[Congressional Record Volume 150, Number 109 (Tuesday, September 14, 2004)]
[House]
[Pages H7080-H7084]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 PROVIDING FOR CONSIDERATION OF H.R. 4571, LAWSUIT ABUSE REDUCTION ACT 
                                OF 2004

  Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 766 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 766

       Resolved, That upon the adoption of this resolution it 
     shall be in order without intervention of any point of order 
     to consider in the House the bill (H.R. 4571) to amend rule 
     11 of the Federal Rules of Civil Procedure to improve 
     attorney accountability, and for other purposes. The bill 
     shall be considered as read for amendment. The amendment in 
     the nature of a substitute recommended by the Committee on 
     the Judiciary now printed in the bill shall be considered as 
     adopted. The previous question shall be considered as ordered 
     on the bill, as amended, and on any further amendment thereto 
     to final passage without intervening motion except: (1) one 
     hour of debate on the bill, as amended, equally divided and 
     controlled by the chairman and ranking minority member of the 
     Committee on the Judiciary; (2) the further amendment printed 
     in the report of the Committee on Rules accompanying this 
     resolution, if offered by Representative Turner of Texas or 
     his designee, which shall be in order without intervention of 
     any point of order, shall be considered as read, and shall be 
     separately debatable for 40 minutes equally divided and 
     controlled by the proponent and an opponent; and (3) one 
     motion to recommit with or without instructions.

  The SPEAKER pro tempore. The gentleman from Texas (Mr. Sessions) is 
recognized for 1 hour.
  Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield 
the customary 30 minutes to the gentleman from Massachusetts (Mr. 
McGovern), pending which I yield myself such time as I may consume. 
During consideration of this resolution, all time yielded is for the 
purpose of debate only.
  The resolution before us is a well-balanced, modified closed rule 
that provides for 1 hour of debate equally divided and controlled by 
the chairman and ranking minority member of the Committee on the 
Judiciary. The rule waives all points of order against consideration of 
the bill and provides that the bill shall be considered as read for 
amendment. The rule provides that the amendment in the nature of a 
substitute recommended by the Committee on the Judiciary now printed in 
the bill shall be considered as adopted and also makes in order the 
amendment printed in the Committee on Rules report accompanying the 
resolution, if offered by the gentleman from Texas (Mr. Turner) or his 
designee. This amendment shall be considered as read and shall be 
debatable for 40 minutes equally divided and controlled by the 
proponent and the opponent.
  Finally, this rule waives all points of order against the amendment 
printed in that report and provides for one motion to recommit with or 
without instructions.
  Mr. Speaker, I rise today in strong support of the rule for H.R. 
4571, the Lawsuit Abuse Reduction Act of 2004, as well as the 
underlying legislation. This bill offered by the gentleman from San 
Antonio, Texas (Mr. Smith), my good friend, is carefully constructed 
legislation that will create a disincentive for attorneys and 
plaintiffs to file many of the frivolous lawsuits that currently clog 
our court system and act as a drain on our Nation's economy.
  Just 6 months ago almost to the day, I came to the floor to manage 
the rule for H.R. 339, the Personal Responsibility in Food Consumption 
Act. Later that day the House voted overwhelmingly by a vote of 267 to 
139 to require courts to dismiss frivolous lawsuits seeking damages for 
injuries resulting from obesity and its intended health problems that 
are filed against the producers and sellers of food. Through passing 
this legislation today, we have another opportunity to help bring our 
tort system back to reality by amending the Federal Rules of Civil 
Procedure to impose greater attorney and client accountability for 
pursuing other frivolous or nuisance lawsuits.
  Our current tort system costs American consumers well over $200 
billion a year, the equivalent of a 5 percent tax on wages. Our courts 
today handle cases ranging from legitimate claims to those that are 
highly suspect and wasteful of time and resources. Some of these 
examples of lawsuit abuse include a woman in Knoxville, Tennessee, who 
sought $125,000 in damage against McDonald's, claiming a hot pickle 
dropped from a hamburger, burned her chin and caused her mental injury. 
Her husband also sued for $15,000 for loss of consortium. Or the case 
of the Girl Scouts of America in metro Detroit, who have to sell 36,000 
boxes of cookies each year just to pay for their liability insurance. 
In fact, according to a former Girl Scout from the greater 
Philadelphia, Pennsylvania area, frivolous litigation is making it 
increasingly hard for them to even sell their cookies and their local 
convenience stores will no longer allow these girls to set up their 
booths anymore for fear of liability issues.
  This economic drain, created by frivolous lawsuits on American 
productivity, is unacceptable and prevents the American economy from 
being as competitive as it should be with the rest of the world.
  H.R. 4571 will help to discourage the filing of frivolous lawsuits by 
restating several important provisions to rule 11 of the Federal Rules 
of Civil Procedure that were changed in 1993 and add several new 
deterrents against baseless claims. In short, this legislation will 
make rule 11 sanctions against attorneys or parties who file frivolous 
lawsuits mandatory rather than discretionary. It will remove rule 11 
safe harbor provisions that currently allow parties and their attorneys 
to avoid sanctions for making frivolous claims by withdrawing them 
within 21 days after motions for sanctions that have been filed. It 
implements a ``three strikes and you're out'' provision that would 
disbar any lawyer for at least 1 year that filed three frivolous 
lawsuits in Federal court. It allows for rule 11 sanctions for 
frivolous or harassing conduct during discovery, and it allows monetary 
sanctions, including attorney fees and compensation against a 
represented party.
  The Lawsuit Abuse Reduction Act also provides new protections against 
frivolous lawsuits such as extending rule 11 sanctions to State cases 
that affect interstate commerce, and reducing forum shopping by 
requiring that a plaintiff in a civil tort action may sue only where he 
or she lives or was injured or where the defendant's principal place of 
business is located.
  A recent poll found that 83 percent of likely voters believe that 
there are too many lawsuits in America and 76 percent believe that 
lawsuit abuse results in higher prices for goods and services. Another 
poll found that 73 percent of Americans support requiring sanctions 
against attorneys who file frivolous lawsuits, just as H.R. 4571 would 
do.
  Small businesses, the engine of job growth in our economy, rank the 
cost and availability of liability insurance as second only to the 
costs of health care as their top priority, and both problems are 
fueled by frivolous lawsuits. A recent report by AEI-Brookings Joint 
Center for Regulatory Studies has concluded: ``The tort liability

