[Congressional Record Volume 145, Number 78 (Thursday, May 27, 1999)]
[Senate]
[Pages S6371-S6379]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DOMENICI (for himself and Mr. Kyl):
  S. 1184. A bill to authorize the Secretary of Agriculture to dispose 
of land for recreation or other public purposes; to the Committee on 
Energy and Natural Resources.


             national forest system community purposes act

  Mr. DOMENICI. Mr. President, I rise to introduce important 
legislation, cosponsored by Senator Kyl, that would allow the Forest 
Service to convey parcels of land to States and local governments, on 
the condition that it be used for a specific recreational or local 
public purpose. The National Forest System Community Purposes Act is 
patterned after an existing law that set in place one of the most 
successful local community assistance programs under the Bureau of Land 
Management (BLM).
  That law, the Recreation and Public Purposes Act, was enacted in 
1926. Under its authority, the BLM has been able to work cooperatively 
with States and communities to provide land needed for recreational 
areas and other public projects to benefit local communities in areas 
where Federal land dominates the landscape. With skyrocketing demands 
on the Forest Service and local communities to provide accommodations 
and other services for an ever-increasing number of Americans who take 
advantage of all the opportunities available in the national forests, I 
believe the time has come to provide this ability to the Forest 
Service.
  In the 1996 Omnibus Parks and Public Lands Management Act, there were 
no fewer than 31 boundary adjustments, land conveyances, and exchanges 
authorized, many of which dealt with national forests. Had this 
legislation been enacted at that time, I cannot say for sure how many 
of these provisions would have been unnecessary, but I expect the 
number would have been reduced by at least one-third.
  During the 105th Congress, I sponsored three bills that directed the 
Secretary of Agriculture to convey small tracts Forest Service land to 
communities in New Mexico. All three bills were subsequently passed in 
the Senate unanimously, but two of these bills were not enacted last 
year, and the Senate has once again seen fit to pass them in the 106th 
Congress. We now await action in the House. I know that other Senators 
are faced with a similar situation of having to shepherd bills through 
the legislative process simply to give the Forest Service the authority 
to cooperate with local communities on projects to meet local needs.
  Over one-third of the land in New Mexico is owned by the federal 
government, and therefore finding appropriate sites for community and 
educational purposes can be difficult. Communities adjacent to and 
surrounded by National Forest System land have limited opportunities to 
acquire land for certain recreational and other local public purposes. 
In many cases, these recreational and other local needs are not within 
the mission of the Forest Service, but would not be inconsistent with 
forest plans developed for the adjacent national forest. To compound 
the problem, small communities are often unable to acquire land due to 
its extremely high market value resulting from the predominance of 
Federal land in the local area.
  The subject of one of the bills I just alluded to provides an 
excellent example of the problem. That bill provided for a one-acre 
conveyance to the Village of Jemez Springs, New Mexico. The land is to 
be used for a desperately needed fire substation, which will obviously 
benefit public safety for the local community. Since over 70 percent of 
the emergency calls in this particular community are for assistance on 
the Santa Fe National Forest, however, the Forest Service would also 
benefit greatly from this new station.
  In fairness, the Forest Service was very willing to sell this land to 
the village, but they were constrained by current law to charge the 
appraised fair market value. Herein lies the biggest problem for small 
communities like Jemez Springs. In this case, the appraised value of an 
acre of land along the highway, obviously necessary for this kind of a 
facility, was estimated to be around $50,000. Combined with the cost of 
building the station itself, this additional cost put the project out 
of reach of the community's 400 residents.
  Through this example, it is clear to see that both the national 
forests and adjacent communities could mutually benefit from a process 
similar to that under the Recreation and Public Purposes Act. This 
program has worked so well for the BLM over the years, I see no reason 
for the Forest Service not to have the same kind of authority.
  The National Forest System Community Purposes Act would give the 
Secretary of Agriculture the authority to convey or lease parcels of 
Forest Service land to States, counties, or other incorporated 
communities at a cost that could be less than fair market value. In 
order to obtain the land, the State or community would develop a plan 
of use that would be subject to Forest Service approval.
  In closing, Mr. President, I think the time has come for this 
legislation. In fact, during a recent discussion I had with Forest 
Service Chief Dombeck, he was somewhat surprised to learn that the 
agency did not already have this authority. I would urge the Senate to 
provide this needed assistance to local communities around the country.
      By Mr. ABRAHAM (for himself, Mr. Lieberman, Mr. Hatch, Mr. 
        McCain, Mr. McConnell, Mr. Lott, Mr. Bond, Mr. Ashcroft, Mr. 
        Coverdell, Mr. Nickles, Mr. Brownback, Mr. Gorton, Mr. 
        Grassley, Mr. Sessions, Mr. Burns, Mr. Inhofe, Mr. Helms, Mr. 
        Allard, Mr. Hagel, Mr. Mack, Mr. Bunning, Mr. Jeffords, Mr. 
        DeWine, Mr. Craig, Mr. Hutchinson,  and Mr. Enzi):
  S. 1185. A bill to provide small business certain protections from 
litigation excesses and to limit the product liability of non-
manufacturer product sellers; to the Committee on the Judiciary.


            the small business liability reform act of 1999

  Mr. ABRAHAM. Mr. President, I rise today to introduce the Small 
Business Liability Reform Act of 1999, legislation that will provide 
targeted relief to small businesses nationwide.
  Small businesses in Michigan and across this nation are faced with a 
daily threat of burdensome litigation, a circumstance which has created 
a desperate need for relief from unwarranted and costly lawsuits. While 
other sectors of our society and our economy also need relief from 
litigation excesses, small businesses by their very nature are 
particularly vulnerable to lawsuit abuse, and find it particularly 
difficult to bear the high cost of defending themselves against 
unjustified and unfair litigation.
  Small businesses represent the engine of our growing economy and 
provide countless benefits to communities across America. The Research 
Institute for Small and Emerging Business, for example, has estimated 
that there are over 20 million small businesses in America, and that 
these small businesses generate 50 percent of our country's private 
sector output.
  My small business constituents relate story after story describing 
the constraints, limitations and fear posed by the very real threat of 
abusive and unwarranted litigation. The real world impact translates 
into high-cost liability insurance, which wastes resources that could 
instead be used to expand small businesses, to provide more jobs, or to 
offer more benefits to employees. According to a recent Gallup survey, 
one out of every five small businesses decides not to hire more 
employees, expand its business, introduce a new product, or improve an 
existing product because of the fear of lawsuits--not entrepeneurial 
risk, not lack of capital resources, but lawsuits.
  In the same vein, innocent product sellers--often small businesses 
like your neighborhood corner grocery

[[Page S6372]]

