[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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