[Congressional Record Volume 144, Number 88 (Tuesday, July 7, 1998)]
[Senate]
[Pages S7526-S7534]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        PRODUCT LIABILITY REFORM ACT OF 1997--MOTION TO PROCEED

  The PRESIDING OFFICER. The question is on the motion to proceed. Is 
there further debate on the motion?
  Mr. THURMOND addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.
  Mr. THURMOND. Mr. President, I ask unanimous consent to speak for 
twelve minutes as in the morning hour.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  (The remarks of Mr. Thurmond pertaining to the introduction of S. 
2266 are located in today's Record under ``Statements on Introduced 
Bills and Joint Resolutions.'')
  Mr. THURMOND. I yield the floor, Mr. President.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The distinguished Senator from Washington is 
recognized.
  Mr. GORTON. Mr. President, is the business before the Senate the 
motion to proceed to S. 648?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. GORTON. Mr. President, S. 648 is a bill relating to product 
liability reported about 1 year ago by the Senate Commerce Committee. 
That bill is identical or nearly identical to the product liability 
legislation that passed both Houses of Congress in the last Congress 
and was vetoed by President Clinton.
  As and when the motion to proceed is agreed to, Senator Rockefeller 
and I will propose an amendment in the nature of a substitute on the 
same subject, product liability, somewhat more modest in scope than the 
bill that was vetoed by the President. It is the result of more than 1 
year of careful and detailed negotiation involving myself, other 
members of this party, Senator Rockefeller and various of his allies, 
and the Office of the President of the United States.
  The willingness of the President of the United States to sign a 
product liability bill in the form of this substitute is due to the 
untiring and diligent efforts of the junior Senator from West Virginia, 
who has literally been tireless in pursuing a solution to a question 
that involved his time and my time for well over a decade, and a 
willingness to pursue it in a White House from which a veto emanated 
almost 2 years ago.
  The bill, of course, is not as broad as the one that was then vetoed 
or the bill that was passed out by the Commerce Committee. 
Nevertheless, it does bring a significant degree of rationality and 
predictability to product liability litigation. It removes a number of 
severe inhibitions that stand in the way of research and development 
for new and approved products in the commerce of the United States. 
That may be its most important single feature, because we have an 
economy in which litigation has provided a severe inhibition to the 
improvement of our products, to the development of new products. 
Perhaps the single most vivid illustration of the value of product 
liability litigation is in the field of piston-driven aircraft, a 
subject with which the Presiding Officer is more than familiar, where a 
limitation on product liability litigation, a modest limitation, passed 
half a dozen years ago, has resulted in the recovery of an industry 
that had almost disappeared in the United States of America. So we are 
not speaking about a theory when we talk about the inhibitions placed 
on various forms of business enterprise, industrial and otherwise, by 
the present state of the law varying from State to State through 50 
States and several other jurisdictions.

  While I would prefer broader product liability legislation, and while 
I believe the Senator from West Virginia might prefer it to be somewhat 
broader than it is at this point, this legislation nevertheless is good 
for the economy of the United States, and it is good for those who are 
injured by the actual or real negligence of manufacturers or sellers. 
It does, however, say that in the case of the seller, the seller is 
only going to be liable when the seller itself is negligent. It does 
put some rational basis on the award of punitive damages with an actual 
cap on punitive damages for modest and for small businesses. In that 
regard, it sets a uniform national standard for punitive damages in 
those States that allow punitive damages--my own, for example, does 
not--raising the bar to require clear, cogent, and convincing evidence 
for the award of punitive damages, a higher standard than exists in 
most States at the present time, with a cap on punitive damages for 
small businesses.
  The National Federation of Independent Business has just come out 
with a study as to who is impacted by that, and while the definition of 
a small business in this bill is 25 employees or $5 million a year in 
sales, their table shows that 73 percent of all the manufacturers in 
the United States have fewer than 20 employees, 88 percent of all the 
retailers in the United States have fewer than 20 employees, and 85 
percent of the wholesalers in the United States fall within the same 
category. So, for the vast majority of business enterprises in the 
United States, there will be a cap on punitive damages that is 
realistic in nature and is something that the business might 
conceivably be able to pay, rather than simply being driven out of 
business by such a verdict.
  With respect to product sellers, it simply states that the product 
seller avoids liability if the product seller is not itself negligent 
or otherwise liable. Manufacturers, under those circumstances--since 
they can't be joined in litigation with the product seller--can almost 
always achieve what amounts to fraudulent joinder and thus get 
diversity of citizenship, a diversity of citizenship that allows them 
to get into a Federal court rather than into State courts where the 
great majority of notorious and unwarranted verdicts in product 
liability cases have taken place in the past.
  Product manufacturers have been frustrated by the unavailability of a 
``misuse'' defense. They have that, to a greater extent, as a result of 
this bill. The bill includes a statute of repose, a very modest and 
narrow statute of

[[Page S7527]]

repose but a statute of repose nevertheless, one of 18 years for 
durable goods used in the workplace where the plaintiff already has 
available to that plaintiff workers compensation or industrial 
insurance.
  Finally, a strong biomaterials bill, particularly important, in my 
view, as the materials that go into implants--for example, heart 
monitors and the like--are often very inexpensive. They are various 
forms of plastic tubing and the like. Yet the biomaterials manufacturer 
almost always finds itself as a defendant in a product liability suit 
directed primarily at the manufacturer or the assembler of the implant. 
And the cost, in the case of many relatively large corporations, of 
successfully defending lawsuits based on those implants literally 
exceeds the total sales price of the materials that they have sold that 
go into those items. So a rational manufacturer of the materials that 
go into various very important cutting-edge medical devices--the 
rational manufacturer simply won't sell them. There is not much point 
in selling $100,000 worth of materials in a year if it is going to cost 
you $1 million a year successfully to defend yourself against lawsuits 
directed primarily at the person who has used the materials that you 
have manufactured.

  Some of those companies have continued in the business just as a 
matter of being good citizens, but we cannot call on them or believe 
that they will continue to do so for an extended period of time. To the 
best of our knowledge, we do not have any who have actually lost these 
lawsuits, but the defense against these lawsuits is important in any 
event.
  We have a system that is sick, a system in which the greater 
percentage of the money that goes into product liability litigation 
goes to lawyers, insurance companies, insurance agents and the like, 
and only a relatively modest portion of it ever gets to the actual 
victims of actual negligence. We have a situation in which there are 
highly publicized and outrageously large punitive damage awards in a 
handful of States of the United States, but where, in the vast majority 
of cases in which some at least modest compensation is due, the 
compensation is less than actual damages.
  This bill is a modest attempt to improve the compensation system for 
defective products in the United States and it modestly improves it. It 
is a modest move in the direction of uniformity. It certainly doesn't 
create uniformity everywhere, but at least it is a modest step in that 
direction. And it is a significant step in the direction of encouraging 
companies to continue to be at the cutting edge of the development of 
new products, new products used both in the workplace and by 
individuals all across the United States--the kind of innovation and 
development which have marked the United States from the very beginning 
of our history and of our economy, and the kind of innovation and 
leadership in the world economy that is vitally important. So I hope we 
will be soon able to move to the bill, to pass the bill in the form as 
it has been worked out by the Senator from West Virginia and myself 
with the cooperation of the White House, its passage by the House, and 
its signing by the President of the United States.
  I dare not say in a body like this that this issue has occupied us 
for more years than any other in which there has not been any actual 
legislation passed, but if it doesn't rank No. 1 in that score, it 
ranks very, very close to No. 1. We now have a real opportunity, if we 
are constructive, to see to it that we are modestly successful, and I 
hope in the course of the next week or 10 days that is exactly what we 
will do.
  The PRESIDING OFFICER. The distinguished Senator from West Virginia 
is recognized.