store--have also described the high legal costs they incur when they 
are needlessly drawn into product liability lawsuits. The unfairness in 
these cases is astonishing--the business may not even produce a 
product, but is still sued for product defects. The reason? It is no 
secret that courts differ in how favorably they look upon product 
liability suits--some are receptive, others outright hostile. So even 
though a local store neither designs nor manufactures the product, it 
is routinely dragged into court because the plaintiff's attorney 
desires to pull manufacturers into a favorable forum. That's called 
``forum shopping'' on the part of the plaintiff, and the practice 
causes needless financial damage to America's small businesses. And 
while the non-culpable product seller is rarely found liable for 
damages, it must still bear the enormous cost of defending itself 
against these unwarranted suits. Rental and leasing companies are in a 
similarly vulnerable position, as they are commonly held liable for the 
wrongful conduct of their customers even though the companies 
themselves are found to have committed no wrong.
  The 105th Congress passed the Volunteer Protection Act, which 
provides specific protections from abusive litigation to volunteers. 
The Senate passed that legislation by an overwhelming margin of 99-1, 
and the President signed it, making it Public Law 105-19. That 
legislation provides a model for further targeted reforms for sectors 
of our economy that are particularly hard hit and in need of immediate 
relief. I believe it is high time for small business liability reform, 
time to take this small step, time to shield those not at fault from 
needless expense and unwarranted distress.
  Mr. President, I'd like to take a moment and provide a little 
background on our effort, as I believe it will highlight the desperate 
need for reform. Small businesses shoulder an often unbearable load 
from unwarranted and unjustified lawsuits. Data from San Diego's 
Superior Court published by the Washington Legal Foundation reveals 
that punitive damages are requested in 41 percent of suits against 
small businesses. It is simply unfathomable that such a large 
proportion of our small businesses could be engaging in the sort of 
egregious misconduct that would warrant a claim of punitive damages. 
Similarly, the National Federal of Independent Business reports that 34 
percent of Texas small business owners are sued or threatened with 
court action seeking punitive damages; again, the outrageously high 
rate of prayer for punitive damages simply cannot have anything to do 
with actual wrongdoing by the defendant.
  The specifics of the cases are no better. In a case reported by the 
American Consulting Engineers Council, a drunk driver had an accident 
after speeding and bypassing detour signs. Eight hours after the crash, 
the driver still had a blood alcohol level of .09. Nonetheless, the 
driver sued the engineering firm that designed the road, the 
contractor, the subcontractor, and the state highway department. Five 
years later, and after expending exorbitant amounts on legal fees, the 
defendants settled the case for $35,000. The engineering firm, a small 
15 person firm, was swamped with over $200,000 in legal costs--an 
intolerable amount for a small business to have to pay in defending an 
unwarranted lawsuit.
  There are more examples. An Ann Landers column from October, 1995, 
reported a case in which a minister and his wife sued a guide-dog 
school for $160,000 after a blind man who was learning to use a seeing-
eye dog stepped on the minister's wife's toes in a shopping mall. The 
guide-dog school, Southeastern Guide Dogs, Inc., which provided the 
instructor supervising the man, was the only school of its kind in the 
southeast. It trains seeing-eye dogs at no cost to the visually 
impaired. The couple filed their lawsuit 13 months after the so-called 
accident, in which witnesses reported that the woman did not move out 
of the blind man's way because she wanted to see if the dog would walk 
around her.
  The experience of a small business in Michigan, the Michigan Furnace 
Company, is likewise alarming. The President of that company has 
reported that every lawsuit in the history of her company has been a 
nuisance lawsuit. She indicates that if the money the company spends on 
liability insurance and legal fees were distributed among employees, it 
would amount to a $10,000 annual raise. That's real money, and that's a 
real cost coming right out of the pocket of Michigan workers.
  These costs are stifling our small businesses and the careers of 
people in their employ. The straightforward provisions of Title I of 
the Small Business Lawsuit Abuse Protection Act will provide small 
businesses with relief by discouraging abusive litigation. This section 
contains two principal reforms.
  First, the bill limits punitive damages that may be awarded against a 
small business. In most civil lawsuits against small businesses, 
punitive damages would be available against the small business only if 
the claimant proves by clear and convincing evidence that the harm was 
caused by the small business through at least a conscious, fragrant 
indifference to the rights and safety of the claimant. Punitive damages 
would also be limited in amount to the lesser of $250,000 or two times 
the compensatory damages awarded for the harm. That formulation is 
exactly the same as that in the small business protection provision 
that was included in the Product Liability Conference Report passed in 
the 104th Congress.
  Second, joint and several liability reforms for small businesses are 
included under the exact same formulation used in the Volunteer 
Protection Act passed in the 105th Congress and in the Protection 
Liability Conference Report passed in the 104th Congress. Joint and 
several liability would be limited such that a small business would be 
liable for noneconomic damages only in proportion to the small 
business's responsibility for causing the harm. If a small business is 
responsible for 100 percent of an accident, then it will be liable for 
100 percent of noneconomic damages. But if it is only 70 percent, 25 
percent, 10 percent or any other percent responsible, then the small 
business will be liable only for a like percentage of noneconomic 
damages.
  Small businesses would still be jointly and severally liable for 
economic damages, and any other defendants in the action that were not 
small businesses could be held jointly and severally liable for all 
damages. But the intent of this provision is to provide some protection 
to small businesses, so that they will not be sought out as ``deep 
pocket'' defendants by trail lawyers who would otherwise try to get 
small businesses on the hook for harms that they have not caused. The 
fact is that many small businesses simply do not have deep pockets, and 
they frequently need all of their resources just to stay in business, 
take care of their employees, and make ends meet.
  Other provisions in this title specify the situations in which its 
reforms apply. The title defines small business as any business having 
fewer than 25 employees, the same definition included in the Product 
Liability Conference Report. Like the Volunteer Protection Act, this 
title covers all civil lawsuits except those involving certain types of 
egregious misconduct. The limitations on liability would not apply to 
any misconduct that constitutes a crime of violence, act of 
international terrorism, hate crime, sexual offense, civil rights law 
violation, or natural resource damages, or damages that occurred while 
the defendant was under the influence of intoxicating alcohol or any 
drug. Any finally, like the Volunteer Protection Act, this title 
includes a State opt-out. A State would be able to opt out of 
these provisions provided that the State enacts a law indicating its 
election to do so and containing no other provisions. I do not expect 
that any State will opt-out of these provisions, but I feel it is 
important to include one out of respect for principles of federalism.

  Title II of the Act addresses liability reform for non-culpable 
product sellers, commonly small businesses, who have long sought help 
in gaining a degree of protection from unwarranted lawsuits. Product 
sellers, like your corner grocery store, provide a crucial service to 
all of us by offering a convenient source for a wide assortment of 
goods. Unfortunately, current law subjects them to harassment and 
unnecessary litigation; in about twenty-nine states, product sellers 
are drawn into the overwhelming majority of product liability cases 
even though they play

[[Page S6373]]

no part in the designing and manufacturing process, and are not to 
blame in any way for the harm. It is pointless to haul a product seller 
into the litigation when everyone in the system knows that the seller 
is not at fault. Dragging in the neighborhood convenience store helps 
no one, not the claimant, not the product seller, and certainly not the 
consumer. All it does is increase the cost to product sellers of doing 
business in our neighborhoods, because these businesses are 
unnecessarily forced to bear the cost of court expenses in their 
defense.
  Again, the real-world background presents a compelling case. In one 
instance, a product seller was dragged into a product liability suit 
even though the product it sold was shipped directly from the 
manufacturer to the plaintiff. In the end, the manufacturer--not the 
product seller--had to pay compensation to the plaintiff. 
Unfortunately, this was after the product seller has been forced to 
spend $25,000 in court expenses $25,000 that could have been used to 
expand the business or to provide higher salaries.
  Title II would allow a plaintiff to sue a product seller only when 
the product seller is responsible for the harm or when the plaintiff 
cannot collect from the manufacturer. This limitation would cover all 
product liability actions brought in any Federal or State Court. 
However, we have specifically ensured that the provision does not apply 
to actions brought for certain commercial losses, and actions brought 
under a theory of dram-shop or third party liability arising out of the 
sale of alcoholic products to intoxicated persons or minors.
  Additionally, rental or leasing companies are often unfairly 
subjected to lawsuits based on vicarious liability, which holds these 
companies responsible for acts committed by an individual rentee or 
lessee. In several states, these companies are subject to liability for 
the negligent tortious acts of their customers even if the rental 
company is not negligent and the product is not deffective. This type 
of fault-ignorant liability is detrimental to the economy because it 
increases non-culpable companies' costs, costs which are ultimately 
passed along to the rental customers.
  Settlements and judgements from vicarious liability claims against 
auto rental companies cost the industry approximately $100 million 
annually. In Michigan, for example, a renter lost control of a car and 
drove off the highway. The care flipped over several times, killing a 
passenger who was not wearing a seat belt. The car rental company, 
which was not at fault, nevertheless settled for $1.226 million out of 
fear of being held vicariously liable for the passenger's death.
  In another case, four British sailors rented a car from Alamo to 
drive from Fort Lauderdale to Naples. The driver fell asleep at the 
wheel, and his car left the road and ended up in a canal. The driver 
and two passengers were killed, while the fourth passenger was 
seriously injured. Although the Court found Alamo not to have acted 
negligently, Alamo was ordered by a jury to pay the plaintiffs $7.7 
million solely due to Alamo's ownership of the vehicle.
  Often even when the injured party and the driver are both at fault, 
it is the innocent rental company that has to bear the resulting 
expenses. For example, an individual in a rented auto struck a 
pedestrian at an intersection in a suburban commercial area on Long 
Island. The pedestrian, who was intoxicated, was jay-walking on her way 
from one bar to another. The driver was also intoxicated. The 
pedestrian unfortunately sustained a traumatic brain injury and was 
left in a permanent vegetative state. Although the auto rental company 
was clearly not at fault in this case, the result is predictable: the 
rental company was forced to settle for $8.5 million out of fear of a 
much larger jury award.
  We believe that subjecting product renters and lessors to vicarious 
liability is not only unfair, but also increases the cost to all 
consumers. Title II resolves this problem by providing that product 
renters and lessors shall not be liable for the wrongful acts of 
another solely by reason of product ownership--product renters and 
lessors would only be responsible for their own acts.
  I am pleased to have Senators Lieberman, Hatch, McCain, McConnell, 
Lott, Bond, Ashcroft, Coverdell. Nickles, Brownback, Gorton, Grassley, 
Sessions, Burns, Inhofe, Helms, Allard, Hagel, Mack, Bunning, Jeffords, 
DeWine, Craig, Hutchison, and Enzi as original cosponsors of the 
legislation and very much appreciate their support for our small 
businesses and for meaningful litigation reform. The list of business 
organizations supporting this bill is also impressive, and includes the 
following: National Federation of Independent Business, the National 
Restaurant Association, The National Association of Wholesalers, The 
National Retail Federation, The American Auto Leasing Association, The 
American Consulting Engineers Council, The Small Business Legislative 
Council, National Small Business United, The National Association of 
Convenience Stores. The American Car Rental Association, The 
International Mass Retail Association, the Associated Builders and 
Contractors, and the National Equipment Leasing Association.
  Mr. President, I ask unanimous consent that the bill and additional 
material be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1185

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Liability Reform Act of 1999''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title.

