether the 
     claimant may be awarded compensatory damages, any evidence, 
     argument, or contention that is relevant only to the claim of 
     punitive damages, as determined by applicable State law, 
     shall be inadmissible.

     SEC. 109. LIABILITY FOR CERTAIN CLAIMS RELATING TO DEATH.

       In any civil action in which the alleged harm to the 
     claimant is death and, as of the effective date of this Act, 
     the applicable State law provides, or has been construed to 
     provide, for damages only punitive in nature, a defendant may 
     be liable for any such damages without regard to section 108, 
     but only during such time as the State law so provides. This 
     section shall cease to be effective September 1, 1997.

     SEC. 110. SEVERAL LIABILITY FOR NONECONOMIC LOSS.

       (a) General Rule.--In a product liability action, the 
     liability of each defendant for noneconomic loss shall be 
     several only and shall not be joint.
       (b) Amount of Liability.--
       (1) In general.--Each defendant shall be liable only for 
     the amount of noneconomic loss allocated to the defendant in 
     direct proportion to the percentage of responsibility of the 
     defendant (determined in accordance with paragraph (2)) for 
     the harm to the claimant with respect to which the defendant 
     is liable. The court shall render a separate judgment against 
     each defendant in an amount determined pursuant to the 
     preceding sentence.
       (2) Percentage of responsibility.--For purposes of 
     determining the amount of noneconomic loss allocated to a 
     defendant under this section, the trier of fact shall 
     determine the percentage of responsibility of each person 
     responsible for the claimant's harm, whether or not such 
     person is a party to the action.

     SEC. 111. WORKERS' COMPENSATION SUBROGATION.

       (a) General Rule.--
       (1) Right of subrogation.--
       (A) In general.--An insurer shall have a right of 
     subrogation against a manufacturer or product seller to 
     recover any claimant's benefits relating to harm that is the 
     subject of a product liability action that is subject to this 
     Act.
       (B) Written notification.--To assert a right of subrogation 
     under subparagraph (A), the insurer shall provide written 
     notice to the court in which the product liability action is 
     brought.
       (C) Insurer not required to be a party.--An insurer shall 
     not be required to be a necessary and proper party in a 
     product liability action covered under subparagraph (A).
       (2) Settlements and other legal proceedings.--
       (A) In general.--In any proceeding relating to harm or 
     settlement with the manufacturer or product seller by a 
     claimant who files a product liability action that is subject 
     to this Act, an insurer may participate to assert a right of 
     subrogation for claimant's benefits with respect to any 
     payment made by the manufacturer or product seller by reason 
     of such harm, without regard to whether the payment is made--
       (i) as part of a settlement;
       (ii) in satisfaction of judgment;
       (iii) as consideration for a covenant not to sue; or
       (iv) in another manner.
       (B) Written notification.--Except as provided in 
     subparagraph (C), an employee shall not make any settlement 
     with or accept any payment from the manufacturer or product 
     seller without written notification to the insurer.
       (C) Exemption.--Subparagraph (B) shall not apply in any 
     case in which the insurer has been compensated for the full 
     amount of the claimant's benefits.
       (3) Harm resulting from action of employer or coemployee.--
       (A) In general.--If, with respect to a product liability 
     action that is subject to this Act, the manufacturer or 
     product seller attempts to persuade the trier of fact that 
     the harm to the claimant was caused by the fault of the 
     employer of the claimant or any coemployee of the claimant, 
     the issue of that fault shall be submitted to the trier of 
     fact, but only after the manufacturer or product seller has 
     provided timely written notice to the insurer.
       (B) Rights of insurer.--
       (i) In general.--Notwithstanding any other provision of 
     law, with respect to an issue of fault submitted to a trier 
     of fact pursuant to subparagraph (A), an insurer shall, in 
     the same manner as any party in the action (even if the 
     insurer is not a named party in the action), have the right 
     to--

       (I) appear;
       (II) be represented;
       (III) introduce evidence;
       (IV) cross-examine adverse witnesses; and
       (V) present arguments to the trier of fact.

       (ii) Last issue.--The issue of harm resulting from an 
     action of an employer or coemployee shall be the last issue 
     that is submitted to the trier of fact.
       (C) Reduction of damages.--If the trier of fact finds by 
     clear and convincing evidence that the harm to the claimant 
     that is the subject of the product liability action was 
     caused by the fault of the employer or a coemployee of the 
     claimant--
       (i) the court shall reduce by the amount of the claimant's 
     benefits--

       (I) the damages awarded against the manufacturer or product 
     seller; and
       (II) any corresponding insurer's subrogation lien; and

       (ii) the manufacturer or product seller shall have no 
     further right by way of contribution or otherwise against the 
     employer.
       (D) Certain rights of subrogation not affected.--
     Notwithstanding a finding by the trier of fact described in 
     subparagraph (C), the insurer shall not lose any right of 
     subrogation related to any--
       (i) intentional tort committed against the claimant by a 
     coemployee; or
       (ii) act committed by a coemployee outside the scope of 
     normal work practices.
       (b) Attorney's Fees.--If, in a product liability action 
     that is subject to this section, the court finds that harm to 
     a claimant was not caused by the fault of the employer or a 
     coemployee of the claimant, the manufacturer or product 
     seller shall reimburse the insurer for reasonable attorney's 
     fees and court costs incurred by the insurer in the action, 
     as determined by the court.
                TITLE II--BIOMATERIALS ACCESS ASSURANCE

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Biomaterials Access 
     Assurance Act of 1997''.