                         Privilege of the Floor

  Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that Rosalind 
Wood, of my staff, be accorded floor privileges for the duration of the 
consideration of the pending product liability bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROCKEFELLER. Mr. President, here we are again. As always, I am 
very proud to be standing across the aisle from my dear colleague, 
Senator Gorton. Senator Lieberman is very much a part of this. There 
are many who are very much a part of this.
  I can report that we are in a position, as the Senator from 
Washington has indicated, to pass and to have signed a product 
liability bill for the first time in my living memory, at least, in the 
Senate. This is, I guess, my 11th year on this subject.
  We have a chance to have the bill signed, however, by the President, 
only if we maintain the bill in its current very limited form. I, 
obviously, congratulate Senator Gorton--who does a prodigious job in 
all events--on this subject and many others, but he has also been 
extraordinary in the way that he has accepted and rejected and 
negotiated not only with myself, but also with the White House in his 
discussions with the majority leader to, in effect, finally bring a 
product liability bill to the floor which actually can pass, and if it 
does pass, will be signed by the President, provided that it is in its 
current limited form.
  It is a good feeling to have a bill that can be signed. I am much 
more accustomed to being here promoting a bill that I know would be a 
good bill, but, on the other hand, which I know in the end isn't going 
to be signed. When you know something is going to be signed, that says 
two things: One is that you are dealing with some folks in the White 
House who have been very honorable and consistent; and, second, you 
have a very limited bill.
  The Senator from Washington used a much more tactful phrase. He said 
a ``somewhat more limited bill.'' I will be more direct and say that it 
is a very much more limited bill. The logic for that is very simple. If 
it was other than its current form, we might be able to pass it, but it 
would not be signed. I just somehow fail to see the logic or the wisdom 
of, once again, passing a bill that is vetoed. I don't see the point in 
that. It takes up a lot of our time.
  We have all worked at this for years and years. If we are going to do 
something, let's get what we can. I think that is one of the lessons we 
learned from health care reform--one which I myself did not learn 
easily--that when we try to do the whole job, or at least a large chunk 
of the job, the Congress is not willing to accept it. I now refer to 
myself on health care reform as a ``raging incrementalist.'' I have had 
to accept that position. On product liability reform, I now think the 
more limited approach makes a great deal more sense.
  I say again to my colleagues and those who work with them, that when 
I say there is not a lot of room for deviation in this bill, the 
Senator from West Virginia really means that. This is a process in 
which I worked for a very long period of time negotiating with the 
White House, knowing that it was fruitless to come forward with a bill 
which would not meet with their approval. In essence, we had to look at 
all of those things which were displeasing to the White House last year 
when the veto took place and then simply excise all of those or 
anything related to those, and proceed to craft a bill which did not 
meet their objections. They were very tough about it, but they were 
very fair about it. They were very consistent. I really respect them 
for that. I can name the people who did that, and I will at the 
appropriate time, but I really honor them for their consistency and 
their willingness to let it be known where they stood.

  Then, my obligation is to let my colleagues know that this is not one 
of those bills where we can come in and do all kinds of things to it or 
else it will be vetoed, and only the President holds the pen. He always 
does, but sometimes there is more room for movement. On this one, I 
think there is very little room for movement.
  Senators know our legislative calendar is growing very short. That is 
why I have been so adamant about urging floor consideration for the 
reform agreement that has been reached with the White House and which 
will be signed if passed. Senator Gorton and I recently completed work 
on some technical changes which the White House had agreed to accept 
but, again, technical, no substantive changes. No substantive changes 
were contemplated by the White House; no substantive changes were 
agreed to by the White House, only some technical changes.
  Why? Because they are the controlling element here. They are the ones 
who have the pen. They can veto it, or they can sign it. Therefore, 
their leverage is considerable. I can pretend we

[[Page S7528]]

are otherwise, but it doesn't do me much good. That is the case. 
Therefore, if we are going to have some form of bill, then let's 
proceed to get what we can. That is the way Senator Gorton and I have 
proceeded on this bill.
  I reemphasize to my colleagues that the White House has publicly 
committed to signing this bill if it remains in this form. That will 
grate on some of my colleagues. I have also had private assurances this 
bill will be signed if it is unamended. It is now up to the full Senate 
to decide if they want a campaign issue or if they want to pass a 
moderate, balanced, responsible reform bill that helps small business, 
product sellers, renters, lessors, as well as consumers, but which, in 
the end, is a fairly modest bill.
  My colleagues know there are many of us who have worked very hard to 
gain a meaningful and fair reform. I have taken on this task, not 
because I am a lawyer, which I am not; not because I am heavily 
involved in following these matters in the trade press, but for a very 
simple reason. And that is I genuinely believe that in an international 
global economy, we have to keep up with the competition.
  I just returned from 10 days in China with the President. It is just 
absolutely stunning to see what is going on there, the way that 
economy, in spite of the Asian troubles, is leaping ahead. This is true 
all over Asia. The Asia crisis is going to pass. It is going to be a 
couple of years. It is going to pass. They are going to come back. The 
Asian countries are predestined to be successful economically.
  All the European Union nations have a single product liability law. I 
know, just as a matter of common sense, that when something is 
manufactured in a State, if it is an average State, 70 percent of the 
manufactured products will be exported on an interstate, if not 
international, basis. Therefore, State law, having had meaning at some 
point, has much less meaning when it comes to interstate commerce, much 
less international commerce. Again, it is not just a question of the 
laws, but it is also a question of are we being competitive or not. 
What is the added cost for liability insurance to our products as we 
compete in Europe and Japan now, for example, which has also taken on a 
single national uniform product liability law.
  All of these things are extremely important. I also think having 50 
States with separate laws is confusing. It means that people forum 
shop. They go to the State where they can get the best deal. I think it 
is true--I am not sure it is true this year--but it is true that last 
year, 85 percent of all of the punitive damages awarded in this country 
came out of Alabama, Texas, and California. That means that people knew 
where to go to get into a court system which would, in a sense, respond 
sympathetically. I don't think that is a wise way to carry on the 
business of our country or the commerce of our country.
  All of these States having different laws is very, very complex and 
very difficult in allowing us to compete, and in fact, in even allowing 
us to adjudicate in product liability cases where people have, in fact, 
been injured and do, in fact, deserve payment and, in some cases, 
punitive damages.
  The plain fact to this Senator's way of thinking is that our current 
system is simply unable to handle this problem in the modern 
marketplace and much less--or more so, really--in the global 
marketplace. States cannot deal with product liability problems that 
occur out of their borders. They can't do that.

