[Congressional Record Volume 143, Number 131 (Friday, September 26, 1997)]
[Senate]
[Pages S10053-S10055]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 NATIONAL LAWSUIT ABUSE AWARENESS WEEK

  Mr. ASHCROFT. Mr. President. This week, the American Tort Reform 
Association is holding a series of events to mark the National Lawsuit 
Awareness Week. Since it was founded in 1986, ATRA has played a 
valuable role in the effort to restore fairness, balance, and 
predictability to the civil justice system.
  To commerate this week, ATRA is hosting a 5k ``Tort Trot'' to benefit 
the Hydrocephalus Research Foundation. Patients who suffer from 
hydrocephalus--excess fluid on the brain--particularly have been 
impacted by law suit abuse. Such patients require brain shunts to drain 
the excess fluid from the brain. While these shunts have saved the 
nearly 75,000 hydrocephalus patient's lives, they are made out of 
silicone which is becoming scarce. The silicone supply used by implant 
manufacturers is threatened by deep pocket liability lawsuits. Rather 
than take a risk over a product which they did not design or 
manufacture, some suppliers are exiting the medical device market.
  Congress can fix this problem. We can pass meaningful tort reform to 
make sure that our system no longer lines the pockets of special 
interests at the expense of those in need of life-saving medical 
devices.
  Americans deserve a system of justice, not justice delayed. Those 
wrongfully injured should have access to a timely remedy from the 
responsible party. A recent study found cases take about 2\1/2\ to 3 
years to be resolved, and even longer in appealed cases. In our 
present--overburdened--system, 50-70 cents of every jury-awarded dollar 
goes to lawyers and legal costs.
  I want to focus my remarks on reforming the product liability system; 
however, I also want to mention a case which illustrates the need for 
overall civil justice reform. This case, coined the ``Great New Orleans 
Train Robbery'' by the national media, resulted in a $2.5 billion 
punitive damages award against a company found to be only 15 percent at 
fault in an accident that did not result in loss of life, serious 
injuries, or major property damage.
  On September 9, 1987, a railroad tank car containing butadiene, a 
volatile compound used in making synthetic rubber, was located in a 
rail yard in New Orleans on tracks that belong to CSX Corp. Since the 
fire involved hazardous materials, the officials involved made a 
determination that the best approach was to let the fire burn itself 
out. In order to avoid any possible harm to nearby residents, an 
evacuation of those living near the yard was undertaken. The fire 
lasted 36 hours. By all accounts, fire officials, and corporate 
representatives undertook heroic efforts to protect life and property. 
As a result, and as I said earlier, no deaths or significant injuries 
were involved, and there was only minimal property damage.
  One year later, the National Transportation Safety Board--the Federal 
agency charged with investigating transportation accidents--determined 
that CSX had not caused this accident. In fact, other than providing 
the track over which the tank car was operated, CSX had no connection 
to the car.
  The very day of the fire, a group of law firms brought a class action 
suit against CSX and other companies alleging various kinds of physical 
and mental anguish. A jury has now decided that the 8,000 plaintiffs 
should be awarded $3.5 billion in punitive damages. Although CSX was 
only found to be 15 percent responsible--presumably because they owned 
the track--its portion of the punitive damage award is $2.5 billion.
  How can it be that a Federal agency determines that a company has no 
responsibility for an accident, another agency declines to assess any 
safety violation against that company, and yet, this enormous verdict 
is awarded?
  The case in New Orleans is but the latest example of why we need to 
reform the entire civil justice system. We need to place some limits on 
verdicts. We need to modify the laws regarding joint liability. 
Finally, we need to provide disincentives for lawyers to sue the deep 
pocket every time they can.
  Before I begin talking about product liability reform, Mr. President 
I ask unanimous consent that articles appearing recently in the Wall 
Street Journal and the Washington Post relating to this almost 
unbelievable case, appear in the Record at this point.
  There being no objection, the articles were ordered to be printed in 
the Record, as follows:

             [From the Wall Street Journal, Sept. 18, 1997]

