[Congressional Record Volume 145, Number 90 (Wednesday, June 23, 1999)]
[Senate]
[Pages S7528-S7530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCONNELL (for himself and Mr. Hatch):
  S. 1269. A bill to provide that the Federal Government and States 
shall be subject to the same procedures and substantive laws that would 
apply to persons on whose behalf certain civil actions may be brought, 
and for other purposes; to the Committee on the Judiciary.


                        litigation fairness act

  Mr. McCONNELL. Mr. President, I rise today to introduce the 
Litigation Fairness Act of 1999. This common sense legislation says 
that whenever the government sues private-sector companies to recover 
costs, the government plaintiff gets no more rights than the ordinary 
plaintiff. If the law is good enough for the average citizen, then it's 
good enough for the government.
  This legislation to codify rules of fair play for government-
sponsored lawsuits is necessary for three reasons:
  First, the Litigation Fairness Act is necessary to prevent an 
avalanche of lawsuits against law-abiding companies. Let me say at the 
outset: this legislation is not about tobacco. Tobacco was just the 
beginning--the Model Act for hungry and enterprising trial lawyers.
  After tobacco, there was speculation that the government would sue 
the men and women who manufacture and sell guns in America. The 
speculation was right. And now that we've got government-sponsored 
lawsuits against gun companies, the speculation turns to other legal 
industries, such as automobile manufacturers, paint manufacturers, 
and--yes, even the fast food industry.
  Before some of you begin to shake your head about this widespread 
speculation, let me share some recent theories I've heard that verify 
that the theater of the absurd continues to move ever closer to legal 
reality. As reported recently by the Associated Press, a Yale professor 
is espousing a theory that, ``There is no difference between Ronald 
McDonald and Joe Camel.'' Both market products that are--and I quote 
this Professor from a recent seminar--``luring our children into killer 
habits'' ultimately increasing healthcare costs for the public--so the 
theory goes. And I promise that I'm not making this up. This Ivy League 
professor was in Washington just yesterday discussing this emerging 
theory.
  Second, this legislation ensures basic fairness for individual 
citizens. Under established principles of tort law, private plaintiffs 
are often barred from recovering damages based on a failure to prove 
direct causation. For example, if a person is injured in an automobile 
accident, but cannot prove that his or her injuries were caused by a 
defect of the

[[Page S7529]]

automobile then that person cannot recover from the manufacturer. This 
legislation simply says that if the injured party couldn't recover from 
the auto manufacturer, then the government should not be able to sue 
the manufacturer to recover the health care expenses incurred by the 
government on behalf of the injured person.
  In short: Government plaintiffs should not have rights superior to 
those rights of private plaintiffs.
  Third, the Litigation Fairness Act is necessary to prevent taxation 
through litigation. The power to tax is a legislative function and 
those who raise taxes should be directly accountable to the voters. 
Fortunately, it is getting more and more difficult to raise taxes in 
the Congress and the State legislatures--so money-hungry trial lawyers 
and big-government public officials are bypassing legislatures to 
engage in taxation and regulation through litigation. The Litigation 
Fairness Act will discourage lawyer-driven tax increases being dressed 
up and passed off as government lawsuits.
  In closing, I want to point out some things that the Litigation 
Fairness Act does not do: it does not prohibit government lawsuits; it 
does not close the courthouse door to injured parties; it does not 
place caps on recoveries or limits on lawyer fees. Further, the 
Litigation Fairness Act cannot be construed to create or authorize any 
cause of action for any governmental entity.
  In fact, the Litigation Fairness Act does not even prohibit the 
unholy marriage between plaintiffs' lawyers and government officials--
although it admittedly makes such a marriage of money and convenience a 
bit less desirable. My legislation will simply ensure that the 
government plays by the same rules as its citizens.
  This bill has broad support. I ask unanimous consent that the Record 
include statements in support of the bill from the United States 
Chamber of Commerce, the American Tort Reform Association, and Citizens 
for a Sound Economy.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

        [From the U.S. Chamber of Commerce News, June 23, 1999]

     U.S. Chamber Endorses McConnell Bill to Stop Governments From 
                  Undermining Business Legal Defenses

