[Congressional Record Volume 144, Number 78 (Tuesday, June 16, 1998)]
[Senate]
[Pages S6364-S6372]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of S. 1415, which the clerk will report.
  The legislative clerk read as follows:

       A bill (S. 1415) to reform and restructure the processes by 
     which tobacco products are manufactured, marketed, and 
     distributed, to prevent the use of tobacco products by 
     minors, to redress the adverse health effects of tobacco use, 
     and for other purposes.

  The Senate resumed consideration of the bill.
  Pending:
       Gregg/Leahy amendment No. 2433 (to amendment No. 2420), to 
     modify the provisions relating to civil liability for tobacco 
     manufacturers.
       Gregg/Leahy amendment No. 2434 (to amendment No. 2433), in 
     the nature of a substitute.
       Gramm motion to recommit the bill to the Committee on 
     Finance with instructions to report back forthwith, with 
     amendment No. 2436, to modify the provisions relating to 
     civil liability for tobacco manufacturers, and to eliminate 
     the marriage penalty reflected in the standard deduction and 
     to ensure the earned income credit takes into account the 
     elimination of such penalty.
       Daschle (for Durbin) amendment No. 2437 (to amendment No. 
     2436), relating to reductions in underage tobacco usage.
       Gorton amendment No. 2705 (to amendment No. 2437), to limit 
     attorneys' fees.


                           Amendment No. 2705

  Mr. GORTON. Mr. President, what is the pending business?
  The PRESIDING OFFICER. The pending business is amendment No. 2705 by 
the Senator from Washington.
  Mr. GORTON. Thank you, Mr. President.
  Mr. President, this will mark the third occasion on which the Senate 
has debated a limitation on attorneys' fees in connection with the 
litigation that led to this debate on tobacco legislation. As a 
consequence, I do not believe this debate need last for as extended a 
period of time as did those on the earlier Faircloth amendments, and I 
believe the leadership is attempting to reach a time agreement on this 
amendment, with a vote to take place perhaps right after the official 
Senate photograph early this afternoon. On the other hand, I do not 
have any official notification about a formal time agreement, but I 
will proceed on the basis that this Gorton amendment can be debated 
relatively expeditiously.
  I have examined the debate on the last amendment on attorneys' fees 
that took place on June 11, less than a week ago, and I believe that 
the rationale for passing legislation with some limits on attorneys' 
fees in connection with this litigation was so well stated by the 
Senator from North Carolina, Senator Faircloth, and by the Senator from 
Alabama, Senator Sessions, and by others that I do not need to repeat 
in detail their scholarly approach and analyses of the subject.
  Mr. President, you may say, agreeing with their rationale, why is it 
that this Senator voted against both the first and the second Faircloth 
amendments? The answer to that is simple. I believe that it is 
appropriate for the Congress to limit attorneys' fees in connection 
with this litigation for reasons that I will outline briefly in the 
course of these comments. At the same time, I did not believe that the 
particular limitations contained in the two earlier Faircloth 
amendments were fair or just. So, with some regret but with firmness, I 
voted to table each of those amendments.
  The fundamental reason for my opposition to those two amendments was 
the fact that they treated all attorneys in all tobacco cases as being 
subject to the same cap or the same limitation. Whether that litigation 
and those attorneys were involved from the very beginning with the 
States of Mississippi and Minnesota, at a time at which tobacco 
companies had not lost any litigation at all, when those initial 
attorneys came up with what were novel and difficult theories of law 
and took a tremendous risk in the litigation in which they were hired, 
those attorneys were treated the same in the two earlier amendments as 
attorneys who have just recently gotten into litigation on this issue 
after it was obvious that, at the very least, settlements were 
available to all of the plaintiffs and, for that matter, were treated 
the same as any attorney who brings litigation in the future when both 
the States and this bill have so substantially changed the burden of 
proof in tobacco litigation that one may almost say that an attorney 
who loses a tobacco case will be exposed to malpractice litigation 
thereafter.
  Mr. President, that is fundamentally unfair. And so the amendment 
that I have put before the Senate today, for our vote, treats 
attorneys' fees differently depending on when the litigation was 
commenced. I have adopted all of the considerations for judges to use 
in determining the amount of attorneys' fees that are fair in a given 
case that were a part of the second Faircloth amendment. They, in turn, 
are an expanded version of considerations that the Supreme Court of the 
United States has articulated as used when the question of reasonable 
attorneys' fees has come before the Supreme Court.
  So the dollar figures that we use per hour in this amendment are 
ceilings; they are not floors. If, in any case, the courts or others 
who make judgments in this connection feel that those figures are too 
high--and I think there will be many instances in which they do--they 
may be reduced below that ceiling. We simply set a ceiling.

[[Page S6365]]

  The ceiling, unlike the $1,000 ceiling in the last Faircloth 
amendment which was mitigated by allowing a cost recovery greater than 
the actual cost expenditures, is simply this. For lawyers who are part 
of litigating cases that began before 1995, the ceiling will be $4,000 
an hour--four times that in the Faircloth amendment. For lawyers as a 
part of litigation that was brought after the beginning of 1995 but 
before April of 1997, the maximum figure, the ceiling, will be $2,000 
an hour. Why, you may ask, April 1997, 2 months before the tobacco 
settlement was announced? That was the date, the time, that Liggett 
gave up--in effect, turned state's evidence--turned all of the internal 
memoranda, which show the horrendous way, the unprincipled way, the 
tobacco companies had acted, over to the general public, to all of the 
lawyers.
  So after that date, after a date at which tobacco litigation was not 
only unprecedented and of extraordinary difficulty but really quite 
simple and easy, the maximum figure will be the $1,000 an hour--in this 
case, identical to the overall limit in that Faircloth amendment, but 
only a recovery of actual costs.
  And, finally, beginning on a date that roughly corresponds with the 
beginning of this debate on the floor of the Senate, in the 
anticipation that even the rules of evidence will be lower and lesser 
if this bill should pass, the ceiling will be $500 an hour--actually 
lower than the Faircloth amendment itself.
  It seems to this Senator, Mr. President, that that is more nuanced 
and more fair than the one-size-fits-all proposition that was contained 
in the two earlier amendments on which we voted.
  As a consequence, this amendment is suggested to all of my colleagues 
here in the Senate, both those who felt that a lower limit was 
appropriate but were unsuccessful in getting a majority and those who, 
like myself, objected to the two earlier Faircloth amendments.
  I believe it is very difficult to stand for the proposition that 
there should be no limitation under any set of circumstances. That 
might be an appropriate position for Members of the U.S. Senate if we 
were not engaged in this debate. If the very people whose clients have 
come before us asking us to pass that bill--ratify the settlement made 
by the great majority of States of the United States--had not come here 
to Congress to ask us to pass this legislation, we would have no 
business simply debating attorneys' fees in the abstract in this 
connection. But they are here. They have used up, as the Senator from 
Idaho said, too much of our time already, time which might more 
profitably have been devoted to other legislation.