  In contrast to the circumstances that existed when our tort system 
was evolving, most goods, as I indicated, move outside of the State. 
That is important. When our tort system was evolving, the States could 
handle it. The States did handle it. Exporting from McDowell County, 
WV, to Braxton County, WV, was the way life went on some time ago. Now 
if you export to Ohio, much less the State of California, much less 
Indonesia, Japan, or China, you have to be much more sophisticated in 
the way you handle these problems. I think a Federal product liability 
law does make sense. That does not mean in all respects, and this bill 
does not do that in all respects, and I think that is an important 
point.
  I was a member of the National Governors' Association for 8 years, 
and, like other companies, I was protective of States rights on all 
issues. But they have fairly consistently recognized the importance of 
establishing a Federal statute on product liability. I think that is 
very significant and deserves the consideration of my colleagues.
  There is another bipartisan group called the American Legislative 
Exchange Council, a group of over 3,000 State legislators from all over 
the country. They have repeatedly urged Congress to enact Federal 
product liability reform--Federal product liability reform.
  The bill we are proposing would address the problems in our product 
liability reform system which we know exist. It would provide increased 
predictability for business. It would improve the system for consumers 
at the same time. Is it gigantic on any side? No, because it is not a 
big bill. That we constantly bear in mind, because if it were a bigger 
bill, it would not get signed. We want to get the bill signed. This is 
not the ``nose under the tent'' theory. It simply would be nice to get 
some sort of uniform Federal standards on product liability going.
  Under today's product liability system, companies have a disincentive 
to invent, to innovate. That means there are a lot of beneficial 
upgrades that are not done. People do not undertake certain kinds of 
biomedical research or pharmaceutical production or other things just 
because they fear the result of getting sued. It isn't really so much 
the number of suits. Those who oppose this Senator's position are 
always talking about, ``The Senator from West Virginia is always 
talking about the explosion of litigation.''
  I have never talked about explosion of litigation. There is no 
explosion of litigation. But the psychological factor of a company 
sitting down and trying to decide whether it will go into a line of 
research and development which could lead to a cure for some disease, 
the present laws pull them back. Look at Viagra. It now has had about 
300 deaths. I don't know what will happen with Viagra. Maybe they 
deserve to get sued, maybe they don't, I don't know. But you can see 
when people are looking at doing some kind of research that they want 
to pull back. In the case of Viagra, maybe they should have in the 
first place. Or maybe their warnings were not adequate.
  I am not here to defend Viagra, as I was never here to defend Ford 
Pinto--that was always the example. Ford Pinto is undefendable. They 
should have been sued, they were sued, and that was the right thing to 
do.
  Keeping products off the market that can do remarkable good for 
people is not in the American tradition; protecting consumers is in the 
American tradition. But we have always managed to find a balance where 
we both protect consumers and we move forward, strongly, in terms of 
innovation. We have always been the country of basic research. Other 
countries have been the countries of applied research. Basic research 
is not undertaken unless you can foresee it ending up someday in the 
marketplace. If you don't, then you don't do it.
  We can help all of this by establishing a set of Federal rules for 
product liability cases. The compromise bill that Senator Gorton and I 
were able to work out with the White House, and which was introduced on 
June 25, creates a national framework for a more rational process for 
litigation regarding products, and products alone. If a manufacturer 
was, in fact, responsible for injury, it would remain accountable. If 
the seller of a product failed in its responsibility, it would be held 
accountable. The legislation is limited, meaningful, and signable.
  I ask unanimous consent a section-by-section analysis of the bill 
appear in the Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. ROCKEFELLER. I will briefly run through a list of the bill's 
major provisions for my colleagues in the hope that some of them and 
some of their staff they work with are listening.
  No. 1, the bill, as the Senator from Washington indicated, protects 
product sellers, renters, and lessors from suits that should be brought 
against manufacturers, not the product sellers, renters, or the 
lessors. Product sellers, renters, or lessors will be held liable

[[Page S7529]]

for their own negligence, make no mistake. For their own negligence 
they will be held accountable, or their failure to comply with express 
warranty, but not for the negligence that is beyond their own control. 
That comports, it seems to me, with common sense.
  The product seller, renter, or lessor remains liable if the 
manufacturer cannot be brought into court. So, again, a consumer 
protection. Or they remain liable if the manufacturer is unable to pay 
judgments. All of this is in order to ensure that consumers retain a 
source of recovery. So, product sellers, renters, or lessors, et 
cetera, are protected, but they are not protected in the ultimate 
sense. That is, if manufacturers don't show up, are broke, can't pay, 
they--the consumer, injured consumer--will still get recovery.
  No. 2, this bill will create a defense in a product liability case if 
a plaintiff is found to have been under the influence of illegal drugs 
or alcohol and was responsible for more than 50 percent of his or her 
own injuries. That has always struck me as a commonsense idea. We 
should help discourage abuse of illegal drugs or alcohol. Maybe it 
will, maybe it won't. But in any event, if people are responsible for 
their own use of alcohol or drugs and responsible for more than 50 
percent of their injury, there should be an absolute defense against 
that.
  No. 3, if a claimant's harm is attributable to the misuse or 
alteration of a product, defendant's liability will be reduced by 
whatever extent the harm is due to that misuse or alteration.
  No. 4, consumers will have 2 full years to file a complaint from the 
time he or she discovers or should have discovered the harm and--this 
is new--the cause of the injury. A lot of States have the harm, the 
discovery of the harm, but there are not as many that have the cause. 
So, this is very, very strongly in favor of the consumer. This is 
particularly true--on the veterans committee, I have worked very hard 
on a variety of issues, including the Persian Gulf War Syndrome, all 
kinds of things in the world we are moving into, like toxic harm, et 
cetera, where the cause becomes much more important, because often 
things don't show up until much later.
  No. 5, the bill's 18-year statute of repose applies to only durable 
goods in the workplace, and only in those situations which are covered 
by State worker compensation laws, and specifically excludes injuries 
caused by toxic harm. I just mentioned toxic harm. Well, toxic harm has 
no place, there is no remedy for it, in this bill. This means that only 
people who can recover for their injuries under State worker 
compensation laws are subject to the statute of repose. The statute of 
repose does not begin until after the product's express warranty 
expires. This provision is good for consumers, and, frankly, it is good 
for business. Businesses are relieved of unlimited liability, and 
consumers have a source of recovery.
  No. 6, alternative dispute resolution--this is not the most potent 
part of the bill that I can imagine--we have an alternative dispute 
resolution that avoids protracted legal battles. That is encouraged 
under this bill. Either party can request alternative dispute 
resolution using existing State ADR procedures.
  No. 7, one of the main provisions of this bill limits punitive 
damages for truly small businesses (under 25 employees with $5 million 
in revenue), individuals (with incomes of $500,000 or less), and local 
governments. It creates a Federal standard for awarding punitive 
damages which are reserved for the most egregious cases--clear and 
convincing. We simply take the Federal standard, uniform standard, and 
put it, frankly, where I think most people agree it should be. The bill 
sets the limit for these punitives for small businesses to $250,000, or 
two times the economic and noneconomic damages. This limit means that 
businesses will still have to pay punitives, should that be the 
judgment of the court, but they are less likely to be bankrupted by the 
cost of the penalty. This bill does not create punitive damages in 
States that do not permit punitive damages. That needs to be said 
clearly. If the State does not have it, this bill will not create it.