       Washington, D.C.--The U.S. Chamber of Commerce today 
     endorsed legislation that would stop the growing trend of 
     governments stripping legitimate industries of their legal 
     defenses and rights and then suing them to raise revenue 
     outside the constraints of the political process.
       The ``Litigation Fairness Act,'' sponsored by Senator Mitch 
     McConnell (R-KY), would prevent governments at any level from 
     changing laws to retroactively strip businesses of their 
     traditional legal rights and defenses in order to sue them.
       ``The U.S. Chamber is greatly concerned this dangerous 
     trend of governments changing the laws to facilitate their 
     revenue-grabbing lawsuits,'' said Chamber Executive Vice 
     President Bruce Josten. ``This practice began in the state 
     lawsuits against the tobacco industry to recover Medicaid 
     funds and, just as the Chamber predicted, has now spread to 
     other industries. President Clinton's plan to use the Justice 
     Department to sue the tobacco industry is a prime example of 
     this problem.
       ``Unfortunately, these lawsuits are becoming all too 
     common,'' Josten added. ``If this trend continues, economic 
     and social decisions affecting all Americans will be made not 
     by the democratically elected legislatures, but instead by 
     trial lawyers.
       ``McConnell's legislation would help curtail this abusive 
     situation,'' Josten said, noting that the legislation does 
     not affect any individual's rights or ability to sue a 
     company that has caused them harm.
       The bill simply says that a government entity filing suite 
     to directly recover funds expended by that government on 
     behalf of a third-party (such as a Medicare or Medicaid 
     patient) would only be entitled to the same rights as an 
     individual suing that defendant. In addition, such a 
     government plaintiff would be subject to the same substantive 
     and procedural rules and defenses as any other individual 
     plaintiff. The legislation recognizes that an indirectly 
     injured party should not have any greater rights than a 
     directly injured person.
       ``This legislation will stop the erosion of the two hundred 
     years of tort law, while fairly protecting the rights of 
     American industries from the litigious trial lawyers 
     collaborating with federal, state and local governments,'' 
     Josten concluded.
       Josten's comments followed a day-long conference, ``The New 
     Business of Government Sponsored Litigation: State Attorneys 
     General and Big City Lawsuits,'' sponsored by the Institute 
     for Legal Reform, the Chamber's legal policy arm, The 
     Federalist Society and The Manhattan Institute. The 
     conference featured Oklahoma Gov. Frank Keating, Alabama Gov. 
     Don Siegelman, attorneys general from New York, Alabama, 
     Delaware and Texas, and noted plaintiff's lawyers such as 
     Richard Scruggs and John Coale. The event can still be viewed 
     on the Chamber's website, at www.uschamber.org.
 ____


      [From the Citizens for a Sound Economy News, June 23, 1999]

 Senator McConnell's Litigation Fairness Act Would Help End `Taxation 
                          Through Litigation'

       Washington.--J.V. Schwan, Deputy Director and Counsel for 
     Civil Justice Reform at Citizens for a Sound Economy (CSE), 
     made the following statement in support of Senator Mitch 
     McConnell's bill, The Litigation Fairness Act.
       ``Taxation through litigation is the latest scheme in 
     Washington. When the Administration can't accomplish their 
     goals through legislation, they sue. This is not what our 
     Founding Fathers intended. `The Litigation Fairness Act' 
     would help stop their `taxation through litigation scheme.'
       ``Specifically, the bill would assure that when governments 
     file lawsuits for economic losses allegedly incurred as a 
     result of harm to citizens, the government's legal rights 
     will not be greater than those injured citizens. The bill 
     would preserve and in some instances restore that equitable 
     rule of law.
       ``McConnell's bill does not bar suits by governments 
     against private defendants, place a cap on the recoveries 
     that may be obtained, or limit attorney fees. It simply 
     codifies a traditional tort law rule that has existed for 
     over 200 years.''
                                  ____


              [From the American Tort Reform Association]

                Government Litigation Against Industries

       Robert Reich recently wrote in USA Today that ``The era of 
     big government may be over, but the era of regulation through 
     litigation has just begun.'' He advocated that courts should 
     be the regulators of society, deciding whether certain 
     products or services should be available and at what price.
       Mr. Reich is referring to the new phenomenon of governments 
     entering into partnerships with private contingency fee 
     attorneys to bring lawsuits against entire industries. 
     Manufacturers of tobacco products and firearms have already 
     been targets of litigation at the State and local levels. At 
     the federal level, President Clinton announced in his 1999 
     State of the Union address that he has directed the 
     Department of Justice to prepare a litigation plan to sue 
     tobacco companies to recover federal funds allegedly paid out 
     under Medicare.
       Future targets of federal and/or state or local cost 
     recovery, or ``recoupment,'' litigations could include 
     producers of beer and wine and other adult beverages, and 
     manufacturers of pharmaceuticals, chemicals, and automobiles. 
     Even Internet providers, the gaming industry, the 
     entertainment industry, and fast food restaurants could be 
     targeted.


                  The Changes to Black-Letter Tort Law

       Under traditional tort law rules, third party payors (e.g., 
     employers, insurers, and governments) have long enjoyed 
     subrogation rights to recover costs for healthcare and other 
     expenses that they are obligated to pay on behalf of 
     individuals.
       For example, if a worker is injured in the workplace as a 
     result of a defective machine tool, tort law permits the 
     worker's employer to recover the cost of worker compensation 
     and other medical expenses paid on behalf of the employee. 
     Through the process of subrogation, the employer can join in 
     the employee's tort claim against the manufacturer of the 
     machine tool or put a lien on the employee's recovery, but 
     the employer cannot bring a direct action on its own.
       Governmental cost recovery actions seek to radically change 
     the traditional subrogation rule. In the State tobacco cases, 
     the attorneys general argued that the States could bring an 
     ``independent'' cause of action against the tobacco 
     companies. Furthermore, the attorneys general argued, because 
     the States' claims were ``independent'' of the claims of 
     individual smokers, the States were not subject to the 
     defenses that could be raised against individual plaintiffs, 
     especially with respect to assumption of risk.
       Despite the current unpopularity of the tobacco companies, 
     most courts have followed basic principles of law and 
     dismissed cost recovery claims against the tobacco companies. 
     One federal district court, however, bent the rules and 
     partially sustained a healthcare reimbursement suit in Texas 
     based on a unique expansion of the ``quasi-sovereign'' 
     doctrine. Before the Texas federal court's decision, the 
     quasi-sovereign doctrine had been limited to suits for 
     injunctive relief; it did not extend to suits seeking 
     monetary damages. Even the ``pro-plaintiff'' Minnesota 
     Supreme Court recognized this fact in a tobacco case. The 
     Texas decision produced an avalanche of claims that were 
     ultimately settled out of court.