[[Page H7081]]

price tag for small businesses in America is $88 billion a year'' and 
that ``small businesses bear 68 percent of the business tort liability 
cost but only take in 25 percent of the business revenue.'' The small 
businesses studied in this report account for 98 percent of the total 
number of small businesses with employees in the United States.
  Mr. Speaker, I believe it is time for Congress to listen to what the 
average Americans say about frivolous lawsuits. It is time for us to 
hear the concerns of small businessmen and -women in our communities, 
along with consumers, who list frivolous lawsuits as one of their 
greatest impediments to success.
  And it is time for us to get serious about encouraging economic 
growth, job creation, and international competitiveness by ending the 
practice that keeps our economy from thriving. The choice presented by 
this legislation is stark and clear and will demonstrate whether we 
support the frivolous actions of the trial lawyer and the drain that 
they place on the American economy or whether we support American 
workers and businesses.
  I encourage all of my colleagues to stand up for our economy and for 
consumers by supporting this rule and the underlying legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. McGOVERN asked and was given permission to revise and extend his 
remarks.)
  Mr. McGOVERN. Mr. Speaker, I thank the gentleman from Texas (Mr. 
Sessions) for yielding me the customary 30 minutes.
  Mr. Speaker, I rise in opposition to this rule and in opposition to 
H.R. 4571, the so-called Frivolous Lawsuit Protection Act.
  Today the Republican leadership of this body continues willful 
disregard for the American public. Once again we are considering 
legislation in the shadow of the November elections, and once again the 
Republican leadership is catering to big business at the expense of the 
public good. And once again that leadership is squandering the House's 
limited time with foolish, misguided special interest legislation.
  This is a bill that attempts to turn back the judicial clock by over 
a decade; and in the process, more pressing issues and priorities are 
ignored. Mr. Speaker, this simply is not needed.
  Yesterday the Federal Assault Weapons Ban died at the hands of the 
Republican leadership. President Bush, who, during his first campaign, 
said he saw no reason for such weapons to be on the street, indicated 
on more than one occasion that he would sign a new bill if the 
Republican-controlled Congress sent him one. But the Republican 
leadership refused to bring the reauthorization up for a vote. I 
believe they prevented a vote to protect President Bush from having to 
sign or veto the reauthorization of the Federal Assault Weapons Ban. 
Why? Because doing the bidding of the gun lobby is their priority. 
Apparently the Republican strategy in homeland security includes 
defying law enforcement by making these military-style assault weapons 
more available.

