[Congressional Record Volume 143, Number 145 (Friday, October 24, 1997)]
[Senate]
[Pages S11206-S11210]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




THE PRODUCT LIABILITY REFORM ACT OF 1997 BIOMATERIALS ACCESS ASSURANCE 
                              ACT OF 1997

                                 ______
                                 

                     ROCKEFELLER AMENDMENT NO. 1525

  (Ordered to lie on the table.)
  Mr. ROCKEFELLER submitted an amendment intended to be proposed by him 
to the bill (S. 648) to establish legal standards and procedures for 
product liability litigation, and for other purposes; as follows:

       Strike all after the enacting clause, and insert the 
     following:

     SECTION 1. SHORT TITLE; 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 for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. 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 alcohol or drugs.
Sec. 105. Misuse or alteration.
Sec. 106. Statute of limitations.
Sec. 107. Statute of repose for durable goods used in a workplace.
Sec. 108. Transitional provision relating to extension of period for 
              bringing certain actions.
Sec. 109. Alternative dispute resolution procedures.
Sec. 110. Offers of judgment.
Sec. 111. Uniform standards for award of punitive damages.
Sec. 112. Liability for certain claims relating to death.
Sec. 113. Workers' compensation subrogation.

                TITLE II--BIOMATERIALS ACCESS ASSURANCE

[TO BE SUPPLIED]

        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

Sec. 301. Federal cause of action precluded.
Sec. 302. Effective date.

     SEC. 2. PURPOSES.

       Based upon the powers contained in clause 3 of section 8 of 
     article I 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 by--
       (1) establishing certain uniform legal principles of 
     product liability that provide a fair balance among the 
     interests of product users, manufacturers, and product 
     sellers;
       (2) providing for reasonable standards concerning, and 
     limits on, punitive damages over and above the actual damages 
     suffered by a claimant;
       (3) ensuring the fair allocation of liability in product 
     liability actions;
       (4) reducing the unacceptable costs and delays in product 
     liability actions caused by excessive litigation that harm 
     both plaintiffs and defendants;
       (5) establishing greater fairness, rationality, and 
     predictability in product liability actions; and
       (6) providing fair and expeditious judicial procedures that 
     are necessary to complement and effectuate the legal 
     principles established by this Act.
                   TITLE I--PRODUCT LIABILITY REFORM

     SEC. 101. DEFINITIONS.

       In this title:
       (1) Alcoholic beverage.--The term ``alcoholic beverage'' 
     includes any beverage in liquid form that contains not less 
     than \1/2\ of 1 percent of alcohol by volume and is intended 
     for human consumption.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings an action covered by this title and any person on 
     whose 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 that 
     standard is more than that required under a preponderance of 
     the evidence, but less than that required for proof beyond a 
     reasonable doubt.
       (5) Commercial loss.--The term ``commercial loss'' means--
       (A) any loss or damage solely to a product itself;
       (B) loss relating to a dispute over the value of a product; 
     or
       (C) 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 noneconomic 
     loss.
       (7) Dram-shop.--The term ``dram-shop'' means a drinking 
     establishment where alcoholic beverages are sold to be 
     consumed on the premises.
       (8) Durable good.--The term ``durable good'' means any 
     product, or any component of any such product, which--
       (A)(i) has a normal life expectancy of 3 or more years; or
       (ii) is of a character subject to allowance for 
     depreciation under the Internal Revenue Code of 1986; and
       (B) is--
       (i) used in a trade or business;
       (ii) held for the production of income; or
       (iii) sold or donated to a governmental or private entity 
     for the production of goods, training, demonstration, or any 
     other similar purpose.
       (9) 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,