     SEC. 202. FINDINGS.

       Congress finds that--
       (1) each year millions of citizens of the United States 
     depend on the availability of lifesaving or life enhancing 
     medical devices, many of which are permanently implantable 
     within the human body;
       (2) a continued supply of raw materials and component parts 
     is necessary for the invention, development, improvement, and 
     maintenance of the supply of the devices;
       (3) most of the medical devices are made with raw materials 
     and component parts that--
       (A) are not designed or manufactured specifically for use 
     in medical devices; and
       (B) come in contact with internal human tissue;
       (4) the raw materials and component parts also are used in 
     a variety of nonmedical products;
       (5) because small quantities of the raw materials and 
     component parts are used for medical devices, sales of raw 
     materials and component parts for medical devices constitute 
     an extremely small portion of the overall market for the raw 
     materials and medical devices;
       (6) under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.), manufacturers of medical devices are 
     required to demonstrate that the medical devices are safe

[[Page S230]]

     and effective, including demonstrating that the products are 
     properly designed and have adequate warnings or instructions;
       (7) notwithstanding the fact that raw materials and 
     component parts suppliers do not design, produce, or test a 
     final medical device, the suppliers have been the subject of 
     actions alleging inadequate--
       (A) design and testing of medical devices manufactured with 
     materials or parts supplied by the suppliers; or
       (B) warnings related to the use of such medical devices;
       (8) even though suppliers of raw materials and component 
     parts have very rarely been held liable in such actions, such 
     suppliers have ceased supplying certain raw materials and 
     component parts for use in medical devices because the costs 
     associated with litigation in order to ensure a favorable 
     judgment for the suppliers far exceeds the total potential 
     sales revenues from sales by such suppliers to the medical 
     device industry;
       (9) unless alternate sources of supply can be found, the 
     unavailability of raw materials and component parts for 
     medical devices will lead to unavailability of lifesaving and 
     life-enhancing medical devices;
       (10) because other suppliers of the raw materials and 
     component parts in foreign nations are refusing to sell raw 
     materials or component parts for use in manufacturing certain 
     medical devices in the United States, the prospects for 
     development of new sources of supply for the full range of 
     threatened raw materials and component parts for medical 
     devices are remote;
       (11) it is unlikely that the small market for such raw 
     materials and component parts in the United States could 
     support the large investment needed to develop new suppliers 
     of such raw materials and component parts;
       (12) attempts to develop such new suppliers would raise the 
     cost of medical devices;
       (13) courts that have considered the duties of the 
     suppliers of the raw materials and component parts have 
     generally found that the suppliers do not have a duty--
       (A) to evaluate the safety and efficacy of the use of a raw 
     material or component part in a medical device; and
       (B) to warn consumers concerning the safety and 
     effectiveness of a medical device;
       (14) attempts to impose the duties referred to in 
     subparagraphs (A) and (B) of paragraph (13) on suppliers of 
     the raw materials and component parts would cause more harm 
     than good by driving the suppliers to cease supplying 
     manufacturers of medical devices; and
       (15) in order to safeguard the availability of a wide 
     variety of lifesaving and life-enhancing medical devices, 
     immediate action is needed--
       (A) to clarify the permissible bases of liability for 
     suppliers of raw materials and component parts for medical 
     devices; and
       (B) to provide expeditious procedures to dispose of 
     unwarranted suits against the suppliers in such manner as to 
     minimize litigation costs.

     SEC. 203. DEFINITIONS.