                              {time}  1030

  Mr. Speaker, in addition to failing to act on the Federal assault 
weapons ban this week, the Republican leadership has scheduled zero 
time, that is zero time, to consider the 9/11 Commission's 
recommendations. The Commission took a hard and comprehensive look at 
the intelligence and homeland security needs of our country. They asked 
Congress to do its job, to take a hard look at the way this House 
organizes and carries out its works, ways that potentially undercut the 
security of our Nation and our people. Yet, today, in this House, it is 
business as usual, with special interest legislation on the House 
floor. Six weeks have passed since the Commission's report was first 
issued, and we still have no firm date as to when this House will take 
up legislation and debate the Commission's recommendations.
  Will it be before Congress breaks for elections? Will we have to wait 
for another September 11 anniversary to come and go before we take up 
the Commission's findings? Or, like today, will this body continue to 
waste its time on frivolous legislation?
  The Republican leadership in both parties of Congress has failed to 
pass a budget resolution, but we are not talking about that today. And 
today we begin one more legislative week without a transportation bill. 
We certainly are not working on a bill to increase the minimum wage, 
even though wages are stagnant and over 4 million Americans have fallen 
out of the middle class into poverty since George Bush became 
President. In fact, the Bush administration and the Republican Congress 
are on track to have the worst jobs record since the Great Depression, 
all the way back to Herbert Hoover. The average length of unemployment 
is at a 10-year high, and manufacturing employment remains at a 53-year 
low. Yet, this House does not seem to have the time to do anything to 
help the millions of Americans who have lost their jobs. No extension 
of unemployment benefits, no help for the millions of uninsured 
Americans, and certainly, no effort to reduce gas prices or lower the 
cost of college tuition, or pass a highway bill that might create good-
paying jobs.
  No, Mr. Speaker, we are not taking up legislation to address these 
issues today.
  Mr. Speaker, if the American public wants real leadership on real 
issues, they should not look here for help. Indeed, this body is guilty 
of willful neglect of America's priorities. Why do we not work on a 
bill to help the millions of uninsured Americans? Over 70 percent of 
the uninsured live in households with at least one worker, and yet we 
sit idly by as more and more Americans work in jobs that provide little 
or no health care benefits.
  Instead, here we are, taking up H.R. 4571, the so-called Frivolous 
Lawsuit Reduction Act, a bill that does nothing to address the real 
problems facing working families of America, yet does so much to help 
the special interests who fill the campaign coffers of the majority.
  Among its provisions, H.R. 4571 would turn back the clock to the pre-
1993 provision of Rule 11 of the Federal Rules of Civil Procedure, 
provisions that were changed on the recommendation of the Judicial 
Conference after years of study, approved by the U.S. Supreme Court, 
and reviewed by Congress in accordance with the Rules Enabling Act.
  What will this bill change? The supporters of H.R. 4571 contend that 
it would help reduce frivolous lawsuits. That is what they say. But in 
reality, the bill would have a terrible effect on credible claims 
brought by families, workers, consumers, and senior citizens.
  Without many of these civil lawsuits, the following changes in 
consumer products would likely never have occurred: The redesign of 
defective baby cribs so that they no longer strangle infants; flammable 
children's pajamas taken off the market; the redesign of harmful 
medical devices; the strengthening of auto fuel systems so that they do 
not blow up upon impact; the addition of basic safeguards to dangerous 
farm machinery; and the elimination of asbestos so that workers are no 
longer poisoned in their workplaces.
  Mr. Speaker, instead of providing more protections for the average 
American, the Republican leadership actually provides protections for, 
get this, the ``Benedict Arnold corporations'' who reincorporate in a 
foreign tax shelter only to avoid paying U.S. taxes. Specifically, this 
bill protects these Benedict Arnold corporations from lawsuits American 
citizens could file if they are injured by those corporations' 
products. Unbelievable. The bill limits the venue of a lawsuit against 
a corporate defendant to either the place the injury happened or the 
jurisdiction where ``the defendant's principal place of business is 
located.'' If a foreign corporation does not do significant business in 
a place where the injury occurred, a plaintiff cannot sue a corporation 
headquartered outside the United States. In other words, a person 
injured by a defective product would be able to sue a U.S. corporation 
in its principal place of business, but he or she would often have no 
way to seek redress against a foreign corporation.
  Now, the gentleman from Texas (Mr. Turner) attempted to fix this 
provision. While the Republican leadership actually made the Turner 
amendment in order, they did so only after a provision intended to hold 
these Benedict Arnold corporations accountable for