            TITLE I--SMALL BUSINESS LAWSUIT ABUSE PROTECTION

Sec. 101. Findings.
Sec. 102. Definitions.
Sec. 103. Limitation on punitive damages for small businesses.
Sec. 104. Limitation on several liability for noneconomic loss for 
              small businesses.
Sec. 105. Exceptions to limitations on liability.
Sec. 106. Preemption and election of State nonapplicability.
Sec. 107. Effective date.

                TITLE II--PRODUCT SELLER FAIR TREATMENT

Sec. 201. Findings; purposes.
Sec. 202. Definitions.
Sec. 203. Applicability; preemption.
Sec. 204. Liability rules applicable to product sellers, renters, and 
              lessors.
Sec. 205. Federal cause of action precluded.
Sec. 206. Effective date.

            TITLE I--SMALL BUSINESS LAWSUIT ABUSE PROTECTION

     SEC. 101. FINDINGS.

       Congress finds that--
       (1) the United States civil justice system is inefficient, 
     unpredictable, unfair, costly, and impedes competitiveness in 
     the marketplace for goods, services, business, and employees;
       (2) the defects in the civil justice system have a direct 
     and undesirable effect on interstate commerce by decreasing 
     the availability of goods and services in commerce;
       (3) there is a need to restore rationality, certainty, and 
     fairness to the legal system;
       (4) the spiralling costs of litigation and the magnitude 
     and unpredictability of punitive damage awards and 
     noneconomic damage awards have continued unabated for at 
     least the past 30 years;
       (5) the Supreme Court of the United States has recognized 
     that a punitive damage award can be unconstitutional if the 
     award is grossly excessive in relation to the legitimate 
     interest of the government in the punishment and deterrence 
     of unlawful conduct;
       (6) just as punitive damage awards can be grossly 
     excessive, so can it be grossly excessive in some 
     circumstances for a party to be held responsible under the 
     doctrine of joint and several liability for damages that 
     party did not cause;
       (7) as a result of joint and several liability, entities 
     including small businesses are often brought into litigation 
     despite the fact that their conduct may have little or 
     nothing to do with the accident or transaction giving rise to 
     the lawsuit, and may therefore face increased and unjust 
     costs due to the possibility or result of unfair and 
     disproportionate damage awards;
       (8) the costs imposed by the civil justice system on small 
     businesses are particularly acute, since small businesses 
     often lack the resources to bear those costs and to challenge 
     unwarranted lawsuits;
       (9) due to high liability costs and unwarranted litigation 
     costs, small businesses face higher costs in purchasing 
     insurance through interstate insurance markets to cover their 
     activities;
       (10) liability reform for small businesses will promote the 
     free flow of goods and services, lessen burdens on interstate 
     commerce, and decrease litigiousness; and
       (11) legislation to address these concerns is an 
     appropriate exercise of the powers of Congress under clauses 
     3, 9, and 18 of section 8 of

[[Page S6374]]

     article I of the Constitution of the United States, and the 
     14 amendment to the Constitution of the United States.

     SEC. 102. DEFINITIONS.

       In this title:
       (1) Act of international terrorism.--The term ``act of 
     international terrorism'' has the same meaning as in section 
     2331 of title 18, United States Code.
       (2) Crime of violence.--The term ``crime of violence'' has 
     the same meaning as in section 16 of title 18, United States 
     Code.
       (3) Drug.--The term ``drug'' means any controlled substance 
     (as defined in section 102 of the Controlled Substances Act 
     (21 U.S.C. 802(b)) that was not legally prescribed for use by 
     the defendant or that was taken by the defendant other than 
     in accordance with the terms of a lawfully issued 
     prescription.
       (4) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) to the extent recovery for such loss is 
     allowed under applicable State law.
       (5) Harm.--The term ``harm'' includes physical, 
     nonphysical, economic, and noneconomic losses.
       (6) Hate crime.--The term ``hate crime'' means a crime 
     described in section 1(b) of the Hate Crime Statistics Act 
     (28 U.S.C. 534 note).
       (7) Noneconomic loss.--The term ``noneconomic loss'' means 
     loss for physical or emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of society and 
     companionship, loss of consortium (other than loss of 
     domestic service), injury to reputation, or any other 
     nonpecuniary loss of any kind or nature.
       (8) Small business.--
       (A) In general.--The term ``small business'' means any 
     unincorporated business, or any partnership, corporation, 
     association, unit of local government, or organization that 
     has less than 25 full-time employees.
       (B) Calculation of number of employees.--For purposes of 
     subparagraph (A), the number of employees of a subsidiary of 
     a wholly owned corporation includes the employees of--
       (i) a parent corporation; and
       (ii) any other subsidiary corporation of that parent 
     corporation.
       (9) State.--The term ``State'' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, Guam, American Samoa, the Northern 
     Mariana Islands, any other territory or possession of the 
     United States, or any political subdivision of any such 
     State, territory, or possession.

     SEC. 103. LIMITATION ON PUNITIVE DAMAGES FOR SMALL 
                   BUSINESSES.

       (a) General Rule.--Except as provided in section 105, in 
     any civil action against a small business, punitive damages 
     may, to the extent permitted by applicable State law, be 
     awarded against the small business only if the claimant 
     establishes by clear and convincing evidence that conduct 
     carried out by that defendant through willful misconduct or 
     with a conscious, flagrant indifference to the rights or 
     safety of others was the proximate cause of the harm that is 
     the subject of the action.
       (b) Limitation on Amount.--In any civil action against a 
     small business, punitive damages shall not exceed the lesser 
     of--
       (1) 2 times the total amount awarded to the claimant for 
     economic and noneconomic losses; or
       (2) $250,000.
       (c) Application by Court.--This section shall be applied by 
     the court and shall not be disclosed to the jury.

     SEC. 104. LIMITATION ON SEVERAL LIABILITY FOR NONECONOMIC 
                   LOSS FOR SMALL BUSINESSES.

       (a) General Rule.--Except as provided in section 105, in 
     any civil action against a small business, the liability of 
     each defendant that is a small business, or the agent of a 
     small business, for noneconomic loss shall be determined in 
     accordance with subsection (b).
       (b) Amount of Liability.--
       (1) In general.--In any civil action described in 
     subsection (a)--
       (A) each defendant described in that subsection shall be 
     liable only for the amount of noneconomic loss allocated to 
     that defendant in direct proportion to the percentage of 
     responsibility of that defendant (determined in accordance 
     with paragraph (2)) for the harm to the claimant with respect 
     to which the defendant is liable; and
       (B) the court shall render a separate judgment against each 
     defendant described in that subsection in an amount 
     determined under subparagraph (A).
       (2) Percentage of responsibility.--For purposes of 
     determining the amount of noneconomic loss allocated to a 
     defendant under this section, the trier of fact shall 
     determine the percentage of responsibility of each person 
     responsible for the harm to the claimant, regardless of 
     whether or not the person is a party to the action.

     SEC. 105. EXCEPTIONS TO LIMITATIONS ON LIABILITY.

       The limitations on liability under sections 103 and 104 do 
     not apply to any misconduct of a defendant--
       (1) that constitutes--
       (A) a crime of violence;
       (B) an act of international terrorism; or
       (C) a hate crime;
       (2) that results in liability for damages relating to the 
     injury to, destruction of, loss of, or loss of use of, 
     natural resources described in--
       (A) section 1002(b)(2)(A) of the Oil Pollution Act of 1990 
     (33 U.S.C. 2702(b)(2)(A)); or
       (B) section 107(a)(4)(C) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9607(a)(4)(C));
       (3) that involves--
       (A) a sexual offense, as defined by applicable State law; 
     or
       (B) a violation of a Federal or State civil rights law; or
       (4) if the defendant was under the influence (as determined 
     under applicable State law) of intoxicating alcohol or a drug 
     at the time of the misconduct, and the fact that the 
     defendant was under the influence was the cause of any harm 
     alleged by the plaintiff in the subject action.