[[Page S11207]]

     loss due to death, burial costs, and loss of business or 
     employment opportunities) to the extent recovery for that 
     loss is allowed under applicable State law.
       (10) Harm.--The term ``harm''--
       (A) means any physical injury, illness, disease, death, or 
     damage to property caused by a product; and
       (B) does not include commercial loss.
       (11) 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.
       (12) 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--
       (i) produces, creates, makes, constructs and designs, or 
     formulates an aspect of the product (or component part of the 
     product) made by another person; or
       (ii) 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.
       (13) 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.
       (14) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity (including 
     any governmental entity).
       (15) Product.--
       (A) In general.--The term ``product'' means any object, 
     substance, mixture, or raw material in a gaseous, liquid, or 
     solid state that--
       (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 ``product'' does not include--
       (i) tissue, organs, blood, and blood products used for 
     therapeutic or medical purposes, except to the extent that 
     such tissue, organs, blood, and blood products (or the 
     provision thereof) are subject, under applicable State law, 
     to a standard of liability other than negligence; or
       (ii) electricity, water delivered by a utility, natural 
     gas, or steam.
       (16) Product liability action.--The term ``product 
     liability action'' means a civil action brought on any theory 
     for harm caused by a product.
       (17) 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.

       (18) Punitive damages.--The term ``punitive damages'' means 
     damages awarded against any person or entity to punish or 
     deter that person or entity, or others, from engaging in 
     similar behavior in the future.
       (19) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, the 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.
       (20) Tobacco product.--The term ``tobacco product'' means--
       (A) a cigarette, as defined in section 3 of the Federal 
     Cigarette Labeling and Advertising Act (15 U.S.C. 1332);
       (B) a little cigar, as defined in section 3 of the Federal 
     Cigarette Labeling and Advertising Act (15 U.S.C. 1332);
       (C) a cigar, as defined in section 5702(a) of the Internal 
     Revenue Code of 1986;
       (D) pipe tobacco;
       (E) loose rolling tobacco and papers used to contain that 
     tobacco;
       (F) a product referred to as smokeless tobacco, as defined 
     in section 9 of the Comprehensive Smokeless Tobacco Health 
     Education Act of 1986 (15 U.S.C. 4408); and
       (G) any other form of tobacco intended for human 
     consumption.

     SEC. 102. APPLICABILITY; PREEMPTION.

       (a) Preemption.--
       (1) In general.--Except as provided in paragraph (2) and 
     title II, this title governs any product liability action 
     brought in any Federal or State court on any theory for harm 
     caused by a product.
       (2) Actions excluded.--
       (A) Actions for commercial loss.--A civil action brought 
     for commercial loss shall be governed only by applicable 
     commercial or contract law.
       (B) Actions for negligent entrustment; negligence per se 
     concerning firearms and ammunition; dram-shop.--
       (i) Negligent entrustment.--A civil action for negligent 
     entrustment shall not be subject to the provisions of this 
     title governing product liability actions, but shall be 
     subject to any applicable Federal or State law.
       (ii) Negligence per se concerning firearms and 
     ammunition.--A civil action brought under a theory of 
     negligence per se concerning the use of a firearm or 
     ammunition shall not be subject to the provisions of this 
     title governing product liability actions, but shall be 
     subject to any applicable Federal or State law.
       (iii) Dram-shop.--A civil action brought under a theory of 
     dram-shop or third-party liability arising out of the sale or 
     provision of an alcoholic beverage to an intoxicated 
     individual or an individual who has not attained the age of 
     21 shall not be subject to the provisions of this title, but 
     shall be subject to any applicable Federal or State law.
       (C) Actions involving harm caused by a tobacco product.--A 
     civil action brought for harm caused by a tobacco product 
     shall not be subject to the provisions of this title 
     governing product liability actions, but shall be subject to 
     any applicable Federal or State law.
       (D) Actions involving harm caused by a breast implant.--
       (i) Implant defined.--As used in this subparagraph, the 
     term ``implant'' has the same meaning as in section __.
       (ii) Exclusion.--A civil action brought for harm caused by 
     a breast implant shall not be subject to the provisions of 
     this title governing product liability actions, but shall be 
     subject to any applicable Federal or State law.
       (b) Relationship to State Law.--This title supersedes a 
     State law only to the extent that the State law applies to a 
     matter covered by this title. Any matter that is not governed 
     by this title, including any standard of liability applicable 
     to a manufacturer, shall be governed by any applicable 
     Federal or State law.
       (c) Effect on Other Law.--Nothing in this title 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 that is 
     subject to this title, a product seller other than a 
     manufacturer shall be liable to a claimant only if the 
     claimant establishes that--
       (A)(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 the harm to the claimant;
       (B)(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 the harm to the claimant; or