[[Page H7082]]

their actions in the United States was removed from the amendment. The 
provision the Republican leadership removed from the Turner amendment 
defines Benedict Arnold corporations as U.S. companies that set up 
corporate shells in foreign countries in order to escape U.S. tax 
liability and other U.S. regulatory duties.
  In other words, Mr. Speaker, the one proposal that was intended to 
protect people, not corporations, was left on the Committee on Rules 
floor last night. The Republican leadership does not want the American 
people to know that their bill puts Benedict Arnold corporations ahead 
of American consumers. This is just one example of the Republican 
leadership bending over backwards for special interests, while ignoring 
the real issues facing the American people. I hope my friend, the 
gentleman from Texas (Mr. Sessions), will take the time during this 
debate to explain to the American people why the Republican leadership 
continues to protect Benedict Arnold companies instead of fighting for 
American jobs here at home.
  But, then again, today's debate is not about the real issues 
confronting the American people; it is all about distraction. If we 
waste enough time on this bill, maybe the American people will not have 
time to ponder the failures and the lack of action by the Republican-
controlled Congress on our most pressing priorities. It is a cynical 
ploy, and I hope that the American people recognize it.
  I urge my colleagues to reject H.R. 4571.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  Republicans do listen to Democrats, and we have had a number of times 
where the Republican Party, the majority party, has talked about tort 
reforms and other issues that are important to consumers.
  One of the persons that we have listened to repeatedly in this debate 
is perhaps one of the most successful trial lawyers who is now a United 
States Senator, and his name is John Edwards. Senator Edwards has 
written in Newsweek that ``lawyers who bring frivolous lawsuits should 
face tough mandatory sanctions with the `3-strikes' penalty.'' That is 
what Mr. Edwards has said. Senator Edwards has also said that he 
``believes we need a national system in place that will weed out 
meritless lawsuits.'' That is exactly what H.R. 4571 would do.
  We are listening to the American people. We are listening to people 
who are lawyers who are engaged in the business of advocating on behalf 
of people who have been harmed. But sometimes those people know most 
about the system, as Senator John Edwards, who knows best that we need 
to reform the system. That is what we are doing here today. I do 
appreciate the opportunity to have Senator Edwards' remarks that were 
in Newsweek magazine included today, because I think it is important 
for the American public to hear that.
  Mr. Speaker, I yield 3 minutes to the gentleman from Bristol, Indiana 
(Mr. Chocola).
  Mr. CHOCOLA. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, I rise today in support of this rule and in support of 
the Lawsuit Abuse Reduction Act, and I do so because I have seen 
firsthand the very destructive nature that frivolous lawsuits have on 
our country, on our job creation, and on our health care costs.
  Before coming to Congress I was in the private sector and ran a 
business, and every year we spent hundreds of thousands of dollars on 
liability insurance in an attempt to protect ourselves and our 
employees from frivolous lawsuits. We spent millions of dollars every 
year on inflated health care costs for our employees, and those suits 
that were filed against us were usually settled and they were usually 
settled in a fashion where the lawyers got millions of dollars and the 
plaintiffs essentially got pennies. In the end, we spent millions of 
dollars every single year to protect ourselves against frivolous 
lawsuits and to get rid of frivolous lawsuits.
  Instead of spending millions of dollars on frivolous lawsuits, it 
would have been much more productive to spend that money on creating 
more jobs and lowering the health care costs for our employees. Every 
year frivolous lawsuits cost our economy $233 billion. That is 2.23 
percent of our GDP, and it costs $109 for every single person in 
America.
  Mr. Speaker, I do not think there are many things that we could do to 
give our economy a boost, to help American companies compete better in 
a global marketplace, than ending frivolous lawsuits. So I encourage 
all of my colleagues to support this rule and to support the Lawsuit 
Abuse Reduction Act.
  Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
  The gentleman from Texas (Mr. Sessions), I am happy to yield to him 
30 seconds to answer the question that I asked in my opening statement 
and that is, why did you remove this section of the Turner amendment 
that held Benedict Arnold corporations accountable? Why do you feel 
that we need to protect companies who purposely open up P.O. boxes in 
Bermuda so that they can escape paying U.S. taxes? Even if you support 
paying Benedict Arnold corporations, why can we not have at least an up 
or down vote on an amendment so that the House can decide?
  I am happy to yield to the gentleman 30 seconds so that he can 
clarify that for me.
  Mr. SESSIONS. Mr. Speaker, I thank the gentleman for yielding, and I 
am pleased to respond. First of all, I would like to say that the 
gentleman from Texas (Mr. Turner) requested its removal.
  Secondly, I would like to say that the provision actually allows a 
covered company under this provision that they have the absolute right 
not only to remove their case to Federal court, but they can remove the 
case to any Federal court in the country that they would like, and that 
they can pick the Federal court if they have one, wherever the Federal 
court is, and have the case there; whereas our bill prevents unfair 
forum shopping by making sure that cases are actually brought in States 
that actually have a connection to the case.
  As the gentleman may be aware, there are abuses that take place all 
across this country, including in Illinois and Mississippi, where there 
are cases that are accepted by courts where no one actually even lives 
in those jurisdictions.
  I thank the gentleman for asking for a response.
  Mr. McGOVERN. Mr. Speaker, reclaiming my time, I appreciate the 
gentleman's response, but it really did not answer my question, and I 
yield myself such time as I may consume.
  The bottom line is the gentleman from Texas (Mr. Turner) decided not 
to pursue his amendment only after he was told by the leadership of 
this House that he could not have the language he wanted, and the 
companies that we are talking about here, these Benedict Arnold 
companies, are not in individual States, they are in places like 
Bermuda.
  I just think it is outrageous that these companies that really skirt 
U.S. tax law, and I think are not the kind of corporations that deserve 
to be protected, are in fact protected in this bill, and I think it is 
wrong.
  Mr. Speaker, I would like to insert in the Record the complete text 
of the amendment that the gentleman from Texas (Mr. Turner) wanted to 
offer and was told that he could not offer because I think it is 
instructive for the American people to at least have on record what he 
tried to do.