       As used in this title:
       (1) Biomaterials supplier.--
       (A) In general.--The term ``biomaterials supplier'' means 
     an entity that directly or indirectly supplies a component 
     part or raw material for use in the manufacture of an 
     implant.
       (B) Persons included.--Such term includes any person who--
       (i) has submitted master files to the Secretary for 
     purposes of premarket approval of a medical device; or
       (ii) licenses a biomaterials supplier to produce component 
     parts or raw materials.
       (2) Claimant.--
       (A) In general.--The term ``claimant'' means any person who 
     brings a civil action, or on whose behalf a civil action is 
     brought, arising from harm allegedly caused directly or 
     indirectly by an implant, including a person other than the 
     individual into whose body, or in contact with whose blood or 
     tissue, the implant is placed, who claims to have suffered 
     harm as a result of the implant.
       (B) Action brought on behalf of an estate.--With respect to 
     an action brought on behalf of or through the estate of an 
     individual into whose body, or in contact with whose blood or 
     tissue the implant is placed, such term includes the decedent 
     that is the subject of the action.
       (C) Action brought on behalf of a minor or incompetent.--
     With respect to an action brought on behalf of or through a 
     minor or incompetent, such term includes the parent or 
     guardian of the minor or incompetent.
       (D) Exclusions.--Such term does not include--
       (i) a provider of professional health care services, in any 
     case in which--

       (I) the sale or use of an implant is incidental to the 
     transaction; and
       (II) the essence of the transaction is the furnishing of 
     judgment, skill, or services; or

       (ii) a person acting in the capacity of a manufacturer, 
     seller, or biomaterials supplier.
       (3) Component part.--
       (A) In general.--The term ``component part'' means a 
     manufactured piece of an implant.
       (B) Certain components.--Such term includes a manufactured 
     piece of an implant that--
       (i) has significant non-implant applications; and
       (ii) alone, has no implant value or purpose, but when 
     combined with other component parts and materials, 
     constitutes an implant.
       (4) Harm.--
       (A) In general.--The term ``harm'' means--
       (i) any injury to or damage suffered by an individual;
       (ii) any illness, disease, or death of that individual 
     resulting from that injury or damage; and
       (iii) any loss to that individual or any other individual 
     resulting from that injury or damage.
       (B) Exclusion.--The term does not include any commercial 
     loss or loss of or damage to an implant.
       (5) Implant.--The term ``implant'' means--
       (A) a medical device that is intended by the manufacturer 
     of the device--
       (i) to be placed into a surgically or naturally formed or 
     existing cavity of the body for a period of at least 30 days; 
     or
       (ii) to remain in contact with bodily fluids or internal 
     human tissue through a surgically produced opening for a 
     period of less than 30 days; and
       (B) suture materials used in implant procedures.
       (6) Manufacturer.--The term ``manufacturer'' means any 
     person who, with respect to an implant--
       (A) is engaged in the manufacture, preparation, 
     propagation, compounding, or processing (as defined in 
     section 510(a)(1)) of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 360(a)(1)) of the implant; and
       (B) is required--
       (i) to register with the Secretary pursuant to section 510 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360) 
     and the regulations issued under such section; and
       (ii) to include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section.
       (7) Medical device.--The term ``medical device'' means a 
     device, as defined in section 201(h) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 321(h)) and includes any 
     device component of any combination product as that term is 
     used in section 503(g) of such Act (21 U.S.C. 353(g)).
       (8) Raw material.--The term ``raw material'' means a 
     substance or product that--
       (A) has a generic use; and
       (B) may be used in an application other than an implant.
       (9) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (10) Seller.--
       (A) In general.--The term ``seller'' means a person who, in 
     the course of a business conducted for that purpose, sells, 
     distributes, leases, packages, labels, or otherwise places an 
     implant in the stream of commerce.
       (B) Exclusions.--The term does not include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services, in any case in 
     which the sale or use of an implant is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who acts in only a financial capacity with 
     respect to the sale of an implant.

     SEC. 204. GENERAL REQUIREMENTS; APPLICABILITY; PREEMPTION.

       (a) General Requirements.--
       (1) In general.--In any civil action covered by this title, 
     a biomaterials supplier may raise any defense set forth in 
     section 205.
       (2) Procedures.--Notwithstanding any other provision of 
     law, the Federal or State court in which a civil action 
     covered by this title is pending shall, in connection with a 
     motion for dismissal or judgment based on a defense described 
     in paragraph (1), use the procedures set forth in section 
     206.
       (b) Applicability.--
       (1) In general.--Except as provided in paragraph (2), 
     notwithstanding any other provision of law, this title 
     applies to any civil action brought by a claimant, whether in 
     a Federal or State court, against a manufacturer, seller, or 
     biomaterials supplier, on the basis of any legal theory, for 
     harm allegedly caused by an implant.
       (2) Exclusion.--A civil action brought by a purchaser of a 
     medical device for use in providing professional services 
     against a manufacturer, seller, or biomaterials supplier for 
     loss or damage to an implant or for commercial loss to the 
     purchaser--
       (A) shall not be considered an action that is subject to 
     this title; and
       (B) shall be governed by applicable commercial or contract 
     law.
       (c) Scope of Preemption.--
       (1) In general.--This title supersedes any State law 
     regarding recovery for harm caused by an implant and any rule 
     of procedure applicable to a civil action to recover damages 
     for such harm only to the extent that this title establishes 
     a rule of law applicable to the recovery of such damages.
       (2) Applicability of other laws.--Any issue that arises 
     under this title and that is not governed by a rule of law 
     applicable to the recovery of damages described in paragraph 
     (1) shall be governed by applicable Federal or State law.
       (d) Statutory Construction.--Nothing in this title may be 
     construed--
       (1) to affect any defense available to a defendant under 
     any other provisions of Federal or State law in an action 
     alleging harm caused by an implant; or

[[Page S231]]

       (2) to create a cause of action or Federal court 
     jurisdiction pursuant to section 1331 or 1337 of title 28, 
     United States Code, that otherwise would not exist under 
     applicable Federal or State law.