     SEC. 106. PREEMPTION AND ELECTION OF STATE NONAPPLICABILITY.

       (a) Preemption.--Subject to subsection (b), this title 
     preempts the laws of any State to the extent that State laws 
     are inconsistent with this title, except that this title 
     shall not preempt any State law that provides additional 
     protections from liability for small businesses.
       (b) Election of State Regarding Nonapplicability.--This 
     title does not apply to any action in a State court against a 
     small business in which all parties are citizens of the 
     State, if the State enacts a statute--
       (1) citing the authority of this subsection;
       (2) declaring the election of such State that this title 
     does not apply as of a date certain to such actions in the 
     State; and
       (3) containing no other provision.

     SEC. 107. EFFECTIVE DATE.

       (a) In General.--This title shall take effect 90 days after 
     the date of enactment of this Act.
       (b) Application.--This title applies to any claim for harm 
     caused by an act or omission of a small business, if the 
     claim is filed on or after the effective date of this title, 
     without regard to whether the harm that is the subject of the 
     claim or the conduct that caused the harm occurred before 
     such effective date.

                TITLE II--PRODUCT SELLER FAIR TREATMENT

     SEC. 201. FINDINGS; PURPOSES.

       (a) Findings.--Congress finds that--
       (1) although damage awards in product liability actions may 
     encourage the production of safer products, they may also 
     have a direct effect on interstate commerce and consumers of 
     the United States by increasing the cost of, and decreasing 
     the availability of products;
       (2) some of the rules of law governing product liability 
     actions are inconsistent within and among the States, 
     resulting in differences in State laws that may be 
     inequitable with respect to plaintiffs and defendants and may 
     impose burdens on interstate commerce;
       (3) product liability awards may jeopardize the financial 
     well-being of individuals and industries, particularly the 
     small businesses of the United States;
       (4) because the product lability laws of a State may have 
     adverse effects on consumers and businesses in many other 
     States, it is appropriate for the Federal Government to enact 
     national, uniform product liability laws that preempt State 
     laws; and
       (5) under clause 3 of section 8 of article I of the United 
     States Constitution, it is the constitutional role of the 
     Federal Government to remove barriers to interstate commerce.
       (b) Purposes.--The purposes of this Act, based on the 
     powers of the United States under clause 3 of section 8 of 
     article I of the United States Constitution, are to promote 
     the free flow of goods and services and lessen the burdens on 
     interstate commerce, by--
       (1) establishing certain uniform legal principles of 
     product liability that provide a fair balance among the 
     interests of all parties in the chain of production, 
     distribution, and use of products; and
       (2) reducing the unacceptable costs and delays in product 
     liability actions caused by excessive litigation that harms 
     both plaintiffs and defendants.

     SEC. 202. DEFINITIONS.

       In this title:
       (1) Alcohol product.--The term ``alcohol product'' includes 
     any product that contains not less than \1/2\ of 1 percent of 
     alcohol by volume and is intended for human consumption.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings an action covered by this title and any person on 
     whose behalf such an action is brought. If such an action is 
     brought through or on behalf of an estate, the term includes 
     the claimant's decedent. If such an action is brought through 
     or on behalf of a minor or incompetent, the term includes the 
     claimant's legal guardian.
       (3) Commercial loss.--The term ``commercial loss'' means--
       (A) any loss or damage solely to a product itself;
       (B) loss relating to a dispute over the value of a product; 
     or
       (C) consequential economic loss, the recovery of which is 
     governed by applicable State commercial or contract laws that 
     are similar to the Uniform Commercial Code.
       (4) Compensatory damages.--The term ``compensatory 
     damages'' means damages awarded for economic and noneconomic 
     losses.

[[Page S6375]]

       (5) Dram-shop.--The term ``dram-shop'' means a drinking 
     establishment where alcoholic beverages are sold to be 
     consumed on the premises.
       (6) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) to the extent recovery for that loss is 
     allowed under applicable State law.
       (7) Harm.--The term ``harm'' includes physical, 
     nonphysical, economic, and noneconomic loss.
       (8) Manufacturer.--The term ``manufacturer'' means--
       (A) any person who--
       (i) is engaged in a business to produce, create, make, or 
     construct any product (or component part of a product); and
       (ii)(I) designs or formulates the product (or component 
     part of the product); or
       (II) has engaged another person to design or formulate the 
     product (or component part of the product);
       (B) a product seller, but only with respect to those 
     aspects of a product (or component part of a product) that 
     are created or affected when, before placing the product in 
     the stream of commerce, the product seller--
       (i) produces, creates, makes, constructs and designs, or 
     formulates an aspect of the product (or component part of the 
     product) made by another person; or
       (ii) has engaged another person to design or formulate an 
     aspect of the product (or component part of the product) made 
     by another person; or
       (C) any product seller not described in subparagraph (B) 
     that holds itself out as a manufacturer to the user of the 
     product.
       (9) Noneconomic loss.--The term ``noneconomic loss'' means 
     loss for physical or emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of society and 
     companionship, loss of consortium (other than loss of 
     domestic service), injury to reputation, or any other 
     nonpecuniary loss of any kind or nature.
       (10) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity (including 
     any governmental entity).
       (11) Product.--
       (A) In general.--The term ``product'' means any object, 
     substance, mixture, or raw material in a gaseous, liquid, or 
     solid state that--
       (i) is capable of delivery itself or as an assembled whole, 
     in a mixed or combined state, or as a component part or 
     ingredient;
       (ii) is produced for introduction into trade or commerce;
       (iii) has intrinsic economic value; and
       (iv) is intended for sale or lease to persons for 
     commercial or personal use.
       (B) Exclusion.--The term ``product'' does not include--
       (i) tissue, organs, blood, and blood products used for 
     therapeutic or medical purposes, except to the extent that 
     such tissue, organs, blood, and blood products (or the 
     provision thereof) are subject, under applicable State law, 
     to a standard of liability other than negligence; or
       (ii) electricity, water delivered by a utility, natural 
     gas, or steam.
       (12) Product liability action.--The term ``product 
     liability action'' means a civil action brought on any theory 
     for any physical injury, illness, disease, death, or damage 
     to property that is caused by a product.
       (13) Product seller.--
       (A) In general.--The term ``product seller'' means a person 
     who in the course of a business conducted for that purpose--
       (i) sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or otherwise is involved in placing a 
     product in the stream of commerce; or
       (ii) installs, repairs, refurbishes, reconditions, or 
     maintains the harm-causing aspect of the product.
       (B) Exclusion.--The term ``product seller'' does not 
     include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--

       (I) acts in only a financial capacity with respect to the 
     sale of a product; or
       (II) leases a product under a lease arrangement in which 
     the lessor does not initially select the leased product and 
     does not during the lease term ordinarily control the daily 
     operations and maintenance of the product.

       (14) State.--The term ``State'' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, Guam, American Samoa, the Northern 
     Mariana Islands, any other territory or possession of the 
     United States, or any political subdivision of any such 
     State, territory, or possession.

     SEC. 203. APPLICABILITY; PREEMPTION.

       (a) Preemption.--
       (1) In general.--Except as provided in paragraph (2), this 
     title governs any product liability action brought in any 
     Federal or State court.
       (2) Actions excluded.--
       (A) Actions for commercial loss.--A civil action brought 
     for commercial loss shall be governed only by applicable 
     State commercial or contract laws that are similar to the 
     Uniform Commercial Code.
       (B) Actions for negligent entrustment; negligence per se 
     concerning firearms and ammunition; dram-shop.--
       (i) Negligent entrustment.--A civil action for negligent 
     entrustment shall not be subject to the provisions of this 
     title governing product liability actions, but shall be 
     subject to any applicable Federal or State law.
       (ii) Negligence per se concerning firearms and 
     ammunition.--A civil action brought under a theory of 
     negligence per se concerning the use of a firearm or 
     ammunition shall not be subject to the provisions of this 
     title governing product liability actions, but shall be 
     subject to any applicable Federal or State law.
       (iii) Dram-shop.--A civil action brought under a theory of 
     dram-shop or third-party liability arising out of the sale or 
     providing of an alcoholic product to an intoxicated person or 
     minor shall not be subject to the provisions of this title, 
     but shall be subject to any applicable Federal or State law.
       (b) Relationship to State Law.--This title supersedes a 
     State law only to the extent that the State law applies to an 
     issue covered by this title. Any issue that is not governed 
     by this title, including any standard of liability applicable 
     to a manufacturer, shall be governed by any applicable 
     Federal or State law.
       (c) Effect on Other Law.--Nothing in this title shall be 
     construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any State law;
       (2) supersede or alter any Federal law;
       (3) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (4) affect the applicability of any provision of chapter 97 
     of title 28, United States Code;
       (5) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation;
       (6) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum; or
       (7) supersede or modify any statutory or common law, 
     including any law providing for an action to abate a 
     nuisance, that authorizes a person to institute an action for 
     civil damages or civil penalties, cleanup costs, injunctions, 
     restitution, cost recovery, punitive damages, or any other 
     form of relief, for remediation of the environment (as 
     defined in section 101(8) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601(8))).