                           Louisiana Jackpot

       The tort wheel of fortune turns round and round. By all 
     accounts, the legal freak show is about to descend on the 
     ``fen-phen'' diet-pill manufacturers. There will be 
     ``thousands of lawsuits scattered all around the country,'' 
     one tort lawyer roared in the Journal yesterday. But before 
     this circus hits town, attention should be drawn to the one 
     now playing in Louisiana.
       In a case that has already been dubbed the Great New 
     Orleans Train Robbery, 8,047 residents of the Big Easy hit 
     the jackpot, winning $3.4 billion in punitive damages in a

[[Page S10054]]

     state court. Forget about McDonald's hot coffee and BMW's 
     paint job; the Louisiana train case is one of the wildest 
     examples yet of the craziness that infects our civil-justice 
     system.
       If the accident that led to the huge award didn't get much 
     attention at the time, that was because nothing much 
     happened. On December 9, 1987, a tank car carrying butadiene, 
     a petroleum byproduct, caught on fire while standing on a 
     railway track in the Gentilly section of New Orleans. The 
     fire burned for 36 hours and about 1,000 neighborhood 
     residents were evacuated. No one died. No one was seriously 
     hurt. There was no significant property damage.
       Within hours the personal-injury lawyers were on the scene 
     sniffing out clients, and the first lawsuit was filed before 
     the fire had even stopped burning. Ultimately, the class in 
     the suit decided last week ballooned to 8,047 people, seeking 
     compensation for the mental anguish that the incident 
     supposedly imposed on them.
       Along the way, a much smaller group of plaintiffs ended up 
     in federal court, which dismissed a bunch of cases and 
     awarded several plaintiffs each about $1,000 in compensatory 
     damages. The court ruled against punitive damages. Reading 
     the writing on the wall, some of the original plaintiffs in 
     the federal case apparently jumped over to the state case as 
     soon as they realized they could shop for more money there.
       There are nine defendants in the tank-car case, but the one 
     that got socked with by far the biggest judgment--$2.5 
     billion in punitive damages--was CSX Transportation, a unit 
     of CSX Corp. Never mind that CSX's only connection to the 
     case was that it owned the track on which the tank car was 
     resting. Never mind that an investigation by the National 
     Transportation Safety Board concluded that CSX bore no 
     responsibility for the accident, which was cause by a faulty 
     gasket. And never mind that the owner and previous owner of 
     the tank car admitted liability for the accident at the 
     trial.
       None of this reality mattered to the jury, which was 
     looking for someone with deep pockets. Stymied because it 
     couldn't go after the previous owner, which under state law 
     was exempt from punitive damages, it settled on CSX.
       The jury, of course, was encouraged to reach this decision 
     by the plaintiff's lawyers, whose notion of justice has more 
     to do with how much money they can siphon off for themselves 
     than how much they can help their clients. The lawyer 
     representing many of the plaintiffs was one Wendell Gauthier, 
     the class-action king better known for masterminding the 
     Castano tobacco suit.
       He and his colleagues were in high dudgeon, carrying on 
     about ``corporate greed,'' executives who travel in ``private 
     Lear Jets and their limos,'' and corporations that cared more 
     about the rich residents of the French Quarter than the 
     lower-middle-class, mostly black residents of Gentilly. 
     ``There is only one thing that will make a company that big 
     respond,'' said Mr. Gauthier in asking the jury for punitive 
     damages.
       It's widely expected that Judge Wallace Edwards will 
     overturn or drastically reduce the verdict. One school of 
     thought opines that this means such unfair awards don't 
     really do any damage; courts usually rein in such irrational 
     exercises of jury power so all turns out well in the end. Or 
     does it? Each case sends a ripple through the civil-justice 
     system. It encourages fee-hungry plaintiff's lawyers to chase 
     crazier and crazier cases, and it encourages companies to 
     settle, no matter how outrageous the claim, if only to avoid 
     having to play Russian roulette in court.
       Louisiana, recognizing the need to restore sanity to its 
     civil-justice system, last year enacted a comprehensive tort-
     reform law that pretty much eliminates punitive damages. This 
     will have the welcome effect of reining in runaway juries and 
     neutralizing Mr. Gauthier and his fellow tort tycoons. But it 
     of course comes too late for CSX and the other defendants in 
     the Great New Orleans Train Robbery.
                                  ____