     SEC. 205. LIABILITY OF BIOMATERIALS SUPPLIERS.

       (a) In General.--
       (1) Exclusion from liability.--Except as provided in 
     paragraph (2), a biomaterials supplier shall not be liable 
     for harm to a claimant caused by an implant.
       (2) Liability.--A biomaterials supplier that--
       (A) is a manufacturer may be liable for harm to a claimant 
     described in subsection (b);
       (B) is a seller may be liable for harm to a claimant 
     described in subsection (c); and
       (C) furnishes raw materials or component parts that fail to 
     meet applicable contractual requirements or specifications 
     may be liable for a harm to a claimant described in 
     subsection (d).
       (b) Liability as Manufacturer.--
       (1) In general.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant if the 
     biomaterials supplier is the manufacturer of the implant.
       (2) Grounds for liability.--The biomaterials supplier may 
     be considered the manufacturer of the implant that allegedly 
     caused harm to a claimant only if the biomaterials supplier--
       (A)(i) has registered with the Secretary pursuant to 
     section 510 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360) and the regulations issued under such section; 
     and
       (ii) included the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section;
       (B) is the subject of a declaration issued by the Secretary 
     pursuant to paragraph (3) that states that the supplier, with 
     respect to the implant that allegedly caused harm to the 
     claimant, was required to--
       (i) register with the Secretary under section 510 of such 
     Act (21 U.S.C. 360), and the regulations issued under such 
     section, but failed to do so; or
       (ii) include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section, 
     but failed to do so; or
       (C) is related by common ownership or control to a person 
     meeting all the requirements described in subparagraph (A) or 
     (B), if the court deciding a motion to dismiss in accordance 
     with section 206(c)(3)(B)(i) finds, on the basis of 
     affidavits submitted in accordance with section 206, that it 
     is necessary to impose liability on the biomaterials supplier 
     as a manufacturer because the related manufacturer meeting 
     the requirements of subparagraph (A) or (B) lacks sufficient 
     financial resources to satisfy any judgment that the court 
     feels it is likely to enter should the claimant prevail.
       (3) Administrative procedures.--
       (A) In general.--The Secretary may issue a declaration 
     described in paragraph (2)(B) on the motion of the Secretary 
     or on petition by any person, after providing--
       (i) notice to the affected persons; and
       (ii) an opportunity for an informal hearing.
       (B) Docketing and final decision.--Immediately upon receipt 
     of a petition filed pursuant to this paragraph, the Secretary 
     shall docket the petition. Not later than 180 days after the 
     petition is filed, the Secretary shall issue a final decision 
     on the petition.
       (C) Applicability of statute of limitations.--Any 
     applicable statute of limitations shall toll during the 
     period during which a claimant has filed a petition with the 
     Secretary under this paragraph.
       (c) Liability as Seller.--A biomaterials supplier may, to 
     the extent required and permitted by any other applicable 
     law, be liable as a seller for harm to a claimant caused by 
     an implant if--
       (1) the biomaterials supplier--
       (A) held title to the implant that allegedly caused harm to 
     the claimant as a result of purchasing the implant after--
       (i) the manufacture of the implant; and
       (ii) the entrance of the implant in the stream of commerce; 
     and
     (B) subsequently resold the implant; or
       (2) the biomaterials supplier is related by common 
     ownership or control to a person meeting all the requirements 
     described in paragraph (1), if a court deciding a motion to 
     dismiss in accordance with section 206(c)(3)(B)(ii) finds, on 
     the basis of affidavits submitted in accordance with section 
     206, that it is necessary to impose liability on the 
     biomaterials supplier as a seller because the related seller 
     meeting the requirements of paragraph (1) lacks sufficient 
     financial resources to satisfy any judgment that the court 
     feels it is likely to enter should the claimant prevail.
       (d) Liability for Violating Contractual Requirements or 
     Specifications.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant, if the claimant 
     in an action shows, by a preponderance of the evidence, 
     that--
       (1) the raw materials or component parts delivered by the 
     biomaterials supplier either--
       (A) did not constitute the product described in the 
     contract between the biomaterials supplier and the person who 
     contracted for delivery of the product; or
       (B) failed to meet any specifications that were--
       (i) provided to the biomaterials supplier and not expressly 
     repudiated by the biomaterials supplier prior to acceptance 
     of delivery of the raw materials or component parts;
       (ii)(I) published by the biomaterials supplier;
       (II) provided to the manufacturer by the biomaterials 
     supplier; or
       (III) contained in a master file that was submitted by the 
     biomaterials supplier to the Secretary and that is currently 
     maintained by the biomaterials supplier for purposes of 
     premarket approval of medical devices; or
       (iii) included in the submissions for purposes of premarket 
     approval or review by the Secretary under section 510, 513, 
     515, or 520 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360, 360c, 360e, or 360j), and received clearance from 
     the Secretary if such specifications were provided by the 
     manufacturer to the biomaterials supplier and were not 
     expressly repudiated by the biomaterials supplier prior to 
     the acceptance by the manufacturer of delivery of the raw 
     materials or component parts; and
       (2) such conduct was an actual and proximate cause of the 
     harm to the claimant.