     SEC. 204. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, 
                   RENTERS, AND LESSORS.

       (a) General Rule.--
       (1) In general.--In any product liability action covered 
     under this Act, a product seller other than a manufacturer 
     shall be liable to a claimant only if the claimant 
     establishes that--
       (A)(i) the product that allegedly caused the harm that is 
     the subject of the complaint was sold, rented, or leased by 
     the product seller;
       (ii) the product seller failed to exercise reasonable care 
     with respect to the product; and
       (iii) the failure to exercise reasonable care was a 
     proximate cause of the harm to the claimant;
       (B)(i) the product seller made an express warranty 
     applicable to the product that allegedly caused the harm that 
     is the subject of the complaint, independent of any express 
     warranty made by a manufacturer as to the same product;
       (ii) the product failed to conform to the warranty; and
       (iii) the failure of the product to conform to the warranty 
     caused the harm to the claimant; or
       (C)(i) the product seller engaged in intentional 
     wrongdoing, as determined under applicable State law; and
       (ii) the intentional wrongdoing caused the harm that is the 
     subject of the complaint.
       (2) Reasonable opportunity for inspection.--For purposes of 
     paragraph (1)(A)(ii), a product seller shall not be 
     considered to have failed to exercise reasonable care with 
     respect to a product based upon an alleged failure to inspect 
     the product, if--
       (A) the failure occurred because there was no reasonable 
     opportunity to inspect the product; or
       (B) the inspection, in the exercise of reasonable care, 
     would not have revealed the aspect of the product that 
     allegedly caused the claimant's harm.
       (b) Special Rule.--
       (1) In general.--A product seller shall be deemed to be 
     liable as a manufacturer of a product for harm caused by the 
     product, if--
       (A) the manufacturer is not subject to service of process 
     under the laws of any State in which the action may be 
     brought; or
       (B) the court determines that the claimant is or would be 
     unable to enforce a judgment against the manufacturer.
       (2) Statute of limitations.--For purposes of this 
     subsection only, the statute of limitations applicable to 
     claims asserting liability of a product seller as a 
     manufacturer shall be tolled from the date of the filing of a 
     complaint against the manufacturer to the date that judgment 
     is entered against the manufacturer.
       (c) Rented or Leased Products.--
       (1) Definition.--For purposes of paragraph (2), and for 
     determining the applicability of

[[Page S6376]]

     this title to any person subject to that paragraph, the term 
     ``product liability action'' means a civil action brought on 
     any theory for harm caused by a product or product use.
       (2) Liability.--Notwithstanding any other provision of law, 
     any person engaged in the business of renting or leasing a 
     product (other than a person excluded from the definition of 
     product seller under section 202(13)(B)) shall be subject to 
     liability in a product liability action under subsection (a), 
     but any person engaged in the business of renting or leasing 
     a product shall not be liable to a claimant for the tortious 
     act of another solely by reason of ownership of that product.

     SEC. 205. FEDERAL CAUSE OF ACTION PRECLUDED.

       The district courts of the United States shall not have 
     jurisdiction under this title based on section 1331 or 1337 
     of title 28, United States Code.

     SEC. 206. EFFECTIVE DATE.

       This title shall apply with respect to any action commenced 
     on or after the date of enactment of this Act without regard 
     to whether the harm that is the subject of the action or the 
     conduct that caused the harm occurred before that date of 
     enactment.
                                  ____


  The Small Business Liability Reform Act of 1999--Section-By-Section 
                                Analysis

       A bill to offer small businesses and product sellers 
     certain protections from litigation excesses.


            Title I: Small Business Lawsuit Abuse Protection

     Section 101: Findings
       This section sets out congressional findings concerning the 
     litigation excesses facing small businesses, and the need for 
     litigation reforms to provide certain protections to small 
     businesses from abusive litigation.
     Section 102: Definitions
       Various terms used in this title are defined in this 
     section. Significantly, for purposes of the legislation, a 
     small business is defined as any business or organization 
     with fewer than 25 full time employees.
     Section 103: Limitation on punitive damages for small 
         businesses
       This section provides that punitive damages may, to the 
     extent permitted by applicable State law, be awarded against 
     a defendant that is a small business only if the claimant 
     establishes by clear and convincing evidence that conduct 
     carried out by that defendant with a conscious, flagrant 
     indifference to the rights or safety of others was the 
     proximate cause of the harm that is the subject of the 
     action.
       This section also limits the amount of punitive damages 
     that may be awarded against a small business. In any civil 
     action against a small business, punitive damages may not 
     exceed the lesser of two times the amount awarded to the 
     claimant for economic and noneconomic losses, or $250,000.
     Section 104: Limitation on several liability for noneconomic 
         loss for small business
       This section provides that, in any civil action against a 
     small business, for each defendant that is a small business, 
     the liability of that defendant for noneconomic loss will be 
     in proportion to that defendant's responsibility for causing 
     the harm. Those defendants would continue, however, to be 
     held jointly and severally liable for economic loss. In 
     addition, any other defendants in the action that are not 
     small businesses would continue to be held jointly and 
     severally liable for both economic and noneconomic loss.
     Section 105: Exceptions to limitations on liability
       The limitations on liability included in this title would 
     not apply to any misconduct that constitutes a crime of 
     violence, act of international terrorism, hate crime, sexual 
     offense, civil rights law violation, or natural resource 
     damages, or which occurred while the defendant was under the 
     influence of intoxicating alcohol or any drug.
     Section 106: Preemption and election of State 
         nonapplicability
       This title preempts State laws to the extent that any such 
     laws are inconsistent with it, but it does not preempt any 
     State law that provides additional protections from liability 
     to small businesses. The title also includes an opt-out 
     provision for the States. A State may opt out of the 
     provisions of the title for any action in State court against 
     a small business in which all parties are citizens of the 
     State. In order to opt out, the State would have to enact a 
     statute citing the authority in this section, declaring the 
     election of the State to opt, and containing no other 
     provisions.
     Section 107: Effective date
       This title would take effect 90 days after the date of 
     enactment, and would apply to claims filed on or after the 
     effective date.


                Title II: Product Seller Fair Treatment

     Section 201: Findings
       This section sets out congressional findings concerning the 
     effect of damage awards in product liability actions on 
     interstate commerce, the present inequities resulting from 
     inconsistent product liability laws within and among the 
     States, and the need for national, uniform federal product 
     liability laws.
     Section 202: Definitions
       Various terms and phrases used in this title are defined.
     Section 203: Applicability; preemption
       This title applies to any product liability action brought 
     in any Federal or State court. Civil actions for commercial 
     loss; negligent entrustment; negligence per se concerning 
     firearms and ammunition; and civil actions for dram shop 
     liability are excluded from the applicability of this title.
       This section further establishes that the preemption of 
     state law by this title is congruent with coverage, and the 
     limit of the preemptive scope of this title is detailed.
     Section 204: Liability rules applicable to product sellers, 
         renters and lessors
       Product sellers other than the manufacturer (wholesaler-
     distributors and retailers, for example) may be held liable 
     only if they are directly at fault for a harm; if the harm 
     was caused by the failure of the product to conform to the 
     product seller's own, independent express warranty; or if 
     harm was the result of the product seller's intentional 
     wrongdoing.
       Product sellers shall ``stand in the shoes'' of a culpable 
     manufacturer when the manufacturer is ``judgement-proof.'' 
     The statute of limitations in such cases is tolled.
       Finally, product renters and lessors shall not be liable 
     for the tortuous acts of another solely by reason of product 
     ownership.
     Section 205: Federal cause of action precluded
       This title does not create Federal district court 
     jurisdiction pursuant to Sections 1331 or 1337 of Title 28, 
     United States Code.
     Section 206: Effective date
       This title shall apply to any action commenced on or after 
     the date of enactment.
                                  ____