  But it has been a serious debate. It has been a debate in which we 
have examined every single element not only of the litigation that led 
to this debate but of the whole relationship between tobacco, the 
tobacco industry, and the farmers, teenagers, adults, health care, and 
the like. And to say that the only aspect of tobacco policy that we 
cannot and should not examine is the fees of the attorneys who are 
involved in this litigation, to me, Mr. President, is an unsupportable 
proposition.
  Mr. President, a couple of weeks ago I came across a short essay by 
Stuart Taylor, Jr., which appears in the May 30 edition of the National 
Journal. I ask unanimous consent that that essay be printed in the 
Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GORTON. Mr. President, Mr. Taylor, in stating the case for 
limitations on lawyers' fees, sets up the five fundamental arguments 
against doing so and deals with each of those five.
  The first is, ``Don't mess with the marketplace''--that these were 
accounts freely entered into. In the first place, I am not sure that 
there was a great deal of ``marketplace'' in connection with litigation 
much of which was solicited by the lawyers themselves.
  But in any event, the marketplace disappears with this legislation. 
There is no real marketplace for tobacco products anymore. It will be 
the most regulated marketplace for any legal commodity in the United 
States, far exceeding the degree of regulation applied to alcohol and 
alcoholic beverages, for example. So if we can regulate the marketplace 
for tobacco, we can regulate the marketplace for tobacco lawyers.
  The second objection that is brought up is that these are sacrosanct 
contract rights. But, of course, these are contract rights that are 
subject to review by the courts, by the judges who are dealing with 
this litigation. There have already been judgments made in that 
connection. The law is clear that attorneys' fees must be reasonable. 
And when they are unreasonable or overreaching, the courts, with their 
equity powers, said, ``We can intervene.'' Well, then, Mr. President, 
it seems to me that we can intervene as well. We represent the 
conscience of the people of the United States. And I believe 
overwhelmingly the people of the United States will reject the kind of 
attorneys' fees running up into the billions of dollars that seem 
clearly possible and perhaps close to certainty should we not intervene 
in this aspect of the marketplace.
  The third objection is States rights--that all of this litigation was 
brought by the States; we ought to stay out of it. Again, Mr. 
President, a good argument had the States not come to us and asked us 
to pass this legislation, because literally, in the case of most of 
them, they could not reach the goals they sought without the assistance 
of the President and the Congress of the United States.
  The fourth reason--and it has been expressed on this floor--is that 
these lawyers deserve these big, huge fees. I was presiding, Mr. 
President, when Senator Hollings eloquently made that case, that 
whatever they get they earn. Well, I suppose one can make that 
argument, but I do not believe that most of the American people believe 
that lawyers, under any circumstances, should earn $10,000 or $50,000 
or $92,000 or $200,000 an hour for their work, no matter how 
imaginative and how successful that work may be.
  I think there are very few Members of this body who believe firmly 
that they deserve fees larger than the $4,000 cap that is included in 
this amendment.
  The final argument that Mr. Taylor set out in his essay 2 or 3 weeks 
ago was that $250 an hour was not enough. That, of course, was a 
reference to the first Faircloth amendment, and I agreed with Mr. 
Taylor, $250 was not enough for those who had begun this litigation by 
any stretch of the imagination. I don't think, myself, $1,000 was 
enough.
  That is why, with a bit more reluctance, I voted against the second 
Faircloth amendment. But I certainly believe that the staged amount 
that we have in this amendment is enough and is enough for each of the 
four different categories of lawyers to whom it applies. It is for that 
reason that I have placed this proposal before the Senate once more in 
a different fashion than the fashion in which it previously appeared.
  This is a legitimate part of the debate over tobacco legislation. We 
should reflect the conscience of the American people in this 
connection. We should try to see to it the maximum amount of money, 
consistent with fairness, that changes hands in one respect or another 
as a result of this legislation goes to the social and mostly 
antismoking purposes for which it is intended. We don't need to make 
billionaires out of lawyers simply because they were lucky enough or 
even wise enough to get into this field at an opportune time. We 
particularly don't need to do that for those lawyers who didn't either 
bother or have enough imagination to get into it until this kind of 
litigation was a slam dunk.
  This is perhaps one element of our system of justice that 
increasingly disturbs the American people. We have dealt with it a 
little bit at a time in tort reform legislation. I hope that the Senate 
will take up a product liability bill and I hope now we can get a 
bipartisan degree of support here on the Senate floor and get a 
signature from the President on a modest attempt to reform our legal 
system.
  I voted for all such reforms that have come before the Senate while I 
have been here in the last 7 years. I am not generally considered to be 
someone who defends trial lawyers. I found it a little bit awkward to 
vote against the first two Faircloth amendments, but I think even with 
respect to people with whom I disagree, with whom many of

[[Page S6366]]

us disagree, fairness is vitally important. I have designed this 
amendment in a way to be fair and to be equitable, to treat people in 
different circumstances differently. I submit it to the consideration 
of the Senate on that basis.

                               Exhibit 1

               [From the National Journal, May 30, 1998]

                          (Stuart Taylor Jr.)

         Tobacco Fees: The Rewards of Winning Could Be Stunning

       It's an estimate, but perhaps not all that far-fetched: In 
     some cases, lawyers suing the tobacco companies could make as 
     much as $100,000 an hour if the cozy contingency fee deals 
     they have signed with state attorneys general and others are 
     left intact.
       That helps explain why some in Congress are pressing to add 
     curbs on lawyers' fees to the $515 billion tobacco bill 
     sponsored by Sen. John McCain, R-Ariz.
       In Texas, five leading plaintiffs lawyers would split a pot 
     of $2.3 billion over the next 25 years--15 percent of a $15.3 
     billion statewide settlement--under a contingency fee deal 
     signed by Democratic state Attorney General Dan Morales for a 
     lawsuit to recover health care costs attributable to tobacco.
       The five lawyers did not keep track of the hours they 
     worked. Nor have they specified how much of the money they 
     would share with the dozens of other lawyers who helped them. 
     But professor Lester Brickman of Benjamin Cardozo Law School, 
     an expert witness in a court challenge brought by Texas' 
     Republican Gov. George W. Bush against the fee deal, says the 
     lawyers' hourly rates come to at least $92,000, based on his 
     estimate that they almost surely put in no more than 25,000 
     hours on the cases.
       In Florida, West Palm Beach Circuit Judge Harold J. Cohen 
     invalidated as ``unconscionable'' a deal that would give the 
     state's 12 lead private lawyers $2.8 billion--25 per cent of 
     a similar, $11.3 billion statewide tobacco settlement. But 
     his decision was overturned on May 18, on procedural grounds, 
     and sent back for further action.
       The total cut for the plaintiffs lawyers in all current and 
     future tobacco cases covered by the McCain bill could run as 
     high as $5 billion a year, with the biggest bucks coming from 
     future class action suits on behalf of sick smokers and their 
     families.
       The plaintiffs lawyers and their champions--one of them 
     Sen. Ernest F. Hollings, D-S.C.--make no serious efforts to 
     knock down the numbers. In fact, they dismiss the dollar 
     figures as irrelevant. ``Don't give me this billable hours or 
     $180,000 an hour or $5 an hour or whatever it is,'' Hollings 
     declared in a May 19 debate. ``This isn't any hourly thing. . 
     . . They deserve every dime of it and more.''
       Hollings was speaking against an attempt by Sen. Lauch 
     Faircloth, R-N.C., to amend the McCain bill by capping the 
     anti-tobacco lawyers' fees at $250 an hour. Faircloth's rider 
     was rejected, 39-58. The bipartisan majority's objections 
     were essentially these:


                    don't mess with the marketplace

       Congress does not curb the gargantuan compensation packages 
     of, say, tobacco executives, other corporate fat cats, actors 
     or star athletes. So why should it selectively restrict the 
     fees of the entrepreneurs of litigation--especially those who 
     take on Big Tobacco?


                            contract rights

       Any move by Capitol Hill to override contingency fee deals 
     would interfere with the lawyers' contract rights. ``A deal 
     is a deal,'' in the words of Sheldon Schlessinger, one of the 
     Florida lawyers pressing for a full 25 per cent cut.