     SEC. 206. PROCEDURES FOR DISMISSAL OF CIVIL ACTIONS AGAINST 
                   BIOMATERIALS SUPPLIERS.

       (a) Motion To Dismiss.--In any action that is subject to 
     this title, a biomaterials supplier who is a defendant in 
     such action may, at any time during which a motion to dismiss 
     may be filed under an applicable law, move to dismiss the 
     action against it on the grounds that--
       (1) the defendant is a biomaterials supplier; and
       (2)(A) the defendant should not, for the purposes of--
       (i) section 205(b), be considered to be a manufacturer of 
     the implant that is subject to such section; or
       (ii) section 205(c), be considered to be a seller of the 
     implant that allegedly caused harm to the claimant; or
       (B)(i) the claimant has failed to establish, pursuant to 
     section 205(d), that the supplier furnished raw materials or 
     component parts in violation of contractual requirements or 
     specifications; or
       (ii) the claimant has failed to comply with the procedural 
     requirements of subsection (b).
       (b) Manufacturer of Implant Shall Be Named a Party.--The 
     claimant shall be required to name the manufacturer of the 
     implant as a party to the action, unless--
       (1) the manufacturer is subject to service of process 
     solely in a jurisdiction in which the biomaterials supplier 
     is not domiciled or subject to a service of process; or
       (2) an action against the manufacturer is barred by 
     applicable law.
       (c) Proceeding on Motion To Dismiss.--The following rules 
     shall apply to any proceeding on a motion to dismiss filed 
     under this section:
       (1) Affidavits relating to listing and declarations.--
       (A) In general.--The defendant in the action may submit an 
     affidavit demonstrating that defendant has not included the 
     implant on a list, if any, filed with the Secretary pursuant 
     to section 510(j) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 360(j)).
       (B) Response to motion to dismiss.--In response to the 
     motion to dismiss, the claimant may submit an affidavit 
     demonstrating that--
       (i) the Secretary has, with respect to the defendant and 
     the implant that allegedly caused harm to the claimant, 
     issued a declaration pursuant to section 205(b)(2)(B); or
       (ii) the defendant who filed the motion to dismiss is a 
     seller of the implant who is liable under section 205(c).
       (2) Effect of motion to dismiss on discovery.--
       (A) In general.--If a defendant files a motion to dismiss 
     under paragraph (1) or (2) of subsection (a), no discovery 
     shall be permitted in connection to the action that is the 
     subject of the motion, other than discovery necessary to 
     determine a motion to dismiss for lack of jurisdiction, until 
     such time as the court rules on the motion to dismiss in 
     accordance with the affidavits submitted by the parties in 
     accordance with this section.
       (B) Discovery.--If a defendant files a motion to dismiss 
     under subsection (a)(2)(B)(i) on the grounds that the 
     biomaterials supplier did not furnish raw materials or 
     component parts in violation of contractual requirements or 
     specifications, the court may permit discovery, as ordered by 
     the court. The discovery conducted pursuant to this 
     subparagraph shall be limited to issues that are directly 
     relevant to--
       (i) the pending motion to dismiss; or
       (ii) the jurisdiction of the court.
       (3) Affidavits relating status of defendant.--
       (A) In general.--Except as provided in clauses (i) and (ii) 
     of subparagraph (B), the court shall consider a defendant to 
     be a biomaterials supplier who is not subject to an action 
     for harm to a claimant caused by an implant, other than an 
     action relating to liability for a violation of contractual 
     requirements or specifications described in subsection (d).