  The bill includes a workplace safety incentive by affecting an 
employer's right to recover worker compensation benefits from a 
manufacturer whose product harms a worker if the employer's fault was a 
substantial cause of the injury.
  Finally, Senator Lieberman's biomaterials access assurance bill is 
the second title of product liability reform. I should say, in all due 
candor, this was something that was worked out between the White House, 
Senator Lieberman, and other parties. I concentrated, as did Senator 
Gorton, on the products aspect of this. Senator Lieberman did the 
biomaterial section of that and did a very good job. The White House 
has accepted it and it is part of the bill. This provision is designed 
to alleviate the shortage of certain biomaterials due to biomaterials 
suppliers who are increasingly unwilling--as those who would wish to do 
basic research--to supply products that produce very little revenue, 
but which would have high litigation costs attached to them. It should 
ensure the availability of life-saving and life-enhancing medical 
devices.
  Specifically, the provision will protect suppliers of biomaterials by 
allowing them to seek early dismissal from claims against a medical 
device manufacturer, so long as the supplier did not manufacture or 
sell the device and met its contract requirements.
  In sum, then, Mr. President, this bill, I think, is balanced in its 
treatment of consumers and business. Again, it is not a large bill. I 
think it should have strong, bipartisan support.
  I believe in the need to develop a Federal-level framework. To me, 
the free flow of interstate commerce demands some form of a rational 
and fair approach. I think that involves, to a certain extent, Federal 
standards. We are, after all, in a global economy, and the world has 
changed almost totally in the last 10 years as regards to this product 
liability subject, and the need for the legislation is greater than 
ever.
  I am not naive. As we head into this debate, there is long 
experience--over a decade--of filibusters and vetoes on products 
legislation. That is why I am so pleased that we have succeeded in 
negotiating a new bill with the President and his team. This bill has a 
firm commitment from the White House that it will be signed if it is 
unaltered. My colleagues do not like to hear the phrase ``if it is 
unaltered.'' The Senate does have a right to work its will, but if the 
Senate works its will and the White House is displeased, of course, 
there will be no bill. That is a choice the Senate will have to make.
  So to hit the highlights again--one gives this speech only once 
during the course of debate--we would gain strong protections for 
product sellers, renters, lessors and suppliers; strong protections for 
biomaterials suppliers; uniform Federal statute of limitations and 
workplace durable goods statute of repose; uniform Federal rules on 
alcohol and drugs; uniform Federal rules on misuse or alteration; 
uniform Federal legal and evidentiary standard for punitive damages--
the key word being ``uniform''--strong protections for small business 
from punitive damage awards; States' advances on joint and several 
liability determination would remain in place; more uniform rules of 
preemption (punitive damages and statute of repose changes). And then, 
as I indicated, there are incentives to resolve litigation, although 
they are not mighty in their nature. Nevertheless, they are there.
  I am fully aware that some have reservations about the limited nature 
of the product liability compromise that we secured with the White 
House, believing that it does not go far enough. That is a view that in 
other places or at other times, perhaps, might have my concurrence. But 
we are not in other places and in other times; we are here and now. It 
is not my view that we will move forward toward enactment of anything 
if we make changes to this bill.
  For the Record, let me acknowledge that we will face amendments that 
go beyond the compromise that Senator Slade Gorton and I have now 
secured with the White House. That was true in the last attempt to move 
product liability reform, and it resulted in--guess what? A veto, and 
no law. Those expansions will not have my support. I will not support 
them, and they cannot be signed into law.
  As I have stated many times before, I don't intend to support product 
liability reform provisions for the sake of doing it, so that I can say 
I did it. I want to see a law. I want to see something come from this 
process after all

[[Page S7530]]

these years. As the Senate proceeds with debate on product liability 
reform, I sincerely hope and believe that the majority leader will take 
advantage of what I consider to be virtually the last opportunity to 
enact limited Federal reform of our product liability laws in the 
foreseeable future.
  Mr. President, that is all I have to say at the present time. I thank 
the Presiding Officer and yield the floor.

                              (Exhibit 1)

                  PRODUCT LIABILITY REFORM ACT OF 1998


                       Section-by-Section Summary

     1. Short Title; Table of Contents.
     2. Findings; Purposes.


                   Title 1--Product Liability Reform

     101. Definitions.
     102. Applicability; Preemption.
       The Act covers product liability actions brought in federal 
     or state court on any theory for harm caused by a product, 
     but excludes actions for: (i) commercial loss; (ii) negligent 
     entrustment; (iii) negligence per se concerning firearms and 
     ammunition; (iv) dram-shop; (v) harm caused by a tobacco 
     product; or (vi) harm caused by a silicone breast implant.
       State law is superseded only to the extent it applies to a 
     matter covered by the Act. Matters not governed by the Act, 
     including the standard of liability applicable to a 
     manufacturer, continue to be governed by applicable federal 
     or state law.
     103. Liability Rules Applicable to Product Sellers, Renters, 
         and Lessors
       Product sellers, rentors, and lessors will be liable only 
     for their own failures and misdeeds: a product seller, rentor 
     or lessor is liable if the harm that is the subject of the 
     action was caused by (i) his failure to exercise reasonable 
     care, (ii) his intentional wrongdoing, or (iii) the product's 
     failure to conform to his express warranty; failure to 
     inspect the product will not constitute failure to exercise 
     reasonable care if there was no opportunity to inspect the 
     product or an inspection wouldn't have revealed the problem; 
     product sellers are liable as manufacturers if the 
     manufacturer is judgment-proof or not subject to service of 
     process, in which case the statute of limitations is tolled 
     until judgment is entered against the manufacturer; and 
     rentors and lessors are not liable solely by reason of 
     ownership.
     104. Defense Based on Claimant's Use of Alcohol
       It is a complete defense in a product liability action if 
     the claimant was under the influence of drugs or alcohol and, 
     as a result, was more than 50 percent responsible for the 
     harm.
     105. Misuse or Alteration.
       Damages for which a defendant is otherwise liable under 
     state or federal law are reduced in proportion to the 
     percentage of harm caused by misuse or alteration of a 
     product if such misuse or alteration was in violation of a 
     manufacturer's warning or involved a risk that was or should 
     have been known by an ordinary person who uses the product. 
     Such damages are not reduced by the percentage of harm 
     attributable to an employer who is immune from suit.
     106. Statute of Limitations.
       The Act creates a uniform, 2-year statute of limitations--
     product liability claims in all states must be filed within 2 
     years of the date the harm and the cause of the harm was, or 
     reasonably should have been, discovered.
     107. Statute of Repose for Durable Goods Used in a Trade or 
         Business.
       The Act creates a uniform 18-year statute of repose for 
     harm (other than toxic harm) caused by durable workplace 
     goods where the claimant has workers compensation coverage, 
     with exceptions for general aviation, transportation of 
     passengers for hire, and products with an express warranty of 
     safety of life expectancy beyond 18 years.
     108. Transitional Provision.
       Claimants have a full year after enactment to bring a 
     claim, regardless of the impact of the new federal statute of 
     limitations or statute of repose.
     109. Alternative Dispute Resolution.
       Claimants and defendants are encouraged to use voluntary, 
     non-binding ADR as available under state law.
     110. Punitive Damages Reforms
       Uniform Standard. The Act creates a uniform legal and 
     evidentiary standard for punitive damages--the claimant must 
     establish by clear and convincing evidence that the harm was 
     the result of conduct carried out with a conscious, flagrant 
     indifference to the rights or safety of others. Punitive 
     damages are explicitly not created in states that do not 
     otherwise allow them.
       Bifurcation. Any party can request that punitive damages be 
     determined in a separate proceeding and that evidence 
     relevant only to the punitive damages determination not be 
     introduced in the underlying action.
       Small Business Limit. Punitive damages awards against small 
     businesses may not exceed 2 times the amount of compensatory 
     damages or $250,000, whichever is less. Small business is 
     defined to cover entities with 25 or fewer employees and less 
     than $5 million in annual revenue. Limitation also applies to 
     local governments and individuals with net worth under 
     $500,000.
     111. Liability for Certain Claims Relating to Death.
       Provisions regarding punitive damages will not apply for 
     one year in states that, in wrongful death actions, permit 
     recovery only for punitive damages.
     112. Workers Compensation Subrogation
       An employer or insurer may lose its lien against a judgment 
     or settlement in a products liability case involving a 
     workplace accident if the employer's conduct was a 
     substantial factor in causing the claimant's harm--thereby 
     providing an incentive for safer workplaces and ensuring 
     workers receive full recovery for their injuries.


                title ii--biomaterials access assurance

       A supplier of biomaterials (component or raw materials used 
     in the manufacture of implantable devices) is permitted to 
     seek early dismissal from claims unless he (i) manufactured 
     the device; (ii) sold the device; or (iii) furnished 
     materials that failed to meet contract requirements or 
     specifications. In the event that the manufacturer or other 
     responsible party is bankrupt or judgment-proof, a supplier 
     will be brought back into the suit if there is evidence of 
     his liability. Lawsuits involving silicone gel breast 
     implants are expressly excluded.


        title III--limitations on applicability; effective date

     301. Federal Cause of Action Precluded.
       No federal causes of action are created.
     302. Effective Date.
       The Act applies to all actions commenced on or after the 
     date of enactment.