[[Page S11208]]

       (C)(i) the product seller engaged in intentional 
     wrongdoing, as determined under applicable State law; and
       (ii) the 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, if--
       (A) the failure occurred because there was no reasonable 
     opportunity to inspect the product; or
       (B) the inspection, in the exercise of reasonable care, 
     would not have revealed the aspect of the product that 
     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 is or 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) Definition.--For purposes of paragraph (2), and for 
     determining the applicability of this title to any person 
     subject to that paragraph, the term ``product liability 
     action'' means a civil action brought on any theory for harm 
     caused by a product or product use.
       (2) Liability.--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(17)(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 that product.

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

       (a) General Rule.--In any product liability action that is 
     subject to this title, it shall be a complete defense to a 
     claim made by a claimant, if that claimant--
       (1) was intoxicated or was under the influence of alcohol 
     or any drug when the accident or other event which resulted 
     in that claimant's harm occurred; and
       (2) as a result of the influence of the alcohol or drug, 
     was more than 50 percent responsible for that harm.
       (b) Construction.--For purposes of subsection (a)--
       (1) the determination of whether a person was intoxicated 
     or was under the influence of 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 any product liability action that is 
     subject to this title, 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 Federal or 
     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 purposes of this title, 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 113, 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. STATUTE OF LIMITATIONS.

       (a) In General.--Except as provided in subsection (b) and 
     subject to section 107, a product liability action that is 
     subject to this title 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, the harm 
     that is the subject of the action and the cause of the harm.
       (b) Exceptions.--
       (1) Person with a legal disability.--A person with a legal 
     disability (as determined under applicable law) may file a 
     product liability action that is subject to this title not 
     later than 2 years after the date on which the person ceases 
     to have the legal disability.
       (2) Effect of stay or injunction.--If the commencement of a 
     civil action that is subject to this title is stayed or 
     enjoined, the running of the statute of limitations under 
     this section shall be suspended until the end of the period 
     that the stay or injunction is in effect.

     SEC. 107. STATUTE OF REPOSE FOR DURABLE GOODS USED IN A 
                   WORKPLACE.

       (a) In General.--
       (1) Applicable period.--Except as provided in subsections 
     (b) and (c), no product liability action that is subject to 
     this title concerning a durable good described in paragraph 
     (2) may be filed after the 18-year period beginning at the 
     time of delivery of the product to the first purchaser or 
     lessee.
       (2) Durable goods described.--A durable good described in 
     this section is a durable good that is--
       (A) used in a workplace; and
       (B) alleged to have caused harm (other than toxic harm) 
     that is covered under an applicable State workers' 
     compensation law.
       (b) Applicability of Statute of Limitations.--
       (1) In general.--Notwithstanding any other provision of 
     this section, a product liability action that is subject to 
     this title and that concerns a durable good described in 
     subsection (a)(2) may be filed during the applicable period 
     prescribed in section 106 (including any applicable period 
     prescribed under the exceptions under subsection (b) of that 
     section) if the condition under paragraph (2) is met.
       (2) Condition.--Paragraph (1) shall apply with respect to a 
     claimant in an action described in that paragraph if that 
     claimant discovers the harm that is the subject of the action 
     during the 18-year period beginning on the date of the 
     delivery of the product to the first purchaser or lessee.
       (c) General Exceptions.--
       (1) In general.--A motor vehicle, vessel, aircraft, or 
     train, that is used primarily to transport passengers for 
     hire, shall not be subject to this section.
       (2) Certain express warranties.--Subsection (a) 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 18 years, except that such subsection shall apply at the 
     expiration of that warranty.
       (3) Aviation limitations period.--Subsection (a) does not 
     affect the limitations period established by the General 
     Aviation Revitalization Act of 1994 (49 U.S.C. 40101 note).

     SEC. 108. TRANSITIONAL PROVISION RELATING TO EXTENSION OF 
                   PERIOD FOR BRINGING CERTAIN ACTIONS.

       If any provision of section 106 or 107 shortens the period 
     during which a product liability action could be otherwise 
     brought pursuant to another provision of law, the claimant 
     may, notwithstanding sections 106 and 107, bring the product 
     liability action not later than 1 year after the date of 
     enactment of this Act, except that nothing in this section 
     shall affect the application of section 107(b).