     SEC. 6. ACCOUNTABILITY FOR BENEDICT ARNOLD CORPORATIONS.

       (a) Jurisdiction.--In any civil action concerning an injury 
     that was sustained in the United States and in which the 
     defendant is a Benedict Arnold corporation, any Federal court 
     in which such action is brought shall have jurisdiction over 
     such defendant.
       (b) Service of Process.--Process in an action described in 
     subsection (a) may be served wherever the Benedict Arnold 
     corporation is located, has an agent, or transacts business.
       (c) Definitions.--For purposes of this subsection:
       (1) The term ``Benedict Arnold corporation'' means a 
     foreign corporation that acquires a domestic corporation in a 
     corporate repatriation transaction.
       (2) The term ``corporate repatriation transaction'' means 
     any transaction in which--
       (A) a foreign corporation acquires substantially all of the 
     properties held by a domestic corporation;

[[Page H7083]]

       (B) shareholders of the domestic corporation, upon such 
     acquisition, are the beneficial owners of securities in the 
     foreign corporation that are entitled to 50 percent or more 
     of the votes on any issue requiring shareholder approval; and
       (C) the foreign corporation does not have substantial 
     business activities (when compared to the total business 
     activities of the corporate affiliated group) in the foreign 
     country in which the foreign corporation is organized.

  Mr. Speaker, I reserve the balance of my time.
  Mr. SESSIONS. Mr. Chairman, I yield 5 minutes to the gentleman from 
Georgia (Mr. Linder), a member of the Committee on Rules.
  Mr. LINDER. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, I rise in strong support of H. Res. 766, a modified, 
closed rule for H.R. 4571, the Lawsuit Abuse Reduction Act of 2004. 
This is a fair rule which provides for consideration of this important 
legislation and gives the minority an opportunity to offer a substitute 
amendment for the full House to consider.
  With regard to the underlying measure, I support placing some level 
of accountability upon those who would otherwise unnecessarily burden 
our Nation's judicial system. While most tort reform measures focus 
primarily on the amount of damages one can collect through civil 
actions, little is ever said, much less done, to admonish the 
individuals who are the cause of the unnecessary litigation. As a 
matter of reason, we all agree that individuals should be given the 
right to seek redresses for certain grievances through civil 
litigation, as long as those claims are legitimate in their nature. 
After all, it is the responsibility of this Nation's judicial system to 
uphold the rights and liberties of the American citizen.
  Our system of justice is flawed, however, in that it fails to 
incorporate checks upon those who would use it for other either 
malevolent means or personal gain. Under current law, for example, a 
lawyer who files a blatantly frivolous lawsuit in violation of Rule 11 
may actually avoid punishment as long as he or she withdraws the filing 
within 21 days after the opposing party has filed a motion for 
sanctions. Judicial filings, whether legitimate or frivolous, bring 
cost burdens to both parties involved and the government, and these 
costs, most notably attorneys fees, do not evaporate once the frivolous 
claim has been withdrawn.
  H.R. 4571, however, corrects these shortcomings by imposing 
reasonable standards of responsibility on the legal community and 
preventing lawyers from circumventing Rule 11. Most importantly, this 
legislation sends out a clear message that our judicial system was 
intended to protect the rights of the aggrieved, not to provide wealth 
to those who would profit from the aggrieved. As such, I am hopeful 
that my colleagues will join me in support of this bill.