  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER (Mr. Thomas). The distinguished Senator from 
South Carolina is recognized.
  Mr. HOLLINGS. I thank the Chair. Mr. President, in a phrase, we ought 
to ``bail this buzzard.'' This bill ought to be killed outright. It is 
nothing more than a political farce. The distinguished Senator from 
West Virginia says 10 years; it is 20 years, really. What sustains a 
20-year drive is nothing more than political polling. I was elected 
some 50 years ago, and if I have watched a dismaying trend, it is the 
lack of really addressing the true needs of a State or the Nation, and 
instead addressing the needs of the individual politician, as reflected 
in the political poll.
  Now, Mr. President, right to the point. We all have heard 
Shakespeare's comment that Dick the butcher calls out in Henry VI, 
``First, we must kill all the lawyers.'' That is in response to the 
intent of fomenting anarchy, imposing tyranny; and Dick the butcher, 
like Adolf Hitler himself, wanted to get rid of the lawyers first. Dick 
the butcher says, ``First, we must kill all the lawyers,'' because he 
knew that as long as you have lawyers standing for individual rights, 
you cannot have anarchy; you cannot have tyranny. But ask people about 
lawyers--until they need one; just like doctors, until they need one--
and they will say get rid of all the lawyers. And over the 20-year 
period, I have kept my good friend Victor Schwartz in business. Maybe 
he will go out of business now with this jury-built nonsense called an 
amendment that we only got on yesterday, and I haven't had a chance--
that is why I have been scurrying around here at the desk--to pick up 
the thrust of this latest assault.
  But back to the initial point--we have been taken over by the 
pollsters.
  Only the week before last, the House of Representatives, the most 
central organ of our representative government, the body that controls 
the purse strings, voted overwhelmingly to do away with tax revenues, 
some $970 billion--just gut the source to pay the bills--that we are 
going to spend and spend and spend. They use substitutes now of 
borrowing from yourself. We passed section 13301 of the Budget Act to 
forbid it. They disregard it regularly, borrowing so much from Social 
Security, the highway trust fund, the airport trust fund, the civil 
service pension fund, the military retirees pension fund, and the 
Federal Financing Bank--at this point over $111 billion--to bring about 
talks of surplus.
  In fact, this year we are spending over $111 billion more than we are 
taking in--a deficit, if you please. But with all of the jargon around 
and the news media coverage that is supposed to educate and illuminate 
and keep us to the truth, politicians have joined in the conspiracy. 
They babble ``surplus, surplus''-- everywhere they call ``surplus.'' 
Well, there isn't any surplus.
  Of course, this bill here is intended strictly to get at the 
lawyers--not as the distinguished gentleman used the expression of ``in 
the American tradition.'' ``In the American tradition,'' Heavens above. 
The American tradition, Mr. President, has been for the

[[Page S7531]]

States to regulate our torts. They have done so commendably. There 
isn't any question. All the farcical preambles--they try to really get 
away from the preambles and just some dribble about interstate 
commerce. I use the expression ``dribble'' and otherwise, because we 
know otherwise.
  The reality, heavens above, is that we have a great economy and 
booming small businesses. The National Federation of Independent 
Businesses says small businesses are having the best of times. My staff 
completed a Lexis-Nexis search for small businesses that couldn't 
operate on account of product liability. You know what--they couldn't 
find any large and serious cases against small businesses. But I 
presume during the debate this legislation's supporters will bring us 
some, and we will see how many they bring.
  The fact remains that there isn't a problem. But there is a political 
interest. There is a political problem. Oh, yes. We have to say we did 
something--we did something to get rid of the lawyers. We showed those 
lawyers. And, as a result, they not only voted away the tax system--now 
here on the Senate side for a nonproblem they come up and talk about 
the American tradition whereby they ask, and the gentleman says, 
``There goes that trial lawyer crowd.'' You are right. They are the 
ones who have really been keeping the system honest. They haven't 
succeeded but in 27 percent of the product liability cases. But they 
still, when they have the clients who have been injured, try to keep 
the system honest. And what happens is that we have the States here--
not only the trial lawyers but we have the States--and the American Bar 
Association.
  So I am very proud to stand here with the State legislature. Don't 
tell me about the Governors. I have been one of those, just like the 
Senator from West Virginia. And when we had Democratic Governors, then 
they voted against this thing right on down the line. Now the 
Republican Governors, the last time they got together and even bothered 
to take action was 6 or 7 years ago. They are not really bothered by 
it. But the State legislatures are bothered by it.
  We have an update here of June 18, less than a month ago. Here is 
what they really said when this was proposed, again on this particular 
bill, before with the amendment, which is to be introduced, I take it, 
later on. This is from the National Conference of State Legislatures:

       As you know, product liability legislation, in some form, 
     may come to the Senate floor before Congress adjourns in 
     November. I urge you, on behalf of the National Conference of 
     State Legislatures, to vote against any such bill, for the 
     simple reason that this is an issue best resolved by state 
     legislatures.
       A good deal of lip service is given today to the advantages 
     of our constitutional system of federalism and to the 
     advantages of devolving authority to the states. But, from 
     the point of view of state legislators, this rhetoric belies 
     the reality of an accelerating trend toward concentration of 
     power in Washington. Every year, Congress passes more laws 
     and federal agencies adopt more rules that preempt state 
     authority. Little consideration is given to the cumulative 
     effect of preemption piled upon preemption. Little thought is 
     given to the shrinking policy jurisdiction of state 
     legislatures.
       Moreover, little consideration is given to whether state 
     legislatures are responsibly exercising their authority. The 
     threat to preempt state product liability law, for example, 
     comes at a time when state legislatures have been 
     particularly active in passing reform bills. As the attached 
     article from the June issue of The States' Advocate shows, 
     over the past ten years, thirty-three product liability 
     reform bills have been enacted in the states. In addition, 
     states have been reforming their tort law generally. As of 
     December 1996, 34 states had revised their rules of joint and 
     several liability and 31 had acted to curb punitive damages.
       Just as the preemption contemplated by a national products 
     law is unprecedented, so the intrusion on the operation of 
     state courts is both unprecedented and disturbing. National 
     products standards would be grafted onto state law. In a 
     sense, Congress would act as a state legislature to amend 
     selected elements of state law, thus blurring the lines of 
     political accountability in ways that raise several Tenth 
     Amendment issues. Given the Supreme Court's recent 
     interpretation of the Tenth Amendment in Printz v. United 
     States, the legislation might even be unconstitutional.
       Our constitutional tradition of federalism deserves more 
     than lip service. It's time to vote ``no'' on product 
     liability and similar proposals to unjustifiably preempt 
     state law.

  That is from the president of the conference and the president-elect 
of the National Conference of State Legislatures, which now has been 
updated in a letter to this Senator dated June 18, 1998.

       Dear Senator Hollings: I write on behalf of the National 
     Conference of State Legislatures in opposition to S. 648, a 
     bill that would supplant state liability laws with federal 
     standards.
       For the National Conference of State Legislatures, this is 
     a simple matter of federalism and states' rights. Tort reform 
     is an issue for state legislatures, not Congress. There is no 
     precedent for such a federal intrusion into such an important 
     area of civil law. Moreover, we regard it as highly 
     inappropriate and perhaps unconstitutional for the state 
     courts to be commandeered as instruments of federal policy in 
     the fashion contemplated by S. 648.
       The states have made considerable progress in reforming 
     their state law, including product liability law, over the 
     past decade. State legislatures are in a good position to 
     balance the needs of the business community and those of 
     consumers, not just in the abstract but in a way that 
     reflects local values and local economic conditions. This is 
     as the Founders intended it when they established a federal 
     republic rather than a unitary state.
       The issue then is not finding the right compromise between 
     consumer and business interests in crafting the language of 
     S. 648. The issue is whether we will take a giant step toward 
     nationalizing the civil law, to the detriment of our 
     constitutional system of Federalism. Again, please oppose S. 
     648.