                      The Role of Outside Counsel

       Another characteristic of the new ``era of regulation 
     through litigation'' is the partnering of governmental 
     entities and private contingency fee attorneys. This new 
     partnership raises a number of serious ethical and ``good 
     government'' issues:
       Contingent fee retainers were designed to give less-
     affluent persons (who could generally ill-afford hourly rates 
     and up-front retainers) access to the courthouse. 
     Governmental entities have their own in-house legal staff; 
     taxpayers should not have to pay

[[Page S7530]]

     excessive fees for legal work that could be done by the 
     government itself.
       In the State tobacco litigation, it seemed that many of the 
     cases were awarded to private attorneys who had been former 
     law partners or campaign supporters of the elected official. 
     Furthermore, there appears to have been a lack of competitive 
     bidding in the attorney selection process. As a result, 
     experts estimate that some plaintiffs' attorneys were paid in 
     excess of $100,000 per hour.\1\
---------------------------------------------------------------------------
     \1\ Professor Lester Brickman, ``Want To Be a Billionaire? 
     Sue a Tobacco Company,'' The Wall Street Journal, December 
     30, 1998.
---------------------------------------------------------------------------
       Should the prosecutorial power of government be brought 
     against lawful, though controversial, industries? ``As the 
     Supreme Court cautioned more than 60 years ago in Berger v. 
     United States, an attorney for the state, `is the 
     representative not of an ordinary party to a controversy, but 
     of a sovereignty whose obligation to govern impartially is as 
     compelling as its obligation to govern at all'.'' \2\
---------------------------------------------------------------------------
     \2\ Robert A. Levy. ``The Great Tobacco Robbery. Hired Guns 
     Corral Contingent Fee Bonanza'' Legal Times, Week of February 
     1, 1999, 27.
---------------------------------------------------------------------------


             All Industries Could Be Targets of Litigation

       To date, recoupment lawsuits have been filed against 
     politically disfavored industries because plaintiff attorneys 
     know that if courts bend the rules for controversial 
     products, those precedents will apply equally to other 
     industries.
       In fact, some contingency fee lawyers have already publicly 
     stated that tobacco and firearms are just the first of many 
     industries likely to be sued in the new era of regulation by 
     litigation. As stated, future targets of litigation could 
     include producers of beer and wine and other adult beverages, 
     manufacturers of pharmaceuticals, chemicals, and automobiles, 
     Internet providers, the gaming industry, the entertainment 
     industry, and fast food restaurants.


                     Separation of Powers Violated

       Legislating public policy in the courtroom violates the 
     ``separation of powers doctrine''--the fundamental rule upon 
     which this country's entire system of government is based. 
     The job of legislatures is to legislate; the job of courts is 
     to interpret the law. This bedrock principle of government 
     should not be eroded for the sake of political expediency and 
     political theater.
                                  ____


    Statement by Victor E. Schwartz, Counsel, American Tort Reform 
                       Association, June 23, 1999


the principle of equal justice under law is preserved by the litigation 
                              fairness act

       The Litigation Fairness Act helps assure equal justice 
     under law; that is why the American Tort Reform Association 
     supports it. Liability law should be neutral. Its principles 
     should apply in the same way to all defendants. A basic 
     principle of system of justice is equal justice under law.
       Unfortunately, legal principles developed in a few tobacco 
     cases did not apply neutral principles. They gave power to 
     state governments under a fiction called the ``quasi-
     sovereign doctrine,'' greater power in the law than was 
     possessed by an injured individual. New cases filed by cities 
     against gun manufacturers also may create new principles of 
     law that give those cities greater rights than injured 
     persons. There is little doubt that an engine behind these 
     new principles is the unpopularity of those defendants.
       These principles may be limited to so-called ``outlaw 
     defendants''--people who make guns, tobacco, liquor, or other 
     products that significant segments of our society do not 
     like. On the other hand, the principles may apply equally to 
     others. If that is true, those principles can apply against 
     people who make fast foods, automobiles that can go over 100 
     mph, motorcycles, hunting knives, and even the entertainment 
     industry.
       The Litigation Fairness Act preserves the principle that an 
     injured person's right to sue is paramount over government 
     rights, where the government has suffered some indirect 
     economic loss because of that person's harm. It restores 
     equal justice under law and neutrality within our tort 
     system.
       For those reasons, the Americans Tort Reform Association 
     supports the Litigation Fairness Act.
                                 ______