[Congressional Record Volume 147, Number 64 (Thursday, May 10, 2001)]
[Extensions of Remarks]
[Pages E783-E784]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INTRODUCTION OF THE SMALL BUSINESS LIABILITY REFORM ACT OF 2001
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HON. ASA HUTCHINSON
of arkansas
in the house of representatives
Thursday, May 10, 2001
Mr. HUTCHINSON. Mr. Speaker, I am pleased to be joined by my
colleagues, the gentleman from Pennsylvania, Mr. Holden; the gentleman
from North Carolina, Mr. Burr; and the gentleman from Virginia, Mr.
Moran in introducing the Small Business Liability Reform Act of 2001.
Members will recall the House's consideration and passage of similar
legislation during the last session of Congress. Following legislative
hearings in the Fall of 1999, that bill (H.R. 2366, 106th Congress) was
the subject of three days of markup in the Judiciary Committee, during
which the Committee considered 21 amendments and adopted five. On
February 16, 2000, the full House took up H.R. 2366 and adopted three
of the four amendments considered before passing the bill on a
bipartisan vote of 221-193.
Like its predecessor, Title I of the bill we are introducing today
proposes three basic reforms to our civil justice system for defendants
with fewer than 25 full time employees--the smallest of America's small
businesses. Section 103 of the bill establishes fair standards of
evidence and liability for the award of punitive damages, and
establishes proportionality in the awarding of punitive damages against
America's small businesses. Section 104 establishes a fair share rule
for the payment of non-economic awards. This reform in effect abolishes
so-called ``joint and several liability'' for damages for pain and
suffering, ensuring that only those defendants who are truly guilty of
inflicting such harm will be held financially responsible.
Title II of the bill contains two important reforms to the product
liability system and is applicable to all who sell, rent or lease
products. First, Sections 204(a) and (b) establish a fault-based
standard of liability for non-manufacturer product sellers in product
liability cases, while preserving a strict liability standard for
breach of the seller's own express warranty and where an otherwise
culpable manufacturer is beyond the court's reach. Section 204(c)
appropriately protects those who merely rent and lease products from
being held vicariously liable for the wrongful conduct of someone else
(a customer for example) simply due to product ownership.
Mr. Speaker, the reforms proposed in the Small Business Liability
Reform Act are both modest and fair and will improve the administration
of civil justice in the United States by reducing needless litigation
and the wasteful legal costs associated with it. Most important, the
bill will advance the core purposes of our civil justice system: to
prevent harm through the deterrence of careless or wrongful conduct; to
assign responsibility for harm to the party in the best position to
avoid it; and to require those whose careless or wrongful conduct cause
harm to pay.
I urge my colleagues on both sides of the aisle to join in supporting
this important legislation, the enactment of which is long overdue.
Mr. Speaker, I submit a section-by-section summary of the Small
Business Liability Reform Act of 2001 for the Record.
The Small Business Liability Reform Act of 2001--Section-by-Section
Summary
A bill to offer small businesses and product sellers
protection 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
reforms to protect small businesses from abusive litigation.
Section 102: Definitions
This section defines various terms used in the bill. A
small business is defined as any business or organization
with fewer than 25 full time employees. Punitive damages are
defined to exclude civil penalties, civil fines, or treble
damages assessed or enforced by a government agency under
federal or state statute.
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 small business only if the claimant establishes by clear
and convincing evidence that the defendant acted with a
conscious, flagrant indifference to the rights or safety of
others, and that the conduct 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 three times the amount awarded to the
claimant for economic and noneconomic losses, or $250,000.
However, a court is permitted to exceed the punitive damages
cap in the event it finds by clear and convincing evidence
that the defendant acted with specific intent to cause the
type of harm for which the action was brought.
Section 104: Limitation on Joint and Several Liability for Noneconomic
Loss for Small Businesses
This section provides that in any civil action against a
small business, each small business defendant will be liable
for non-economic loss only in proportion to its
responsibility for causing the harm.
Section 105: Exceptions to Limitations on Liability
This section ensures that the benefits of this legislation
are not available to any defendant whose misconduct (1)
constitutes a crime of violence or an act of international
terrorism; (2) results in certain natural resource damages;
(3) involves a sexual offense or a violation of civil rights
law; (4) occurs while the defendant is under the influence of
an intoxicating alcohol or a drug; (5) is prosecuted under
the Federal False Claims Act; or (6) is prosecuted under
fraud or false statement laws.
Section 106: Preemption and Election of State Nonapplicability
This section provides for uniform rules with regard to
small business liability. The bill preempts state laws to the
extent that any such laws are inconsistent with the
provisions of Title I. However, the bill includes an opt-out
provision for the states. A state may opt out of the
provisions of this title for actions in state court against a
small business in which all parties are citizens of the
state. In order to opt out, the state must enact a statute
citing the authority in this section and declaring its
intention to opt out.
Title II: Product Seller Fair Treatment
Section 201: Findings
This section sets out congressional findings concerning the
effect on interstate commerce of damage awards in product
liability cases; 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
This section defines various terms and phrases used in this
title.
[[Page E784]]
Section 203: Applicability; Preemption
This section applies to any product liability action
brought in federal or state court. Civil actions for
commercial loss are excluded from the applicability of this
title.
In addition, this section clarifies that the preemption of
state law by this title is limited to only those issues
specifically addressed by the legislation and not other
unrelated liability laws.
Section 204: Liability Rules Applicable to Product Sellers, Renters and
Lessors
This section provides that product sellers other than the
manufacturer (such as wholesaler distributors and retailers)
may be held liable only if they are directly at fault for the
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 the harm was the result of the product
seller's intentional wrongdoing.
However, the provision ensures that product sellers will
``stand in the shoes'' of a culpable manufacturer when the
manufacturer is judgment-proof In addition, the statute of
limitations in such cases is tolled.
Finally, this section specifies that product renters and
lessors will not be liable for the tortious acts of another
solely by reason of product ownership.
Section 205: Federal Cause of Action Precluded
This section clarifies that the bill does not create
federal district court jurisdiction pursuant to Section 1331
or Section 1337 of Title 28, United States Code.
Title III: Effective Date
Section 301: Effective Date
This section provides that the bill's provisions will apply
to any civil action commenced after the date of enactment of
the legislation.
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