  That is from the Conference of State Legislatures, which, of course, 
is once again over this 20-year period bolstered by the American Bar 
Association in a letter dated July 1, 1998.

       Dear Senator: We understand that on July 7, broad federal 
     product liability legislation will be the subject of a 
     cloture vote on the Senate floor. I am writing to you to 
     express the American Bar Association's opposition to S. 648, 
     the bill reported by the Commerce Committee, and S. 2236, the 
     compromise proposal introduced by Senators Gorton and 
     Rockefeller. The ABA believes that improvements in the tort 
     liability system should continue to be implemented at the 
     state level and not be preempted by broad Federal law.
       S. 648 and S. 2236, which would federalize portions of tort 
     law, would deprive consumers in the United States of the 
     guidance of the well-developed product liability laws of 
     their individual states. This legislation would also deprive 
     the states of their traditional flexibility to refine 
     carefully the product liability laws through their state 
     courts and state legislatures.
       The ABA has worked extensively to improve our civil justice 
     system, including developing extensive recommendations on 
     punitive damages and on other aspects of the tort liability 
     system for consideration at the state level. Broad federal 
     product liability legislation, however, would constitute an 
     unwise and unnecessary intrusion of major proportion on the 
     long-standing authority of the states to promulgate tort law. 
     Such preemption would cause the whole body of state tort law 
     to become unsettled and create new complexities for the 
     federal system. Unequal results would occur when product 
     liability litigation is combined with other types of law that 
     have differing rules of law. An example of this would be a 
     situation where a product liability claim is joined with a 
     medical malpractice claim. If state tort laws differ from the 
     federal law in areas such as caps on punitive damages, 
     conflicts and uncertainly would likely result; one defendant 
     in an action could well be treated entirely different than 
     another. Having one set of rules to try product liability 
     cases and another set of rules to try other tort cases is not 
     consistent with the sound and equitable administration of 
     justice.
       The ABA opposes the product seller provisions of section 
     103 of S. 648 and S. 2236 because those provisions remove the 
     motivation of the only party with direct contact with the 
     consumer, the seller, to ensure that the shelves in American 
     businesses are stocked only with safe products. Seller 
     liability is an effective way of maintaining and improving 
     product safety. Manufacturers traditionally rely on sellers 
     to market their products. Through their purchasing and 
     marketing power, sellers have influenced manufacturers to 
     design and produce safer consumer goods.
       Ambiguity in the language of S. 648 and S. 2236 may result 
     in unintentionally eliminating grounds for liability which 
     promote safety. For example, the two bills expressly 
     eliminate a product seller's liability for breach of warranty 
     except for breach of express warranties. This Uniform 
     Commercial Code, long regarded as a reasonable, balanced law, 
     holds sellers responsible for breach of implied warranties as 
     well. By their vague and ambiguous language, S. 648 and S. 
     2236 may result in preempting these long established grounds 
     of liability.
       We urge you to vote no on federal product liability 
     legislation as it is an unwise and unnecessary intrusion on 
     the long-standing authority of the states to promulgate tort 
     law.

  Now, Mr. President, we all know the majority crowd and how they came 
to power in 1995. The election in 1994 said that Contract sounds pretty 
good, and

[[Page S7532]]

one of the big things about that Contract was regulation, regulation, 
regulation. They wanted to diminish regulation. Well, heavens above, as 
they said in the American Bar Association letter, you have two bills 
expressly eliminating a product seller's liability and thereby coming 
and taking the Uniform Commercial Code and standing it on its head.
  So we surgically are running into the Uniform Commercial Code, tried 
and true at the State level, and you have the most complex regulatory 
mess you have ever seen. All in the attempt to diminish litigation, 
they compound it. Oh, yes, all in essence to protect the 10th 
amendment.
  The first vote we had was the particular vote with respect to 
unfunded mandates upon the States, and what-have-you. And here is an 
unfunded mandate, constitutional mandate, if you please, because they 
don't give a Federal cause of action. They come with an unfunded 
mandate on the States and say we know best up here in the Congress in 
the light of the most dynamic economy we have ever seen.
  Where is Mr. Greenspan's statement.

       Federal Reserve Board Chairman Alan Greenspan offered a 
     decidedly upbeat assessment of the Nation's economic health 
     yesterday--

  This is dated June 11--

       pronouncing the current expansion ``as impressive as any I 
     have witnessed in nearly half a century of daily operation.''

  Where is the small business response?
  Let's get the rebound. This is another quote.

       ``The rebound in the optimism index, coupled with other 
     national economic indicators, suggests economic growth for 
     this year will be a lot closer to last year's level than many 
     have predicted,'' said National Federation of Independent 
     Business Foundation Chief Economist William Dunkelberg.
       Far from worrying the expansion has just about played 
     itself out, more and more small business owners feel the best 
     is yet to come.

  Dunkelberg noted that, ``Small business capital investment remains 
exceptionally strong.''
  On and on, on and on, Mr. President. There is no foundation for 
claims that trial lawyers are undermining small business entrepreneurs. 
That is why I say this is a political farce responding to the political 
poll. It is not responding to the needs of small business. It is not 
responding to the needs of the States, their inability to handle 
product liability law. It is in response to the needs of the political 
poll and the drive of trying to get rid of trial by jury and lawyers.
  They know, in business, they are in their heyday here, and they are 
onto a real binge here, having a wonderful time--that they can come in 
now with this particular Congress ready to do away with the income 
tax--let's do away with the lawyers and trial by jury. Whoopee. They 
get Gallup at the White House, and the White House follows the polls 
too, so they get together on this jury-built thing that is really an 
embarrassment for a lawyer to read.
  They have a statute of repose in here for the individual but not for 
the business, so the individual injured is barred by the statute of 
repose, but the business he is working for, they can sue for the 
particular product and get a verdict. I never heard of a more selfish 
instrument than that presented here, just crassly selfish, trying to do 
away with trial by juries, the States and lawyers. Pell-mell, in a 
rush, this body now just writes in such things.
  And what about tobacco? Here we have been debating for a month one of 
the most injurious products that everybody agrees upon. Do you know 
what? This bill says exempt tobacco. The unmitigated gall of the White 
House and these authors that write this thing--it is just unforgivable 
to come forth here, now, after 4 weeks and everybody charged up, we are 
going to do something about the victims of tobacco; how it is habit-
forming and everything else of that kind, so many deaths, more than 
heart attacks, more than cancer, more than all the rest, the injury--
the unmitigated gall to come and have a product liability that exempts 
tobacco. You would never get my name on such a charade, a political 
farce as this, all in the name of the political poll. Kill all the 
lawyers, that is right. Just kill all the lawyers. So we really got it.
  Small businesses are not asking for it. The States are not asking for 
it. They are trying to force Federal law upon the States over their 
objections. I was just amazed when the distinguished Senator from West 
Virginia started talking about competition with Japan. I cannot keep 
them out of my State. They are running all over me. We just broke 
ground for Honda at Timmonsville. We just broke ground for another 
division of Fuji photographic equipment and the little speed cameras. 
They make 60,000 a day. This is the fourth increment of Fuji, a $1 
billion investment there. There are 58 Japanese plants, 100 German 
plants--foreign competition? They are buying us up. Yet they find out 
we cannot compete with the foreigners.
  I make a habit of visiting these industries. We shake hands, of 
course, with all, if they will allow us in the plant. I went through 
the GE plant.
  Incidentally, they think we are nothing but textiles. Tell them keep 
on thinking. We lost, since NAFTA, 24,000 textile and apparel jobs in 
South Carolina. Little South Carolina lost 24,000 textile and apparel 
jobs. That is from the National Bureau of Labor Statistics as of the 
end of April this year. And we have had, in May-June, several other 
closings. So that is the April figure by the Bureau of Labor 
Statistics. We were proud of those jobs. We hate to lose them. But we 
have these other industries here and they are exporting like 
gangbusters.
  I was in that GE plant. I would say of those gas turbines, almost 100 
percent are exported. One turbine was ready for delivery at Riyadh, 
Saudi Arabia; another one was ready for delivery to Tokyo, Japan. The 
same is true for all of these Torrington and other industries. They are 
in the context of manufacture.

