[Congressional Record Volume 143, Number 25 (Monday, March 3, 1997)]
[Extensions of Remarks]
[Pages E358-E359]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    ALTERNATIVE DISPUTE RESOLUTION AND SETTLEMENT ENCOURAGEMENT ACT

                                 ______
                                 

                           HON. HOWARD COBLE

                           of north carolina

                    in the house of representatives

                         Monday, March 3, 1997

  Mr. COBLE. Mr. Speaker, today, I am pleased to introduce a bill which 
will provide concrete steps to restore accountability, efficiency, and 
fairness to our Federal civil justice system, the Alternative Dispute 
Resolution and Settlement Encouragement Act. This legislation will 
implement a more complete, fair, and effective policy than exists at 
present to favor alternative means of resolving disputes and to 
encourage compromise by parties to Federal litigation. The effect of 
these changes will be to: First, provide for a quicker, more efficient 
way to resolve some Federal cases when the parties so choose; second, 
lessen the incentive to litigate and consequently the caseload burdens 
faced by the Federal judiciary; and third, assure that only meritorious 
and justiciable cases supported by scientific facts be adjudicated in 
Federal courts.
  This legislation would require all Federal district courts to 
establish an arbitration program, which in the discretion of the court 
could be either voluntary or mandatory. In 1988 Congress enacted 
chapter 44 of title 28 U.S.C. in order to authorize 10 pilot programs 
of mandatory court annexed arbitration that were in operation in the 
Federal courts, as well as to authorize 10 additional districts, which 
were to be selected later by the U.S. Judicial Conference, for 
voluntary programs. The legislation further required that the Federal 
Judicial Center [FJC] submit a report on the implementation of the act, 
which it transmitted to Congress on October 4, 1991. Based upon this 
study, the Federal Judicial Center recommended to Congress that it 
enact a provision authorizing all Federal courts to adopt, in their 
discretion, local rules for arbitration to be mandatory or voluntary in 
the discretion of various courts. This bill does just that.

  The goal of court-annexed arbitration is to provide more options for 
litigants, while reducing cost, delay, and court burden. In addition, 
it is the only option that provides to litigants in cases where smaller 
amounts are in controversy the opportunity for an early advisory 
adjudication on the merits of the case.
  In addition to creating more opportunities for alternative dispute 
resolution, this bill will also encourage parties to settle their cases 
by offering an incentive to accept good offers of settlement. This 
section of the legislation, developed in the last Congress by 
Representative Bob Goodlatte of Virginia, a senior member of the 
Judiciary Subcommittee on Courts and Intellectual Property, would amend 
28 U.S.C. section 1332, the provision granting diversity jurisdiction 
in U.S. district courts, by creating an incentive triggered by an offer 
of settlement. The intent of this procedure is to encourage and 
facilitate the early settlement of lawsuits and reduce protracted 
litigation. The offer of settlement procedure would allow a party to 
make, by filing with the court in writing and serving on an adverse 
party, at any time up to 10 days before trial, a formal offer to settle 
any or all claims in a suit for a specified amount. If the offer of 
settlement is accepted, the claim or claims are resolved pursuant to 
the terms of the agreement. If the offer is rejected, however, and the 
offeree does not obtain a judgment, order, or verdict more favorable 
than that offered on the applicable claims, the offeree is liable for 
the costs and attorney's fees of the offeror for those claims from the 
date the last offer was made by the adverse party. Usually this will be 
for an amount including costs of up to 10 days before trial.
  There are two exceptions to the requirement that a court award costs 
and attorneys fees. The first exception would allow the court to exempt 
certain individual cases based upon express findings that the case 
presents novel and important questions of law or fact and that it 
substantially affects nonparties. The second instance where a court 
would not be required to award costs and attorney's fees or may reduce 
such costs or fees would be when it finds that it would be manifestly 
unjust to do so.