               [From the Washington Post, Sept. 9, 1997]

              Jury Awards $3.4 Billion in 1987 Rail Blast

       A jury awarded damages totaling $3.4 billion today to 8,000 
     people who said they were injured mentally and physically by 
     a 1987 railroad tank car explosion.
       Hardest hit by the award was rail firm CSX Transportation, 
     a unit of Richmond-based CSX Corp., which was ordered to pay 
     $2.5 billion.
       The plaintiffs accused CSX Transportation and eight other 
     defendants of negligence in the Sept. 9, 1987, incident in 
     which a rail car carrying the petrochemical butadiene leaked 
     and caught fire.
       Residents from nearly 200 blocks in New Orleans were 
     evacuated overnight. They said they suffered health problems 
     and mental anguish, which the defendants disputed.
       Chicago-based defendant GATX Corp., which was ordered to 
     pay $190 million, said there were no deaths or significant 
     injuries and no major property damage occurred.
       Defense attorney Brent Barriere said: ``This should have 
     been a case of reasonable damages for the inconvenience of 
     residents being out of their homes for about 36 hours. But it 
     was not reasonable. It was outrageous.''
       Plaintiffs' attorney Wendell Gauthier said the companies 
     had been ``careless and indifferent'' to the people living 
     near the railroad. He said the accident was preceded by 
     ongoing mishandling of dangerous materials by the defendants.
       CSX Transportation President A.R. Carpenter said in a 
     statement that the firm was ``very disappointed with this 
     decision. . . .It is clearly not consistent with the facts.
       ``CSXT handled the leaking car in complete accordance with 
     very stringent federal safety standards. The National 
     Transportation Safety Board investigation into this accident 
     concluded the incident was not caused by CSXT,'' he said.
       Juror Kimbra Whitney told reporters she thought the 
     defendants did not do enough to protect residents of the 
     area. ``I felt the evidence showed they were unconcerned,'' 
     she said.
       Other defendants ordered to pay damages were Mitsui & Co., 
     $375 million; Alabama Great Southern Railway, $175 million; 
     and Illinois Railroad Co., $125 million.

  Mr. ASHCROFT. Commonsense product liability reform is vital to the 
global competitiveness of American manufacturers and workers. U.S. 
companies face product liability insurance costs that are 20 to 50 
times greater than those of our foreign competitors. Due to these high 
costs, American many manufacturers spend more on litigation than on 
research and development and the American consumer is deprived of the 
highest quality and most innovative product.
  In addition, commonsense reform is vital to the health--in a very 
real sense--of millions of Americans. In 1993, Jim Vincent, the 
chairman and CEO of Biogen, indicated to this committee that his 
company decided not to pursue research into the development of an AIDS 
vaccine, because of the current U.S. product liability system. In 
addition, availability of many biomaterials such as silicone, 
polyester, dacron, and rubber that are used in lifesaving medical 
implant devices is being threatened by our current product liability 
system.
  Despite years of effort, the only Federal tort reform we have been 
able to accomplish has been in the areas of food donations, securities 
litigation, general aviation aircraft, and individual volunteer 
liability. The one area of reform that has been, in effect, long enough 
for us to measure its results is the General Aviation Revitalization 
Act of 1994, which was signed by President Clinton 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 
American again, and an endangered industry has been revitalized. 
President Clinton was right to support that bill. Let us bring the 
results of the General Aviation Revitalization Act of 1994 to the broad 
segments of our country and industries.
  The principles which we begin this conversation should be based on 
making the product liability laws in this Nation fair for consumers who 
purchase defective products while placing the burden on those 
responsible for putting these products into the stream of commerce. We 
also should seek to ensure 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.
  We should not affect the ability of plaintiffs to sue manufacturers 
or sellers of medical implants. Rather, we should allow raw materials 
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 members of this committee, on both sides 
of the aisle, and with the administration toward ending the 20-year 
study and painstaking endeavor to provide our Nation with sound and 
fair Federal

[[Page S10055]]

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.

                          ____________________