  I said do you have any problem here with product liability? They 
almost--well, at Bosch they got insulted. ``What do you mean, product 
liability?'' They went over there and showed me the antilock brake that 
they got a contract for from Mercedes, Toyota, and all of General 
Motors. They said, ``Here is a number. We know it immediately. We never 
have had product liability. We practice safety, Senator.'' As if I had 
insulted them with the question.
  We have a result from these wonderful trial lawyers that nobody wants 
to talk about. We have the safest society in the entire world. Let's 
talk about competitiveness. We have Europe. The Pacific Rim--
economically, competitively on the ropes. And here they want to put in 
a bill to compete with Japan, and Japan is coming here and saying we 
love it in America. The other States have always had Japanese plants 
coming. I have yet to have one of them say I can't come because of your 
product liability and the litigation explosion and all, torts. What is 
all these silly expressions they have here in these preambles? Here is 
what they have been referring to ever since last year: that the civil 
justice system is overcrowded, sluggish, and costly.
  Mr. President, what is the actual fact? The National Center for State 
Courts, on State civil filings, their most recent statistics show that 
product liability cases constitute only 4 percent of all State tort 
filings, and a mere \36/100\ of 1 percent of all civil cases. 
Explosion? Come on. Where is the support? They just use this language 
around here that the distinguished Senator from Washington put in, 
these preambles here, ``excessive, unpredictable and often arbitrary 
damage awards.''
  What does the Justice Department say here? In a recent report, they 
validate all the studies and the witnesses who appeared before our 
committees, and said, ``Juries nationwide have become much tougher on 
plaintiffs.'' According to the Department of Justice report, 
``Plaintiffs prevailed in only 27 percent of the product liability 
cases that were filed in Federal court between 1994 and 1995.''
  In 1992, Professors James Henderson, a supporter of tort reform, and 
Theodore Eisenberg, of Cornell University, released a study, ``Inside 
the Quiet Revolution in Products Liability,'' which also found 
``notable declines in the number of product liability cases filed, as 
well as significant decreases in the size of awards.'' The study 
concludes that:

       By most measures, product liability has returned to where 
     it was at the beginning of the decade.

  The study confirmed Professors Henderson and Eisenberg's findings in 
an earlier study which found:


[[Page S7533]]


       A quiet revolution away from extending the boundaries of 
     products liability and toward placing significant limitations 
     on plaintiffs' rights to recover in tort for product-related 
     injuries.

  And then the other preamble about all the punitive damages.
  There is another study. The American Bar Foundation conducted a 
nationwide study overseen by Dr. Steven Daniels of 25,000 civil jury 
awards, and it found that punitive damages were only awarded in 4.9 
percent of the cases reviewed. Can you imagine that, only 4.9 percent?
  He stated that the debate over punitive damages ``changed in the 
eighties as the part of an intense, well-organized and well-financed 
political campaign by interest groups seeking fundamental reforms in 
the civil justice system benefiting themselves.''
  Did you hear that?--A ``political campaign by interest groups.''
  Then the American Bar Foundation went on to state that this 
``politicization of the punitive damages debate makes the debate more 
emotional and manipulative and less reasoned. The reformers appeal to 
emotions, fear and anxiety in this political effort, while avoiding 
reason and rational discourse.''
  He concluded that punitive damages were not routinely awarded, were 
awarded in modest amounts, were awarded more often in financial and 
property harm cases than in product liability cases, which, of course, 
is like Pennzoil suing Texaco with a $12 billion award in Texas, which 
was more than all the oil product liability verdicts given cumulatively 
since the beginning of product liability law. Just add them all up, and 
you will never get to $12 billion. But there it goes from the American 
Bar on down.
  I think there was one particular study that showed there were only 
350 punitive damage awards. I want to find out the exact period of 
time. This is Professor Rustid of the Suffolk University Law School and 
Professor Thomas Kearney of Northeastern University. The Supreme Court 
recently referred to this report. This is our U.S. Supreme Court:

       The most exhaustive study of punitive damages . . .

  Professors Rustid and Kearney reviewed all product liability awards 
from 1965 to 1990 in both State and Federal courts. During that time, 
punitive damages were awarded in only 355 cases --355 cases. That is 
what we find, as a matter of Federal interest, to violate the tenth 
amendment, to violate the Republican contract of trying to get 
Government back to the people, trying to preserve and not have unfunded 
mandates upon the States.
  We can go on and on, Mr. President. But what really has happened--and 
it is why this Senator is somewhat disarmed because I have seen it 
occur over the past 20 years--Mr. Victor Schwartz with the National 
Association of Manufacturers has buddied up now with the Chamber of 
Commerce, my friend, Tom Donahue. He is a fighter, and I respect him. 
Also, the Business Roundtable and the Conference Board, they seek out 
the candidates before they even get here.
  They say, ``We would like to help you, but are you for tort reform?''
  ``Of course.''
  With respect to the general expression ``tort reform'' and 
``torts''--``Yeah, yeah, yeah, I'm for tort reform.'' So you see them 
marching like sheep up to the voting table down in the well voting, by 
gosh, to stop debate on one of the most heinous bills that has ever 
been presented in the U.S. Senate, because politically they remember 
their campaigns and politically they were asked and politically they 
answered, ``Yes, I'm for reform,'' and they know that if they don't 
vote that way, some opponent is going to come and say, ``Here is what 
you said and then flip-flopped.''
  They didn't even know the facts of the case. In essence, the jury is 
fixed. The jury is fixed, Mr. President, before I can get to them, 
before the National Conference of State Legislatures can get to them, 
before the American Bar Association can get to them, before the Supreme 
Court citing the most exhaustive study on punitive damages can get to 
them.
  There are no facts to support this particular initiative. This is 
just jerry-built from the word go. They say, ``Let's remove the seller 
from strict liability on toxic''--by the way, they have some very 
dangerous language in here, because some of the lawyers know how to 
word this language to get rid of the Dalkon Shield cases.

  Let me quote this particular finding:

       The difficulty in using the toxic nature of a product as a 
     means of statutorily differentiating between products covered 
     by the statute of repose is highlighted by the following 
     scenario that occurred in an asbestos case brought against 
     Owens-Corning Fiberglas Corp. In their opening statement, the 
     Owens-Corning Fiberglas Corp.'s counsel pronounced that their 
     product, Kaylo [K-A-Y-L-O, Kaylo] an insulation product 
     containing 1.5 percent amosite and chrysotile [C-H-R-Y-S-O-T-
     I-L-E] asbestos was not toxic. OC's counsel relied on the 
     1964 article in the Journal of the American Medical 
     Association that stated that asbestos was not considered 
     toxic because it does not produce systemic poisoning.