                             states' rights

       In the many cases in which attorneys general and other 
     state officials have retained private lawyers to sue tobacco 
     companies, federal fee-capping legislation would interfere 
     with the states' rights to sign whatever contingency fee 
     deals they choose.


                         they deserve big fees

       The plaintiffs' lawyers are entitled to generous rewards 
     because they took extraordinary risks--which even state 
     governments could not take on their own--and used their 
     expertise, financial resources and entrepreneurial flair to 
     bring to their knees the mighty tobacco companies, which 
     until recently had seemed invincible.


                           $250 is not enough

       While it may seem a princely wage to most people, $250 an 
     hour is barely half the rate tobacco companies and other 
     corporate clients pay their highest-paid lawyers. And those 
     lawyers are paid whether they win or lose. Contingency fee 
     layers, on the other hand, get nothing when they lose. So 
     when they win, they should get more--far more, in some 
     cases--to compensate for their risks.
       This last point is so clearly, well, on the money, that by 
     itself it warrants rejection of Faircloth's $250-an-hour cap, 
     which smacked of standard conservative Republican lawyer 
     bashing.
       But what about a fairer, more realistic curb on fees in 
     tobacco cases covered by the McCain measure? Brickman--a 
     leading scholar on contingency fees and a fierce critic of 
     excessive ones--proposes an upper limit of $2,000 an hour, 
     several times the rates charged by the tobacco companies' 
     lawyers.
       Although some of the points noted thus far could be raised 
     against a $2,000-an-hour fee cap, the counterarguments seem 
     more persuasive.
       Don't mess with the marketplace? Precious little evidence 
     suggests that many contingency fee lawyers engage in the kind 
     of competition for business that is the essence of a health 
     marketplace--perhaps because most smokers and other 
     individual plaintiffs don't have the time or expertise to 
     bargain or shop around for better fee deals.
       And even some of the fee deals signed by presumably astute 
     state attorneys general, such as Dan Morales, seem remarkably 
     unsophisticated (at best), with the same fixed percentage of 
     the award going to the lawyers no matter how large the award. 
     Noting that Morales (like many other politicians) got 
     campaign contributions from some of the same lawyers, Bush 
     and Brickman have suggested that he either sold out or was 
     snookered or both. (Morales, returning the fire, has called 
     Bush a lackey of the tobacco companies.)
       Be that as it may, the McCain bill would not leave much 
     freedom in any corner of the tobacco marketplace. It would 
     subject tobacco products, advertising and litigation alike to 
     pervasive federal regulation, in a manner somewhat analogous 
     to the government's Medicare and Medicaid systems, which of 
     course impose strict limits on doctors' fees.
       The McCain measure would also make winning a lawsuit 
     against tobacco companies far easier (by superseding key 
     state tort law rules), while at the same time giving the 
     companies strong financial incentives to offer plaintiffs 
     generous settlements rather than fighting tort suits and 
     class actions all the way to trial. For a Congress that would 
     thus be enriching both plaintiffs and their lawyers--by 
     eliminating much of the risk of litigation and enabling them 
     to win with relatively little effort--it would be a bit odd 
     to ignore the matter of how much money the lawyers should be 
     able to take off the top.
       Contract rights? As fiduciaries, lawyers everywhere are 
     subject to ethical rules barring them from charging 
     ``excessive'' or ``unreasonable'' fees. So Brickman's 
     proposed fee cap would clash with the contract rights of only 
     those who can show that they can reasonably demand more than 
     $2,000 an hour.
       Individual lawyers should be free to try to make such a 
     showing, on a case-by-case basis, and, if they are 
     successful, obtain an exemption from the $2,000-an-hour cap. 
     But few would (or should) succeed. And a requirement that 
     lawyers present justifications in court for such 
     exceptionally high fees would have the wholesome effect of 
     spurring judges to put teeth into the seldom-enforced ethics 
     rules against unreasonable fees.
       States' rights? The McCain bill would virtually take over--
     at the behest of the states themselves--the pending state 
     lawsuits to recover tobacco-related costs incurred by 
     combined state-federal Medicaid programs. In this context, on 
     what basis could any state official object to attaching a 
     $2,000-an-hour fee cap, especially one that would benefit the 
     state's citizens?
       While some opponents of any fee cap assert that the main 
     beneficiaries would be the merchants of death (aka the 
     tobacco companies), it seems more likely to affect only the 
     split between the merchants of litigation (aka the trial 
     lawyers) and their clients--the states themselves, smokers 
     and others.
       Do the lawyers really deserve more than $2,000 an hour? 
     Many surely do not, because their risk of loss has 
     diminished, and will diminish even more if the McCain bill 
     passes. Fred Levin, a Florida lawyer, helped illustrate this 
     point by boasting on ABC's 20-20 program not long ago that he 
     not only had brokered the contingency fee deal between the 
     state and its private lawyers for his ``good friend'' 
     Democratic Gov. Lawton Chiles, but also had the lawsuit 
     against the tobacco companies ``a slam dunk,'' by slipping 
     through the state Legislature obscure amendments that 
     virtually guaranteed victory to the state.
       Not much risk there. Could even so stalwart a champion of 
     the trial lawyers as Sen. Hollings explain why, for such 
     lawyers, $2,000 an hour is not enough?

  Mr. McCAIN. Mr. President, first of all, I say the Senator from Idaho 
came to the floor to argue that the tobacco legislation now spends more 
money than it takes in. The argument neglects one fundamental fact, and 
that is the legislation can't spend more than it takes in because the 
authorizations, including the drug amendment, come from the trust fund 
only. You can earmark all you want to, but unless the money is in the 
trust fund, it can't be spent. That is, obviously, up to the 
appropriators.
  Having only been here for 12 years, I have, time after time after 
time, observed authorizations of large amounts of money which are then 
reduced by the appropriators, as which is their job, to fit into the 
overall budget. These authorizations that are a result--the drug 
amendment, prevention, cessation, counterads, research, et cetera--that 
are authorized, cannot be appropriated unless the money is there in the 
trust fund.
  By the way, those who would argue that we need to reduce the size of 
this bill by about $100 billion, I say that is a very likely outcome if 
we are successful in reducing teen smoking, because the volume of 
cigarettes sold in

[[Page S6367]]