[[Page S232]]

       (B) Responses to motion to dismiss.--The court shall grant 
     a motion to dismiss any action that asserts liability of the 
     defendant under subsection (b) or (c) of section 205 on the 
     grounds that the defendant is not a manufacturer subject to 
     such section 205(b) or seller subject to section 205(c), 
     unless the claimant submits a valid affidavit that 
     demonstrates that--
       (i) with respect to a motion to dismiss contending the 
     defendant is not a manufacturer, the defendant meets the 
     applicable requirements for liability as a manufacturer under 
     section 205(b); or
       (ii) with respect to a motion to dismiss contending that 
     the defendant is not a seller, the defendant meets the 
     applicable requirements for liability as a seller under 
     section 205(c).
       (4) Basis of ruling on motion to dismiss.--
       (A) In general.--The court shall rule on a motion to 
     dismiss filed under subsection (a) solely on the basis of the 
     pleadings of the parties made pursuant to this section and 
     any affidavits submitted by the parties pursuant to this 
     section.
       (B) Motion for summary judgment.--Notwithstanding any other 
     provision of law, if the court determines that the pleadings 
     and affidavits made by parties pursuant to this section raise 
     genuine issues as concerning material facts with respect to a 
     motion concerning contractual requirements and 
     specifications, the court may deem the motion to dismiss to 
     be a motion for summary judgment made pursuant to subsection 
     (d).
       (d) Summary Judgment.--
       (1) In general.--
       (A) Basis for entry of judgment.--A biomaterials supplier 
     shall be entitled to entry of judgment without trial if the 
     court finds there is no genuine issue as concerning any 
     material fact for each applicable element set forth in 
     paragraphs (1) and (2) of section 205(d).
       (B) Issues of material fact.--With respect to a finding 
     made under subparagraph (A), the court shall consider a 
     genuine issue of material fact to exist only if the evidence 
     submitted by claimant would be sufficient to allow a 
     reasonable jury to reach a verdict for the claimant if the 
     jury found the evidence to be credible.
       (2) Discovery made prior to a ruling on a motion for 
     summary judgment.--If, under applicable rules, the court 
     permits discovery prior to a ruling on a motion for summary 
     judgment made pursuant to this subsection, such discovery 
     shall be limited solely to establishing whether a genuine 
     issue of material fact exists as to the applicable elements 
     set forth in paragraphs (1) and (2) of section 205(d).
       (3) Discovery with respect to a biomaterials supplier.--A 
     biomaterials supplier shall be subject to discovery in 
     connection with a motion seeking dismissal or summary 
     judgment on the basis of the inapplicability of section 
     205(d) or the failure to establish the applicable elements of 
     section 205(d) solely to the extent permitted by the 
     applicable Federal or State rules for discovery against 
     nonparties.
       (e) Stay Pending Petition for Declaration.--If a claimant 
     has filed a petition for a declaration pursuant to section 
     205(b)(3)(A) with respect to a defendant, and the Secretary 
     has not issued a final decision on the petition, the court 
     shall stay all proceedings with respect to that defendant 
     until such time as the Secretary has issued a final decision 
     on the petition.
       (f) Manufacturer Conduct of Proceeding.--The manufacturer 
     of an implant that is the subject of an action covered under 
     this title shall be permitted to file and conduct a 
     proceeding on any motion for summary judgment or dismissal 
     filed by a biomaterials supplier who is a defendant under 
     this section if the manufacturer and any other defendant in 
     such action enter into a valid and applicable contractual 
     agreement under which the manufacturer agrees to bear the 
     cost of such proceeding or to conduct such proceeding.
       (g) Attorney Fees.--The court shall require the claimant to 
     compensate the biomaterials supplier (or a manufacturer 
     appearing in lieu of a supplier pursuant to subsection (f)) 
     for attorney fees and costs, if--
       (1) the claimant named or joined the biomaterials supplier; 
     and
       (2) the court found the claim against the biomaterials 
     supplier to be without merit and frivolous.
        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

     SEC. 301. EFFECT OF COURT OF APPEALS DECISIONS.

       A decision by a Federal circuit court of appeals 
     interpreting a provision of this Act (except to the extent 
     that the decision is overruled or otherwise modified by the 
     Supreme Court) shall be considered a controlling precedent 
     with respect to any subsequent decision made concerning the 
     interpretation of such provision by any Federal or State 
     court within the geographical boundaries of the area under 
     the jurisdiction of the circuit court of appeals.

     SEC. 302. FEDERAL CAUSE OF ACTION PRECLUDED.

       The district courts of the United States shall not have 
     jurisdiction pursuant to this Act based on section 1331 or 
     1337 of title 28, United States Code.

     SEC. 303. EFFECTIVE DATE.

       This Act shall apply with respect to any action commenced 
     on or after the date of the enactment of this Act without 
     regard to whether the harm that is the subject of the action 
     or the conduct that caused the harm occurred before such date 
     of enactment.