  I can tell you right now, that is trying to get rid of the asbestosis 
cases and the Dalkon Shield cases, when they give to women $250,000 for 
the stay-at-home mom. Where have I heard that expression, the ``stay-
at-home mom''? Oh, they were so disturbed on tobacco for the stay-at-
home mom who doesn't economically win anything. I never heard of the 
husband paying the wife a salary. Maybe that happens somewhere else. It 
doesn't happen in South Carolina, I can tell you that.
  So there is no economic loss. You can come in with a Dalkon Shield 
case, be injured for life, never be able to reproduce, never have that 
family, and buy it off for $250,000. That is easy pickings, easy 
pickings.
  Let me tell you, Mr. President, this thing is a dangerous measure, as 
well as a political farce. When they come out with, for example, 
punitive damages, I go back to that 1978 case. I remind my colleagues 
of the wonderful result of punitive damages.
  In 1978, Mr. Mark Robinson in San Diego brought the Pinto case 
against Ford Motor Co. The verdict--the Presiding Officer is a good 
trial lawyer--the verdict, I think, was $3.5 million actual damages and 
$125 million punitive damages.

  Now, Mr. Robinson had not been able to collect a red cent of that 
$125 million, but, boy, oh, boy, hasn't that brought safety practices 
galore, saving lives, saving injury galore over the past 20 years.
  They had a recall; it was on the radio this morning; Ford Motor just 
recalled--I know they recalled about 1.5 million about 2 months ago 
because the wheels were coming off, but they had another recall, here, 
of how many vehicles involved in this--another 11,200 recalled 
yesterday. I remember Chrysler, at the end of the year, recalled 1.5 
million hatchbacks. We will get in the debate the National Safety 
Transportation Administration's statistical recalls, but recall upon 
recall upon recall didn't impoverish the businesses but it sure made 
safer this society in which we live.
  I came when we were talking about toxic fumes of the Love Canal up 
there in Buffalo, NY. We put in the Environmental Protection Agency, 
the impact statements, and they are a matter of habit now. We look 
environmentally, and we have the dump costs and everything else that 
has to take care of in this Congress, I hope before we leave. But it 
has been a wonderful result, so that environmentally we know now that 
we are not inhaling the fumes and otherwise on account of the 
Environmental Protection Agency.
  We then had the little babies burning up in the cribs--flammable 
blankets. Since my time, we have instituted a Consumer Product Safety 
Commission. At one time, J.C. Penney's took me up to their safety lab 
in New York and showed how, not just blankets, but toys and the various 
products that they sold, they were testing in this particular lab to 
make sure, so they put in safety ahead of giving it to the seller and 
otherwise. So we got the Consumer Product Safety Commission.
  And right to tobacco. Of course, they haven't won a class action. 
That was an individual suit down in Florida; all the rest have been 
turned aside. So when they whine on the floor of the U.S. Senate, ``Why 
could you give this particular industry immunity from liability? Why 
are we doing this?''--because the jurors of America have given them, 
time and time and time again, immunity. They say, look, the Congress, 
in its wisdom, has required ``smoking is dangerous to your health''

[[Page S7534]]

notification on every one of those packs of cigarettes. It is your 
assumption of risk. You could have stopped. More people have stopped 
smoking than have started smoking in America this minute.
  So the jurors, in their wisdom--but, oh, no, they want to exempt 
tobacco on the one hand here, and the cases brought by the attorneys 
general and the trial lawyers have done more to save people from cancer 
than Dr. Koop and Dr. Kessler and the American Cancer Society for the 
last 30 years that I have been up here. They really have gotten us 
aware, and more people have stopped smoking, like I say, than are 
smoking this minute in the United States of America.
  So when we go to the hearings where we used to have an ashtray and 
the room was clouded with smoke and my distinguished beloved former 
chairman, the Senator from Washington, Senator Magnuson, with that 
cigar right there--we don't have that anymore. But we don't have it not 
on account of Dr. Koop and Dr. Kessler but on account of the trial 
lawyers. They are the ones who got into the records. They are the ones 
bringing the truth out. They are the ones bringing the class action 
suits, bringing about settlements in Florida, Mississippi, Texas, and 
Minnesota, and they continue to bring the cases.
  They had an orderly process to end all litigation and get a 
sweetheart deal in the interest of society whereby they would advertise 
negatively--we can't control their advertising under the first 
amendment, but they agreed to it--whereby they would have a look-back 
provision whereby we could come in and control that and fine them if 
they didn't control it. But instead, that case now is temporarily on 
hold--tobacco--and these particular authors want to make sure that 
tobacco, the most injurious of products, is exempted from this so-
called product liability bill.
  Mr. FAIRCLOTH. Mr. President, I rise in strong support of this bill, 
and it is long overdue. In a way, this is a tax cut bill, because it 
will cut the ``trial lawyer tax'' often referred to as the ``tort 
tax.''
  The ``trial lawyer tax'' is equivalent to the amount of liability 
insurance that people pay to protect themselves from trial lawyers. 
They pay it because no one is safe anymore.
  We're looking at product liability cases here, but the problem 
extends far beyond product liability, and I remain committed to broad 
civil justice reform.
  If any Senators think this narrow bill is sufficient, let me mention 
a few recent verdicts from the tort capital of the United States, New 
York City. I am convinced that Senators will think twice before they 
put civil justice reform on the back burner after they hear these 
horror stories.
  A mugger on the New York City subway who was preying on the elderly 
became a multimillionaire when a Manhattan jury awarded him $4.3 
million for being shot as he fled from the scene of a crime. A Bronx 
jury gave $500,000 to a woman who broke her toe in a pothole. Another 
Bronx jury awarded $6 million to the family of a drunk who fell in 
front of a subway train after the jury found the drunk wholly without 
fault. Another jury in a medical malpractice case awarded $27 million 
to an injured patient and another $6 million to the members of his 
family--even though they hadn't even sued.
  Mr. President, let me return to the subject at hand, which is limited 
product liability reform. The tort system is really a ``trial lawyer 
tax'' that costs American consumers more than $132 billion per year.
  This is a 125 percent increase over the past 10 years. In fact, 
between 1930 and 1994, tort costs grew four times faster than the 
growth rate of the economy.
  This tort tax costs the average American consumer $616 per year. The 
civil justice system, in effect, deputizes the trial lawyers as tax 
collectors. Further, because they often sue under a contingent fee 
arrangement, the trial lawyers are bounty hunters.
  They all want to bag the big case--the trophy case--and raid those 
``deep pockets.''
  The U.S. tort system is the most expensive in the world and costs 2.2 
percent of gross domestic product.
  This is a jobs issue, Mr. President, because tort reform is good for 
economic development. The evidence is clear: when States pass tort 
reform, productivity increases, and employment rises. Let me offer a 
few examples of the ``trial lawyer tax'' in action. A heart pacemaker 
costs $18,000; $3,000 of that is the ``trial lawyer tax.'' A motorized 
wheelchair averages $1,000; $170 of that is the ``trial lawyer tax.'' A 
doctor's fee for removing tonsils averages $578; $191 of that is the 
``trial lawyer tax.'' A two-day maternity stay averages $3,367; $500 is 
the ``trial lawyer tax.''
  These are the costs of the ``trial lawyer tax.'' Now let's contrast 
that with the benefits of product liability reform.
  Before federal legislation was enacted, production of single engine 
aircraft had fallen 95 percent from the previous highs of the late 
1970s.
  Plants were closed and more than 100,000 jobs were lost. In 1986, 
Cessna Aircraft Company discontinued production of the single engine 
aircraft. However, Cessna pledged that it would resume production if 
Congress passed product liability legislation to protect the general 
aviation industry from the predatory practices of the trial lawyers.
  When the Congress finally passed the General Aviation Revitalization 
Act, Cessna invested $55 million in facilities and equipment, and it 
now employs 650 people and plans to double that number.
  That is the choice, Mr. President, jobs or lawsuits. Money for 
working Americans or rapacious trial lawyers. Productivity or 
litigation.
  I'll side with working Americans, not fat-cat trial lawyers, and I 
hope the Senate will invoke cloture on this landmark bill.
  I yield the floor and I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Sessions). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BROWNBACK. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWNBACK. Mr. President, I ask unanimous consent to proceed for 
a period of up to 15 minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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