America, if we are successful, would be reduced significantly, which 
would, first of all, mean less revenues and less payments into the 
trust fund which is set up, and over time, obviously, would then reduce 
the amount of money that can be spent. Most experts believe that if 
this legislation is enacted that we could effectively reduce teen 
smoking in America.
  So I say to my friend from Idaho when he comes to the floor, when we 
come to the floor in a day or so with a defense authorization bill 
which greatly exceeds the amount that is budgeted, I hope that he will 
make the same arguments that we exceeded in practically every other 
authorization bill. As the Senator from Idaho well knows, the way we do 
business around here is we authorize a certain amount of expenditures 
and then that is subject to the appropriators who are guided by the 
budget--in this case, guided by the amount of money that will be in the 
trust fund. I think it is important that be mentioned.
  I think most of us agree it is time we made a decision on this bill. 
I want to comment on the Gorton amendment. I think it is important. I 
think it is a good amendment. I think Senator Gorton, Senator Sessions, 
and Senator Faircloth have great credibility in this body--both Senator 
Gorton and Senator Sessions having been former attorneys general. I 
believe that it is appropriate if we are going to designate how the 
money is spent that comes from the increase in the price of a pack of 
cigarettes, then there should also be some limitation on the amount of 
money that is paid for legal expenses.
  Senator Gorton's amendment calls for initially $4,000 an hour and 
scales down as to what time in the calendar the legal entities entered 
into these settlements. I think most Americans would believe that 
$4,000 an hour is a rather generous wage. In fact, there are very few 
Americans who are compensated to the tune of $4,000 an hour.
  The argument will be made on the other side that we are dictating 
something that should be left up to the States, should be left up to 
arbitration. We have just passed several amendments that come from that 
side that dictate exactly what the States should do. We just passed one 
that said a certain amount of money had to go to early child 
development. We passed one that said a certain amount had to go to a 
specific kind of research.
  In all due respect to the arguments that somehow we are interfering 
with some kind of States rights here, then obviously an amendment 
should be supported that says the States can do whatever they want to 
with any of the money that goes to them, which contemplated in the 
original bill is some 30 to 40 percent of the entire amount of money 
that is collected.
  Most Americans, when asked if $4,000 per hour is adequate 
compensation to anyone--there may be some exception to that, perhaps 
brain surgery--but for legal services I think the overwhelming majority 
of Americans would view $4,000 per hour as more than generous 
compensation. In fact, if we pass the Gorton amendment, there will be 
some who will complain that this is far too generous. I remind 
observers that this is the third iteration we have attempted to try to 
bring some restraint to what many Americans are appalled to discover--
that a single law firm, in the case of the Florida settlement, could 
make a couple of billion dollars.
  I don't think that is appropriate, and I believe that we ought to act 
overwhelmingly in favor of the Gorton amendment.
  We have been told of two possible substitute amendments--one by 
Senator Hatch and the other by Senators Gramm and Domenici. I hope and 
expect that if those amendments are to be offered, we can move to them 
shortly.
  As I said, the Senate has adopted several significant amendments, 
particularly with respect to how funding under this bill is 
apportioned. I thought it might be helpful to recap for the Senate 
where the bill stands in that regard.
  The Joint Tax Committee estimates that under the managers' amendment, 
$52 million would be available in the trust fund in the first 4 years 
and an additional $72 billion in the following 5 years, producing a 9-
year total of $124 billion.
  The Senate adopted amendments to the bill to provide $3 billion to 
assist veterans with smoking-related diseases and $46 billion in tax 
cuts, leaving a total of $75 billion over 9 years for apportionment to 
the four major accounts authorized under the bill--the State account, 
the public health account, the research account, and the farmer 
assistance account.
  Under the bill, 40 percent of the money, or $30 billion over the next 
9 years, would be made available to the States to settle their Medicaid 
and legal claims against the tobacco industry. This would mean a payout 
of approximately $3.3 billion per year, or an average of $66 million 
per State per year, to compensate State taxpayers.
  And 22 percent of the money, or $16.5 billion over 9 years, would be 
made available for public health programs, including 
counteradvertising, smoking prevention and cessation services, as well 
as for drug control programs authorized under the Coverdell-Craig 
amendment. As the bill currently stands, the precise amounts and 
selected purposes would be subject to appropriations.
  This means an amount of approximately $1.8 billion available for 
public health and subject to drug control purposes. Under the bill, 90 
percent of the money reserved for public health is to be block-granted 
to the States.
  Another 22 percent of the funds, or $16.5 billion over 9 years, would 
be made available for health research at the National Institutes of 
Health and Centers for Disease Control. This would mean a payout of 
nearly $1.8 billion per year for advanced medical research.
  As you know, Mr. President, lately the public health groups have 
complained about some of the reductions as a result of setting aside $3 
billion for veterans' treatment of tobacco-related illness as a result 
of tax cuts and as a result of an anti-illegal drug program. It still 
provides $1.8 billion per year for advanced medical research. I would 
say that is a significant amount of money.
  The bill designates 16 percent of the fund to tobacco farmer and farm 
community assistance. Also, Mr. President, $1.8 billion is available 
for public health. And $1.8 billion is, I think, a sizable amount of 
money. This is a total of $12 billion over 9 years, or a yearly payout 
of $1.3 billion.
  The farm provisions still have to be worked out. I hope we can 
accomplish that end expeditiously and in a manner that is fair and 
appropriate.
  I remind my colleagues again that the bill, as modified, contains 
measures of enormous benefit to the Nation, including vital anti-youth 
smoking initiatives that will stop 3,000 kids a day from taking up a 
habit that will kill one-third of them, critical funding for 
groundbreaking health research, and assistance to our Nation's veterans 
who suffer from smoking-related illnesses.

  I would like to mention again, Mr. President, that for reasons that 
are still not clear to me, money was taken to use for highways that 
should have been used for treating veterans who suffer from tobacco-
related illnesses. This provision of the bill is an effort to provide 
some funding for veterans who were encouraged to smoke during the 
period of time they were serving this Nation.
  The bill will also fund a major antidrug effort to attack the serious 
threat posed by illegal drugs, and it contains one of the largest tax 
decreases ever to eliminate the marriage penalty for low- and moderate-
income Americans, and achieve 100 percent deductibility of health 
insurance for self-employed individuals. In fact, every penny raised 
above the amount agreed to by the industry last June is returned to the 
American people in the form of a tax cut.
  Let me repeat that, Mr. President. I think it is rather important. It 
happens that this tax cut takes into consideration all of the 
additional funds above that which were agreed to by the attorneys 
general and the industry last June.
  The bill provides the opportunity to settle 36 pending State cases, 
collectively, efficiently, and in a timely fashion. I argue that it is 
now time to finish our business and move the process forward.
  There are those who labor under the unfortunate misapprehension that 
if we do nothing, the issue will go away. I don't believe that is 
correct. I don't

[[Page S6368]]

believe it is correct because the facts won't go away. Mr. President, 
3,000 kids take up the habit every day, teen smoking is on the rise, 
and that probably won't stop unless we do something.
  Mr. President, 418,000 Americans die of smoking-related illnesses 
every year--the No. 1 cause of preventable disease and death in America 
by far. This death march won't stop unless we do something. The 
taxpayers must shell out $50 billion a year to pay for smoking-related 
health care costs--nearly $455 per household. That number is increasing 
because the number of youth smokers is rising. I want to again repeat, 
those who call this a ``big tax bill''--and I congratulate the tobacco 
industry for doing polling and finding that most Americans 
understandably are opposed to ``big tax increases,'' but I argue that 
the tobacco industry is responsible for one of the biggest tax 
increases in the history of this country. That tax increase is what 
taxpayers have to pay to treat tobacco-related illnesses. Those 
tobacco-related illnesses are directly related to the sale of their 
product.
  If the bill disappears--which would be much to the industry's 
delight--the State suits will not disappear with it. If we fail to act, 
the States will continue their suits and they will win judgments and 
the price of cigarettes will increase sharply. So please don't be 
misled by those who would have the public believe that killing this 
bill would eliminate taxes or relieve smokers of an undue price 
increase. Following the Minnesota settlement, the price of a pack of 
cigarettes went up 5 cents, on an average, throughout the country, not 
just in Minnesota.
  Mr. President, we have a tendency to throw around polling data quite 
frequently. Recently, there was a poll paid for by the tobacco 
companies, and some of the opponents took great heart in that the 
American people somehow did not support legislation to attack the 
problem of kids smoking. There was another telephone survey conducted 
by Market Facts TeleNation, which is an independent polling firm, and 
this poll was paid for by the Effective National Action to Control 
Tobacco. Mr. President, these polls' questions are always very 
important because how they shape the question quite often dictates the 
answer. We know very well how highly paid pollsters are.
  Here is the question:

       As you may know, the Congress is currently considering the 
     McCain tobacco bill, which creates a national tobacco policy 
     to reduce tobacco use among kids. Based on what you know 
     about the bill, do you favor or oppose Congress passing the 
     McCain bill?