  Mr. McCAIN. Mr. President, the Product Liability Reform Act of 1997 
overhauls an unfair and inefficient product liability system for the 
benefit of American consumers and entrepreneurs. The text of this bill 
will be familiar to all Senators who are veterans of the 104th 
Congress: it is the conference report that Congress approved last year. 
Unfortunately, President Clinton vetoed that conference report, but I 
want to remind my colleagues that the President said in his veto 
statement ``I support real common sense product liability reform.'' 
Well, Mr. President, we will soon again hold your words to task.
  The introduction of this bill today, as one of the first 10 bills 
introduced in the Congress, is an indication of the importance of the 
legislation and the priority that we place on its consideration. The 
text of the Conference Report has been introduced because it is the 
last action Congress took on this matter.
  Now members from both sides of the aisle will undertake bipartisan 
discussions and diverse viewpoints will be addressed. In the last 
Congress Senator Gorton and Senator Rockefeller did an excellent job in 
developing a bipartisan consensus to pass this legislation. I 
appreciate their hard work and dedication. Their efforts will be called 
on again. Senator Ashcroft has assumed the chairmanship of the 
subcommittee with jurisdiction over this bill and I know he will be a 
valuable asset as this legislation advances.
  As we address this important legislation I look forward to working 
with the President as well. The President's veto statement outlined 
some of his concerns with the conference report. In my opinion, many of 
those concerns can be addressed easily and directly. Other issues, such 
as reform of punitive damages and joint and several liability, will 
require meaningful discussions.
  I am nevertheless hopeful that those negotiations will succeed. I am 
encouraged that the President has strongly indicated his support for 
meaningful product liability reform. I recall that in the first 
Presidential debate with Senator Dole, in October 1996, the President 
said, when discussing product liability, ``we're going to eliminate 
frivolous lawsuits, I'll sign the bill.'' In that debate, the President 
reminded the public that he has supported tort reform in the past. In 
1994, the President signed the General Aviation Revitalization Act 
which, by instituting a statute of repose, truly revitalized a 
withering industry and in the process created hundreds of high quality 
jobs.
  As this legislation moves forward, I remind my colleagues that we 
must not let the perfect be the enemy of the good. Much is at stake. 
Federal liability legislation is urgently needed. The present system in 
the United States for resolving product liability actions is costly, 
slow, inequitable and unpredictable. I find it shocking that the 
system's transaction costs exceed the compensation paid to individuals 
who have sustained injury. These transaction costs are inevitably 
passed on to consumers through higher product prices. The inefficiency 
and unpredictability of the product liability system has also stifled 
innovation, kept beneficial products off the market, and has 
handicapped American firms as they compete in a global market.
  Consumers who are legitimately injured suffer most from this broken 
system. Many consumers who are injured by defective products and are in 
need of compensation are unable to recover damages or must wait years 
to recover them. They are thrown into a product liability litigation 
system where identical cases can produce shockingly different results. 
Sadly, severely injured victims tend to receive far less than their 
actual economic losses, while those with minor injuries often are 
dramatically overcompensated. This legislation will help fix this 
broken system. I feel it is important to emphasize that this 
legislation will greatly benefit consumers and it will not bar the door 
to the court house or limit the compensatory damages that an injured 
plaintiff can receive.
  The malfunctions of this system are particularly evident in the area 
of biomaterials where valuable life-saving products are kept from 
consumers. I was introduced to this issue when the Ransom family in 
Mesa, AZ wrote to

[[Page S233]]