                              {time}  1045

  Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I urge my colleagues to reject H.R. 4571, and I ask that 
they support the substitute that will be offered by the gentleman from 
Texas (Mr. Turner).
  The Turner substitute is a stronger bill and addresses the real needs 
of the American public. The Turner substitute respects all Americans by 
setting up other three strikes and you are out systems while protecting 
civil rights lawsuits. The Turner substitute also prevents corporate 
wrongdoers from sealing their activities in court records. And the 
Turner substitute requires States to put into action a system to speed 
up the trial process and eliminate junk lawsuits.
  Let me again state for the record, Mr. Speaker, that it is 
frustrating and it is mind boggling to me that the Republican 
leadership insists that the Turner substitute not include language that 
would hold Benedict Arnold corporations accountable. What is the deal?
  Why does the Republican leadership not only on this bill but on so 
many other bills in which we try to hold these companies accountable 
insist on bending over backwards to protect them. These are companies 
that purposefully set up P.O. boxes in places like Bermuda to avoid 
paying U.S. taxes. There is no citizen in this country that can do 
that. But these corporations that make millions and millions, if not 
billions of dollars get to do that, get to take advantage of all the 
benefits of this country, but do not have to pay U.S. taxes and here 
they are being protect from lawsuits if in fact they produce a damaging 
product.
  It is wrong. It is outrageous. This should not be happening, and I 
would again just say that it is sad that we are at this point.
  Mr. Speaker, I would urge the adoption again of the Turner substitute 
and the rejection of this ill-conceived, ill-advised bill, and I would 
urge my colleagues to vote no on H.R. 4571.
  Mr. Speaker, I yield back the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, today, as I had stated, this is balanced legislation 
that is important to consumers. It is important to judges who sit to 
make themselves ready for those lawsuits that are necessary to make 
wise decisions on. But frivolous lawsuits are clogging our courts.
  Mr. Speaker, I would remind this body that we have debated numerous 
tort reform issues, and one which was decided as a local issue in Texas 
was about medical malpractice, tort reform for medical malpractice. It 
was passed last year. It became law in January of this year. And one of 
the most important health care systems in Texas, a company called 
Christus HealthCare Systems, has announced earlier this month that as a 
result of those tort reform changes in Texas, they are able to put $21 
million that previously they had set aside for lawsuits, that would go 
right back into their hospitals, to health care, to retraining of their 
employees, to make their system better, to make health care work better 
for every single consumer, and most of all to hire more nurses which is 
where the shortage was in their hospital.
  Tort reform issues and ideas work but so do those things like we are 
doing today, H.R. 4571, that says we are going to alleviate and stop 
frivolous lawsuits from clogging our courts. I would remind this 
wonderful body that the young chairman, the gentleman from San Antonio, 
Texas (Mr. Smith), has worked very diligently to ensure that this is 
balanced legislation that was brought to the floor, as he appeared 
yesterday in the Committee on Rules to talk about the need for this. I 
think we are listening to the special interests and we admit in the 
Republican Party we do have a specialty interest, they are call 
consumers. They are called taxpayers. And those special interest people 
that the Republican Party represents, we will continue to do so with 
common sense legislation that will allow the United States Congress to 
speak on issues that are important.
  Mr. Speaker, I encourage all of my colleagues to stand up to support 
not only this rule but also the underlying legislation that is good for 
consumers. It is good for small businesses. It is good to ensure that 
America's economic growth continues. And most of all, it is good for 
the people, like Senator Edwards noted, who are there on the front line 
in our courts who say that frivolous lawsuits must end. The United 
States Congress will speak today. Every single Member of this body will 
have a chance to make that firm decision whether we want to end 
frivolous lawsuits or whether we are going to allow the status quo.
  I urge my fellow Members to please support this underlying 
legislation and we will make a strong statements on behalf of 
consumers.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in opposition to the 
rule issued by the Committee on Rules for H.R. 4571, the Lawsuit Abuse 
Reduction Act of 2004.
  As I mentioned during the Committee on the Judiciary's oversight 
hearing on this legislation and reiterated in my statement for the 
markup, one of the main functions of that body's oversight is to 
analyze potentially negative impact against the benefits that a legal 
process or piece of legislation will have on those affected. The base 
bill before the House today does not represent the product of careful 
analysis and therefore, it is critical that Members be given the 
ability to offer amendments to improve its provisions.
  In the case of H.R. 4571, the Lawsuit Abuse Reduction Act, the 
oversight functions of the Judiciary Committee allowed us to craft a 
bill that will protect those affected from negative impacts of the 
shield from liability that it proposes. This legislation requires an 
overhaul in