     SEC. 109. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.

       (a) Notification Requirement.--In any case in which an 
     applicable State law provides for an alternative dispute 
     resolution procedure, each defendant in a product liability 
     action that is subject to this title shall, not later than 10 
     days before the applicable date specified for service of an 
     offer under subsection (b), notify the claimant to inform the 
     claimant of the applicability of that State law.
       (b) Service of Offer.--A claimant or a defendant in a 
     product liability action that is subject to this title may 
     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 that action is 
     maintained, not later than 60 days after the later of--
       (1) service of the initial complaint; or
       (2) the expiration of the applicable period for a 
     responsive pleading.
       (c) Written Notice of Acceptance or Rejection.--Except as 
     provided in subsection (d), not later than 20 days after the 
     service of an offer to proceed under subsection (b), an 
     offeree shall file a written notice of acceptance or 
     rejection of the offer.
       (d) Extension.--
       (1) In general.--The court may, upon motion by an offeree 
     made prior to the expiration of the 20-day period specified 
     in subsection (c), extend the period for filing 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 (c).
       (2) Permitted discovery.--Discovery may be permitted during 
     the period described in paragraph (1).

     SEC. 110. OFFERS OF JUDGMENT.

       (a) Offers of Judgment by Claimants.--Any claimant in a 
     product liability action that is subject to this title may, 
     at any time after filing the complaint for that action,

[[Page S11209]]

     serve an offer of judgment to be entered against a defendant 
     for a specified dollar amount as complete satisfaction of the 
     claim.
       (b) Offers of Judgment by Defendants.--A defendant in an 
     action referred to in subsection (a) may, during the period 
     described in that subsection, serve an offer of judgment to 
     be entered against that defendant for a specified dollar 
     amount as complete satisfaction of a claim referred to in 
     that subsection.
       (c) Response Period.--Subject to subsection (d), the period 
     for response to an offer of judgment under this section shall 
     be the later of--
       (1) the date that is 30 days after the date of the receipt 
     of the offer; or
       (2) the date of expiration of any otherwise applicable 
     period for response.
       (d) Extension of Response Period.--
       (1) In general.--The court may extend the period for 
     response to an offer of judgment under subsection (c) on a 
     motion made by an offeree.
       (2) Requirements for motion.--Any motion made by an offeree 
     under paragraph (1) shall be accompanied by an affidavit 
     that--
       (A) sets forth the reasons why the extension requested in 
     the motion is necessary; and
       (B) includes a statement that the information that is 
     likely to be discovered during the period of the extension 
     referred to in subparagraph (A) is--
       (i) material; and
       (ii) not, after reasonable inquiry, otherwise available to 
     that offeree.
       (e) Penalty to Defendants for Rejection of Offer.--
       (1) Modification of judgment.--The court may modify a 
     judgment against a defendant under paragraph (2) if--
       (A) a defendant, as an offeree, does not serve on the 
     claimant a written notification of acceptance of an offer of 
     judgment served by the claimant in accordance with this 
     section--
       (i) during the applicable period for response referred to 
     in subsection (c); or
       (ii) in any case in which the responsive pleading of the 
     defendant contains a motion to dismiss, not later than 30 
     days after the date on which the court denies that motion to 
     dismiss; and
       (B) the unadjusted final judgment against the defendant 
     includes damages (including any compensatory, punitive, 
     exemplary, or other damages) in an amount greater than the 
     amount specified by the claimant in the offer of judgment.
       (2) Amount of modification.--The court may make a 
     modification under paragraph (1) to provide for an increase 
     of the civil penalties assessed against that defendant in an 
     amount not to exceed the lesser of--
       (A) $50,000; or
       (B) the difference between--
       (i) the amount of the unadjusted judgment; and
       (ii) the amount of the offer of judgment made by the 
     claimant.
       (f) Penalty to Claimants for Rejection of Offer.--
       (1) Modification of judgment.--The court may modify a 
     judgment against a defendant in accordance with paragraph 
     (2), if--
       (A) a claimant, as an offeree, does not serve on the 
     defendant a written notice of acceptance of an offer of 
     judgment served by that defendant in accordance with this 
     section during the applicable period for response referred to 
     in subsection (c); and
       (B) the unadjusted final judgment against that defendant 
     includes damages (including any compensatory, punitive, 
     exemplary, or other damages) in an amount less than the 
     amount specified by that defendant in the offer of judgment.
       (2) Amount of modification.--The court may make a 
     modification under paragraph (1) to provide for a decrease of 
     the civil penalties assessed against that defendant in an 
     amount not to exceed the lesser of--
       (A) $50,000; or
       (B)(i) the difference between--
       (I) the amount of the unadjusted judgment; and
       (II) the amount of the offer of judgment made by the 
     defendant; reduced by
       (ii) a reasonable attorney's fee.
       (3) Claimant not prevailing party.--In any case in which 
     the claimant is not the prevailing party, the refusal of the 
     claimant to accept an offer of judgment shall not result in 
     the payment of a penalty under this subsection.
       (g) Evidence of Offer.--An offer of judgment that is not 
     accepted by the offeree by the applicable date for response 
     specified in this section--
       (1) shall be considered to have been withdrawn; and
       (2) except in a proceeding to determine reasonable 
     attorney's fees and costs, shall not be admissible as 
     evidence in an action brought under this title.