            NAW Endorses Abraham-Lieberman Legal Reform Bill


         Legislation Would Reduce Unnecessary Litigation; Costs

       Washington, D.C.--The National Association of Wholesaler-
     Distributors (NAW) today gave its ``enthusiastic and 
     wholehearted support'' to the Small Business Liability Reform 
     Act of 1999, which would significantly reduce the exposure of 
     wholesaler-distributors and retailers to unwarranted product 
     liability lawsuits and legal costs.
       The legislation, introduced in the U.S. Senate today by 
     Senators Spencer Abraham (R-MI) and Joseph Lieberman (D-CT), 
     would eliminate joint (``deep pockets'') liability for 
     ``noneconomic loss'' and limit punitive damage awards to 
     $250,000 for employers with fewer than 25 full-time employees 
     that become defendants in civil lawsuits. Neither of these 
     provisions would apply to lawsuits involving certain 
     egregious misconduct, and states would be able to opt-out by 
     statute.
       In product liability lawsuits, the bill would limit the 
     liability of non-manufacturer product sellers such as 
     wholesaler-distributors, retailers, lessors and renters to 
     harms caused by their own negligence or intentional 
     wrongdoing, the product's breech of the seller's own express 
     warranty, and for the product manufacturer's responsibility 
     when the manufacturer is judgment-proof.
       ``The product liability laws of a majority of states do not 
     make the distinction between the differing roles of 
     manufacturers and non-manufacturer product sellers. As a 
     result, blameless wholesaler-distributors are routinely 
     joined in product liability lawsuits simply because they are 
     in the product's chain of distribution,'' explained George 
     Keeley, NAW general counsel and senior partner in the firm of 
     Keeley, Kuenn & Reid. ``In the end, the staggering legal fees 
     which cost the seller dearly do not benefit the claimant in 
     any way. These costs will be significantly reduced if the 
     Abraham-Lieberman bill is enacted.''
       ``For too long, wholesaler-distributors have been among the 
     victims of a product liability system that serves the 
     interests of trial lawyers very well, at everyone else's 
     expense,'' said Dirk Van Dongen, NAW's president. ``For 
     nearly two decades, NAW has vigorously advocated Federal 
     legislation to rein-in these abuses. Enactment of the Small 
     Business Liability Reform Act of 1999 is at the very top of 
     our agenda for the 106th Congress and I commend Senators 
     Abraham and Lieberman for their continuing, tireless 
     leadership of this important effort.''
                                  ____


                 NFIB Backs New Legal Reform Initiative

       Washington, D.C.--The National Federation of Independent 
     Business (NFIB) will champion a new legal reform proposal 
     that aims to protect small-business owners from frivolous 
     lawsuits and the threat of being ``stuck with the whole tab'' 
     for damage awards arising from incidents in which they were 
     only ``bit players.''
       The nation's leading small-business advocacy group, NFIB 
     hailed today's introduction of the Small Business Liability 
     Reform Act of 1999. Sponsored by U.S. Sens. Spencer Abraham 
     (Mich.) and Joseph Lieberman (Conn.), the proposal would 
     limit the amount of punitive damages that might be sought 
     from a small firm to two times the amount of compensatory 
     damages or $250,000, whichever is less.
       The measure also would eliminate joint-and-several 
     liability for small firms, leaving them responsible for 
     paying only their ``proportionate'' share of non-economic 
     damages. Under the current doctrine of joint-and-several 
     liability, defendants found to be as little as 1 percent ``at 
     fault'' in a civil case may end up paying all assessed 
     damages, if no other defendants are able to pay.
       ``This bill strikes a long-overdue blow on behalf of 
     fairness, common sense and true justice,'' said Dan Danner, 
     NFIB's vice president of federal public policy. ``Limiting 
     punitive damages and exposure to liability will

[[Page S6377]]

     make small businesses a much less lucrative--and, thus, a 
     much less attractive--target for trial lawyers and others 
     tempted to file frivolous lawsuits to extort settlements.
       ``Ending joint-and-several liability will improve justice 
     by making sure small-business owners pay their fair share of 
     damages--but not more,'' he continued. ``Under the current 
     doctrine, the effort to compensate one victim often creates 
     yet another victim--the marginally-involved business owner 
     who is left holding the bag for everyone else involved.''
       The Abraham-Lieberman bill would limit liability in all 
     types of civil lawsuits for businesses with fewer than 25 
     employees. NFIB's Danner estimated the liability limitations 
     would apply to ``a little more than 90 percent'' of all 
     employing businesses. ``Passage would bring relief to 
     literally millions of small-business owners and their 
     families,'' he said. ``It would certainly ease Main Street's 
     growing anxiety about being slapped with--and ruined by--a 
     Mickey Mouse lawsuit.''
       ``When we asked our members in Alabama to identify the 
     biggest problem facing their businesses, the most frequent 
     answer, by far, was `cost of liability insurance/fear of 
     lawsuits','' Danner noted. ``Another problem, `street crime,' 
     drew only a third as many responses.
       ``There's something dreadfully wrong with our justice 
     system when small-business owners are three times more 
     fearful of being mugged by trial lawyers than by common 
     street thugs.''
       A nationwide survey of NFIB's 600,000 members found 
     virtually all (93 percent) favor capping punitive damages. 
     ``Small-business owners support any measures that will 
     restore fairness, balance and common sense to our civil 
     justice system,'' Danner said. ``We have pledged our full 
     support to Sens. Abraham and Lieberman in their efforts to do 
     just that, through their Small Business Liability Reform 
     Act.''
       Eliminating frivolous lawsuits is a priority in NFIB's 
     Small Business Growth Agenda for the 106th Congress. To learn 
     more about the Act of NFIB's Agenda, please contact McCall 
     Cameron at 202/554-9000.
                                  ____


    SBLC Applauds Senator Abraham's Small Business Liability Reform 
                              Legislation

       Washington, D.C.--``We are pleased that Senator Spencer 
     Abraham has introduced legislation that will have a 
     significant impact on small business and the legal system,'' 
     said David Gorin, Chairman of the Small Business Legislative 
     Council (SBLC). Mr. Gorin's remarks refer to the Small 
     Business Liability Reform Act of 1999, which Senator Abraham 
     and Senator Joseph Lieberman have introduced today. The 
     legislation proposes a $250,000 limit on punitive damages for 
     small business as well as provide protection from product-
     related injuries for non-manufacturing product sellers.
       Gorin continued, ``For far too long, small businesses have 
     been the losers in `litigation lottery.' As our civil justice 
     system has moved farther and farther away from common sense, 
     small businessses have had to absorb an increasing hidden 
     cost of doing business. That hidden cost is the result of 
     making decisions and undertaking actions, not on the basis of 
     what makes good business sense, but rather on the basis of 
     `will I be sued?' ''
       Gorin concluded, ``The Small Business Legislative Council 
     strongly supports Senator Abraham's legislation. SBLC 
     believes the Small Business Liability Reform Act will restore 
     common sense to the civil justice system and allow small 
     businesses to make decisions on the basis of what's best for 
     the economy, not the trial lawyers.''
       The SBLC is a permanent, independent coalition of nearly 
     eighty trade and professional associations that share a 
     common commitment to the future of small business. Our 
     members represent the interests of small businesses in such 
     diverse economic sectors as manufacturing, retailing, 
     distribution, professional and technical services, 
     construction, transportation, and agriculture. Our policies 
     are developed through a consensus among our membership. 
     Individual associations may express their own views.