[[Page H7084]]

order to make it less of a misnomer--to reduce abuse rather than 
encourage it.
  The goal of the tort reform legislation is to allow businesses to 
externalize, or shift, some of the cost of the injuries they cause to 
others. Tort law always assigns liability to the party in the best 
position to prevent an injury in the most reasonable and fair manner. 
In looking at the disparate impact that the new tort reform laws will 
have on ethnic minority groups, it is unconscionable that the burden 
will be placed on these groups--that are in the worst position to bear 
the liability costs.
  When Congress considers pre-empting State laws, it must strike the 
appropriate balance between two competing values--local control and 
national uniformity. Local control is extremely important because we 
all believe, as did the Founders two centuries ago, that State 
governments are closer to the people and better able to assess local 
needs and desires. National uniformity is also an important 
consideration in federalism--Congress's exclusive jurisdiction over 
interstate commerce has allowed our economy to grow dramatically over 
the past 200 years.

  This legislation would reverse the changes to Rule 11 of the Federal 
Rules of Civil Procedure (FRCP) that were made by the Judicial 
Conference in 1993 such that (1) sanctions against an attorney whose 
litigation tactics are determined to harass or cause unnecessary delay 
or cost or who has been determined to have made frivolous legal 
arguments or unwarranted factual assertions would become mandatory 
rather than discretionary to the court, (2) discovery-related activity 
would be included within the scope of the rule, and (3) the rule would 
be extended to State cases affecting interstate commerce so that if a 
State judge decides that a case affects interstate commerce, he or she 
must apply rule 11 if violations are found.
  This legislation strips State and Federal judges of their discretion 
in the area of applying rule 11 sanctions. Furthermore, it infringes 
States' rights by forcing State courts to apply the rule if interstate 
commerce is affected. Why is the discretion of the judge not sufficient 
in discerning whether rule 11 sanctions should be assessed?
  If this legislation moves forward in this body, it will be important 
for us to find out its effect on indigent plaintiffs or those who must 
hire an attorney strictly on a contingent-fee basis. Because the 
application of rule 11 would be mandatory, attorneys will pad their 
legal fees to account for the additional risk that they will have to 
incur in filing lawsuits and the fact that they will have no 
opportunity to withdraw the suit due to a mistake. Overall, this 
legislation will deter indigent plaintiffs from seeking counsel to file 
meritorious claims given the extremely high legal fees.
  Furthermore, H.R. 4571, as drafted, would allow corporations that 
perform sham and non-economic transactions in order to enjoy economic 
benefits in this country.
  This is a bad rule that will have terrible implications on our 
legislative branch, and I ask that my colleagues defeat the rule, 
defeat the bill, and support the substitute offered by Mr. Turner. We 
must carefully consider the long-term implications that this bill, as 
drafted, will have on indigent claimants, the trial attorney community, 
and facilitation of corporate fraud.
  Mr. SESSIONS. Mr. Speaker, I yield back the balance of my time, and I 
move the previous question on the resolution.
  The previous question was ordered.
  The SPEAKER pro tempore (Mr. Ose). The question is on the resolution.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. McGOVERN. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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