  Registered voters in favor were 62 percent. It is broken down: 45 
percent strongly favor; 17 percent somewhat favor; strongly oppose, 23 
percent; somewhat oppose, 9 percent. All adults who favor are 62 
percent; oppose, 30 percent.

       Question: The McCain bill includes public education to 
     discourage kids from smoking, help for smokers to quit, 
     enforcement of laws to prevent tobacco sales to kids and 
     increases in the price of tobacco products to discourage use 
     by kids. There would also be strict limitations on tobacco 
     advertising and marketing to kids, as well as authority for 
     the Food and Drug Administration to regulate tobacco like it 
     does other consumer products. These programs would be funded 
     by increasing the price of a pack of cigarettes by $1.10 over 
     the next 5 years. Knowing this about the McCain bill, do you 
     favor or oppose the bill?

  This is what we call usually a ``push question.'' And the number goes 
up to 66 percent registered voters strongly favor, and about 4 percent 
oppose.

       Question: If two candidates for Congress were otherwise 
     equal, but one supported the McCain bill and the other 
     opposed it, would you be * * *

  More likely to support the candidate who supports the bill, 44 
percent more likely; more likely to support the candidate who opposes 
the bill, 18 percent; 37 percent would say no effect on their vote; 44 
percent would most likely support the candidate who supports the bill.

       Question: Some in Congress have proposed amendments to the 
     McCain bill that address issues other than tobacco use--like 
     tax reductions and the war on illegal drugs. Which of the 
     following statements do you agree with most?

  The tobacco bill should address issues only, and other issues should 
be dealt with in separate legislation, 79 percent.
  Mr. President, I ask unanimous consent that this poll be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Effective National Action to Control Tobacco: A Public Health Coalition


                         tobacco survey results

       Telephone survey using a random digit sample, commissioned 
     by the Campaign for Tobacco-Free Kids and conducted June 12-
     15, 1998 by Market Facts' TeleNation, an independent polling 
     firm. The poll included 924 adults and 784 registered voters. 
     Responses below are based on the full sample of respondents 
     unless otherwise noted. Margin of error is +/-3.2 percent for 
     all adults and +/-3.5 percent for registered voters.
       Question: As you may know, the Congress is currently 
     considering the McCain tobacco bill which creates a national 
     tobacco policy to reduce tobacco use among kids. Based on 
     what you know about the bill, do you favor or oppose Congress 
     passing the McCain bill?

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Favor (Net)......................................          62         62
    Strongly Favor...............................          45         44
    Somewhat Favor...............................          17         17
Oppose (Net).....................................          31         30
    Strongly Oppose..............................          23         22
    Somewhat Oppose..............................           9          8
DK/Refused.......................................           7          8
------------------------------------------------------------------------

       Question: The McCain bill includes public education to 
     discourage kids from smoking, help for smokers to quit, 
     enforcement of laws to prevent tobacco sales to kids and 
     increases in the price of tobacco products to discourage use 
     by kids. There would also be strict limitations on tobacco 
     advertising and marketing to kids, as well as authority for 
     the Food and Drug Administration to regulate tobacco like it 
     does other consumer products. These programs would be funded 
     by increasing the price of a pack of cigarettes by $1.10 over 
     the next five years. Knowing this about the McCain bill, do 
     you favor or oppose the bill?

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Favor (Net)......................................          66         65
    Strongly Favor...............................          50         49
    Somewhat Favor...............................          17         17
Oppose (Net).....................................          32         33
    Strongly Oppose..............................          24         24
    Somewhat Oppose..............................           9          8
DK/Refused.......................................           1          2
------------------------------------------------------------------------

       Question: If two candidates for Congress were otherwise 
     equal, but one supported the McCain bill and the other 
     opposed it, would you be:

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
More Likely to Support The Candidate Who Supports          44         44
 The Bill (Net)..................................
    Much More Likely.............................          30         31
    Somewhat More Likely.........................          14         13
More Likely to Support The Candidate Who Opposes           18         19
 The Bill (Net)..................................
    Much More Likely.............................          14         13
    Somewhat More Likely.........................           5          5
No Effect On Vote................................          36         37
DK/Refused.......................................           1          1
------------------------------------------------------------------------

       Question: Some in Congress have proposed amendments to the 
     McCain bill that address issues other than tobacco use--like 
     tax reductions and the war on illegal drugs. Which of the 
     following statements do you agree with the most?

------------------------------------------------------------------------
                                                   Registered     All
                    Randomized                       voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
The tobacco bill should address tobacco issues             79         79
 only, and other issues should be dealt with in
 separate legislation............................
Issues such as tax reduction and illegal drugs             18         18
 are so important that they should be addressed
 in the tobacco bill even if it means reducing
 funds for programs to combat tobacco use among
 kids............................................
DK/Refused.......................................           4          4
------------------------------------------------------------------------

       Question: Now let me ask you about a couple of specific 
     amendments to the tobacco bill. Please tell me which of the 
     following positions you agree with most.

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Some in Congress want to amend the bill to use             22         22
 money intended for tobacco prevention to reduce
 the so-called marriage tax for couples with
 incomes under $50,000 because these couples
 currently pay somewhat more in income taxes than
 two individuals who are not married.............
Others say the marriage tax should not be                  69         69
 addressed in the tobacco bill and that it takes
 too much of the money intended for programs to
 reduce tobacco use among kids...................
DK/Refused.......................................           9          9
------------------------------------------------------------------------

       Question: Which of the following positions do you agree 
     with most?

------------------------------------------------------------------------
                                                                  All
                                                   Registered    adults
                                                     voters    (percent)
----------------------------------------------------(percent)-----------
Some in Congress want to take much of the revenue          21         22
 generated by tobacco price increases that is
 intended for programs to reduce tobacco use
 among kids and use it instead to add to the
 funds the government has for fighting illegal
 drugs...........................................
Others say the money raised by the tobacco bill            75         74
 should be used first and foremost to address the
 tobacco problem, and that if more money is
 needed to fight illegal drugs, it should come
 from other source...............................

[[Page S6369]]

 
DK/Refused.......................................           4          4
------------------------------------------------------------------------

       Question: Please tell me whether you favor or oppose 
     spending the revenues from the McCain tobacco bill for each 
     of the following.
       Do you (strongly/somewhat) favor or oppose spending the 
     revenues from the McCain tobacco bill for?

------------------------------------------------------------------------
                                                   Registered     All
                    Randomized                       voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Reimbursing the states for the money they have             43         43
 spent treating sick smokers (favor (Net)).......
Funding health and medical research (favor (Net))          78         78
Funding programs designed to reduce tobacco use            84         85
 among kids like public education campaigns,
 school-based programs, and enforcement of laws
 prohibiting tobacco sales to minors (favor
 (Net))..........................................
Providing money and other assistance to tobacco            62         62
 farmers to help them in the transition to other
 ways of making a living (favor (Net))...........
Reducing the marriage tax for couples making               34         35
 under $50,000 (favor (Net)).....................
Adding funding to the government's budget for              46         46
 fighting illegal drugs (favor (Net))............
Funding for states to provide expanded child care          46         48
 services (favor (Net))..........................
------------------------------------------------------------------------

       Question: And which of those uses of the McCain tobacco 
     bill's revenues is the most important in your mind?