me about their daughter's desperate need for a specialized brain shunt. 
They were concerned this life-saving device may not be available for 
their daughter because companies were no longer willing to supply the 
raw materials necessary due to the high risk of being unjustifiably 
sued.
  In the last Congress, Senator Lieberman and I introduced legislation 
to address this problem. That legislation, the Biomaterials Access 
Assurance Act, became part of the product liability bill and was 
included in the Conference Report of the bill. In the closing weeks of 
the last Congress, Senator Lieberman and I proposed a version of our 
bill that excluded breast implant litigation from its coverage. I 
expect the legislation advanced in this Congress will also contain that 
exclusion for breast implant litigation. I look forward to working 
closely with Senator Lieberman on this matter.
  I hope that bipartisan negotiations begin in earnest on The Product 
Liability Reform Act. It is my desire to have this legislation be the 
first bill reported in this Congress by the Committee on Commerce, 
Science, and Transportation.
  Mr. ABRAHAM. Mr. President, I rise today in support of S. 5, a bill 
to reform product liability law. 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.
  Our current legal system, under which we spend $300 billion or 4\1/2\ 
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.
  The bill I cosponsor today would do much to address these problems. 
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 of them.
  Last year, President Clinton chose to veto the bipartisan products 
liability bill that passed the Congress. For the sake of all Americans, 
I hope this year will be different.
  Mr. ASHCROFT. Mr. President, today is an exciting day as I introduce, 
along with Senators McCain, Coverdell, McConnell,  and Abraham, S. 5, 
the Product Liability Fairness Act of 1977.
  Justice Holmes once wisely observed that a page of history is worth a 
volume of logic. With respect to the effort to enact product liability 
law, we have hundreds of pages of history and volumes of logic to 
support its enactment now.
  The effort of the Federal Government to address product liability 
goes back almost two decades when President Ford established the 
Federal Inter-Agency Task Force on Product Liability. Although 
administration changed, President Carter did not abandon the effort, 
but enhanced it with resulting research that supports what we do today. 
President Carter chartered the drafting of the Model Uniform Product 
Liability Act, which tentatively was offered as a vehicle for state 
action.
  Product liability legislation has been reported out of the Senate 
Commerce Committee seven times. Last Congress, legislation and a 
conference report containing many compromises and bipartisan agreements 
was voted upon favorably in each House. A bipartisan majority of the 
Senate approved the conference report on March 21, 1996.
  The bill that we introduce today is that conference report. I 
appreciate that today's bill reflects a bill one that was vetoed by 
President Clinton. But, we are not here today to simply repeat history. 
We are here to make history and provide Americans with fair product 
liability legislation.
  We are introducing the same bill as a ``place marker'' for 
discussions and a fair resolution of issues. The President's veto 
message suggested that he well may have been misinformed about the 
nature of the legislation passed by bipartisan majorities last year. 
Let us have discussions to clarify those matters so that the 
legislation is unequivocal in its meaning and purpose.
  We are resolved to work with the White House to obtain the 
President's support. I take the President at his word when he said in 
the Presidential debate on October 6, 1996, ``I signed a tort reform 
bill that dealt with civil aviation a couple of years ago. I proved 
that I will sign a reasonable tort reform.''
  It is interesting that the President referred to the General Aviation 
Revitalization Act of 1994, which he did sign on August 17, 1994. The 
aviation liability reform bill enacted a statute of repose for general 
aviation aircraft. In 1994, proponents of the bill said that it would 
produce jobs. It has. To date, over 9,000 new jobs, good jobs, have 
been created. Single engine aircraft are being manufactured in America 
again, and an endangered industry has been revitalized. President 
Clinton was right to support that bill.
  What did opponents say in 1994 aviation bill? They said that no new 
jobs would be produced. And, they said that if planes were produced, 
they would be unsafe and, in hyperbole, suggested that they might be 
made of balsa wood. What actually happened? I already mentioned that 
9,000 new jobs have been created. You should also know that the 
aircraft being made by American workers are the safest single engine 
aircraft produced in the history of this country.
  Let us bring the results of the General Aviation Revitalization Act 
of 1994 to the broad segments of our country and industries.
  We introduce this bill to stimulate job growth. We introduce this 
bill to remove the chilling effects that prevent the introduction of 
good and useful products. We introduce this bill to encourage new 
product development. On the other hand, it is our goal to assure that 
anyone that makes dangerous and defective products is appropriately 
sanctioned by our tort law.
  From the perspective of many, this bill is a very modest one. From 
their perspective, there is a need to have liability reform in other 
crucial areas, such as: general punitive reform, medical liability 
reform, and volunteers' liability reform.
  The principles contained in this bill are a good starting point to 
make the product liability laws in this nation fair for consumers who 
purchase defective products while placing the burden on those 
responsible for placing these products in the stream of commerce. It 
also ensures that those who misuse products, or use them while under 
the influence of drugs or alcohol, do not collect a windfall which 
becomes a burden for American consumers in the form of increased costs 
for products--useful products that are no longer available in the 
market, and the loss of jobs and greater opportunities.

  This bill in no way limits compensatory damages. This bill would not 
affect the ability of plaintiffs to sue manufacturers or sellers of 
medical implants. It would, however, allow raw material suppliers to be 
dismissed from lawsuits if the generic raw material used in the medical 
device met contract specifications, and if the biomaterial supplier is 
not classified as either a manufacturer or seller of the implant.
  Strong product liability reform is good for America. It ensures that 
consumers, injured by a product, will be fairly compensated. It will 
enhance American innovation, which is the best in the world, by 
treating responsible entrepreneurs fairly while treating the bad actors 
harshly and to the full extent of the law.
  As chairman of the Consumer Affairs Subcommittee I am committed and 
look forward to working with this administration toward ending the 20-
year study and painstaking endeavor to provide our Nation with sound 
and fair Federal product liability law. It took the European community 
about 6 years to accomplish this goal and create the European product 
liability directive. Japan enacted its first product liability reform 
law almost 2 years ago.
  Our Nation, this Congress, and this administration should pull 
together and meet the challenge of our foreign competitors and enact 
fair and balanced product liability law. In that

[[Page S234]]

spirit and for that purpose, we introduce S. 5.
       By Mr. SANTORUM (for himself and Mr. Smith):

  S. 6. A bill to amend title 18, United States Code, to ban partial-
birth abortions; to the Committee on the Judiciary.

                          ____________________