     SEC. 111. UNIFORM STANDARDS FOR AWARD OF PUNITIVE DAMAGES.

       (a) General Rule.--To the extent punitive damages are 
     permitted by applicable State law, punitive damages may be 
     awarded against a defendant in any product liability action 
     that is subject to this title if the claimant establishes by 
     clear and convincing evidence that the harm that is the 
     subject of the action was the result of conduct carried out 
     by the defendant with a conscious, flagrant indifference to 
     the rights or safety of others.
       (b) Special Rule.--
       (1) In general.--Subject to subsection (c), in any action 
     described in subsection (a) against a person or entity 
     described in paragraph (2), an award of punitive damages 
     shall not exceed the lesser of--
       (A) 2 times the amount of compensatory damages awarded; or
       (B) $250,000.
       (2) Persons and entities described.--
       (A) In general.--A person or entity described in this 
     paragraph is--
       (i) an individual whose net worth does not exceed $500,000; 
     or
       (ii) an owner of an unincorporated business, or any 
     partnership, corporation, association, unit of local 
     government, or organization that has--

       (I) annual revenues of less than or equal to $5,000,000; 
     and
       (II) fewer than 25 full-time employees.

       (B) Annual revenues and employees.--For the purpose of 
     determining the applicability of this subsection to a 
     corporation, the calculation of--
       (i) the annual revenues of that corporation shall include 
     the annual revenues of any parent corporation (or other 
     subsidiary of the parent corporation), subsidiary, branch, 
     division, department, or unit of that corporation; and
       (ii) the number of employees of that corporation shall 
     include the number of employees of any parent corporation (or 
     other subsidiary of the parent corporation), subsidiary, 
     branch, division, department, or unit of that corporation.
       (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. 112. LIABILITY FOR CERTAIN CLAIMS RELATING TO DEATH.

       (a) In General.--Subject to subsection (b), a defendant may 
     be liable for damages that are only punitive in nature 
     without regard to section 111 in any product liability action 
     that is subject to this title--
       (1) in which the alleged harm to the claimant is death; and
       (2) that is subject to an applicable State law that, as of 
     the date of enactment of this Act, provides, or is construed 
     to provide, for damages that are only punitive in nature.
       (b) Limitation.--Subsection (a) shall apply to an action 
     that meets the requirements of paragraphs (1) and (2) of that 
     subsection only during such period as the State law provides, 
     or is construed to provide, for damages that are only 
     punitive in nature.
       (c) Sunset.--This section shall cease to be effective on 
     September 1, 1998.

     SEC. 113. 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 
     title.
       (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 title, 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 that 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 title, the manufacturer or 
     product seller attempts to persuade the trier of fact that 
     the

[[Page S11210]]

     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
        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

     SEC. 301. 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. 302. EFFECTIVE DATE.

       This Act shall apply with respect to any action commenced 
     on or after the date of 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 that date of 
     enactment.

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