------------------------------------------------------------------------
                                                   Registered     All
                    Randomized                       voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Reimbursing the states for the money they have              6          6
 spent treating sick smokers.....................
Funding health and medical research..............          16         15
Funding programs designed to reduce tobacco use            48         48
 among kids like public education campaigns,
 school-based programs, and enforcement of laws
 prohibiting tobacco sales to minors.............
Providing money and other assistance to tobacco             7          8
 farmers to help them in the transition to other
 ways of making a living.........................
Reducing the marriage tax for couples making                5          5
 under $50,000 (favor (Net)).....................
Adding funding to the government's budget for               8          8
 fighting illegal drugs (favor (Net))............
Funding for states to provide expanded child care           7          7
 services (favor (Net))..........................
------------------------------------------------------------------------

       Question: Amendments passed so far to the McCain tobacco 
     bill have removed virtually all funds dedicated to tobacco 
     prevention programs, Funds remain in the bill for medical 
     research, tobacco farmers, child care, reimbursement of state 
     medical costs, the marriage tax reduction, and additional 
     funds to fight illegal drugs.
       Do you favor or oppose restoring the money in the bill for 
     tobacco prevention efforts even if it means reducing the 
     funds available for these other purposes?

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Favor (Net)......................................          61         61
      Strongly Favor.............................          37         36
    Somewhat Favor...............................          24         25
Oppose (Net).....................................          33         33
    Strongly Oppose..............................          17         17
    Somewhat Oppose..............................          16         16
DK/Refused.......................................           6          6
------------------------------------------------------------------------

       Question: Other things equal, if one candidate for Congress 
     supported restoring the money for tobacco prevention programs 
     in the McCain bill and the other candidate opposed restoring 
     the money, would you be:

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
More Likely to Support The Candidate Who                   54         53
 Supported Restoring The Tobacco Prevention Money
 (Net)...........................................
    Much More Likely.............................          30         29
    Somewhat More Likely.........................          25         23
More Likely To Support The Candidate Who Opposed           14         14
 Restoring The Tobacco Prevention Money (Net)....
    Much More Likely.............................           4          3
    Somewhat More Likely.........................          10         11
No Effect On Vote................................          26         26
DK/Refused.......................................           7          7
------------------------------------------------------------------------

       Question: How much do you trust each of the following to do 
     the right thing on national tobacco policy?
       How much do you trust Democrats in Congress to do the right 
     thing on national tobacco policy? Do you:

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Trust (Net)......................................          47         47
    Trust a lot..................................          11         11
    Trust somewhat...............................          36         37
Distrust (Net)...................................          49         49
    Distrust a lot...............................          23         23
    Distrust somewhat............................          27         26
DK/Refused.......................................           3          4
------------------------------------------------------------------------

       How much do you trust Republicans in Congress to do the 
     right thing on national tobacco plicy? Do you:

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Trust (Net)......................................          46         45
    Trust a lot..................................           9          8
    Trust somewhat...............................          37         37
Distrust (Net)...................................          51         51
    Distrust a lot...............................          25         25
    Distrust somewhat............................          25         26
DK/Refused.......................................           4          4
------------------------------------------------------------------------

       How much do you trust President Clinton to do the right 
     thing on national tobacco policy?

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Trust (Net)......................................          51         52
    Trust a lot..................................          21         19
    Trust somewhat...............................          31         32
Distrust (Net)...................................          48         47
    Distrust a lot...............................          32         31
    Distrust somewhat............................          16         16
DK/Refused.......................................           1          2
------------------------------------------------------------------------

       Question: If the McCain bill to reduce tobacco use among 
     kids is not passed by the Congress, who will be most 
     responsible for it not passing?

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Democrats in Congress............................          16         16
Republicans in Congress..........................          40         37
President Clinton................................          13         14
All of the above.................................          11         12
None of the above................................           4          4
DK/Refused.......................................          16         17
------------------------------------------------------------------------

       Question: Which of the following describes your use of 
     tobacco products?

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Current regular smoker or regular smokeless                25         26
 tobacco user....................................
Former regular smoker or regular smokeless                 25         25
 tobacco user, or................................
Never smoked cigarettes regularly or used                  49         48
 smokeless tobacco regularly.....................
------------------------------------------------------------------------

       Question: Do you generally consider yourself a Republican 
     or a Democrat?

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Republican.......................................          37         35
Democrat.........................................          39         39
Independent......................................          17         17
Other............................................           5          6
DK/Refused.......................................           2          3
------------------------------------------------------------------------

       Question: Are you currently registered to vote in the state 
     where you live?

------------------------------------------------------------------------
                                                   Registered     All
                                                     voters      adults
                                                    (percent)  (percent)
------------------------------------------------------------------------
Yes..............................................         100         86
No...............................................  ..........         14
DK/Refused.......................................  ..........          1
------------------------------------------------------------------------

  Mr. McCAIN. Mr. President, as we do battle of the polls, there is one 
today that I think in many ways supports the argument that the American 
people want to do something about the issue. The other argument that I 
hear quite often is the American people do not care, that they care 
more about illegal drugs, that they care more about crime, that they 
care more about education. I agree with that. But they also care about 
tobacco.
  After this issue is taken up, I understand there will be efforts to 
take up the issue of patients' rights under the present health 
management regime in America. I haven't seen that in any polls. That is 
one of the most important issues. Yet, I think Members of this body 
think that it is of great importance. We are going to take up the 
defense bill, of which there will be several controversial issues, such 
as ballistic missile defense, our sanctions on China, et cetera.
  I haven't seen those in any polls either. But yet I think the 
American people care about our Nation's security, especially our 
ability to defend the Nation.
  Should we do something about illegal drugs? Yes. I hope we will. I 
believe that this bill has been improved by that.
  Should we do something about education? I believe that we have had 
significant and substantial debate on the floor of the Senate regarding 
that issue. The very excellent bill of Senator Coverdell was passed 
after a very difficult process.
  Should we do things about crime? Yes.
  But, Mr. President, I think we should also do something about this 
issue as well.
  As I began my comments, I believe that we are in an important period 
of time. I say the best way to proceed is to have a cloture vote 
proposed by the majority leader, which is the way we do business around 
here. If the Senate, in its wisdom, decides by 40 votes, and we don't 
have enough votes to conclude debate after being here in this fourth 
week, then we should go on to other issues. If there are sufficient 
votes, 60 votes to invoke cloture, I urge both proponents and opponents 
of the legislation to try to complete action on this legislation this 
week.

[[Page S6370]]