  This bill would not necessarily require an offeree to pay the entire 
amount of the offerer's attorney's fees. Rather, it would limit the 
offeree's liability for the offeror's attorney's fees to an amount not 
exceeding the amount the offeree paid its own attorney. If the offeree 
hired its attorney on a contingency basis--an agreement in which a 
plaintiff does not pay unless it prevails--and, because it lost, paid 
its attorney nothing, then it would be liable for the offeror's 
attorney's fees up to the amount that would have been incurred by the 
offeree for an attorney's noncontingency fee. This will encourage 
accurate reporting and maintenance of hourly work and costs by 
attorneys hired under a contingency agreement, since a fee petition 
containing hours worked must be presented to the court within 10 days 
of entry of a final judgment, order, or verdict on a claim in order to 
collect such costs and attorney's fees.

[[Page E359]]

  The House passed this settlement encouragement legislation last 
Congress, and I am convinced it will prove to be a valuable resource to 
both parties to Federal litigation and to the courts in promoting quick 
and fair settlement.
  This legislation would also amend rule 702 of the Federal Rules of 
Evidence, which allows expert witnesses to testify as to their expert 
opinions with respect to scientific, technical, or other specialized 
knowledge. Such evidence may have an enormous impact on a jury's 
decision because of its nature. Accordingly, assuring that such 
evidence is valid and reliable is of utmost importance. With that in 
mind, the amendment would make a scientific opinion inadmissible unless 
it is:
  First, scientifically valid and reliable; second, has a valid 
scientific connection to the fact it is offered to prove; and third, 
sufficiently reliable so that the probative value of such evidence 
outweighs the dangers specified in Federal rule of Evidence 403.
  The standard for admissibility of scientific expert testimony was 
most recently addressed by the Supreme Court in Daubert v. Merrell Dow 
Pharmaceuticals, Inc., 113 S.Ct. 2786 (1993), on remand, No. 90-55397 
(9th Cir., Jan. 4, 1995, Kozinski, J.). In that case, the Supreme Court 
held that rule 702 does not require that scientific evidence have 
general acceptance in the relevant scientific community to be 
admissible. Rather, the Court held that the rule requires that expert 
testimony rest on a reliable foundation; that is, the methodology from 
which the evidence is derived must be based on scientific knowledge and 
be relevant to the task at hand; that is, it must assist the trier of 
fact and have a logical scientific nexus to the subject matter of the 
suit or other admitted evidence.

  This legislation would serve to codify and is meant to complement the 
standards established in Daubert by the Supreme Court. It requires that 
the methodology from which scientific evidence is derived be based on 
scientific knowledge and that it have a logical, scientific nexus to 
the subject matter of the suit or other admitted evidence.
  Finally, this bill would make expert testimony inadmissible if the 
witness is entitled to receive any compensation contingent on the legal 
disposition of any claim with respect to which such testimony is 
offered. The reason for this provision is that an expert witness who 
receives a contingency fee is less likely to furnish reliable testimony 
than one who receives a flat or hourly fee since he or she has a vested 
interest in the outcome of the litigation. The provision would exclude 
evidence if the witness receives any contingency fee, even if such fee 
is not a percentage of the judgment or settlement, but rather is a flat 
fee or hourly fee the payment of which is contingent upon the legal 
disposition of the claim.
  This bill will prevent trial lawyers from taking advantage of the 
court system. If there is a consensus in the scientific community that 
a hazard or risk--usually of a product--is real or substantial, the 
trial lawyers will implore that consensus to support complaints for 
compensatory and punitive damages. If the consensus in the scientific 
community is that a hazard or risk is trivial or imaginary, however, 
the same lawyers should not be able to brush that fact aside and find 
fringe experts to testify otherwise. Even in cases where real hazards 
exist, trial lawyers will attempt to stretch claims beyond validity in 
order to collect punitive damages. By creating a presumption of 
inadmissibility, rebutted by the standards created by the Supreme Court 
in Daubert, along with a lower standard of prejudice, an amended rule 
702 will be effective in weeding out junk science as evidence in our 
Federal courtrooms.
  These amendments to rule 702 would apply only to civil and not 
criminal cases. They would most frequently be used in product liability 
cases. This will prevent frustration in the important use of scientific 
evidence such as blood-type analysis and DNA testing in criminal 
proceedings.
  Mr. Speaker, the importance of this legislation to our Federal courts 
cannot be underestimated. Congress must play a key role in affording 
Federal litigants efficient, quick, and fair adjudication of their 
claims. This bill will move us firmly in the right direction.

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