           Members of the Small Business Legislative Council

       ACIL.
       Air Conditioning Contractors of America.
       Alliance for Affordable Health Care.
       Alliance for American Innovation.
       Alliance of Independent Store Owners and Professionals.
       American Animal Hospital Association.
       American Association of Equine Practitioners.
       American Bus Association.
       American Consulting Engineers Council.
       American Machine Tool Distributors Association.
       American Nursery and Landscape Association.
       American Road & Transportation Builders Association.
       American Society of Interior Designers.
       American Society of Travel Agents, Inc.
       American Subcontractors Association.
       American Textile Machinery Association.
       American Trucking Associations, Inc.
       Architectural Precast Association.
       Associated Equipment Distributors.
       Associated Landscape Contractors of America.
       Association of Small Business Development Centers.
       Association of Sales and Marketing Companies.
       Automotive Recyclers Association.
       Automotive Service Association.
       Bowling Proprietors Association of America.
       Building Service Contractors Association International.
       Business Advertising Council.
       CBA.
       Council of Fleet Specialists.
       Council of Growing Companies.
       Direct Selling Association.
       Electronics Representatives Association.
       Florists' Transworld Delivery Association.
       Health Industry Representatives Association.
       Helicopter Association International.
       Independent Bankers Association of America.
       Independent Medical Distributors Association.
       International Association of Refrigerated Warehouses.
       International Formalwear Association.
       International Franchise Association.
       Machinery Dealers National Association.
       Mail Advertising Service Association.
       Manufacturers Agents for the Food Service Industry.
       Manufacturers Agents National Association.
       Manufacturers Representatives of America, Inc.
       National Association for the Self-Employed.
       National Association of Home Builders.
       National Association of Plumbing-Heating-Cooling 
     Contractors.
       National Association of Realtors.
       National Association of RV Parks and Campgrounds.
       National Association of Small Business Investment 
     Companies.
       National Association of Surety Bond Producers.
       National Association of the Remodeling Industry.
       National Chimney Sweep Guild.
       National Community Pharmacists Association.
       National Electrical Contractors Association.
       National Electrical Manufacturers Representatives 
     Association.
       National Funeral Directors Association, Inc.
       National Lumber & Building Material Dealers Association.
       National Moving and Storage Association.
       National Ornamental & Miscellaneous Metals Association.
       National Paperbox Association.
       National Shoe Retailers Association.
       National Society of Public Accountants.
       National Tooling and Machining Association.
       National Tour Association.
       National Wood Flooring Association.
       Opticians Association of America.
       Organization for the Promotion and Advancement of Small 
     Telephone Companies.
       Petroleum Marketers Association of America.
       Power Transmission Representatives Association.
       Printing Industries of America, Inc.
       Professional Lawn Care Association of America.
       Promotional Products Association International.
       The Retailer's Bakery Association.
       Small Business Council of America, Inc.
       Small Business Exporters Association.
       SMC Business Councils.
       Small Business Technology Coalition.
       Society of American Florists.
       Turfgrass Producers International.
       Tire Association of North America.
       United Motorcoach Association.
                                  ____


      NSBU Enthusiastically Supports Small Business Liability Bill


    Small Business Association of Michigan also lends their support

       Washington, DC--National Small Business United (NSBU), the 
     nation's oldest bipartisan small business advocacy 
     organization, is pleased to announce their support for the 
     Small Business Liability Reform Act of 1999. The Small 
     Business Association of Michigan (SBAM), one of NSBU's 
     affiliate groups, has also announced their support for the 
     legislation which will provide protections to small business 
     from frivolous and excessive litigation as well as limiting 
     the product liability of non-manufacturer product sellers.
       Senators Spencer Abraham (R-Mich.) and Joseph Lieberman (D-
     Conn.), both of whom sit on the Senate Committee on Small 
     Business, will introduce this measure which provides critical 
     and necessary restrictions upon litigation, while not 
     prohibiting legitimate litigation.
       ``In today's litigious environment, small businesses are 
     often used as a scapegoat. Everyday, small businesses are 
     forced to shut down and close because of these frivolous, and 
     often times, unnecessary lawsuits,'' said Tom Farrell, NSBU 
     Chair and owner of Farrell Consulting, Inc. in Pittsburgh, 
     PA. ``The Small Business Liability Reform Act will finally 
     place some common sense limitations on these unfounded 
     lawsuits.''
       NSBU joins SBAM in applauding Senators Abraham and 
     Lieberman for their pragmatic leadership on such an important 
     issue for the small business community.
                                  ____


    NRF Supports Bill To Protect Small Businesses From Unnecessary 
                               Litigation

       Washington, DC--The National Retail Federation voiced its 
     support for the Small

[[Page S6378]]

     Business Liability Reform Act of 1999. The bill, which is 
     sponsored by Senators Spencer Abraham (R-MI) and Joseph 
     Lieberman (D-CT), would help protect small businesses from 
     frivolous litigation and exorbitant legal fees. Of particular 
     interest to the retail industry are the bill's provisions to 
     exclude small businesses from joint liability stemming from 
     products they sell.
       ``Retailers often find themselves party to product 
     liability lawsuits where no direct liability exists,'' said 
     NRF Vice President and General Counsel, Mallory Duncan. 
     ``This bill would shift the responsibility for defective 
     products to where it rightly belongs--the manufacturer.''
       The Small Business Liability Reform Act of 1999 would apply 
     to businesses with 25 or fewer employees. According to 
     Department of Commerce figures, more than 80 percent of the 
     nation's retailers employ fewer than 25 individuals.
       A recent Gallup survey suggests that some business owners' 
     fear of litigation may impact critical operational decisions. 
     The resulting ``chilling effect'' on the growth potential of 
     small businesses underscores the need for reform, according 
     to NRF.
       ``This bill would provide long-overdue and much needed 
     relief to millions of entrepreneurs whose businesses could 
     succeed or fail as the result of a single lawsuit,'' Duncan 
     said. ``Most small business owners lack the resources to both 
     defend themselves against legal action and remain solvent. 
     This bill would give them some piece of mind and the 
     confidence to manage their business without undue fear of 
     financial ruin.''
       The National Retail Federation (NRF) is the world's largest 
     retail trade association with membership that comprises all 
     retail formats and channels of distribution including 
     department, specialty, discount, catalogue, Internet and 
     independent stores. NRF members represent an industry that 
     encompasses more than 1.4 million U.S. retail establishments, 
     employs more than 20 million people--about 1 in 5 American 
     workers--and registered 1998 sales of $2.7 trillion. NRF's 
     international members operate stores in more than 50 nations. 
     In its role as the retail industry's umbrella group, NRF also 
     represents 32 national and 50 state associations in the U.S. 
     as well as 36 international associations representing 
     retailers abroad.
                                  ____


National Restaurant Association Backs Abraham/Lieberman Effort To Crack 
                       Down on Frivolous Lawsuits


     Says small restaurants need protection from costly, excessive 
                               litigation

       Washington, DC--Saying that just one costly lawsuit is 
     enough to put a restaurant out of business, the National 
     Restaurant Association today strongly endorsed a bill 
     sponsored by Sens. Spence Abraham (R-MI) and Joseph Lieberman 
     (D-CT) to protect small businesses from litigation abuse.
       ``The tendency for people today to sue for outlandish 
     reasons is out of control,'' said Association Senior Vice 
     President of Government and Corporate Affairs Elaine Z. 
     Graham. ``In recent years, many restaurants unfortunately 
     have become targets for frivolous lawsuits. The reality is 
     that it only takes one such lawsuit to drive a restaurant out 
     of business. As a result, restaurants pay for high-priced 
     liability insurance in an effort to arm themselves against 
     the prospects of being sued.
       ``Our legal system needs to be reformed. We strongly 
     support the Abraham/Lieberman bill and believe it will go a 
     long way toward protecting smaller restaurants and curbing 
     litigation abuse,'' she added.
       The bill, the Small Business Lawsuit Abuse Protection Act, 
     limits the amount of punitive damages that may be awarded 
     against a business with 25 or fewer employees. Currently, 
     many small businesses settle out of court and pay hefty 
     awards--even if the claim is unfounded--because they are 
     fearful of being hit with unlimited punitive damages. By 
     putting a cap on punitive damages, the Abraham/Lieberman bill 
     helps eliminate needless lawsuits and makes it easier for 
     small businesses to get fair settlements, avoiding excessive 
     legal fees.
       The Association is urging members of Congress to support 
     the Abraham/Lieberman bill.
                                  ____


          NACS Supports Small Business Lawsuit Protection Act

       Alexandria, Virginia--The National Association of 
     Convenience Stores (NACS) is pleased to endorse legislation 
     authored by Senators Spencer Abraham (R-MI) and Joe Lieberman 
     (D-CT) that would limit small businesses' exposure to damages 
     and liability in civil cases.
       The ``Small Business Liability Reform Act of 1999'' is 
     broken into two sections: ``Small Business Lawsuit Abuse 
     Protection'' and ``Product Seller Fair Treatment.'' The Small 
     Business Lawsuit Abuse Protection section would limit small 
     business exposure to punitive damages and joint liability for 
     non-economic damages, in any civil action (with some 
     exceptions). The damages would be limited to a maximum of 
     $250,000. Under the bill, small businesses are defined as 
     having under 25 employees. The Product Seller Fair Treatment 
     section would hold non-manufacturing product sellers (local 
     wholesaler-distributors and neighborhood retailers) liable 
     for product-related injuries only when the seller is directly 
     responsible for the harm.
       ``More than 70 percent of the over 77,000 stores operated 
     by NACS members are either one-store operations or part of a 
     chain of 10 or fewer stores. These small business owners 
     provide an essential service to their communities, contribute 
     significantly to local economies and employ hundreds of 
     thousands of people,'' said Lyle Beckwith, Director, 
     Government Relations at NACS. ``Because this bill protects 
     those small business people from rising liability insurance 
     costs and frivolous lawsuits, NACS will work proactively for 
     its passage, and encourage other senators to follow the 
     leadership of Senators Abraham and Lieberman.''
                                  ____