  We all know we have 13 appropriations bills; perhaps product 
liability reform; perhaps other issues that are important to the 
American people as well.
  I don't mind staying here all summer, if I may borrow a phrase from 
another leader of a different magnitude than I. But I believe that we 
have discussed and debated this issue at great length, and it is now 
time for us to make a decision as to whether we move forward on this 
bill or not, or throw the issue back to the States. Thirty-six 
attorneys general voted for it. Larger and larger settlements, and 
larger and larger legal fees will occur. But most importantly, as I 
have said on a number of occasions on the floor, today 3,000 kids will 
start to smoke, and tomorrow, and the next day, and the next day.
  Mr. President, I yield the floor.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I thank my colleague, Senator McCain, for 
his remarks and putting some of this argument back in perspective.
  I want to address briefly the amendment of the Senator from 
Washington, Senator Gorton. I know there are other colleagues waiting 
to speak on this question.
  Mr. President, I understand the strong feeling that we want to limit 
lawyers' fees. I don't think there is a Member of this body that isn't 
concerned about seeing lawyers get windfall results for themselves as a 
result of this litigation.
  We have in the McCain legislation, the bill that came out of the 
Commerce Committee on a 19-to-1 vote, a strong bipartisan vote, a means 
of addressing that problem.
  What is in the bill is a provision for arbitration panels to 
determine what are the appropriate legal fees.
  I think probably that is the best answer, as imperfect as it is.
  The problem with the our taking action is, What action do you take? I 
think Senator Gorton has probably the best chance of prevailing. But it 
has problems. I think his is probably the most thoughtful provision 
before us.
  But I say to my colleague from Washington, I think there are real 
problems with what he has proposed. Under Senator Gorton's proposal, 
fees would be limited to $4,000 an hour for actions filed before 12-31 
of 1994. The problem is that may be way too much. It is even 
conceivable in certain circumstances that it is too little, but I think 
it is more likely that it is too much.
  He also provides $2,000 an hour for actions filed between 12-31 1994 
and 4-1 1997.
  I tell you, my own view is that may well be too much. It is hard to 
say because it is an arbitrary cap. That is the problem with what the 
Senator from Washington is offering. In many cases, it may be way too 
much.
  He says it establishes a cap, not a floor. But I think we all 
understand what happens in these cases. Very often what is intended is 
a cap which then becomes a floor. What we may find out is that people 
being compensated at $4,000 an hour do not deserve a fraction of that. 
Or we may find that we have attorneys who file actions between 12-31 
1994 and 4-1 1997 who are capped at $2,000 an hour. That may be far in 
excess of what they should receive.
  He also provides for $1,000 an hour for actions filed between 4-1 
1979, and 6-15 of 1998; $1,000 an hour.
  Again, because this is arbitrary, it can wind up being too much in 
one case when it goes down to $500 for actions filed after 6-15 of 
1998. Those would be new cases.
  That may be appropriate for those who have just gone out and made a 
copy of the previous actions filed by others, but if it is a new 
action, taking on the tobacco industry on a new theory where a law firm 
has to put up substantial resources of its own to bring an action, $500 
may not be enough.
  The point is we don't know. Sitting here in this Chamber, how do we 
make a decision about what is an appropriate legal fee for literally 
thousands of cases across this country. I don't think it is possible 
for us to make this judgment. That is why some of us believe an 
arbitration panel is the appropriate resolution. Let's leave it up to 
the parties at issue. They each name somebody on their behalf, and 
those two name a third, and they reach a conclusion on what the 
appropriate fees are in a particular case. But to have us sit in 
Washington and try to decide what a contract ought to be in the State 
of Minnesota is really pretty far-fetched. We often say we are engaged 
in too much micromanagement from here in Washington. In fact, our 
friends on the other side of the aisle say that frequently, and 
frequently they are right. If there was ever a case of micromanagement, 
this is it. We are deciding what legal fees should be in the State of 
Washington, the State of Minnesota, the State of North Dakota. I don't 
think so. I tell you what an appropriate legal fee in North Dakota is 
and what an appropriate legal fee in New York is are probably not the 
same. For us just to put in an arbitrary amount that applies across the 
country is meddling at a level that I think is counterproductive.

  Now, we have heard, gee, some of these cases that are settled are 
going to lead to a windfall for the attorneys at issue. I tell you, I 
am very concerned about that. That is why I have supported arbitration, 
because where there is a difference between those who hired the lawyers 
and those who have been hired, there ought to be a way of resolving it 
so lawyers do not enjoy windfall returns.
  We have heard a lot of discussion about Florida. There has been the 
suggestion that law firms down there are going to get $2 billion. I 
tell you, that is outrageous, absolutely outrageous --$2 billion for a 
case in Florida. But I am not the only one who thinks it is outrageous. 
The State court in Florida thinks it is outrageous. In fact, they have 
said it is unconscionable in the State of Florida, and they have not 
approved it.
  So why are we substituting our judgment for the judgment of courts in 
the individual States and the judgment of the attorneys general in the 
various States who are the ones who have hired lawyers on a contingency 
basis? Because that is why we have the problem. We have the problem 
because individual attorneys general did not, by themselves, have the 
resources to go take on the tobacco industry. They did not have the 
resources to do that. We all understand, before this series of cases, 
the tobacco industry had never lost a case and they had the best legal 
talent in the country.
  By the way, as I understand it, the proposal of the Senator from 
Washington only applies to plaintiffs' attorneys. It does not apply to 
the tobacco industry's attorneys. So you have kind of an uneven fight 
here: The tobacco industry has no limitation, and the plaintiffs' 
lawyers, those who sue on behalf of the victims, are capped. And the 
caps that apply under the amendment of the Senator from Washington may 
be way too much. In fact, I think in virtually every case $4,000 an 
hour is way too much; $2,000 an hour for a different set of classes 
based on the time that they were filed may be way too much; $500 an 
hour for new cases may be too little if the law firm has to put up 
substantial resources of its own in order to bring the action and 
successfully take on the multibillion-dollar tobacco industry, 
especially given the tobacco industry's rate of success.
  Mr. President, in the task force that I headed for our side, the 
conclusion we came to as the appropriate resolution is not to have us 
try to determine appropriate legal fees. The Senate of the United 
States is not equipped, frankly, to reach into the facts, the different 
fact patterns of hundreds of different cases, even thousands of 
different cases across this country, and determine what are the 
appropriate legal fees.
  I think that is a profound mistake, and it sets a precedent. Are we 
going to start to determine the legal fees in cases that involve the 
automobile industry? Are we going to start to get involved in what the 
legal fees should be in the medical industry?
  Boy, I tell you, I do not think that is a road we want to go down, 
because I do not think this body is equipped to determine the legal 
fees. I think we may make very serious mistakes, and I can easily see 
under the amendment offered by the Senator from Washington that we 
could wind up with a scheme in which lawyers were compensated far more 
than they should be.

  Now, if we look at what has happened around the country, I think we 
will see that, in fact, the individual States are responding to these 
challenges. We are

[[Page S6371]]

seeing in State after State that they are not accepting these 
outrageous contingency agreements that were entered into. They are not 
accepting 25 percent contingency agreements. In State after State they 
have changed what was proposed.
  In Minnesota, outside counsel agreed to accept 7.5 percent instead of 
the 25 percent fee as called for in the original contract. In 
Mississippi, both the State and their counsel have agreed to submit a 
decision on fees and expenses to an arbitration panel. In both Texas 
and Florida, where there is a dispute over fees, the attorneys' fees 
and expenses will be decided either through agreement, arbitration, or 
court order. In each case, mechanisms are now in place to determine the 
amount of the attorneys' fees.
  In Texas, a State court ruled that a 15 percent contingency fee 
called for in the contract between the State attorney general and the 
attorneys was reasonable but refused to award a specific dollar amount. 
In that State, the Governor has now petitioned the court to reconsider 
its decision and has asked for an evidentiary hearing. The decision is 
not expected until later this year.
  In Florida, as I indicated, the State court rejected as 
unconscionable the fee request of the attorneys. Well, good for the 
court in Florida; they should have rejected it as unconscionable. But 
that is where the decision ought to be made. It should not be made here 
in this Chamber where we are not privy to the facts in each of these 
cases and not in the position to determine what are the appropriate 
legal fees.
  Let me say further that the Gorton amendment would interfere in 
private contracts. That is a very serious matter. Where a State 
attorney general has entered into an agreement with an outside law 
firm, I think it is highly questionable for the Senate to reach behind 
that contract and say we know better, we know what the appropriate 
legal fees should be, and we divide it on this arbitrary basis as is 
called for in the Gorton amendment. I do not think I have ever heard 
our colleagues on the other side of the aisle call for interference in 
private contracts. I do not think that is a precedent that stands much 
scrutiny.
  I am going to have more to say about this amendment as we go forward. 
I would say that Senator Gorton, I think, has done the most serious job 
of trying to address this vexing question, to try to prevent windfalls 
to attorneys, but I am afraid it fails at least the test that I would 
apply for something that can meet the very different standards one sees 
all across the country in the literally thousands of different cases 
where legal fees apply.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Sessions). The Senator from Washington.
  Mr. GORTON. Mr. President, the Senator from North Dakota finds 
himself on the horns of a delicious dilemma. He feels there may be 
cases in which the amendment I propose would result in attorneys' fees 
being awarded that are too great, and so his answer is to reject the 
amendment and allow attorneys' fees in any amount. Attorneys' fees in 
one case, in Texas, I believe, have already been approved by the court 
in an amount more than 10 times higher than the highest amount in this 
amendment. I am afraid the Senator from North Dakota misreads the 
amendment.
  The heart and soul of the amendment is a set of criteria for 
determining reasonable attorneys' fees, listing a wide range of 
factors, some of which we have discussed here, but leaving the matter 
to the discretion of the court. There is a limitation imposed on the 
discretion of the court by the amendment in the amounts that we have 
stated and debated. This is a cap and by no means a floor.
  The Senator from North Dakota says that the better system is the 
system that is included in this bill, a system of arbitration. But, and 
the current Presiding Officer has read this very carefully, this is 
some kind of arbitration. This arbitration is to be decided under the 
bill by three arbitrators --one appointed by the plaintiff's trial 
lawyer himself, one appointed by the plaintiff, and a third appointed 
by the first two. The plaintiff has already signed an agreement--the 
plaintiff in most of these major cases is the State--they have signed 
an agreement, in some cases, for a 25-percent contingency fee on 
billions of dollars' worth of recoveries. Who is going to represent the 
public interest in this arbitration? No, Mr. President, there isn't 
anyone there to do that.
  Mr. CONRAD. Will the Senator yield for a quick point?
  Mr. GORTON. Sure.
  (Mr. COATS assumed the Chair.)
  Mr. CONRAD. I think the Senator misspoke himself. The Senator 
indicated in the arbitration panel one would be appointed by the 
plaintiff, one by the plaintiff's lawyer, and then one by the two. I am 
sure the Senator will acknowledge it is one by the defendant, one by 
the plaintiff, and the two of them determine the third member. Section 
1413 provides how the arbitration panel will work. Obviously, the two 
sides at issue each pick one, and the two of them pick the third. That 
is the standard means of establishing an arbitration panel.
  Mr. GORTON. I am reading section 1413. It says:

       . . .In any such arbitration, the arbitration panel shall 
     consist of 3 persons, one of whom shall be chosen by the 
     plaintiff, one of whom shall be chosen by the attorney, and 
     one of whom shall be chosen jointly by those 2 arbitrators.

  That is not plaintiff and defendant. That is a fixed deal. In any 
event, to say that because it is possible that this sets a ceiling, 
that a $4,000 fee or a $2,000 fee might be too great a ceiling, we 
should, therefore, have no ceiling at all, we should, therefore, allow 
attorneys' fees that have already been approved in far larger amounts, 
is, I think, a difficult argument to make.
  The Senator from North Dakota makes it very well. But, in fact, the 
Congress of the United States has set attorneys' fees in all kinds of 
cases. They were discussed a few days ago by the Senator from Alabama 
and by others. There are many forms of litigation against the 
government itself in which we have set attorneys' fees that now, I 
think, are rather modest with the passage of time.
  This is not unprecedented by any stretch of the imagination. What is 
unprecedented is the generosity of the proposal that I have put before 
the Senate. It is not unprecedented from the point of view of whether 
or not we have done it. No, we either have to say that because the 
States of these attorneys have come to us and have asked us to regulate 
tobacco in every conceivable, possible fashion, because they have asked 
us for a bill--this bill that makes it almost impossible for them to 
lose a case in the future because it totally changes the burden of 
proof--that we can say there is a certain level beyond which the 
conscience just simply doesn't allow attorneys' fees to go, or you have 
to take the position that we can regulate everything with respect to 
tobacco to the minutest degree, but we dare not touch attorneys' fees, 
personally, I think that is a very, very difficult argument to make.

  Mr. WELLSTONE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. CONRAD. Will the Senator from Minnesota yield for just one 
moment?
  Mr. WELLSTONE. I will be pleased to yield if I can have the floor.
  The PRESIDING OFFICER. The Senator is entitled to yield for a 
question in order to regain the floor.
  Mr. CONRAD. I ask unanimous consent, so I can get recognition, that 
the Senator from Minnesota be recognized right after I finish. I will 
take 1 minute.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. CONRAD. Mr. President, I want to clear up this confusion about 
the arbitration panel. On page 438 of the bill it says:

       * * * the arbitration panel shall consist of 3 persons, one 
     of whom shall be chosen by the plaintiff--

  In this case, the State, who has hired the attorney--

     one of whom shall be chosen by the attorney--

  That would be the claimant for the fees--

     and one of whom shall be chosen jointly by those 2 
     arbitrators.

  That is the standard method of setting up an arbitration panel. 
Nothing new, nothing unusual here. That is the way of setting up an 
arbitration panel

[[Page S6372]]

to get a result that is fair to both parties.
  I say to my colleague from Washington, for us to decide we have 
better judgment than the State courts that administer the cases that 
are before them, I think, is a huge mistake. We talk about 
micromanagement. When we start deciding legal fees in this Senate 
Chamber, we are making a mistake. We do need to be worried about 
windfalls to attorneys; absolutely we do. That is why arbitration 
panels were included in the legislation that came out of the Commerce 
Committee on a 19-to-1 bipartisan vote. I yield the floor.
  Mr. WELLSTONE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. I thank the Chair.
  Mr. President, my colleague from North Dakota has spoken to the 
arbitration provision in the legislation. I shall not do so. I just 
want to present a Minnesota perspective for just a moment.
  I come from a State where we just went through a very important 
trial. The lawyers in my State, working with the attorney general, were 
able to unearth 33 million pages of documents--33 million pages of 
documents. This was during a discovery process that went from August 
1994 to the end of 1997. Many of those documents have had an enormous 
impact, not just on the settlement in Minnesota, which was a very 
important settlement, but also directly on the debate in the U.S. 
Congress. Thirty-nine thousand pages of those documents were ordered 
produced by the Minnesota judge and were ultimately subpoenaed by the 
House of Representatives and made public on the Internet.
  What I want to do is speak to the part of this amendment that 
concerns me the most. I have had some discussion with my colleague from 
Alabama, and I have said to him, ``Why don't you, in fact, not make 
this retroactive,'' when he had his similar amendments on the floor, 
because I don't think we should be taking action here that reaches back 
to the Minnesota settlement, which has already been entered into and 
has been declared final by the court. We already have an arrangement 
between the State and the Attorney General and the lawyers who 
represented our State. Congress should not disturb that.
  I think the amendment of my colleague from the State of Washington 
has a different weakness and that is its lack of evenhandedness. What I 
want to see at a bare minimum is to have the same kind of caps or 
limits put on those attorneys representing the tobacco companies. I say 
to colleagues, when you vote on this amendment, the thing you ought to 
fasten your attention on is that we don't have the same kind of 
ceiling, the same kind of caps put on fees that go to lawyers 
representing the tobacco companies. I see nothing here that does that, 
in which case I would argue that we are hardly talking about a level 
playing field.

  I think the problem with the amendment is that it just simply lacks 
balance. I cannot support an amendment that puts caps on the fees of 
plaintiffs' attorneys representing consumers and representing the 
attorney general from a State, but at the same time puts no cap at all 
on the fees of attorneys hired by tobacco companies or other big 
corporations with their corporate lawyers working with these companies, 
but there is no cap on the fees. That just simply makes no sense to me 
from a kind of elementary standard of fairness, and that is why I think 
the amendment is fatally flawed.

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