         ACEC Supports ``Small Business Liability Reform Act''

       Washington, D.C.--The American Consulting Engineers Council 
     (ACEC) strongly supports the ``Small Business Liability 
     Reform Act of 1999'' which was introduced today by Senators 
     Spencer Abraham (R-MI) and Joseph Lieberman (D-CT). The 
     legislation, which builds on proposals that have earned 
     strong bipartisan support in recent Congresses, will improve 
     out nation's civil justice system through a package of 
     carefully-targeted reforms--reforms that will deter 
     unwarranted, frivolous, and needlessly wasteful litigation 
     against employers, and particularly small businesses.
       The threat of litigation and frivolous lawsuits continues 
     to be a primary concern for consulting engineering firms 
     according to ACEC's recent Professional Liability Survey 
     report. Fully 75% of survey respondents indicated that the 
     threat of litigation stifled the use of innovative techniques 
     or technologies while working on projects. Over one-third of 
     all claims filed against ACEC member firms resulted in no 
     payment of any kind to the plaintiff, a fact which indicates 
     that ``frivolous'' litigation remains a problem for the 
     industry.
       The Small Business Liability Reform Act would limit the 
     exposure of small businesses to punitive damages and joint 
     liability for non-economic damages in any civil action, with 
     the exception of lawsuits involving certain types of 
     egregious conduct. If passed, the bill would limit punitive 
     damages to the lesser of two times the amount awarded to the 
     claimant for economic and noneconomic losses, or $250,000.
       Howard M. Messner, ACEC's Executive Vice President, 
     applauded the Senators' decision to sponsor this legislation, 
     saying ``ACEC has long supported the types of reforms 
     incorporated in this legislation. Our member firms have 
     learned from direct experience that meritless lawsuits can 
     cripple a professional's practice, especially when that 
     professional is a small businessperson. For this reason, we 
     will certainly support legislative initiatives designed to 
     provide some much-needed relief from baseless lawsuits.''
                                  ____


IMRA Hails Bill Limiting Retailers' Exposure to Product Liability Suits


        abraham-lieberman bill would guard innocent distributors

       Arlington, VA--The International Mass Retail Association 
     (IMRA) applauds today's introduction of the bipartisan 
     ``Small Business Liability Reform Act of 1999'' by Senators 
     Spencer Abraham (R-MI) and Joseph Lieberman (D-CT). The bill 
     would shield from product liability lawsuits retailers and 
     other distributors if they did not take part in the product's 
     design and manufacture. It would generally hold retailers and 
     other distributors responsible only for their own negligence, 
     not for the actions of manufacturers.
       ``All too often, mass retailers are unfairly dragged into 
     product liability lawsuits when they have had no part in 
     designing or producing the item in question,'' said IMRA 
     President Robert J. Verdisco. ``Simply selling a product 
     should not automatically bring the retailer or distributor 
     into product liability lawsuits.''
       The Abraham-Lieberman bill would allow a product seller to 
     be brought into Federal or state product liability lawsuits 
     only if the plaintiff can show harm due to a retailer's or 
     distributor's failure to exercise reasonable care with the 
     product, failure to live up to its own express warranty, or 
     deliberate wrongdoing. Retailers and distributors could also 
     be brought in when the product maker cannot be brought into 
     court or pay a judgment against it.
       Verdisco called the Abraham-Lieberman measure ``long-
     needed, common-sense reform to our nation's product liability 
     system.'' He noted that the same provisions have been part of 
     broader product liability reform bills for many years without 
     prompting major controversy.
       ``Product safety is an important concern for the nation's 
     mass retailers,'' Verdisco noted, ``but groundless, costly 
     product liability cases against retailers who have no 
     involvement other than selling the product can jeopardize the 
     wide selection and low prices that consumers have come to 
     expect from mass retail stores.'' He added, ``The Abraham-
     Lieberman bill would provide innocent retailers and 
     distributors with fair and reasonable safeguards, while still 
     allowing consumers to pursue claims they believe are 
     meritorious against those most responsible for the product.''
                                  ____


      ABC Applauds Introduction of Small Business Liability Reform

       Washington, D.C.--May 28, 1999--ABC applauded the 
     introduction today of the Small Business Liability Reform Act 
     of 1999 by Sens. Spencer Abraham (R-Mich.) and Joseph 
     Lieberman (D-Conn.).
       ABC President David Bush said, ``ABC has long been 
     supportive of lawsuit reform as a

[[Page S6379]]

     beneficial solution of the pressing problem of frivolous 
     lawsuits which raise the cost of doing business and clog the 
     nation's court systems.''
       The legislation would limit punitive damages and joint 
     liability for non-economic damages against small businesses 
     in any civil lawsuit. Under current law, punitive damage 
     verdicts are commonplace as a result of vague substantive 
     standards and unrestrained plaintiff's lawyers. Awards in 
     non-economic cases compensate plaintiffs for ``pain and 
     suffering'' or ``emotional distress,'' and are not calculated 
     on tangible economic loss. Multi-million dollar punitive 
     damage awards are now routinely sought and frequently imposed 
     in almost every type of civil case.
       ABC has long been supportive of lawsuit reforms. The 
     construction industry is particularly concerned about 
     frivolous cases brought before the National Labor Relations 
     Board as a result of ``salting'' abuses.
       ``ABC commends Sens. Abraham and Lieberman for introducing 
     common-sense legislation that, if passed, will discourage 
     costly and frivolous lawsuits against small business 
     owners.''

  Mr. McCONNELL. Mr. President, I rise today to join my esteemed 
colleagues in the introduction of the Small Business Liability Reform 
Act of 1999.
  Over the last 30 years, the American civil justice system has become 
inefficient, unpredictable and costly. Consequently, I have spent a 
great deal of my time in the United States Senate working to reform the 
legal system. I was particularly pleased to help lead in the efforts to 
pass the Volunteer Protection Act, which offers much-needed litigation 
protection for our country's battalion of volunteers. America's 
litigation crisis, however, goes well beyond our volunteers.
  Lawsuits and the mere threat of lawsuits impede invention and 
innovation, and the competitive position our nation has enjoyed in the 
world marketplace. The litigation craze has several perverse effects. 
For example, it discourages the production of more and better products, 
while encouraging the production of more and more attorneys. In the 
1950s, there was one lawyer for every 695 Americans. Today, in 
contrast, there is one lawyer for every 290 people. In fact, we have 
more lawyers per capita than any other western democracy.
  Mr. President, don't get me wrong--there is nothing inherently wrong 
with being a lawyer. I am proud to be a graduate of the University of 
Kentucky College of Law. My point, however, is simple: government and 
society should promote a world where its more desirable to create goods 
and services than it is to create lawsuits.
  The chilling effects of our country's litigation epidemic are felt 
throughout our national economy--especially by our small businesses. We 
must act to remove the litigation harness that constrains our nation's 
small businesses.
  Small businesses are vital to our nation's economy. My state provides 
a perfect example of the importance of small business. In Kentucky, 
more than 85% of our businesses are small businesses.
  The Small Business Lawsuit Abuse Protection Act is a narrowly-crafted 
bill which seeks to restore some rationality, certainty and civility to 
the legal system.
  First, Title I of this bill would offer limited relief to businesses 
or organizations that have fewer than 25 full-time employees. Title I 
seeks to provide some reasonable limits on punitive damages, which 
typically serve as a windfall to plaintiffs. It also provides that a 
business's responsibility for noneconomic losses would be in proportion 
to the business's responsibility for causing the harm.
  The other Title in the bill includes liability reforms for innocent 
product sellers--which are very often small businesses. These 
businesses are often dragged into product liability cases even though 
they did not produce, design or manufacture the product, and are not in 
any way to blame for the harm that the product is alleged to have 
caused. Title II would help protect product sellers from being 
subjected to frivolous lawsuits when they are not responsible for the 
alleged harm.
  Now, let me explain what this bill does not do. It does not close the 
courthouse door to plaintiffs who sue small businesses. For example, 
this bill does not limit a plaintiff's ability to sue a small business 
for an act of negligence, or any other act, for that manner. It also 
does not prevent a plaintiff from recovering from product sellers when 
those sellers are responsible for harm.
  Mr. President, this is a sensible, narrowly-tailored piece of 
legislation that is greatly needed to free up the enterprising spirit 
of our small businesses. I look forward to the Senate's consideration 
of this important legislation.

                          ____________________